485APOS 1 vaipvanew485a103015filing.htm IPVA NEW - PEA #11 VA-IPVA New 485A 103015 Combined Document


Registration No. 333-188293
811-02091
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 11
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 214
(Check appropriate box or boxes)
Principal Life Insurance Company Separate Account B
--------------------------------------------------------------------------------
(Exact Name of Registrant)
Principal Life Insurance Company
--------------------------------------------------------------------------------
(Name of Depositor)
The Principal Financial Group, Des Moines, Iowa 50392
--------------------------------------------------------------------------------
(Address of Depositor's Principal Executive Offices) (Zip Code)
(515) 362-2384
-------------------------------------------------------------------------------
Depositor's Telephone Number, including Area Code
Doug Hodgson
The Principal Financial Group, Des Moines, Iowa 50392
--------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Title of Securities Being Registered: PRINCIPAL INVESTMENT PLUS VARIABLE ANNUITYSM  
(for applications signed on or after August 1, 2013)
It is proposed that this filing will become effective (check appropriate box)
_____    immediately upon filing pursuant to paragraph (b) of Rule 485
_____    on (date) pursuant to paragraph (b) of Rule 485
_____    60 days after filing pursuant to paragraph (a)(1) of Rule 485
__XX_    on November 2, 2015 pursuant to paragraph (a)(1) of Rule 485
If appropriate, check the following box:
_____    This post-effective amendment designates a new effective date for a previously filed post-effective amendment.




 

PRINCIPAL INVESTMENT PLUS VARIABLE ANNUITYSM 
(FOR APPLICATIONS SIGNED ON OR AFTER AUGUST 1, 2013)
Prospectus dated November 2, 2015
This prospectus describes Principal Investment Plus Variable Annuity, an individual, flexible premium, deferred variable annuity (the “Contract”), issued by Principal Life Insurance Company (“the Company”, “we”, “our” or “us”) through Principal Life Insurance Company Separate Account B (“Separate Account”).
This prospectus provides information about the Contract and the Separate Account that you, as owner, should know before investing. The prospectus should be read and retained for future reference. Additional information about the Contract and the Separate Account is included in the Statement of Additional Information (“SAI”), dated November 2, 2015, which has been filed with the Securities and Exchange Commission (the “SEC”) and is considered a part of this prospectus. The table of contents of the SAI is at the end of this prospectus. You may obtain a free copy of the SAI and all additional information by writing or calling: Principal Investment Plus Variable AnnuitySM, Principal Financial Group, P.O. Box 9382, Des Moines, Iowa 50306-9382, Telephone: 1-800-852-4450. You can also visit the SEC’s website at www.sec.gov, which contains the SAI, material incorporated into this prospectus by reference, and other information about registrants that file electronically with the SEC.
These securities have not been approved or disapproved by the SEC or any state securities commission nor has the SEC or any state securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
You generally may allocate your investment in the Contract among the following investment options: dollar cost averaging fixed accounts (“DCA Plus accounts”), a Fixed Account and the Separate Account divisions. The DCA Plus accounts and the Fixed Account are a part of our General Account. Obligations of the General Account are subject to the rights of the Company’s other creditors and the Company's overall claims paying ability. Each division of the Separate Account invests in shares of a corresponding mutual fund (the “underlying mutual funds”). A list of the underlying mutual funds available under the Contract is shown below.
Your accumulated value will vary according to the investment performance of the underlying mutual funds in which your selected division(s) are invested. We do not guarantee the investment performance of the underlying mutual funds.
For any administrative questions, you may contact us by writing or calling: Principal Investment Plus Variable AnnuitySM, Principal Financial Group, P.O. Box 9382, Des Moines, Iowa 50306-9382, Telephone: 1-800-852-4450.
The Contract is available with or without the Premium Payment Credit Rider. This rider applies credits to the accumulated value for premium payments made in contract year one. The amount of the credit may be more than offset by the additional charges associated with it (higher surrender charges, a longer surrender charge period and increased annual expenses). A Contract with the Premium Payment Credit Rider will cost more than a Contract without the Premium Payment Credit Rider. You should review your own circumstances to determine whether this rider is suitable for you. To assist you in making that determination, we have highlighted in grey boxes those portions of this prospectus pertaining to the rider.
NOTE:
We recapture the premium payment credit if you return the Contract during the examination offer period or request full annuitization of the Contract prior to the third Contract anniversary. You take the risk that the recaptured amount may exceed the then current value of the credit(s). This risk occurs when your investment options have experienced negative investment performance (i.e., have lost value) since the credit was applied. In that situation, you would be worse off than if you had not purchased the Premium Payment Credit Rider.
The Contract is available with or without a Guaranteed Minimum Withdrawal Benefit rider (GMWB). The GMWB riders currently available are Principal Income Builder 3 (“PIB 3”) and Principal Income Builder 10 (“PIB 10”). You may only elect one GMWB rider. There is a charge for the rider that is deducted quarterly.
If you purchase a GMWB rider with your Contract, your investment options are limited to the following Principal Variable Contracts Funds: Diversified Balanced Managed Volatility Account; Diversified Growth Managed Volatility Account; Diversified Balanced Account; Diversified Growth Account; and Diversified Income Account.
This prospectus describes all material features of the Contract and any material differences due to state variations. All italicized words within this Prospectus are defined terms that can be found in the Glossary.




The underlying mutual funds available under the Contract are listed below(1). However, if you purchase a GMWB rider with your Contract, your investment options are limited to the following Principal Variable Contracts Funds: Diversified Balanced Managed Volatility Account; Diversified Growth Managed Volatility Account; Diversified Balanced Account; Diversified Growth Account; and Diversified Income Account.
AllianceBernstein Variable Products Series Fund — Class A
Neuberger Berman Advisers Management Trust
• AllianceBernstein Small/Mid Cap Value Portfolio
• Large Cap Value Portfolio — I Class
American Century Variable Portfolios, Inc.
• Socially Responsive Portfolio — I Class
• Inflation Protection Fund — Class II
PIMCO Variable Insurance Trust
• Mid Cap Value Fund — Class II
• All Asset Portfolio — Administrative Class
• Ultra Fund — Class II
• High Yield Portfolio — Administrative Class
American Funds Insurance Series — Class 2
•
Low Duration Portfolio — Advisor Class
• Global Small Capitalization Fund
• Total Return Portfolio — Administrative Class
• New World Fund
Principal Variable Contracts Funds — Class 1
BlackRock Variable Insurance Funds — Class III
• Bond & Mortgage Securities Account
•
Global Allocation V.I. Fund
• Diversified International Account
•
iShares Alternative Strategies V.I.
• Equity Income Account
•
iShares Dynamic Allocation V.I.
• Government & High Quality Bond Account
•
iShares Dynamic Fixed Income V.I.
•
Income Account
•
iShares Equity Appreciation V.I.
• International Emerging Markets Account
Columbia VP — Class 2
• LargeCap Growth Account
•
Limited Duration Credit Fund
• LargeCap Growth Account I
Delaware Variable Insurance Products — Service Class
• LargeCap S&P 500 Index Account
•
Limited Term Diversified Income Series
• LargeCap Value Account
• Small Cap Value
• MidCap Account(2)
Deutsche Variable Insurance Portfolio — Class B
• Money Market Account
• Small Mid Cap Value VIP
• Principal Capital Appreciation Division
Dreyfus Investment Portfolios — Service Shares
• Principal LifeTime 2010 Account(3)
• Technology Growth Portfolio
• Principal LifeTime 2020 Account(3)
Fidelity Variable Insurance Products — Service Class 2
• Principal LifeTime 2030 Account(3)
• Contrafund® Portfolio
• Principal LifeTime 2040 Account(3)
• Equity-Income Portfolio
• Principal LifeTime 2050 Account(3)
• Growth Portfolio
• Principal LifeTime Strategic Income Account(3)
• Mid Cap Portfolio
• Real Estate Securities Account
• Overseas Portfolio
• Short-Term Income Account
Franklin Templeton Variable Insurance Products Trust
• SmallCap Blend Account
• Franklin Global Real Estate VIP Fund — Class 2
• Strategic Asset Management Balanced Account Portfolio(3)
• Small Cap Value VIP Fund — Class 2
• Strategic Asset Management Conservative Balanced Portfolio(3)
• Templeton Global Bond VIP Fund — Class 4
• Strategic Asset Management Conservative Growth Portfolio(3)
Goldman Sachs Variable Insurance Trust — Institutional Shares
• Strategic Asset Management Flexible Income Portfolio(3)
• MidCap Value Fund
• Strategic Asset Management Strategic Growth Portfolio(3)
• Small Cap Equity Insights Fund
Principal Variable Contracts Funds — Class 2
Guggenheim Investments Variable Insurance Funds
• Diversified Balanced Account(3)
• Global Managed Futures Strategy Fund
• Diversified Balanced Managed Volatility Account(3)
• Long Short Equity Fund
• Diversified Growth Account(3)
• Multi-Hedge Strategies Fund
• Diversified Growth Managed Volatility Account(3)
• Series F (Guggenheim Floating Rate Strategies Series)
• Diversified Income Account(3)
• Series M (Guggenheim Macro Opportunities Series)
Rydex Variable Insurance
Invesco Variable Insurance Funds — Series I
• Commodities Strategy Fund
• International Growth Fund
T. Rowe Price Equity Series, Inc. — II
• Small Cap Equity Fund
• T. Rowe Price Blue Chip Growth Portfolio
• Value Opportunities Fund
• T. Rowe Price Health Sciences Portfolio
MFS Variable Insurance Trust — Service Class
Van Eck VIP Global Insurance Trust — Class S Shares
• International Value Portfolio
• Global Hard Assets Fund
• New Discovery Series
 
• Utilities Series
 
• Value Series
 
(1) 
If you elect a GMWB rider, your investment options for premium payments and accumulated value will be restricted to the following Principal Variable Contracts Funds: Diversified Balanced Managed Volatility Account; Diversified Growth Managed Volatility Account; Diversified Balanced Account; Diversified Growth Account; and Diversified Income Account.
(2)
Effective August 16, 2013, the MidCap Account is no longer available to customers with an application signature date on or after August 16, 2013.
(3) 
This underlying mutual fund is a fund of funds. The fund of funds expenses may be higher than other fund types because the expenses of the selected fund include the expenses of the funds it holds.
(4) 
Effective June 1, 2015, the T. Rowe Price Health Sciences Portfolio is no longer available to customers with an application signature date on or after June 1, 2015.

2


An investment in the Contract is not a deposit or obligation of any bank and is not insured or guaranteed by any bank, the Federal Deposit Insurance Corporation or any other government agency.

The Contract, certain Contract features and/or some of the investment options may not be available in all states or through all broker dealers. In addition, some optional features may restrict your ability to elect certain other optional features. For further details, please contact us at 1-800-852-4450.

This prospectus is valid only when accompanied by the current prospectuses for the underlying mutual funds. These prospectuses should be kept for future reference. This prospectus is not an offer to sell, or solicitation of an offer to buy, the Contract in states in which the offer or solicitation may not be lawfully made. No person is authorized to give any information or to make any representation in connection with this Contract other than those contained in this prospectus.

3


TABLE OF CONTENTS
SEPARATE ACCOUNT INVESTMENT OPTIONS
2
GLOSSARY
SUMMARY OF EXPENSE INFORMATION
SUMMARY
 
 
1. THE CONTRACT
How To Buy a Contract
Premium Payments
Allocating Premium Payments
Principal Variable Annuity Exchange Offer (“exchange offer”)
Investment Plus Variable Annuity GMWB Exchange Offer
Exchange Credit (for exchanges from our fixed deferred annuities)
Right to Examine the Contract (free look)
Accumulated Value
Telephone and Internet Services
 
 
2. CHARGES AND DEDUCTIONS
Surrender Charge
Free Surrender Amount
When Surrender Charges Do Not Apply
Waiver of Surrender Charge Rider
Transaction Fee
Premium Taxes
Annual Fee
Separate Account Annual Expenses
Mortality and Expense Risks Charge
Administration Charge
Charges for Rider Benefits Currently Available
Premium Payment Credit Rider
Principal Income Builder 3 (PIB 3) Rider
Principal Income Builder 10 Rider (PIB 10) Rider
Special Provisions for Group or Sponsored Arrangements
 
 
3. FIXED ACCOUNT AND DCA PLUS ACCOUNTS
Fixed Account
Fixed Account Value
Dollar Cost Averaging Plus Program (DCA Plus Program)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

4


4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) (for applications signed on or after November 2, 2015)
Factors to Consider Before You Buy A Contract With A GMWB Rider
Which GMWB Rider May Be Appropriate for You
GMWB Rider Restrictions/Limitations
GMWB Investment Options
Overview of Principal Income Builder 3 and Principal Income Builder 10
Additional Premium Payments
     Withdrawal Benefit Base
     Withdrawal Benefit Payment
     GMWB Bonus
     GMWB Step-Up
     GMWB Percentages (for applications signed on or after November 2, 2015)
     Covered Life Change
     Effect of Withdrawals
     Excess Withdrawals
     Required Minimum Distribution (RMD) Program for GMWB Riders
     Effect of Reaching the Maximum Annuitization Date
     Effect of the Contract Accumulated Value Reaching Zero
     Termination and Reinstatement
     Effect of Divorce
     PIB 3 Rider Summary
     PIB 10 Rider Summary
 
 
5. PREMIUM PAYMENT CREDIT RIDER
 
 
6. TRANSFERS AND SURRENDERS
Division Transfers
Unscheduled Transfers
Scheduled Transfers (Dollar Cost Averaging)
Fixed Account Transfers, Total and Partial Surrenders
Automatic Portfolio Rebalancing (APR)
Surrenders
Total Surrender
Unscheduled Partial Surrender
Scheduled Partial Surrender
 
 
7. THE ANNUITIZATION PERIOD
Annuitization Date
Full Annuitization
Partial Annuitization
Annuity Benefit Payment Options
Tax Considerations Regarding Annuity Benefit Payment Options
Death of Annuitant (During the Annuitization Period)
 
 
8. DEATH BENEFIT
Payment of Death Benefit
Standard Death Benefit Formula
GMWB Death Benefit
 
 

5


9. ADDITIONAL INFORMATION ABOUT THE CONTRACT
The Contract
Delay of Payments
Misstatement of Age or Gender
Assignment
Change of Owner or Annuitant
Beneficiary
Contract Termination
Reinstatement
Reports
Important Information About Customer Identification Procedures
Frequent Trading and Market-Timing (Abusive Trading Practices)
Distribution of the Contract
Performance Calculation
 
 
10. FEDERAL TAX MATTERS
Taxation of Non-Qualified Contracts
Taxation of Qualified Contracts
Withholding
 
 
11. GENERAL INFORMATION ABOUT THE COMPANY
Corporate Organization and Operation
Legal Opinions
Legal Proceedings
Other Variable Annuity Contracts
Payments to Financial Intermediaries
Service Arrangements and Compensation
Mutual Fund Diversification
State Regulation
Independent Registered Public Accounting Firm
Financial Statements
 
 
12. TABLE OF SEPARATE ACCOUNT DIVISIONS
13. REGISTRATION STATEMENT
14. TABLE OF CONTENTS OF THE SAI
APPENDIX A — PRINCIPAL VARIABLE ANNUITY EXCHANGE OFFER
APPENDIX B — INVESTMENT PLUS VARIABLE ANNUITY GMWB EXCHANGE OFFER
APPENDIX C — PIB 3 EXAMPLES (applications signed on or after August 1, 2013)
APPENDIX D — PIB 10 EXAMPLES (applications signed on or after June 1, 2015)
APPENDIX E — GMWB DEATH BENEFIT EXAMPLES (Contracts with a GMWB rider and application was signed on or after August 1, 2013)
APPENDIX F — PIB 10 (applications signed before June 1, 2015)
APPENDIX G — PIB 3 (applications signed before November 2, 2015)
APPENDIX H — PIB 10 (applications signed June 1, 2015 through November 1, 2015)
APPENDIX I — CONDENSED FINANCIAL INFORMATION
APPENDIX J — NEW YORK REG 60 – DETERMINING GMWB PERCENTAGES AND SUBMISSION GUIDELINES (for applications signed on or after November 2, 2015)


6


GLOSSARY
The terms defined below are italicized throughout this Prospectus.
accumulated value – the sum of the values in the DCA Plus Account(s), the Fixed Account and the Separate Account divisions.
anniversary(ies) – the same date and month of each year following the contract date.
annuitant – the person, including any joint annuitant, on whose life the annuity benefit payment is based. This person may or may not be the owner.
annuitization – application of a portion or all of the accumulated value to an annuity benefit payment option to make income payments.
annuitization date – the date all of the owner’s accumulated value is applied to an annuity benefit payment option.
Automatic Portfolio Rebalancing (APR) – the transfer of money among your Separate Account divisions on a set schedule to maintain a specified percentage in each Separate Account division.
cash surrender value – the accumulated value minus any applicable surrender charges and fee(s) (contract fee and/or prorated share of the charge(s) for optional rider(s)).
contract date – the date that the Contract is issued and which is used to determine contract years.
contract year – the one-year period beginning on the contract date and ending one day before the contract anniversary and any subsequent one-year period beginning on a contract anniversary (for example, if the contract date is June 5, 2013, the first contract year ends on June 4, 2014, and the first contract anniversary falls on June 5, 2014).
data page – that portion of the Contract which contains the following: owner and annuitant data (names, gender, annuitant age); the Contract issue date; maximum annuitization date; Contract charges and limits; benefits; and a summary of any optional benefits chosen by the Contract owner.
Dollar Cost Averaging Plus (DCA Plus) account – an account which uses a guaranteed interest rate to calculate interest earned for a specific amount of time.
Dollar Cost Averaging Plus (DCA Plus) account value – the amount invested in the DCA Plus Account(s) (plus interest earned and less any surrenders and/or transfers).
Dollar Cost Averaging Plus (DCA Plus) program – a program through which your DCA Plus value is transferred from a DCA Plus Account to the investment options over a specified period of time.
Fixed Account – an account which uses a guaranteed interest rate to calculate interest earned.
Fixed Account value – the amount invested in the Fixed Account (plus interest earned and less any surrenders and/or transfers).
good order – an instruction or request is in good order when it is received in our home office, or other place we may specify, and has such clarity and completeness that we do not have to exercise any discretion to carry out the instruction or request. We may require that the instruction or request be given in a certain form.
home office – Company’s corporate headquarters located at Principal Financial Group, Des Moines, Iowa 50392-1770.
investment options – the DCA Plus Accounts, Fixed Account and Separate Account divisions.
joint annuitant – an annuitant whose life determines the annuity benefit under this Contract. Any reference to the death of the annuitant means the death of the first annuitant to die.

7


joint owner – an owner who has an undivided interest with the right of survivorship in this Contract with another owner. Any reference to the death of the owner means the death of the first owner to die.
non-qualified contract – a Contract which does not qualify for favorable tax treatment as a Qualified Plan, Individual Retirement Annuity, Roth IRA, SEP IRA, Simple-IRA or Tax Sheltered Annuity.
notice – any form of communication received by us, at the home office, either in writing or in another form approved by us in advance.
Your notices may be mailed to us at:
Principal Life Insurance Company
P O Box 9382
Des Moines, Iowa 50306-9382
owner – the person, including joint owner, who owns all the rights and privileges of this Contract. For the Principal Variable Annuity Exchange Offer, owner refers to the original owner.
premium payments – the gross amount you contributed to the Contract.
qualified plans – retirement plans which receive favorable tax treatment under Section 401 or 403(a) of the Internal Revenue Code.
Required Minimum Distribution (“RMD”) amount – the amount required to be distributed each calendar year for purposes of satisfying the RMD rules of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, and related Code provisions.
Separate Account division (division(s)) – a part of the Separate Account which invests in shares of an underlying mutual fund. (Referred to in the marketing materials as “sub-accounts.”)
Separate Account division value – the sum of all divisions’ value; each division’s value is determined by multiplying the number of units in that division by the unit value of that division.
surrender charge – the charge deducted upon certain partial surrenders or total surrender of the Contract before the annuitization date.
surrender value – accumulated value less any applicable surrender charge, rider fees, annual fee, transaction fees and any premium tax or other taxes.
transfer – moving all or a portion of your accumulated value to or from one investment option or among several investment options. All transfers initiated during the same valuation period are considered to be one transfer for purposes of calculating the transaction fee, if any.
underlying mutual fund – a registered open-end investment company, or a series or portfolio thereof, in which a division invests.
unit – the accounting measure used to determine your proportionate interest in a division.
unit value – a measure used to determine the value of an investment in a division.
valuation date (valuation days) – each day the New York Stock Exchange (“NYSE”) is open for trading and trading is not restricted.
valuation period – the period of time from one determination of the value of a unit of a division to the next. Each valuation period begins at the close of normal trading on the NYSE, generally 4:00 p.m. Eastern Time, on each valuation date and ends at the close of normal trading of the NYSE on the next valuation date.
we, our, us – Principal Life Insurance Company. We are also referred to throughout this prospectus as the Company.
you, your – the owner of this Contract, including any joint owner.


8


SUMMARY OF EXPENSE INFORMATION
The tables below describe the fees and expenses that you will pay when buying, owning and surrendering the Contract. The expenses for a Contract with the Premium Payment Credit Rider are higher than the expenses for the Contract without the Premium Payment Credit Rider.
The following table describes the fees and expenses you will pay at the time you buy the Contract, surrender the Contract or transfer cash value between investment options.
Contract owner transaction expenses(1)
 
Maximum
Current
Surrender charge - with the Premium Payment Credit Rider (as a percentage of amount surrendered)(2)
8%
8%
Surrender charge - without the Premium Payment Credit Rider (as a percentage of amount surrendered)(3)
6%
6%
Transaction Fees
 
 
• for each unscheduled partial surrender
the lesser of $25 or 2% of each unscheduled partial surrender after the 12th unscheduled partial surrender in a contract year
$0
• for each unscheduled transfer
the lesser of $25 or 2% of each unscheduled transfer after the first unscheduled transfer in a contract year
$0
State Premium Taxes (vary by state)(4)
3.50% of premium payments made
0%
(1)
For additional information about the fees and expenses described in the table, see 2. CHARGES AND DEDUCTIONS.
(2) 
Surrender charge with the Premium Payment Credit Rider (as a percentage of amounts surrendered):
Table of surrender charges with the Premium Payment Credit Rider
Number of completed contract years
since each premium payment was made
Surrender charge applied to all premium
payments received in that contract year
0 (year of premium payment)
8%
1
8%
2
7%
3
6%
4
5%
5
4%
6
3%
7
2%
8
1%
9 and later
0%
(3) 
Surrender charge without the Premium Payment Credit Rider (as a percentage of amounts surrendered):
Table of surrender charges without the Premium Payment Credit Rider
Number of completed contract years
since each premium payment was made
Surrender charge applied to all premium
payments received in that contract year
0 (year of premium payment)
6%
1
6%
2
6%
3
5%
4
4%
5
3%
6
2%
7 and later
0%
(4) 
We do not currently assess premium taxes for any Contract issued, but reserve the right in the future to assess up to 3.50% of premium payments made for Contract owners in those states where a premium tax is assessed.

9


The following table describes the fees and expenses that are deducted periodically during the time that you own the Contract, not including underlying mutual fund fees and expenses.
Periodic Expenses
 
Maximum Annual Charge
Current Annual Charge
Annual Fee (waived for Contracts with accumulated value of $30,000 or more)
The lesser of $30 or 2.00% of the accumulated value
The lesser of $30 or 2.00% of the accumulated value
 
 
 
Separate Account Annual Expenses
Mortality and Expense Risks Charge (as a percentage of average daily Separate Account value)
1.25%
1.25%
Administration Charge (as a percentage of average daily Separate Account value)
0.15%
0.15%
Total Separate Account Annual Expense
1.40%
1.40%
Optional Riders(1)
 
Maximum Annual Charge
Current Annual Charge
Premium Payment Credit Rider
 
 
• Separate Account – based on the average daily accumulated value in the divisions, deducted daily
0.60%
0.60%
• Fixed Account – maximum reduction in interest rate
0.60%
0.00%
For applications signed on or after August 1, 2013: PIB 3 rider (GMWB) (as a percentage of the average quarterly For Life withdrawal benefit base)(2)
1.65%
1.05%
For applications signed on or after June 1, 2015: PIB 10 rider (GMWB) (as a percentage of the average quarterly For Life withdrawal benefit base)(2)
2.00%
1.25%
For applications signed before June 1, 2015: PIB 10 rider (GMWB) (as a percentage of the average quarterly Investment Back withdrawal benefit base)(3)
2.00%
1.20%
Total Separate Account Annual Expense plus Optional Riders Annual Expense
 
 
• with PIB 3(4)  (for applications signed on or after August 1, 2013)
3.65%
3.05%
• with PIB 10(5) (for applications signed on or after June 1, 2015)
4.00%
3.25%
• with PIB 10(5) (for applications signed before June 1, 2015)
4.00%
3.20%
(1) 
Some rider provisions may vary from state to state and may be subject to additional restrictions.
(2) 
At the end of each calendar quarter, one-fourth of the annual charge is multiplied by the average quarterly For Life withdrawal benefit base. The For Life withdrawal benefit base is used to calculate the annual withdrawal benefit payment available for your life. We calculate the withdrawal benefit base on the rider effective date and each Contract anniversary. The average quarterly For Life withdrawal benefit base is equal to (1) the For Life withdrawal benefit base at the beginning of the calendar quarter plus (2) the For Life withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is higher than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters. See 2. CHARGES AND DEDUCTIONS for more information on how the rider charge is calculated. If your rider charge will increase, it will not exceed the maximum rider charge allowed. If you opt out of the GMWB Step-Up feature, your rider charge will not increase.

10


(3) 
At the end of each calendar quarter, one-fourth of the annual charge is multiplied by the average quarterly Investment Back withdrawal benefit base. The Investment Back withdrawal benefit base is used to calculate the maximum annual withdrawal benefit payment available to you until you at least receive your premium payments. We calculate the withdrawal benefit base on the rider effective date and each Contract anniversary. The average quarterly Investment Back withdrawal benefit base is equal to (1) the Investment Back withdrawal benefit base at the beginning of the calendar quarter plus (2) the Investment Back withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is higher than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters. See 2. CHARGES AND DEDUCTIONS for more information on how the rider charge is calculated. If your rider charge will increase, it will not exceed the maximum rider charge allowed. If you opt out of the GMWB Step-Up feature, your rider charge will not increase.
(4)  
This amount assumes the Principal Income Builder 3 rider was elected (in addition to the 1.25% Mortality and Expense Risks Charge and the 0.15% Administration Charge). This assumes the withdrawal benefit base is equal to the initial premium payment. If the withdrawal benefit base changes, the charge for your optional GMWB rider and your Total Separate Account Annual Expense would be higher or lower.
(5)  
This amount assumes the Principal Income Builder 10 rider was elected (in addition to the 1.25% Mortality and Expense Risks Charge and the 0.15% Administration Charge). This assumes the withdrawal benefit base is equal to the initial premium payment. If the withdrawal benefit base changes, the charge for your optional GMWB rider and your Total Separate Account Annual Expense would be higher or lower.
This table shows the minimum and maximum total operating expenses charged by the underlying mutual funds that you may pay periodically during the time that you own the Contract. More detail concerning the fees and expenses of each underlying mutual fund is contained in its prospectus.
Minimum and Maximum Annual Underlying Mutual Fund Operating Expenses
as of December 31, 2014
 
Minimum
Maximum
Total annual underlying mutual fund operating expenses (expenses that are deducted from underlying mutual fund assets, including management fees, distribution and/or service (12b-1) fees and other expenses)*
0.25%
8.32%
*
Some of the funds available are structured as a “fund of funds”. A fund of funds is a mutual fund that invests primarily in a portfolio of other mutual funds. The expenses shown include all the fees and expenses of the funds that a fund of funds holds in its portfolio. The underlying fund with the highest operating expenses is a fund of funds.
EXAMPLES
These examples are intended to help you compare the cost of investing in the Contract with the cost of investing in other variable annuity contracts. These costs include Contract owner transaction expenses, Contract fees, Separate Account annual expenses, and underlying mutual fund fees and expenses.
Example 1 (with GMWB rider)
The example figures are based on a Contract with the most expensive combination of optional features available under the Contract. This example reflects the maximum charges imposed if you were to purchase the Contract with the Principal Income Builder 10 rider (2.00%), as well as the Premium Payment Credit Rider (0.60%). The amounts below are calculated using the maximum rider fees and not the current rider fees. The example assumes(1):
•
a $10,000 premium payment to issue the Contract;
•
a 5% return each year;
•
an annual Contract fee of $30 (expressed as a percentage of the average accumulated value);
•
the minimum and maximum annual underlying mutual fund operating expenses as of December 31, 2014, for the underlying mutual funds that are available when purchasing a GMWB rider (without voluntary waivers of fees by the underlying funds, if any);
•
Mortality and Expense Risks Charge of 1.25%
•
Administration Charge of 0.15%
•
no premium taxes are deducted;
•
the Principal Income Builder 10 rider was added to the Contract at issue(2) and the withdrawal benefit base is equal to the initial premium payment; and
•
the Premium Payment Credit Rider is added to the Contract at issue and the Premium Payment Credit Rider surrender charge schedule is applied. Because the premium payment credit is not added to the accumulated value in the examples, the actual costs would be higher.

11


Although your actual costs may be higher or lower, based on these assumptions, your costs would be as shown below:
 
If you surrender your
Contract at the end of the
applicable time period
If you do not
surrender your Contract
If you fully annuitize your
Contract at the end of the
applicable time period
 
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
Maximum Total Underlying Mutual Fund Operating Expenses (0.67%)
$1,183
$2,045
$2,855
$4,930
$461
$1,411
$2,402
$4,930
$461
$1,411
$2,402
$4,930
Minimum Total Underlying Mutual Fund Operating Expenses (0.56%)
$1,173
$2,016
$2,807
$4,834
$450
$1,379
$2,351
$4,834
$450
$1,379
$2,351
$4,834
(1) 
If the withdrawal benefit base changes, the charge for your optional GMWB rider and your Total Separate Account Annual Expense would be higher or lower.
(2)  
For applications signed on or after June 1, 2015, the For Life withdrawal benefit base is used to calculate the Principal Income Builder 10 rider charge. For applications signed before June 1, 2015, the Investment Back withdrawal benefit base is used to calculate the Principal Income Builder 10 rider charge. The withdrawal benefit base is equal to your premiums and increased for any applicable GMWB Bonus and any applicable GMWB Step-Up and decreased for any excess withdrawals. At the end of each calendar quarter, one-fourth of the annual Principal Income Builder 10 rider charge is multiplied by the applicable average quarterly withdrawal benefit base. The applicable average quarterly withdrawal benefit base is equal to the applicable withdrawal benefit base at the beginning of the calendar quarter plus the applicable withdrawal benefit base at the end of the calendar quarter and the sum is divided by two.
Example 2 (without GMWB rider)
The example figures are based on a Contract with the most expensive combination of optional features available under the Contract except that no GMWB rider was elected. This example reflects the maximum charges imposed if you were to purchase the Contract with the Premium Payment Credit Rider (0.60%) but without a GMWB rider. The amounts below are calculated using the maximum rider fees and not the current rider fees. The example assumes:
•
a $10,000 premium payment to issue the Contract;
•
a 5% return each year;
•
an annual Contract fee of $30 (expressed as a percentage of the average accumulated value);
•
the minimum and maximum annual underlying mutual fund operating expenses as of December 31, 2014 (without voluntary waivers of fees by the underlying funds, if any);
•
Mortality and Expense Risks Charge of 1.25%;
•
Administration Charge of 0.15%;
•
no premium taxes are deducted; and
•
the Premium Payment Credit Rider is added to the Contract at issue and the Premium Payment Credit Rider surrender charge schedule is applied. Because the premium payment credit is not added to the accumulated value in the examples, the actual costs would be higher.
Although your actual costs may be higher or lower, based on these assumptions, your costs would be as shown below:
 
If you surrender your
Contract at the end of the
applicable time period
If you do not
surrender your Contract
If you fully annuitize your
Contract at the end of the
applicable time period
 
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
Maximum Total Underlying Mutual Fund Operating Expenses (8.32%)
$1,691
$3,405
$4,885
$7,949
$1,013
$2,881
$4,554
$7,949
$1,013
$2,881
$4,554
$7,949
Minimum Total Underlying Mutual Fund Operating Expenses (0.25%)
$963
$1,371
$1,668
$2,357
$221
$682
$1,168
$2,357
$221
$682
$1,168
$2,357
For Condensed Financial Information, see Appendix I.

12


SUMMARY
This prospectus describes an individual flexible premium deferred variable annuity offered by the Company. The Contract is designed to provide individuals with retirement benefits, including:
•
non-qualified retirement programs; and
•
Individual Retirement Annuities (“IRA”), Simplified Employee Pension plans (“SEPs”) and Savings Incentive Match Plan for Employees (“SIMPLE”) IRAs adopted according to Section 408 of the Internal Revenue Code (see 10. FEDERAL TAX MATTERS). The Contract does not provide any additional tax deferral if you purchase it to fund an IRA or other investment vehicle that already provides tax deferral.
For information on how to purchase the Contract, see 1. THE CONTRACT.
This section is a brief summary of the Contract’s features. More detailed information follows later in this prospectus.
Investment Limitations
•
Initial premium payment must be at least $5,000 for non-qualified contracts.
•
Initial premium payment must be at least $2,000 for all other contracts.
•
Each subsequent premium payment must be at least $500.
•
If you are a member of a retirement plan covering three or more persons and premium payments are made through an automatic investment program, the initial and subsequent premium payments for the Contract must average at least $100 and not be less than $50.
•
The total sum of all premium payments may not be greater than $2,000,000 without prior home office approval.
You may allocate your net premium payments to the investment options.
•
A complete list of the divisions may be found in 12. TABLE OF SEPARATE ACCOUNT DIVISIONS. Each division invests in shares of an underlying mutual fund. More detailed information about the underlying mutual funds may be found in the current prospectus for each underlying mutual fund. These underlying mutual fund prospectuses are bound together with this prospectus.
•
The investment options also include the Fixed Account and the DCA Plus accounts.
•
The GMWB riders impose limitations on the investment options available by requiring you to allocate 100% of your Separate Account assets to one or more of the available Separate Account GMWB investment options.
Transfers
During the accumulation period:
•
a dollar amount or percentage of transfer must be specified;
•
a transfer may occur on a scheduled or unscheduled basis;
•
transfers to the Fixed Account are not permitted if a transfer has been made from the Fixed Account to a division within six months; and
•
transfers into DCA Plus accounts are not permitted.
During the annuitization period, transfers are not permitted (no transfers once payments have begun).
See 1. THE CONTRACT, 3. FIXED ACCOUNT AND DCA PLUS ACCOUNTS, and 6. TRANSFERS AND SURRENDERS for additional restrictions.
This Transfers section does not apply to transfers under the DCA Plus program. See 3. FIXED ACCOUNT AND DCA PLUS ACCOUNTS.
Surrenders
During the accumulation period:
•
the gross dollar amount to be surrendered must be specified;
•
surrendered amounts may be subject to surrender charges:
•
for Contracts without the Premium Payment Credit Rider, the maximum surrender charge is 6% of the amount(s) surrendered; or
•
for Contracts with the Premium Payment Credit Rider, the maximum surrender charge is 8% of the 
amount(s) surrendered;
•
full surrender of your Contract may be subject to an annual Contract fee;
•
during a contract year, each partial surrender that is less than the Free Surrender Amount is not subject to a surrender charge; and
•
surrenders before age 59½ may involve an income tax penalty (see 10. FEDERAL TAX MATTERS).

13


During the annuitization period, surrenders are not allowed.
See 6. TRANSFERS AND SURRENDERS for additional information.
Charges and Deductions
•
No sales charge is deducted from premium payments at the time received. However, the Contract may impose a surrender charge on surrenders greater than the Free Surrender Amount.
•
A contingent deferred surrender charge is imposed on certain total or partial surrenders.
•
An annual mortality and expense risks charge equal to 1.25% of amounts in the Separate Account divisions is imposed daily.
•
The following riders are available at an additional cost:
•
Premium Payment Credit Rider – The current annual rider charge is 0.60% of the average daily accumulated value in the Separate Account divisions, deducted daily (with no reduction of the Fixed Account interest rate). The maximum annual rider charge is 0.60% of the average daily accumulated value in the Separate Account divisions, deducted daily (with a reduction of up to 0.60% of the Fixed Account interest rate).
•
Principal Income Builder 3 –
•
The current annual rider charge is 1.05% of the average For Life withdrawal benefit base, deducted quarterly. The maximum annual rider charge is 1.65%.
•
Principal Income Builder 10 –
•
For applications signed on or after June 1, 2015, the current annual rider charge is 1.25% of the average For Life withdrawal benefit base, deducted quarterly. The maximum annual rider charge is 2.00%.
•
For applications signed before June 1, 2015, the current annual rider charge is 1.20% of the average Investment Back withdrawal benefit base, deducted quarterly. The maximum annual rider charge is 2.00%.
•
An annual Separate Account administration charge equal to 0.15% of amounts in the Separate Account divisions is imposed daily.
•
There are underlying mutual fund expenses. More detailed information about the underlying mutual fund expenses may be found in the current prospectus for each underlying mutual fund.
•
Contracts with an accumulated value of less than $30,000 are subject to an annual fee of the lesser of $30 or 2% of the accumulated value. Currently we do not charge the annual fee if your accumulated value is $30,000 or more. If you own more than one variable annuity contract with us, then all the contracts you own or jointly own are aggregated on each contract’s anniversary to determine if the $30,000 minimum has been met and whether that contract will be charged.
•
Certain states and local governments impose a premium tax. We reserve the right to deduct the amount of the tax from premium payments or the accumulated value.
See 2. CHARGES AND DEDUCTIONS for additional information.
Annuity Benefit Payments
•
You may choose from several fixed annuity benefit payment options which are described in 7. THE ANNUITIZATION PERIOD.
•
Payments are made to the owner (or beneficiary depending on the annuity benefit payment option selected). You should carefully consider the tax implications of each annuity benefit payment option. See 7. THE ANNUITIZATION PERIOD and 10. FEDERAL TAX MATTERS.

14


Death Benefit
•
The standard death benefit is only available for contracts without a GMWB rider and generally is the greatest of the accumulated value, the total of premium payments minus an adjustment for surrenders, or the highest accumulated value on any Contract anniversary wholly divisible by seven. See 8. DEATH BENEFIT for more specific details.
•
If the owner dies before the annuitization date, a death benefit is payable. The death benefit may be paid as either a single payment or under an annuity benefit payment option. If no election is made within the required period of time, the full amount will be paid in a lump sum to the applicable state. Once the money is paid to the applicable state, the beneficiary will have to contact the state to request additional assistance.
•
If the annuitant dies after the annuitization date, payments will continue only as provided by the annuity benefit payment option in effect.
•
The sole death benefit provided when you have a GMWB rider is:
•
Principal Income Builder 3 – beneficiary receives the GMWB Death Benefit.
•
Principal Income Builder 10 – allows the beneficiary(ies) to elect a) the GMWB Death Benefit, or b) the Investment Back remaining withdrawal benefit base as a series of payments. For applications signed on or after June 1, 2015, Investment Back will no longer be included as a benefit of the PIB 10 rider.
See 8. DEATH BENEFIT and 7. THE ANNUITIZATION PERIOD.
Examination Offer Period (free look)
You may return the Contract during the examination offer period, which is generally 10 days from the date you receive the Contract. The examination offer period may be longer in certain states.
•
The amount refunded will be a full refund of your accumulated value plus any Contract charges and premium taxes you paid unless state law requires otherwise. The underlying mutual fund fees and charges are not refunded to you as they are already factored into the Separate Account division value.
•
The amount refunded may be more or less than the premium payments made.
•
We recapture the full amount of any premium payment credit or exchange credit.
See 1. THE CONTRACT for additional information.
Optional Riders
Subject to certain conditions, you may elect to add one or more of the available optional riders to your Contract. Some rider provisions may vary from state to state and may be subject to additional restrictions. All material state variations have been described in this prospectus.
The optional riders available are:
•
Premium Payment Credit Rider – This rider applies credits to the accumulated value for premium payments made in contract year one. The surrender charge period is nine years if this rider is elected.
•
Guaranteed Minimum Withdrawal Benefit riders (you may only elect one GMWB rider):
•
PIB 3 – This rider allows you to take certain guaranteed annual withdrawals during the Contract accumulation phase, regardless of your Contract accumulated value. This rider includes an annual bonus in the first 3 contract years for not taking withdrawals. Election of this rider results in restriction of your Contract investment options to the more limited GMWB investment options. There is a charge for the rider that is deducted quarterly.
•
PIB 10 – This rider allows you to take certain guaranteed annual withdrawals during the Contract accumulation phase, regardless of your Contract accumulated value. This rider includes an annual bonus in the first 10 contract years for not taking withdrawals. Election of this rider results in restriction of your Contract investment options to the more limited GMWB investment options. There is a charge for the rider that is deducted quarterly.

15


Termination
The Contract will terminate:
•
If no premiums are paid during two consecutive calendar years and the accumulated value (or total premium payments less partial surrenders and applicable surrender charges) is less than $2,000 unless you have a GMWB rider. The Company will first notify you of its intent to exercise this right and give you 60 days to increase the accumulated value to at least $2,000.
•
If you fully annuitize and your accumulated value on the annuitization date is less than $2,000 or if the amount applied under an annuity benefit payment option is less than the minimum requirement.
The GMWB rider will terminate:
•
The date you send us notice to terminate the rider (after the 5th Contract anniversary following the rider effective date).
•
The date you fully annuitize, fully surrender or otherwise terminate the Contract.
•
The date the Contract owner is changed (annuitant is changed if the owner is not a natural person), except when the change in owner is due to a spousal continuation of the rider or the removal/addition of a joint life.
•
The date your surviving spouse elects to continue the Contract without this rider (even if prior to the fifth Contract anniversary following the rider effective date).
•
The date you make an impermissible change in a covered life.
•
If you have a PIB 10 rider and your application was signed before June 1, 2015:
•
If the Investment Back remaining withdrawal benefit base and the For Life withdrawal benefit base are both zero.
•
The date the Investment Back remaining withdrawal benefit base is zero and there are no eligible covered lives.
•
If you have the PIB 10 rider and your application was signed on or after June 1, 2015, the date the For Life withdrawal benefit base is zero and there are no eligible covered lives.
•
If you have the PIB 3 rider, the date the For Life withdrawal benefit base is zero and there are no eligible covered lives.
The GMWB Death Benefit will terminate:
•
If you have the PIB 3 rider and you terminate the PIB 3 rider.
•
If you have the PIB 10 rider and you terminate the PIB 10 rider.
1.
THE CONTRACT
The Principal Investment Plus Variable Annuity is significantly different from a fixed annuity. As the owner of a variable annuity, you assume the risk of investment gain or loss (as to amounts in the Separate Account divisions) rather than the Company. The Separate Account division value under a variable annuity is not guaranteed and varies with the investment performance of the underlying mutual funds.
Based on your investment objectives, you direct the allocation of premium payments and accumulated values. There can be no assurance that your investment objectives will be achieved.
How to Buy a Contract
If you want to buy a Contract, you must submit an application and make an initial premium payment. If you are buying the Contract to fund a SIMPLE-IRA or SEP, an initial premium payment is not required at the time you send in the application. If the application is complete and the Contract applied for is suitable, the Contract is issued. If the completed application is received in good order, the initial premium payment is credited within two valuation days after the later of receipt of the application or receipt of the initial premium payment at our home office. If the initial premium payment is not credited within five valuation days, it is refunded unless we have received your permission to retain the premium payment until we receive the information necessary to issue the Contract.
The date the Contract is issued is the contract date. The contract date is the date used to determine contract years, regardless of when the Contract is delivered.

16


Tax-qualified retirement arrangements, such as IRAs, SEPs, and SIMPLE-IRAs, are tax-deferred. You derive no additional benefit from the tax deferral feature of the annuity. Consequently, an annuity should be used to fund an IRA or other tax qualified retirement arrangement to benefit from the annuity’s features other than tax deferral. These features may include guaranteed lifetime income, death benefits without surrender charges, guaranteed caps on fees, and the ability to make scheduled transfers among investment options without transaction fees.
Premium Payments
•
The initial premium payment must be at least $5,000 for non-qualified contracts.
•
The initial premium payment must be at least $2,000 for all other contracts.
•
If you are making premium payments through a payroll deduction plan or through a bank (or similar financial institution) account under an automated investment program, your initial and subsequent premium payments must be at least $100.
•
All premium payments are subject to a surrender charge period that begins in the contract year each premium payment is received.
•
Subsequent premium payments must be at least $500 and can be made until the annuitization date.
•
Premium payments are to be made by personal or financial institution check (for example, a cashier’s check). We reserve the right to refuse any premium payment that we feel presents a fraud or money laundering risk. Examples of the types of premium payments we will not accept are cash, money orders, starter checks, travelers checks, credit card checks, and foreign checks.
•
If you are a member of a retirement plan covering three or more persons, the initial and subsequent premium payments for the Contract must average at least $100 and cannot be less than $50.
•
The total sum of all premium payments for a Contract may not be greater than $2,000,000 (maximum premium limit) without our prior approval. For further information, please call 1-800-852-4450.
•
We reserve the right to treat all of your and/or your spouse’s Principal deferred variable annuity contracts, with a guaranteed minimum withdrawal benefit rider attached, as one contract for purposes of determining whether you have exceeded the maximum premium limit (without home office approval).
•
Additional premium restrictions may apply to Contracts with a guaranteed minimum withdrawal benefit rider. See 4. LIVING BENEFIT - GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB).
•
The Company reserves the right to increase the minimum amount for each premium payment with advance notice.
•
Premium payments are credited on the basis of the unit value next determined after we receive a premium payment.
•
The state of Washington does not allow premium payments to be made after the first contract year on Contracts issued with the Premium Payment Credit Rider. See 5. PREMIUM PAYMENT CREDIT RIDER for more information.
•
If no premium payments are made during two consecutive calendar years and the accumulated value is less than $2,000, we reserve the right to terminate the Contract. See 9. ADDITIONAL INFORMATION ABOUT THE CONTRACT.

17


Allocating Premium Payments
•
On your application, you direct how your premium payments will be allocated to the investment options.
•
If you elect a GMWB rider, your investment options for premium payments and accumulated value will be restricted (for restrictions see 4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) - GMWB Investment Options).
•
Allocations must be in percentages.
•
Percentages must be in whole numbers and total 100%.
•
Subsequent premium payments are allocated according to your then current allocation instructions.
•
Changes to the allocation instructions are made without charge.
•
A change is effective on the next valuation period after we receive your new instructions in good order.
•
You can change the current allocations and future allocation instructions by:
•
mailing your instructions to us;
•
calling us at 1-800-852-4450 (if telephone privileges apply);
•
faxing your instructions to us at 1-866-894-2093; or
•
visiting www.principal.com.
•
Changes to premium payment allocations do not result in the transfer of any existing investment option accumulated values. You must provide specific instructions to transfer existing accumulated values. We currently do not charge a transaction fee for these transfers but reserve the right to charge such a fee in the future.
•
Premium payments are credited on the basis of the unit value next determined after we receive a premium payment.
Principal Variable Annuity Exchange Offer (“exchange offer”)
Original owners of an eligible Principal variable annuity contract may elect to exchange their Principal variable annuity contract (“old contract”) for a new Principal Investment Plus Variable Annuity contract ("new contract") subject to the exchange offer terms and conditions. To determine if it is in your best interest to participate in the exchange offer, we recommend that you consult with your tax advisor and financial professional before electing to participate in the exchange offer.
You are eligible to participate in the exchange offer when:
•
your old contract is not subject to any surrender charges; and
•
the exchange offer is available in your state.
Currently, there is no closing date for the exchange offer. We reserve the right, however, to modify the exchange offer commencement date and to modify or terminate the exchange offer upon reasonable written notice to you.
See APPENDIX A for further details about the exchange offer.
Investment Plus Variable Annuity GMWB Exchange Offer
IPVA GMWB exchange offer ("GMWB exchange offer")
This GMWB exchange offer was made available effective January 20, 2014. Original owners of an eligible Principal Investment Plus Variable Annuity contract (“old contract”) may elect to exchange their old contract for a new Principal Investment Plus Variable Annuity contract ("new contract") subject to the GMWB exchange offer terms and conditions below. To determine if it is in your best interest to participate in the GMWB exchange offer, we recommend that you consult with your tax advisor and financial professional before electing to participate in the GMWB exchange offer.
You are eligible to participate in the GMWB exchange offer when:
•
The old contract doesn't have a GMWB rider; or
•
The old contract has a GMWB 1 rider; and
•
Your old contract is not subject to any surrender charges; and
•
Available in your state.
Currently, there is no closing date for the GMWB exchange offer. We reserve the right, however, to modify the GMWB exchange offer commencement date and to modify or terminate the GMWB exchange offer upon reasonable written notice to you.
See APPENDIX B for further details about the GMWB exchange offer.

18


Exchange Credit (for exchanges from our fixed deferred annuities)
If you own a fixed deferred annuity issued by us and are no longer subject to surrender charges, you may transfer the accumulated value, without charge, to the Contract described in this prospectus. We will add 1% of the fixed annuity contract’s surrender value at the time of exchange to this Contract’s accumulated value. There is no charge or cost to you for this exchange credit.
This exchange credit is allocated among the Contract’s investment options in the same ratio as your allocation of premium payments. The credit is treated as earnings.
NOTE:
The exchange may not be suitable for you if you do not want to accept market risk. Fixed deferred annuities provide a fixed rate of accumulation. This Contract provides Separate Account divisions. The value of this Contract will increase or decrease depending on the investment performance of the Separate Account divisions you select.
NOTE:
The charges and provisions of a fixed annuity contract and this Contract differ. The charges for this Contract are typically higher than charges for a fixed annuity and will increase further with the Premium Payment Credit Rider or a GMWB rider. In some instances, your existing fixed annuity contract may have benefits that are not available under this Contract.
NOTE:
This exchange credit may not be available in all states. In addition, we reserve the right to change or discontinue the exchange credit. You may obtain more specific information regarding the exchange credit from your registered representative or by calling us at 1-800-852-4450.
Right to Examine the Contract (free look)
It is important to us that you are satisfied with the purchase of your Contract. Under state law, you have the right to return the Contract for any reason during the examination offer period (a “free look”). The examination offer period is the later of 10 days after the Contract is delivered to you, or such later date as specified by applicable state law.
Although we currently allocate your initial premium payments to the investment options you have selected, during times of economic uncertainty and with prior notice to you, we may exercise our right to allocate initial premium payments to the Money Market division during the examination offer period. If your initial premium payments are allocated to the Money Market division and the free look is exercised, you will receive the greater of premium payments or the accumulated value.
In California, for owners age 60 or older, we allocate initial premium payments to the Money Market division during the examination offer period unless you elect to immediately invest in the allocations you selected. If your premium payments were allocated to the Money Market division, after the free look period ends, your accumulated value will be converted into units of the division(s) according to your allocation instructions. The units allocated will be based on the unit value next determined for each division.
To exercise your free look, you must send the Contract and a written request to us postmarked before the close of business on the last day of the examination offer period.
If you properly exercise your free look, we will cancel the Contract. In the states that require us to return your premium payments, we will return the greater of your premium payments or accumulated value. In all states we will return at least your accumulated value plus any premium tax charge deducted, and minus any applicable federal and state income tax withholding. The amount returned may be higher or lower than the premium payment(s) applied during the examination offer period.
If you are purchasing this Contract to fund an IRA, SIMPLE-IRA, or SEP-IRA and you return it on or before the seventh day of the examination offer period, we will return the greater of:
•
the total premium payment(s) made; or
•
your accumulated value plus any premium tax charge deducted, less any applicable federal and state income tax withholding and depending upon the state in which the Contract was issued, any applicable fees and charges.
You may obtain more specific information regarding the free look from your registered representative or by calling us at 1-800-852-4450.

19


Accumulated Value
The accumulated value of your Contract is the total of the Separate Account division value plus the DCA Plus account(s) value plus the Fixed Account value. The DCA Plus accounts and Fixed Account are described in the section titled 3. FIXED ACCOUNT AND DCA PLUS ACCOUNTS.
There is no guaranteed minimum Separate Account division value. The value reflects the investment experience of the divisions that you choose and also reflects your premium payments, partial surrenders, surrender charges, partial annuitizations and the Contract expenses deducted from the Separate Account.
The Separate Account division value changes from day to day. To the extent the accumulated value is allocated to the Separate Account divisions, you bear the investment risk. At the end of any valuation period, your Contract’s value in a division is:
•
the number of units you have in a division multiplied by
•
the value of a unit in the division.
The number of units is equal to the total units purchased by allocations to the division from:
•
your initial premium payment;
•
subsequent premium payments;
•
your exchange credit;
•
premium payment credits; and
•
transfers from another investment option
minus units sold:
•
for partial surrenders and/or partial annuitizations from the division;
•
as part of a transfer to another division or the Fixed Account; and
•
to pay Contract charges and fees (not deducted as part of the daily unit value calculation).
Unit values are calculated each valuation date at the close of normal trading of the NYSE (generally 4:00 p.m. EST). To calculate the unit value of a division, the unit value from the previous valuation date is multiplied by the division’s net investment factor for the current valuation period. The number of units does not change due to a change in unit value.
The net investment factor measures the performance of each division. The net investment factor for a valuation period is [(a plus b) divided by (c)] minus d where:
a =
the share price (net asset value) of the underlying mutual fund at the end of the valuation period;
b =
the per share amount of any dividend* (or other distribution) made by the mutual fund during the valuation period;
c =
the share price (net asset value) of the underlying mutual fund at the end of the previous valuation period; and
d =
the daily charge for Total Separate Account Annual Expenses and any Optional Riders, if applicable. The daily charge is calculated by dividing the annual amount of these expenses by 365 and multiplying by the number of days in the valuation period.
*
When an investment owned by an underlying mutual fund pays a dividend, the dividend increases the net asset value of a share of the underlying mutual fund as of the date the dividend is recorded. As the net asset value of a share of an underlying mutual fund increases, the unit value of the corresponding division also reflects an increase. Payment of a dividend under these circumstances does not increase the number of units you own in the division.
The Company reserves the right to terminate a Contract and send you the accumulated value if no premiums are paid during two consecutive calendar years and the accumulated value (or total premium payments less partial surrenders and applicable surrender charges) is less than $2,000 unless you have a GMWB rider. The Company will first notify you of its intent to exercise this right and give you 60 days to increase the accumulated value to at least $2,000.

20


Telephone and Internet Services
If you elect telephone services or you elect internet services and satisfy our internet service requirements (which are designed to ensure compliance with federal UETA and E-SIGN laws), instructions for the following transactions may be given to us via the telephone or internet:
•
make premium payment allocation changes;
•
set up Dollar Cost Averaging (DCA) scheduled transfers;
•
make transfers; and
•
make changes to Automatic Portfolio Rebalancing (APR).
Neither the Company nor the Separate Account is responsible for the authenticity of telephone service or internet transaction requests. We reserve the right to refuse telephone service or internet transaction requests. You are liable for a loss resulting from a fraudulent telephone or internet order that we reasonably believe is genuine. We follow procedures in an attempt to assure genuine telephone service or internet transactions. If these procedures are not followed, we may be liable for loss caused by unauthorized or fraudulent transactions. The procedures may include recording telephone service transactions, requesting personal identification (for example, name, address, security phrase, password, daytime telephone number, or birth date) and sending written confirmation to your address of record.
Instructions received via our telephone services and/or the internet are binding on both owners if the Contract is jointly owned.
If the Contract is owned by a business entity or a trust, an authorized individual (with the proper password) may use telephone and/or internet services. Instructions provided by the authorized individual are binding on the owner.
We reserve the right to modify or terminate telephone service or internet transaction procedures at any time. Whenever reasonably feasible, we will provide you with prior notice (by mail or by email, if previously authorized by you) if we modify or terminate telephone service or internet transaction procedures. In some instances, it may not be reasonably feasible to provide prior notice if we modify or terminate telephone service or internet transaction procedures; however, any modification or termination will apply to all Contract owners in a non-discriminatory fashion.
Telephone Services
Telephone services are available to you. Telephone services may be declined on the application or at any later date by providing us with written notice. You may also elect telephone authorization for your registered representative by providing us written notice.
If you elect telephone privileges, instructions
•
may be given by calling us at 1-800-852-4450 while we are open for business (generally, between 8 a.m. and 6 p.m. Eastern Time on any day that the NYSE is open).
•
that are in good order and received by us before the close of a valuation period will receive the price next determined (the value as of the close of that valuation period).
•
that are in good order and received by us after the close of a valuation period will receive the price next determined (the value as of the close of the next valuation period).
•
that are not in good order when received by us will be effective the next valuation date that we receive good order instructions.
Internet
Internet services are available to you if you register for a secure login on the Principal Financial Group web site, www.principal.com. You may also elect internet authorization for your registered representative by providing us written notice.
If you register for internet privileges, instructions
•
that are in good order and received by us before the close of a valuation period will receive the price next determined (the value as of the close of that valuation period).
•
that are in good order and received by us after the close of a valuation period will receive the price next determined (the value as of the close of the next valuation period).
•
that are not in good order when received by us will be effective the next valuation day that we receive good order instructions.

21


2.
CHARGES AND DEDUCTIONS
Certain charges are deducted under the Contract. If the charge is not sufficient to cover our costs, we bear the loss. If the expense is more than our costs, the excess is profit to the Company. We expect a profit from all the fees and charges listed below, except the Annual Fee, Transaction Fee and Premium Tax. For a summary, see SUMMARY OF EXPENSE INFORMATION.
In addition to the charges under the Contract, there are also deductions from and expenses paid out of the assets of the underlying mutual funds which are described in the underlying mutual funds’ prospectuses.
Surrender Charge
No sales charge is collected or deducted when premium payments are applied under the Contract. A surrender charge is assessed on certain total or partial surrenders. The surrender charge would be deducted from the accumulated value remaining in the investment option(s) from which the amount is surrendered.
The amounts we receive from the surrender charge are used to cover some of the expenses of the sale of the Contract (primarily commissions, as well as other promotional or distribution expenses). If the surrender charge collected is not enough to cover the actual costs of distribution, the costs are paid from the Company’s General Account assets which include profit, if any, from the mortality and expense risks charge.
NOTE:
If you plan to make multiple premium payments, you need to be aware that each premium payment has its own surrender charge period (shown below). The surrender charge for any total or partial surrender is a percentage of all premium payments surrendered which were received by us during the contract years prior to the surrender. The applicable percentage which is applied to the premium payments surrendered is determined by the following tables.
Surrender charge for Contracts without the Premium Payment Credit Rider (as a percentage of amounts surrendered):
Number of completed contract years
since each premium payment
was made
Surrender charge applied to all
premium payments received in
that contract year
0 (year of premium payment)
6%
1
6%
2
6%
3
5%
4
4%
5
3%
6
2%
7 and later
0

Surrender Charge for Contracts with the Premium Payment Credit Rider (as a percentage of amounts surrendered):
Number of completed contract years
since each premium payment
was made
Surrender charge applied to all
premium payments received in
that contract year
0 (year of premium payment)
8%
1
8%
2
7%
3
6%
4
5%
5
4%
6
3%
7
2%
8
1%
9 and later
0%


22


Each premium payment begins in year 0 for purposes of calculating the percentage applied to that premium payment. However, premium payments are added together by contract year for purposes of determining the applicable surrender charge. If your contract year begins April 1 and ends March 31 the following year, all premium payments received during that period are considered to have been made in that contract year.
NOTE:    Regarding Contracts written in the states of Alabama, Massachusetts, and Washington:
•
For Contracts without the Premium Payment Credit Rider, surrender charges are applicable only to premium payments made in the first three contract years.
•
For Contracts with the Premium Payment Credit Rider, surrender charges are applicable only to premium payments made in the first contract year.
For purpose of calculating surrender charges, we assume that surrenders and transfers are made in the following order:
•
first from premium payments no longer subject to a surrender charge;
•
then from the free surrender privilege (first from the earnings, then from the oldest premium payments (i.e., on a first-in, first-out basis)) described below; and
•
then from premium payments subject to a surrender charge on a first-in, first-out basis.
NOTE:    Partial surrenders may be subject to both a surrender charge and a transaction fee.
Free Surrender Amount
The free surrender amount may be surrendered without a surrender charge. This amount is the greater of:
•
earnings in the Contract (earnings equal accumulated value less unsurrendered premium payments as of the date of the surrender); or
•
10% of the premium payments, decreased by any partial surrenders and partial annuitizations since the last Contract anniversary.
Any amount not taken under the free surrender amount in a contract year is not added to the amount available under the free surrender amount for any following contract year(s).
Unscheduled partial surrenders of the free surrender amount may be subject to the transaction fee (see Transaction Fee).
When Surrender Charges Do Not Apply
The surrender charge does not apply to:
•
amounts applied under an annuity benefit payment option; or
•
payment of any death benefit, however, the surrender charge does apply to premium payments made by a surviving spouse after an owner’s death; or
•
amounts distributed to satisfy the minimum distribution requirement of Section 401(a)9 of the Internal Revenue Code, provided that the amount surrendered does not exceed the minimum distribution amount which would have been calculated based on the value of this Contract alone; or
•
an amount transferred from a Contract used to fund an IRA to another annuity contract issued by the Company to fund an IRA of the participant’s spouse when the distribution is made pursuant to a divorce decree.
Waiver of Surrender Charge Rider
This rider is automatically added to the Contract at issue (subject to state approval and state variations may apply). There is no charge for this benefit.
This rider waives the surrender charge on surrenders made after the first Contract anniversary if the owner or annuitant has a critical need. A critical need includes confinement to a health care facility, terminal illness diagnosis, or total and permanent disability.
The benefits are available for a critical need if the following conditions are met:
•
the owner or annuitant has a critical need; and
•
the critical need did not exist before the contract date.

23


For the purposes of this rider, the following definitions apply:
•
health care facility — a licensed hospital or inpatient nursing facility providing daily medical treatment and keeping daily medical records for each patient (not primarily providing just residency or retirement care). This does not include a facility owned or operated by the owner, annuitant or a member of their immediate family. If the critical need is confinement to a health care facility, the confinement must continue for at least 60 consecutive days after the contract date and the surrender must occur within 90 days of the confinement’s end. Notice must be provided within 90 days after confinement ends.
•
terminal illness — sickness or injury that results in the owner’s or annuitant’s life expectancy being 12 months or less from the date notice to receive a distribution from the Contract is received by the Company.
•
total and permanent disability — the owner or annuitant is unable to engage in any occupation for pay or profit due to sickness or injury.
Transaction Fee
To assist in covering our administration costs, we reserve the right to charge a transaction fee of the lesser of $25 or 2% of each unscheduled partial surrender after the 12th unscheduled partial surrender in a contract year. The transaction fee would be deducted from the accumulated value remaining in the investment option(s) from which the amount is surrendered, on a pro rata basis.
To assist in covering our administration costs or to discourage market timing, we also reserve the right to charge a transaction fee of the lesser of $25 or 2% of each unscheduled transfer after the first unscheduled transfer in a contract year. The transaction fee would be deducted from the investment option(s) from which the amount is transferred, on a pro rata basis.
If we elect to begin charging for the transaction fees, we will provide you with advance written notice.
Premium Taxes
We reserve the right to deduct an amount to cover any premium taxes imposed by states or other jurisdictions. If we elect to begin deducting any premium taxes, we will provide you with advance written notice. Any deduction is made from either a premium payment when we receive it, or the accumulated value when you request a surrender (total or partial) or you request application of the accumulated value (full or partial) to an annuity benefit payment option. Premium taxes range from 0% in most states to as high as 3.50%.
Annual Fee
Contracts with an accumulated value of less than $30,000 are subject to an annual Contract fee of the lesser of $30 or 2% of the accumulated value. Currently, we do not charge the annual fee if your accumulated value is $30,000 or more. If we elect to begin charging the annual fee if your accumulated value is $30,000 or more, we will provide you with advance written notice. If you own more than one variable annuity contract with us, all the Contracts you own or jointly own are aggregated, on each Contract’s anniversary, to determine if the $30,000 minimum has been met and whether that Contract will be charged. The fee is deducted from the investment option that has the greatest value. The fee is deducted on each Contract anniversary and upon total surrender of the Contract. The fee assists in covering administration costs, primarily costs to establish and maintain the records which relate to the Contract.
Separate Account Annual Expenses
Mortality and Expense Risks Charge
We assess each division with a daily charge for mortality and expense risks. The annual rate of the charge is 1.25% of the average daily net assets of the Separate Account divisions. We agree not to increase this charge for the duration of the Contract. This charge is assessed only prior to the annuitization date. This charge is assessed daily when the value of a unit is calculated.
This charge is intended to compensate us for the mortality risk on the Contract. We have a mortality risk in that we guarantee payment of a death benefit in a single payment or under an annuity benefit payment option. We do not impose a surrender charge on a death benefit payment, which is an additional mortality risk.

24


This charge is also intended to cover our expenses, primarily related to operation of the Contract, including
•
furnishing periodic Contract statements, confirmations and other customer communications;
•
preparation and filing of regulatory documents (such as this prospectus);
•
preparing, distributing and tabulating proxy voting materials related to the underlying mutual funds; and
•
providing computer, actuarial and accounting services.
If the mortality and expense risks charge is not enough to cover our costs, we bear the loss. If the mortality and expense risks charge is more than our costs, the excess is profit to the Company.
Administration Charge
We assess each division with a daily Separate Account administration charge. The annual rate of the charge is 0.15% of the average daily net assets of the Separate Account divisions. This charge is assessed only prior to the annuitization date. This charge is assessed daily when the value of a unit is calculated. The administration charge is intended to cover our costs for administration of the Contract that are not covered in the mortality and expense risks charge.
If the administration charge is not enough to cover our costs, we bear the loss. If the administration charge is more than our costs, the excess is profit to the Company.
Charges for Rider Benefits Currently Available
Subject to certain conditions, you may add one or more of the following optional riders to your Contract. Please contact your registered representative or call us at 1-800-852-4450 if you have any questions.
Premium Payment Credit Rider
The maximum annual charge for this rider is 0.60% of the average daily net assets of the Separate Account divisions and a reduction of 0.60% of the Fixed Account interest rate. We currently impose the maximum charge against the average daily net assets of the Separate Account divisions, but do not currently impose the Fixed Account interest rate reduction. We will provide prior written notice in the event that we decide to exercise our right to reduce the Fixed Account interest rate.
If you elect the Premium Payment Credit Rider, the rider charge is assessed until completion of your 8th contract year (and only prior to the annuitization date) even if the credit(s) have been recovered. This charge is assessed daily against the Separate Account division values in the same manner as the mortality and expense risks charge, above. After the 8th Contract anniversary, your Contract accumulated value is moved to units in your chosen divisions that do not include this rider charge. This move of division units will not affect your accumulated value. It will, however, result in a smaller number of division units but those units will have a higher unit value. We will notify you when the division units move because of discontinuation of the rider charge.
The rider charge is intended to cover our cost for the credit(s).
Principal Income Builder 3 (PIB 3) Rider
The current annual charge for the rider is 1.05% of the average quarterly For Life withdrawal benefit base. The charge is calculated and deducted from your accumulated value at the end of the calendar quarter at a quarterly rate of 0.2625%, based on the average quarterly For Life withdrawal benefit base during the calendar quarter.
The average quarterly For Life withdrawal benefit base is equal to (1) the For Life withdrawal benefit base at the beginning of the calendar quarter plus (2) the For Life withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is different than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters.
For existing contracts, advance notice will be sent if the rider charge will increase. Before the effective date of the rider charge increase, you have the following options:
•
Accept the increased rider charge and continue to be eligible to receive a GMWB Step-Up at each rider anniversary; or
•
Decline the increased rider charge by sending us notice that you are opting out of the GMWB Step-Up and electing to remain at your current rider charge. Once you opt out of the GMWB Step-Up, you will no longer be eligible for any future GMWB Step-Ups and the feature cannot be added back to this rider.

25


At the end of each calendar quarter (or on the next valuation date, if the calendar quarter ends on a non-valuation date), the rider charge is deducted through the redemption of units from your accumulated value in the same proportion as the surrender allocation percentages. If this rider is purchased after the beginning of a calendar quarter, the rider charge is prorated according to the number of days this rider is in effect during the calendar quarter. Upon termination of this rider, the rider charge will be based on the number of days this rider is in effect during the calendar quarter.
We reserve the right to increase the rider charge up to the maximum annual charge. The maximum annual charge is 1.65% (0.4125% quarterly) of the average quarterly For Life withdrawal benefit base.
The rider charge is intended to reimburse us for the cost of the protection provided by this rider.
Principal Income Builder 10 (PIB 10) Rider
For applications signed on or after June 1, 2015:
The current annual charge for the rider is 1.25% of the average quarterly For Life withdrawal benefit base. The charge is calculated and deducted from your accumulated value at the end of the calendar quarter at a quarterly rate of 0.3125%, based on the average quarterly For Life withdrawal benefit base during the calendar quarter.
The average quarterly For Life withdrawal benefit base is equal to (1) the For Life withdrawal benefit base at the beginning of the calendar quarter plus (2) the For Life withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is different than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters.
For applications signed before June 1, 2015:
The current annual charge for the rider is 1.20% of the average quarterly Investment Back withdrawal benefit base. The charge is calculated and deducted from your accumulated value at the end of the calendar quarter at a quarterly rate of 0.3000%, based on the average quarterly Investment Back withdrawal benefit base during the calendar quarter.
The average quarterly Investment Back withdrawal benefit base is equal to (1) the Investment Back withdrawal benefit base at the beginning of the calendar quarter plus (2) the Investment Back withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is different than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters.
For all existing contracts (regardless of date the application was signed), advance notice will be sent if the rider charge will increase. Before the effective date of the rider charge increase, you have the following options:
•
Accept the increased rider charge and continue to be eligible to receive a GMWB Step-Up at each rider anniversary; or
•
Decline the increased rider charge by sending us notice that you are opting out of the GMWB Step-Up and electing to remain at your current rider charge. Once you opt out of the GMWB Step-Up, you will no longer be eligible for any future GMWB Step-Ups and the feature cannot be added back to this rider.

At the end of each calendar quarter (or on the next valuation date, if the calendar quarter ends on a non-valuation date), the rider charge is deducted through the redemption of units from your accumulated value in the same proportion as the surrender allocation percentages. If this rider is purchased after the beginning of a calendar quarter, the rider charge is prorated according to the number of days this rider is in effect during the calendar quarter. Upon termination of this rider, the rider charge will be based on the number of days this rider is in effect during the calendar quarter.
We reserve the right to increase the rider charge up to the maximum annual charge. The maximum annual charge is 2.00% (0.5000% quarterly) of the average quarterly Investment Back or For Life withdrawal benefit base, as applicable.
The rider charge is intended to reimburse us for the cost of the protection provided by this rider.

26


Special Provisions for Group or Sponsored Arrangements
Where permitted by state law, Contracts may be purchased under group or sponsored arrangements as well as on an individual basis.
Group Arrangement – program under which a trustee, employer or similar entity purchases Contracts covering a group of individuals on a group basis.
Sponsored Arrangement – program under which an employer permits group solicitation of its employees or an association permits group solicitation of its members for the purchase of Contracts on an individual basis.
The charges and deductions described above may be reduced or eliminated for Contracts issued in connection with group or sponsored arrangements. The rules in effect at the time the application is approved will determine if reductions apply. Reductions may include but are not limited to sales of Contracts without, or with reduced, mortality and expense risks charges, annual fees or surrender charges.
Eligibility for and the amount of these reductions are determined by a number of factors, including the number of individuals in the group, the amount of expected premium payments, total assets under management for the owner, the relationship among the group’s members, the purpose for which the Contract is being purchased, the expected persistency of the Contract, and any other circumstances which, in our opinion, are rationally related to the expected reduction in expenses. Reductions reflect the reduced sales efforts and administration costs resulting from these arrangements. We may modify the criteria for and the amount of the reduction in the future. Modifications will not unfairly discriminate against any person, including affected owners and other owners with contracts funded by the Separate Account.
3.
FIXED ACCOUNT AND DCA PLUS ACCOUNTS
This prospectus is intended to serve as a disclosure document only for the Contract as it relates to the Separate Account and contains only selected information regarding the Fixed Account and DCA Plus accounts. The Fixed Account and the DCA Plus accounts are a part of our General Account. Because of exemptions and exclusions contained in the Securities Act of 1933 and the Investment Company Act of 1940, the Fixed Account, the DCA Plus accounts, and any interest in them, are not subject to the provisions of these acts. As a result the SEC has not reviewed the disclosures in this prospectus relating to the Fixed Account and the DCA Plus accounts. However, disclosures relating to them are subject to generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses.
Our obligations with respect to the Fixed Account and DCA Plus accounts are supported by our General Account. The General Account is the assets of the Company other than those assets allocated to any of our Separate Accounts. Subject to applicable law, we have sole discretion over the assets in the General Account. Separate Account expenses are not assessed against any Fixed Account or DCA Plus account values. You can obtain more information concerning the Fixed Account and DCA Plus accounts from your registered representative or by calling us at 1-800-852-4450.
We reserve the right to refuse premium payment allocations and transfers from the other investment options to the Fixed Account and premium payment allocations to the DCA Plus accounts. We will send you a written notice at least 30 days prior to the date we exercise this right. We will also notify you if we lift such restrictions.
Fixed Account
The Company guarantees that premium payments allocated and amounts transferred to the Fixed Account earn interest at the interest rate in effect on the date premium payments are received or amounts are transferred. This rate applies to each premium payment or amount transferred through the end of the contract year.

27


Each Contract anniversary, we declare a renewal interest rate that applies to the Fixed Account value in existence at that time. This rate applies until the end of the contract year. Interest is earned daily and compounded annually at the end of each contract year. Once credited, the interest is guaranteed and becomes part of the Fixed Account value from which deductions for fees and charges may be made.
NOTE:
We reserve the right to reduce the Fixed Account interest rate by up to 0.60% if you elect the Premium Payment Credit Rider.
NOTE:
Transfers and surrenders from the Fixed Account are subject to certain limitations as to frequency and amount. See 6. TRANSFERS AND SURRENDERS.
NOTE:
We may defer payment of surrender proceeds payable out of the Fixed Account for up to six months. See 9. ADDITIONAL INFORMATION ABOUT THE CONTRACT.
Fixed Account Value
Your Fixed Account value on any valuation date is equal to:
•
premium payments or credits allocated to the Fixed Account;
•
plus any transfers to the Fixed Account from the other investment options;
•
plus interest credited to the Fixed Account;
•
minus any surrenders or applicable surrender charges or partial annuitizations from the Fixed Account;
•
minus any transfers to the Separate Account.
Dollar Cost Averaging Plus Program (DCA Plus Program)
Premium payments allocated to the DCA Plus accounts earn the interest rate in effect at the time each premium payment is received. A portion of your DCA Plus account value is periodically transferred (on the 28th of each month) to Separate Account divisions or to the Fixed Account. If the 28th is not a valuation date, the transfer occurs on the next valuation date. The transfers are allocated according to your DCA Plus allocation instructions. Transfers into a DCA Plus account are not permitted. There is no charge for participating in the DCA Plus program.
NOTE:
If you elect the Premium Payment Credit Rider, you may not participate in the DCA Plus program.
DCA Plus Premium Payments
You may enroll in the DCA Plus program by allocating a minimum premium payment of $1,000 into a DCA Plus account and selecting investment options into which transfers will be made. Subsequent premium payments of at least $1,000 are permitted. You can change your DCA Plus allocation instructions during the transfer period. Automatic Portfolio Rebalancing does not apply to DCA Plus accounts.
DCA Plus premium payments receive the fixed interest rate in effect on the date each premium payment is received by us. The fixed interest rate remains in effect for the remainder of the 6-month or 12-month DCA Plus program.
Selecting a DCA Plus Account
DCA Plus accounts are available in either a 6-month transfer program or a 12-month transfer program. The 6-month transfer program and the 12-month transfer program generally will have different credited interest rates. You may enroll in both a 6-month and 12-month DCA Plus program. However, you may only participate in one 6-month and one 12-month DCA Plus program at a time. Under the 6-month transfer program, all premium payments and accrued interest must be transferred from the DCA Plus account to the selected investment options in no more than 6 months. Under the 12-month transfer program, all premium payments and accrued interest must be transferred to the selected investment options in no more than 12 months.
We will transfer an amount each month which is equal to your DCA Plus account value divided by the number of months remaining in your transfer program. For example, if four scheduled transfers remain in the six-month transfer program and the DCA Plus account value is $4,000, the transfer amount would be $1,000 ($4,000 / 4).

28


DCA Plus Transfers
Transfers are made from DCA Plus accounts to the investment options according to your allocation instructions. The transfers begin after we receive your premium payment and completed enrollment instructions. Transfers occur on the 28th of the month and continue until your entire DCA Plus account value is transferred.
Unscheduled DCA Plus Transfers. You may make unscheduled transfers from DCA Plus accounts to the investment options. A transfer is made, and values determined, as of the end of the valuation period in which we receive your request.
DCA Plus Surrenders. You may take scheduled or unscheduled surrenders from DCA Plus accounts. Premium payments earn interest according to the corresponding rate until the surrender date. Surrenders are subject to any applicable surrender charge.
4.
LIVING BENEFIT - GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) (for applications signed on or after November 2, 2015) (1)  
This Section 4 covers important information for you about GMWB riders.
Guaranteed Minimum Withdrawal Benefit (GMWB) riders are designed to provide withdrawals for the rest of your life that help protect you from the risk of outliving your money. The GMWB rider allows you to take certain guaranteed annual withdrawals during the Contract accumulation phase, regardless of your Contract accumulated value.
We currently make available two optional GMWB riders, the Principal Income Builder 3 rider and the Principal Income Builder 10 rider. We offer different GMWB riders so you can choose the level of benefits and charges that make the most sense for you. The availability and eligibility requirements of these riders are shown below.
Name of Rider
PIB 3
PIB 10
Marketing Name
Principal Income Builder 3
Principal Income Builder 10
Eligibility
The owner(s) (or the annuitant(s) if the owner is not a natural person) must be at least age 45 and younger than age 81
The owner(s) (or the annuitant(s) if the owner is not a natural person) must be at least age 45 and younger than age 81
You may elect a GMWB rider only when you purchase the Contract. We reserve the right, in our sole discretion, to allow Contract owners to add a rider after issue. If we exercise this right, we will give written notice and our offer will not be unfairly discriminatory.
(1)  
For applications signed:
•
before November 2, 2015, where the purchase includes a Principal Income Builder 3 (PIB 3) rider, Appendix G provides information about the features of your PIB 3 rider.
•
on or after June 1, 2015, through and including November 1, 2015, where the purchase includes a Principal Income Builder 10 (PIB 10) rider, Appendix H provides information about the features of your PIB 10 rider.
•
before June 1, 2015, where the purchase includes a PIB 10 rider, Appendix F provides information about the features of your PIB 10 rider.
Factors to Consider Before You Buy A Contract With A GMWB Rider
A Contract with a GMWB rider may be appropriate if you:
•
Want to benefit from potential annual increases in your rider values that match the growth of your Contract accumulated value.
•
Want to protect against the risk of you or your spouse outliving your income.
A Contract with a GMWB rider generally will not be appropriate if you:
•
Do not intend to take any withdrawals from your Contract.
•
Intend to allocate a significant portion of your Contract accumulated value to the Fixed Account or DCA Plus Accounts.
•
Have an aggressive growth investment objective.
•
Plan on taking withdrawals that exceed the GMWB withdrawal limits.

29


Before you purchase a Contract with a GMWB rider, you should carefully consider the following:
•
The features of a GMWB rider may not be purchased separately. As a result, you may pay for rider features that you never use.
•
If you take withdrawals that exceed a GMWB rider’s withdrawal limits (excess withdrawals), you will shorten the life of the rider, lower the withdrawal benefit payment(s) and/or cause the rider to terminate for lack of value.
•
A GMWB rider does not guarantee that the withdrawal benefit payment(s) will be sufficient to meet your future income needs.
•
A GMWB rider is not a guarantee that you will receive any earnings on your premium payments.
•
A GMWB rider is not a guarantee that your investment is protected against loss of purchasing power due to inflation.
•
The fee for the GMWB rider may increase over time due to GMWB Step-Ups, but will not exceed the maximum fee.
•
A GMWB rider restricts your investment options to investment options that reflect a generally balanced investment objective. The Contract's more aggressive growth investment options are not available if you elect a GMWB rider.
•
Once elected, you may not terminate the GMWB rider until the 5th Contract anniversary following the rider effective date.
You should review the terms of each GMWB rider carefully and work with your registered representative to decide which GMWB rider, if any, is appropriate for you based on a thorough analysis of your particular needs, financial objectives, investment goals, time horizons and risk tolerance.
Which GMWB Rider May Be Appropriate for You
The Principal Income Builder 3 rider may be appropriate if you:
•
Want to protect against the risk of you or your spouse outliving your income.
•
Want to benefit from potential annual increases in your rider values that match the growth of your Contract accumulated value.
•
Want our lowest-cost GMWB rider, which for most customers will result in a lower withdrawal benefit payment percentage.
•
Want the ability to have a guaranteed payment at a lower cost than the PIB 10 rider.
•
Want to defer taking withdrawals for a shorter period and receive an accelerated GMWB Bonus rate. The PIB 3 Bonus period is 3 years.
The Principal Income Builder 10 rider may be appropriate if you:
•
Want to protect against the risk of you or your spouse outliving your income.
•
Want to benefit from potential annual increases in your rider values that match the growth of your Contract accumulated value.
•
Want a higher withdrawal benefit payment percentage, which will result in higher GMWB rider charges.
•
May want to defer taking withdrawals in order to receive the GMWB Bonus for a longer period of time (up to 10 years).
GMWB Rider Restrictions/Limitations
Once elected, the GMWB rider may not be terminated for 5 contract years following the rider effective date.
The GMWB rider does not restrict or change your right to take — or not take — withdrawals under the Contract. All withdrawals reduce the Contract accumulated value by the amount withdrawn and are subject to the same conditions, limitations, fees, charges and deductions as withdrawals otherwise taken under the provisions of the Contract; for example, withdrawals will be subject to surrender charges if they exceed the free surrender amount (see 2. CHARGES AND DEDUCTIONS). However, any withdrawals may have an impact on the value of your rider’s benefits.
If you take withdrawals in an amount that exceeds an available withdrawal benefit payment (excess withdrawal), you will shorten the life of the rider, lower the withdrawal benefit payment(s) and/or cause the rider to terminate for lack of value unless you make additional premium payments or a GMWB Step-Up is applied.
There is a charge for the GMWB rider which can increase up to the guaranteed maximum charge for the rider (see SUMMARY OF EXPENSE INFORMATION).

30


Election of a GMWB rider results in restriction of your Contract investment options to the more limited GMWB investment options (see GMWB Investment Options).
Any ownership change, change of beneficiary or other change before the annuitization date which would cause a change in a covered life may result in termination of the rider (see Covered Life Change).
GMWB Investment Options
While a GMWB rider is in effect, the investment options you may select are restricted. The limited investment options available under a GMWB rider (the GMWB investment options) reflect a balanced investment objective and if your investment goal is aggressive growth, a GMWB rider may not support your investment objective. With GMWB investment options that reflect a balanced investment objective, there is potentially a reduced likelihood that we will have to make GMWB benefit payments when the Contract value goes to zero, reaches the maximum annuitization date, or if there is a death claim.
When you purchase a GMWB rider, you must allocate 100% of your Separate Account division value to one or more of the available Separate Account GMWB investment options. Any future premium payments are allocated to the GMWB investment option(s) your Separate Account division value is/are invested in at the time of the new premium payments.
The available GMWB investment options are:
•
Diversified Balanced Managed Volatility Account;
•
Diversified Growth Managed Volatility Account;
•
Diversified Balanced Account;
•
Diversified Growth Account; and
•
Diversified Income Account.
For more information about the Diversified Balanced Managed Volatility Account, Diversified Growth Managed Volatility Account, Diversified Balanced Account, Diversified Growth Account, and Diversified Income Account, see the underlying mutual fund’s prospectus provided with this prospectus.
You may allocate premium payments and transfer Contract accumulated value to the Fixed Account. You may also allocate new premium payments to the DCA Plus accounts. Such allocations and transfers are subject to the provisions of your Contract. See 3. FIXED ACCOUNT AND DCA PLUS ACCOUNTS.
We reserve the right to modify the list of available Separate Account divisions in a GMWB Model or modify the list of available GMWB investment options, subject to compliance with applicable regulations. We may make available other GMWB Models. We also may make changes to or restrict the availability of GMWB Models or other GMWB investment options. Changes or restrictions will apply only to new purchasers of the Contract or to you if you transfer out of a GMWB Model or investment option and wish to transfer back to that GMWB Model or investment option.
You must stay invested in the GMWB investment options as long as the GMWB rider is in effect. NOTE: The rider may not be terminated for five contract years following the rider effective date.
Transfers Between GMWB Investment Options
You may transfer 100% of your Separate Account division value from your current GMWB investment option to one or more of the GMWB investment options available at the time of the transfer. If you transfer from a discontinued GMWB investment option, you will not be able to transfer back to that GMWB investment option. You may make a transfer by providing us notice (we will effect the transfer at the price next determined after we receive your notice in good order).
If your Separate Account division value is invested in a GMWB investment option which is no longer available with the rider but is still available under the Contract, you may continue to maintain that investment and allocate new premium payments to it. If the discontinued GMWB investment option involves more than one Separate Account division, we will rebalance your Separate Account division value each calendar quarter. You may not transfer your Separate Account division value to any other discontinued GMWB investment option. You may transfer your Separate Account division value to another GMWB investment option that is available at the time of transfer; in which case the discontinued GMWB investment option will no longer be available to you.

31


GMWB Investment Options Underlying Funds
You should note that the GMWB investment options are series of Principal Variable Contracts Funds, Inc., which is managed by Principal Management Corporation ("PMC"), an affiliate of ours. If you wish to invest your Contract accumulated value predominantly in underlying funds that are not managed by an affiliate of ours, a GMWB rider may not be appropriate for you.
To the extent that an underlying fund managed by PMC may be included as a GMWB investment option, PMC will receive additional compensation from the management fee of the underlying fund. However, we do not take such potential financial benefit into account in selecting the underlying fund to be a GMWB investment option.
Overview of Principal Income Builder 3 and Principal Income Builder 10
The Principal Income Builder (PIB) riders provide For Life withdrawals that help protect you against the risk of outliving your money.
For Life withdrawal benefit payment percentages. These riders permit an election of “Joint Life” For Life withdrawal benefit payments or “Single Life” For Life withdrawal benefit payments.
Bonus feature. These riders have a bonus feature which rewards you annually for not taking withdrawals for a period of time immediately following purchase of a Contract. The GMWB Bonus increases the withdrawal benefit base, which increases your available withdrawal benefit payment amount. The GMWB Bonus does not increase your Contract accumulated value.
Step-Up feature. These riders have an annual step-up feature which can increase your rider withdrawal benefit payments if your Contract accumulated value increases. The Contract accumulated value increases whenever additional premium payments are made, the division values rise with market growth, or credits (premium payment credits or exchange credit) are applied.
Maximum annual rider charge. The PIB 3 rider has a maximum annual rider charge of 1.65% of the For Life withdrawal benefit base. The PIB 10 rider has a maximum annual rider charge of 2.00% of the For Life withdrawal benefit base.
Spousal continuation. These riders provide that the For Life withdrawal benefit payments may be available to an eligible spouse who continues the Contract with the rider, if certain conditions are met.
Rider Terms
We use the following definitions to describe the features of the GMWB riders:
•
Excess Withdrawal — the portion of a withdrawal that exceeds the available withdrawal benefit payment.
•
GMWB Bonus — a bonus credited to the withdrawal benefit base, provided certain conditions are met.
•
GMWB investment options – the limited investment options available under the GMWB rider, which reflect a balanced investment objective.
•
GMWB Step-Up — an increase to the withdrawal benefit base to an amount equal to your Contract’s accumulated value on the most recent Contract anniversary, provided certain conditions are met.
•
Required minimum distribution (“RMD”) amount — the amount required to be distributed each calendar year for purposes of satisfying the RMD rules of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, and related Code provisions in effect as of the rider effective date.
•
Rider effective date — the date the rider is issued.
•
Withdrawal — any partial surrender (including surrender charges, if any) and/or any partial annuitization of your Contract’s accumulated value.
•
Withdrawal benefit base (also referred to as For Life withdrawal benefit base) — the basis for determining the withdrawal benefit payment available each year.
•
Withdrawal benefit payment (also referred to as For Life withdrawal benefit payment) — the amount that we guarantee you may withdraw each contract year.

32


Additional Premium Payments
Before your Contract accumulated value is reduced to zero, you may make additional premium payments, subject to the limitations described below. We will not accept additional premium payments once the Contract accumulated value becomes zero.
While the rider is in effect, we may limit or not accept additional premium payments if we determine that, as a result of the timing and amounts of your additional premium payments and withdrawals, a limitation is necessary for us to manage the financial risks incurred in providing the GMWB. We also reserve the right to limit or not accept additional premium payments if we are not then offering this benefit for new contracts, or if we are offering a modified version of this benefit for new contracts. We will exercise such reservation of right for all annuity owners in the same class, in a non-discriminatory manner.
Withdrawal Benefit Base
The withdrawal benefit base is used to calculate the annual withdrawal benefit payment. We calculate the withdrawal benefit base on the rider effective date and each Contract anniversary.
The initial withdrawal benefit base is equal to the initial premium payment.
On each Contract anniversary, the withdrawal benefit base is reset to the greater of 1 or 2, where:
1= the accumulated value on the Contract anniversary (see GMWB Step-Up).
2 = the result of (a + b + c - d), where:
a = prior year withdrawal benefit base (or initial withdrawal benefit base if first Contract anniversary);
b = additional premiums since the previous Contract anniversary (dollar-for-dollar);
c = any GMWB Bonus credited since the previous Contract anniversary;
d = any excess withdrawals taken since the previous Contract anniversary*.
* NOTE: The reduction for an excess withdrawal will be greater than dollar-for-dollar if the Contract accumulated value is less than the withdrawal benefit base at the time of the excess withdrawal. See Excess Withdrawals later in this section for information about the negative effect of excess withdrawals.
If you take withdrawals prior to the oldest owner attaining age 59½, the For Life withdrawal benefit base will be reduced for excess withdrawals. If the adjustment for any withdrawal causes the For Life withdrawal benefit base to reduce to zero, the rider will terminate at the next Contract anniversary, unless you make additional premium payments or a GMWB Step-Up is applied.
Withdrawal Benefit Payment
For Life withdrawal benefit payments are available (i) on the rider effective date if the oldest owner (or oldest annuitant, if the Contract owner is not a natural person) is at least age 59½ or (ii) on the Contract anniversary following the date that the oldest owner (or oldest annuitant, if applicable) attains age 59½.
The For Life withdrawal benefit payments are automatically calculated as “Single Life” unless you provide notice and good order instructions to select “Joint Life” For Life withdrawal benefit payments. If eligible, you may elect “Joint Life” For Life withdrawal benefit payments anytime on or before your first withdrawal following the rider effective date. Once you take this first withdrawal, you cannot change your election of “Single Life” or “Joint Life” For Life withdrawal benefit payments, regardless of any change in life events.
“Single Life” For Life withdrawal benefit payments

“Single Life” For Life withdrawal benefit payments are based on one covered life. The covered life for “Single Life” is the:
a.
Owner if there is only one owner;
b.
Annuitant if the owner is not a natural person;
c.
Youngest joint owner if there are joint owners; or
d.
Youngest annuitant if there are joint annuitants and the owner is not a natural person.
In addition, the covered life must satisfy the rider’s issue age requirements on the date the covered life is designated in accordance with the terms of the rider.

33


As long as the Contract is in effect, “Single Life” or “Joint Life” For Life withdrawal benefit payments may be taken until the earlier of the date of the death of the first owner to die (first annuitant, if applicable) or the date the For Life withdrawal benefit base reduces to zero.
“Joint Life” For Life withdrawal benefit payments

“Joint Life” For Life withdrawal benefit payments are based on two covered lives. You may only elect “Joint Life” For Life withdrawal benefit payments if there are two covered lives that meet the eligibility requirements. There can be no more than two covered lives. The “Joint Life” election is not available if the owner is not a natural person.
To be eligible for “Joint Life” the covered lives must be:
a.
The owner and the owner’s spouse, provided there is only one owner and the spouse is named as a primary beneficiary; or
b.
The joint owners, provided the joint owners are each other’s spouse.
NOTE:  Under the Internal Revenue Code (the “Code”), spousal continuation and certain distribution options are available only to “spouses.” In satisfying such requirements, we will follow the U.S. Supreme Court's ruling in United States v. Windsor, 133 S. Ct. 2675 (2013) and any applicable regulatory requirements implemented in response to the Windsor ruling. As a result of the Windsor case, same-sex couples who are legally married in their respective states have the same rights to benefits under federal law as all opposite-sex couples have. All Contract provisions will be interpreted and administered in accordance with the requirements of the Code and Windsor. For more information, please see your tax advisor.
NOTE:
At the time a covered life is designated, that covered life must satisfy the rider’s issue age requirements.
As long as the Contract is in effect, “Joint Life” For Life withdrawal benefit payments will continue until the earlier of the date of the death of the last covered life or the date the “For Life” withdrawal benefit base reduces to zero.
Calculating the For Life Withdrawal Benefit Payment
The For Life withdrawal benefit payment is an amount equal to a percentage multiplied by the For Life withdrawal benefit base.
The For Life withdrawal benefit payment percentage depends on whether you have elected “Single Life” or “Joint Life” and the age of the covered life on the date of the first withdrawal following the rider effective date.
The withdrawal benefit payment percentages applicable to the For Life withdrawal benefit payment are disclosed in the GMWB Percentages section of this prospectus, or in a prospectus supplement that updates the percentages (“GMWB Percentages Prospectus Supplement”).
Because the For Life withdrawal benefit payments are tiered based on the age of the younger covered life at the time of the first withdrawal, you should carefully choose when to take the first withdrawal following the rider effective date. Once a withdrawal is taken, the For Life withdrawal benefit payment percentage is locked in for the life of the rider. In addition, when you take your first withdrawal, your election of “Single Life” or “Joint Life” remains locked in and cannot be changed. For example, if you have elected “Joint Life” For Life withdrawal benefit payments and take the first withdrawal when the younger covered life is age 46, your For Life withdrawal benefit payment percentage will be based on age 46 and locked in for the remaining life of the rider.
GMWB Bonus
Under the GMWB Bonus we will credit a bonus (“GMWB Bonus”) to the withdrawal benefit base provided you have not taken any withdrawals since the rider effective date.
The GMWB Bonus is equal to the total of all premium payments made prior to the applicable Contract anniversary multiplied by the applicable GMWB Bonus Percentage disclosed in the GMWB Percentages section of this prospectus, or in the GMWB Percentages Prospectus Supplement.

34


If the contract date and the rider effective date are different (if we previously have allowed contract owners to add a rider after issue), the GMWB Bonus is equal to the Contract accumulated value on the rider effective date plus premium payments made between the rider effective date and the Contract anniversary, multiplied by the applicable GMWB Bonus Percentage.
For PIB 3, the GMWB Bonus is no longer available after the earlier of:
•
The 3rd Contract anniversary following the rider effective date; or
•
The date you take a withdrawal following the rider effective date.
For PIB 10, the GMWB Bonus is no longer available after the earlier of:
•
The 10th Contract anniversary following the rider effective date; or
•
The date you take a withdrawal following the rider effective date.
NOTE:
The GMWB Bonus is used only for the purposes of calculating the withdrawal benefit base. The GMWB Bonus is not added to your Contract accumulated value.
GMWB Step-Up
The GMWB Step-Up is automatic and applies annually.
If you satisfy the eligibility requirements on a Contract anniversary and your Contract accumulated value is greater than the withdrawal benefit base, we will Step-Up the withdrawal benefit base to your Contract accumulated value on that Contract anniversary. We will not reduce your withdrawal benefit base if your Contract accumulated value on a Contract anniversary is less than the withdrawal benefit base.
NOTE:
All scheduled withdrawals (scheduled partial surrenders) occurring on the Contract anniversary are reflected in the values for the prior contract year and prior to determining if the withdrawal benefit base will Step-Up.
If we increase the rider charge for existing contracts and you are eligible for a GMWB Step-Up of the withdrawal benefit base, you will be charged the then current rider charge. You may choose to opt out of the GMWB Step-Up feature if the charge for your rider will increase. We will send you advance notice if the charge for your rider will increase in order to give you the opportunity to opt out of the GMWB Step-Up feature. Once you opt out, you will no longer be eligible for future GMWB Step-Ups. For more information on the rider charge see SUMMARY OF EXPENSE INFORMATION section.
On each Contract anniversary following the rider effective date, you are eligible for a GMWB Step-Up of the withdrawal benefit base if you satisfy all of the following requirements:
1.
The Contract anniversary occurs before the later of:
a.
the Contract anniversary following the date the oldest owner (oldest annuitant if the owner is not a natural person) attains age 80; or
b.
10 years after the rider effective date;
2.
You have not declined any increases in the rider charge; and
3.
You have not fully annuitized the Contract.
GMWB Percentages (for applications signed on or after November 2, 2015)
This provision applies when the Contract includes a PIB 3 or PIB 10 rider.
The withdrawal benefit payment percentages and GMWB Bonus percentages (collectively, "GMWB Percentages") that apply to your Contract are determined as described in this provision or the applicable GMWB Percentages Prospectus Supplement. Refer to Determining GMWB Percentages in the prospectus for rules to determine which GMWB Percentages will apply to your Contract. For more information regarding the GMWB Bonus and the For Life withdrawal benefit payment percentages, see GMWB Bonus and Withdrawal Benefit Payment sections of the prospectus.

35


The For Life withdrawal benefit payment percentages in the following tables apply for applications signed on or after November 2, 2015 through and including November 30, 2015. The For Life withdrawal benefit payment percentages may be different than those listed below for applications signed after November 30, 2015. For that reason, it is important you have the GMWB Percentages Prospectus Supplement with the most current GMWB Percentages as of the date you sign the application. Visit www.principal.com or work with your financial professional to confirm the most current GMWB Percentages. All GMWB Percentages Prospectus Supplements also are available on the EDGAR system at www.sec.gov (type file number 333-188293).
PIB 3:
 
Single Life
Joint Life*
Age of Covered Life at First Withdrawal*
For Life Withdrawal Benefit Payment Percentage
For Life Withdrawal Benefit Payment Percentage
45-54
3.00%
2.50%
55-59
3.80%
3.30%
60-64
3.80%
3.30%
65-74
4.80%
4.30%
75+
5.05%
4.55%
* Joint Life is based on age of younger covered life at first withdrawal.
PIB 10:
 
Single Life
Joint Life*
Age of Covered Life at First Withdrawal*
For Life Withdrawal Benefit Payment Percentage
For Life Withdrawal Benefit Payment Percentage
45-54
3.00%
2.50%
55-64
4.00%
3.50%
65-74
5.00%
4.50%
75+
5.25%
4.75%
* Joint Life is based on age of younger covered life at first withdrawal.
The GMWB Bonus percentages in the following tables apply for applications signed on or after November 2, 2015 through and including November 30, 2015. The GMWB Bonus percentages may be different than those listed below for applications signed after November 30, 2015. For that reason, it is important you have the GMWB Percentages Prospectus Supplement with the most current GMWB Percentages as of the date you sign the application. Visit www.principal.com or work with your financial professional to confirm the most current GMWB Percentages. All GMWB Percentages Prospectus Supplements also are available on the EDGAR system at www.sec.gov (type file number 333-188293).
PIB 3:
Contract Anniversary (following the rider effective date)
GMWB Bonus Percentage
1
7.00%
2
6.00%
3
5.00%
PIB 10:
Contract Anniversary (following the rider effective date)
GMWB Bonus Percentage
1-10
5.00%
11+
0.00%


36


Determining GMWB Percentages (for applications signed on or after November 2, 2015)
The GMWB Percentages for your Contract will be determined as described in this paragraph so long as you satisfy the guidelines on submitting your application (see GMWB Submission Guidelines section). The GMWB Percentages in effect on the date you sign the application will apply to your Contract except in the following situation. If any of the GMWB Percentages in effect on the date we receive the money have increased from those in effect on the date you signed your application, you will receive the GMWB Percentages in effect on the date we receive the money, provided that no GMWB percentages have decreased.
You will be notified if the GMWB Submission Guidelines are not satisfied, in which case we will provide you with the current GMWB Percentages Prospectus Supplement, which will include the GMWB Percentages applicable to your Contract. Additional paperwork may be required.
The GMWB Percentages applicable to your Contract will not change for the life of your Contract, and for applications signed after November 30, 2015, the GMWB Percentages applicable to your Contract will be in a GMWB Percentages Prospectus Supplement attached to your prospectus.
For contract replacements where New York Reg 60 applies, see Appendix J for New York submission guidelines and information on determining GMWB Percentages.
GMWB Submission Guidelines (for applications signed on or after November 2, 2015)
The guidelines that apply to the submission of your application (“GMWB Submission Guidelines”) are:
•
your application must be signed within the stated time period during which the GMWB Percentages are in effect;
•
your application must be received by us within 7 calendar days of the date the application is signed; and
•
the annuity must be funded within 60 calendar days of the date the application is signed.
Under certain circumstances we may waive the GMWB Submission Guidelines or extend these time periods in a nondiscriminatory manner.
For contract replacements where New York Reg 60 applies, see Appendix J for New York submission guidelines and information on determining GMWB Percentages.
NOTE:
For applications signed:
•
before November 2, 2015, where a PIB 3 rider was purchased, see Appendix G for the withdrawal benefit payment percentages and GMWB Bonus percentages applicable to your Contract.
•
on or after June 1, 2015, through and including November 1, 2015, where a PIB 10 rider was purchased, see Appendix H for the withdrawal benefit payment percentages and GMWB Bonus percentages applicable to your Contract.
•
before June 1, 2015, where a PIB 10 rider was purchased, see Appendix F for the withdrawal benefit payment percentages and GMWB Bonus percentages applicable to your Contract.

37


Covered Life Change
Any ownership change, change of beneficiary or other change before the annuitization date which would cause a change in a covered life (a “Change”) will result in termination of the rider, except for the following permissible Changes:
1.
Spousal continuation of the rider as described in 8. DEATH BENEFIT.
2.
If withdrawals have not been taken and you have not previously elected to continue the rider as provided in 8. DEATH BENEFIT, then:
a.
You may add a joint owner or primary beneficiary to your Contract as a covered life, provided that the new joint owner or primary beneficiary is an eligible covered life as set forth above.
b.
You may remove a joint owner or primary beneficiary as a covered life.
c.
The For Life withdrawal benefit payment percentage will be based on the age of the covered lives and will lock in at the percentage applicable on the date of your first withdrawal.
3.
If withdrawals have been taken and you have locked in “Single Life” For Life withdrawal benefit payments, then:
a.
You may remove a joint owner as a covered life.
b.
You may add a primary beneficiary to your Contract, however, you may not add a primary beneficiary as a covered life for purposes of the rider.
c.
The For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.
4.
If withdrawals have been taken and you have locked in “Joint Life” For Life withdrawal benefit payments, then:
a.
You may remove a joint owner or primary beneficiary as a covered life.
b.
You may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of the rider.
c.
The For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.
5.
If you have previously elected to continue the rider as provided in 8. DEATH BENEFIT, then you may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of the rider. If the primary beneficiary that you add is your spouse, upon your death the spouse can continue the Contract, but the rider will terminate.
No Change is effective until approved by us in writing. Upon our approval, the Change is effective as of the date you signed the notice requesting the Change.
An assignment of the Contract or the rider shall be deemed a request for a Change. If the Change is not one of the above permissible Changes, the rider will be terminated as of the date of the assignment.
Effect of Withdrawals
The rider does not require you to take an available withdrawal benefit payment. If you want to take advantage of the rider’s GMWB Bonus feature, withdrawals cannot be taken during the period the GMWB Bonus is available. See GMWB Bonus.
If you elect not to take an available withdrawal benefit payment, that amount will not be carried forward to the next contract year.
Each time you take a withdrawal, it is reflected immediately in your Contract accumulated value. All scheduled withdrawals (scheduled partial surrenders) occurring on the Contract anniversary are reflected in the values for the prior contract year.

38


All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Under 72t, a customer can receive substantially equal payments without an IRS tax penalty, even if under age 59½. If you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals. See Excess Withdrawals for additional information.
If you take excess withdrawals, the withdrawal benefit base will be reduced on the next Contract anniversary. See Excess Withdrawals for information about the negative effect of excess withdrawals.
To help you better understand the various features of the rider and to demonstrate how premium payments made and withdrawals taken from the Contract affect the values and benefits under the rider, we have provided several examples in APPENDIX C and APPENDIX D. The PIB 3 examples included in Appendix C apply to all customers with the PIB 3 rider, or evaluating the purchase of the PIB 3 rider, regardless of the application signature date. With regard to PIB 10, Appendix D provides examples for customers who signed their applications on or after June 1, 2015. For owners with the PIB 10 rider who purchased their Contract prior to June 1, 2015, PIB 10 examples can be found in Appendix F.
Excess Withdrawals
Any portion of a withdrawal that exceeds the available withdrawal benefit payment is an excess withdrawal. Excess withdrawals decrease the withdrawal benefit base, which will reduce future withdrawal benefit payments. The reductions can be greater than dollar-for-dollar when the Contract accumulated value is less than the withdrawal benefit base at the time of the excess withdrawal.
All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Therefore, if you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals.
If you choose to take an excess withdrawal, the equation below shows how to calculate the excess withdrawal adjustment.
Effect on withdrawal benefit base. Excess withdrawals will reduce the withdrawal benefit base in an amount equal to the greater of:
•
the excess withdrawal, or
•
the result of (a divided by b) multiplied by c, where:
a = the amount withdrawn that exceeds the available withdrawal benefit payment prior to the withdrawal;
b = the Contract accumulated value after the withdrawal benefit payment is deducted, but prior to deducting the amount of the excess withdrawal; and
c = the withdrawal benefit base prior to the adjustment for the excess withdrawal.
NOTE:
All withdrawals taken prior to the date that the oldest owner (oldest annuitant, if applicable) has met the For Life age eligibility requirement are excess withdrawals.
NOTE:    Withdrawals prior to age 59½ may be subject to a 10% IRS penalty tax.
Required Minimum Distribution (RMD) Program for GMWB Riders
Tax-qualified contracts are subject to federal tax rules requiring that RMD be taken on a calendar year basis (i.e., compared to a contract year basis), usually beginning after age 70½.
If you are eligible for and enroll in our RMD Program for GMWB Riders, as discussed below, a withdrawal taken to satisfy RMD for the Contract (an “RMD amount”) that exceeds a withdrawal benefit payment for that contract year will not be deemed an excess withdrawal. If you are eligible for and do not enroll in our RMD Program for GMWB Riders, as discussed below, a withdrawal taken to satisfy RMD for the Contract that exceeds a withdrawal benefit payment for that contract year will be deemed an excess withdrawal.

39


RMD Program. Eligibility in the RMD Program for GMWB Riders is determined by satisfaction of the following requirements:
•
The amount required to be distributed each calendar year for purposes of satisfying the RMD rules of the Internal Revenue Code is based only on this Contract (the “RMD amount”); and
•
You have elected scheduled withdrawal payments.
NOTE:
Although enrollment in the RMD Program for GMWB Riders does not prevent you from taking an unscheduled withdrawal, an unscheduled withdrawal will cause you to lose the RMD Program protections for the remainder of the contract year. This means that any withdrawals (scheduled or unscheduled) during the remainder of the contract year that exceed applicable withdrawal benefit payments will be treated as excess withdrawals, even if the purpose is to take the RMD amount. You will automatically be re-enrolled in the RMD Program for GMWB Riders on your next Contract anniversary.
We reserve the right to modify or eliminate the RMD Program for GMWB Riders; for example, if there is a change to the Internal Revenue Code or Internal Revenue Service rules or interpretations relating to RMD, including the issuance of relevant IRS guidance. We will send you at least 30 days advance notice of any change in or elimination of the RMD Program for GMWB Riders. Any modifications or elimination of the RMD Program for GMWB Riders will take effect after notice. If we exercise our right to modify or eliminate the RMD Program for GMWB Riders, then any scheduled or unscheduled withdrawal in excess of a withdrawal benefit payment after the effective date of the program’s modification or elimination will be deemed an excess withdrawal.
You may obtain more information regarding our RMD Program for GMWB Riders by contacting your registered representative or by calling us at 1-800-852-4450.
Effect of Reaching the Maximum Annuitization Date
On or before the maximum annuitization date, you must elect one of the Contract or GMWB rider payment options described below.
1.
Contract payment options:
•
Payments resulting from applying the Contract accumulated value to an annuity benefit payment option.
•
Payment of the Contract accumulated value as a single payment.
2.
GMWB rider payment option:
•
Fixed scheduled payments each year in the amount of the For Life withdrawal benefit payment until the date of death of the last covered life.
See Effect of Withdrawals for information on how withdrawals prior to the maximum annuitization date affect the GMWB values.
We will send you written notice at least 30 days prior to the maximum annuitization date and ask you to select one of the available payment options listed above. If we have not received your election as of the maximum annuitization date, we will automatically apply your Contract accumulated value to an annuity benefit payment option:
•
for Contracts with one annuitant – Life Income with payments guaranteed for a period of 10 years.
•
for Contracts with joint annuitants – Joint and Full Survivor Income with payments guaranteed for a period of 10 years.
Effect of the Contract Accumulated Value Reaching Zero
We will send you prior written notice whenever reasonably feasible if your Contract accumulated value is approaching zero.

40


In the event that the Contract accumulated value reduces to zero, we will pay the withdrawal benefit payments as follows:
•
If you have taken withdrawal benefit payments prior to the Contract accumulated value reaching zero, your For Life withdrawal option is either “Joint Life” or “Single Life” depending on your election at the time of your first withdrawal.
•
If you have not taken withdrawal benefit payments prior to the Contract accumulated value reaching zero, you must elect either
•
the “Single Life” For Life withdrawal option: you will receive fixed scheduled payments each year in the amount of the “Single Life” For Life withdrawal benefit payment, until the date of your death (annuitant’s death if the owner is not a natural person); or the “Joint Life” For Life withdrawal option: you will receive fixed scheduled payments each year in the amount of the “Joint Life” For Life withdrawal benefit payment, until the date of the death of the last covered life.
NOTE:
In the event that the Contract accumulated value reduces to zero, the withdrawal benefit payments elected above will continue, but all other rights and benefits under the rider and the Contract (including the death benefits) will terminate, and no additional premium payments will be accepted.
Termination and Reinstatement
You may not terminate the rider prior to the 5th Contract anniversary following the rider effective date.
At any point in time, we will terminate the rider upon the earliest to occur:
•
The date you send us notice to terminate the rider (after the 5th Contract anniversary following the rider effective date). This will terminate the rider, not the Contract.
•
The date you fully annuitize, fully surrender or otherwise terminate the Contract.
•
The For Life withdrawal benefit base is zero.
•
The date the Contract owner is changed (annuitant is changed if the owner is not a natural person), except a change in owner due to a spousal continuation of the rider as described in 8. DEATH BENEFIT or the removal/ addition of a joint life as described in Covered Life Change.
•
The date your surviving spouse elects to continue the Contract without the rider (even if prior to the 5th Contract anniversary following the rider effective date).
•
The date you make an impermissible change in a covered life.
If the rider terminates for any reason other than full surrender of the Contract, the rider may not be reinstated. Upon termination of the GMWB Rider, any and all benefits and guarantees under the rider will no longer be available to you.
If you surrender the Contract with the rider attached and the Contract is later reinstated, the rider also must be reinstated. At the time the rider is reinstated, we will deduct rider charges scheduled during the period of termination and make any other adjustments necessary to reflect any changes in the amount reinstated and the Contract accumulated value as of the date of termination.
Effect of Divorce
Generally, in the event of a divorce, the spouse who retains ownership of the Contract will continue to be entitled to all rights and benefits of the rider while the former spouse will no longer have any such rights or be entitled to any benefits under the rider. If you take a withdrawal to satisfy a court order to pay a portion of the Contract to your former spouse, any portion of such withdrawal that exceeds the available withdrawal benefit payments will be deemed an excess withdrawal under the rider.
NOTE:
If this excess withdrawal causes the For Life withdrawal benefit base to go to zero, the rider will terminate at the next Contract anniversary unless you make additional premium payments or a GMWB Step-Up is applied. For further information, see Excess Withdrawals.

41


PIB 3 Rider Summary
Name of Rider
PIB 3
Marketing Name
Principal Income Builder 3
Rider Issue Age
45 – 80
Rider Charge
PIB 3 Charges (as a percentage of average quarterly For Life withdrawal benefit base)
•    Maximum annual charge is 1.65%.
•    Current annual charge is 1.05%.
Guaranteed Minimum Withdrawal Benefit
•    For Life
Annual Withdrawal Limits
•    “Single Life” — tiered percentages based on age at first withdrawal, calculated as a percentage of the For Life withdrawal benefit base
•    “Joint Life” — tiered percentages based on age at first withdrawal, calculated as a percentage of the For Life withdrawal benefit base

NOTE: Refer to GMWB Percentages section of this prospectus or the applicable GMWB Percentage Prospectus Supplement.
For Life Withdrawal Benefit Payments
•    “Single Life” or “Joint Life” (your life and the lifetime of your eligible spouse)
•    For Life withdrawal benefit payments default to “Single Life” unless “Joint Life” is elected
•    Available the Contract anniversary following the date the oldest owner turns 59½ — all withdrawals prior to that Contract anniversary are excess withdrawals under the For Life withdrawal option
Termination
•    You may terminate this rider anytime after the 5th Contract anniversary following the rider effective date
GMWB Step-Up
•    Automatic annual GMWB Step-Up available until the later of (a) the Contract anniversary prior to age 80 or (b) 10 years after the rider effective date.
GMWB Bonus
•    If no withdrawals are taken, a GMWB Bonus is applied to the benefit base on each applicable Contract anniversary. 
Investment Restrictions
•    You must select one or more of the available GMWB investment options; there are no additional restrictions on allocations to the Fixed Account or DCA Plus accounts.
Spousal Continuation
•    At the death of the first owner to die, a spouse who is a joint owner or primary beneficiary may have the option to continue the Contract with or without this rider.



42


PIB 10 Rider Summary
Name of Rider
PIB 10 (for applications signed on or after June 1, 2015)
Marketing Name
Principal Income Builder 10
Rider Issue Age
45 – 80
Rider Charge
PIB 10 Rider Charges (as a percentage of average quarterly For Life withdrawal benefit base)
•    Maximum annual charge is 2.00%.
•    Current annual charge is 1.25%.
Guaranteed Minimum Withdrawal Benefit
•    For Life
Annual Withdrawal Limits
•    “Single Life” — tiered percentages based on age at first withdrawal, calculated as a percentage of the For Life withdrawal benefit base
•    “Joint Life” — tiered percentages based on age at first withdrawal, calculated as a percentage of the For Life withdrawal benefit base

NOTE: Refer to GMWB Percentages section of this prospectus or the applicable GMWB Percentage Prospectus Supplement.
For Life Withdrawal Benefit Payments
•    “Single Life” or “Joint Life” (your life and the lifetime of your eligible spouse)
•    For Life withdrawal benefit payments default to “Single Life” unless “Joint Life” is elected
•    Available the Contract anniversary following the date the oldest owner turns 59½ — all withdrawals prior to that Contract anniversary are excess withdrawals under the For Life withdrawal option
Termination
•    You may terminate this rider anytime after the 5th Contract anniversary following the rider effective date
GMWB Step-Up
•    Automatic annual GMWB Step-Up available until the later of (a) the Contract anniversary prior to age 80 or (b) 10 years after the rider effective date.
GMWB Bonus
•    If no withdrawals are taken, a GMWB Bonus is applied to the benefit base on each applicable Contract anniversary.
Investment Restrictions
•    You must select one or more of the available GMWB investment options; there are no additional restrictions on allocations to the Fixed Account or DCA Plus accounts.
Spousal Continuation
•    At the death of the first owner to die, a spouse who is a joint owner or primary beneficiary may have the option to continue the Contract with or without this rider.


43


5.
PREMIUM PAYMENT CREDIT RIDER
The Premium Payment Credit Rider applies credits to the accumulated value for premium payments made in contract year one. This rider can only be elected at the time the Contract is issued. Once this rider is elected, it cannot be terminated. There is a charge for this rider (see 2. CHARGES AND DEDUCTIONS) as well as an increased surrender charge and longer surrender charge period.
If you elect this rider, the following provisions apply to the Contract:
•
We will apply a credit of 5% of the premium payment to your accumulated value for each premium payment received during your first contract year. The credit is applied to the Contract on the same date the related premium payment is applied to the Contract. For example, if you make a premium payment of $10,000 in your first contract year, a credit amount of $500 will be added to your accumulated value (5% x $10,000).
•
No credit(s) are applied for premium payments made after the first contract year.
•
For Contracts issued in the state of Washington, no premium payments are allowed after the first contract year for Contracts issued with the Premium Payment Credit Rider.
•
The premium payment credit is allocated among the investment options according to your then current premium payment allocations.
•
We recapture the credit(s) if you exercise your right to return the Contract during the examination offer period or if you request full annuitization of the Contract prior to the third Contract anniversary.
•
The amount we recapture may be more than the current value of the credit(s). If your investment options have experienced negative investment performance (i.e., have lost value) you bear the loss for the difference between the original value of the credit(s) and the current (lower) value of the credit(s).
•
Partial annuitizations are restricted in each of contract years two and three to no more than 10% of the accumulated value as of the most recent Contract anniversary.
•
Credits are considered earnings under the Contract, not premium payments.
•
All premium payments are subject to the 9-year surrender charge period and higher surrender charge (see 2. CHARGES AND DEDUCTIONS).
•
The Premium Payment Credit Rider cannot be cancelled and the associated surrender charge period and percentages cannot be changed.
•
The DCA Plus program is not available to you if you elect this rider.
If you elect the Premium Payment Credit Rider, your unit values will be lower than if you did not elect the rider. The difference reflects the annual charge for the Premium Payment Credit Rider. After the 8th Contract anniversary, your accumulated value is moved to units in your chosen divisions that do not include this rider charge. This move of division units will not affect your accumulated value. It will, however, result in a smaller number of division units but those units will have a higher unit value. We will notify you when the division units move because of discontinuation of the rider charge. The following example is provided to assist you in understanding this adjustment.
 
Sample Division
Unit Value(1)
Number of Units in
Sample Division
Accumulated Value
Prior to the one time adjustment
25.560446
1,611.0709110
$41,179.69
After the one time adjustment
26.659024
1,544.6811189
$41,179.69
(1) Multiple factors impact the amount of the adjustment, including the annual charge for the Premium Payment Credit rider. For a detailed description of how the unit value is calculated, see subsection Accumulated Value under 1.THE CONTRACT.
You should carefully examine the Premium Payment Credit Rider to decide if this rider is suitable for you. There are circumstances under which you would be worse off for having received the credit. In making this determination, you should consider the following factors:
•
this rider increases the amount and duration of the surrender charges, see 2. CHARGES AND DEDUCTIONS;
•
we recapture the credit(s) if you exercise your right to return the Contract during the examination offer period or if you request full annuitization of the Contract prior to the third Contract anniversary.
•
partial annuitizations are restricted in each of contract years two and three to no more than 10% of the accumulated value as of the most recent Contract anniversary.
•
any premium payments made after the first contract year do not have a credit applied even though they are subject to the rider’s higher Separate Account charges; and
•
the higher Separate Account charges reduce investment performance.
The charges used to recoup our cost for the premium payment credit(s) include the surrender charge and the Premium Payment Credit Rider charge (see 2. CHARGES AND DEDUCTIONS). We expect to make a profit from these charges.

44


The following tables demonstrate hypothetical surrender values for Contracts with and without this rider but do not show the impact of partial surrenders or partial annuitizations. The table reflects surrender charges, when applicable. The tables are based on:
•
a $25,000 initial premium payment and no additional premium payments;
•
the deduction of maximum Separate Account annual expenses:
•
Contracts with the Premium Payment Credit Rider:
•
2.00% annually for the first eight contract years
•
1.40% annually after the first eight contract years
•
Contracts without the Premium Payment Credit Rider:
•
1.40% annually for all contract years.
•
the deduction of the arithmetic average of the underlying mutual fund expenses as of December 31, 2014;
•
0%, 5% and 10% annual rates of return before charges; and
•
payment of the $30 annual Contract fee (while the Contract’s value is less than $30,000).
 
0% Annual Return
5% Annual Return
10% Annual Return
Contract
Year
Surrender Value
Without
Premium Payment
Credit Rider
Surrender Value
With
Premium Payment
Credit Rider
Surrender Value
Without
Premium Payment
Credit Rider
Surrender Value
With
Premium Payment
Credit Rider
Surrender Value
Without
Premium Payment
Credit Rider
Surrender Value
With
Premium Payment
Credit Rider
1
$23,001.59
$23,540.14
$24,176.59
$24,747.64
$25,351.59
$25,994.71
2
$22,370.29
$22,756.51
$24,715.61
$25,152.27
$27,253.65
$27,857.38
3
$21,755.66
$22,210.20
$25,267.36
$25,819.61
$29,370.15
$30,125.99
4
$21,355.73
$21,672.50
$26,080.35
$26,525.05
$31,892.45
$32,531.06
5
$20,959.19
$21,143.39
$26,936.43
$27,238.52
$34,582.00
$35,081.84
6
$20,566.13
$20,622.84
$27,815.96
$27,960.15
$37,451.13
$37,788.16
7
$20,176.60
$20,110.83
$28,710.34
$28,690.09
$40,513.04
$40,660.56
8
$19,965.33
$19,607.29
$29,869.95
$29,428.47
$44,031.93
$43,710.25
9
$19,408.41
$19,230.74
$30,575.12
$30,385.03
$47,273.04
$47,214.48
10
$18,866.18
$18,857.74
$31,296.94
$31,358.26
$50,752.72
$50,958.25
15
$16,362.31
$16,354.92
$35,169.85
$35,238.76
$72,391.62
$72,684.78
20
$14,171.86
$14,165.40
$39,522.02
$39,599.46
$103,256.46
$103,674.62

The better your Contract’s investment performance, the more advantageous the Premium Payment Credit Rider becomes due to the effect of compounding. However, Contracts with the Premium Payment Credit Rider are subject to both a greater surrender charge and a longer surrender charge period than Contracts issued without this rider (see 2. CHARGES AND DEDUCTIONS). If you surrender your Contract with the Premium Payment Credit Rider while subject to a surrender charge, your surrender value will be less than the surrender value of a Contract without this rider.
6.
TRANSFERS AND SURRENDERS
Division Transfers
•
You may request an unscheduled transfer or set up a scheduled transfer by
•
mailing your instructions to us;
•
calling us at 1-800-852-4450 (if telephone privileges apply);
•
faxing your instructions to us at 1-866-894-2093; or
•
visiting www.principal.com.
•
You must specify the dollar amount or percentage to transfer from each division.
•
The minimum transfer amount is the lesser of $100 or the value of your division.
•
In states where allowed, we reserve the right to reject transfer instructions from someone providing them for multiple contracts for which he or she is not the owner.
You may not make a transfer to the Fixed Account if:
•
a transfer has been made from the Fixed Account to a division within six months; or
•
following the transfer, the Fixed Account value would be greater than $1,000,000.

45


Unscheduled Transfers
You may make unscheduled division transfers from one division to another division or to the Fixed Account.
•
Transfers are not permitted into DCA Plus accounts.
•
Transfer values are calculated using the price next determined after we receive your request.
•
We reserve the right to impose a fee of the lesser of $30 or 2% of the amount transferred on each unscheduled transfer after the first unscheduled transfer in a contract year. If we elect to begin charging for the transaction fee, we will provide you with written notice at least 30 days in advance.
Limitations on Unscheduled Transfers. We reserve the right to reject excessive exchanges or purchases if the trade would disrupt the management of the Separate Account, any division of the Separate Account or any underlying mutual fund. In addition, we may suspend or modify transfer privileges in our sole discretion at any time to prevent market timing efforts that could disadvantage other owners. These modifications could include, but not be limited to:
•
requiring a minimum time period between each transfer;
•
imposing the transaction fee;
•
limiting the dollar amount that an owner may transfer at any one time; or
•
not accepting transfer requests from someone providing requests for multiple Contracts for which he or she is not the owner.
Scheduled Transfers (Dollar Cost Averaging)
•
You may elect to have transfers made on a scheduled basis.
•
There is no charge for scheduled transfers and no charge for participating in the scheduled transfer program.
•
You must specify the dollar amount of the transfer.
•
You select the transfer date (other than the 29th, 30th or 31st) and the transfer period (monthly, quarterly, semi-annually or annually).
•
If the selected date is not a valuation date, the transfer is completed on the next valuation date.
•
Transfers are not permitted into DCA Plus accounts.
•
If you want to stop a scheduled transfer, you must provide us notice prior to the date of the scheduled transfer.
•
Transfers continue until your value in the division is zero or we receive notice to stop the transfers.
•
The number of divisions available for simultaneous transfers will never be less than two. When we have more than two divisions available, we reserve the right to limit the number of divisions from which simultaneous transfers are made.
Scheduled transfers are designed to reduce the risks that result from market fluctuations. They do this by spreading out the allocation of your money to investment options over a longer period of time. This allows you to reduce the risk of investing most of your money at a time when market prices are high. The results of this strategy depend on market trends and are not guaranteed.
Example:
Month
Amount Invested
Share Price
Shares Purchased
January
$100
$25.00
4
February
$100
$20.00
5
March
$100
$20.00
5
April
$100
$10.00
10
May
$100
$25.00
4
June
$100
$20.00
5
Total
$600
$120.00
33

In the example above, the average share price is $20.00 [total of share prices ($120.00) divided by number of purchases (6)]. The average share cost is $18.18 [amount invested ($600.00) divided by number of shares purchased (33)].

46


Fixed Account Transfers, Total and Partial Surrenders
Transfers and surrenders from the Fixed Account are subject to certain limitations. In addition, surrenders from the Fixed Account may be subject to a surrender charge (see Section 2. CHARGES AND DEDUCTIONS).
You may transfer amounts from the Fixed Account to the Separate Account divisions before the annuitization date and as provided below. The transfer is effective on the valuation date following our receipt of your instructions. You may transfer amounts on either a scheduled or unscheduled basis. You may not make both scheduled and unscheduled Fixed Account transfers in the same contract year.
Unscheduled Fixed Account Transfers. The minimum transfer amount is $100 (or entire Fixed Account value if less than $100). Once per contract year, within the 30 days following the Contract anniversary date, you can:
•
transfer an amount not to exceed 25% of your Fixed Account value; or
•
transfer up to 100% of your Fixed Account value if:
•
your Fixed Account value is less than $1,000; or
•
a minus b is greater than 1% where:
a = the weighted average of your Fixed Account interest rates for the preceding contract year; and
b = the renewal interest rate for the Fixed Account.
Scheduled Fixed Account Transfers (Fixed Account Dollar Cost Averaging). You may make scheduled transfers on a monthly basis from the Fixed Account to the Separate Account as follows:
•
You may establish scheduled transfers by sending a written request or by telephoning the home office at 1-800-852-4450.
•
Transfers occur on a date you specify (other than the 29th, 30th or 31st of any month).
•
If the selected date is not a valuation date, the transfer is completed on the next valuation date.
•
Scheduled transfers are only available if the Fixed Account value is $5,000 or more at the time the scheduled transfers begin.
•
Scheduled monthly transfers of a specified dollar amount will continue until the Fixed Account value is zero or until you notify us to discontinue the transfers. This specified dollar amount cannot exceed 2% of your Fixed Account value.
•
The minimum transfer amount is $100.
•
If the Fixed Account value is less than $100 at the time of transfer, the entire Fixed Account value will be transferred.
•
If you stop the transfers, you may not start transfers again without our prior approval.
Automatic Portfolio Rebalancing (APR)
•
APR allows you to maintain a specific percentage of your Separate Account division value in specified divisions over time.
•
You may elect APR at any time after the examination offer period has expired.
•
APR is not available for values in the Fixed Account or the DCA Plus accounts.
•
APR is not available if you have arranged scheduled transfers from the same division.
•
APR is required quarterly if your Contract has an active PIB 3 or PIB 10 rider.
•
There is no charge for APR transfers and no charge for participating in the APR program.
•
APR will be done on the frequency you specify:
•
quarterly (on a calendar year or contract year basis); or
•
semiannually or annually (on a contract year basis).
•
You may rebalance by
•
mailing your instructions to us;
•
calling us at 1-800-852-4450 (if telephone privileges apply);
•
faxing your instructions to us at 1-866-894-2093; or
•
visiting www.principal.com.
•
Divisions are rebalanced at the end of the next valuation period following your request.
Example:
You elect APR to maintain your Separate Account division value with 50% in the LargeCap Value division and 50% in the Bond & Mortgage Securities division. At the end of the specified period, 60% of the accumulated value is in the LargeCap Value division, with the remaining 40% in the Bond & Mortgage Securities division. By rebalancing, units from the LargeCap Value division are redeemed and applied to the Bond & Mortgage Securities division so that 50% of the Separate Account division value is once again in each division.

47


Surrenders
You may surrender your Contract by providing us notice. Surrender requests may be sent to us at:
Principal Life Insurance Company
PO Box 9382
Des Moines, Iowa 50306-9382
Surrenders result in the redemption of units and your receipt of the value of the redeemed units minus any applicable surrender charge and fees. Surrender values are calculated using the price next determined after we receive your request. Surrenders from the Separate Account are generally paid within seven days of the effective date of the request for surrender (or earlier if required by law). However, certain delays in payment are permitted (see 9. ADDITIONAL INFORMATION ABOUT THE CONTRACT). Surrenders before age 59½ may involve an income tax penalty (see 10. FEDERAL TAX MATTERS).
You may specify surrender allocation percentages with each partial surrender request. If you do not provide us with specific percentages, we will use your premium payment allocation percentages for the partial surrender. Surrenders may be subject to a surrender charge (see 2. CHARGES AND DEDUCTIONS).
Total Surrender
•
You may surrender the Contract at any time before the annuitization date.
•
Surrender values are calculated using the price next determined after we receive your request.
•
The cash surrender value is your accumulated value minus any applicable surrender charges and fee(s) (Contract fee and/or prorated share of the charge(s) for optional rider(s)).
•
We reserve the right to require you to return the Contract.
•
The written consent of all collateral assignees and irrevocable beneficiaries must be obtained prior to surrender.
Unscheduled Partial Surrender
•
You may surrender a part of your accumulated value at any time before the annuitization date.
•
You must specify the dollar amount of the surrender (which must be at least $100).
•
The surrender is effective at the end of the valuation period during which we receive your written request for surrender.
•
The surrender is deducted from your investment options according to your surrender allocation percentages.
•
If surrender allocation percentages are not specified, we use your premium payment allocation percentages.
•
We surrender units from your investment options to equal the dollar amount of the surrender request plus any applicable surrender charge and transaction fee, if any.
•
Your accumulated value after the unscheduled partial surrender must be equal to or greater than $5,000; we reserve the right to increase this amount up to and including $10,000.
•
The written consent of all collateral assignees and irrevocable beneficiaries must be obtained prior to surrender.
Scheduled Partial Surrender
•
You may elect partial surrenders from any of your investment options on a scheduled basis.
•
Your accumulated value must be at least $5,000 when the scheduled partial surrenders begin.
•
You may specify monthly, quarterly, semi-annually or annually and choose a surrender date (other than the 29th, 30th or 31st).
•
If the selected date is not a valuation date, the partial surrender is completed on the next valuation date.
•
All scheduled partial surrenders occurring on the Contract anniversary are reflected in the values for the prior contract year.
•
We surrender units from your investment options to equal the dollar amount of the partial surrender request plus any applicable partial surrender charge.
•
The partial surrenders continue until your value in the investment option is zero or we receive written notice to stop the partial surrenders.
•
The written consent of all collateral assignees and irrevocable beneficiaries must be obtained prior to partial surrender.

48


7.
THE ANNUITIZATION PERIOD
Annuitization Date
You may specify an annuitization date in your application. You may change the annuitization date with our prior approval. The request must be in writing. You may not select an annuitization date prior to the first Contract anniversary or after the maximum annuitization date (the later of age 85 or ten years after Contract issue; state variations may apply) found on the data page. If you do not specify an annuitization date, the annuitization date is the maximum annuitization date shown on the data page.
Full Annuitization
Any time after the first contract year, you may annuitize your Contract by electing to receive payments under an annuity benefit payment option. If the accumulated value on the annuitization date is less than $2,000 or if the amount applied under an annuity benefit payment option is less than the minimum requirement, we may pay out the entire amount in a single payment. The Contract would then be canceled. You may select when you want the payments to begin (within the period that begins the business day following our receipt of your instruction and ends one year after our receipt of your instructions).
Once payments begin under the annuity benefit payment option you choose, the option may not be changed. In addition, once payments begin, you may not surrender or otherwise liquidate or commute any of the portion of your accumulated value that has been annuitized.
Depending on the type of annuity benefit payment option selected, payments that are initiated either before or after the annuitization date may be subject to penalty taxes (see 10. FEDERAL TAX MATTERS). You should consider this carefully when you select or change the annuity benefit payment commencement date.
Partial Annuitization
You have the right to partially annuitize a portion of your accumulated value. After the first contract year and prior to the annuitization date, you may annuitize a portion of your accumulated value by sending us a notice.
If you have elected the Premium Payment Credit Rider, the amount of the partial annuitization during each of contract years two and three is limited to no more than 10% of the accumulated value as of the most recent Contract anniversary.
The minimum partial annuitization amount is $2,000. Any partial annuitization request that reduces the accumulated value to less than $5,000 will be treated as a request for full annuitization.
You may select one of the annuity benefit payment options listed below. Once payments begin under the option you selected, the option may not be changed. In addition, once payments begin you may not surrender or otherwise liquidate or commute any portion of your accumulated value that has been annuitized.
Annuity Benefit Payment Options
We offer fixed annuity benefit payments only. No surrender charge is imposed on any portion of your accumulated value that has been annuitized.
You may choose from several fixed annuity benefit payment options. Payments will be made on the frequency you choose. You may elect to have your annuity benefit payments made on a monthly, quarterly, semiannual or annual basis. The dollar amount of the payments is specified for the entire payment period according to the option selected. There is no right to take any total or partial surrenders after the annuitization date. The fixed annuity benefit payment must begin within one year of the annuity benefit election.
The amount of the fixed annuity benefit payment depends on the:
•
amount of accumulated value applied to the annuity benefit payment option;
•
annuity benefit payment option selected;
•
age and gender of the annuitant (unless fixed income option is selected);
•
frequency of the annuity benefit payments; and
•
duration of the annuity benefit payments.

49


The amount of the initial payment is determined by applying all or a portion of the accumulated value as of the date of the application to the annuity table for the annuitant’s annuity benefit payment option, gender, and age. The annuity benefit payment tables contained in the Contract are based on the Annuity 2000 Mortality Table. These tables are guaranteed for the life of the Contract.
Annuity benefit payments generally are higher for male annuitants than for female annuitants with an otherwise identical Contract. This is because statistically females have longer life expectancies than males. In certain states, this difference may not be taken into consideration in determining the payment amount. Additionally, Contracts with no gender distinctions are made available for certain employer-sponsored plans because, under most such plans, gender discrimination is prohibited by law.
The frequency and duration of the annuity benefit payments affect the income amount received. The annuity benefit payments generally are lower if you receive payments more frequently. For example, monthly payments generally will be lower than quarterly payments. Generally, all other factors being equal, the longer the duration of annuity benefit payments, the lower the annuity benefit payments amounts and the shorter the duration, the higher the annuity benefit payment amounts.
You may select an annuity benefit payment option by written request only. Your selection of an annuity benefit payment option for a partial annuitization must be in writing and may not be changed after payments begin. Your selection of an annuity benefit payment option for any portion not previously annuitized may be changed by written request prior to the annuitization date.
If an annuity benefit payment option is not selected, we will automatically apply:
•
for Contracts with one annuitant — Life Income with payments guaranteed for a period of 10 years.
•
for Contracts with joint annuitants — Joint and Full Survivor Life Income with payments guaranteed for a period of 10 years.
The available annuity benefit payment options for both full and partial annuitizations include:
•
Fixed Period Income – Level payments continue for a fixed period. You may select a range from 5 to 30 years (state variations may apply). If the annuitant dies before the selected period expires, payments continue to you or the person(s) you designate until the end of the fixed period. Payments stop after all guaranteed payments are received.
•
Life Income – Level payments continue for the annuitant’s lifetime. If you defer the first payment date, it is possible that you would receive no payments if the annuitant dies before the first payment date. NOTE: There is no death benefit value remaining and there are no further payments when the annuitant dies.
•
Life Income with Period Certain – Level payments continue during the annuitant’s lifetime with a guaranteed payment period of 5 to 30 years. If the annuitant dies before all of the guaranteed payments have been made, the guaranteed payments continue to you or the person(s) you designate until the end of the guaranteed payment period.
•
Joint and Survivor – Payments continue as long as either the annuitant or the joint annuitant is alive. You may also choose an option that lowers the amount of income after the death of a joint annuitant. It is possible that you would only receive one payment under this option if both annuitants die before the second payment is due. If you defer the first payment date, it is possible that you would receive no payments if both the annuitants die before the first payment date. NOTE: There is no death benefit value remaining and there are no further payments after both annuitants die.
•
Joint and Survivor with Period Certain – Payments continue as long as either the annuitant or the joint annuitant is alive with a guaranteed payment period of 5 to 30 years. You may choose an option that lowers the amount of income after the death of a joint annuitant. If both annuitants die before all guaranteed payments have been made, the guaranteed payments continue to you or the person(s) you designate until the end of the guaranteed payment period.
Other annuity benefit payment options may be available.

50


Tax Considerations Regarding Annuity Benefit Payment Options
If you own one or more tax qualified annuity contracts, you may avoid tax penalties if payments from at least one of your tax qualified contracts begin no later than April 1 following the calendar year in which you turn age 70½. The required minimum distribution payment must be in equal (or substantially equal) amounts over your life or over the joint lives of you and your designated beneficiary. These required minimum distribution payments must be made at least once a year. Tax penalties may apply at your death on certain excess accumulations. You should confer with your tax advisor about any potential tax penalties before you select an annuity benefit payment option or take other distributions from the Contract. Additional rules apply to distributions under non-qualified contracts (see 10. FEDERAL TAX MATTERS).
Death of Annuitant (During the Annuitization Period)
If the annuitant dies during the annuity benefit payment period, remaining payments are made to the owner throughout the guaranteed payment period, if any, or for the life of any joint annuitant, if any. If the owner is the annuitant, remaining payments are made to the contingent owner. In all cases the person entitled to receive payments also receives any rights and privileges under the annuity benefit payment option.

51


8.
DEATH BENEFIT
This Contract provides a death benefit upon the death of the owner. The Contract will not provide death benefits upon the death of an annuitant unless the annuitant is also an owner or the owner is not a natural person.
The following tables illustrate the various situations and the resulting death benefit payment if death occurs before the annuitization date and while the accumulated value is greater than zero.
If you die and...
And...
Then...
You are the sole owner
Your spouse is not named as a primary beneficiary
The beneficiary(ies) receives the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
If a beneficiary dies before you, upon your death we will make equal payments to the surviving beneficiaries unless you provided us with other written instructions. If no beneficiary(ies) survives you, the death benefit is paid to your estate in a single payment.
Upon your death, only your beneficiary’s(ies’) right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.
You are the sole owner
Your spouse is named as a primary beneficiary
Your spouse may either
a. continue the Contract; or
b. receive the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
All other beneficiaries receive the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
If a beneficiary dies before you, upon your death we will make equal payments to the surviving beneficiaries unless you provided us with other written instructions. If no beneficiary(ies) survives you, the death benefit is paid to your estate in a single payment.
Unless your spouse elects to continue the Contract, only your spouse’s and any other beneficiary’s(ies’) right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.
You are a joint owner
The surviving joint owner is not your spouse
The surviving owner receives the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
Upon your death, only the surviving owner’s right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.
You are a joint owner
The surviving joint owner is your spouse
Your spouse may either
a. continue the Contract; or
b. receive the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
Unless your surviving spouse owner elects to continue the Contract, upon your death, only your spouse’s right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the rider and the Contract will terminate.


52


If...
And...
Then...
If the annuitant dies
The owner is not a natural person
The beneficiary(ies) receives the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
If a beneficiary dies before the annuitant, upon the annuitant’s death we will make equal payments to the surviving beneficiaries unless the owner provided us with other written instructions.
Upon the annuitant’s death, only the beneficiary’s(ies’) right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.

Before the annuitization date, you may give us written instructions for payment under a death benefit option. If we do not receive your instructions, a death benefit is paid according to instructions from the beneficiary(ies). The beneficiary(ies) may elect to apply a death benefit under an annuity benefit payment option or receive a death benefit as a single payment. Generally, unless the beneficiary(ies) elects otherwise, we pay a death benefit in a single payment, subject to proof of your death.
No surrender charge applies when a death benefit is paid.
Payment of Death Benefit
The death benefit is usually paid within five business days of our receiving all required documents (including proof of death) to process the claim. Payment is made according to benefit instructions provided by you. Some states require this payment to be made in less than five business days. Under certain circumstances, this payment may be delayed (see 9. ADDITIONAL INFORMATION ABOUT THE CONTRACT).
NOTE:
Proof of death includes: a certified copy of a death certificate; a certified copy of a court order; a written statement by a medical doctor; or other proof satisfactory to us.
The accumulated value remains invested in the divisions until the valuation period during which we receive the required documents. If more than one beneficiary is named, each beneficiary’s portion of the death benefit remains invested in the divisions until the valuation period during which we receive the required documents for that beneficiary. Unless otherwise required by law, we pay interest on the death benefit from the first day the accumulated value is no longer invested in the divisions until payment is made. After payment of all of the death benefit (including any applicable interest), the Contract is terminated.
Standard Death Benefit Formula
The standard death benefit is automatically included with your Contract if you do not have one of the Guaranteed Minimum Withdrawal Benefit riders.
The amount of the standard death benefit is the greatest of a, b or c, where:
a =
the accumulated value on the date we receive proof of death and all required documents;
b =
the total of premium payments minus an adjustment for each partial surrender (and any applicable surrender charges and fees) and minus an adjustment for each partial annuitization made prior to the date we receive proof of death and all required documents; and
c =
the highest accumulated value on any Contract anniversary that is wholly divisible by seven (for example, Contract anniversaries 7, 14, 21, 28, etc.) plus any premium payments since that Contract anniversary and minus an adjustment for each partial surrender (and any applicable surrender charges and fees) and minus an adjustment for each partial annuitization made after that Contract anniversary.

53


The adjustment for each partial surrender (and any applicable surrender charges and fees) and for each partial annuitization made prior to the date we receive proof of death and all required documents is equal to (x divided by y) multiplied by z, where:
x = the amount of the partial surrender (and any applicable surrender charges and fees) or the amount of the partial annuitization; and
y = the accumulated value immediately prior to the partial surrender or partial annuitization; and
z = the amounts determined in b or c above immediately prior to the partial surrender or partial annuitization.
Example:
Your accumulated value is $10,000 and you take a partial surrender of $2,000 (20% of your accumulated value). For purposes of calculating the death benefit, we reduce the amounts determined in b or c above by 20%.
GMWB Death Benefit
The GMWB Death Benefit information in this provision applies to all Contract owners with a PIB 3 rider. For owners who have the PIB 10 rider, this provision applies to your Contract if your application was signed on or after June 1, 2015. For GMWB Death Benefit information for contracts with a PIB 10 rider and your application was signed before June 1, 2015, refer to Appendix F.
While a GMWB rider is active, the GMWB Death Benefit replaces any other death benefit under the Contract. The GMWB Death Benefit is similar to the Standard Death Benefit with the exception of how withdrawals reduce the death benefit amount. The GMWB Death Benefit terminates when the GMWB rider terminates.
1.
If you are the only owner, upon your death, your primary beneficiary may elect one of the following:
a.
receive the GMWB Death Benefit as set forth below; or
b.
if the primary beneficiary is your spouse, your spouse may continue the Contract with or without the rider as set forth later in this section.
2.
If there are joint owners, upon the death of the first joint owner to die, the surviving joint owner may elect one of the following:
a.
receive the GMWB Death Benefit as set forth below; or
b.
if the surviving joint owner is your spouse, your spouse may continue the Contract with or without the rider as set forth later in this section.
The GMWB Death Benefit is equal to the greatest of:
1.
the Contract accumulated value as of the valuation date on which we receive the proof of death and all required documents;
2.
the total premium payments minus each withdrawal** taken on or before the valuation date on which we receive the proof of death and all required documents;
3.
the Contract accumulated value that was in effect on any prior Contract anniversary that is divisible equally by 7, plus any premium payments made after that Contract anniversary minus each withdrawal** taken after that Contract anniversary.
**
For 2. and 3. above, a withdrawal that is not a "For Life" Excess Withdrawal will reduce the GMWB Death Benefit by the amount of the withdrawal. Then, each "For Life" Excess Withdrawal will proportionately reduce the GMWB Death Benefit by the ratio of the "For Life" Excess Withdrawal taken to the Contract accumulated value immediately prior to the "For Life" Excess Withdrawal. For example, if your accumulated value decreases due to the poor performance of the investment options you selected, the death benefit is reduced by more than the amount of the withdrawal for an excess withdrawal. NOTE: This is different than how withdrawals reduce the standard death benefit.
** For 2. and 3. above, withdrawals up to the RMD amount under the RMD Program for GMWB Riders are not considered excess withdrawals and reduce the GMWB Death Benefit by the amount of the withdrawal.
For details of the GMWB Death Benefit calculations, see APPENDIX E - GMWB DEATH BENEFIT EXAMPLES.

54


If the Contract Accumulated Value is Greater than Zero. The following table illustrates the various situations and the resulting outcomes if your Contract accumulated value is greater than zero at your death.
If you die and...
And...
Then...
You are the sole owner
Your spouse is not named as a primary beneficiary
The primary beneficiary(ies) will receive the GMWB Death Benefit.

All other rights and benefits under the rider and Contract will terminate.
You are the sole owner
Your spouse is named as a primary beneficiary
Your spouse may:

a. Continue the Contract with or without the rider as set forth later in this section; or
b. Receive the GMWB Death Benefit.

All other primary beneficiaries will receive the GMWB Death Benefit.

Unless your spouse elects to continue the Contract with the rider, only your spouse’s and beneficiary(ies)’s right to the above-selected payments will continue; all other rights and benefits under the rider and Contract will terminate.
You are a joint owner
The surviving joint owner is not your spouse
Your surviving owner will receive the GMWB Death Benefit.

All other rights and benefits under the rider and Contract will terminate.
You are a joint owner
The surviving joint owner is your spouse
Your spouse may:

a. Continue the Contract with or without the rider as set forth later in this section; or
b. Receive the GMWB Death Benefit.

Unless the surviving spouse owner elects to continue the Contract with the rider, upon your death, only your spouse’s right to the above-selected payments will continue; all other rights and benefits under the rider and Contract will terminate.
NOTE: The “Joint Life” For Life withdrawal option is not available if the owner is not a natural person.
If...
And...
Then...
The annuitant dies
The owner is not a natural person
The beneficiary(ies) receive the GMWB Death Benefit.
If a beneficiary dies before the annuitant, on the annuitant’s death we will make equal payments to the surviving beneficiaries unless the owner provided us with other written instructions. If no beneficiary(ies) survive the annuitant, the GMWB Death Benefit is paid to the owner.
Upon the annuitant’s death, only the beneficiary(ies) right to the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.


55


If the Contract Accumulated Value is Zero. The following table illustrates the various situations and the resulting outcomes if the Contract accumulated value is zero at your death.
If you die and…
And…
Then…
You are the sole owner
You elected the “Single Life” For Life withdrawal benefit payments*
All payments stop and all rights and benefits under the Contract terminate.
You are the sole owner
You elected the “Joint Life” For Life withdrawal benefit payments*
We will continue payments to the surviving covered life according to the schedule established when you made your election until the date of the surviving covered life’s death.
Upon the surviving covered life’s death, all payments stop and all rights and benefits under the Contract terminate.
You are a joint owner
You elected the “Single Life” For Life withdrawal benefit payments*
All payments stop and all rights and benefits under the Contract terminate.
You are a joint owner
You elected the “Joint Life” For Life withdrawal benefit payments*
We will continue payments to the surviving covered life according to the schedule established when you made your election until the date of the surviving covered life’s death.

Upon the surviving joint owner’s death, all payments stop and all rights and benefits under the Contract terminate.
* See 4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) - Effect of the Contract Accumulated Value Reaching Zero for details regarding election of the For Life withdrawal option.
NOTE: The “Joint Life” For Life withdrawal option is not available if the owner is not a natural person.
Spousal Continuation of a GMWB Rider
The rider provides that the For Life withdrawal benefit payment may be available in certain situations to an eligible spouse who continues the Contract with the rider.
If you die while the rider is in effect and if your surviving spouse elects to continue the Contract in accordance with its terms, the surviving spouse may also elect to continue the rider if:
1.
The Contract accumulated value is greater than zero;
2.
There has not been a previous spousal continuation of the Contract and the rider; and
3.
Your spouse is either:
a.    your primary beneficiary, if you were the sole owner; or
b.    the surviving joint owner, if there were joint owners.
If your spouse elects to continue the Contract without the rider, the rider and all rights, benefits and charges under the rider will terminate and cannot be reinstated.
NOTE:
Although spousal continuation may be available under federal tax laws for a subsequent spouse, the rider may be continued one time only.

56


The following table illustrates the various changes and the resulting outcomes associated with continuation of the rider by an eligible surviving spouse.
If you die and…
And…
Then if your spouse continues the rider…
No withdrawals have been taken since the rider effective date

Your spouse meets the minimum issue age requirement

Your spouse may continue the rider and take withdrawals until the earlier of your spouse's death or the For Life withdrawal benefit base reduces to zero.

For Life withdrawal benefits will automatically be calculated as “Single Life” and your spouse will be the sole covered life. Your spouse may not add a new covered life or elect “Joint Life”.

The For Life withdrawal benefit percentage will be based on your spouse’s age and will lock in at the “Single Life” percentage applicable on the date of your spouse’s first withdrawal.

All other provisions of the rider will continue as in effect on the date of your death.
No withdrawals have been taken since the rider effective date
Your spouse does not meet the minimum issue age requirement
The GMWB rider terminates upon your death.

All other provisions of this Contract will continue as in effect on the date of your death.
If you die and…
And…
And…
Then if your spouse continues the rider
Withdrawals have been taken since the rider effective date
You have locked in “Single Life” For Life withdrawal benefits
---
The GMWB rider terminates upon your death.

All other provisions of this Contract will continue as in effect on the date of your death.
Withdrawals have been taken since the rider effective date
You have locked in “Joint Life” For Life withdrawal benefits
Your spouse is the surviving covered life
Your spouse may continue the rider and take For Life withdrawal benefit payments until the earlier of your spouse's death or the For Life withdrawal benefit base reduces to zero.

For Life withdrawal benefits will continue to be calculated as “Joint Life”.

The For Life withdrawal benefit percentage will remain locked in at the “Joint Life” percentage applicable on the date of your first withdrawal and will not be reset to reflect your death.

All other provisions of the rider will continue as in effect on the date of your death.
Withdrawals have been taken since the rider effective date
You have locked in “Joint Life” For Life withdrawal benefits
There is no surviving covered life
The GMWB rider terminates upon your death.

All other provisions of this Contract will continue as in effect on the date of your death.


57


9.
ADDITIONAL INFORMATION ABOUT THE CONTRACT
The Contract
The entire Contract is made up of the Contract, amendments, riders and endorsements and data page. Only our corporate officers can agree to change or waive any provisions of a Contract. Any change or waiver must be in writing and signed by an officer of the Company.
Delay of Payments
Surrendered amounts are generally disbursed within seven calendar days after we receive your instruction for a surrender in a form acceptable to us. This period may be shorter where required by law. However, payment of any amount upon total or partial surrender, death, annuitization of the accumulated value or the transfer to or from a division may be deferred during any period when the right to sell mutual fund shares is suspended as permitted under provisions of the Investment Company Act of 1940 (as amended).
The right to sell shares may be suspended during any period when:
•
trading on the NYSE is restricted as determined by the SEC or when the NYSE is closed for other than weekends and holidays; or
•
an emergency exists, as determined by the SEC, as a result of which:
•
disposal by a mutual fund of securities owned by it is not reasonably practicable;
•
it is not reasonably practicable for a mutual fund to fairly determine the value of its net assets; or
•
the SEC permits suspension for the protection of security holders.
If payments are delayed the transfer will be processed on the first valuation date following the expiration of the permitted delay unless we receive your written instructions to cancel your surrender, annuitization, or transfer. Your written instruction must be received in the home office prior to the expiration of the permitted delay. The transaction will be completed within seven business days following the expiration of a permitted delay.
In addition, we reserve the right to defer payment of that portion of your accumulated value that is attributable to a premium payment made by check for a reasonable period of time (not to exceed 15 business days) to allow the check to clear the banking system.
We may also defer payment of surrender proceeds payable out of the Fixed Account for a period of up to six months.
Misstatement of Age or Gender
If the age or, where applicable, gender of the annuitant has been misstated, we adjust the annuity benefit payment under your Contract to reflect the amount that would have been payable at the correct age and gender. If we make any overpayment because of incorrect information about age or gender, or any error or miscalculation, we deduct the overpayment from the next payment or payments due. Underpayments are added to the next payment.
Assignment
If your Contract is part of your qualified plan, IRA, SEP, or SIMPLE-IRA, you may not assign ownership.
You may assign ownership of your non-qualified contract. Each assignment is subject to any payments made or action taken by the Company prior to our notification of the assignment. We assume no responsibility for the validity of any assignment. An assignment or pledge of a Contract may have adverse tax consequences.
An assignment must be made in writing and filed with us at our home office. The irrevocable beneficiary(ies), if any, must authorize any assignment in writing. Your rights, as well as those of the annuitant and beneficiary, are subject to any assignment on file with us. Any amount paid to an assignee is treated as a partial surrender and is paid in a single payment.
The Company may refuse any assignment or transfer at any time on a non-discriminatory basis and may refuse any assignment where it believes such assignment may cause the development of a trading market.
If your Contract has a GMWB rider, an assignment of the Contract shall be deemed a request for a change in a covered life. If the change in covered life is not permissible under this rider, the rider will be terminated as of the date of the assignment. See 4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB).

58


Change of Owner or Annuitant
If your Contract is part of your qualified plan, IRA, SEP, or SIMPLE-IRA you may not change either the owner or the annuitant.
You may change the owner and/or annuitant of your non-qualified contract at any time. Your request must be in writing and approved by us. After approval, the change is effective as of the date you signed the request for change. If ownership is changed, the benefits under certain riders may be affected. We reserve the right to require that you send us the Contract so that we can record the change.
If an annuitant who is not an owner dies while the Contract is in force, a new annuitant may be named unless the owner is a corporation, trust or other entity.
If your Contract has a GMWB rider, any ownership change before the annuitization date which would cause a change in the covered life will result in termination of this rider except in certain circumstances. See 4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB).
Beneficiary
While this Contract is in force, you have the right to name or change a beneficiary. This may be done as part of the application process or by sending us a written request. Unless you have named an irrevocable beneficiary, you may change your beneficiary designation by sending us notice.
If your Contract has a GMWB rider, any beneficiary change before the annuitization date which would cause a change in the covered life will result in termination of this rider except in certain circumstances. See 4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB).
Contract Termination
We reserve the right to terminate the Contract and make a single payment (without imposing any charges) to you if your accumulated value at the end of the accumulation period is less than $2,000, unless you have the GMWB rider. Before the Contract is terminated, we will send you a notice to increase the accumulated value to $2,000 within 60 days. Termination of the Contracts will not unfairly discriminate against any owner.
Reinstatement
Reinstatement is only available for full surrender of your Contract. You cannot reinstate a partial surrender or partial annuitization; if you return either of these amounts, they will be considered new premium payments.
If you have requested to replace this Contract with an annuity contract from another company and want to reinstate this Contract, the following apply:
•
we reinstate the Contract effective on the original surrender date;
•
if you had the Premium Payment Credit Rider on the original Contract, the 9-year surrender charge period applies to the reinstated Contract. The remaining surrender charge period, if any, is calculated based on the number of years since the original contract date;
•
we apply the amount received from the other company (“reinstatement amount”) and the amount of the surrender charge you paid when you surrendered the Contract;
•
these amounts are priced on the valuation date the money from the other company is received by us;
•
commissions are not paid on the reinstatement amounts; and
•
new data page is sent to your address of record.
If a rider was in force at the time of surrender, rider fees will apply for the period between the date you requested termination and the date your Contract was reinstated.
If a rider was in force at the time of surrender, rider benefits will be adjusted when the amount originally surrendered differs from the reinstatement amount.

59


Reports
We will mail to you a statement, along with any reports required by state law, of your current accumulated value at least once per year prior to the annuitization date. After the annuitization date, any reports will be mailed to the person receiving the annuity benefit payments.
Quarterly statements reflect purchases and redemptions occurring during the quarter as well as the balance of units owned and accumulated values.
Important Information About Customer Identification Procedures
To help the government fight the funding of terrorism and money laundering activities, Federal law requires financial institutions to obtain, verify, and record information that identifies each person who applies for a Contract. When you apply for a Contract, we will ask for your name, address, date of birth, and other information that will allow us to verify your identity. We may also ask to see your driver’s license or other identifying documents.
If concerns arise with verification of your identification, no transactions will be permitted while we attempt to reconcile the concerns. If we are unable to verify your identity within 30 days of our receipt of your original premium payment, the Contract will be terminated and any value surrendered in accordance with normal redemption procedures. We will not suspend your right of full redemption, or postpone the date of payment upon redemption except as permitted by Section 22(e) of the Investment Act of 1940 or as amended.
We do not knowingly sell annuities that are for the benefit of a business/organization that is illegal under Federal and/or State law (such as a marijuana clinic), or a person who owns or receives income from such an entity or whose source of funds is illegal.
Frequent Trading and Market-Timing (Abusive Trading Practices)
This Contract is not designed for frequent trading or market timing activity of the investment options. If you intend to trade frequently and/or use market timing investment strategies, you should not purchase this Contract. The Company does not accommodate market timing.
We consider frequent trading and market timing activities to be abusive trading practices because they:
•
Disrupt the management of the underlying mutual funds by:
•
forcing the fund to hold short-term (liquid) assets rather than investing for long term growth, which results in lost investment opportunities for the fund; and
•
causing unplanned portfolio turnover;
•
Hurt the portfolio performance of the underlying mutual funds; and
•
Increase expenses of the underlying mutual fund and separate account due to:
•
increased broker-dealer commissions; and
•
increased record keeping and related costs.
If we are not able to identify such abusive trading practices, the abuses described above will negatively impact the Contract and cause investors to suffer the harms described.
We have adopted policies and procedures to help us identify and prevent abusive trading practices. In addition, the underlying mutual funds monitor trading activity to identify and take action against abuses. While our policies and procedures are designed to identify and protect against abusive trading practices, there can be no certainty that we will identify and prevent abusive trading in all instances. When we do identify abusive trading, we will apply our policies and procedures in a fair and uniform manner.

60


If we, or an underlying mutual fund that is an investment option with the Contract, deem abusive trading practices to be occurring, we will take action that may include, but is not limited to:
•
Rejecting transfer instructions from a Contract owner or other person authorized by the owner to direct transfers;
•
Restricting submission of transfer requests by, for example, allowing transfer requests to be submitted by 1st class U.S. mail only and disallowing requests made via the internet, by facsimile, by overnight courier or by telephone;
•
Limiting the number of unscheduled transfers during a contract year to no more than 12;
•
Prohibiting you from requesting a transfer among the divisions for a minimum of thirty days where there is evidence of at least one round-trip transaction (exchange or redemption of shares that were purchased within 30 days of the exchange/redemption) by you; and
•
Taking such other action as directed by the underlying mutual fund.
We support the underlying mutual funds right to accept, reject or restrict, without prior written notice, any transfer requests into a fund.
In some instances, a transfer may be completed prior to a determination of abusive trading. In those instances, we will reverse the transfer (within two business days of the transfer) and return the Contract to the investment option holdings it had prior to the transfer. We will give you notice in writing in this instance.
Distribution of the Contract
The Company has appointed Princor Financial Services Corporation (“Princor”) (Des Moines, Iowa 50392-0200), a broker-dealer registered under the Securities Exchange Act of 1934, a member of the Financial Industry Regulatory Authority and affiliate of the Company, as the distributor and principal underwriter of the Contract. Princor is paid 6.50% of premium payments by the Company for the distribution of the Contract. Princor also may receive 12b-1 fees in connection with purchases and sales of mutual funds underlying the Contracts. Princor currently receives 12b-1 fees for the Diversified Balanced Managed Volatility Account, Diversified Growth Managed Volatility Account, Diversified Balanced Account, Diversified Growth Account, and Diversified Income Account.
Princor is an affiliate of the Company. Both Princor and the Company are subsidiaries of Principal Financial Services, Inc.
Applications for the Contracts are solicited by registered representatives of Princor or such other broker-dealers as have entered into selling agreements with Princor. Such registered representatives act as appointed agents of the Company under applicable state insurance law and must be licensed to sell variable insurance products. The Company intends to offer the Contract in all jurisdictions where it is licensed to do business and where the Contract is approved.
The distributor and/or its affiliates provide services to and/or funding vehicles for retirement plans and employer sponsored benefit programs. The distributor and its affiliates may pay a bonus or other consideration or incentive to intermediaries if a participant in such a retirement plan establishes a rollover individual retirement account with the assistance of a registered representative of an affiliate of distributor, if the intermediary sold the funding vehicle the retirement plan utilizes or if the intermediary subsequently became the broker of record with regard to the retirement plan. The distributor and its affiliates may pay a bonus or other consideration or incentive to intermediaries if an employee covered under an employer sponsored benefit program purchases a product from an affiliate of distributor with the assistance of a registered representative of an affiliate of distributor, if the intermediary sold the funding vehicle the employer sponsored benefit program utilizes or if the intermediary subsequently became the broker of record with regard to the employer sponsored benefit program.
The intermediary may pay to its financial professionals some or all of the amounts the distributor and its affiliates pay to the intermediary.
Performance Calculation
The Separate Account may publish advertisements containing information (including graphs, charts, tables and examples) about the hypothetical performance of its divisions for this Contract as if the Contract had been issued on or after the date the underlying mutual fund in which the division invests was first offered. The hypothetical performance from the date of the inception of the underlying mutual fund in which the division invests is calculated by reducing the actual performance of the underlying mutual fund by the fees and charges of this Contract as if it had been in existence.

61


The yield and total return figures described below vary depending upon market conditions, composition of the underlying mutual fund’s portfolios and operating expenses. These factors and possible differences in the methods used in calculating yield and total return should be considered when comparing the Separate Account performance figures to performance figures published for other investment vehicles. The Separate Account may also quote rankings, yields or returns as published by independent statistical services or publishers and information regarding performance of certain market indices. Any performance data quoted for the Separate Account represents only historical performance and is not intended to indicate future performance. For further information on how the Separate Account calculates yield and total return figures, see the SAI.
From time to time the Separate Account advertises its Money Market division’s “yield” and “effective yield” for these Contracts. Both yield figures are based on historical earnings and are not intended to indicate future performance. The “yield” of the division refers to the income generated by an investment in the division over a 7-day period (which period is stated in the advertisement). This income is then “annualized.” That is, the amount of income generated by the investment during that week is assumed to be generated each week over a 52-week period and is shown as a percentage of the investment. The “effective yield” is calculated similarly but, when annualized, the income earned by an investment in the division is assumed to be reinvested. The “effective yield” is slightly higher than the “yield” because of the compounding effect of the assumed reinvestment.
The Separate Account also advertises the average annual total return of its various divisions. The average annual total return for any of the divisions is computed by calculating the average annual compounded rate of return over the stated period that would equate an initial $1,000 investment to the ending redeemable accumulated value.
10.
FEDERAL TAX MATTERS
The following description is a general summary of the tax rules, primarily related to federal income taxes, which in our opinion are currently in effect. These rules are based on laws, regulations and interpretations which are subject to change at any time. This summary is not comprehensive and is not intended as tax advice. Federal estate and gift tax considerations, as well as state and local taxes, may also be material. You should consult a tax advisor about the tax implications of taking action under a Contract or related retirement plan.
Taxation of Non-Qualified Contracts
Non-Qualified Contracts
Section 72 of the Internal Revenue Code governs the income taxation of annuities in general.
•
Premium payments made under non-qualified contracts are not excludable or deductible from your gross income or any other person’s gross income.
•
An increase in the accumulated value of a non-qualified contract owned by a natural person resulting from the investment performance of the Separate Account or interest credited to the DCA Plus accounts and the Fixed Account is generally not taxable until paid out as surrender proceeds, death benefit proceeds, or otherwise.
•
Generally, owners who are not natural persons are immediately taxed on any increase in the accumulated value.
The following discussion applies generally to Contracts owned by natural persons.
•
Surrenders or partial surrenders are taxed as ordinary income to the extent of the accumulated income or gain under the Contract.
•
The value of the Contract pledged or assigned is taxed as ordinary income to the same extent as a partial surrender.
•
Annuity benefit payments:
•
The “investment in the Contract” is generally the total of the premium payments made.
•
The basic rule for taxing annuity benefit payments is that part of each annuity benefit payment is considered a nontaxable return of the investment in the Contract and part is considered taxable income. An “exclusion ratio” is applied to each annuity benefit payment to determine how much of the payment is excludable from gross income. The remainder of the annuity benefit payment is includable in gross income for the year received.
•
After the premium payment(s) in the Contract is paid out, the full amount of any annuity benefit payment is taxable.
For purposes of determining the amount of taxable income resulting from distributions, all Contracts and other annuity contracts issued by us or our affiliates to the same owner within the same calendar year are treated as if they are a single contract.

62


Transfer of ownership may have tax consequences to the owner. Please consult with your tax advisor before changing ownership of your Contract.
Required Distributions for Non-Qualified Contracts
In order for a non-qualified contract to be treated as an annuity contract for federal income tax purposes, the Internal Revenue Code requires:
•
If the person receiving payments dies on or after the annuitization date but prior to the time the entire interest in the Contract has been distributed, the remaining portion of the interest is distributed at least as rapidly as under the method of distribution being used as of the date of that person’s death.
•
If you die prior to the annuitization date, the entire interest in the Contract will be distributed:
•
within five years after the date of your death; or
•
as annuity benefit payments which begin within one year of your death and which are made over the life of your designated beneficiary or over a period not extending beyond the life expectancy of that beneficiary.
•
If you take a distribution from the Contract before you are 59½, you may incur an income tax penalty.
Generally, unless the beneficiary elects otherwise, the above requirements are satisfied prior to the annuitization date by paying the death benefit in a single payment, subject to proof of your death. The beneficiary may elect, by written request, to receive an annuity benefit payment option instead of a single payment.
If your designated beneficiary is your surviving spouse, the Contract may be continued with your spouse deemed to be the new owner for purposes of the Internal Revenue Code. Where the owner or other person receiving payments is not a natural person, the required distributions provided for in the Internal Revenue Code apply upon the death of the annuitant.
Net Investment Income Tax Change for 2013
Beginning in 2013, the Net Investment Income tax will be imposed at a rate of 3.8% on unearned income for higher tax bracket individuals.
As part of the Health Care and Reconciliation Act of 2010, the new tax increase may apply to individuals' net investment income with an Adjustable Gross Income over $200,000 (single filers) or $250,000 for married couples filing jointly. The tax applies to income from interest, dividends, annuities, royalties and rents not obtained in a normal trade of business. The tax may also apply to certain trusts and estates with net investment income.
Income from annuities that are part of a qualified retirement plan (as described in the following section) are not treated as investment income for the purpose of this new tax and thus are not subject to the new 3.8% rate but may be includible for purposes of determining whether the applicable Net Investment Income Tax income limits are exceeded.
Taxation of Qualified Contracts
Tax-Qualified Contracts: IRA, SEP, and SIMPLE-IRA
The Contract may be used to fund IRAs, SEPs, and SIMPLE-IRAs.
•
IRA – An Individual Retirement Annuity (IRA) is a retirement savings annuity. Contributions grow tax deferred.
•
SEP-IRA – SEP stands for Simplified Employee Pension and is a form of IRA. A SEP allows you, as an employer, to provide retirement benefits for your employees by contributing to their IRAs.
•
SIMPLE-IRA – SIMPLE stands for Savings Incentive Match Plan for Employees. A SIMPLE-IRA allows employees to save for retirement by deferring salary on a pre-tax basis and receiving predetermined company contributions.
The tax rules applicable to owners, annuitants and other payees vary according to the type of plan and the terms and conditions of the plan itself. In general, premium payments made under a retirement program recognized under the Internal Revenue Code are excluded from the participant’s gross income for tax purposes prior to the annuity benefit payment date (subject to applicable state law). The portion, if any, of any premium payment made that is not excluded from their gross income is their investment in the Contract. Aggregate deferrals under all plans at the employee’s option may be subject to limitations.

63


Tax-qualified retirement arrangements, such as IRAs, SEPs, and SIMPLE-IRAs, are tax-deferred. You derive no additional benefit from the tax deferral feature of the annuity. Consequently, an annuity should be used to fund an IRA, or other tax qualified retirement arrangement to benefit from the annuity’s features other than tax deferral. These features may include guaranteed lifetime income, death benefits without surrender charges, guaranteed caps on fees, and the ability to transfer among investment options without sales or withdrawal charges.
The tax implications of these plans are further discussed in the SAI under the heading Taxation Under Certain Retirement Plans. Check with your tax advisor for the rules which apply to your specific situation.
Premature Distributions: There is a 10% penalty under the Internal Revenue Code on the taxable portion of a “premature distribution” from IRAs, IRA rollovers, SEP-IRAs and SIMPLE-IRAs. The tax penalty is increased to 25% in the case of distributions from SIMPLE-IRAs during the first two years of participation. Generally, an amount is a “premature distribution” unless the distribution is:
•
made on or after you reach age 59½;
•
made to a beneficiary on or after your death;
•
made upon your disability;
•
part of a series of substantially equal periodic payments for the life or life expectancy of you or you and the beneficiary;
•
made to pay certain medical expenses;
•
for health insurance premiums while unemployed;
•
for first home purchases (up to $10,000);
•
for qualified higher education expenses;
•
for qualified disaster tax relief distributions (up to $100,000);
•
for qualified reservist distributions;
•
for amounts levied by the IRS directly against your IRA;
•
for earnings associated with refunds of excess IRA contributions paid prior to your tax filing deadline;
•
for certain Roth IRA conversions; or
•
for transfer of IRA incident to divorce.
For more information regarding premature distributions, please reference IRS Publication 590 and consult your tax advisor.
Rollover IRAs
If you receive a lump-sum distribution from a qualified retirement plan, tax-sheltered annuity or governmental 457(b) plan, you may maintain the tax-deferred status of the distribution by rolling it over into an eligible retirement plan or IRA. You can accomplish this by electing a direct rollover from the plan, or you can receive the distribution and roll it over into an eligible retirement plan or IRA within 60 days. However, if you do not elect a direct rollover from the plan, the plan is required to withhold 20% of the distribution. This amount is sent to the IRS as income tax withholding to be credited against your taxes. Amounts received prior to age 59½ and not rolled over may be subject to an additional 10% excise tax. You may roll over amounts from a qualified plan directly to a Roth IRA. As part of this rollover, previously taxed deferred funds from the qualified plan are converted to after-tax funds under a Roth IRA. Generally, the entire rollover is taxable (unless it includes after-tax dollars) and is included in gross income in the year of the rollover/conversion. For more information, please see your tax advisor.
When considering all the IRA accounts you own in the aggregate, you may be limited to executing just one IRA-to-IRA indirect rollover per twelve month period. For more information, please see your tax advisor.
Roth IRAs
The Contract may be purchased to fund a Roth IRA. Contributions to a Roth IRA are not deductible from taxable income. Subject to certain limitations, a traditional IRA, SIMPLE-IRA or SEP-IRA may be converted into a Roth IRA or a distribution from such an arrangement may be rolled over to a Roth IRA. However, a conversion or a rollover to a Roth IRA is not excludable from gross income. If certain conditions are met, qualified distributions from a Roth IRA are tax-free. For more information, please contact your tax advisor.
Required Minimum Distributions for IRAs
The Required Minimum Distribution (RMD) regulations dictate when individuals must start taking payments from their IRA. Generally speaking, RMDs for IRAs must begin no later than April 1 following the close of the calendar year in which you turn 70½. Thereafter, the RMD is required no later than December 31 of each calendar year.

64


The RMD rules apply to traditional IRAs, as well as SEP-IRAs and SIMPLE-IRAs, during the lifetime and after the death of IRA owners. They do not, however, apply to Roth IRAs during the lifetime of the Roth IRA owner. If an individual owns more than one IRA, the RMD amount must be determined for each, but the actual distribution can be satisfied from a combination of one or more of the owner's IRAs (not applicable to Roth IRAs).
NOTE:
Contractual limitations exist that may limit the ability to satisfy an individual's multiple RMD obligations via this annuity. For details, see 4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) - Required Minimum Distribution (RMD) Program for GMWB Riders.
Failure to comply with the RMD rules can result in an excise tax penalty.
Withholding
Annuity benefit payments and other amounts received under the Contract are subject to income tax withholding unless the recipient elects not to have taxes withheld. The amounts withheld vary among recipients depending on the tax status of the individual and the type of payments from which taxes are withheld.
Notwithstanding the recipient’s election, withholding may be required on payments delivered outside the United States. Moreover, special “backup withholding” rules may require us to disregard the recipient’s election if the recipient fails to supply us with a “TIN” or taxpayer identification number (social security number for individuals), or if the Internal Revenue Service notifies us that the TIN provided by the recipient is incorrect.
11.
GENERAL INFORMATION ABOUT THE COMPANY
Corporate Organization and Operation
Principal Life Insurance Company
Principal Life Insurance Company is a stock life insurance company with authority to transact life and annuity business in all states of the United States and the District of Columbia. Our home office is located at: Principal Financial Group, Des Moines, Iowa 50392. We are a wholly owned subsidiary of Principal Financial Services, Inc., which in turn, is a wholly owned direct subsidiary of Principal Financial Group, Inc., a publicly-traded company.
On June 24, 1879, we were incorporated under Iowa law as a mutual assessment life insurance company named Bankers Life Association. We became a legal reserve life insurance company and changed our name to Bankers Life Company in 1911. In 1986, we changed our name to Principal Mutual Life Insurance Company. In 1998, we became Principal Life Insurance Company, a subsidiary stock life insurance company of Principal Mutual Holding Company, as part of a reorganization into a mutual insurance holding company structure. In 2001, Principal Mutual Holding Company converted to a stock company through a process called demutualization, resulting in our current organizational structure.
Principal Life Insurance Company Separate Account B
The Separate Account was established under Iowa law on January 12, 1970 and was registered as a unit investment trust with the SEC on July 17, 1970. This registration does not involve SEC supervision of the investments or investment policies of the Separate Account. We do not guarantee the investment results of the Separate Account. There is no assurance that the value of your Contract will equal the total of the payments you make to us.
The Separate Account is not affected by the rate of return of our General Account or by the investment performance of any of our other assets. Any income, gain, or loss (whether or not realized) from the assets of the Separate Account are credited to or charged against the Separate Account without regard to our other income, gains, or losses. Assets of the Separate Account attributed to the reserves and other liabilities under the Contract may not be charged with liabilities arising from any of our other businesses.
Any Contract obligations in excess of the Separate Account value (for example, annuity benefit payments, death benefit payment(s) and guaranteed minimum withdrawal benefit payments) become obligations of the General Account and will be subject to the rights of the Company’s other creditors and its overall claims paying ability.
The Separate Account is divided into divisions. The assets of each division invest in a corresponding underlying mutual fund. New divisions may be added and made available. Divisions may also be eliminated. These changes will be made in a manner that is consistent with applicable laws and regulations.


65


The Underlying Mutual Funds
The underlying mutual funds are registered under the Investment Company Act of 1940 as open-end investment management companies. The underlying mutual funds provide the investment vehicles for the Separate Account. A full description of the underlying mutual funds, the investment objectives, policies and restrictions, charges and expenses and other operational information are contained in the accompanying prospectuses (which should be read carefully before investing) and the Statement of Additional Information (“SAI”). You may request additional copies of these documents without charge from your registered representative or by calling us at 1-800-852-4450.
We purchase and sell shares of the underlying mutual fund for the Separate Account at their net asset value. Shares represent interests in the underlying mutual fund available for investment by the Separate Account. Each underlying mutual fund corresponds to one of the divisions. The assets of each division are separate from the others. A division’s performance has no effect on the investment performance of any other division.
The underlying mutual funds are NOT available to the general public directly. The underlying mutual funds are available only as investment options in variable life insurance policies or variable annuity contracts issued by life insurance companies and qualified plans. Some of the underlying mutual funds have been established by investment advisers that manage publicly traded mutual funds having similar names and investment objectives. While some of the underlying mutual funds may be similar to, and may in fact be modeled after publicly traded mutual funds, you should understand that the underlying mutual funds are not otherwise directly related to any publicly traded mutual fund. Consequently, the investment performance of any underlying mutual fund may differ substantially from the investment performance of a publicly traded mutual fund.
The Table of Separate Account Divisions included later in this prospectus contains a brief summary of the investment objectives and a listing of the advisor and, if applicable, sub-advisor for each division.
Deletion or Substitution of Separate Account Divisions
We reserve the right, within the law, to make additions, deletions and substitutions for the divisions. We will make no such substitution or deletion without first notifying you and obtaining approval of the appropriate insurance regulatory authorities and the SEC (to the extent required by 1940 Act).
If the shares of a division are no longer available for investment or if, in the judgment of our management, investment in a division becomes inappropriate for the purposes of our contract, we may eliminate the shares of a division and substitute shares of another division of the Trust or another open-end registered investment company. Substitution may be made with respect to both existing investments and the investment of future premium payments.
If we eliminate divisions, you may change allocation percentages and transfer any value in an affected division to another division(s) without charge. You may exercise this exchange privilege until the later of 60 days after a) the effective date of the additions, deletions and/or substitutions of the change, or b) the date you receive notice of the options available. You may only exercise this right if you have any value in the affected division(s).
We also reserve the right to establish additional divisions, each of which would invest in a separate underlying mutual fund with a specified investment objective.
Voting Rights
We vote shares of the underlying mutual funds owned by the Separate Account according to the instructions of Contract owners.
We will notify you of shareholder meetings of the mutual funds underlying the divisions in which you hold units. We will send you proxy materials and instructions for you to provide voting instructions to us. We will arrange for the handling and tallying of proxies received from you and other owners. If you give no voting instructions, we will vote those shares in the same proportion as shares for which we received instructions. Because there is no required minimum number of votes, a small number of votes can have a disproportionate effect.
We determine the number of fund shares that you may instruct us to vote by allocating one vote for each $100 of accumulated value in the division. Fractional votes are allocated for amounts less than $100. We determine the number of underlying fund shares you may instruct us to vote as of the record date established by the underlying mutual fund for its shareholder meeting. In the event that applicable law changes or we are required by regulators to disregard voting instructions, we may decide to vote the shares of the underlying mutual funds in our own right.

66


Legal Opinions
Legal matters applicable to the issue and sale of the Contracts, including our right to issue Contracts under Iowa Insurance Law, have been passed upon by Karen Shaff, Executive Vice President, General Counsel and Secretary.
Legal Proceedings
There are no legal proceedings pending for which the following would be adversely affected in a material way: Separate Account B, the Company; any subsidiary of the Company; principal underwriter; or depositor.
Other Variable Annuity Contracts
The Company currently offers other variable annuity contracts that participate in Separate Account B. In the future, we may designate additional group or individual variable annuity contracts as participating in Separate Account B.
Householding
To avoid sending duplicate copies of materials to owners, only one copy of the prospectus and annual and semi-annual reports for the funds will be mailed to owners having the same name and address on our records. The consolidation of these mailings, called householding, benefits us through reduced mailing expense. If you want to receive multiple copies of these materials, you may call us at 1-800-852-4450. You may also notify us in writing. Individual copies of prospectuses and reports will be sent to you within thirty (30) days after we receive your request to stop householding.
Payments to Financial Intermediaries
The Company pays compensation to broker-dealers, financial institutions, and other parties (“Financial Intermediaries”) for the sale of the Contract according to schedules in the sales agreements and other agreements reached between the Company and the Financial Intermediaries. Such compensation generally consists of commissions on premiums paid on the Contract. The Company and/or its affiliates may also pay other amounts (“Additional Payments”) that include, but are not limited to, marketing allowances, expense reimbursements, and educational payments. These Additional Payments are designed to provide incentives for the sale of the Contracts as well as other products sold by the Company and may influence the Financial Intermediaries or their registered representatives to recommend the purchase of this Contract over competing annuity contracts or other investment products. You may ask your registered representative about these differing and divergent interests, how your registered representative is personally compensated, and how your registered representative’s broker-dealer is compensated for soliciting applications for the Contract.
We and/or our affiliates provide services to and/or funding vehicles for welfare benefit plans, retirement plans and employer sponsored benefits. We and our affiliates may pay a bonus or other consideration or incentive to brokers or dealers:
•
if a participant in such a welfare benefit or retirement plan or an employee covered under an employer sponsored benefit purchases an individual product with the assistance of a registered representative of an affiliate of ours;
•
if a participant in such a retirement plan establishes a rollover individual retirement account with the assistance of a registered representative of an affiliate of ours;
•
if the broker or dealer sold the funding vehicle the welfare benefit or retirement plan or employer sponsored benefit utilizes; or
•
based on the broker's or dealer's relationship to the welfare benefit or retirement plan or employer sponsored benefit.
The broker or dealer may pay to its financial professionals some or all of the amounts we pay to the broker or dealer.

67


Service Arrangements and Compensation
The Company has entered into agreements with the distributors, advisers, and/or the affiliates of some of the mutual funds underlying the Contract and receives compensation for providing certain services including, but not limited to, distribution and operational support services, to the underlying mutual fund. Fees for these services are paid periodically (typically, quarterly or monthly) based on the average daily net asset value of shares of each fund held by the Separate Account and purchased at the Contract owners’ instructions. Because the Company receives such fees, it may be subject to competing interests in making these funds available as investment options under the Contract. The Company takes into consideration the anticipated payments from underlying mutual funds when it determines the charges assessed under the Contract. Without these payments, charges under the Contract are expected to be higher.
Mutual Fund Diversification
The United States Treasury Department has adopted regulations under Section 817(h) of the Internal Revenue Code which establishes standards of diversification for the investments underlying the Contracts. Under this Internal Revenue Code Section, Separate Account investments must be adequately diversified in order for the increase in the value of non-qualified contracts to receive tax-deferred treatment. In order to be adequately diversified, the portfolio of each underlying mutual fund must, as of the end of each calendar quarter or within 30 days thereafter, have no more than 55% of its assets invested in any one investment, 70% in any two investments, 80% in any three investments and 90% in any four investments. Failure of an underlying mutual fund to meet the diversification requirements could result in tax liability to non-qualified contract holders.
The investment opportunities of the underlying mutual funds could conceivably be limited by adhering to the above diversification requirements. This would affect all owners, including owners of Contracts for whom diversification is not a requirement for tax-deferred treatment.
State Regulation
The Company is subject to the laws of the State of Iowa governing insurance companies and to regulation by the Iowa Insurance Division. An annual statement in a prescribed form must be filed by March 1 in each year covering our operations for the preceding year and our financial condition on December 31 of the prior contract year. Our books and assets are subject to examination by the Commissioner of Insurance of the State of Iowa, or the Commissioner’s representatives, at all times. A full examination of our operations is conducted periodically by the National Association of Insurance Commissioners. Iowa law and regulations also prescribe permissible investments, but this does not involve supervision of the investment management or policy of the Company.
In addition, we are subject to the insurance laws and regulations of other states and jurisdictions where we are licensed to operate. Generally, the insurance departments of these states and jurisdictions apply the laws of the state of domicile in determining the field of permissible investments.
Independent Registered Public Accounting Firm
The financial statements of Principal Life Insurance Company Separate Account B and the consolidated financial statements of Principal Life Insurance Company are included in the SAI. Those statements have been audited by Ernst & Young LLP, independent registered public accounting firm, 801 Grand Avenue, Des Moines, Iowa 50309, for the periods indicated in their reports which also appear in the SAI.
Financial Statements
The consolidated financial statements of Principal Life Insurance Company which are included in the SAI should be considered only as they relate to our ability to meet our obligations under the Contract. They do not relate to investment performance of the assets held in the Separate Account.

68


12.
TABLE OF SEPARATE ACCOUNT DIVISIONS

AllianceBernstein Small/Mid Cap Value Division

Invests in:
AllianceBernstein Variable Products Series Small/Mid Cap Value Portfolio – Class A
Investment Advisor:
AllianceBernstein L.P.
Investment Objective:
seeks long-term growth of capital.

American Century VP Inflation Protection Division

Invests in:
American Century VP Inflation Protection Fund – Class II
Investment Advisor:
American Century Investment Management, Inc.
Investment Objective:
seeks long-term total return using a strategy that seeks to protect against U.S. inflation.

American Century VP Mid Cap Value Division

Invests in:
American Century VP Mid Cap Value Fund – Class II
Investment Advisor:
American Century Investment Management, Inc.
Investment Objective:
seeks long-term capital growth. Income is a secondary objective.

American Century VP Ultra Division

Invests in:
American Century VP Ultra Fund – Class II
Investment Advisor:
American Century Investment Management, Inc.
Investment Objective:
seeks long-term capital growth.

American Funds Insurance Series Global Small Capitalization Fund Division

Invests in:
American Funds Insurance Series Global Small Capitalization – Class 2
Investment Advisor:
Capital Research and Management Company
Investment Objective:
seeks long-term growth of capital.

American Funds Insurance Series New World Fund Division

Invests in:
American Funds Insurance Series New World Fund – Class 2
Investment Advisor:
Capital Research and Management Company
Investment Objective:
seeks long-term capital appreciation.

69


BlackRock Global Allocation Division

Invests in:
BlackRock Global Allocation V.I. Fund – Class III
Investment Advisor:
BlackRock Investment Management, LLC
Investment Objective:
seeks high total investment return.

BlackRock iShares Alternative Strategies Division

Invests in:
BlackRock iShares Alternative Strategies V.I. – Class III
Investment Advisor:
BlackRock Advisors, LLC
Investment Objective:
seeks to achieve long term growth of capital and risk adjusted returns.

BlackRock iShares Dynamic Allocation Division

Invests in:
BlackRock iShares Dynamic Allocation V.I. – Class III
Investment Advisor:
BlackRock Advisors, LLC
Investment Objective:
seeks to provide total return.

BlackRock iShares Dynamic Fixed Income Division

Invests in:
BlackRock iShares Dynamic Fixed Income V.I. – Class III
Investment Advisor:
BlackRock Advisors, LLC
Investment Objective:
seeks to provide total return.

BlackRock iShares Equity Appreciation Division

Invests in:
BlackRock iShares Equity Appreciation V.I. – Class III
Investment Advisor:
BlackRock Advisors, LLC
Investment Objective:
seeks to provide growth of capital.

Columbia Limited Duration Credit Division

Invests in:
Columbia VP Limited Duration Credit Fund – Class 2
Investment Advisor:
Columbia Management Investment Advisors, LLC
Investment Objective:
seeks to provide shareholders with a level of current income consistent with preservation of capital.

70


Delaware Limited Term Diversified Income Division

Invests in:
Delaware VIP Limited Term Diversified Income Series – Service Class
Investment Advisor:
Delaware Management Company
Investment Objective:
seeks maximum return consistent with reasonable risk.

Delaware Small Cap Value Division

Invests in:
Delaware VIP Small Cap Value Series – Service Class
Investment Advisor:
Delaware Management Company
Investment Objective:
seeks capital appreciation.

Deutsche Small Mid Cap Value Division

Invests in:
Deutsche Small Mid Cap Value VIP – Class B
Investment Advisor:
Deutsche Investment Management Americas Inc.
Investment Objective:
seeks long-term capital appreciation.

Dreyfus Investment Portfolio Technology Growth Division

Invests in:
Dreyfus Investment Portfolio Technology Growth Portfolio – Service Shares
Investment Advisor:
The Dreyfus Corporation
Investment Objective:
seeks capital appreciation.

Fidelity VIP Contrafund® Division

Invests in:
Fidelity VIP Contrafund® Portfolio – Service Class 2
Investment Advisor:
Fidelity Management & Research Company
Investment Objective:
seeks long-term capital appreciation.

Fidelity VIP Equity-Income Division

Invests in:
Fidelity VIP Equity-Income Portfolio – Service Class 2
Investment Advisor:
Fidelity Management & Research Company
Investment Objective:
seeks reasonable income. The fund will also consider the potential for capital appreciation. The fund’s goal is to achieve a yield which exceeds the composite yield on the securities comprising the Standard & Poor’s 500(sm) Index (S&P 500®).


71


Fidelity VIP Growth Division

Invests in:
Fidelity VIP Growth Portfolio – Service Class 2
Investment Advisor:
Fidelity Management & Research Company
Investment Objective:
seeks to achieve capital appreciation.

Fidelity VIP Mid Cap Division

Invests in:
Fidelity VIP Mid Cap Portfolio – Service Class 2
Investment Advisor:
Fidelity Management & Research Company
Investment Objective:
seeks long-term growth of capital.

Fidelity VIP Overseas Division

Invests in:
Fidelity VIP Overseas Portfolio – Service Class 2
Investment Advisor:
Fidelity Management & Research Company
Investment Objective:
seeks long-term growth of capital.

Franklin Global Real Estate VIP Division

Invests in:
Franklin Global Real Estate VIP Fund – Class 2
Investment Advisor:
Franklin Templeton Institutional LLC
Investment Objective:
seeks high total return.

Franklin Small Cap Value VIP Division

Invests in:
Franklin Templeton VIP Trust – Franklin Small Cap Value VIP Fund – Class 2
Investment Advisor:
Franklin Advisers Services, LLC.
Investment Objective:
seeks long-term total return.

Goldman Sachs VIT Mid Cap Value Division

Invests in:
Goldman Sachs VIT – Goldman Sachs Mid Cap Value Fund – Institutional Shares
Investment Advisor:
Goldman Sachs Asset Management, L.P.
Investment Objective:
seeks long-term capital appreciation.


72


Goldman Sachs VIT Small Cap Equity Insights Division

Invests in:
Goldman Sachs VIT – Goldman Sachs Structured Small Cap Equity Fund – Institutional Shares
Investment Advisor:
Goldman Sachs Asset Management, L.P.
Investment Objective:
seeks long-term growth of capital.

Guggenheim Floating Rate Strategies Division

Invests in:
Guggenheim Investments VIF – Series F (Guggenheim Floating Rate Strategies Series)
Investment Advisor:
Guggenheim Partners Investment Management LLC d/b/a Guggenheim Investments
Investment Objective:
seeks to provide a high level of current income while maximizing total return.

Guggenheim Investments Global Managed Futures Strategy Division

Invests in:
Guggenheim Investments VIF Global Managed Futures Strategy Fund
Investment Advisor:
Security Investors, LLC, which operates under the name of Guggenheim Investments
Investment Objective:
seeks to generate positive returns over time.

Guggenheim Investments Long Short Equity Division

Invests in:
Guggenheim Investments VIF Long Short Equity Fund
Investment Advisor:
Security Investors, LLC, which operates under the name of Guggenheim Investments
Investment Objective:
seeks long-term capital appreciation.

Guggenheim Investments Multi-Hedge Strategies Division

Invests in:
Guggenheim Investments VIF Multi-Hedge Strategies Fund
Investment Advisor:
Security Investors, LLC, which operates under the name of Guggenheim Investments
Investment Objective:
seeks long-term capital appreciation with less risk than traditional equity funds.


73


Guggenheim Macro Opportunities Division

Invests in:
Guggenheim Investments VIF – Series M (Guggenheim Macro Opportunities Series)
Investment Advisor:
Guggenheim Partners Investment Management, LLC d/b/a Guggenheim Investments
Investment Objective:
seeks to provide total return, comprised of current income and capital appreciation.

Invesco International Growth Division

Invests in:
Invesco V.I. International Growth Fund – Series I Shares
Investment Advisor:
Invesco Advisors, Inc.
Investment Objective:
seeks long-term growth of capital.

Invesco Small Cap Equity Division

Invests in:
Invesco V.I. Small Cap Equity Fund – Series I Shares
Investment Advisor:
Invesco Advisors, Inc.
Investment Objective:
seeks long-term growth of capital.

Invesco Value Opportunities Division

Invests in:
Invesco V.I. Value Opportunities Division Fund – Series I Shares
Investment Advisor:
Invesco Advisors, Inc.
Investment Objective:
seeks long-term growth of capital.

MFS VIT International Value Division

Invests in:
MFS® VIT International Value Portfolio – Service Class
Investment Advisor:
Massachusetts Financial Services Company
Investment Objective:
seeks capital appreciation.

MFS VIT New Discovery Division

Invests in:
MFS® VIT New Discovery Series – Service Class
Investment Advisor:
Massachusetts Financial Services Company
Investment Objective:
seeks capital appreciation.


74


MFS VIT Utilities Division

Invests in:
MFS® VIT Utilities Series – Service Class
Investment Advisor:
Massachusetts Financial Services Company
Investment Objective:
seeks total return.

MFS VIT Value Division

Invests in:
MFS® VIT Value Series – Service Class
Investment Advisor:
Massachusetts Financial Services Company
Investment Objective:
seeks capital appreciation.

Neuberger Berman AMT Large Cap Value Division

Invests in:
Neuberger Berman AMT Large Cap Value Portfolio – Class I
Investment Advisor:
Neuberger Berman LLC through a sub-advisory agreement with Neuberger Berman Management LLC
Investment Objective:
seeks growth of capital.

Neuberger Berman AMT Socially Responsive Division

Invests in:
Neuberger Berman AMT Socially Responsive Portfolio – Class I
Investment Advisor:
Neuberger Berman LLC through a sub-advisory agreement with Neuberger Berman Management LLC
Investment Objective:
seeks long-term growth of capital by investing primarily in securities of companies that meet the fund’s financial criteria and social policy.

PIMCO All Asset Division

Invests in:
PIMCO VIT All Asset Portfolio – Administrative Class
Investment Advisor:
Research Affiliates, LLC through a sub-advisory agreement with Pacific Investment Management Company LLC (PIMCO)
Investment Objective:
seeks maximum real return consistent with preservation of real capital and prudent investment management.

PIMCO High Yield Division

Invests in:
PIMCO VIT High Yield Portfolio – Administrative Class
Investment Advisor:
Pacific Investment Management Company LLC
Investment Objective:
seeks maximum total return, consistent with preservation of capital and prudent investment management.

75


PIMCO Low Duration Division

Invests in:
PIMCO VIT Low Duration Portfolio – Advisor Class
Investment Advisor:
Pacific Investment Management Company LLC
Investment Objective:
seeks maximum total real return, consistent with preservation of capital and prudent investment management.

PIMCO Total Return Division

Invests in:
PIMCO VIT Total Return Portfolio – Administrative Class
Investment Advisor:
Pacific Investment Management Company, LLC
Investment Objective:
seeks maximum total return, consistent with preservation of capital and prudent investment management.

Bond & Mortgage Securities Division

Invests in:
Principal Variable Contracts Funds Bond & Mortgage Securities Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks to provide current income and, as a secondary objective, capital appreciation.

Diversified Balanced Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Diversified Balanced Account – Class 2
Investment Advisor:
Principal Management Corporation
Investment Objective:
seeks to provide as high a level of total return (consisting of reinvested income and capital appreciation) as is consistent with reasonable risk.

Diversified Balanced Managed Volatility Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Diversified Balanced Managed Volatility Account – Class 2
Investment Advisor:
Principal Management Corporation
Investment Objective:
seeks to provide as high a level of total return (consisting of reinvested income and capital appreciation) as is consistent with reasonable risk, with an emphasis on managing volatility.


76


Diversified Growth Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Diversified Growth Account – Class 2
Investment Advisor:
Principal Management Corporation
Investment Objective:
seeks to provide long-term capital appreciation.

Diversified Growth Managed Volatility Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Diversified Growth Managed Volatility Account – Class 2
Investment Advisor:
Principal Management Corporation
Investment Objective:
seeks to provide long-term capital appreciation, with an emphasis on managing volatility.

Diversified Income Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Diversified Income Account – Class 2
Investment Advisor:
Principal Management Corporation
Investment Objective:
seeks to provide as high a level of total return (consisting of reinvested income and capital appreciation) as is consistent with reasonable risk.

Diversified International Division

Invests in:
Principal Variable Contracts Funds Diversified International Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks long-term growth of capital.

Equity Income Division

Invests in:
Principal Variable Contracts Funds Equity Income Account – Class 1
Investment Advisor:
Edge Asset Management, Inc. through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks to provide a relatively high level of current income and long-term growth of income and capital.


77


Government & High Quality Bond Division

Invests in:
Principal Variable Contracts Funds Government & High Quality Bond Account – Class 1
Investment Advisor:
Edge Asset Management, Inc. through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks a high level of current income consistent with safety and liquidity.

Income Division

Invests in:
Principal Variable Contracts Funds Income Account – Class 1
Investment Advisor:
Edge Asset Management
Investment Objective:
seeks to provide a high level of current income consistent with preservation of capital.

International Emerging Markets Division

Invests in:
Principal Variable Contracts Funds International Emerging Markets Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks long-term growth of capital.

LargeCap Growth Division

Invests in:
Principal Variable Contracts Funds LargeCap Growth Account – Class 1
Investment Advisor:
Columbus Circle Investors through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks long-term growth of capital.

LargeCap Growth I Division

Invests in:
Principal Variable Contracts Funds LargeCap Growth Account I – Class 1
Investment Advisor:
T. Rowe Price Associates through a sub-advisory agreement and Brown Investment Advisory Incorporated through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks long-term growth of capital.


78


LargeCap S&P 500 Index Division

Invests in:
Principal Variable Contracts Funds LargeCap S&P 500 Index Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks long-term growth of capital.

LargeCap Value Division

Invests in:
Principal Variable Contracts Funds LargeCap Value Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks long-term growth of capital.

MidCap Division (no longer available to new investors with an application signature dated on or after 08/16/2013)

Invests in:
Principal Variable Contracts Funds MidCap Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks long-term growth of capital.

Money Market Division

Invests in:
Principal Variable Contracts Funds Money Market Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks as high a level of current income as is considered consistent with preservation of principal and maintenance of liquidity.

Principal Capital Appreciation Division

Invests in:
Principal Variable Contracts Funds Principal Capital Appreciation Account – Class 1
Investment Advisor:
Edge Asset Management, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks to provide long-term growth capital.


79


Principal LifeTime 2010 Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Principal LifeTime 2010 Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks a total return consisting of long-term growth of capital and current income.

Principal LifeTime 2020 Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Principal LifeTime 2020 Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks a total return consisting of long-term growth of capital and current income.

Principal LifeTime 2030 Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Principal LifeTime 2030 Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks a total return consisting of long-term growth of capital and current income.

Principal LifeTime 2040 Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Principal LifeTime 2040 Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks a total return consisting of long-term growth of capital and current income.

Principal LifeTime 2050 Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Principal LifeTime 2050 Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks a total return consisting of long-term growth of capital and current income.


80


Principal LifeTime Strategic Income Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Principal LifeTime Strategic Income Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks current income, and as a secondary objective, capital appreciation.

Real Estate Securities Division

Invests in:
Principal Variable Contracts Funds Real Estate Securities Account – Class 1
Investment Advisor:
Principal Real Estate Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks to generate a total return.

Short-Term Income Division

Invests in:
Principal Variable Contracts Funds Short-Term Income Account – Class 1
Investment Advisor:
Edge Asset Management, Inc. through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks to provide as high a level of current income as is consistent with prudent investment management and stability of principal.

SmallCap Blend Division

Invests in:
Principal Variable Contracts Funds SmallCap Blend Account – Class 1
Investment Advisor:
Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks long-term growth of capital.

SAM Balanced Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Strategic Asset Management Portfolios –Balanced Portfolio – Class 1
Investment Advisor:
Edge Asset Management, Inc. through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks to provide a high level of total return (consisting of reinvested income and capital appreciation), as is consistent with reasonable risk. In general, relative to the other Portfolios, the Balanced Portfolio should offer investors the potential for a medium level of income and medium level of capital growth, while exposing them to a medium level of principal risk.


81


SAM Conservative Balanced Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Strategic Asset Management Portfolios – Conservative Balanced Portfolio – Class 1
Investment Advisor:
Edge Asset Management, Inc. through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks to provide a high level of total return (consisting of reinvestment of income and capital appreciation), consistent with a moderate degree of principal risk. In general, relative to the other Portfolios, the Conservative Balanced Portfolio should offer investors the potential for a medium to high level of income and a medium to low level of capital growth, while exposing them to a medium to low level of principal risk.

SAM Conservative Growth Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Strategic Asset Management Portfolios – Conservative Growth Portfolio – Class 1
Investment Advisor:
Edge Asset Management, Inc. through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks to provide long-term capital appreciation. In general, relative to the other Portfolios, the Conservative Growth Portfolio should offer investors the potential for a low to medium level of income and a medium to high level of capital growth, while exposing them to a medium to high level of principal risk.

SAM Flexible Income Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Strategic Asset Management Portfolios – Flexible Income Portfolio – Class 1
Investment Advisor:
Edge Asset Management, Inc. through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks to provide a high level of total return (consisting of reinvestment of income with some capital appreciation). In general, relative to the other Portfolios, the Flexible Income Portfolio should offer investors the potential for a high level of income and a low level of capital growth, while exposing them to a low level of principal risk.

SAM Strategic Growth Division (This underlying mutual fund is a fund of funds.)

Invests in:
Principal Variable Contracts Funds Strategic Asset Management Portfolios – Strategic Growth Portfolio – Class 1
Investment Advisor:
Edge Asset Management, Inc. through a sub-advisory agreement with Principal Management Corporation
Investment Objective:
seeks to provide long-term capital appreciation. In general, relative to the other Portfolios, the Strategic Growth Portfolio should offer investors the potential for a high level of capital growth, and a corresponding level of principal risk.


82


Rydex Commodities Strategy Division

Invests in:
Rydex VI Commodities Strategy Fund
Investment Advisor:
Security Investors, LLC, which operates under the name of Guggenheim Investments
Investment Objective:
seeks to provide investment results that correlate, before fees and expenses, to the performance of a benchmark for commodities.

T. Rowe Price Blue Chip Growth Division

Invests in:
T. Rowe Price Blue Chip Growth Portfolio – II
Investment Advisor:
T. Rowe Price Associates Inc.
Investment Objective:
seeks to provide long-term capital growth. Income is a secondary objective.

T. Rowe Price Health Sciences Division (no longer available to new investors with an application signature date on or after 06/01/2015)

Invests in:
T. Rowe Price Health Sciences Portfolio – II
Investment Advisor:
T. Rowe Price Associates Inc.
Investment Objective:
seeks long-term capital appreciation.

Templeton Global Bond VIP Division

Invests in:
Franklin Templeton VIP Trust – Templeton Global Bond VIP Fund – Class 4
Investment Advisor:
Franklin Advisors, Inc.
Investment Objective:
seeks high current income, consistent with preservation of capital. Capital appreciation is a secondary consideration.

Van Eck VIP Global Hard Assets Division

Invests in:
Van Eck VIP Global Hard Assets Fund – Class S Shares
Investment Advisor:
Van Eck Associates Corporation
Investment Objective:
seeks long-term capital appreciation by investing primarily in "hard asset" securities. Income is a secondary consideration.


83


13.
REGISTRATION STATEMENT
This prospectus (Part A of the registration statement) omits some information contained in the Statement of Additional Information (Part B of the registration statement) and Part C of the registration statement which the Company has filed with the SEC. The SAI is hereby incorporated by reference into this prospectus. You may request a free copy of the SAI by contacting your registered representative or calling us at 1-800-852-4450.
Information about the Contract (including the Statement of Additional Information and Part C of the registration statement) can be reviewed and copied at the Securities and Exchange Commission’s Public Reference Room in Washington, D.C. Information on the operation of the public reference room may be obtained by calling the Commission at 202-551-8090. Reports and other information about the Contract are available on the Commission’s internet site at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the Commission, 100 F Street NE, Washington, D.C. 20549-0102.
The registration numbers for the Contract are 333-188293 and 811-02091.
14.
TABLE OF CONTENTS OF THE SAI
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY
3
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
3
PRINCIPAL UNDERWRITER
3
CALCULATION OF PERFORMANCE DATA
3
TAXATION UNDER CERTAIN RETIREMENT PLANS
10
Principal Life Insurance Company Separate Account B
 
Report of Independent Registered Public Accounting Firm
13
Financial Statements
14
Principal Life Insurance Company
 
Report of Independent Registered Public Accounting Firm
195
Financial Statements
196

To obtain a copy of the Statement of Additional Information, free of charge, write or telephone:

Princor Financial Services Corporation
a company of
the Principal Financial Group
Des Moines, IA 50392-2080
Telephone: 1-800-852-4450

84


APPENDIX A – PRINCIPAL VARIABLE ANNUITY EXCHANGE OFFER

Principal Variable Annuity Exchange Offer (“exchange offer”)

This exchange offer was made available effective January 4, 2010. Original owners of an eligible Principal variable annuity contract (“old contract”) may elect to exchange their old contract for a new Principal Investment Plus Variable Annuity contract ("new contract") subject to the exchange offer terms and conditions. To determine if it is in your best interest to participate in the exchange offer, we recommend that you consult with your tax advisor and financial professional before electing to participate in the exchange offer.

You are eligible to participate in the exchange offer when:
•
Your old contract is not subject to any surrender charges; and
•
Available in your state.

Exchange Offer Terms and Conditions

•
You must qualify for and elect either the Principal Income Builder 3 or Principal Income Builder 10 rider. To qualify for a GMWB rider, you (or the annuitant if the original owner is a non-natural person) must be between the ages of 45 and 80.
•
You must receive a current prospectus for the new contract.
•
You must complete all required exchange offer forms.
•
The Premium Payment Credit Rider is not available on the new contract.
•
If we approve your application to participate in the exchange offer, you are directing that all of your investment options under your old contract be terminated. The resulting amount will be transferred to your new contract and allocated as you direct. Election of the Principal Income Builder 3 or Principal Income Builder 10 rider results in restriction of your Contract investment options to the more limited GMWB investment options (review this prospectus in its entirety for full details).
•
The amount being exchanged to the new contract cannot be allocated to the DCA Plus accounts.
•
Any new premium payments (excluding the amount transferred under this exchange offer) you make to the new contract are subject to surrender charges.
•
At Contract issue, the death benefit under your new contract will be the greater of the death benefit under your old contract on the exchange date or the death benefit under the new contract.
•
We reserve the right to require you to return your old contract to us. Upon issuing you a new contract, your old contract will terminate.
•
The exchange offer is not available for partial exchanges.
•
Only one old contract can be exchanged for one new contract.

Exchange Offer Duration

Currently, there is no closing date for the exchange offer. We reserve the right, however, to modify the exchange offer commencement date and to modify or terminate the exchange offer upon reasonable written notice to you.

IMPORTANT CONSIDERATIONS

An exchange may or may not be in your best interest.

The features and benefits, investment options, and charges and deductions of the new contract differ from those of your old contract. For your convenience, we have provided the following chart with a side-by-side summary comparison of the features and costs of your old contract and the new contract available under the exchange offer.

There may be additional differences important for you to consider prior to making an exchange. You should carefully review this prospectus and compare it to the old contract prospectus before deciding to make an exchange. To obtain a prospectus, please contact us at 1-800-852-4450.


Appendix A – Principal Variable Annuity     85
Exchange Offer

Summary Comparison* of Principal Variable Annuity and
Investment Plus Variable Annuity with GMWB Rider

To participate in the exchange offer you must elect either the Principal Income Builder 3 or Principal Income Builder 10 rider.
A. Features
Principal Variable Annuity
Investment Plus Variable Annuity
GMWB Rider(s)




Not available




Principal Income Builder 3

Principal Income Builder 10


GMWB investment options
Not applicable
Diversified Balanced Managed Volatility Account
Diversified Growth Managed Volatility Account
Diversified Balanced Account
Diversified Growth Account
Diversified Income Account
Fixed Rate Options (including 2 dollar-cost averaging options)
1 year - Fixed Account
6 month - DCA Plus account
12 month - DCA Plus account
1 year - Fixed Account
6 month - DCA Plus account***
12 month - DCA Plus account***
Automatic Portfolio Rebalancing
Quarterly, Semi-Annually, Annually
Calendar Quarterly (required with GMWB riders)
No. of Free Division Transfers/ contract year
12
1
B. Annuitization
Principal Variable Annuity
Investment Plus Variable Annuity
Annuity Benefit Payments First Available
Any time
Any time on/after the first Contract anniversary
Annuity Benefit Payments
Fixed annuity benefit payments
Same
Annuity Mortality Table
1983a Annuity Mortality Table
Annuity 2000 Mortality Table
Annuity Benefit Payment Options
Fixed period; life income; life income with fixed period; custom options
Same
C. Death Benefit
Principal Variable Annuity
Investment Plus Variable Annuity
Death Benefit
An amount equal to the greatest of
(i) total premium payments less surrenders, or
(ii) Contract value, or
(iii) 7 year Step-Up

For partial surrenders from old contracts prior to November 23, 2003, the death benefit is reduced by the amount of each withdrawal.

For partial surrenders from old contracts issued on or after November 23, 2003, the death benefit is reduced proportionately for each withdrawal.
An amount equal to the greatest of
(i) total premium payments less surrenders, or
(ii) Contract value, or
(iii) 7 year Step-Up

For partial surrenders, withdrawals that are not For Life excess withdrawals will reduce the GMWB Death Benefit by the amount of withdrawal. Any For Life excess withdrawal amounts reduce the GMWB Death Benefit proportionately.

See the Death Benefit section in this appendix for more details.
Optional Enhanced Death Benefit Rider
Available
Not available
Payable
1st owner or annuitant to die
1st owner to die


Appendix A – Principal Variable Annuity     86
Exchange Offer

D. Fees and Charges
Principal Variable Annuity
Investment Plus Variable Annuity
Annual Fee (waived for Contracts with accumulated value of $30,000 or more)
Lesser of $30 or 2% of Contract accumulated value
Same
Mortality and Expense Risks Charge**
1.25%
Same
Administration Charge** (on an annual basis)
Maximum: 0.15%

Current: 0.05%
Maximum: 0.15%

Current: 0.15%
Available Underlying Mutual Fund Expenses****
Maximum Annual: 8.32%

Minimum Annual: 0.25%
Maximum Annual: 0.67%

Minimum Annual: 0.56%
Principal Income Builder 3 Rider Charge – Taken as % of average quarterly For Life withdrawal benefit base.

-OR-

Principal Income Builder 10 Rider Charge – Taken as % of average quarterly For Life withdrawal benefit base.*****
Not available






Not available
Maximum Annual: 1.65%

Current Annual: 1.05%




Maximum Annual: 2.00%

Current Annual: 1.25%
E. Transaction Charges
Principal Variable Annuity
Investment Plus Variable Annuity
Surrender Charge Period and % of amount surrendered (applies only to new premium payments)
7 years (6,6,6,5,4,3,2)

9 years (8,8,8,8,7,6,5,4,3) if you elected the Purchase Payment Credit Rider
7 years (6,6,6,5,4,3,2)

Premium Payment Credit Rider not available
Unscheduled Partial Surrender
Maximum: lesser of $25 or 2% of each unscheduled partial surrender after the 1st in a contract year.

Current: $0/0%
Maximum: lesser of $25 or 2% of each unscheduled partial surrender after the 12th in a contract year.


Current $0/0%
Unscheduled Transfers
Maximum: lesser of $30 or 2% of each unscheduled transfer after the 12th in a contract year.

Current: $0/0%
Maximum: lesser of $25 or 2% of each unscheduled transfer after the 1st in a contract year.

Current: $0/0%

*
Does not reflect state variations.
**
Charges taken daily as a percentage of the average daily Separate Account division value.
***
Only available for new premium payments. The DCA Plus Accounts are not available for the amount being exchanged.
****
For the new contract, only maximum and minimum charges for the GMWB investment options are reflected.
*****
For applications signed before June 1, 2015, the PIB 10 rider includes an Investment Back benefit and rider charges are based on the Investment Back withdrawal benefit base. For applications signed on or after June 1, 2015, the PIB 10 rider no longer includes an Investment Back benefit and the rider charges are based on the For Life withdrawal benefit base.


Appendix A – Principal Variable Annuity     87
Exchange Offer

Charges and Expenses
The new contract and your old contract have different annual expenses, different transaction charges, and different investment options that may result in different underlying mutual fund expenses.
Surrender Charges
Under the exchange offer, surrender charges will not apply on any amounts transferred from the old contract to the new contract. Surrender charges under the new contract will only apply to new contract premium payments.
Death Benefit
The death benefit in the new contract will be calculated as specified in the prospectus for the new contract. At the time of the exchange, the death benefit from the old contract will be transferred to the new contract and will be adjusted for new premium payments made and withdrawals taken under the new contract.
Upon your death, we will pay the greater of the new contract death benefit or the old contract death benefit adjusted as described above.
GMWB Rider
The new contract offers GMWB riders (Principal Income Builder 3 or Principal Income Builder 10) not available under the old contract. A GMWB rider allows you to take certain guaranteed annual withdrawals, regardless of your Contract accumulated value.
Your Contract can only have one GMWB rider. You must qualify for and elect either the Principal Income Builder 3 or Principal Income Builder 10 rider when you purchase the new contract.
Once elected, the Principal Income Builder 3 or Principal Income Builder 10 rider may not be terminated for 5 contract years following the rider effective date.
Election of a GMWB rider results in restriction of your Contract investment options to the more limited GMWB investment options (additional information is included in the new contract prospectus). The GMWB investment options reflect a balanced investment objective that is intended to support the rider guarantees. If your investment objective is aggressive growth, the rider investment restrictions may not support your investment objective.
Principal Income Builder 3
The Principal Income Builder 3 rider offers an annual Step-Up feature. The GMWB Step-Up can increase your rider withdrawal benefit payments if your Contract accumulated value increases. The Contract accumulated value increases whenever additional premium payments are added or the division values rise with market growth.
The Principal Income Builder 3 rider also offers a 3-year GMWB Bonus. The GMWB Bonus rewards you annually for not taking a withdrawal in the first 3 years of the rider. The GMWB Bonus amount will provide an increase to your rider withdrawal benefit payments. The GMWB Bonus does not increase your Contract accumulated value.
The Principal Income Builder 3 rider provides your beneficiary(ies) with the GMWB Death Benefit.
Principal Income Builder 10
The Principal Income Builder 10 rider offers an annual Step-Up feature. The GMWB Step-Up can increase your rider withdrawal benefit payments if your Contract accumulated value increases. The Contract accumulated value increases whenever additional premium payments are made or the division values rise with market growth.
The Principal Income Builder 10 rider also offers a 10-year GMWB Bonus. The GMWB Bonus rewards you annually for not taking a withdrawal in the first 10 years of the rider. The GMWB Bonus amount will provide an increase to your rider withdrawal benefit payments. The GMWB Bonus does not increase your Contract accumulated value.
It is important that you review the new contract prospectus in its entirety for additional information regarding the Principal Income Builder 3 and Principal Income Builder 10 riders and whether a GMWB rider is appropriate for your needs.


Appendix A – Principal Variable Annuity     88
Exchange Offer

Tax Matters
Although we believe that an exchange as described in this appendix will not be a taxable event for Federal tax purposes, we recommend that you consult your tax advisor before electing to participate in the exchange offer.
There may be differences between your old contract, as amended by tax-qualified retirement plan endorsements, and the new contract, as amended by similar qualified plan endorsements. If you are using the old contract in connection with a tax-qualified retirement plan, you should consult a tax advisor before electing to participate in the exchange offer. See 10. FEDERAL TAX MATTERS section of this prospectus.

Appendix A – Principal Variable Annuity     89
Exchange Offer

APPENDIX B – INVESTMENT PLUS VARIABLE ANNUITY GMWB EXCHANGE OFFER
IPVA GMWB Exchange Offer ("GMWB Exchange Offer")
This GMWB Exchange Offer is available January 20, 2014. Original owners of an eligible Principal Investment Plus Variable Annuity contract (“old contract”) may elect to exchange their old contract for a new Principal Investment Plus Variable Annuity contract ("new contract") subject to the GMWB Exchange Offer terms and conditions below. To determine if it is in your best interest to participate in the GMWB Exchange Offer, we recommend that you consult with your tax advisor and financial professional before electing to participate in the GMWB Exchange Offer. Please contact your registered representative or call us at 1-800-852-4450 if you have any questions.
You are eligible to participate in the GMWB Exchange Offer when:
•
The old contract doesn't have a Guaranteed Minimum Withdrawal Benefit ("GMWB") rider or the old contract has a GMWB 1 rider (Investment Protector Plus); and
•
Your old contract is not subject to any surrender charges; and
•
The GMWB Exchange Offer is available in your state.
GMWB Exchange Offer Terms and Conditions
•
You must qualify for and elect either the Principal Income Builder 3 or Principal Income Builder 10 rider (currently being marketed by us). To qualify for a GMWB rider, you (or the annuitant if the original owner is a non-natural person) must be between the ages of 45 and 80.
•
You must receive a current prospectus for the new contract.
•
You must complete all required GMWB Exchange Offer forms.
•
The Premium Payment Credit Rider is not available on the new contract.
•
If we approve your application to participate in the GMWB Exchange Offer, you are directing that all of your investment options under your old contract be terminated. The resulting amount will be transferred to your new contract and allocated as you direct. Election of the Principal Income Builder 3 or Principal Income Builder 10 rider results in restriction of your Contract investment options to the more limited GMWB investment options (review the new contract prospectus in its entirety for full details).
•
Any new premium payments (excluding the amount transferred under this GMWB Exchange Offer) you make to the new contract are subject to surrender charges.
•
The amount being exchanged to the new contract cannot be allocated to the DCA Plus accounts. However, new premium payments may be allocated to the DCA Plus accounts.
•
At Contract issue, the death benefit under your new contract will be the greater of the death benefit under your old contract on the exchange date or the death benefit under the new contract.
•
Upon issuing you a new contract, your old contract will terminate.
•
The GMWB Exchange Offer is not available for partial exchanges.
•
Only one old contract can be exchanged for one new contract.
GMWB Exchange Offer Duration
Currently, there is no closing date for the GMWB Exchange Offer. We reserve the right, however, to modify the GMWB Exchange Offer commencement date and to modify or terminate the GMWB Exchange Offer upon reasonable written notice to you.
IMPORTANT CONSIDERATIONS
An exchange may or may not be in your best interest.

If you currently have the GMWB 1 rider with your old contract, this GMWB Exchange Offer may be appropriate if you:
•
Do not intend to take withdrawals in the near future and want to benefit from the GMWB Bonus feature.
•
Want to benefit from potential annual increases to your rider values instead of every 5 years with the GMWB 1 rider.
•
Want the ability to elect the Joint Life benefit instead of only Single Life with the GMWB 1 rider.
•
Want to protect against the risk that your Contract accumulated value could fall below your investment due to market decline.


Appendix B – Investment Plus Variable Annuity     90
GMWB Exchange Offer

If you currently do not have a GMWB rider with your old contract, this GMWB Exchange Offer may be appropriate if you:
•
Do not intend to take withdrawals in the near future and want to benefit from the GMWB Bonus feature.
•
Want to benefit from potential annual increases in your rider values that match the growth of your Contract accumulated value.
•
Want to protect against the risk of you or your spouse outliving your income.
•
Want to protect against the risk that your Contract accumulated value could fall below your investment due to market decline.
The features and benefits, investment options, and charges and deductions of the new contract may differ from those of your old contract. For your convenience, we have provided the following chart with a side-by-side summary comparison of the features and costs of your old contract and the new contract available under the GMWB Exchange Offer.
There may be additional differences important for you to consider prior to making an exchange. You should carefully review the new contract prospectus and compare it to the old contract prospectus before deciding to make an exchange. To obtain a prospectus, please contact us at 1-800-852-4450.
Summary Comparison* of Old Contract and New Contract
To participate in the GMWB Exchange Offer you must elect either the Principal Income Builder 3 or Principal Income Builder 10 rider.
A. GMWB Rider Features
Old Investment Plus Variable Annuity
New Investment Plus Variable Annuity**
GMWB Rider(s) (applicable to this offer)

GMWB 1 (when applicable)

Principal Income Builder 3

Principal Income Builder 10
Guaranteed Minimum Withdrawal Benefits
• Investment Back
• For Life (“Single Life”)
Principal Income Builder 3:
• For Life (“Single Life” or
   “Joint Life”)

Principal Income Builder 10:
• For Life (“Single Life” or
   “Joint Life”)
Annual Withdrawal Limits
• Investment Back - 7.00% of the
   the Investment Back
   withdrawal benefit base
• For Life - 5.00% of the For
   Life withdrawal benefit base
   
Principal Income Builder 3 and Principal Income Builder 10:
•    “Single Life” — tiered percentages based on age at first withdrawal, calculated as a percentage of the For Life withdrawal benefit base
•    “Joint Life” — tiered percentages based on age at first withdrawal, calculated as a percentage of the For Life withdrawal benefit base

NOTE: Refer to GMWB Percentages section of this prospectus or the applicable GMWB Percentage Prospectus Supplement.

Appendix B – Investment Plus Variable Annuity     91
GMWB Exchange Offer

A. GMWB Rider Features
Old Investment Plus Variable Annuity
New Investment Plus Variable Annuity**
GMWB investment options

Restricted investment options depending on when old contract was purchased and customer’s actions:
• GMWB Self-Build Models
• GMWB Select Models
• Principal Lifetime 2010 Account
• Principal Lifetime 2020 Account
• Principal Lifetime Strategic
   Income account
• Strategic Asset Management
   Balanced Portfolio
• Strategic Asset Management
    Conservative Balanced
    Portfolio
• Strategic Asset Management
    Flexible Income Portfolio
• Diversified Balanced Account
• Diversified Growth Account
• Diversified Income Account

NOTE: If GMWB was not elected, there are no investment restrictions.
• Diversified Balanced Account
• Diversified Growth Account
• Diversified Income Account
• Diversified Balanced Managed
    Volatility Account
• Diversified Growth Managed
    Volatility Account
    
 
Fixed Rate Options (including 2 dollar-cost averaging options)

1 year - Fixed Account
6 month - DCA Plus account***
12 month - DCA Plus account***
Same

Appendix B – Investment Plus Variable Annuity     92
GMWB Exchange Offer

A. GMWB Rider Features
Old Investment Plus Variable Annuity
New Investment Plus Variable Annuity**
GMWB Bonus

If no withdrawals are taken, a GMWB Bonus is applied to the benefit bases each year on the Contract anniversary as shown below:
• Years 1-5 - 5.00% of
    premium payments
• Years 6+ - 0.00% of
    premium payments
If no withdrawals are taken, a GMWB bonus is applied to the benefit base on each Contract anniversary as shown below:
Principal Income Builder 3:
• Year 1 - 7.00% of
    premium payments
• Year 2 - 6.00% of
    premium payments
• Year 3 - 5.00% of
    premium payments
• Years 4+ - 0.00% of
    premium payments

 Principal Income Builder 10:
• Years 1-10 - 5.00% of
    premium payments
• Years 11+ - 0.00% of
    premium payments

NOTE: The percentages above apply for applications signed from November 2, 2015 through November 30, 2015. The GMWB Bonus Percentages may be different than those listed above for applications signed after November 30, 2015.
GMWB Step-Up

• Optional GMWB Step-Up
    that you may elect beginning
    with the 5th Contract
    anniversary.  Once you have
    elected a GMWB Step-Up,
    you must wait at least 5
    5 contract years to elect
    another GMWB Step-Up.
• Rider effective dates on or
    after June 15, 2008: the
    remaining withdrawal benefit
    bases are not eligible for
    Step-Ups after the
    Investment Back remaining
    withdrawal benefit base
    reduces to zero, even if
    additional premium payments
    are made.
• Automatic annual GMWB Step-Up available until the later of (a) the Contract anniversary prior to age 80 or (b) 10 years after the rider effective date.

Automatic Portfolio Rebalancing
Calendar Quarterly (required with GMWB 1 rider)
Calendar Quarterly (required with GMWB riders)
No. of Free Division Transfers/contract year
1
1


Appendix B – Investment Plus Variable Annuity     93
GMWB Exchange Offer

B. Annuitization
Old Investment Plus
Variable Annuity
New Investment Plus
Variable Annuity
Annuity Benefit Payments First Available
Any time on/after the first Contract anniversary
Same
Annuity Benefit Payments
Fixed annuity benefit payments
Same
Annuity Mortality Table
Annuity 2000 Mortality Table
Same
Annuity Benefit Payment Options
Fixed period; life income; life income with fixed period; custom options
Same
C. Death Benefit
Old Investment Plus
Variable Annuity
New Investment Plus
Variable Annuity
Death Benefit
An amount equal to the greatest of
(i) total premium payments less surrenders, or
(ii) Contract value, or
(iii) 7 year Step-Up
For partial surrenders, the death benefit is reduced proportionately for each withdrawal.
See the Death Benefit section in this appendix for more details.

An amount equal to the greatest of
(i) total premium payments less surrenders, or
(ii) Contract value, or
(iii) 7 year Step-Up
For partial surrenders, withdrawals that are not For Life excess withdrawals will reduce the GMWB Death Benefit by the amount of withdrawal. Any For Life excess withdrawal amounts reduce the GMWB Death Benefit proportionately.
See the Death Benefit section in this appendix for more details.
Optional Enhanced Death Benefit Rider
Available
Not available
Payable
1st owner to die
Same

Appendix B – Investment Plus Variable Annuity     94
GMWB Exchange Offer

D. Fees and Charges
Old Investment Plus
Variable Annuity
New Investment Plus
Variable Annuity
Annual Fee (waived for Contracts with accumulated value of $30,000 or more)
Lesser of $30 or 2% of Contract accumulated value
Same
Mortality and Expense Risks Charge****
1.25%
Same
Administration Charge**** (on an annual basis)
Maximum: 0.15%
Current: 0.15%
Same
Available Underlying Mutual Fund Expenses*****
Maximum Annual: 8.32%
Minimum Annual: 0.25%
Maximum Annual: 0.67%
Minimum Annual: 0.56%
GMWB 1 Rider Charge – Taken as % of average quarterly Investment Back remaining withdrawal benefit base.
Maximum Annual: 0.85%
Current Annual: 0.80%
A 0.60% annual charge is assessed if the rider application was signed before February 16, 2009 and no GMWB Step-Up has occurred. A 0.80% annual charge is assessed if the rider application was signed before February 16, 2009 and a GMWB Step-Up has occurred. If the rider application was signed after February 16, 2009, the annual fee is 0.80%.
Not applicable
Principal Income Builder 3 Rider Charge – Taken as % of average quarterly For Life withdrawal benefit base.
-OR-
Principal Income Builder 10 Rider Charge – Taken as % of average quarterly For Life withdrawal benefit base.
Not applicable





Not applicable
Maximum Annual: 1.65%
Current Annual: 1.05%




Maximum Annual: 2.00%
Current Annual: 1.25%

Appendix B – Investment Plus Variable Annuity     95
GMWB Exchange Offer

E. Transaction Charges
Old Investment Plus
Variable Annuity
New Investment Plus
Variable Annuity
Surrender Charge Period and % of amount surrendered (applies only to new premium payments)
7 years (6,6,6,5,4,3,2)
9 years (8,8,7,6,5,4,3,2,1) if you elected the Premium Payment Credit Rider
7 years (6,6,6,5,4,3,2)
Premium Payment Credit Rider not available
Unscheduled Partial Surrender
Maximum: lesser of $25 or 2% of each unscheduled partial surrender after the 12th in a contract year.
Current $0/0%
Same
Unscheduled Transfers
Maximum: lesser of $25 or 2% of each unscheduled transfer after the 1st in a contract year.
Current: $0/0%
Same
*    Does not reflect state variations.
**
For applications signed before June 1, 2015, the PIB 10 rider includes an Investment Back benefit and rider charges are based on the Investment Back withdrawal benefit base. For applications signed on or after June 1, 2015, the PIB 10 rider no longer includes an Investment Back benefit and the rider charges are based on the For Life withdrawal benefit base.
***
Only available for new premium payments. The DCA Plus Accounts are not available for the amount being exchanged.
****
Charges taken daily as a percentage of the average daily Separate Account division value
*****
For the new contract, only maximum and minimum charges for the GMWB investment options are reflected.
Charges and Expenses
The new contract and your old contract have different annual expenses, different transaction charges, and different investment options that may result in different underlying mutual fund expenses.
Surrender Charges
Under the GMWB Exchange Offer, surrender charges will not apply on any amounts transferred from the old contract to the new contract. Surrender charges under the new contract will only apply to new contract premium payments.
Death Benefit
The death benefit in the new contract will be calculated as specified in the prospectus for the new contract. At the time of the exchange, the death benefit from the old contract will be transferred to the new contract and will be adjusted for new premium payments made and withdrawals taken under the new contract.
Upon your death, we will pay the greater of the new contract death benefit or the old contract death benefit adjusted as described above.
GMWB Rider
The new contract offers GMWB riders (Principal Income Builder 3 or Principal Income Builder 10) that were not available when you purchased your old contract. A GMWB rider allows you to take certain guaranteed annual withdrawals, regardless of your Contract accumulated value.
Your Contract can only have one GMWB rider. You must qualify for and elect either the Principal Income Builder 3 or Principal Income Builder 10 rider when you purchase the new contract.
Once elected, the Principal Income Builder 3 or Principal Income Builder 10 rider may not be terminated for 5 contract years following the rider effective date.

Appendix B – Investment Plus Variable Annuity     96
GMWB Exchange Offer

Election of a GMWB rider results in restriction of your Contract investment options to the more limited GMWB investment options (additional information is included in the new contract prospectus). The GMWB investment options reflect a balanced investment objective that is intended to support the rider guarantees. If your investment objective is aggressive growth, the rider investment restrictions may not support your investment objective.
Principal Income Builder 3
The Principal Income Builder 3 rider offers an annual Step-Up feature. The GMWB Step-Up can increase your rider withdrawal benefit payments if your Contract accumulated value increases. The Contract accumulated value increases whenever additional premium payments are added or the division values rise with market growth.
The Principal Income Builder 3 rider also offers a 3-year GMWB Bonus. The GMWB Bonus rewards you annually for not taking a withdrawal in the first 3 years of the rider. The GMWB Bonus amount will provide an increase to your rider withdrawal benefit payments. The GMWB Bonus does not increase your Contract accumulated value.
The Principal Income Builder 3 rider provides your beneficiary(ies) with the GMWB Death Benefit.
Principal Income Builder 10
The Principal Income Builder 10 rider offers an annual Step-Up feature. The GMWB Step-Up can increase your rider withdrawal benefit payments if your Contract accumulated value increases. The Contract accumulated value increases whenever additional premium payments are made or the division values rise with market growth.
The Principal Income Builder 10 rider also offers a 10-year GMWB Bonus. The GMWB Bonus rewards you annually for not taking a withdrawal in the first 10 years of the rider. The GMWB Bonus amount will provide an increase to your rider withdrawal benefit payments. The GMWB Bonus does not increase your Contract accumulated value.
It is important that you review the new contract prospectus in its entirety for additional information regarding the Principal Income Builder 3 and Principal Income Builder 10 riders and whether a GMWB rider is appropriate for your needs.
Tax Matters
Although we believe that an exchange as described in this appendix will not be a taxable event for Federal tax purposes, we recommend that you consult your tax advisor before electing to participate in the GMWB Exchange Offer.
There may be differences between your old contract, as amended by tax-qualified retirement plan endorsements, and the new contract, as amended by similar qualified plan endorsements. If you are using the old contract in connection with a tax-qualified retirement plan, you should consult a tax advisor before electing to participate in the GMWB Exchange Offer. See 10. FEDERAL TAX MATTERS section of the new contract prospectus.



Appendix B – Investment Plus Variable Annuity     97
GMWB Exchange Offer


APPENDIX C – PIB 3 Examples (for applications signed on or after August 1, 2013)
These examples have been provided to assist you in understanding the various features of the Principal Income Builder 3 GMWB rider and to demonstrate how premium payments received and withdrawals taken from the Contract affect the values and benefits under the rider. These examples are based on certain hypothetical assumptions and are for illustrative purposes only. These examples are not intended to serve as projections of future investment returns.
NOTE:    The owner’s actions determine the benefits received.
NOTE:
For the purpose of the following examples, a partial annuitization has the same effect as a partial surrender and both are referred to as a withdrawal in the following examples.
Examples Without Excess Withdrawals
Examples 1-5 assume the following:
•
the owner is age 62 and the owner’s spouse is age 60 on the rider effective date.
•
initial premium payment = $100,000.
•
The For Life withdrawal benefit base prior to partial surrender = $100,000.
•
“Single Life” For Life (3.80%) withdrawal benefit payment = $3,800, if withdrawals start prior to the owner attaining age 65.
•
“Joint Life” For Life (3.30%) withdrawal benefit payment = $3,300, if withdrawals start prior to the spouse attaining age 65.
Example 1
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the owner has not made a For Life withdrawal benefit payment election, we automatically calculate the For Life withdrawal benefit payment as “Single Life”.
On the first Contract anniversary:
•
a 7% GMWB bonus is credited to the withdrawal benefit base. The credit is $100,000 x 0.07 = $7,000.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new For Life withdrawal benefit base is $100,000 + $7,000 = $107,000.
•
the new “Single Life” For Life withdrawal benefit payment is $107,000 x 0.0380 = $4,066.00.
Example 2
In contract year one:
•
no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the owner has not made a For Life withdrawal benefit payment election, we automatically calculate the For Life withdrawal benefit payment as “Single Life”.
•
the owner makes a premium payment of $50,000.
On the first Contract anniversary:
•
a 7% GMWB bonus is credited to the withdrawal benefit base. The credit is ($100,000 + $50,000) x 0.07 = $10,500.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new For Life withdrawal benefit base is $100,000 + $50,000 + $10,500 = $160,500.
•
the new “Single For Life” For Life withdrawal benefit payment is $160,500 x 0.0380 = $6,099.00.
Example 3
In contract year one, the owner elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $3,300. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 3.30%.
On the first Contract anniversary:
•
Since a withdrawal was taken in contract year one, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the For Life withdrawal benefit base remains the same ($100,000).
•
the “Joint Life” For Life withdrawal benefit payment for the next contract year remains the same ($100,000 x .0330 = $3,300).

Appendix C – PIB 3 Examples    98
(for applications signed on or after August 1, 2013)


Example 4
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the owner has not made a For Life withdrawal benefit payment election, we automatically calculate For Life withdrawal benefit payment as “Single Life”.
On the first Contract anniversary:
•
a 7% GMWB bonus is credited to the withdrawal benefit bases. The credit is $100,000 x 0.07 = $7,000.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new For Life withdrawal benefit base is $100,000 + $7,000 = $107,000.
•
the new “Single Life” For Life withdrawal benefit payment is $107,000 x .0380 = $4,066.00.
In contract year two, the owner elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $3,531. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 3.30%.
On the second Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the For Life withdrawal benefit base remains the same ($107,000).
•
the “Joint Life” For Life withdrawal benefit payment for the next contract year is $107,000 x .0330 = $3,531.00.
In contract year three, no withdrawals are taken. The “Joint Life” For Life withdrawal benefit payment percentage remains locked-in at 3.30%.
On the third Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the For Life withdrawal benefit base remains the same ($107,000).
•
The “Joint Life” For Life withdrawal benefit payment for the next contract year remains the same ($107,000 x .0330 = $3,531.00)
Example 5
The owner elects the “Single Life” For Life withdrawal benefit payment, and in each of the first two contract years, takes a withdrawal of $3,800. Assume there is no GMWB Step-Up on the first Contract anniversary. On the 2nd Contract anniversary, the owner will receive GMWB Step-Up if the Contract’s accumulated value is greater than the applicable withdrawal benefit base.
If the accumulated value on the second
Contract anniversary is:
$95,000
$110,000
For Life (“Single Life”)
 
 
Prior to step-up
 
 
Withdrawal Benefit Base
$100,000
$100,000
Withdrawal Benefit Payment
$100,000 x 0.0380 = $3,800
$100,000 x 0.0380 = $3,800
After step-up
 
 
Withdrawal Benefit Base
$100,000
$110,000
Withdrawal Benefit Payment
$100,000 x 0.0380 = $3,800
$110,000 x 0.0380 = $4,180
Example 6 assumes the following:
•
the owner is age 70 and the owner’s spouse is age 56 on the rider effective date.
•
initial premium payment = $100,000.
•
The For Life withdrawal benefit base prior to partial surrender = $100,000.
•
“Single Life” For Life (4.80%) withdrawal benefit payment = $4,800.
•
“Joint Life” For Life (3.30%) withdrawal benefit payment = $3,300, if withdrawals start prior to the owner’s spouse attaining age 65.

Appendix C – PIB 3 Examples    99
(for applications signed on or after August 1, 2013)


Example 6
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the owner has not made a For Life withdrawal benefit payment election, we automatically calculate For Life withdrawal benefit payment as “Single Life”.
On the first Contract anniversary:
•
a 7% GMWB bonus is credited to the withdrawal benefit bases. The credit is $100,000 x 0.07 = $7,000.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new For Life withdrawal benefit base is $100,000 + $7,000 = $107,000.
•
the new “Single Life” For Life withdrawal benefit payment is $107,000 x .0480 = $5,136.00.
In contract year two, the owner elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $3,531.00. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 3.30%.
On the second Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the For Life withdrawal benefit base remains the same ($107,000).
•
the “Joint Life” For Life withdrawal benefit payment for the next contract year is $107,000 x .0330 = $3,531.00.
In contract year three, no withdrawals are taken. The “Joint Life” For Life withdrawal benefit payment percentage remains locked-in at 3.30%.
On the third Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the For Life withdrawal benefit base remains the same ($107,000).
•
The “Joint Life” For Life withdrawal benefit payment for the next contract year remains the same ($107,000 x .0330 = $3,531.00)
Examples With Excess Withdrawals
Examples 7-8 assume the following:
•
the owner is age 62 and elected “Single Life” For Life withdrawal benefit payments at the first withdrawal and therefore, locks-in the “Single Life” For Life withdrawal benefit payment percentage at 3.80%.
•
the initial premium payment is $100,000
•
the For Life withdrawal benefit base prior to partial surrender = $100,000
•
“Single Life” For Life (3.80%) withdrawal benefit payment = $3,800
•
Withdrawal taken = $8,500
•excess amount under the For Life withdrawal option is $4,700
Example 7
In this example, assume the accumulated value prior to the withdrawal is $90,000.
Withdrawal Benefit Base Calculation
On the Contract anniversary following the withdrawal, the withdrawal benefit base is adjusted for any excess withdrawals.
For Life
The amount of the adjustment* is $5,452.44. The new For Life withdrawal benefit base is $100,000 - $5,452.44 = $94,547.56.
*The amount of the adjustment for the excess withdrawal is the greater of a or b where:
a = $4,700 (the amount of the excess withdrawal); and
b = $5,452.44 (the result of (1 divided by 2) multiplied by 3) where:
1 = the amount of the withdrawal greater than the “Single Life” For Life withdrawal benefit payment remaining prior to the withdrawal ($4,700);
2 = the accumulated value after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($90,000 - $3,800); and
3 = the For Life withdrawal benefit base prior to the adjustment for the excess amount ($100,000).

Appendix C – PIB 3 Examples    100
(for applications signed on or after August 1, 2013)


Withdrawal Benefit Payment Calculation (for the next contract year)
The withdrawal benefit payment is the new withdrawal benefit base (calculated on the Contract anniversary) multiplied by the associated percentage. The “Single Life” For Life withdrawal benefit payment percentage is locked-in at 3.80%.
For Life
The new “Single Life” For Life withdrawal benefit payment is $94,547.56 x 0.0380 = $3,592.81.
Example 8
In this example, assume the accumulated value prior to the withdrawal is $115,000.
Withdrawal Benefit Base Calculation
On the Contract anniversary following the withdrawal, the withdrawal benefit base is adjusted for any excess withdrawals.
For Life
The amount of the adjustment* is $4,700 (the amount of the excess withdrawal). The new For Life withdrawal benefit base is $100,000 - $4,700 = $95,300.
*
The amount of the adjustment for excess withdrawal is the greater of a or b where:
a = $4,700 (the amount of the excess withdrawal); and
b = $4,226.62 (the result of (1 divided by 2) multiplied by 3) where:
1 = the amount of the withdrawal greater than the “Single Life” For Life withdrawal benefit payment available prior to the withdrawal ($4,700);
2 = the accumulated value after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($115,000 minus $3,800); and
3 = the For Life withdrawal benefit base prior to the adjustment for the excess amount ($100,000).
Withdrawal Benefit Payment Calculation (for the next contract year)
The withdrawal benefit payment is the new withdrawal benefit base (calculated on the Contract anniversary) multiplied by the associated percentage. The “Single Life” For Life withdrawal benefit payment percentage is locked-in at 3.80%.
For Life
The new “Single Life” For Life withdrawal benefit payment is $95,300 x 0.0380 = $3,621.40.


Appendix C – PIB 3 Examples    101
(for applications signed on or after August 1, 2013)


APPENDIX D – PIB 10 Examples (for applications signed on or after June 1, 2015)
For applications signed before June 1, 2015, refer to Appendix F for PIB 10 examples.
These examples have been provided to assist you in understanding the various features of the Principal Income Builder 10 GMWB rider and to demonstrate how premium payments received and withdrawals taken from the Contract affect the values and benefits under the rider. These examples are based on certain hypothetical assumptions and are for illustrative purposes only. These examples are not intended to serve as projections of future investment returns.
NOTE:    The owner’s actions determine the benefits received.
NOTE:
For the purpose of the following examples, a partial annuitization has the same effect as a partial surrender and both are referred to as a withdrawal in the following examples.
Examples Without Excess Withdrawals
Examples 1-5 (without excess withdrawals) assume the following:
•
the owner is age 62 and the owner’s spouse is age 60 on the rider effective date.
•
initial premium payment = $100,000.
•
the withdrawal benefit base prior to partial surrender = $100,000.
•
“Single Life” For Life (4.00%) withdrawal benefit payment = $4,000, if withdrawals start prior to the owner attaining age 65.
•
“Joint Life” For Life (3.50%) withdrawal benefit payment = $3,500, if withdrawals start prior to the spouse attaining age 65.
Example 1
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the owner has not made a For Life withdrawal benefit payment election, we automatically calculate the For Life withdrawal benefit payment as “Single Life”.
On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit base. The credit is $100,000 x 0.05 = $5,000.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new For Life withdrawal benefit base is $100,000 + 5,000 = $105,000.
•
the new “Single Life” For Life withdrawal benefit payment is $105,000 x 0.040 = $4,200.
Example 2
In contract year one:
•
no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the owner has not made a For Life withdrawal benefit payment election, we automatically calculate the For Life withdrawal benefit payment as “Single Life”.
•
the owner makes a premium payment of $50,000.
On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit base. The credit is ($100,000 + $50,000) x 0.05 = $7,500.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new For Life withdrawal benefit base is $100,000 + $50,000 + $7,500 = $157,500.
•
the new “Single Life” For Life withdrawal benefit payment is $157,500 x 0.040 = $6,300.

Appendix D – PIB 10 Examples    102
(for applications signed on or after June 1, 2015)


Example 3
In contract year one, the owner elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $3,500. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 3.50%.
On the first Contract anniversary:
•
Since a withdrawal was taken in contract year one, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the For Life withdrawal benefit base remains the same ($100,000).
•
the “Joint Life” For Life withdrawal benefit payment for the next contract year remains the same ($100,000 x 0.0350 = $3,500).
Example 4
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the owner has not made a For Life withdrawal benefit payment election, we automatically calculate For Life withdrawal benefit payment as “Single Life”.
On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit base. The credit is $100,000 x 0.05 = $5,000.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new For Life withdrawal benefit base is $100,000 + 5,000 = $105,000.
•
the new “Single Life” For Life withdrawal benefit payment is $105,000 x 0.040 = $4,200.
In contract year two, the owner elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $3,500. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 3.50%.
On the second Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the For Life withdrawal benefit base remains the same ($105,000).
•
the “Joint Life” For Life withdrawal benefit payment for the next contract year is $105,000 x 0.0350 = $3,675.
In contract year three, no withdrawals are taken. The “Joint Life” For Life withdrawal benefit payment percentage remains locked-in at 3.50%.
On the third Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the For Life withdrawal benefit base remains the same ($105,000).
•
the “Joint Life” For Life withdrawal benefit payment for the next contract year remains the same ($105,000 x 0.0350 = $3,675).
Example 5
The owner elects the “Single Life” For Life withdrawal benefit payment, and in each of the first two contract years, takes a withdrawal of $4,000. Assume there is no GMWB Step-Up on the first Contract anniversary. On the 2nd Contract anniversary, the owner will receive the GMWB Step-Up if the Contract’s accumulated value is greater than the For Life withdrawal benefit base.
If the accumulated value on the second
Contract anniversary is:
$95,000
$110,000
For Life (“Single Life”)
 
 
Prior to step-up
 
 
Withdrawal Benefit Base
$100,000
$100,000
Withdrawal Benefit Payment
$100,000 x 0.040 = $4,000
$100,000 x 0.040 = $4,000
After step-up
 
 
Withdrawal Benefit Base
$100,000
$110,000
Withdrawal Benefit Payment
$100,000 x 0.040 = $4,000
$110,000 x 0.040 = $4,400

Appendix D – PIB 10 Examples    103
(for applications signed on or after June 1, 2015)


Example 6 (without excess withdrawals) assumes the following:
•
the owner is age 70 and the owner’s spouse is age 56 on the rider effective date.
•
initial premium payment = $100,000.
•
the withdrawal benefit base prior to partial surrender = $100,000.
•
“Single Life” For Life (5.00%) withdrawal benefit payment = $5,000.
•
“Joint Life” For Life (3.50%) withdrawal benefit payment = $3,500, if withdrawals start prior to the owner’s spouse attaining age 65.
Example 6
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the owner has not made a For Life withdrawal benefit payment election, we automatically calculate For Life withdrawal benefit payment as “Single Life”.
On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit base. The credit is $100,000 x 0.050 = $5,000.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new For Life withdrawal benefit base is $100,000 + 5,000 = $105,000.
•
the new “Single Life” For Life withdrawal benefit payment is $105,000 x 0.0500 = $5,250.
In contract year two, the owner elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $3,500. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 3.50%.
On the second Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the For Life withdrawal benefit base remains the same ($105,000).
•
the “Joint Life” For Life withdrawal benefit payment for the next contract year is $105,000 x 0.0350 = $3,675.
In contract year three, no withdrawals are taken. The “Joint Life” For Life withdrawal benefit payment percentage remains locked-in at 3.50%.
On the third Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the For Life withdrawal benefit base remains the same ($105,000).
•
the “Joint Life” For Life withdrawal benefit payment for the next contract year remains the same ($105,000 x 0.0350 = $3,675).
Examples With Excess Withdrawals
Excess withdrawal examples 7-8 assume the following:
•
the owner is age 62 and elected “Single Life” For Life withdrawal benefit payments at the first withdrawal and therefore, locks-in the “Single Life” For Life withdrawal benefit payment percentage at 4.00%.
•
the initial premium payment is $100,000
•
the withdrawal benefit base prior to partial surrender = $100,000
•
“Single Life” For Life (4.00%) withdrawal benefit payment = $4,000
•
Withdrawal taken = $8,000
•excess amount under the For Life withdrawal benefit base is $4,000

Appendix D – PIB 10 Examples    104
(for applications signed on or after June 1, 2015)


Example 7
In this example, assume the accumulated value prior to the withdrawal is $90,000.
Withdrawal Benefit Base Calculation
On the Contract anniversary following the withdrawal, the withdrawal benefit base is adjusted for any excess withdrawals.
The amount of the adjustment* is $4,651.16. The new For Life withdrawal benefit base is $100,000 - $4,651.16 = $95,348.84.

*The amount of the adjustment for the excess withdrawal is the greater of a or b where:
a = $4,000 (the amount of the excess withdrawal); and
b = $4,651.16 (the result of (1 divided by 2) multiplied by 3) where:
1 = the amount of the withdrawal greater than the “Single Life” For Life withdrawal benefit payment remaining prior to the withdrawal ($4,000);
2 = the accumulated value after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($90,000 - $4,000); and
3 = the For Life withdrawal benefit base prior to the adjustment for the excess amount ($100,000).
Withdrawal Benefit Payment Calculation (for the next contract year)
The withdrawal benefit payment is the new withdrawal benefit base (calculated on the Contract anniversary) multiplied by the associated percentage. The “Single Life” For Life withdrawal benefit payment percentage is locked-in at 4.00%.
The new “Single Life” For Life withdrawal benefit payment is $95,348.84 x 0.040 = $3,813.95.
Example 8
In this example, assume the accumulated value prior to the withdrawal is $110,000.
Withdrawal Benefit Base Calculation
On the Contract anniversary following the withdrawal, the withdrawal benefit base is adjusted for any excess withdrawals.
The amount of the adjustment* is $4,000 (the amount of the excess withdrawal). The new For Life withdrawal benefit base is $100,000 - $4,000 = $96,000.
*
The amount of the adjustment for excess withdrawal is the greater of a or b where:
a = $4,000 (the amount of the excess withdrawal); and
b = $3,773.58 (the result of (1 divided by 2) multiplied by 3) where:
1 = the amount of the withdrawal greater than the “Single Life” For Life withdrawal benefit payment available prior to the withdrawal ($4,000);
2 = the accumulated value after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($110,000 minus $4,000); and
3 = the For Life withdrawal benefit base prior to the adjustment for the excess amount ($100,000).
Withdrawal Benefit Payment Calculation (for the next contract year)
The withdrawal benefit payment is the new withdrawal benefit base (calculated on the Contract anniversary) multiplied by the associated percentage. The “Single Life” For Life withdrawal benefit payment percentage is locked-in at 4.00%.
The new “Single Life” For Life withdrawal benefit payment is $96,000 x 0.040 = $3,840.



Appendix D – PIB 10 Examples    105
(for applications signed on or after June 1, 2015)


APPENDIX E – GMWB DEATH BENEFIT EXAMPLES (for Contracts with a GMWB rider and application was signed on or after August 1, 2013)
These examples have been provided to assist you in understanding the GMWB Death Benefit and to demonstrate how premium payments received and withdrawals taken from the Contract affect the GMWB Death Benefit. These examples are based on certain hypothetical assumptions and are for illustrative purposes only. These examples are not intended to serve as projections of future investment returns.
NOTE:
The owner’s actions determine the benefits received.
NOTE:
For the purpose of the following examples, a partial annuitization has the same effect as a partial surrender and both are referred to as a withdrawal in the following examples.
Withdrawals impact the GMWB Death Benefit as follows:
•
A withdrawal that is not a "For Life" Excess Withdrawal will reduce the GMWB Death Benefit by the amount of the withdrawal. Then, each "For Life" Excess Withdrawal will proportionately reduce the GMWB Death Benefit.
•
A withdrawal up to the RMD amount under the RMD Program for GMWB Riders is not considered an excess withdrawal and will reduce the GMWB Death Benefit by the amount of the withdrawal.
•
If your GMWB rider offers the Investment Back withdrawal option and you are taking withdrawals under this option, any amount greater than the "For Life" withdrawal benefit payment, or RMD amount if taken under the RMD Program for GMWB Riders, are deducted proportionately rather than dollar for dollar.
NOTE:
The numbers used in the examples below are hypothetical only and are intended to illustrate how the death benefit is calculated. The available For Life withdrawal benefit payment is determined by multiplying the For Life withdrawal benefit base by the For Life withdrawal benefit payment percentage and then subtracting any previous withdrawals taken within that contract year.

Example 1
Contract issue date = September 1
Initial premium payment = $100,000
Available For Life withdrawal benefit payment = $4,000
Additional premium payments = $0
Withdrawals = $0
On the contract anniversary in the following calendar year, assume the Contract accumulated value is $90,000.
The GMWB Death Benefit is the greatest of 1, 2, and 3 below.
1.
$90,000 = accumulated value
2.
$100,000 = $100,000 - $0 = total premium payments minus each withdrawal taken
3.
N/A – Contract has not reached 7th Contract anniversary
The GMWB Death Benefit on the first contract anniversary is $100,000.
Example 2
Contract issue date = August 15
Initial premium payment = $50,000
Available For Life withdrawal benefit payment = $4,000
Additional premium payment received on October 3 of the same calendar year = $25,000
Withdrawals = $0
On the contract anniversary in the following calendar year, assume the Contract accumulated value is $110,000.
The GMWB Death Benefit is the greatest of 1, 2, and 3 below.
1.
$110,000 = accumulated value
2.
$75,000 = $50,000 + $25,000 - $0 = total premium payments minus each withdrawal taken
3.
N/A – Contract has not reached 7th Contract anniversary
The GMWB Death Benefit on the first contract anniversary is $110,000.

Appendix E – GMWB Death Benefit Examples    106
(for Contracts with a GMWB rider and application was signed on or after August 1, 2013)


Example 3
Contract issue date = August 31
Initial premium payment = $75,000
Available For Life withdrawal benefit payment = $4,000
Additional premium payment = $0
Withdrawal on November 3 of same calendar year = $2,500
Withdrawal on January 15 of following calendar year = $8,000
On November 3, assume the accumulated value prior to the withdrawal is $85,000.
The GMWB Death Benefit on November 3 is the greatest of 1, 2, and 3 below.
1.
$82,500 = accumulated value ($85,000 - $2,500)
2.
$72,500 = $75,000 - $2,500 = total premium payments minus each withdrawal taken
3.
N/A – Contract has not reached 7th Contract anniversary
On November 3, the GMWB Death Benefit is $82,500. The available For Life withdrawal benefit payment is reduced to $1,500 ($4,000 - $2,500).
On January 15, assume the accumulated value prior to the withdrawal is $88,000. Since the available For Life withdrawal benefit payment is $1,500, an excess withdrawal of $6,500 is taken.
Accumulated Value after $1,500 withdrawal = $86,500
Excess withdrawal death benefit proportion = ($6,500 / $86,500) = 0.0751
The GMWB Death Benefit after the withdrawal on January 15 is the greatest of 1, 2, and 3 below.
1.
$80,000 = accumulated value ($88,000 - $8,000)
2.
$65,667.90 = $75,000 – $2,500 – $1,500 – [($75,000 - $2,500 - $1,500) * 0.0751)] = total premium payments minus each withdrawal taken
3.
N/A – Contract has not reached 7th Contract anniversary
On January 15, the GMWB death benefit is $80,000.
NOTE:
For number 2 above, $4,000 of the withdrawals were not "For Life" Excess Withdrawals and reduced the GMWB Death Benefit by $4,000. The "For Life" Excess Withdrawal of $6,500 proportionately reduced the GMWB Death Benefit by the ratio of the "For Life" Excess Withdrawal taken to the Contract accumulated value immediately prior to the "For Life" Excess Withdrawal ($6,500 / $86,500 = 0.0751).
Example 4
Contract issue date = October 25
Initial premium payment = $75,000
Available For Life withdrawal benefit payment = $4,000
Additional premium payment = $0
Withdrawal on November 3 of same calendar year = $2,500
Withdrawal on January 15 of following calendar year = $8,000
On November 3, assume the accumulated value prior to the withdrawal is $62,500.
The GMWB Death Benefit on November 3 is the greatest of 1, 2, and 3 below.
1.
$62,500 = accumulated value
2.
$72,500 = $75,000 - $2,500 = total premium payments minus each withdrawal taken
3.
N/A – Contract has not reached 7th Contract anniversary
On November 3, the GMWB Death Benefit is $72,500. The available For Life withdrawal benefit payment is reduced to $1,500 ($4,000 - $2,500).
On January 15, assume the accumulated value prior to the withdrawal is $58,000. Since the available For Life withdrawal benefit payment is $1,500, an excess withdrawal of $6,500 is taken.
Accumulated Value after $1,500 withdrawal = $56,500
Excess withdrawal death benefit proportion = ($6,500 / $56,500) = 0.1150

Appendix E – GMWB Death Benefit Examples    107
(for Contracts with a GMWB rider and application was signed on or after August 1, 2013)


The GMWB Death Benefit after the withdrawal on January 15 is the greatest of 1, 2, and 3 below.
1.
$50,000 = accumulated value ($58,000 - $8,000)
2.
$62,835.00 = $75,000 – $2,500 – $1,500 – [($75,000 - $2,500 - $1,500) * 0.1150)] = total premium payments minus each withdrawal taken
3.
N/A – Contract has not reached 7th Contract anniversary
On January 15, the GMWB death benefit is $62,835.00.
NOTE:
For number 2 above, $4,000 of the withdrawals were not "For Life" Excess Withdrawals and reduced the GMWB Death Benefit by $4,000. The "For Life" Excess Withdrawal of $6,500 proportionately reduced the GMWB Death Benefit by the ratio of the "For Life" Excess Withdrawal taken to the Contract accumulated value immediately prior to the "For Life" Excess Withdrawal ($6,500 / $56,500 = 0.1150).
Example 5
Contract issue date = November 3
Initial premium payment = $75,000
Available For Life withdrawal benefit payment = $3,000
Additional premium payment = $0
Withdrawal on December 30 of same calendar year = $5,000
Accumulated Value on Contract anniversary divisible equally by 7 = $53,750
On December 30, assume the accumulated value prior to the withdrawal is $65,000. Since the available For Life withdrawal benefit payment is $3,000, an excess withdrawal of $2,000 is taken.
Accumulated value after $3,000 withdrawal = $62,000
Excess withdrawal death benefit proportion = ($2,000 / $62,000) = 0.0323
The GMWB Death Benefit on December 30 is the greatest of 1, 2, and 3 below.
1.
$62,000 = accumulated value
2.
$69,674.40 = $75,000 - $3,000 – [($75,000 - $3,000) * 0.0323] = total premium payments minus each withdrawal taken
3.
$49,110.77 = $53,750 + $0 - $3,000 - [($53,750 - $3,000) * 0.0323] = the Contract accumulated value that was in effect on any prior Contract anniversary that is divisible equally by 7, plus any premium payments made after that Contract anniversary minus each withdrawal taken after that Contract anniversary.
On December 30, the GMWB death benefit is $69,674.40.
NOTE:
For numbers 2 and 3 above, $3,000 of the withdrawals were not "For Life" Excess Withdrawals and reduced the GMWB Death Benefit by $3,000. The "For Life" Excess Withdrawal of $2,000 proportionately reduced the GMWB Death Benefit by the ratio of the "For Life" Excess Withdrawal taken to the Contract accumulated value immediately prior to the "For Life" Excess Withdrawal ($2,000 / $62,000 = 0.0323).

Appendix E – GMWB Death Benefit Examples    108
(for Contracts with a GMWB rider and application was signed on or after August 1, 2013)


APPENDIX F – PIB 10 (for applications signed before June 1, 2015)
Overview of Principal Income Builder 10
Withdrawal options. This rider provides the flexibility of both a For Life withdrawal option and an Investment Back withdrawal option. You are not required to choose between these two withdrawal options unless your Contract accumulated value is zero or you reach the maximum annuitization date.
The For Life withdrawal option helps to protect you against the risk of a decrease in the Contract accumulated value due to market declines as well as the risk of outliving your money. The Investment Back withdrawal option helps to protect you against the risk of a decrease in the Contract accumulated value due to market declines and is designed to permit you to recover at least your premium payments.
For Life withdrawal benefit payment percentages. This rider permits an election of “Joint Life” For Life withdrawal benefit payments or “Single Life” For Life withdrawal benefit payments.
Bonus feature. This rider has a Bonus feature which rewards you annually for not taking a withdrawal in the first 10 years of the rider. The GMWB Bonus increases the withdrawal benefit base, which increases your available withdrawal benefit payment amount. The GMWB Bonus does not increase the remaining withdrawal benefit base. The GMWB Bonus also does not increase your Contract accumulated value.
Step-Up feature. This rider has an annual Step-Up feature which can increase your rider withdrawal benefit payments if your Contract accumulated value increases. The Contract accumulated value increases whenever additional premium payments are made, the division values rise with market growth, or credits (premium payment credits or exchange credit) are applied.
Maximum annual rider charge. This rider has a maximum annual rider charge of 2.00% of the Investment Back withdrawal benefit base.
Spousal continuation. This rider provides that the Investment Back and the For Life withdrawal options may be available to an eligible spouse who continues the Contract with the rider, if certain conditions are met.
Principal Income Builder 10 Terms
We use the following definitions to describe the features of this rider:
•
Excess Withdrawal — the portion of a withdrawal that exceeds the available withdrawal benefit payment for a withdrawal option.
•
GMWB Bonus — a bonus credited to the withdrawal benefit base for each withdrawal option, provided certain conditions are met.
•
GMWB investment options – the limited investment options available under the GMWB rider, which reflect a balanced investment objective.
•
GMWB Step-Up — an increase to the withdrawal benefit base and/or remaining withdrawal benefit base for each withdrawal option to an amount equal to your Contract’s accumulated value on the most recent Contract anniversary, provided certain conditions are met.
•
Remaining withdrawal benefit base — the amount available for future withdrawal benefit payments under a withdrawal option. The remaining withdrawal benefit base for each withdrawal option is calculated separately. (not applicable to PIB3) 
•
Required minimum distribution (“RMD”) amount — the amount required to be distributed each calendar year for purposes of satisfying the RMD rules of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, and related Code provisions in effect as of the rider effective date.
•
Rider effective date — the date the rider is issued.
•
Withdrawal — any partial surrender (including surrender charges, if any) and/or any partial annuitization of your Contract’s accumulated value.
•
Withdrawal benefit base — the basis for determining the withdrawal benefit payment available each year under a withdrawal option. The withdrawal benefit base for each withdrawal option is calculated separately.
•
Withdrawal benefit payment — the amount that we guarantee you may withdraw each contract year under a withdrawal option.

Appendix F – PIB 10    109
(for applications signed before June 1, 2015)    


Principal Income Builder 10 - Withdrawal Options
For Life Withdrawal Option. This option is intended to help you avoid the risk of out-living your money. You are eligible to take For Life withdrawal benefit payments beginning (i) on the rider effective date if the oldest owner (or the oldest annuitant, if the Contract owner is not a natural person) is at least age 59½ or (ii) on the Contract anniversary following the date that the oldest owner (or the oldest annuitant, if applicable) attains age 59½. Once eligible, each year you may withdraw an amount up to the annual For Life withdrawal benefit payment until the earlier of the date of the death of the last covered life or the date the For Life withdrawal benefit base reduces to zero.
Investment Back Withdrawal Option. This option is intended to allow a more rapid recovery of your premium payments (approximately 14 years). You are eligible to take Investment Back withdrawal benefit payments beginning on the rider effective date. You may withdraw an amount up to the annual Investment Back withdrawal benefit payment until the earlier of the date of your death (annuitant’s death if the owner is not a natural person) or the date the Investment Back remaining withdrawal benefit base equals zero. Under this option, you may take withdrawals prior to the oldest owner attaining age 59½. If you take withdrawals prior to the oldest owner attaining age 59½, the For Life benefit bases will be reduced for excess withdrawals. If the adjustment for the withdrawals causes the For Life withdrawal benefit base to reduce to zero, the For Life withdrawal option will no longer be available to you (unless you make additional premium payments).
Principal Income Builder 10 - Withdrawal Benefit Base
Each withdrawal option has its own withdrawal benefit base, which is used to calculate the annual withdrawal benefit payment for that option. We calculate the withdrawal benefit base for the Investment Back and the For Life withdrawal options separately on:
•
The rider effective date and
•
Each Contract anniversary.
The initial withdrawal benefit base for both withdrawal options is equal to the initial premium payment.
On each Contract anniversary, the withdrawal benefit base for each withdrawal option is reset to the greater of 1 or 2, where:
1 = the accumulated value on the Contract anniversary (see Principal Income Builder 10 – GMWB Step-Up).
2 = the result of (a + b + c - d), where:
a = prior year withdrawal benefit base (or initial withdrawal benefit base if first Contract anniversary);
b = additional premiums since the previous Contract anniversary (dollar-for-dollar);
c = any GMWB Bonus credited since the previous Contract anniversary;
d = any excess withdrawals taken since the previous Contract anniversary*.
* NOTE:
The reduction for an excess withdrawal will be greater than dollar-for-dollar if the Contract accumulated value is less than the withdrawal benefit base at the time of the excess withdrawal. See Principal Income Builder 10 - Excess Withdrawals later in this section for information about the negative effect of excess withdrawals.
If you take withdrawals prior to the oldest owner attaining age 59½, the For Life withdrawal benefit bases will be reduced for excess withdrawals. If the adjustment for the withdrawals causes the For Life withdrawal benefit base to reduce to zero, the For Life withdrawal option will no longer be available to you at the next Contract anniversary, unless you make additional premium payments.
Principal Income Builder 10 - Remaining Withdrawal Benefit Base
Each withdrawal option has its own remaining withdrawal benefit base. The remaining withdrawal benefit base is used to determine the amount available for future withdrawal benefit payments under each withdrawal option. We calculate the For Life and the Investment Back remaining withdrawal benefit bases separately on:
•
The rider effective date,
•
When a premium payment is made,
•
When a GMWB Step-Up is applied, and
•
When a withdrawal is taken.
The initial remaining withdrawal benefit base for both withdrawal options is equal to the initial premium payment (and likewise equal to the initial withdrawal benefit base) on the rider effective date.

Appendix F – PIB 10    110
(for applications signed before June 1, 2015)    


After the rider effective date, the remaining withdrawal benefit base for each withdrawal option will be:
•
increased dollar-for-dollar by each additional premium payment made and any GMWB Step-Up; and
•
decreased dollar-for-dollar for each withdrawal benefit payment taken; and
•
decreased to reflect any excess withdrawals taken since the previous Contract anniversary (the reduction will be greater than dollar-for-dollar, as shown below, if the Contract accumulated value is less than the remaining withdrawal benefit base at the time of the excess withdrawal). See Principal Income Builder 10 - Excess Withdrawals, below, for information about the negative effect that excess withdrawals have on the riders.
NOTE:
The For Life remaining withdrawal benefit base is only applicable when the Contract accumulated value reduces to zero. Once your Contract accumulated value reduces to zero, For Life withdrawal benefit payments will be payable until the later of the date of your death or the date the For Life remaining withdrawal benefit base is zero. For further information, see Effect of the Contract Accumulated Value Reaching Zero Under the Principal Income Builder 10 Rider.
Principal Income Builder 10 - Withdrawal Benefit Payments
The Investment Back withdrawal benefit payment is equal to 7% of the Investment Back withdrawal benefit base. The Investment Back withdrawal benefit payments are available as of the rider effective date.
For Life withdrawal benefit payments are available (i) on the rider effective date if the oldest owner (or oldest annuitant, if the Contract owner is not a natural person) is at least age 59½ or (ii) on the Contract anniversary following the date that the oldest owner (or oldest annuitant, if applicable) attains age 59½.
The For Life withdrawal benefit payments are automatically calculated as “Single Life” unless you provide notice and good order instructions to select “Joint Life” For Life withdrawal benefit payments. If eligible, you may elect “Joint Life” For Life withdrawal benefit payments anytime on or before your first withdrawal following the rider effective date. Once you take this first withdrawal, you cannot change your election of “Single Life” or “Joint Life” For Life withdrawal benefit payments, regardless of any change in life events.
“Single Life” For Life withdrawal benefit payments. “Single Life” For Life withdrawal benefit payments are based on one covered life. The covered life for “Single Life” is the:
a.
Owner if there is only one owner;
b.
Annuitant if the owner is not a natural person;
c.
Youngest joint owner if there are joint owners; or
d.
Youngest annuitant if there are joint annuitants and the owner is not a natural person.
In addition, the covered life must satisfy this rider’s issue age requirements on the date the covered life is designated in accordance with the terms of this rider.
As long as the Contract is in effect, “Single Life” or “Joint Life” For Life withdrawal benefit payments may be taken until the earlier of the date of the death of the first owner to die (first annuitant, if applicable) or the date the For Life withdrawal benefit base reduces to zero.
“Joint Life” For Life withdrawal benefit payments. “Joint Life” For Life withdrawal benefit payments are based on two covered lives. You may only elect “Joint Life” For Life withdrawal benefit payments if there are two covered lives that meet the eligibility requirements. There can be no more than two covered lives. The “Joint Life” election is not available if the owner is not a natural person.
To be eligible for “Joint Life” the covered lives must be:
a.
The owner and the owner’s spouse, provided there is only one owner and the spouse is named as a primary beneficiary; or
b.
The joint owners, provided the joint owners are each other’s spouse.
NOTE:  Under the Internal Revenue Code (the “Code”), spousal continuation and certain distribution options are available only to “spouses.” In satisfying such requirements, we will follow the U.S. Supreme Court's ruling in United States v. Windsor, 133 S. Ct. 2675 (2013) and any applicable regulatory requirements implemented in response to the Windsor ruling. As a result of the Windsor case, same-sex couples who are legally married in their respective states have the same rights to benefits under federal law as all opposite-sex couples have. All Contract provisions will be interpreted and administered in accordance with the requirements of the Code and Windsor. For more information, please see your tax advisor.
NOTE:
At the time a covered life is designated, that covered life must satisfy this rider’s issue age requirements.

Appendix F – PIB 10    111
(for applications signed before June 1, 2015)    


As long as the Contract is in effect, “Joint Life” For Life withdrawal benefit payments will continue until the earlier of the date of the death of the last covered life or the date the “For Life” withdrawal benefit base reduces to zero.
Calculating the Principal Income Builder 10 For Life Withdrawal Benefit Payment
The For Life withdrawal benefit payment is an amount equal to a percentage multiplied by the For Life withdrawal benefit base.
The For Life withdrawal benefit payment percentage depends on whether you have elected “Single Life” or “Joint Life” and the age of the covered life on the date of the first withdrawal following the rider effective date:
•
“Single Life”:
Age of Covered Life at First Withdrawal
For Life Withdrawal Benefit Payment Percentage
45-54
3.00%
55-64
4.00%
65-74
5.00%
75+
5.25%

•
“Joint Life”:
Age of Younger Covered Life at First Withdrawal
For Life Withdrawal Benefit Payment Percentage
45-54
2.50%
55-64
3.50%
65-74
4.50%
75+
4.75%

NOTE:
All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Under 72t, a customer can receive substantially equal payments without an IRS tax penalty, even if under age 59½. If you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals. See Principal Income Builder 10 - Excess Withdrawals for additional information.
Because the For Life withdrawal benefit payments are tiered based on the age of the younger covered life at the time of the first withdrawal, you should carefully choose when you take the first withdrawal following the rider effective date. Once a withdrawal is taken, the For Life withdrawal benefit payment percentage is locked in for the life of this rider. In addition, when you take your first withdrawal, your election of “Single Life” or “Joint Life” remains locked in and cannot be changed. For example, if you have elected “Joint Life” For Life withdrawal benefit payments and take the first withdrawal when the younger covered life is age 46, your For Life withdrawal benefit payment percentage will be locked in at 2.50% for the remaining life of this rider and cannot be changed.

Appendix F – PIB 10    112
(for applications signed before June 1, 2015)    


Principal Income Builder 10 - Covered Life Change
Any ownership change, change of beneficiary or other change before the annuitization date which would cause a change in a covered life (a “Change”) will result in termination of this rider, except for the following permissible Changes:
1.
Spousal continuation of this rider as described below in 8. DEATH BENEFIT.
2.
If withdrawals have not been taken and you have not previously elected to continue this rider as provided in 8. DEATH BENEFIT, then:
a.
You may add a joint owner or primary beneficiary to your Contract as a covered life, provided that the new joint owner or primary beneficiary is an eligible covered life as set forth above.
b.
You may remove a joint owner or primary beneficiary as a covered life.
c.
The For Life withdrawal benefit payment percentage will be based on the age of the covered lives and will lock in at the percentage applicable on the date of your first withdrawal.
3.
If withdrawals have been taken and you have locked in “Single Life” For Life withdrawal benefit payments, then:
a.
You may remove a joint owner as a covered life.
b.
You may add a primary beneficiary to your Contract, however, you may not add a primary beneficiary as a covered life for purposes of this rider.
c.
The For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.
4.
If withdrawals have been taken and you have locked in “Joint Life” For Life withdrawal benefit payments, then:
a.
You may remove a joint owner or primary beneficiary as a covered life.
b.
You may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider.
c.
The For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.
5.
If you have previously elected to continue this rider as provided in 8. DEATH BENEFIT, then you may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider. If the primary beneficiary that you add is your spouse, upon your death the spouse can continue the Contract, but the rider will terminate.
No Change is effective until approved by us in writing. Upon our approval, the Change is effective as of the date you signed the notice requesting the Change.
An assignment of the Contract or this rider shall be deemed a request for a Change. If the Change is not one of the above permissible Changes, this rider will be terminated as of the date of the assignment.
Principal Income Builder 10 - Effect of Withdrawals
This rider does not require you to take an available withdrawal benefit payment. If you want to take advantage of this rider’s GMWB Bonus feature, withdrawals cannot be taken during the period the GMWB Bonus is available. See Principal Income Builder 10 - GMWB Bonus.
If you elect not to take an available withdrawal benefit payment, that amount will not be carried forward to the next contract year.
Each time you take a withdrawal, it is reflected immediately in your Contract accumulated value and in the remaining withdrawal benefit base for each withdrawal option.

Appendix F – PIB 10    113
(for applications signed before June 1, 2015)    


If you take excess withdrawals, the withdrawal benefit base for each withdrawal option will be reduced on the next Contract anniversary. See Principal Income Builder 10 - Excess Withdrawals for information about the negative effect of excess withdrawals.
To help you better understand the various features of this rider and to demonstrate how premium payments made and withdrawals taken from the Contract affect the values and benefits under this rider, we have provided several examples at the end of this appendix.
Principal Income Builder 10 - Excess Withdrawals
Any portion of a withdrawal that exceeds the available withdrawal benefit payment for either withdrawal option is an excess withdrawal. Excess withdrawals decrease the withdrawal benefit bases, which will reduce future withdrawal benefit payments.
All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Therefore, if you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals.
The Investment Back withdrawal option permits larger payments to you than the For Life withdrawal option. As a result, if you take a withdrawal in an amount permitted under the Investment Back withdrawal option, that withdrawal will be an excess withdrawal to the extent that it exceeds the applicable For Life withdrawal benefit payment.
Excess withdrawals reduce withdrawal benefit payments, the withdrawal benefit bases, and the remaining withdrawal benefit bases for the two withdrawal options. The reductions can be greater than dollar-for-dollar when the Contract accumulated value is less than the applicable rider withdrawal benefit base at the time of the excess withdrawal.
The withdrawal benefit base is used to determine the withdrawal benefit payment whereas the remaining withdrawal benefit base is used to determine the amount available for future withdrawal benefit payments. These two values are calculated differently and have different purposes; therefore, the excess withdrawal adjustment for each will vary. If you choose to take an excess withdrawal, the equations below show how to calculate the excess withdrawal adjustment.
Effect on withdrawal benefit base. Excess withdrawals will reduce each of the withdrawal benefit bases in an amount equal to the greater of:
•
the excess withdrawal, or
•
the result of (a divided by b) multiplied by c, where:
a = the amount withdrawn that exceeds the available withdrawal benefit payment prior to the withdrawal;
b = the Contract accumulated value after the withdrawal benefit payment is deducted, but prior to deducting the amount of the excess withdrawal; and
c = the withdrawal benefit base prior to the adjustment for the excess withdrawal.
Effect on remaining withdrawal benefit base. Excess withdrawals will reduce each of the remaining withdrawal benefit bases in an amount equal to the greater of:
•
the excess withdrawal, or
•
the result of (a divided by b) multiplied by c, where:
a = the amount withdrawn that exceeds the available withdrawal benefit payment prior to the withdrawal;
b = the Contract accumulated value after the withdrawal benefit payment is deducted, but prior to deducting the amount of the excess withdrawal; and
c = the remaining withdrawal benefit base prior to the adjustment for the excess withdrawal.
NOTE:
All withdrawals taken prior to the date that the oldest owner (oldest annuitant, if applicable) has met the For Life age eligibility requirement are excess withdrawals.
NOTE:
Withdrawals prior to age 59½ may be subject to a 10% IRS penalty tax.

Appendix F – PIB 10    114
(for applications signed before June 1, 2015)    


Required Minimum Distribution (RMD) Program for GMWB Riders
Tax-qualified contracts are subject to certain federal tax rules requiring that RMD be taken on a calendar year basis (i.e., compared to a contract year basis), usually beginning after age 70½.
If you are eligible for and enroll in our RMD Program for GMWB Riders, as discussed below, a withdrawal taken to satisfy RMD for the Contract (an “RMD amount”) that exceeds a withdrawal benefit payment for that contract year will not be deemed an excess withdrawal. If you are eligible for and do not enroll in our RMD Program for GMWB Riders, as discussed below, a withdrawal taken to satisfy RMD for the Contract that exceeds a withdrawal benefit payment for that contract year will be deemed an excess withdrawal.
RMD Program. Eligibility in the RMD Program for GMWB Riders is determined by satisfaction of the following requirements:
•
The amount required to be distributed each calendar year for purposes of satisfying the RMD rules of the Internal Revenue Code is based only on this Contract (the “RMD amount”); and
•
You have elected scheduled withdrawal payments.
NOTE:
Although enrollment in the RMD Program for GMWB Riders does not prevent you from taking an unscheduled withdrawal, an unscheduled withdrawal will cause you to lose the RMD Program protections for the remainder of the contract year. This means that any withdrawals (scheduled or unscheduled) during the remainder of the contract year that exceed applicable withdrawal benefit payments will be treated as excess withdrawals, even if the purpose is to take the RMD amount. You will automatically be re-enrolled in the RMD Program for GMWB Riders on your next Contract anniversary.
We reserve the right to modify or eliminate the RMD Program for GMWB Riders; for example, if there is a change to the Internal Revenue Code or Internal Revenue Service rules or interpretations relating to RMD, including the issuance of relevant IRS guidance. We will send you at least 30 days advance notice of any change in or elimination of the RMD Program for GMWB Riders. Any modifications or elimination of the RMD Program for GMWB Riders will take effect after notice. If we exercise our right to modify or eliminate the RMD Program for GMWB Riders, then any scheduled or unscheduled withdrawal in excess of a withdrawal benefit payment after the effective date of the program’s modification or elimination will be deemed an excess withdrawal.
You may obtain more information regarding our RMD Program for GMWB Riders by contacting your registered representative or by calling us at 1-800-852-4450.
Principal Income Builder 10 - GMWB Bonus
Under the GMWB Bonus, on each of the first 10 Contract anniversaries following the rider effective date, we will credit a bonus (“GMWB Bonus”) to the withdrawal benefit base for each withdrawal option, provided you have not taken any withdrawals since the rider effective date.
The GMWB Bonus is equal to the total of all premium payments made prior to the applicable Contract anniversary multiplied by the applicable percentage shown in the chart below. If the contract date and the rider effective date are different (if we previously have allowed Contract owners to add a rider after issue), the GMWB Bonus is equal to the Contract accumulated value on the rider effective date plus premium payments made between the rider effective date and the Contract anniversary, multiplied by the applicable percentage shown in the chart below.
Contract Anniversary
(following the rider effective date)
GMWB Bonus Percentage
1-10
5.00%
11+
0.00%
The GMWB Bonus is no longer available after the earlier of:
•
The 10th Contract anniversary following the rider effective date; or
•
The date you take a withdrawal following the rider effective date.
NOTE:
The GMWB Bonus is used only for the purposes of calculating the withdrawal benefit bases for each withdrawal option. The GMWB Bonus is not added to your Contract accumulated value.

Appendix F – PIB 10    115
(for applications signed before June 1, 2015)    


Principal Income Builder 10 - GMWB Step-Up
The GMWB Step-Up is automatic and applies annually. Under this rider, unless an owner opts out of the automatic GMWB Step-Up, the rider charge will increase if our then current rider charge is higher than when the rider was purchased. The rider charge will never be greater than the maximum Principal Income Builder 10 rider charge. See SUMMARY OF EXPENSE INFORMATION section.
We determine eligibility for a GMWB Step-Up of the withdrawal benefit base and remaining withdrawal benefit base for each withdrawal option separately. If you satisfy the eligibility requirements on a Contract anniversary and your Contract accumulated value is greater than the applicable withdrawal benefit base, we will Step-Up the applicable withdrawal benefit base and remaining withdrawal benefit base to your Contract accumulated value on that Contract anniversary. We will not reduce your withdrawal benefit base or remaining withdrawal benefit base if your Contract accumulated value on a Contract anniversary is less than a withdrawal benefit base.
If we increase the rider charge for existing Contracts and you are eligible for a GMWB Step-Up of the withdrawal benefit base, you will be charged the then current rider charge. You may choose to opt out of the GMWB Step-Up feature if the charge for your rider will increase. We will send you advance notice if the charge for your rider will increase in order to give you the opportunity to opt out of the GMWB Step-Up feature. Once you opt out, you will no longer be eligible for future GMWB Step-Ups.
The GMWB Step-Up operates as follows:
On each Contract anniversary following the rider effective date, you are eligible for a GMWB Step-Up of a withdrawal benefit base if you satisfy all of the following requirements:
1.
The Contract anniversary occurs before the later of:
a.
the Contract anniversary following the date the oldest owner (oldest annuitant if the owner is not a natural person) attains age 80; or
b.
10 years after the rider effective date;
2.
You have not declined any increases in the rider charge; and
3.
You have not fully annuitized the Contract.
On each Contract anniversary following the rider effective date, you are eligible for a GMWB Step-Up of a remaining withdrawal benefit base if you satisfy all of the following requirements:
1.
The Contract anniversary occurs before the later of:
a.
the Contract anniversary following the date the oldest owner (oldest annuitant if the owner is not a natural person) attains age 80; or
b.
10 years after the rider effective date;
2.
You have not declined any increases in the rider charge;
3.
You have not fully annuitized the Contract; and
4.
The remaining withdrawal benefit base has not reduced to zero during the life of the rider.
NOTE:
If you take withdrawals in amounts that reduce the remaining withdrawal benefit base to zero, the remaining withdrawal benefit base is not eligible for a GMWB Step-Up (even if additional premium payments are made).

Appendix F – PIB 10    116
(for applications signed before June 1, 2015)    


Principal Income Builder 10 - Effect of Reaching the Maximum Annuitization Date
On or before the maximum annuitization date, you must elect one of the Contract or GMWB rider payment options described below.
1.
Contract payment options:
•
Payments resulting from applying the Contract accumulated value to an annuity benefit payment option.
•
Payment of the Contract accumulated value as a single payment.
2.
GMWB rider payment options:
•
You may elect the Investment Back withdrawal option and receive fixed scheduled payments each year in the amount of the Investment Back withdrawal benefit payment, until the Investment Back remaining withdrawal benefit base is zero. If there is any Investment Back remaining withdrawal benefit base at the time of your death (death of the first annuitant to die if the owner is not a natural person), we will continue payments as described in 8. DEATH BENEFIT.
•
You may elect the For Life withdrawal option and receive fixed scheduled payments each year in the amount of the For Life withdrawal benefit payment, until the later of:
•
the date the For Life remaining withdrawal benefit base is zero; or
•
the date of death of the last covered life.
If there is any For Life remaining withdrawal benefit base at the time of your death, we will continue payments as described in 8. DEATH BENEFIT.
The For Life withdrawal option allows you to spread your withdrawal benefit payments over your lifetime. The Investment Back withdrawal option provides a faster pay out of rider withdrawal benefit payments.
See Principal Income Builder 10 - Effect of Withdrawals for information on how withdrawals prior to the maximum annuitization date affect the GMWB values.
•
We will send you written notice at least 30 days prior to the maximum annuitization date and ask you to select one of the available payment options listed above. If we have not received your election as of the maximum annuitization date, we will automatically apply your Contract accumulated value to an annuity benefit payment option:
•
for Contracts with one annuitant – Life Income with payments guaranteed for a period of 10 years.
•
for Contracts with joint annuitants – Joint and Full Survivor Income with payments guaranteed for a period of 10 years.
Principal Income Builder 10 - Effect of the Contract Accumulated Value Reaching Zero
We will send you prior written notice whenever reasonably feasible if your Contract accumulated value is approaching zero.
In the event that the Contract accumulated value reduces to zero, you must elect either:
•
The Investment Back withdrawal option (only available if the Investment Back remaining withdrawal benefit base is greater than zero; see Principal Income Builder 10 - Effect of Withdrawals); or
•
The For Life withdrawal option (only available if the For Life withdrawal benefit base is greater than zero; see Principal Income Builder 10 - Effect of Withdrawals).
If we have not received your election or if you are receiving Investment Back scheduled withdrawal benefit payments, we will automatically begin making withdrawal benefit payments to you under the Investment Back withdrawal option, unless:
•
You have been receiving For Life scheduled withdrawal benefit payments. We will automatically continue to make payments to you under the For Life withdrawal option.
•
The Investment Back remaining withdrawal benefit base is zero. We will automatically begin making payments under the Single Life For Life withdrawal option.
The For Life withdrawal option allows you to spread your withdrawal benefit payments over your lifetime. The Investment Back withdrawal option provides a faster pay out of withdrawal benefit payments.

Appendix F – PIB 10    117
(for applications signed before June 1, 2015)    


We will pay the withdrawal benefit payments under the withdrawal option you have elected as follows:
•
If you elect the Investment Back withdrawal option, you will receive fixed scheduled payments each year in the amount of the Investment Back withdrawal benefit payment until the Investment Back remaining withdrawal benefit base is zero. If there is any Investment Back remaining withdrawal benefit base at the time of your death, we will continue payments as described in 8. DEATH BENEFIT.
•
If you have taken withdrawal benefit payments prior to the Contract accumulated value reaching zero, your For Life withdrawal option is either “Joint Life” or “Single Life” depending on your election at the time of your first withdrawal.
•
If you have not taken withdrawal benefit payments prior to the Contract accumulated value reaching zero, you must elect either:
•
The “Single Life” For Life withdrawal option: you will receive fixed scheduled payments each year in the amount of the “Single Life” For Life withdrawal benefit payment, until the later of:
•
the date the For Life remaining withdrawal benefit base is zero; or
•
the date of your death (annuitant’s death if the owner is not a natural person).
•
The “Joint Life” For Life withdrawal option: you will receive fixed scheduled payments each year in the amount of the “Joint Life” For Life withdrawal benefit payment, until the later of:
•
the date the For Life remaining withdrawal benefit base is zero; or
•
the date of the death of the last covered life.
If there is any For Life remaining withdrawal benefit base at the time of your death, we will continue payments as described in 8. DEATH BENEFIT.
NOTE:
In the event that the Contract accumulated value reduces to zero, the withdrawal benefit payments elected above will continue, but all other rights and benefits under this rider and the Contract (including the death benefits) will terminate, and no additional premium payments will be accepted.
Principal Income Builder 10 - Termination and Reinstatement
You may not terminate this rider prior to the 5th Contract anniversary following the rider effective date.
At any point in time, we will terminate this rider upon the earliest to occur:
•
The date you send us notice to terminate the rider (after the 5th Contract anniversary following the rider effective date). This will terminate the rider, not the Contract.
•
The date you fully annuitize, fully surrender or otherwise terminate the Contract.
•
The date the Investment Back remaining withdrawal benefit base and the For Life withdrawal benefit base are both zero.
•
The date the Contract owner is changed (annuitant is changed if the owner is not a natural person), except a change in owner due to a spousal continuation of the rider as described in 8. DEATH BENEFIT or the removal/ addition of a joint life as described in Principal Income Builder 10 - Covered Life Change.
•
The date your surviving spouse elects to continue the Contract without this rider (even if prior to the 5th Contract anniversary following the rider effective date).
•
The date the Investment Back remaining withdrawal benefit base is zero and there are no eligible covered lives.
•
The date you make an impermissible change in a covered life.
If this rider terminates for any reason other than full surrender of the Contract, this rider may not be reinstated.
If you surrender the Contract with this rider attached and the Contract is later reinstated, this rider also must be reinstated. At the time this rider is reinstated, we will deduct rider charges scheduled during the period of termination and make any other adjustments necessary to reflect any changes in the amount reinstated and the Contract accumulated value as of the date of termination.

Appendix F – PIB 10    118
(for applications signed before June 1, 2015)    


Principal Income Builder 10 - Effect of Divorce
Generally, in the event of a divorce, the spouse who retains ownership of the Contract will continue to be entitled to all rights and benefits of this rider while the former spouse will no longer have any such rights or be entitled to any benefits under this rider. If you take a withdrawal to satisfy a court order to pay a portion of the Contract to your former spouse, any portion of such withdrawal that exceeds the available withdrawal benefit payments will be deemed an excess withdrawal under this rider.
NOTE:
If this excess withdrawal causes both the For Life withdrawal benefit base and the Investment Back remaining withdrawal benefit base to go to zero, the rider will terminate at the next Contract anniversary unless you make additional premium payments or a GMWB Step-Up is applied. For further information, see Principal Income Builder 10 - Excess Withdrawals.
Principal Income Builder 10 Rider Summary
Name of Rider
PIB 10
Marketing Name
Principal Income Builder 10
Rider Issue Age
45 – 80
Rider Charge
PIB 10 Rider Charges (as a percentage of average quarterly Investment Back withdrawal benefit base)
•    Maximum annual charge is 2.00%.
•    Current annual charge is 1.20%.
Guaranteed Minimum Withdrawal Benefits
•    Investment Back
•    For Life
Annual Withdrawal Limits
•    Investment Back — 7.00% of the Investment Back withdrawal benefit base.
•    “Single Life” — tiered percentages based on age at first withdrawal, beginning at 3.00% and capping at a maximum of 5.25% of the For Life withdrawal benefit base
•    “Joint Life” — tiered percentages based on age at first withdrawal, beginning at 2.50% and capping at a maximum of 4.75% of the For Life withdrawal benefit base
For Life Withdrawal Benefit Payments
•    “Single Life” or “Joint Life” (your life and the lifetime of your eligible spouse)
•    For Life withdrawal benefit payments default to “Single Life” unless “Joint Life” is elected
•    Available the Contract anniversary following the date the oldest owner turns 59½ — all withdrawals prior to that Contract anniversary are excess withdrawals under the For Life withdrawal option
Termination
•    You may terminate this rider anytime after the 5th Contract anniversary following the rider effective date
GMWB Step-Up
•    Automatic annual GMWB Step-Up available until the later of (a) the Contract anniversary prior to age 80 or (b) 10 years after the rider effective date.
•    A remaining withdrawal benefit base under a withdrawal option is not eligible for a GMWB Step-Up after the remaining withdrawal benefit base reduces to zero, even if additional premium payments are made.
GMWB Bonus
•    If no withdrawals are taken, a GMWB Bonus is applied to the benefit bases on each applicable Contract anniversary.
Investment Restrictions
•    You must select one or more of the available GMWB investment options; there are no additional restrictions on allocations to the Fixed Account or DCA Plus accounts.
Spousal Continuation
•    At the death of the first owner to die, a spouse who is a joint owner or primary beneficiary may continue the Contract with or without this rider.
•    The Investment Back withdrawal option continues; the For Life withdrawal option continues only for eligible spouses.

Appendix F – PIB 10    119
(for applications signed before June 1, 2015)    


GMWB Death Benefit - Principal Income Builder 10
While a GMWB rider is active, the GMWB Death Benefit replaces any other death benefit under the Contract. The GMWB Death Benefit is similar to the Standard Death Benefit with the exception of how withdrawals reduce the death benefit amount. The GMWB Death Benefit terminates when the GMWB rider terminates.
1.     If you are the only owner, upon your death, your primary beneficiary may elect one of the following:
a.
receive the GMWB Death Benefit as set forth below;
b.
receive the Investment Back Remaining Withdrawal Benefit Base as a series of payments in an amount and frequency acceptable to us; or
c.
if the primary beneficiary is your spouse, your spouse may continue the Contract with or without this rider as set forth later in this section.
2. If there are joint owners, upon the death of the first joint owner to die, the surviving joint owner may elect one of the following:
a.
receive the GMWB Death Benefit as set forth below;
b.
receive the Investment Back Remaining Withdrawal Benefit Base as a series of payments in an amount and frequency acceptable to us; or
c.
if the surviving joint owner is your spouse, your spouse may continue the Contract with or without this rider as set forth later in this section.
The GMWB Death Benefit is equal to the greatest of:
1.
the Contract accumulated value as of the valuation date on which we receive the proof of death and all required documents;
2.
the total premium payments minus each withdrawal** taken on or before the valuation date on which we receive the proof of death and all required documents;
3.
the Contract accumulated value that was in effect on any prior Contract anniversary that is divisible equally by 7, plus any premium payments made after that Contract anniversary minus each withdrawal** taken after that Contract anniversary.
**
For 2. and 3. above, a withdrawal that is not a "For Life" Excess Withdrawal will reduce the GMWB Death Benefit by the amount of the withdrawal. Then, each "For Life" Excess Withdrawal will proportionately reduce the GMWB Death Benefit by the ratio of the "For Life" Excess Withdrawal taken to the Contract accumulated value immediately prior to the "For Life" Excess Withdrawal. NOTE: This is different than how withdrawals reduce the standard death benefit.
**
For 2. and 3. above, withdrawals up to the RMD amount under the RMD Program for GMWB Riders are not considered excess withdrawals and reduce the GMWB Death Benefit by the amount of the withdrawal. If you are taking withdrawals under the Investment Back withdrawal option, any amount greater than the “For Life” withdrawal benefit payment, or RMD amount if taken under the RMD Program for GMWB Riders, are deducted proportionately rather than dollar-for-dollar.

Appendix F – PIB 10    120
(for applications signed before June 1, 2015)    


If the Contract Accumulated Value is Greater than Zero. The following table illustrates the various situations and the resulting outcomes if your Contract accumulated value is greater than zero at your death.
If you die and...
And...
Then...
You are the sole owner
Your spouse is not named as a primary beneficiary
The primary beneficiary(ies) must elect one of the following:

a. Receive the GMWB Death Benefit; or
b. Receive the Investment Back remaining withdrawal benefit base as a series of payments.*

Upon your death, only your beneficiary(ies)’s right to the above-selected payments will continue; all other rights and benefits under the rider and Contract will terminate.
You are the sole owner
Your spouse is named as a primary beneficiary
Your spouse may:

a. Continue the Contract with or without this rider as set forth later in this section; or
b. Elect one of the following:
•    receive the GMWB Death Benefit;
•    receive the Investment Back remaining withdrawal benefit base as a series of payments.*

All other primary beneficiaries must elect one of the options listed above in b.

Unless your spouse elects to continue the Contract with this rider, only your spouse’s and beneficiary(ies)’s right to the above-selected payments will continue; all other rights and benefits under the rider and Contract will terminate.
You are a joint owner
The surviving joint owner is not your spouse
Your surviving owner must elect one of the following:

a. Receive the GMWB Death Benefit; or
b. Receive the Investment Back remaining withdrawal benefit base as a series of payments.*

Upon your death, only the surviving owner’s right to the above selected payments will continue; all other rights and benefits under the rider and Contract will terminate.
You are a joint owner
The surviving joint owner is your spouse
Your spouse may:

a. Continue the Contract with or without this rider as set forth later in this section; or
b. Elect one of the following:
•    receive the GMWB Death Benefit;
•    receive the Investment Back remaining withdrawal benefit base as a series of payments.*

Unless the surviving spouse owner elects to continue the Contract with this rider, upon your death, only your spouse’s right to the above-selected payments will continue; all other rights and benefits under the rider and Contract will terminate.

*
We will make payments in an amount and frequency acceptable to us. If a surviving owner or beneficiary chooses a periodic payment, it must be at least $100 per payment until the Investment Back remaining withdrawal benefit base is zero.

NOTE: The “Joint Life” For Life withdrawal option is not available if the owner is not a natural person.

Appendix F – PIB 10    121
(for applications signed before June 1, 2015)    


If...
And...
Then...
The annuitant dies
The owner is not a natural person
The beneficiary(ies) receive the death benefit under the Contract.
If a beneficiary dies before the annuitant, on the annuitant’s death we will make equal payments to the surviving beneficiaries unless the owner provided us with other written instructions. If no beneficiary(ies) survive the annuitant, the death benefit is paid to the owner.
Upon the annuitant’s death, only the beneficiary(ies) right to the death benefit will continue; all other rights and benefits under the Contract will terminate.

If the Contract Accumulated Value is Zero. The following table illustrates the various situations and the resulting outcomes if the Contract accumulated value is zero at your death.
If you die and…
And…
Then…
You are the sole owner
You elected the “Single Life” For Life withdrawal option*
We will continue payments to your beneficiary(ies) according to the schedule established when you made your election until the For Life remaining withdrawal benefit base reduces to zero.
You are the sole owner
You elected the “Joint Life” For Life withdrawal option*
We will continue payments to the surviving covered life according to the schedule established when you made your election until the date of the surviving covered life’s death.
Upon the surviving covered life’s death, we will continue payments to your beneficiary(ies) according to the schedule established when you made your election until the For Life remaining withdrawal benefit base reduces to zero.
You are the sole owner
You elected the Investment Back withdrawal option*
We will continue payments to your beneficiary(ies) according to the schedule established when you made your election until the Investment Back remaining withdrawal benefit base reduces to zero.
You are a joint owner
You elected the “Single Life” For Life withdrawal option*
We will continue payments to the surviving joint owner according to the schedule established when you made your election until the For Life remaining withdrawal benefit base reduces to zero.

Upon the surviving joint owner’s death, we will continue payments to your beneficiary(ies) according to the schedule established when you made your election until the For Life remaining withdrawal benefit base reduces to zero.
You are a joint owner
You elected the “Joint Life” For Life withdrawal option*
We will continue payments to the surviving covered life according to the schedule established when you made your election until the date of the surviving covered life’s death.

Upon the surviving joint owner’s death, we will continue payments to your beneficiary(ies) according to the schedule established when you made your election until the For Life remaining withdrawal benefit base reduces to zero.

Appendix F – PIB 10    122
(for applications signed before June 1, 2015)    


If you die and…
And…
Then…
You are a joint owner
You elected the Investment Back withdrawal option*
We will continue payments to the surviving joint owner according to the schedule established when you made your election until the Investment Back remaining withdrawal benefit base reduces to zero.

Upon the surviving joint owner’s death, we will continue payments to your beneficiary(ies) according to the schedule established when you made your election until the Investment Back remaining withdrawal benefit base reduces to zero.
* See Principal Income Builder 10 - Effect of the Contract Accumulated Value Reaching Zero for details regarding election of the For Life withdrawal option or the Investment Back withdrawal option.
NOTE: The “Joint Life” For Life withdrawal option is not available if the owner is not a natural person.
If...
And...
Then...
The annuitant dies
The owner is not a natural person

The owner elected the “Single Life” For Life Withdrawal option*


The owner elected the Investment Back withdrawal option*

The beneficiary(ies) receive the death benefit under the Contract.

We will continue payments to the owner’s beneficiary(ies) according to the schedule established when the owner made its election until the For Life remaining withdrawal benefit base reduces to zero.

We will continue payments to the owner’s beneficiary(ies) according to the schedule established when the owner made its election until the Investment Back remaining withdrawal benefit base reduces to zero.

Spousal Continuation of the Principal Income Builder 10 Rider
This rider provides that the Investment Back and the For Life withdrawal options may be available in certain situations to an eligible spouse who continues the Contract with the rider.
If you die while this rider is in effect and if your surviving spouse elects to continue the Contract in accordance with its terms, the surviving spouse may also elect to continue this rider if:
1.
The Contract accumulated value is greater than zero;
2.
There has not been a previous spousal continuation of the Contract and this rider; and
3.
Your spouse is either:
a.    your primary beneficiary, if you were the sole owner; or
b.    the surviving joint owner, if there were joint owners.
If your spouse elects to continue the Contract without this rider, this rider and all rights, benefits and charges under this rider will terminate and cannot be reinstated.
NOTE:
Although spousal continuation may be available under federal tax laws for a subsequent spouse, this rider may be continued one time only.

Appendix F – PIB 10    123
(for applications signed before June 1, 2015)    


The following table illustrates the various changes and the resulting outcomes associated with continuation of this rider by an eligible surviving spouse.
If you die and…
And…
Then if your spouse continues this rider…
No withdrawals have been taken since the rider effective date

Your spouse meets the minimum issue age requirement

Your spouse may take withdrawals under either withdrawal option as follows:

a. The For Life withdrawal option will be available until the earlier of the death of your spouse or the For Life withdrawal benefit base reduces to zero. For Life withdrawal benefits will automatically be calculated as “Single Life” and your spouse will be the sole covered life. Your spouse may not add a new covered life or elect “Joint Life”. The For Life withdrawal benefit percentage will be based on your spouse’s age and will lock in at the “Single Life” percentage applicable on the date of your spouse’s first withdrawal.
b. The Investment Back withdrawal option will continue to be available until the Investment Back remaining withdrawal benefit base is zero.
c. All other provisions of this rider will continue as in effect on the date of your death.
No withdrawals have been taken since the rider effective date
Your spouse does not meet the minimum issue age requirement
The For Life withdrawal option terminates upon your death.

Your spouse may take withdrawals under the Investment Back withdrawal option as follows:

a. The Investment Back withdrawal option will continue to be available until the Investment Back remaining withdrawal benefit base is zero.
b. All other provisions of this rider will continue as in effect on the date of your death.

Appendix F – PIB 10    124
(for applications signed before June 1, 2015)    


If you die and…
And…
And…
Then if your spouse continues this rider
Withdrawals have been taken since the rider effective date
You have locked in “Single Life” For Life withdrawal benefits
---
The For Life withdrawal option terminates upon your death.

Your spouse may take withdrawals under the Investment Back withdrawal option as follows:

a. The Investment Back withdrawal option will continue to be available until the Investment Back remaining withdrawal benefit base reduces to zero.
b. All other provisions of this rider will continue as in effect on the date of your death.
Withdrawals have been taken since the rider effective date
You have locked in “Joint Life” For Life withdrawal benefits
Your spouse is the surviving covered life
Your spouse may take withdrawals under either withdrawal option as follows:

a. The For Life withdrawal option will continue to be available until the earlier of the death of your spouse or the For Life withdrawal benefit base reduces to zero. For Life withdrawal benefits will continue to be calculated as “Joint Life”. The For Life withdrawal benefit percentage will remain locked in at the “Joint Life” percentage applicable on the date of your first withdrawal and will not be reset to reflect your death.
b. The Investment Back withdrawal option will continue to be available until the Investment Back remaining withdrawal benefit base reduces to zero.
c. All other provisions of this rider will continue as in effect on the date of your death.
Withdrawals have been taken since the rider effective date
You have locked in “Joint Life” For Life withdrawal benefits
There is no surviving covered life
The For Life withdrawal option terminates upon your death.

Your spouse may take withdrawals under the Investment Back withdrawal option as follows:

a. The Investment Back withdrawal option will continue to be available until the Investment Back remaining withdrawal benefit base reduces to zero.
b. All other provisions of this rider will continue as in effect on the date of your death.

Appendix F – PIB 10    125
(for applications signed before June 1, 2015)    


Principal Income Builder 10 Examples (for applications signed before June 1, 2015)
These examples have been provided to assist you in understanding the various features of the Principal Income Builder 10 GMWB rider and to demonstrate how premium payments received and withdrawals taken from the Contract affect the values and benefits under the rider. These examples are based on certain hypothetical assumptions and are for illustrative purposes only. These examples are not intended to serve as projections of future investment returns.

NOTE:    The owner’s actions determine the benefits received.

NOTE:
For the purpose of the following examples, a partial annuitization has the same effect as a partial surrender and both are referred to as a withdrawal in the following examples.

Examples Without Excess Withdrawals

Examples 1-5 (without excess withdrawals) assume the following:
•
the owner is age 62 and the owner’s spouse is age 60 on the rider effective date.
•
initial premium payment = $100,000.
•
the withdrawal benefit bases prior to partial surrender = $100,000.
•
the remaining withdrawal benefit bases prior to partial surrender = $100,000.
•
Investment Back (7%) withdrawal benefit payment = $7,000.
•
“Single Life” For Life (4.00%) withdrawal benefit payment = $4,000, if withdrawals start prior to the owner attaining age 65.
•
“Joint Life” For Life (3.50%) withdrawal benefit payment = $3,500, if withdrawals start prior to the spouse attaining age 65.

Example 1
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the owner has not made a For Life withdrawal benefit payment election, we automatically calculate the For Life withdrawal benefit payment as “Single Life”.

On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit base (but not to the remaining withdrawal benefit bases). The credit is $100,000 x 0.05 = $5,000.
•
there is no GMWB Step-Up because the withdrawal benefit bases after the bonus is credited are larger than the Contract’s accumulated value.
•
Investment Back:
•the new Investment Back withdrawal benefit base is $100,000 + 5,000 = $105,000;
•the Investment Back remaining withdrawal benefit base remains the same ($100,000); and
•the new Investment Back withdrawal benefit payment is $105,000 x 0.07 = $7,350.
•
For Life:
•
the new For Life withdrawal benefit base is $100,000 + 5,000 = $105,000;
•
the For Life remaining withdrawal benefit base remains the same ($100,000); and
•
the new “Single Life” For Life withdrawal benefit payment is $105,000 x 0.040 = $4,200.

Example 2
In contract year one:
•
no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the owner has not made a For Life withdrawal benefit payment election, we automatically calculate the For Life withdrawal benefit payment as “Single Life”.
•
the owner makes a premium payment of $50,000.


Appendix F – PIB 10    126
(for applications signed before June 1, 2015)    


On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit base (but not to the remaining withdrawal benefit bases). The credit is ($100,000 + $50,000) x 0.05 = $7,500.
•
there is no GMWB Step-Up because the withdrawal benefit bases after the bonus is credited are larger than the Contract’s accumulated value.
•
Investment Back:
•
the new Investment Back withdrawal benefit base is $100,000 + $50,000 + $7,500 = $157,500;
•
the new Investment Back remaining withdrawal benefit base is $100,000 + $50,000 = $150,000; and
•the new Investment Back withdrawal benefit payment is $157,500 x 0.07 = $11,025.
•
For Life:
•
the new For Life withdrawal benefit base is $100,000 + $50,000 + $7,500 = $157,500;
•
the new For Life remaining withdrawal benefit base is $100,000 + $50,000 = $150,000; and
•
the new “Single Life” For Life withdrawal benefit payment is $157,500 x 0.040 = $6,300.

Example 3
In contract year one, the owner elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $3,500. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 3.50%.

On the first Contract anniversary:
•
Since a withdrawal was taken in contract year one, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit bases are larger than the Contract’s accumulated value.
•
Investment Back:
•
the withdrawal benefit base remains the same ($100,000);
•
the new remaining withdrawal benefit base is $100,000 - $3,500 = $96,500; and
•
the withdrawal benefit payment for the next contract year remains the same ($100,000 x 0.07 = $7,000).
•
For Life:
•
the For Life withdrawal benefit base remains the same ($100,000);
•
the new For Life remaining withdrawal benefit base is $100,000 - $3,500 = $96,500; and
•
the “Joint Life” For Life withdrawal benefit payment for the next contract year remains the same ($100,000 x 0.0350 = $3,500).

Example 4
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the owner has not made a For Life withdrawal benefit payment election, we automatically calculate For Life withdrawal benefit payment as “Single Life”.

On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit bases. The credit is $100,000 x 0.05 = $5,000.
•
there is no GMWB Step-Up because the withdrawal benefit bases after the bonus is credited are larger than the Contract’s accumulated value.
•
Investment Back:
•
the new Investment Back withdrawal benefit base is $100,000 + 5,000 = $105,000;
•
the Investment Back remaining withdrawal benefit base remains the same ($100,000); and
•
the new Investment Back withdrawal benefit payment is $105,000 x 0.07 = $7,350.
•
For Life:
•
the new For Life withdrawal benefit base is $100,000 + 5,000 = $105,000;
•
the For Life remaining withdrawal benefit base remains the same ($100,000); and
•
the new “Single Life” For Life withdrawal benefit payment is $105,000 x 0.0400 = $4,200.

In contract year two, the owner elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $3,500. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 3.50%.

Appendix F – PIB 10    127
(for applications signed before June 1, 2015)    


On the second Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit bases are larger than the Contract’s accumulated value.
•
Investment Back:
•the Investment Back withdrawal benefit base remains the same ($105,000);
•the new Investment Back remaining withdrawal benefit base is $100,000 - $3,500 = $96,500; and
•
the Investment Back withdrawal benefit payment for the next contract year remains the same ($105,000 x 0.07 = $7,350).
•
For Life:
•
the For Life withdrawal benefit base remains the same ($105,000);
•
the new For Life remaining withdrawal benefit base is $100,000 - $3,500 = $96,500; and
•
the “Joint Life” For Life withdrawal benefit payment for the next contract year is $105,000 x 0.0350 = $3,675.

In contract year three, no withdrawals are taken. The “Joint Life” For Life withdrawal benefit payment percentage remains locked-in at 3.50%.

On the third Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit bases are larger than the Contract’s accumulated value.
•
Investment Back:
•
the Investment Back withdrawal benefit base remains the same ($105,000);
•
the Investment Back remaining withdrawal benefit base remains the same ($96,500); and
•
the Investment Back withdrawal benefit for the next contract year remains the same ($105,000 x 0.07 = $7,350).
•
For Life:
•
the For Life withdrawal benefit base remains the same ($105,000);
•
the For Life remaining withdrawal benefit base remains the same ($96,500); and
•
the “Joint Life” For Life withdrawal benefit payment for the next contract year remains the same ($105,000 x 0.0350 = $3,675).
Example 5
The owner elects the “Single Life” For Life withdrawal benefit payment, and in each of the first two contract years, takes a withdrawal of $4,000. Assume there is no GMWB Step-Up on the first Contract anniversary. On the 2nd Contract anniversary, the owner will receive the GMWB Step-Up if the Contract’s accumulated value is greater than the applicable withdrawal benefit base.
If the accumulated value on the second
Contract anniversary is:
$95,000
$110,000
Investment Back
 
 
Prior to step-up
 
 
Withdrawal Benefit Base
$100,000
$100,000
Withdrawal Benefit Payment
$100,000 x 0.07 = $7,000
$100,000 x 0.07 = $7,000
Remaining Withdrawal Benefit Base
$90,000
$90,000
After step-up
 
 
Withdrawal Benefit Base
$100,000
$110,000
Withdrawal Benefit Payment
$100,000 x 0.07 = $7,000
$110,000 x 0.07 = $7,700
Remaining Withdrawal Benefit Base
$90,000
$110,000
For Life (“Single Life”)
 
 
Prior to step-up
 
 
Withdrawal Benefit Base
$100,000
$100,000
Withdrawal Benefit Payment
$100,000 x 0.0400 = $4,000
$100,000 x 0.0400 = $4,000
Remaining withdrawal Benefit Base
$90,000
$90,000

Appendix F – PIB 10    128
(for applications signed before June 1, 2015)    


If the accumulated value on the second
Contract anniversary is:
$95,000
$110,000
After step-up
 
 
Withdrawal Benefit Base
$100,000
$110,000
Withdrawal Benefit Payment
$100,000 x 0.0400 = $4,000
$110,000 x 0.0400 = $4,400
Remaining Withdrawal Benefit Base
$90,000
$110,000

Example 6 (without excess withdrawals) assumes the following:
•
the owner is age 70 and the owner’s spouse is age 56 on the rider effective date.
•
initial premium payment = $100,000.
•
the withdrawal benefit bases prior to partial surrender = $100,000.
•
the remaining withdrawal benefit bases prior to partial surrender = $100,000.
•
Investment Back (7%) withdrawal benefit payment = $7,000.
•
“Single Life” For Life (5.00%) withdrawal benefit payment = $5,000.
•
“Joint Life” For Life (3.50%) withdrawal benefit payment = $3,500, if withdrawals start prior to the owner’s spouse attaining age 65.
Example 6
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the owner has not made a For Life withdrawal benefit payment election, we automatically calculate For Life withdrawal benefit payment as “Single Life”.
On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit bases. The credit is $100,000 x 0.050 = $5,000.
•
there is no GMWB Step-Up because the withdrawal benefit bases after the bonus is credited are larger than the Contract’s accumulated value.
•
Investment Back:
•
the new Investment Back withdrawal benefit base is $100,000 + 5,000 = $105,000;
•
the Investment Back remaining withdrawal benefit base remains the same ($100,000); and
•
the new Investment Back withdrawal benefit payment is $105,000 x 0.07 = $7,350.
•
For Life:
•
the new For Life withdrawal benefit base is $100,000 + 5,000 = $105,000;
•
the For Life remaining withdrawal benefit base remains the same ($100,000); and
•
the new “Single Life” For Life withdrawal benefit payment is $105,000 x 0.0500 = $5,250.
In contract year two, the owner elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $3,500. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 3.50%.
On the second Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit bases are larger than the Contract’s accumulated value.
•
Investment Back:
•the Investment Back withdrawal benefit base remains the same ($105,000);
•the new Investment Back remaining withdrawal benefit base is $100,000 - $3,500 = $96,500; and
•
the Investment Back withdrawal benefit payment for the next contract year remains the same ($105,000 x 0.07 = $7,350).
•
For Life:
•
the For Life withdrawal benefit base remains the same ($105,000);
•
the new For Life remaining withdrawal benefit base is $100,000 - $3,500 = $96,500; and
•
the “Joint Life” For Life withdrawal benefit payment for the next contract year is $105,000 x 0.0350 = $3,675.
In contract year three, no withdrawals are taken. The “Joint Life” For Life withdrawal benefit payment percentage remains locked-in at 3.50%.

Appendix F – PIB 10    129
(for applications signed before June 1, 2015)    


On the third Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit bases are larger than the Contract’s accumulated value.
•
Investment Back:
•
the Investment Back withdrawal benefit base remains the same ($105,000);
•
the Investment Back remaining withdrawal benefit base remains the same ($96,500); and
•
the Investment Back withdrawal benefit for the next contract year remains the same ($105,000 x 0.07 = $7,350).
•
For Life:
•
the For Life withdrawal benefit base remains the same ($105,000);
•
the For Life remaining withdrawal benefit base remains the same ($96,500); and
the “Joint Life” For Life withdrawal benefit payment for the next contract year remains the same ($105,000 x 0.0350 = $3,675).

Examples With Excess Withdrawals

Excess withdrawal examples 7-8 assume the following:
•
the owner is age 62 and elected “Single Life” For Life withdrawal benefit payments at the first withdrawal and therefore, locks-in the “Single Life” For Life withdrawal benefit payment percentage at 4.00%.
•
the initial premium payment is $100,000
•
the withdrawal benefit bases prior to partial surrender = $100,000
•
the remaining withdrawal benefit bases prior to partial surrender = $100,000
•
Investment Back (7%) withdrawal benefit payment = $7,000
•
“Single Life” For Life (4.00%) withdrawal benefit payment = $4,000
•
Withdrawal taken = $8,000
•excess amount under the Investment Back withdrawal option is $1,000; and
•excess amount under the For Life withdrawal option is $4,000

Example 7
In this example, assume the accumulated value prior to the withdrawal is $90,000.

Withdrawal Benefit Base Calculation
On the Contract anniversary following the withdrawal, the withdrawal benefit base is adjusted for any excess withdrawals.

Investment Back
The amount of the adjustment* is $1,204.82. The new Investment Back withdrawal benefit base is $100,000 - $1,204.82 = $98,795.18.

*The amount of the adjustment for the excess withdrawal is the greater of a or b where:

a = $1,000 (the amount of the excess withdrawal); and
b = $1,204.82 (the result of (1 divided by 2) multiplied by 3) where:

1 = the amount of the withdrawal greater than the Investment Back withdrawal benefit payment remaining prior to the withdrawal ($1,000);

2 = the accumulated value after the Investment Back withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($90,000 - $7,000); and

3 = the Investment Back withdrawal benefit base prior to the adjustment for the excess amount ($100,000).


Appendix F – PIB 10    130
(for applications signed before June 1, 2015)    


For Life
The amount of the adjustment* is $4,651.16. The new For Life withdrawal benefit base is $100,000 - $4,651.16 = $95,348.84.

*The amount of the adjustment for the excess withdrawal is the greater of a or b where:
a = $4,000 (the amount of the excess withdrawal); and
b = $4,651.16 (the result of (1 divided by 2) multiplied by 3) where:
1 = the amount of the withdrawal greater than the “Single Life” For Life withdrawal benefit payment remaining prior to the withdrawal ($4,000);
2 = the accumulated value after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($90,000 - $4,000); and
3 = the For Life withdrawal benefit base prior to the adjustment for the excess amount ($100,000).
Remaining Withdrawal Benefit Base Calculation
The remaining withdrawal benefit base is adjusted when withdrawals are taken.

Investment Back
The amount of the adjustment* is $8,120.48 (the amount of the Investment Back withdrawal benefit plus the excess withdrawal). The new Investment Back remaining withdrawal benefit base is $100,000 - $8,120.48 = $91,879.52.

*
The amount of the adjustment is (a plus b) where:
a = $7,000 (the actual amount withdrawn that does not exceed the Investment Back withdrawal benefit payment); and
b = $1,120.48 (a proportionate reduction for the excess withdrawal). The amount of the proportionate reduction is the greater of 1 or 2 where:

1 = $1,000 (the amount of the excess withdrawal); and

2 = $1,120.48 (the result of (x divided by y) multiplied by z) where:

x = the amount of the withdrawal greater than the Investment Back withdrawal benefit payment available prior to the withdrawal ($1,000);

y = the accumulated value after the Investment Back withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($90,000 - $7,000); and

z = the Investment Back remaining withdrawal benefit base after the Investment Back withdrawal benefit payment is deducted but prior to the adjustment for the excess amount ($100,000 - $7,000).


Appendix F – PIB 10    131
(for applications signed before June 1, 2015)    


For Life
The amount of the adjustment* is $8,465.12 (the amount of the “Single Life” For Life withdrawal benefit payment plus the excess withdrawal). The new For Life remaining withdrawal benefit base is $100,000 - $8,465.12 = $91,534.88.

*
The amount of the adjustment is (a plus b) where:
a = $4,000 (the actual amount withdrawn that does not exceed the “Single Life” For Life withdrawal benefit payment); and
b = $4,465.12 (a proportionate reduction for the excess withdrawal). The amount of the proportionate reduction is the greater of 1 or 2 where:

1 = $4,000 (the amount of the excess withdrawal); and

2 = $4,465.12 (the result of (x divided by y) multiplied by z) where:

x = the amount of the withdrawal greater than the “Single Life” For Life withdrawal benefit payment remaining prior to the withdrawal ($4,000);

y = the accumulated value after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($90,000 - $4,000); and

z = the For Life remaining withdrawal benefit base after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the adjustment for the excess amount ($100,000 - $4,000).

Withdrawal Benefit Payment Calculation (for the next contract year)
The withdrawal benefit payment is the new withdrawal benefit base (calculated on the Contract anniversary) multiplied by the associated percentage. The “Single Life” For Life withdrawal benefit payment percentage is locked-in at 4.00%.

Investment Back
The new Investment Back withdrawal benefit payment is $98,795.18 x 0.07 = $6,915.66.

For Life
The new “Single Life” For Life withdrawal benefit payment is $95,348.84 x 0.0400 = $3,813.95.

Example 8
In this example, assume the accumulated value prior to the withdrawal is $110,000.

Withdrawal Benefit Base Calculation
On the Contract anniversary following the withdrawal, the withdrawal benefit base is adjusted for any excess withdrawals.

Investment Back
The amount of the adjustment* is $1,000 (the amount of the excess withdrawal). The new Investment Back withdrawal benefit base is $100,000 - $1,000 = $99,000.

*
The amount of the adjustment for excess withdrawal is the greater of a or b where:
a = $1,000 (the amount of the excess withdrawal); and
b = $970.87 (the result of (1 divided by 2) multiplied by 3) where:
1 = the amount of the withdrawal greater than the Investment Back withdrawal benefit payment available prior to the withdrawal ($1,000);
2 = the accumulated value after the Investment Back withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($110,000 minus $7,000); and
3 = the Investment Back withdrawal benefit base prior to the adjustment for the excess amount ($100,000)

Appendix F – PIB 10    132
(for applications signed before June 1, 2015)    


For Life
The amount of the adjustment* is $4,000 (the amount of the excess withdrawal). The new For Life withdrawal benefit base is $100,000 - $4,000 = $96,000.

*
The amount of the adjustment for excess withdrawal is the greater of a or b where:
a = $4,000 (the amount of the excess withdrawal); and
b = $3,773.58 (the result of (1 divided by 2) multiplied by 3) where:
1 = the amount of the withdrawal greater than the “Single Life” For Life withdrawal benefit payment available prior to the withdrawal ($4,000);
2 = the accumulated value after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($110,000 minus $4,000); and
3 = the For Life withdrawal benefit base prior to the adjustment for the excess amount ($100,000).
Remaining Withdrawal Benefit Base Calculation
The remaining withdrawal benefit base is adjusted when withdrawals are taken.
Investment Back
The amount of the adjustment* is $8,000 (the amount of the Investment Back withdrawal benefit payment plus the excess withdrawal). The new Investment Back remaining withdrawal benefit base is $100,000 - $8,000 = $92,000.

*
The amount of the adjustment is a plus b where:
a = $7,000 (the actual amount withdrawn that does not exceed the Investment Back withdrawal benefit payment); and
b = $1,000 (a proportionate reduction for the excess withdrawal). The amount of the proportionate reduction is the greater of 1 or 2 where:
1 = $1,000 (the amount of the excess withdrawal); and
2 = $902.91 (the result of (x divided by y) multiplied by z) where:
x = the amount of the withdrawal greater than the Investment Back withdrawal benefit payment available prior to the withdrawal ($1,000);
y = the accumulated value after the Investment Back withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($110,000 - $7,000); and
z = the Investment Back remaining withdrawal benefit base after the Investment Back withdrawal benefit payment is deducted but prior to the adjustment for the excess amount ($100,000 - $7,000).
For Life
The amount of the adjustment* is $8,000 (the amount of the “Single Life” For Life withdrawal benefit payment plus the excess withdrawal). The new For Life remaining withdrawal benefit base is $100,000 - $8,000 = $92,000.

*
The amount of the adjustment is a plus b where:
a = $4,000 (the actual amount withdrawn that does not exceed the “Single Life” For Life withdrawal benefit payment); and
b = $4,000 (a proportionate reduction for the excess withdrawal). The amount of the proportionate reduction is the greater of 1 or 2 where:
1 = $4,000 (the amount of the excess withdrawal); and
2 = $3,622.64 (the result of (x divided by y) multiplied by z) where:
x = the amount of the withdrawal greater than the “Single Life” For Life withdrawal benefit payment available prior to the withdrawal ($4,000);
y = the accumulated value after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($110,000 - $4,000); and
z = the For Life remaining withdrawal benefit base after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the adjustment for the excess amount ($100,000 - $4,000).

Appendix F – PIB 10    133
(for applications signed before June 1, 2015)    


Withdrawal Benefit Payment Calculation (for the next contract year)
The withdrawal benefit payment is the new withdrawal benefit base (calculated on the Contract anniversary) multiplied by the associated percentage. The “Single Life” For Life withdrawal benefit payment percentage is locked-in at 4.00%.

Investment Back
The new Investment Back withdrawal benefit payment is $99,000 x 0.07 = $6,930.

For Life
The new “Single Life” For Life withdrawal benefit payment is $96,000 x 0.0400 = $3,840.


Appendix F – PIB 10    134
(for applications signed before June 1, 2015)    


APPENDIX G – PIB 3 (for applications signed before November 2, 2015)
Overview of Principal Income Builder 3
For Life withdrawal benefit payment percentages. This rider permits an election of “Joint Life” For Life withdrawal benefit payments or “Single Life” For Life withdrawal benefit payments.
Bonus feature. This rider has a Bonus feature which rewards you annually for not taking a withdrawal within the first 3 years of the rider. The GMWB Bonus increases the withdrawal benefit base, which increases your available withdrawal benefit payment amount. The GMWB Bonus does not increase your Contract accumulated value.
Step-Up feature. This rider has an annual Step-Up feature which can increase your rider withdrawal benefit payments if your Contract accumulated value increases. The Contract accumulated value increases whenever additional premium payments are made, the division values rise with market growth, or credits (premium payment credits or exchange credit) are applied.
Maximum annual rider charge. This rider has a maximum annual rider charge of 1.65% of the For Life withdrawal benefit base.
Spousal continuation. This rider provides that the For Life withdrawal options may be available to an eligible spouse who continues the Contract with the rider, if certain conditions are met.
Principal Income Builder 3 Terms
We use the following definitions to describe the features of this rider:
•
Excess Withdrawal — the portion of a withdrawal that exceeds the available withdrawal benefit payment.
•
GMWB Bonus — a bonus credited to the withdrawal benefit base, provided certain conditions are met.
•
GMWB investment options – the limited investment options available under the GMWB rider, which reflect a balanced investment objective.
•
GMWB Step-Up — an increase to the withdrawal benefit base to an amount equal to your Contract’s accumulated value on the most recent Contract anniversary, provided certain conditions are met.
•
Required minimum distribution (“RMD”) amount — the amount required to be distributed each calendar year for purposes of satisfying the RMD rules of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, and related Code provisions in effect as of the rider effective date.
•
Rider effective date — the date the rider is issued.
•
Withdrawal — any partial surrender (including surrender charges, if any) and/or any partial annuitization of your Contract’s accumulated value.
•
Withdrawal benefit base (also referred to as For Life withdrawal benefit base) — the basis for determining the withdrawal benefit payment available each year.
•
Withdrawal benefit payment (also referred to as For Life withdrawal benefit payment) — the amount that we guarantee you may withdraw each contract year.
Principal Income Builder 3 - Withdrawal Benefit Base
The withdrawal benefit base is used to calculate the annual withdrawal benefit payment. We calculate the withdrawal benefit base on the rider effective date and each Contract anniversary.
The initial withdrawal benefit base is equal to the initial premium payment.
On each Contract anniversary, the withdrawal benefit base is reset to the greater of 1 or 2, where:
1= the accumulated value on the Contract anniversary (see Appendix G - Principal Income Builder 3 – GMWB Step-Up).
2 = the result of (a + b + c - d), where:
a = prior year withdrawal benefit base (or initial withdrawal benefit base if first Contract anniversary);
b = additional premiums since the previous Contract anniversary (dollar-for-dollar);
c = any GMWB Bonus credited since the previous Contract anniversary;
d = any excess withdrawals taken since the previous Contract anniversary*.
* NOTE: The reduction for an excess withdrawal will be greater than dollar-for-dollar if the Contract accumulated value is less than the withdrawal benefit base at the time of the excess withdrawal. See Appendix G - Principal Income Builder 3 - Excess Withdrawals later in this section for information about the negative effect of excess withdrawals.

Appendix G – PIB 3    135
(for applications signed before November 2, 2015)    



If you take withdrawals prior to the oldest owner attaining age 59½, the For Life withdrawal benefit base will be reduced for excess withdrawals. If the adjustment for any withdrawals causes the For Life withdrawal benefit base to reduce to zero, the rider will terminate at the next Contract anniversary, unless you make additional premium payments or a GMWB Step-Up is applied.
Principal Income Builder 3 - Withdrawal Benefit Payment
For Life withdrawal benefit payments are available (i) on the rider effective date if the oldest owner (or oldest annuitant, if the Contract owner is not a natural person) is at least age 59½ or (ii) on the Contract anniversary following the date that the oldest owner (or oldest annuitant, if applicable) attains age 59½.
The For Life withdrawal benefit payments are automatically calculated as “Single Life” unless you provide notice and good order instructions to select “Joint Life” For Life withdrawal benefit payments. If eligible, you may elect “Joint Life” For Life withdrawal benefit payments anytime on or before your first withdrawal following the rider effective date. Once you take this first withdrawal, you cannot change your election of “Single Life” or “Joint Life” For Life withdrawal benefit payments, regardless of any change in life events.
“Single Life” For Life withdrawal benefit payments. “Single Life” For Life withdrawal benefit payments are based on one covered life. The covered life for “Single Life” is the:
a.
Owner if there is only one owner;
b.
Annuitant if the owner is not a natural person;
c.
Youngest joint owner if there are joint owners; or
d.
Youngest annuitant if there are joint annuitants and the owner is not a natural person.
In addition, the covered life must satisfy this rider’s issue age requirements on the date the covered life is designated in accordance with the terms of this rider.
As long as the Contract is in effect, “Single Life” or “Joint Life” For Life withdrawal benefit payments may be taken until the earlier of the date of the death of the first owner to die (first annuitant, if applicable) or the date the For Life withdrawal benefit base reduces to zero.
“Joint Life” For Life withdrawal benefit payments. “Joint Life” For Life withdrawal benefit payments are based on two covered lives. You may only elect “Joint Life” For Life withdrawal benefit payments if there are two covered lives that meet the eligibility requirements. There can be no more than two covered lives. The “Joint Life” election is not available if the owner is not a natural person.
To be eligible for “Joint Life” the covered lives must be:
a.
The owner and the owner’s spouse, provided there is only one owner and the spouse is named as a primary beneficiary; or
b.
The joint owners, provided the joint owners are each other’s spouse.
NOTE:  Under the Internal Revenue Code (the “Code”), spousal continuation and certain distribution options are available only to “spouses.” In satisfying such requirements, we will follow the U.S. Supreme Court's ruling in United States v. Windsor, 133 S. Ct. 2675 (2013) and any applicable regulatory requirements implemented in response to the Windsor ruling. As a result of the Windsor case, same-sex couples who are legally married in their respective states have the same rights to benefits under federal law as all opposite-sex couples have. All Contract provisions will be interpreted and administered in accordance with the requirements of the Code and Windsor. For more information, please see your tax advisor.
NOTE:
At the time a covered life is designated, that covered life must satisfy this rider’s issue age requirements.
As long as the Contract is in effect, “Joint Life” For Life withdrawal benefit payments will continue until the earlier of the date of the death of the last covered life or the date the “For Life” withdrawal benefit base reduces to zero.

Appendix G – PIB 3    136
(for applications signed before November 2, 2015)    



Calculating the Principal Income Builder 3 For Life Withdrawal Benefit Payment
The For Life withdrawal benefit payment is an amount equal to a percentage multiplied by the For Life withdrawal benefit base.
The For Life withdrawal benefit payment percentage depends on whether you have elected “Single Life” or “Joint Life” and the age of the covered life on the date of the first withdrawal following the rider effective date:
•
“Single Life”:
Age of Covered Life at
First Withdrawal
For applications signed on or after June 1, 2015
For applications signed before June 1, 2015
For Life Withdrawal Benefit Payment Percentage
For Life Withdrawal Benefit Payment Percentage
45-54
3.00%
3.00%
55-59
3.80%
4.00%
60-64
3.80%
4.25%
65-74
4.80%
5.00%
75+
5.05%
5.25%

•
“Joint Life”:
Age of Younger Covered Life at First Withdrawal
For applications signed on or after June 1, 2015
For applications signed before June 1, 2015
For Life Withdrawal Benefit Payment Percentage
For Life Withdrawal Benefit Payment Percentage
45-54
2.50%
2.50%
55-59
3.30%
3.50%
60-64
3.30%
3.75%
65-74
4.30%
4.50%
75+
4.55%
4.75%

NOTE:
All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Under 72t, a customer can receive substantially equal payments without an IRS tax penalty, even if under age 59½. If you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals. See Appendix G - Principal Income Builder 3 - Excess Withdrawals for additional information.
Because the For Life withdrawal benefit payments are tiered based on the age of the younger covered life at the time of the first withdrawal, you should carefully choose when you take the first withdrawal following the rider effective date. Once a withdrawal is taken, the For Life withdrawal benefit payment percentage is locked in for the life of this rider. In addition, when you take your first withdrawal, your election of “Single Life” or “Joint Life” remains locked in and cannot be changed. For example, if you have elected “Joint Life” For Life withdrawal benefit payments and take the first withdrawal when the younger covered life is age 46, your For Life withdrawal benefit payment percentage will be locked in at 2.50% for the remaining life of this rider and cannot be changed.

Appendix G – PIB 3    137
(for applications signed before November 2, 2015)    



Principal Income Builder 3 - Covered Life Change
Any ownership change, change of beneficiary or other change before the annuitization date which would cause a change in a covered life (a “Change”) will result in termination of this rider, except for the following permissible Changes:
1.
Spousal continuation of this rider as described in 8. DEATH BENEFIT.
2.
If withdrawals have not been taken and you have not previously elected to continue this rider as provided in 8. DEATH BENEFIT, then:
a.
You may add a joint owner or primary beneficiary to your Contract as a covered life, provided that the new joint owner or primary beneficiary is an eligible covered life as set forth above.
b.
You may remove a joint owner or primary beneficiary as a covered life.
c.
The For Life withdrawal benefit payment percentage will be based on the age of the covered lives and will lock in at the percentage applicable on the date of your first withdrawal.
3.
If withdrawals have been taken and you have locked in “Single Life” For Life withdrawal benefit payments, then:
a.
You may remove a joint owner as a covered life.
b.
You may add a primary beneficiary to your Contract, however, you may not add a primary beneficiary as a covered life for purposes of this rider.
c.
The For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.
4.
If withdrawals have been taken and you have locked in “Joint Life” For Life withdrawal benefit payments, then:
a.
You may remove a joint owner or primary beneficiary as a covered life.
b.
You may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider.
c.
The For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.
5.
If you have previously elected to continue this rider as provided in 8. DEATH BENEFIT, then you may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider. If the primary beneficiary that you add is your spouse, upon your death the spouse can continue the Contract, but the rider will terminate.
No Change is effective until approved by us in writing. Upon our approval, the Change is effective as of the date you signed the notice requesting the Change.
An assignment of the Contract or this rider shall be deemed a request for a Change. If the Change is not one of the above permissible Changes, this rider will be terminated as of the date of the assignment.
Principal Income Builder 3 - Effect of Withdrawals
This rider does not require you to take an available withdrawal benefit payment. If you want to take advantage of this rider’s GMWB Bonus feature, withdrawals cannot be taken during the period the GMWB Bonus is available. See Appendix G - Principal Income Builder 3 - GMWB Bonus below.
If you elect not to take an available withdrawal benefit payment, that amount will not be carried forward to the next contract year.
Each time you take a withdrawal, it is reflected immediately in your Contract accumulated value. All scheduled withdrawals (scheduled partial surrenders) occurring on the Contract anniversary are reflected in the values for the prior contract year.

Appendix G – PIB 3    138
(for applications signed before November 2, 2015)    



If you take excess withdrawals, the withdrawal benefit base will be reduced on the next Contract anniversary. See Appendix G - Principal Income Builder 3 - Excess Withdrawals for information about the negative effect of excess withdrawals.
To help you better understand the various features of this rider and to demonstrate how premium payments made and withdrawals taken from the Contract affect the values and benefits under this rider, we have provided several examples in APPENDIX C.
Principal Income Builder 3 - Excess Withdrawals
Any portion of a withdrawal that exceeds the available withdrawal benefit payment is an excess withdrawal. Excess withdrawals decrease the withdrawal benefit base, which will reduce future withdrawal benefit payments. The reductions can be greater than dollar-for-dollar when the Contract accumulated value is less than the withdrawal benefit base at the time of the excess withdrawal.
All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Therefore, if you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals.
If you choose to take an excess withdrawal, the equation below shows how to calculate the excess withdrawal adjustment.
Effect on withdrawal benefit base. Excess withdrawals will reduce the withdrawal benefit base in an amount equal to the greater of:
•
the excess withdrawal, or
•
the result of (a divided by b) multiplied by c, where:
a = the amount withdrawn that exceeds the available withdrawal benefit payment prior to the withdrawal;
b = the Contract accumulated value after the withdrawal benefit payment is deducted, but prior to deducting the amount of the excess withdrawal; and
c = the withdrawal benefit base prior to the adjustment for the excess withdrawal.
NOTE:
All withdrawals taken prior to the date that the oldest owner (oldest annuitant, if applicable) has met the For Life age eligibility requirement are excess withdrawals.
NOTE:    Withdrawals prior to age 59½ may be subject to a 10% IRS penalty tax.
Required Minimum Distribution (RMD) Program for GMWB Riders
Tax-qualified contracts are subject to certain federal tax rules requiring that RMD be taken on a calendar year basis (i.e., compared to a contract year basis), usually beginning after age 70½.
If you are eligible for and enroll in our RMD Program for GMWB Riders, as discussed below, a withdrawal taken to satisfy RMD for the Contract (an “RMD amount”) that exceeds a withdrawal benefit payment for that contract year will not be deemed an excess withdrawal. If you are eligible for and do not enroll in our RMD Program for GMWB Riders, as discussed below, a withdrawal taken to satisfy RMD for the Contract that exceeds a withdrawal benefit payment for that contract year will be deemed an excess withdrawal.
RMD Program. Eligibility in the RMD Program for GMWB Riders is determined by satisfaction of the following requirements:
•
The amount required to be distributed each calendar year for purposes of satisfying the RMD rules of the Internal Revenue Code is based only on this Contract (the “RMD amount”); and
•
You have elected scheduled withdrawal payments.
NOTE:
Although enrollment in the RMD Program for GMWB Riders does not prevent you from taking an unscheduled withdrawal, an unscheduled withdrawal will cause you to lose the RMD Program protections for the remainder of the contract year. This means that any withdrawals (scheduled or unscheduled) during the remainder of the contract year that exceed applicable withdrawal benefit payments will be treated as excess withdrawals, even if the purpose is to take the RMD amount. You will automatically be re-enrolled in the RMD Program for GMWB Riders on your next Contract anniversary.

Appendix G – PIB 3    139
(for applications signed before November 2, 2015)    



We reserve the right to modify or eliminate the RMD Program for GMWB Riders; for example, if there is a change to the Internal Revenue Code or Internal Revenue Service rules or interpretations relating to RMD, including the issuance of relevant IRS guidance. We will send you at least 30 days advance notice of any change in or elimination of the RMD Program for GMWB Riders. Any modifications or elimination of the RMD Program for GMWB Riders will take effect after notice. If we exercise our right to modify or eliminate the RMD Program for GMWB Riders, then any scheduled or unscheduled withdrawal in excess of a withdrawal benefit payment after the effective date of the program’s modification or elimination will be deemed an excess withdrawal.
You may obtain more information regarding our RMD Program for GMWB Riders by contacting your registered representative or by calling us at 1-800-852-4450.
Principal Income Builder 3 - GMWB Bonus
Under the GMWB Bonus, on each of the first three Contract anniversaries following the rider effective date, we will credit a bonus (“GMWB Bonus”) to the withdrawal benefit base provided you have not taken any withdrawals since the rider effective date.
The GMWB Bonus is equal to the total of all premium payments made prior to the applicable Contract anniversary multiplied by the applicable percentage shown in the chart below. If the contract date and the rider effective date are different (if we previously have allowed Contract owners to add a rider after issue), the GMWB Bonus is equal to the Contract accumulated value on the rider effective date plus premium payments made between the rider effective date and the Contract anniversary, multiplied by the applicable percentage shown in the chart below.
Contract Anniversary
(following the rider effective date)
GMWB Bonus Percentage
1
7.00%
2
6.00%
3
5.00%
The GMWB Bonus is no longer available after the earlier of:
•
The 3rd Contract anniversary following the rider effective date; or
•
The date you take a withdrawal following the rider effective date.
NOTE:
The GMWB Bonus is used only for the purposes of calculating the withdrawal benefit base. The GMWB Bonus is not added to your Contract accumulated value.
Principal Income Builder 3 - GMWB Step-Up
The GMWB Step-Up is automatic and applies annually. Under this rider, unless an owner opts out of the automatic GMWB Step-Up, the rider charge will increase if our then current rider charge is higher than when the rider was purchased. The rider charge will never be greater than the maximum Principal Income Builder 3 rider charge. See SUMMARY OF EXPENSE INFORMATION section.
If you satisfy the eligibility requirements on a Contract anniversary and your Contract accumulated value is greater than the withdrawal benefit base, we will Step-Up the withdrawal benefit base to your Contract accumulated value on that Contract anniversary. We will not reduce your withdrawal benefit base if your Contract accumulated value on a Contract anniversary is less than the withdrawal benefit base.
NOTE:
All scheduled withdrawals (scheduled partial surrenders) occurring on the Contract anniversary are reflected in the values for the prior contract year and prior to determining if the withdrawal benefit base will Step-Up.
If we increase the rider charge for existing Contracts and you are eligible for a GMWB Step-Up of the withdrawal benefit base, you will be charged the then current rider charge. You may choose to opt out of the GMWB Step-Up feature if the charge for your rider will increase. We will send you advance notice if the charge for your rider will increase in order to give you the opportunity to opt out of the GMWB Step-Up feature. Once you opt out, you will no longer be eligible for future GMWB Step-Ups.

Appendix G – PIB 3    140
(for applications signed before November 2, 2015)    



On each Contract anniversary following the rider effective date, you are eligible for a GMWB Step-Up of the withdrawal benefit base if you satisfy all of the following requirements:
1.
The Contract anniversary occurs before the later of:
a.
the Contract anniversary following the date the oldest owner (oldest annuitant if the owner is not a natural person) attains age 80; or
b.
10 years after the rider effective date;
2.
You have not declined any increases in the rider charge; and
3.
You have not fully annuitized the Contract.
Principal Income Builder 3 - Effect of Reaching the Maximum Annuitization Date
On or before the maximum annuitization date, you must elect one of the Contract or GMWB rider payment options described below.
1.
Contract payment options:
•
Payments resulting from applying the Contract accumulated value to an annuity benefit payment option.
•
Payment of the Contract accumulated value as a single payment.
2.
GMWB rider payment option:
•
Fixed scheduled payments each year in the amount of the For Life withdrawal benefit payment until the date of death of the last covered life.
See Appendix G - Principal Income Builder 3 - Effect of Withdrawals for information on how withdrawals prior to the maximum annuitization date affect the GMWB values.
We will send you written notice at least 30 days prior to the maximum annuitization date and ask you to select one of the available payment options listed above. If we have not received your election as of the maximum annuitization date, we will automatically apply your Contract accumulated value to an annuity benefit payment option:
•
for Contracts with one annuitant – Life Income with payments guaranteed for a period of 10 years.
•
for Contracts with joint annuitants – Joint and Full Survivor Income with payments guaranteed for a period of 10 years.
Principal Income Builder 3 - Effect of the Contract Accumulated Value Reaching Zero
We will send you prior written notice whenever reasonably feasible if your Contract accumulated value is approaching zero.
In the event that the Contract accumulated value reduces to zero, we will pay the withdrawal benefit payments as follows:
•
If you have taken withdrawal benefit payments prior to the Contract accumulated value reaching zero, your For Life withdrawal option is either “Joint Life” or “Single Life” depending on your election at the time of your first withdrawal.
•
If you have not taken withdrawal benefit payments prior to the Contract accumulated value reaching zero, you must elect either
•
the “Single Life” For Life withdrawal option: you will receive fixed scheduled payments each year in the amount of the “Single Life” For Life withdrawal benefit payment, until the date of your death (annuitant’s death if the owner is not a natural person); or the “Joint Life” For Life withdrawal option: you will receive fixed scheduled payments each year in the amount of the “Joint Life” For Life withdrawal benefit payment, until the date of the death of the last covered life.
NOTE:
In the event that the Contract accumulated value reduces to zero, the withdrawal benefit payments elected above will continue, but all other rights and benefits under this rider and the Contract (including the death benefits) will terminate, and no additional premium payments will be accepted.

Appendix G – PIB 3    141
(for applications signed before November 2, 2015)    



Principal Income Builder 3 - Termination and Reinstatement
You may not terminate this rider prior to the 5th Contract anniversary following the rider effective date.
At any point in time, we will terminate this rider upon the earliest to occur:
•
The date you send us notice to terminate the rider (after the 5th Contract anniversary following the rider effective date). This will terminate the rider, not the Contract.
•
The date you fully annuitize, fully surrender or otherwise terminate the Contract.
•
The For Life withdrawal benefit base is zero.
•
The date the Contract owner is changed (annuitant is changed if the owner is not a natural person), except a change in owner due to a spousal continuation of the rider as described in 8. DEATH BENEFIT or the removal/ addition of a joint life as described in Principal Income Builder 3 - Covered Life Change.
•
The date your surviving spouse elects to continue the Contract without this rider (even if prior to the 5th Contract anniversary following the rider effective date).
•
The date you make an impermissible change in a covered life.
If this rider terminates for any reason other than full surrender of the Contract, this rider may not be reinstated.
If you surrender the Contract with this rider attached and the Contract is later reinstated, this rider also must be reinstated. At the time this rider is reinstated, we will deduct rider charges scheduled during the period of termination and make any other adjustments necessary to reflect any changes in the amount reinstated and the Contract accumulated value as of the date of termination.
Principal Income Builder 3 - Effect of Divorce
Generally, in the event of a divorce, the spouse who retains ownership of the Contract will continue to be entitled to all rights and benefits of this rider while the former spouse will no longer have any such rights or be entitled to any benefits under this rider. If you take a withdrawal to satisfy a court order to pay a portion of the Contract to your former spouse, any portion of such withdrawal that exceeds the available withdrawal benefit payments will be deemed an excess withdrawal under this rider.
NOTE:
If this excess withdrawal causes the For Life withdrawal benefit base to go to zero, the rider will terminate at the next Contract anniversary unless you make additional premium payments or a GMWB Step-Up is applied. For further information, see Appendix G - Principal Income Builder 3 – Excess Withdrawals.

Appendix G – PIB 3    142
(for applications signed before November 2, 2015)    



Principal Income Builder 3 Rider Summary
Name of Rider
PIB 3
Marketing Name
Principal Income Builder 3
Rider Issue Age
45 – 80
Rider Charge
PIB 3 Charges (as a percentage of average quarterly For Life withdrawal benefit base)
•    Maximum annual charge is 1.65%.
•    Current annual charge is 1.05% for applications signed before June 1, 2015.
•    Current annual charge is 1.05% for applications signed on or after June 1, 2015.
Guaranteed Minimum Withdrawal Benefit
•    For Life
Annual Withdrawal Limits
•    “Single Life” — tiered percentages based on age at first withdrawal, beginning at 3.00% and capping at a maximum of 5.05% of the For Life withdrawal benefit base
•    “Joint Life” — tiered percentages based on age at first withdrawal, beginning at 2.50% and capping at a maximum of 4.55% of the For Life withdrawal benefit base
NOTE: The ranges are based on application signature date
For Life Withdrawal Benefit Payments
•    “Single Life” or “Joint Life” (your life and the lifetime of your eligible spouse)
•    For Life withdrawal benefit payments default to “Single Life” unless “Joint Life” is elected
•    Available the Contract anniversary following the date the oldest owner turns 59½ — all withdrawals prior to that Contract anniversary are excess withdrawals under the For Life withdrawal option
Termination
•    You may terminate this rider anytime after the 5th Contract anniversary following the rider effective date
GMWB Step-Up
•    Automatic annual GMWB Step-Up available until the later of (a) the Contract anniversary prior to age 80 or (b) 10 years after the rider effective date.
GMWB Bonus
•    If no withdrawals are taken, a GMWB Bonus is applied to the benefit base on each applicable Contract anniversary. 
Investment Restrictions
•    You must select one or more of the available GMWB investment options; there are no additional restrictions on allocations to the Fixed Account or DCA Plus accounts.
Spousal Continuation
•    At the death of the first owner to die, a spouse who is a joint owner or primary beneficiary may have the option to continue the Contract with or without this rider.


Appendix G – PIB 3    143
(for applications signed before November 2, 2015)    



APPENDIX H – PIB 10 (for applications signed June 1, 2015 through November 1, 2015)
Overview of Principal Income Builder 10
For applications signed on or after June 1, 2015, Investment Back will no longer be included as a benefit of the PIB 10 rider. For applications signed before June 1, 2015, refer to Appendix F for details about your PIB 10 rider.
The PIB 10 rider provides For Life withdrawals that help protect you against the risk of a decrease in the Contract accumulated value due to market declines as well as the risk of outliving your money.
For Life withdrawal benefit payment percentages. This rider permits an election of “Joint Life” For Life withdrawal benefit payments or “Single Life” For Life withdrawal benefit payments.
Bonus feature. This rider has a Bonus feature which rewards you annually for not taking a withdrawal in the first 10 years of the rider. The GMWB Bonus increases the withdrawal benefit base, which increases your available withdrawal benefit payment amount. The GMWB Bonus does not increase your Contract accumulated value.
Step-Up feature. This rider has an annual Step-Up feature which can increase your rider withdrawal benefit payments if your Contract accumulated value increases. The Contract accumulated value increases whenever additional premium payments are made, the division values rise with market growth, or credits (premium payment credits or exchange credit) are applied.
Maximum annual rider charge. This rider has a maximum annual rider charge of 2.00% of the For Life withdrawal benefit base.
Spousal continuation. This rider provides that For Life withdrawals may be available to an eligible spouse who continues the Contract with the rider, if certain conditions are met.
Principal Income Builder 10 Terms
We use the following definitions to describe the features of this rider:
•
Excess Withdrawal — the portion of a withdrawal that exceeds the available withdrawal benefit payment.
•
GMWB Bonus — a bonus credited to the withdrawal benefit base, provided certain conditions are met.
•
GMWB investment options – the limited investment options available under the GMWB rider, which reflect a balanced investment objective.
•
GMWB Step-Up — an increase to the withdrawal benefit base to an amount equal to your Contract’s accumulated value on the most recent Contract anniversary, provided certain conditions are met.
•
Required minimum distribution (“RMD”) amount — the amount required to be distributed each calendar year for purposes of satisfying the RMD rules of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, and related Code provisions in effect as of the rider effective date.
•
Rider effective date — the date the rider is issued.
•
Withdrawal — any partial surrender (including surrender charges, if any) and/or any partial annuitization of your Contract’s accumulated value.
•
Withdrawal benefit base (also referred to as For Life withdrawal benefit base) — the basis for determining the withdrawal benefit payment available each year.
•
Withdrawal benefit payment (also referred to as For Life withdrawal benefit payment) — the amount that we guarantee you may withdraw each contract year.
Principal Income Builder 10 - Withdrawal Benefit Base
The withdrawal benefit base is used to calculate the annual withdrawal benefit payment. We calculate the withdrawal benefit base on the rider effective date and each Contract anniversary.
The initial withdrawal benefit base is equal to the initial premium payment.

Appendix H – PIB 10    144
(for applications signed June 1, 2015 through November 1, 2015)    



On each Contract anniversary, the withdrawal benefit base is reset to the greater of 1 or 2, where:
1= the accumulated value on the Contract anniversary (see Appendix H - Principal Income Builder 10 – GMWB Step-Up).
2 = the result of (a + b + c - d), where:
a = prior year withdrawal benefit base (or initial withdrawal benefit base if first Contract anniversary);
b = additional premiums since the previous Contract anniversary (dollar-for-dollar);
c = any GMWB Bonus credited since the previous Contract anniversary;
d = any excess withdrawals taken since the previous Contract anniversary*.
* NOTE:
The reduction for an excess withdrawal will be greater than dollar-for-dollar if the Contract accumulated value is less than the withdrawal benefit base at the time of the excess withdrawal. See Appendix H - Principal Income Builder 10 - Excess Withdrawals later in this section for information about the negative effect of excess withdrawals.
If you take withdrawals prior to the oldest owner attaining age 59½, the For Life withdrawal benefit base will be reduced for excess withdrawals. If the adjustment for any withdrawals causes the For Life withdrawal benefit base to reduce to zero, the rider will terminate at the next Contract anniversary, unless you make additional premium payments or a GMWB Step-Up is applied.
Principal Income Builder 10 - Withdrawal Benefit Payment
For Life withdrawal benefit payments are available (i) on the rider effective date if the oldest owner (or oldest annuitant, if the Contract owner is not a natural person) is at least age 59½ or (ii) on the Contract anniversary following the date that the oldest owner (or oldest annuitant, if applicable) attains age 59½.
The For Life withdrawal benefit payments are automatically calculated as “Single Life” unless you provide notice and good order instructions to select “Joint Life” For Life withdrawal benefit payments. If eligible, you may elect “Joint Life” For Life withdrawal benefit payments anytime on or before your first withdrawal following the rider effective date. Once you take this first withdrawal, you cannot change your election of “Single Life” or “Joint Life” For Life withdrawal benefit payments, regardless of any change in life events.
“Single Life” For Life withdrawal benefit payments. “Single Life” For Life withdrawal benefit payments are based on one covered life. The covered life for “Single Life” is the:
a.
Owner if there is only one owner;
b.
Annuitant if the owner is not a natural person;
c.
Youngest joint owner if there are joint owners; or
d.
Youngest annuitant if there are joint annuitants and the owner is not a natural person.
In addition, the covered life must satisfy this rider’s issue age requirements on the date the covered life is designated in accordance with the terms of this rider.
As long as the Contract is in effect, “Single Life” or “Joint Life” For Life withdrawal benefit payments may be taken until the earlier of the date of the death of the first owner to die (first annuitant, if applicable) or the date the For Life withdrawal benefit base reduces to zero.
“Joint Life” For Life withdrawal benefit payments. “Joint Life” For Life withdrawal benefit payments are based on two covered lives. You may only elect “Joint Life” For Life withdrawal benefit payments if there are two covered lives that meet the eligibility requirements. There can be no more than two covered lives. The “Joint Life” election is not available if the owner is not a natural person.

Appendix H – PIB 10    145
(for applications signed June 1, 2015 through November 1, 2015)    



To be eligible for “Joint Life” the covered lives must be:
a.
The owner and the owner’s spouse, provided there is only one owner and the spouse is named as a primary beneficiary; or
b.
The joint owners, provided the joint owners are each other’s spouse.
NOTE:  Under the Internal Revenue Code (the “Code”), spousal continuation and certain distribution options are available only to “spouses.”  In satisfying such requirements, we will follow the U.S. Supreme Court's ruling in United States v. Windsor, 133 S. Ct. 2675 (2013) and any applicable regulatory requirements implemented in response to the Windsor ruling.  As a result of the Windsor case, same-sex couples who are legally married in their respective states have the same rights to benefits under federal law as all opposite-sex couples have.  All Contract provisions will be interpreted and administered in accordance with the requirements of the Code and Windsor.  For more information, please see your tax advisor.
NOTE:
At the time a covered life is designated, that covered life must satisfy this rider’s issue age requirements.
As long as the Contract is in effect, “Joint Life” For Life withdrawal benefit payments will continue until the earlier of the date of the death of the last covered life or the date the “For Life” withdrawal benefit base reduces to zero.
Calculating the Principal Income Builder 10 For Life Withdrawal Benefit Payment
The For Life withdrawal benefit payment is an amount equal to a percentage multiplied by the For Life withdrawal benefit base.
The For Life withdrawal benefit payment percentage depends on whether you have elected “Single Life” or “Joint Life” and the age of the covered life on the date of the first withdrawal following the rider effective date:
•
“Single Life”:

Age of Covered Life at First Withdrawal
For Life Withdrawal Benefit Payment Percentage
45-54
3.00%
55-64
4.00%
65-74
5.00%
75+
5.25%

•
“Joint Life”:
Age of Younger Covered Life at First Withdrawal
For Life Withdrawal Benefit Payment Percentage
45-54
2.50%
55-64
3.50%
65-74
4.50%
75+
4.75%

NOTE:
All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Under 72t, a customer can receive substantially equal payments without an IRS tax penalty, even if under age 59½. If you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals. See Appendix H - Principal Income Builder 10 - Excess Withdrawals for additional information.
Because the For Life withdrawal benefit payments are tiered based on the age of the younger covered life at the time of the first withdrawal, you should carefully choose when you take the first withdrawal following the rider effective date. Once a withdrawal is taken, the For Life withdrawal benefit payment percentage is locked in for the life of this rider. In addition, when you take your first withdrawal, your election of “Single Life” or “Joint Life” remains locked in and cannot be changed. For example, if you have elected “Joint Life” For Life withdrawal benefit payments and take the first withdrawal when the younger covered life is age 46, your For Life withdrawal benefit payment percentage will be locked in at 2.50% for the remaining life of this rider and cannot be changed.

Appendix H – PIB 10    146
(for applications signed June 1, 2015 through November 1, 2015)    



Principal Income Builder 10 - Covered Life Change
Any ownership change, change of beneficiary or other change before the annuitization date which would cause a change in a covered life (a “Change”) will result in termination of this rider, except for the following permissible Changes:
1.
Spousal continuation of this rider as described below in 8. DEATH BENEFIT.
2.
If withdrawals have not been taken and you have not previously elected to continue this rider as provided in 8. DEATH BENEFIT, then:
a.
You may add a joint owner or primary beneficiary to your Contract as a covered life, provided that the new joint owner or primary beneficiary is an eligible covered life as set forth above.
b.
You may remove a joint owner or primary beneficiary as a covered life.
c.
The For Life withdrawal benefit payment percentage will be based on the age of the covered lives and will lock in at the percentage applicable on the date of your first withdrawal.
3.
If withdrawals have been taken and you have locked in “Single Life” For Life withdrawal benefit payments, then:
a.
You may remove a joint owner as a covered life.
b.
You may add a primary beneficiary to your Contract, however, you may not add a primary beneficiary as a covered life for purposes of this rider.
c.
The For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.
4.
If withdrawals have been taken and you have locked in “Joint Life” For Life withdrawal benefit payments, then:
a.
You may remove a joint owner or primary beneficiary as a covered life.
b.
You may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider.
c.
The For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.
5.
If you have previously elected to continue this rider as provided in 8. DEATH BENEFIT, then you may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider. If the primary beneficiary that you add is your spouse, upon your death the spouse can continue the Contract, but the rider will terminate.
No Change is effective until approved by us in writing. Upon our approval, the Change is effective as of the date you signed the notice requesting the Change.
An assignment of the Contract or this rider shall be deemed a request for a Change. If the Change is not one of the above permissible Changes, this rider will be terminated as of the date of the assignment.
Principal Income Builder 10 - Effect of Withdrawals
This rider does not require you to take an available withdrawal benefit payment. If you want to take advantage of this rider’s GMWB Bonus feature, withdrawals cannot be taken during the period the GMWB Bonus is available. See Appendix H - Principal Income Builder 10 - GMWB Bonus.
If you elect not to take an available withdrawal benefit payment, that amount will not be carried forward to the next contract year.
Each time you take a withdrawal, it is reflected immediately in your Contract accumulated value. All scheduled withdrawals (scheduled partial surrenders) occurring on the Contract anniversary are reflected in the values for the prior contract year.

Appendix H – PIB 10    147
(for applications signed June 1, 2015 through November 1, 2015)    



If you take excess withdrawals, the withdrawal benefit base will be reduced on the next Contract anniversary. See Appendix H - Principal Income Builder 10 - Excess Withdrawals for information about the negative effect of excess withdrawals.
To help you better understand the various features of this rider and to demonstrate how premium payments made and withdrawals taken from the Contract affect the values and benefits under this rider, we have provided several examples in APPENDIX D.
Principal Income Builder 10 - Excess Withdrawals
Any portion of a withdrawal that exceeds the available withdrawal benefit payment is an excess withdrawal. Excess withdrawals decrease the withdrawal benefit base, which will reduce future withdrawal benefit payments. The reductions can be greater than dollar-for-dollar when the Contract accumulated value is less than the withdrawal benefit base at the time of the excess withdrawal.
All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Therefore, if you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals.
If you choose to take an excess withdrawal, the equation below shows how to calculate the excess withdrawal adjustment.
Effect on withdrawal benefit base. Excess withdrawals will reduce the withdrawal benefit base in an amount equal to the greater of:
•
the excess withdrawal, or
•
the result of (a divided by b) multiplied by c, where:
a = the amount withdrawn that exceeds the available withdrawal benefit payment prior to the withdrawal;
b = the Contract accumulated value after the withdrawal benefit payment is deducted, but prior to deducting the amount of the excess withdrawal; and
c = the withdrawal benefit base prior to the adjustment for the excess withdrawal.
NOTE:
All withdrawals taken prior to the date that the oldest owner (oldest annuitant, if applicable) has met the For Life age eligibility requirement are excess withdrawals.
NOTE:
Withdrawals prior to age 59½ may be subject to a 10% IRS penalty tax.
Required Minimum Distribution (RMD) Program for GMWB Riders
Tax-qualified contracts are subject to certain federal tax rules requiring that RMD be taken on a calendar year basis (i.e., compared to a contract year basis), usually beginning after age 70½.
If you are eligible for and enroll in our RMD Program for GMWB Riders, as discussed below, a withdrawal taken to satisfy RMD for the Contract (an “RMD amount”) that exceeds a withdrawal benefit payment for that contract year will not be deemed an excess withdrawal. If you are eligible for and do not enroll in our RMD Program for GMWB Riders, as discussed below, a withdrawal taken to satisfy RMD for the Contract that exceeds a withdrawal benefit payment for that contract year will be deemed an excess withdrawal.
RMD Program. Eligibility in the RMD Program for GMWB Riders is determined by satisfaction of the following requirements:
•
The amount required to be distributed each calendar year for purposes of satisfying the RMD rules of the Internal Revenue Code is based only on this Contract (the “RMD amount”); and
•
You have elected scheduled withdrawal payments.
NOTE:
Although enrollment in the RMD Program for GMWB Riders does not prevent you from taking an unscheduled withdrawal, an unscheduled withdrawal will cause you to lose the RMD Program protections for the remainder of the contract year. This means that any withdrawals (scheduled or unscheduled) during the remainder of the contract year that exceed applicable withdrawal benefit payments will be treated as excess withdrawals, even if the purpose is to take the RMD amount. You will automatically be re-enrolled in the RMD Program for GMWB Riders on your next Contract anniversary.

Appendix H – PIB 10    148
(for applications signed June 1, 2015 through November 1, 2015)    



We reserve the right to modify or eliminate the RMD Program for GMWB Riders; for example, if there is a change to the Internal Revenue Code or Internal Revenue Service rules or interpretations relating to RMD, including the issuance of relevant IRS guidance. We will send you at least 30 days advance notice of any change in or elimination of the RMD Program for GMWB Riders. Any modifications or elimination of the RMD Program for GMWB Riders will take effect after notice. If we exercise our right to modify or eliminate the RMD Program for GMWB Riders, then any scheduled or unscheduled withdrawal in excess of a withdrawal benefit payment after the effective date of the program’s modification or elimination will be deemed an excess withdrawal.
You may obtain more information regarding our RMD Program for GMWB Riders by contacting your registered representative or by calling us at 1-800-852-4450.
Principal Income Builder 10 - GMWB Bonus
Under the GMWB Bonus, on each of the first 10 Contract anniversaries following the rider effective date, we will credit a bonus (“GMWB Bonus”) to the withdrawal benefit base provided you have not taken any withdrawals since the rider effective date.
The GMWB Bonus is equal to the total of all premium payments made prior to the applicable Contract anniversary multiplied by the applicable percentage shown in the chart below. If the contract date and the rider effective date are different (if we previously have allowed Contract owners to add a rider after issue), the GMWB Bonus is equal to the Contract accumulated value on the rider effective date plus premium payments made between the rider effective date and the Contract anniversary, multiplied by the applicable percentage shown in the chart below.
Contract Anniversary
(following the rider effective date)
GMWB Bonus Percentage
1-10
5.00%
11+
0.00%
The GMWB Bonus is no longer available after the earlier of:
•
The 10th Contract anniversary following the rider effective date; or
•
The date you take a withdrawal following the rider effective date.
NOTE:
The GMWB Bonus is used only for the purposes of calculating the withdrawal benefit base. The GMWB Bonus is not added to your Contract accumulated value.
Principal Income Builder 10 - GMWB Step-Up
The GMWB Step-Up is automatic and applies annually. If you satisfy the eligibility requirements on a Contract anniversary and your Contract accumulated value is greater than the withdrawal benefit base, we will Step-Up the withdrawal benefit base to your Contract accumulated value on that Contract anniversary. We will not reduce your withdrawal benefit base if your Contract accumulated value on a Contract anniversary is less than the withdrawal benefit base.
NOTE:
All scheduled withdrawals (scheduled partial surrenders) occurring on the Contract anniversary are reflected in the values for the prior contract year and prior to determining if the withdrawal benefit base will Step-Up.
If we increase the rider charge for existing Contracts and you are eligible for a GMWB Step-Up of the withdrawal benefit base, you will be charged the then current rider charge. You may choose to opt out of the GMWB Step-Up feature if the charge for your rider will increase. We will send you advance notice if the charge for your rider will increase in order to give you the opportunity to opt out of the GMWB Step-Up feature. Once you opt out, you will no longer be eligible for future GMWB Step-Ups. The rider charge will never be greater than the maximum Principal Income Builder 10 rider charge. See SUMMARY OF EXPENSE INFORMATION section.

Appendix H – PIB 10    149
(for applications signed June 1, 2015 through November 1, 2015)    



On each Contract anniversary following the rider effective date, you are eligible for a GMWB Step-Up of the withdrawal benefit base if you satisfy all of the following requirements:
1.
The Contract anniversary occurs before the later of:
a.
the Contract anniversary following the date the oldest owner (oldest annuitant if the owner is not a natural person) attains age 80; or
b.
10 years after the rider effective date;
2.
You have not declined any increases in the rider charge; and
3.
You have not fully annuitized the Contract.
Principal Income Builder 10 - Effect of Reaching the Maximum Annuitization Date
On or before the maximum annuitization date, you must elect one of the Contract or GMWB rider payment options described below.
1.
Contract payment options:
•
Payments resulting from applying the Contract accumulated value to an annuity benefit payment option.
•
Payment of the Contract accumulated value as a single payment.
2.
GMWB rider payment option:
•
Fixed scheduled payments each year in the amount of the For Life withdrawal benefit payment until the date of death of the last covered life.
See Appendix H - Principal Income Builder 10 - Effect of Withdrawals for information on how withdrawals prior to the maximum annuitization date affect the GMWB values.
We will send you written notice at least 30 days prior to the maximum annuitization date and ask you to select one of the available payment options listed above. If we have not received your election as of the maximum annuitization date, we will automatically apply your Contract accumulated value to an annuity benefit payment option:
•
for Contracts with one annuitant – Life Income with payments guaranteed for a period of 10 years.
•
for Contracts with joint annuitants – Joint and Full Survivor Income with payments guaranteed for a period of 10 years.
Principal Income Builder 10 - Effect of the Contract Accumulated Value Reaching Zero
We will send you prior written notice whenever reasonably feasible if your Contract accumulated value is approaching zero.
In the event that the Contract accumulated value reduces to zero, we will pay the withdrawal benefit payments as follows:
•
If you have taken withdrawal benefit payments prior to the Contract accumulated value reaching zero, your For Life withdrawal option is either “Joint Life” or “Single Life” depending on your election at the time of your first withdrawal.
•
If you have not taken withdrawal benefit payments prior to the Contract accumulated value reaching zero, you must elect either
•
the “Single Life” For Life withdrawal option: you will receive fixed scheduled payments each year in the amount of the “Single Life” For Life withdrawal benefit payment, until the date of your death (annuitant’s death if the owner is not a natural person); or the “Joint Life” For Life withdrawal option: you will receive fixed scheduled payments each year in the amount of the “Joint Life” For Life withdrawal benefit payment, until the date of the death of the last covered life.
NOTE:
In the event that the Contract accumulated value reduces to zero, the withdrawal benefit payments elected above will continue, but all other rights and benefits under this rider and the Contract (including the death benefits) will terminate, and no additional premium payments will be accepted.

Appendix H – PIB 10    150
(for applications signed June 1, 2015 through November 1, 2015)    



Principal Income Builder 10 - Termination and Reinstatement
You may not terminate this rider prior to the 5th Contract anniversary following the rider effective date.
At any point in time, we will terminate this rider upon the earliest to occur:
•
The date you send us notice to terminate the rider (after the 5th Contract anniversary following the rider effective date). This will terminate the rider, not the Contract.
•
The date you fully annuitize, fully surrender or otherwise terminate the Contract.
•
The For Life withdrawal benefit base is zero.
•
The date the Contract owner is changed (annuitant is changed if the owner is not a natural person), except a change in owner due to a spousal continuation of the rider as described in 8. DEATH BENEFIT or the removal/ addition of a joint life as described in Principal Income Builder 10 - Covered Life Change.
•
The date your surviving spouse elects to continue the Contract without this rider (even if prior to the 5th Contract anniversary following the rider effective date).
•
The date you make an impermissible change in a covered life.
If this rider terminates for any reason other than full surrender of the Contract, this rider may not be reinstated.
If you surrender the Contract with this rider attached and the Contract is later reinstated, this rider also must be reinstated. At the time this rider is reinstated, we will deduct rider charges scheduled during the period of termination and make any other adjustments necessary to reflect any changes in the amount reinstated and the Contract accumulated value as of the date of termination.
Principal Income Builder 10 - Effect of Divorce
Generally, in the event of a divorce, the spouse who retains ownership of the Contract will continue to be entitled to all rights and benefits of this rider while the former spouse will no longer have any such rights or be entitled to any benefits under this rider. If you take a withdrawal to satisfy a court order to pay a portion of the Contract to your former spouse, any portion of such withdrawal that exceeds the available withdrawal benefit payments will be deemed an excess withdrawal under this rider.
NOTE:
If this excess withdrawal causes the For Life withdrawal benefit base to go to zero, the rider will terminate at the next Contract anniversary unless you make additional premium payments or a GMWB Step-Up is applied. For further information, see Appendix H - Principal Income Builder 10 – Excess Withdrawals.

Appendix H – PIB 10    151
(for applications signed June 1, 2015 through November 1, 2015)    



Principal Income Builder 10 Rider Summary
Name of Rider
PIB 10 (for applications signed on or after June 1, 2015)
Marketing Name
Principal Income Builder 10
Rider Issue Age
45 – 80
Rider Charge
PIB 10 Rider Charges (as a percentage of average quarterly For Life withdrawal benefit base)
•    Maximum annual charge is 2.00%.
•    Current annual charge is 1.25%.
Guaranteed Minimum Withdrawal Benefit
•    For Life
Annual Withdrawal Limits
•    “Single Life” — tiered percentages based on age at first withdrawal, beginning at 3.00% and capping at a maximum of 5.25% of the For Life withdrawal benefit base
•    “Joint Life” — tiered percentages based on age at first withdrawal, beginning at 2.50% and capping at a maximum of 4.75% of the For Life withdrawal benefit base
For Life Withdrawal Benefit Payments
•    “Single Life” or “Joint Life” (your life and the lifetime of your eligible spouse)
•    For Life withdrawal benefit payments default to “Single Life” unless “Joint Life” is elected
•    Available the Contract anniversary following the date the oldest owner turns 59½ — all withdrawals prior to that Contract anniversary are excess withdrawals under the For Life withdrawal option
Termination
•    You may terminate this rider anytime after the 5th Contract anniversary following the rider effective date
GMWB Step-Up
•    Automatic annual GMWB Step-Up available until the later of (a) the Contract anniversary prior to age 80 or (b) 10 years after the rider effective date.
GMWB Bonus
•    If no withdrawals are taken, a GMWB Bonus is applied to the benefit base on each applicable Contract anniversary.
Investment Restrictions
•    You must select one or more of the available GMWB investment options; there are no additional restrictions on allocations to the Fixed Account or DCA Plus accounts.
Spousal Continuation
•    At the death of the first owner to die, a spouse who is a joint owner or primary beneficiary may have the option to continue the Contract with or without this rider.


Appendix H – PIB 10    152
(for applications signed June 1, 2015 through November 1, 2015)    



APPENDIX I – CONDENSED FINANCIAL INFORMATION
Financial statements are included in the Statement of Additional Information.
The following table contains the unit values for the Contract without the Premium Payment Credit Rider for the periods ended December 31. With the exception of the 2013 End of Period unit values, all of the unit values shown below have been updated to factor in the 0.15% administrative fee that was added to this product effective August 1, 2013. The 2013 End of Period values are the actual unit values, which also factor in the administrative fee.
For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
AllianceBernstein Small Cap Growth
 
 
 
 
2014
$26.624
$25.778
-3.18%
158
2013
18.535
26.624
43.64
174
2012
16.343
18.535
13.41
164
2011
15.865
16.343
3.01
170
2010
11.752
15.865
35.00
168
2009
8.407
11.752
39.79
122
2008
15.657
8.407
-46.31
109
2007
13.919
15.657
12.49
78
2006
12.752
13.919
9.15
53
2005(1)
12.007
12.752
6.20
18
AllianceBernstein Small/Mid Cap Value
 
 
 
 
2014
11.367
12.240
7.68
131
2013(10)
10.003
11.367
13.64
57
American Century VP Capital Appreciation
 
 
2014(12)
10.000
10.797
7.97
199
American Century VP Inflation Protection
 
 
 
 
2014
12.870
13.110
1.86
4,504
2013
14.261
12.870
-9.75
5,079
2012
13.468
14.261
5.89
4,968
2011
12.222
13.468
10.19
4,861
2010
11.793
12.222
3.64
5,503
2009
10.847
11.793
8.72
5,350
2008
11.180
10.847
-2.98
4,752
2007
10.352
11.180
8.00
5,125
2006
10.333
10.352
0.18
3,389
2005(1)
10.256
10.333
0.75
1,227
American Century VP Mid Cap Value
 
 
 
 
2014
16.685
19.125
14.62
168
2013
13.025
16.685
28.10
120
2012
11.366
13.025
14.60
111
2011
11.624
11.366
-2.22
57
2010(2)
10.048
11.624
15.68
17
American Century VP Ultra
 
 
 
 
2014
17.035
18.450
8.31
2,159
2013
12.617
17.035
35.02
2,594
2012
11.246
12.617
12.19
3,367
2011
11.307
11.246
-0.54
3,824
2010
9.900
11.307
14.21
3,933
2009
7.463
9.900
32.65
4,281
2008
12.971
7.463
-42.46
4,883
2007
10.886
12.971
19.15
3,530
2006
11.426
10.886
-4.73
2,714
2005(1)
11.101
11.426
2.93
911
Delaware VIP Small Cap Value
 
 
 
 
2014
11.393
11.866
4.15
48
2013(10)
10.003
11.393
13.90
14

Appendix I – Condensed Financial Information    153


For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Dreyfus Technology Growth
 
 
 
 
2014
$21.453
$22.546
5.09%
178
2013
16.420
21.453
30.65
170
2012
14.437
16.420
13.74
159
2011
15.920
14.437
-9.32
146
2010
12.452
15.920
27.85
202
2009
8.039
12.452
54.89
153
2008
13.876
8.039
-42.07
60
2007
12.297
13.876
12.84
38
2006
11.987
12.297
2.59
25
2005(1)
11.094
11.987
8.05
10
DWS Small Mid Cap Value
 
 
 
 
2014
11.383
11.797
3.64
39
2013(10)
10.003
11.383
13.80
8
Fidelity VIP Contrafund®
 
 
 
 
2014
20.778
22.877
10.10
2,136
2013
16.090
20.778
29.14
2,258
2012
14.050
16.090
14.52
2,514
2011
14.656
14.050
-4.13
2,728
2010
12.711
14.656
15.30
2,671
2009
9.515
12.711
33.59
2,635
2008
16.839
9.515
-43.49
2,410
2007
14.558
16.839
15.67
2,031
2006
13.248
14.558
9.89
1,240
2005(1)
11.709
13.248
13.14
427
Fidelity VIP Equity-Income
 
 
 
 
2014
16.629
17.788
6.97
553
2013
13.192
16.629
26.05
549
2012
11.430
13.192
15.42
547
2011
11.515
11.430
-0.74
558
2010
10.162
11.515
13.31
558
2009
7.934
10.162
28.08
557
2008
14.070
7.934
-43.61
572
2007
14.090
14.070
-0.14
686
2006
11.914
14.090
18.26
347
2005(1)
11.517
11.914
3.45
94
Fidelity VIP Growth
 
 
 
 
2014
18.148
19.866
9.47
384
2013
13.532
18.148
34.11
336
2012
11.996
13.532
12.80
340
2011
12.169
11.996
-1.42
379
2010
9.963
12.169
22.14
467
2009
7.895
9.963
26.19
426
2008
15.196
7.895
-48.05
436
2007
12.168
15.196
24.88
376
2006
11.578
12.168
5.10
204
2005(1)
10.947
11.578
5.76
59
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    154


For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Fidelity VIP Mid Cap
 
 
 
 
2014
$24.805
$25.935
4.56%
604
2013
18.513
24.805
33.99
525
2012
16.389
18.513
12.96
484
2011
18.643
16.389
-12.09
507
2010
14.704
18.643
26.79
558
2009
10.670
14.704
37.81
396
2008
17.918
10.670
-40.45
357
2007
15.755
17.918
13.73
321
2006
14.214
15.755
10.84
198
2005(1)
12.651
14.214
12.35
36
Fidelity VIP Overseas
 
 
 
 
2014
17.787
16.084
-9.57
2,020
2013
13.848
17.787
28.44
2,015
2012
11.655
13.848
18.82
2,387
2011
14.288
11.655
-18.43
2,626
2010
12.830
14.288
11.36
2,507
2009
10.308
12.830
24.47
2,659
2008
18.654
10.308
-44.74
2,623
2007
16.162
18.654
15.42
2,013
2006
13.916
16.162
16.14
1,503
2005(1)
12.103
13.916
14.98
581
Franklin Small Cap Value Securities
 
 
 
 
2014
18.920
18.764
-0.82
160
2013
14.083
18.920
34.35
153
2012
12.064
14.083
16.74
121
2011
12.712
12.064
-5.10
123
2010(3)
10.289
12.712
23.55
27
Goldman Sachs VIT Mid Cap Value
 
 
 
 
2014
21.688
24.289
11.99
659
2013
16.550
21.688
31.05
625
2012
14.168
16.550
16.81
686
2011
15.346
14.168
-7.68
788
2010
12.449
15.346
23.27
812
2009
9.482
12.449
31.29
911
2008
15.276
9.482
-37.93
981
2007
15.011
15.276
1.77
925
2006
13.104
15.011
14.55
550
2005(1)
12.043
13.104
8.81
162
Goldman Sachs VIT Small Cap Equity Insights
 
 
 
 
2014
17.405
18.353
5.45
342
2013
13.014
17.405
33.74
315
2012
11.698
13.014
11.25
346
2011
11.783
11.698
-0.72
418
2010
9.183
11.783
28.31
395
2009
7.294
9.183
25.90
360
2008
11.212
7.294
-34.94
322
2007
13.615
11.212
-17.65
287
2006
12.298
13.615
10.71
189
2005(1)
11.649
12.298
5.57
‑
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    155


For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Invesco Van Kampen VI Value Opportunities
 
 
 
 
2014
$14.264
$14.996
5.13%
305
2013
10.814
14.264
31.90
325
2012
9.318
10.814
16.05
352
2011
9.746
9.318
-4.39
389
2010
9.207
9.746
5.85
363
2009
6.308
9.207
45.96
310
2008
13.265
6.308
-52.45
91
2007
13.248
13.265
0.13
69
2006
11.867
13.248
11.64
49
2005(1)
11.451
11.867
3.63
5
Invesco V.I. International Growth
 
 
 
 
2014
11.220
11.101
-1.06
853
2013
9.551
11.220
17.47
720
2012
8.373
9.551
14.07
661
2011
9.081
8.373
-7.80
621
2010
8.159
9.081
11.30
446
2009
6.118
8.159
33.36
359
2008(4)
10.079
6.118
-39.30
14
Invesco V.I. SmallCap Equity
 
 
 
 
2014
22.780
22.993
0.94
244
2013
16.805
22.780
35.55
242
2012
14.964
16.805
12.30
252
2011
15.285
14.964
-2.10
273
2010
12.059
15.285
26.75
219
2009
10.083
12.059
19.60
188
2008
14.887
10.083
-32.27
82
2007
14.353
14.887
3.72
50
2006
12.394
14.353
15.81
25
2005(1)
11.645
12.394
6.43
6
MFS Utilities
 
 
 
 
2014
20.377
22.598
10.90
456
2013
17.189
20.377
18.55
358
2012
15.398
17.189
11.63
259
2011
14.661
15.398
5.03
178
2010
13.098
14.661
11.93
84
2009(5)
10.063
13.098
30.16
30
MFS Value
 
 
 
 
2014
20.086
21.827
8.67
200
2013
15.022
20.086
33.71
184
2012
13.146
15.022
14.27
102
2011
13.394
13.146
-1.85
97
2010
12.213
13.394
9.67
100
2009(5)
10.063
12.213
21.37
32
MFS VIT New Discovery
 
 
 
 
2014
11.835
10.796
-8.78
56
2013(10)
10.003
11.835
18.31
21
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    156


For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Neuberger Berman AMT Large Cap Value
 
 
 
 
2014
$17.662
$19.133
8.33%
247
2013
13.659
17.662
29.31
247
2012
13.591
13.659
0.50
305
2011
13.591
11.880
-12.59
291
2010
11.916
13.591
14.06
288
2009
7.742
11.916
53.91
344
2008
16.494
7.742
-53.06
356
2007
15.299
16.494
7.81
327
2006
13.822
15.299
10.69
209
2005(1)
12.454
13.822
10.98
40
Neuberger Berman AMT Small Cap Growth
 
 
 
 
2014
14.867
15.169
2.03
164
2013
10.338
14.867
43.81
182
2012
9.634
10.338
7.31
206
2011
9.875
9.634
-2.44
222
2010
8.372
9.875
17.95
223
2009
6.916
8.372
21.05
221
2008
11.589
6.916
-40.32
179
2007
11.693
11.589
-0.89
163
2006
11.266
11.693
3.79
104
2005(1)
10.812
11.266
4.20
35
Neuberger Berman AMT Socially Responsive
 
 
 
 
2014
19.415
21.133
8.85
246
2013
14.308
19.415
35.69
315
2012
13.075
14.308
9.43
374
2011
13.681
13.075
-4.43
401
2010
11.293
13.681
21.15
373
2009
8.714
11.293
29.60
384
2008
14.593
8.714
-40.29
338
2007
13.753
14.593
6.11
265
2006
12.265
13.753
12.13
144
2005(1)
11.613
12.265
5.61
54
PIMCO VIT All Asset
 
 
 
 
2014
14.514
14.380
-0.92
328
2013
14.679
14.514
-1.12
292
2012
12.951
14.679
13.34
263
2011
12.882
12.951
0.54
170
2010
11.551
12.882
11.52
153
2009(5)
10.063
11.551
14.79
35
PIMCO VIT High Yield Portfolio
 
 
 
 
2014
13.602
13.862
1.91
1,050
2013
13.044
13.602
4.28
932
2012
11.571
13.044
12.73
852
2011
11.352
11.571
1.93
986
2010 (3)
10.096
11.352
12.44
488
PIMCO VIT Total Return
 
 
 
 
2014
12.206
12.552
2.83
2,159
2013
12.626
12.206
-3.33
2,345
2012
11.683
12.626
8.07
3,113
2011
11.434
11.683
2.18
2,029
2010
10.725
11.434
6.61
1,309
2009(5)
10.063
10.725
6.58
353
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    157


For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
T. Rowe Price Blue Chip Growth
 
 
 
 
2014
$20.431
$21.928
7.33%
488
2013
14.710
20.431
38.89
478
2012
12.653
14.710
16.26
487
2011
12.658
12.653
-0.04
486
2010
11.066
12.658
14.39
453
2009
7.914
11.066
39.83
383
2008
13.996
7.914
-43.46
114
2007
12.618
13.996
10.92
87
2006
11.704
12.618
7.81
51
2005(1)
10.911
11.704
7.27
34
T. Rowe Price Health Sciences
 
 
 
 
2014
34.278
44.356
29.40
571
2013
23.095
34.278
48.42
497
2012
17.880
23.095
29.17
395
2011
16.425
17.880
8.86
328
2010
14.446
16.425
13.70
303
2009
11.153
14.446
29.53
257
2008
15.969
11.153
-30.16
262
2007
13.759
15.969
16.06
181
2006
12.867
13.759
6.93
113
2005(1)
10.777
12.867
19.39
34
Van Eck Global Hard Assets
 
 
 
 
2014
15.267
12.142
-20.47
382
2013
14.037
15.267
8.76
362
2012
13.806
14.037
1.67
311
2011
16.806
13.806
-17.85
319
2010
13.245
16.806
26.89
190
2009(5)
10.063
13.245
31.62
60
Bond & Mortgage Securities
 
 
 
 
2014
22.892
23.756
3.77
3,611
2013
23.416
22.892
-2.24
3,962
2012
22.082
23.416
6.04
4,098
2011
20.913
22.082
5.59
4,013
2010
18.994
20.913
10.10
4,398
2009
15.930
18.994
19.23
4,388
2008
19.479
15.930
-18.22
4,452
2007
19.104
19.479
1.96
4,627
2006
18.512
19.104
3.20
2,822
2005(1)
18.309
18.512
1.11
1,000
Diversified Balanced
 
 
 
 
2014
13.452
14.248
5.92
63,235
2013
12.076
13.452
11.39
56,392
2012
11.163
12.076
8.18
43,622
2011
10.925
11.163
2.18
27,478
2010(3)
10.133
10.925
7.82
14,593
Diversified Balanced Managed Volatility
 
 
 
 
2014
10.071
10.616
5.41
6,137
2013(11)
9.917
10.071
1.55
64
Diversified Growth
 
 
 
 
2014
14.299
15.205
6.34
173,923
2013
12.292
14.299
16.33
140,583
2012
11.167
12.292
10.07
91,780
2011
11.074
11.167
0.84
62,385
2010(3)
10.163
11.074
8.96
27,443
 
 
 
 
 

Appendix I – Condensed Financial Information    158


For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Diversified Growth Managed Volatility
 
 
 
 
2014
$10.120
$10.684
5.57%
11,309
2013(11)
9.877
10.120
2.46
309
Diversified Income
 
 
 
 
2014
11.196
11.801
5.40
12,955
2013
24.265
11.196
-53.86
8,875
2012(9)
10.049
10.499
4.48
4,725
Diversified International
 
 
 
 
2014
28.421
27.126
-4.56
1,638
2013
24.265
28.421
17.13
1,643
2012
20.777
24.265
16.79
1,796
2011
23.644
20.777
-12.13
1,998
2010
21.087
23.644
12.13
2,035
2009
16.594
21.087
27.08
1,498
2008
31.290
16.594
-46.97
1,267
2007
27.336
31.290
14.46
1,077
2006
21.662
27.336
26.19
612
2005(1)
18.387
21.662
17.81
184
Equity Income
 
 
 
 
2014
13.442
14.951
11.23
12,022
2013
10.708
13.442
25.53
14,254
2012
9.609
10.708
11.44
16,532
2011
9.242
9.609
3.97
18,577
2010
8.067
9.242
14.57
12,283
2009
6.817
8.067
18.34
13,024
2008
10.466
6.817
-34.87
12,992
2007(6)
10.221
10.466
2.40
11,013
Government & High Quality Bond
 
 
 
 
2014
11.668
12.090
3.62
4,302
2013
11.955
11.668
-2.40
4,762
2012
11.668
11.955
2.46
5,088
2011
11.138
11.668
4.76
4,636
2010
10.671
11.138
4.38
5,005
2009
10.164
10.671
4.99
694
2008(7)
10.071
10.164
0.92
12
International Emerging Markets
 
 
 
 
2014
33.482
31.779
-5.09
1,005
2013
35.611
33.482
-5.98
982
2012
29.896
35.611
19.12
945
2011
36.746
29.896
-18.64
952
2010
31.244
36.746
17.61
894
2009
18.682
31.244
67.24
878
2008
41.970
18.682
-55.49
756
2007
29.952
41.970
40.12
658
2006
21.958
29.952
36.41
368
2005(7)
17.986
21.958
22.08
131
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    159


For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
LargeCap Blend II
 
 
 
 
2014
$17.681
$19.407
9.76%
3,520
2013
13.645
17.681
29.58
4,097
2012
12.013
13.645
13.59
4,994
2011
12.196
12.013
-1.50
5,817
2010
10.921
12.196
11.67
5,985
2009
8.540
10.921
27.88
6,533
2008
13.619
8.540
-37.29
6,947
2007
13.139
13.619
3.65
5,847
2006
11.504
13.139
14.21
3,901
2005(1)
11.109
11.504
3.56
1,448
LargeCap Growth
 
 
 
 
2014
26.666
29.219
9.57
387
2013
20.195
26.666
32.04
429
2012
17.528
20.195
15.22
474
2011
18.560
17.528
-5.56
528
2010
15.899
18.560
16.74
549
2009
12.694
15.899
25.25
576
2008
22.650
12.694
-43.96
361
2007
18.646
22.650
21.47
236
2006
17.202
18.646
8.39
125
2005(1)
15.544
17.202
10.67
23
LargeCap Growth I
 
 
 
 
2014
51.131
54.763
7.10
295
2013
38.087
51.131
34.25
273
2012
33.191
38.087
14.75
255
2011
33.769
33.191
-1.71
252
2010
28.631
33.769
17.95
246
2009
19.013
28.631
50.59
273
2008
32.464
19.013
-41.43
232
2007
30.341
32.464
7.00
194
2006
28.968
30.341
4.74
129
2005(1)
25.820
28.968
12.19
40
LargeCap S&P 500 Index
 
 
 
 
2014
14.388
16.073
11.71
2,376
2013
11.050
14.388
30.21
2,290
2012
9.702
11.050
13.89
2,277
2011
9.671
9.702
0.32
2,574
2010
8.553
9.671
13.07
2,467
2009
6.867
8.553
24.55
2,416
2008
11.071
6.867
-37.97
1,888
2007
10.678
11.071
3.68
1,455
2006
9.370
10.678
13.96
891
2005(1)
9.086
9.370
3.13
350
LargeCap Value
 
 
 
 
2014
36.285
39.778
9.63
389
2013
28.126
36.285
29.01
385
2012
24.054
28.126
16.93
418
2011
24.111
24.054
-0.24
434
2010
21.432
24.111
12.50
434
2009
18.688
21.432
14.68
428
2008
29.232
18.688
-36.07
362
2007
29.676
29.232
-1.50
390
2006
25.087
29.676
18.29
209
2005(1)
24.347
25.087
3.04
84
 
 
 
 
 

Appendix I – Condensed Financial Information    160


For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
MidCap
 
 
 
 
2014
$73.158
$81.509
11.42%
1,558
2013
55.395
73.158
32.07
1,774
2012
47.033
55.395
17.78
1,963
2011
44.045
47.033
6.78
2,172
2010
35.990
44.045
22.38
2,193
2009
27.285
35.990
31.90
1,398
2008
41.878
27.285
-34.85
1,393
2007
38.803
41.878
7.92
1,220
2006
34.448
38.803
12.64
815
2005(1)
31.855
34.448
8.14
319
Money Market
 
 
 
 
2014
13.611
13.421
-1.40
1,592
2013
13.803
13.611
-1.39
1,830
2012
13.998
13.803
-1.39
1,671
2011
14.195
13.998
-1.39
2,077
2010
14.395
14.195
-1.39
2,034
2009
14.565
14.395
-1.17
2,509
2008
14.400
14.565
1.15
2,954
2007
13.914
14.400
3.49
894
2006
13.482
13.914
3.20
371
2005(1)
13.326
13.482
1.17
166
Principal Capital Appreciation
 
 
 
 
2014
14.495
16.074
10.89
935
2013
11.081
14.495
30.81
935
2012
9.873
11.081
12.24
842
2011
9.999
9.873
-1.26
733
2010
8.787
9.999
13.79
558
2009
6.864
8.787
28.02
385
2008
10.447
6.864
-34.30
203
2007(8)
10.126
10.447
3.17
93
Principal LifeTime 2010
 
 
 
 
2014
14.814
15.310
3.35
1,880
2013
13.553
14.814
9.30
1,993
2012
12.296
13.553
10.22
2,148
2011
12.291
12.296
0.04
2,309
2010
10.940
12.291
12.35
2,473
2009
8.870
10.940
23.34
2,598
2008
13.019
8.870
-31.87
2,466
2007
12.728
13.019
2.29
2,499
2006
11.493
12.728
10.75
1,605
2005(1)
10.994
11.493
4.54
904
Principal LifeTime 2020
 
 
 
 
2014
16.135
16.825
4.28
6,965
2013
14.103
16.135
14.41
8,239
2012
12.463
14.103
13.16
8,852
2011
12.776
12.463
-2.45
9,541
2010
11.261
12.776
13.45
10,091
2009
8.957
11.261
25.72
10,584
2008
13.797
8.957
-35.08
9,751
2007
13.343
13.797
3.40
8,959
2006
11.749
13.343
13.57
5,303
2005(1)
11.160
11.749
5.28
1,657
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    161


For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Principal LifeTime 2030
 
 
 
 
2014
$16.165
$16.906
4.58%
3,371
2013
13.773
16.165
17.37
3,454
2012
12.085
13.773
13.97
3,594
2011
12.534
12.085
-3.58
3,660
2010
11.014
12.534
13.80
3,740
2009
8.711
11.014
26.44
3,369
2008
13.897
8.711
-37.32
1,333
2007
13.299
13.897
4.50
1,138
2006
11.745
13.299
13.23
677
2005(1)
11.178
11.745
5.07
190
Principal LifeTime 2040
 
 
 
 
2014
16.795
17.589
4.73
706
2013
13.904
16.795
20.79
630
2012
12.082
13.904
15.08
676
2011
12.655
12.082
-4.53
689
2010
11.081
12.655
14.20
672
2009
8.674
11.081
27.75
557
2008
14.226
8.674
-39.03
591
2007
13.542
14.226
5.05
555
2006
11.928
13.542
13.53
278
2005(1)
11.322
11.928
5.35
93
Principal LifeTime 2050
 
 
 
 
2014
16.876
17.674
4.73
406
2013
13.823
16.876
22.09
373
2012
11.975
13.823
15.43
360
2011
12.642
11.975
-5.28
323
2010
11.032
12.642
14.59
327
2009
8.603
11.032
28.23
319
2008
14.315
8.603
-39.90
305
2007
13.616
14.315
5.13
271
2006
11.956
13.616
13.88
168
2005(1)
11.351
11.956
5.33
27
Principal LifeTime Strategic Income
 
 
 
 
2014
13.597
14.021
3.12
1,100
2013
13.116
13.597
3.67
1,263
2012
12.131
13.116
8.12
1,405
2011
11.883
12.131
2.09
1,475
2010
10.834
11.883
9.68
1,505
2009
9.236
10.834
17.30
1,556
2008
12.306
9.236
-24.95
1,026
2007
12.222
12.306
0.69
1,246
2006
11.240
12.222
8.74
851
2005(1)
10.785
11.240
4.22
446
Real Estate Securities
 
 
 
 
2014
39.634
51.911
30.98
618
2013
38.611
39.634
2.65
590
2012
33.419
38.611
15.54
518
2011
31.110
33.419
7.42
480
2010
25.097
31.110
23.96
431
2009
19.741
25.097
27.13
454
2008
29.820
19.741
-33.80
417
2007
36.742
29.820
-18.84
414
2006
27.274
36.742
34.71
286
2005(1)
22.670
27.274
20.31
81
 
 
 
 
 

Appendix I – Condensed Financial Information    162


For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
SAM Balanced
 
 
 
 
2014
$13.311
$14.021
5.33%
39,321
2013
11.467
13.311
16.08
46,819
2012
10.314
11.467
11.18
50,915
2011
10.357
10.314
-0.42
53,610
2010
9.245
10.357
12.03
55,182
2009
7.570
9.245
22.13
51,928
2008
10.401
7.570
-27.22
23,851
2007(8)
10.094
10.401
3.04
2,332
SAM Conservative Balanced
 
 
 
 
2014
13.243
13.871
4.74
9,316
2013
12.040
13.243
9.99
10,333
2012
10.981
12.040
9.64
10,099
2011
10.886
10.981
0.87
10,213
2010
9.871
10.886
10.28
10,654
2009
8.263
9.871
19.46
10,128
2008
10.372
8.263
-20.33
4,867
2007(8)
10.094
10.372
2.75
599
SAM Conservative Growth
 
 
 
 
2014
12.963
13.732
5.93
4,956
2013
10.677
12.963
21.41
4,368
2012
9.483
10.677
12.59
3,903
2011
9.661
9.483
-1.84
3,570
2010
8.503
9.661
13.62
3,116
2009
6.860
8.503
23.95
2,317
2008
10.401
6.860
-34.04
1,434
2007(8)
10.099
10.401
2.99
410
SAM Flexible Income
 
 
 
 
2014
13.355
13.963
4.55
9,081
2013
12.567
13.355
6.27
9,299
2012
11.520
12.567
9.09
9,859
2011
11.300
11.520
1.95
9,389
2010
10.369
11.300
8.98
9,408
2009
8.766
10.369
18.29
8,280
2008
10.308
8.766
-14.96
4,008
2007(8)
10.094
10.308
2.12
109
SAM Strategic Growth
 
 
 
 
2014
12.816
13.735
7.17
2,955
2013
10.197
12.816
25.68
2,552
2012
8.952
10.197
13.91
2,361
2011
9.253
8.952
-3.25
2,460
2010
8.062
9.253
14.77
2,231
2009
6.414
8.062
25.69
1,781
2008
10.395
6.414
-38.30
1,229
2007(8)
10.107
10.395
2.85
401
Short-Term Income
 
 
 
 
2014
11.561
11.598
0.32
8,558
2013
11.592
11.561
-0.27
9,294
2012
11.197
11.592
3.53
9,441
2011
11.201
11.197
-0.04
8,893
2010
10.901
11.201
2.75
8,687
2009
10.055
10.901
8.41
1,322
2008(7)
10.071
10.055
-0.16
19
Small Cap Blend
 
 
 
 
2014
20.012
20.699
3.43
165
2013(10)
16.342
20.012
22.46
40

Appendix I – Condensed Financial Information    163


For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
SmallCap Growth II
 
 
 
 
2014
$16.681
$17.564
5.29%
523
2013
11.475
16.681
45.37
551
2012
10.007
11.475
14.67
498
2011
10.613
10.007
-5.71
529
2010
8.479
10.613
25.17
586
2009
6.527
8.479
29.91
551
2008
11.248
6.527
-41.97
498
2007
10.864
11.248
3.53
418
2006
10.110
10.864
7.46
244
2005(1)
9.455
10.110
6.93
65
SmallCap Value I
 
 
 
 
2014
35.242
37.243
5.68
1,026
2013
25.570
35.242
37.83
1,169
2012
21.304
25.570
20.02
1,430
2011
22.424
21.304
-4.99
1,710
2010
18.039
22.424
24.31
1,660
2009
15.743
18.039
14.58
1,053
2008
23.416
15.743
-32.77
1,766
2007
26.246
23.416
-10.78
1,639
2006
22.433
26.246
17.00
950
2005(1)
21.201
22.433
5.81
362

(1) Commenced Operations on March 1, 2005
(2) Commenced Operations on May 22, 2010
(3) Commenced Operations on January 4, 2010
(4) Commenced Operations on May 16, 2008
(5) Commenced Operations on May 16, 2009
(6) Commenced Operations on January 12, 2007
(7) Commenced Operations on November 21, 2008
(8) Commenced Operations on May 1, 2007
(9) Commenced Operations on May 15, 2012
(10) Commenced Operations on May 18, 2013
(11) Commenced Operations on October 31, 2013
(12)
Commenced Operations on April 25, 2014



Appendix I – Condensed Financial Information    164


The following table contains the unit values for the Contract with the Premium Payment Credit Rider for the periods ended December 31. With the exception of the 2013 End of Period unit values, all of the unit values shown below have been updated to factor in the 0.15% administrative fee that was added to this product effective August 1, 2013. The 2013 End of Period values are the actual unit values, which also factor in the administrative fee.
For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
AllianceBernstein Small Cap Growth
 
 
 
 
2014
$25.169
$24.222
-3.76%
36
2013
17.627
25.169
42.79
61
2012
15.636
17.627
12.73
63
2011
15.270
15.636
2.40
90
2010
11.379
15.270
34.19
66
2009
8.189
11.379
38.95
42
2008
15.344
8.189
-46.63
38
2007
13.724
15.344
11.80
41
2006
12.649
13.724
8.50
19
2005(1)
11.969
12.649
5.68
4
AllianceBernstein Small/Mid Cap Value
 
 
 
 
2014
11.325
12.122
7.04
37
2013(10)
10.003
11.325
13.22
20
American Century VP Capital Appreciation
 
2014(12)
10.000
10.753
7.53
42
American Century VP Inflation Protection
 
 
 
 
2014
12.167
12.319
1.25
498
2013
13.563
12.167
-10.29
1,108
2012
12.886
13.563
5.25
1,356
2011
11.764
12.886
9.54
1,358
2010
11.419
11.764
3.02
1,634
2009
10.567
11.419
8.06
1,625
2008
10.957
10.567
-3.56
1,573
2007
10.206
10.957
7.36
1,864
2006
10.249
10.206
-0.42
1,377
2005(1)
10.224
10.249
0.24
560
American Century VP Mid Cap Value
 
 
 
 
2014
16.327
18.602
13.93
36
2013
12.816
16.327
27.40
32
2012
11.250
12.816
13.92
18
2011
11.575
11.250
-2.81
16
2010(2)
10.043
11.575
15.25
7
American Century VP Ultra
 
 
 
 
2014
16.104
17.337
7.66
290
2013
11.999
16.104
34.21
634
2012
10.760
11.999
11.51
1,078
2011
10.883
10.760
-1.13
1,252
2010
9.586
10.883
13.53
1,324
2009
7.270
9.586
31.86
1,459
2008
12.712
7.270
-42.81
1,731
2007
10.733
12.712
18.44
1,347
2006
11.333
10.733
-5.29
1,128
2005(1)
11.066
11.333
2.41
468
Delaware VIP Small Cap Value
 
 
 
 
2014
11.350
11.751
3.53
12
2013(10)
10.003
11.350
13.47
7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    165


For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Dreyfus Technology Growth
 
 
 
 
2014
$20.280
$21.186
4.47%
48
2013
15.616
20.280
29.87
48
2012
13.812
15.616
13.06
45
2011
15.324
13.812
-9.87
46
2010
12.057
15.324
27.10
41
2009
7.831
12.057
53.97
44
2008
13.599
7.831
-42.41
30
2007
12.125
13.599
12.16
36
2006
11.889
12.125
1.99
12
2005(1)
11.059
11.889
7.51
3
DWS Small Mid Cap Value
 
 
 
 
2014
11.341
11.682
3.01
10
2013(10)
10.003
11.341
13.38
4
Fidelity VIP Contrafund®
 
 
 
 
2014
19.642
21.497
9.44
286
2013
15.302
19.642
28.36
454
2012
13.443
15.302
13.83
573
2011
14.107
13.443
-4.71
637
2010
12.308
14.107
14.62
646
2009
9.269
12.308
32.79
658
2008
16.502
9.269
-43.83
648
2007
14.354
16.502
14.96
540
2006
13.141
14.354
9.23
380
2005(1)
11.672
13.141
12.59
101
Fidelity VIP Equity-Income
 
 
 
 
2014
15.508
16.489
6.33
114
2013
12.377
15.508
25.30
150
2012
10.788
12.377
14.73
178
2011
10.934
10.788
-1.34
184
2010
9.707
10.934
12.64
170
2009
7.624
9.707
27.32
169
2008
13.603
7.624
-43.95
177
2007
13.705
13.603
-0.74
180
2006
11.658
13.705
17.56
144
2005(1)
11.326
11.658
2.93
56
Fidelity VIP Growth
 
 
 
 
2014
17.155
18.668
8.82
97
2013
12.869
17.155
33.30
131
2012
11.477
12.869
12.13
161
2011
11.712
11.477
-2.01
181
2010
9.647
11.712
21.41
200
2009
7.691
9.647
25.43
231
2008
14.893
7.691
-48.36
239
2007
11.997
14.893
24.14
230
2006
11.484
11.997
4.47
160
2005(1)
10.912
11.484
5.24
56
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    166


For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Fidelity VIP Mid Cap
 
 
 
 
2014
$23.449
$24.371
3.93%
88
2013
17.607
23.449
33.18
98
2012
15.681
17.607
12.28
108
2011
17.944
15.681
-12.61
137
2010
14.238
17.944
26.03
135
2009
10.394
14.238
36.98
125
2008
17.560
10.394
-40.81
134
2007
15.534
17.560
13.04
105
2006
14.098
15.534
10.19
85
2005(1)
12.611
14.098
11.79
35
Fidelity VIP Overseas
 
 
 
 
2014
16.814
15.114
-10.11
347
2013
13.169
16.814
27.68
590
2012
11.151
13.169
18.10
838
2011
13.752
11.151
-18.91
954
2010
12.423
13.752
10.70
918
2009
10.041
12.423
23.72
992
2008
18.282
10.041
-45.08
1,056
2007
15.935
18.282
14.73
890
2006
13.803
15.935
15.45
694
2005(1)
12.064
13.803
14.41
301
Franklin Small Cap Value Securities
 
 
 
 
2014
18.471
18.209
-1.42
21
2013
13.832
18.471
33.54
24
2012
11.921
13.832
16.03
21
2011
12.636
11.921
-5.66
20
2010(3)
10.288
12.636
22.82
8
Goldman Sachs VIT Mid Cap Value
 
 
 
 
2014
20.502
22.824
11.33
104
2013
15.739
20.502
30.26
214
2012
13.555
15.739
16.11
279
2011
14.771
13.555
-8.23
319
2010
12.055
14.771
22.53
338
2009
9.236
12.055
30.52
385
2008
14.970
9.236
-38.30
403
2007
14.800
14.970
1.15
416
2006
12.998
14.800
13.86
303
2005(1)
12.005
12.998
8.27
91
Goldman Sachs VIT Small Cap Equity Insights
 
 
 
 
2014
16.454
17.245
4.81
35
2013
12.377
16.454
32.94
96
2012
11.192
12.377
10.59
111
2011
11.341
11.192
-1.31
117
2010
8.892
11.341
27.54
121
2009
7.105
8.892
25.15
127
2008
10.988
7.105
-35.34
139
2007
13.424
10.988
-18.15
132
2006
12.198
13.424
10.05
110
2005(1)
11.612
12.198
5.05
31
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    167


For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Invesco V.I. Van Kampen VI Value Opportunities
 
 
 
 
2014
$13.484
$14.091
4.50%
55
2013
10.284
13.484
31.12
77
2012
8.915
10.284
15.36
76
2011
9.381
8.915
-4.97
87
2010
8.915
9.381
5.23
82
2009
6.145
8.915
45.08
78
2008
13.000
6.145
-52.73
45
2007
13.062
13.000
-0.47
45
2006
11.771
13.062
10.97
33
2005(1)
11.415
11.771
3.12
8
Invesco V.I. International Growth
 
 
 
 
2014
10.848
10.668
-1.66
90
2013
9.290
10.848
16.77
71
2012
8.193
9.290
13.39
74
2011
8.939
8.193
-8.35
78
2010
8.080
8.939
10.63
57
2009
6.095
8.080
32.57
41
2008(4)
10.079
6.095
-39.53
4
Invesco V.I. SmallCap Equity
 
 
 
 
2014
21.534
21.606
0.33
41
2013
15.981
21.534
34.75
52
2012
14.317
15.981
11.62
53
2011
14.712
14.317
-2.68
57
2010
11.677
14.712
25.99
48
2009
9.822
11.677
18.89
50
2008
14.589
9.822
-32.68
51
2007
14.152
14.589
3.09
51
2006
12.293
14.152
15.12
30
2005(1)
11.608
12.293
5.90
7
MFS Utilities
 
 
 
 
2014
19.818
21.848
10.24
79
2013
16.819
19.818
17.83
68
2012
15.157
16.819
10.97
52
2011
14.518
15.157
4.40
34
2010
13.049
14.518
11.26
27
2009(5)
10.063
13.049
29.67
15
MFS Value
 
 
 
 
2014
19.535
21.102
8.02
38
2013
14.698
19.535
32.91
39
2012
12.941
14.698
13.58
31
2011
13.264
12.941
-2.44
17
2010
12.167
13.264
9.02
10
2009(5)
10.063
12.167
20.91
7
MFS VIT New Discovery
 
 
 
 
2014
11.791
10.691
-9.33
10
2013(10)
10.003
11.791
17.87
10
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    168


For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Neuberger Berman AMT Large Cap Value
 
2014
$16.697
$17.978
7.67%
29
2013
12.989
16.697
28.55
64
2012
11.366
12.989
14.28
89
2011
13.081
11.366
-13.11
106
2010
11.538
13.081
13.37
107
2009
7.542
11.538
52.98
113
2008
16.164
7.542
-53.34
123
2007
15.084
16.164
7.16
112
2006
13.710
15.084
10.02
101
2005(1)
12.415
13.710
10.43
25
Neuberger Berman AMT Small Cap Growth
 
 
 
 
2014
14.054
14.254
1.42
42
2013
9.831
14.054
42.96
74
2012
9.218
9.831
6.65
92
2011
9.504
9.218
-3.01
99
2010
8.107
9.504
17.23
107
2009
6.737
8.107
20.34
116
2008
11.357
6.737
-40.68
109
2007
11.528
11.357
-1.48
109
2006
11.174
11.528
3.17
71
2005(1)
10.778
11.174
3.67
22
Neuberger Berman AMT Socially Responsive
 
 
 
 
2014
18.354
19.858
8.19
44
2013
13.607
18.354
34.89
72
2012
12.510
13.607
8.77
86
2011
13.168
12.510
-5.00
94
2010
10.935
13.168
20.42
97
2009
8.488
10.935
28.83
93
2008
14.301
8.488
-40.65
75
2007
13.559
14.301
5.47
60
2006
12.165
13.559
11.46
42
2005(1)
11.576
12.165
5.09
9
PIMCO VIT All Asset
 
 
 
 
2014
14.117
13.903
-1.52
38
2013
14.363
14.117
-1.71
54
2012
12.749
14.363
12.66
59
2011
12.756
12.749
-0.05
31
2010
11.507
12.756
10.85
81
2009(5)
10.063
11.507
14.35
10
PIMCO VIT High Yield Portfolio
 
 
 
 
2014
13.279
13.452
1.30
108
2013
12.812
13.279
3.65
116
2012
11.433
12.812
12.06
274
2011
11.284
11.433
1.32
353
2010(3)
10.095
11.284
11.78
226
PIMCO VIT Total Return
 
 
 
 
2014
11.871
12.135
2.22
168
2013
12.354
11.871
-3.91
211
2012
11.500
12.354
7.43
505
2011
11.323
11.500
1.56
263
2010
10.684
11.323
5.98
151
2009(5)
10.063
10.684
6.17
48
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    169


For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
T. Rowe Price Blue Chip Growth
 
 
 
 
2014
$19.314
$20.605
6.68%
93
2013
13.989
19.314
38.07
88
2012
12.105
13.989
15.56
80
2011
12.184
12.105
-0.65
76
2010
10.715
12.184
13.71
82
2009
7.710
10.715
38.98
74
2008
13.716
7.710
-43.79
50
2007
12.441
13.716
10.25
49
2006
11.609
12.441
7.17
32
2005(1)
10.877
11.609
6.73
22
T. Rowe Price Health Sciences
 
 
 
 
2014
32.404
41.681
28.63
114
2013
21.964
32.404
47.53
135
2012
17.107
21.964
28.39
120
2011
15.810
17.107
8.20
110
2010
13.988
15.810
13.03
93
2009
10.864
13.988
28.76
84
2008
15.650
10.864
-30.58
78
2007
13.566
15.650
15.36
63
2006
12.763
13.566
6.29
49
2005(1)
10.743
12.763
18.80
9
Van Eck Global Hard Assets
 
 
 
 
2014
14.848
11.738
-20.95
71
2013
13.734
14.848
8.11
70
2012
13.590
13.734
1.06
65
2011
16.643
13.590
-18.34
62
2010
13.195
16.643
26.13
50
2009(5)
10.063
13.195
31.12
23
Bond & Mortgage Securities
 
 
 
 
2014
21.161
21.828
3.15
502
2013
21.775
21.161
-2.82
934
2012
20.659
21.775
5.40
1,225
2011
19.682
20.659
4.96
1,242
2010
17.984
19.682
9.44
1,340
2009
15.174
17.984
18.52
1,384
2008
18.666
15.174
-18.71
1,452
2007
18.418
18.666
1.35
1,650
2006
17.954
18.418
2.58
1,157
2005(1)
17.847
17.954
0.60
474
Diversified Balanced
 
 
 
 
2014
13.133
13.827
5.28
5,558
2013
11.861
13.133
10.72
4,998
2012
11.030
11.861
7.53
3,694
2011
10.860
11.030
1.57
2,245
2010(3)
10.132
10.860
7.19
1,008
Diversified Balanced Managed Volatility
 
 
 
 
2014
10.064
10.545
4.78
392
2013(11)
9.919
10.064
1.46
‑
Diversified Growth
 
 
 
 
2014
13.960
14.755
5.69
13,505
2013
12.072
13.960
15.64
11,106
2012
11.034
12.072
9.41
7,150
2011
11.008
11.034
0.24
4,756
2010(3)
10.162
11.008
8.33
1,931
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    170


For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Diversified Growth Managed Volatility
 
 
 
 
2014
$10.113
$10.612
4.93%
1,003
2013(11)
9.880
10.113
2.36
26
Diversified Income
 
 
 
 
2014
11.088
11.617
4.77
744
2013
10.460
11.088
6.00
668
2012(9)
10.050
10.460
4.08
406
Diversified International
 
 
 
 
2014
26.271
24.923
-5.13
264
2013
22.564
26.271
16.43
446
2012
19.437
22.564
16.09
561
2011
22.252
19.437
-12.65
626
2010
15.806
22.252
40.78
655
2009
15.806
19.966
26.32
400
2008
29.985
15.806
-47.29
384
2007
26.353
29.985
13.78
347
2006
21.009
26.353
25.44
239
2005(1)
17.922
21.009
17.22
64
Equity Income
 
 
 
 
2014
12.889
14.251
10.57
1,481
2013
10.329
12.889
24.78
3,117
2012
9.326
10.329
10.75
4,601
2011
9.023
9.326
3.36
5,277
2010
7.923
9.023
13.88
3,426
2009
6.736
7.923
17.62
3,702
2008
10.404
6.736
-35.26
3,927
2007(6)
10.220
10.404
1.80
3,617
Government & High Quality Bond
 
 
 
 
2014
11.315
11.655
3.00
646
2013
11.664
11.315
-2.99
1,048
2012
11.453
11.664
1.84
1,418
2011
10.998
11.453
4.14
1,176
2010
10.601
10.998
3.74
1,182
2009
10.157
10.601
4.37
98
2008(7)
10.071
10.157
0.85
‑
International Emerging Markets
 
 
 
 
2014
30.949
29.199
-5.65
167
2013
33.115
30.949
-6.54
254
2012
27.969
33.115
18.40
279
2011
34.584
27.969
-19.13
305
2010
29.583
34.584
16.90
316
2009
17.794
29.583
66.25
345
2008
40.219
17.794
-55.76
357
2007
28.876
40.219
39.28
317
2006
21.296
28.876
35.59
214
2005(1)
17.532
21.296
21.47
64
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    171


For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
LargeCap Blend II
 
 
 
 
2014
$16.489
$17.990
9.10%
481
2013
12.802
16.489
28.80
1,060
2012
11.338
12.802
12.91
1,617
2011
11.580
11.338
-2.09
1,903
2010
10.432
11.580
11.00
2,021
2009
8.207
10.432
27.11
2,185
2008
13.167
8.207
-37.67
2,452
2007
12.780
13.167
3.03
2,224
2006
11.257
12.780
13.53
1,642
2005(1)
10.924
11.257
3.05
664
LargeCap Growth
 
 
 
 
2014
24.649
26.847
8.92
94
2013
18.779
24.649
31.26
126
2012
16.397
18.779
14.53
143
2011
17.467
16.397
-6.13
149
2010
15.053
17.467
16.04
153
2009
12.091
15.053
24.50
146
2008
21.705
12.091
-44.29
123
2007
17.975
21.705
20.75
113
2006
16.683
17.975
7.74
77
2005(1)
15.150
16.683
10.12
11
LargeCap Growth I
 
 
 
 
2014
47.262
50.316
6.46
38
2013
35.417
47.262
33.44
63
2012
31.051
35.417
14.06
76
2011
31.781
31.051
-2.30
84
2010
27.108
31.781
17.24
88
2009
18.110
27.108
49.69
99
2008
31.109
18.110
-41.79
95
2007
29.250
31.109
6.36
91
2006
28.094
29.250
4.11
65
2005(1)
25.167
28.094
11.63
18
LargeCap S&P 500 Index
 
 
 
 
2014
13.300
14.769
11.05
341
2013
10.275
13.300
29.44
508
2012
9.077
10.275
13.20
620
2011
9.102
9.077
-0.27
680
2010
8.098
9.102
12.40
651
2009
6.540
8.098
23.82
665
2008
10.609
6.540
-38.35
630
2007
10.294
10.609
3.06
589
2006
9.087
10.294
13.28
446
2005(1)
8.856
9.087
2.61
166
LargeCap Value
 
 
 
 
2014
33.540
36.549
8.97
90
2013
26.154
33.540
28.24
138
2012
22.504
26.154
16.22
166
2011
22.692
22.504
-0.83
183
2010
20.292
22.692
11.83
192
2009
17.801
20.292
13.99
194
2008
28.013
17.801
-36.45
192
2007
28.610
28.013
-2.09
201
2006
24.331
28.610
17.59
130
2005(1)
23.731
24.331
2.53
31
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    172


For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
MidCap
 
 
 
 
2014
$67.624
$74.893
10.75%
220
2013
51.513
67.624
31.28
391
2012
44.000
51.513
17.08
535
2011
41.453
44.000
6.14
617
2010
34.076
41.453
21.65
685
2009
25.989
34.076
31.12
453
2008
40.131
25.989
-35.24
499
2007
37.407
40.131
7.28
468
2006
33.409
37.407
11.97
343
2005(1)
31.049
33.409
7.60
147
Money Market
 
 
 
 
2014
12.581
12.332
-1.98
213
2013
12.835
12.581
-1.98
341
2012
13.096
12.835
-1.99
550
2011
13.360
13.096
-1.98
610
2010
13.630
13.360
-1.98
715
2009
13.874
13.630
-1.76
847
2008
13.799
13.874
0.54
1,131
2007
13.414
13.799
2.87
593
2006
13.076
13.414
2.58
370
2005(1)
12.989
13.076
0.67
189
Principal Capital Appreciation
 
 
 
 
2014
13.926
15.350
10.23
223
2013
10.710
13.926
30.03
231
2012
9.600
10.710
11.56
191
2011
9.781
9.600
-1.85
195
2010
8.647
9.781
13.11
188
2009
6.795
8.647
27.26
145
2008
10.405
6.795
-34.69
96
2007(8)
10.126
10.405
2.76
44
Principal LifeTime 2010
 
 
 
 
2014
14.006
14.389
2.73
104
2013
12.892
14.006
8.64
231
2012
11.766
12.892
9.57
415
2011
11.832
11.766
-0.56
463
2010
10.595
11.832
11.68
485
2009
8.642
10.595
22.60
469
2008
12.761
8.642
-32.28
478
2007
12.551
12.761
1.67
555
2006
11.402
12.551
10.08
436
2005(1)
10.961
11.402
4.02
222
Principal LifeTime 2020
 
 
 
 
2014
15.255
15.813
3.66
1,048
2013
13.414
15.255
13.72
2,104
2012
11.927
13.414
12.47
2,788
2011
12.299
11.927
-3.02
2,986
2010
10.906
12.299
12.77
3,134
2009
8.727
10.906
24.97
3,168
2008
13.524
8.727
-35.47
3,188
2007
13.158
13.524
2.78
3,302
2006
11.656
13.158
12.89
1,978
2005(1)
11.127
11.656
4.75
602
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    173


For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Principal LifeTime 2030
 
 
 
 
2014
$15.284
$15.889
3.96%
707
2013
13.101
15.284
16.66
739
2012
11.565
13.101
13.28
781
2011
12.066
11.565
-4.15
911
2010
10.667
12.066
13.12
999
2009
8.487
10.667
25.69
992
2008
13.621
8.487
-37.69
500
2007
13.115
13.621
3.86
415
2006
11.651
13.115
12.57
234
2005(1)
11.144
11.651
4.55
90
Principal LifeTime 2040
 
 
 
 
2014
15.879
16.531
4.11
70
2013
13.225
15.879
20.07
106
2012
11.561
13.225
14.39
132
2011
12.182
11.561
-5.10
145
2010
10.732
12.182
13.51
156
2009
8.451
10.732
26.99
161
2008
13.944
8.451
-39.39
198
2007
13.354
13.944
4.42
197
2006
11.833
13.354
12.85
103
2005(1)
11.288
11.833
4.83
30
Principal LifeTime 2050
 
 
 
 
2014
15.956
16.611
4.11
55
2013
13.148
15.956
21.36
76
2012
11.459
13.148
14.74
92
2011
12.170
11.459
-5.84
113
2010
10.684
12.170
13.91
108
2009
8.382
10.684
27.46
113
2008
14.031
8.382
-40.26
123
2007
13.427
14.031
4.50
134
2006
11.860
13.427
13.21
92
2005(1)
11.317
11.860
4.80
39
Principal LifeTime Strategic Income
 
 
 
 
2014
12.856
13.177
2.50
150
2013
12.476
12.856
3.05
217
2012
11.609
12.476
7.47
237
2011
11.440
11.609
1.48
240
2010
10.492
11.440
9.04
255
2009
8.999
10.492
16.59
211
2008
12.062
8.999
-25.39
245
2007
12.052
12.062
0.08
264
2006
11.151
12.052
8.08
184
2005(1)
10.753
11.151
3.70
45
Real Estate Securities
 
 
 
 
2014
36.636
47.697
30.19
137
2013
35.905
36.636
2.04
160
2012
31.265
35.905
14.84
167
2011
29.279
31.265
6.78
161
2010
23.762
29.279
23.22
156
2009
18.804
23.762
26.37
165
2008
28.576
18.804
-34.20
172
2007
35.423
28.576
-19.33
165
2006
26.452
35.423
33.91
135
2005(1)
22.097
26.452
19.71
55
 
 
 
 
 
 
 
 
 
 

Appendix I – Condensed Financial Information    174


For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
SAM Balanced
 
 
 
 
2014
$12.788
$13.390
4.71%
5,099
2013
11.083
12.788
15.38
6,348
2012
10.029
11.083
10.51
6,676
2011
10.131
10.029
-1.01
6,895
2010
9.097
10.131
11.37
7,259
2009
7.495
9.097
21.37
6,724
2008
10.359
7.495
-27.65
3,960
2007(8)
10.094
10.359
2.63
967
SAM Conservative Balanced
 
 
 
 
2014
12.723
13.247
4.12
1,509
2013
11.636
12.723
9.34
1,630
2012
10.678
11.636
8.97
1,768
2011
10.649
10.678
0.27
1,853
2010
9.714
10.649
9.63
1,835
2009
8.180
9.714
18.75
2,061
2008
10.331
8.180
-20.82
1,276
2007(8)
10.094
10.331
2.35
184
SAM Conservative Growth
 
 
 
 
2014
12.454
13.114
5.30
1,278
2013
10.319
12.454
20.69
1,250
2012
9.221
10.319
11.91
1,149
2011
9.450
9.221
-2.42
1,055
2010
8.367
9.450
12.94
966
2009
6.791
8.367
23.21
952
2008
10.359
6.791
-34.44
779
2007(8)
10.099
10.359
2.57
175
SAM Flexible Income
 
 
 
 
2014
12.830
13.334
3.93
1,665
2013
12.147
12.830
5.62
1,967
2012
11.202
12.147
8.44
1,917
2011
11.053
11.202
1.35
1,716
2010
10.204
11.053
8.32
1,763
2009
8.678
10.204
17.58
1,647
2008
10.267
8.678
-15.48
1,252
2007(8)
10.094
10.267
1.71
15
SAM Strategic Growth
 
 
 
 
2014
12.313
13.116
6.52
1,123
2013
9.855
12.313
24.94
1,064
2012
8.704
9.855
13.22
901
2011
9.051
8.704
-3.83
861
2010
7.933
9.051
14.09
810
2009
6.350
7.933
24.93
841
2008
10.353
6.350
-38.67
615
2007(8)
10.107
10.353
2.43
207
Short-Term Income
 
 
 
 
2014
11.212
11.180
-0.29
937
2013
11.310
11.212
-0.87
1,776
2012
10.990
11.310
2.91
2,178
2011
11.060
10.990
-0.63
2,051
2010
10.829
11.060
2.13
2,302
2009
10.049
10.829
7.76
166
2008(7)
10.071
10.049
-0.22
3
SmallCap Blend
 
 
 
 
2014
18.497
19.018
2.82
35
2013(10)
15.162
18.497
22.00
26
 
 
 
 
 

Appendix I – Condensed Financial Information    175


For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
SmallCap Growth II
 
 
 
 
2014
$15.419
$16.137
4.66%
84
2013
10.670
15.419
44.51
128
2012
9.361
10.670
13.98
143
2011
9.988
9.361
-6.28
160
2010
8.028
9.988
24.41
167
2009
6.217
8.028
29.13
188
2008
10.474
6.217
-40.64
173
2007
10.474
10.778
2.90
157
2006
9.805
10.474
6.82
111
2005(1)
9.216
9.805
6.39
32
SmallCap Value I
 
 
 
 
2014
32.576
34.219
5.04
139
2013
23.778
32.576
37.00
261
2012
19.931
23.778
19.30
394
2011
21.105
19.931
-5.56
490
2010
17.079
21.105
23.57
486
2009
14.995
17.079
13.90
549
2008
22.439
14.995
-33.17
563
2007
25.303
22.439
-11.32
551
2006
21.757
25.303
16.30
373
2005(1)
20.665
21.757
5.28
152

(1) Commenced Operations on March 1, 2005
(2) Commenced Operations on May 22, 2010
(3) Commenced Operations on January 4, 2010
(4) Commenced Operations on May 16, 2008
(5) Commenced Operations on May 16, 2009
(6) Commenced Operations on January 12, 2007
(7) Commenced Operations on November 21, 2008
(8) Commenced Operations on May 1, 2007
(9) Commenced Operations on May 15, 2012
(10) Commenced Operations on May 18, 2013
(11) Commenced Operations on October 31, 2013
(12)
Commenced Operations on April 25, 2014


Appendix I – Condensed Financial Information    176


APPENDIX J – NEW YORK REG 60 – DETERMINING GMWB PERCENTAGES AND SUBMISSION GUIDELINES (for applications signed on or after November 2, 2015)
This appendix provides information about GMWB Percentages and application submission guidelines (“GMWB New York Reg 60 Submission Guidelines”) for Contracts where New York Reg 60 applies. This information only applies to your Contract if you have purchased a PIB 3 or PIB 10 rider.
Determining GMWB Percentages – NY Reg 60
If you are applying for this Contract as a replacement for an existing life insurance policy or annuity contract, in order to receive the GMWB Percentages in effect on the date the application is signed, the submission guidelines applicable to New York Reg 60 must be met (see GMWB New York Reg 60 Submission Guidelines section).
When the GMWB New York Reg 60 Submission Guidelines are met, a comparison of the GMWB Percentages in effect on the following dates will be used to determine which set of GMWB Percentages will apply to your Contract:
•
the date you signed the Client Authorization Form;
•
the date you signed the application; and
•
the date the money is received by us.
The comparison will be done in a two-step process as follows:
Step One: The GMWB Percentages in effect on the date you signed the Client Authorization Form will be compared to the GMWB Percentages in effect on the date you signed the application. If any of the GMWB Percentages have decreased, the GMWB Percentages in effect on the date you signed the Client Authorization Form will be used in step two. Otherwise, the GMWB Percentages in effect on the date you signed the application will be used in step two.
Step Two: The GMWB Percentages determined in step one will be compared to the GMWB Percentages in effect on the date the money is received. If any of the GMWB Percentages have increased, you will receive the GMWB Percentages in effect on the date the money is received by us , provided that no GMWB Percentages have decreased. Otherwise, you will receive the GMWB Percentages determined by step one.
Example:
 
GMWB Percentages in effect on:
 
Client Authorization Form Signature Date
Application Signature Date
Money Received Date
GMWB Bonus
7% year one,
6% year two,
5% year three
7% year one,
6% year two,
5% year three
7% year one,
7% year two,
7% year three
Ages: 45-54
3.00%
3.00%
3.00%
Ages: 55-59
3.80%
3.80%
3.80%
Ages: 60-64
3.80%
3.80%
3.80%
Ages: 65-74
4.80%
5.80%
3.80%
Ages: 75+
5.05%
5.05%
5.05%
Step One: In the table above, compare the GMWB Percentages on the client authorization form signature date to the GMWB Percentages on the application signature date. In this example, a GMWB Percentage increased on the application signature date (ages 65-74) and no GMWB Percentages decreased. As a result, the GMWB Percentages in effect on the application signature date are used in step two.
Step Two: Compare the GMWB Percentages on the application signature date to the GMWB Percentages on the money received date. In this example, a GMWB Percentage decreased (ages 65-74) and a GMWB Percentage increased (GMWB Bonus) on the money received date. As a result, the GMWB Percentages in effect on the application signature date will apply to your Contract.
You will be notified if the GMWB New York Reg 60 Submission Guidelines are not satisfied, in which case we will provide you with the current GMWB Percentages Prospectus Supplement, which will include the GMWB Percentages applicable to your Contract. Additional paperwork may be required.

APPENDIX J – NEW YORK REG 60 –     177
DETERMINING GMWB PERCENTAGES AND SUBMISSION
GUIDELINES (for applications signed on or after November 2, 2015)


The GMWB Percentages applicable to your Contract will not change for the life of your Contract, and for applications signed after November 30, 2015, the GMWB Percentages applicable to your Contract will be in a GMWB Percentages Prospectus Supplement attached to your prospectus.
GMWB New York Reg 60 Submission Guidelines
The GMWB New York Reg 60 Submission Guidelines are:
•
your application must be signed within the stated time period during which the GMWB Percentages are in effect;
•
your application must be received by us within 7 calendar days of the date the application is signed; and
•
the annuity must be funded within 90 calendar days of the date the Client Authorization Form is signed.
Under certain circumstances we may waive these conditions or extend these time periods in a nondiscriminatory manner.

APPENDIX J – NEW YORK REG 60 –     178
DETERMINING GMWB PERCENTAGES AND SUBMISSION
GUIDELINES (for applications signed on or after November 2, 2015)
 


PART B

PRINCIPAL LIFE INSURANCE COMPANY
(the “Depositor”)

PRINCIPAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT B
(the “Registrant”)

PRINCIPAL INVESTMENT PLUS VARIABLE ANNUITYSM 
(FOR APPLICATIONS SIGNED ON OR AFTER AUGUST 1, 2013)

Statement of Additional Information

dated November 2, 2015

This Statement of Additional Information provides information about the Principal Investment Plus Variable Annuity (the “Contract”) in addition to the information that is contained in the Contract’s Prospectus dated November 2, 2015.

This Statement of Additional Information is not a prospectus. It should be read in conjunction with the Prospectus, a copy of which can be obtained free of charge by writing or calling:

Principal Investment Plus Variable Annuity
The Principal Financial Group
P.O. Box 9382
Des Moines, Iowa 50306-9382
Telephone: 1-800-852-4450



TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PRINCIPAL UNDERWRITER
CALCULATION OF PERFORMANCE DATA
TAXATION UNDER CERTAIN RETIREMENT PLANS
Principal Life Insurance Company Separate Account B
 
Report of Independent Registered Public Accounting Firm
13
Financial Statements
14
Principal Life Insurance Company
 
Report of Independent Registered Public Accounting Firm
195
Financial Statements
196




GENERAL INFORMATION AND HISTORY
Principal Life Insurance Company (the “Company”) is the issuer of the Principal Investment Plus Variable Annuity (the “Contract”) and serves as custodian of its assets. The Company is a stock life insurance company with authority to transact life and annuity business in all states of the United States and the District of Columbia. The Company’s home office is located at: Principal Financial Group, Des Moines, Iowa 50392. The Company is a wholly owned subsidiary of Principal Financial Services, Inc., which in turn, is a wholly owned direct subsidiary of Principal Financial Group, Inc., a publicly-traded company.
On June 24,1879, the Company was incorporated under Iowa law as a mutual assessment life insurance company named Bankers Life Association. The Company became a legal reserve life insurance company and changed its name to Bankers Life Company in 1911. In 1986, the Company changed its name to Principal Mutual Life Insurance Company. In 1998, the Company became Principal Life Insurance Company, a subsidiary stock life insurance company of Principal Mutual Holding Company, as part of a reorganization into a mutual insurance holding company structure. In 2001, Principal Mutual Holding Company converted to a stock company through a process called demutualization, resulting in the current organizational structure.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP, 801 Grand Avenue, Suite 3000, Des Moines, Iowa 50309, serves as the independent registered public accounting firm for Principal Life Insurance Company Separate Account B and the Principal Life Insurance Company.
PRINCIPAL UNDERWRITER
The principal underwriter of the Contract is Princor Financial Services Corporation (“Princor”) which is a wholly owned subsidiary of Principal Financial Services, Inc. and an affiliate of the Company. The address of Princor is the Principal Financial Group, 655 9th Street, Des Moines, Iowa 50392. Princor was incorporated in Iowa in 1968 and is a securities broker-dealer registered with the Securities Exchange Commission as well as a member of the FINRA. The Contracts may also be sold through other broker-dealers authorized by Princor and applicable law to do so. Registered representatives of such broker-dealers may be paid on a different basis than described below.
The Contract’s offering to the public is continuous. As the principal underwriter, Princor is paid for the distribution of the Contract. For the last two fiscal years Princor has received and retained the following commissions:
2014
received/retained
2013
received/retained
$33,929,265/$0
$34,275,779/$0
CALCULATION OF PERFORMANCE DATA
The Separate Account may publish advertisements containing information (including graphs, charts, tables and examples) about the performance of one or more of its divisions. Separate performance figures will be shown for the Contract without the premium payment credit rider and for the Contract with the premium payment credit rider.
The Contract was not offered prior to August 1, 2013. However, the certain divisions invest in underlying mutual funds which were offered prior to the date the Contract was available. Thus, the Separate Account may publish advertisements containing information about the hypothetical performance of one or more of its divisions for this Contract as the Contract was issued on or after the date the underlying mutual fund was first offered. The hypothetical performance from the date of inception of the underlying mutual fund in which the division invests is derived by reducing the actual performance of the underlying mutual fund by the highest level of fees and charges of the Contract as if it had been in existence.
In addition, as certain of the underlying mutual funds have added classes since the inception of the fund, performance may be shown for periods prior to the inception date of the new class which represents the historical results of initial class shares adjusted to reflect the fees and expenses of the new class.
The yield and total return figures described below will vary depending upon market conditions, the composition of the underlying mutual fund’s portfolios and operating expenses. These factors and possible differences in the methods used in calculating yield and total return should be considered when comparing the Separate Account performance figures to performance figures published for other investment vehicles.

3

The Separate Account may also quote rankings, yields or returns as published by independent statistical services or publishers and information regarding performance of certain market indices. Any performance data quoted for the Separate Account represents only historical performance and is not intended to indicate future performance.
From time to time the Separate Account advertises its Money Market Division’s “yield” and “effective yield” for the Contract. Both yield figures are based on historical earnings and are not intended to indicate future performance. The “yield” of the division refers to the income generated by an investment under the Contract in the division over a 7-day period (which period will be stated in the advertisement). This income is then “annualized.” That is, the amount of income generated by the investment during that week is assumed to be generated each week over a 52-week period and is shown as a percentage of the investment. The “effective yield” is calculated similarly but, when annualized, the income earned by an investment in the division is assumed to be reinvested. The “effective yield” will be slightly higher than the “yield” because of the compounding effect of this assumed reinvestment. Neither yield quotation reflects a sales load deducted from purchase payments which, if included, would reduce the “yield” and “effective yield.”
 
Yield For the Period Ended December 31, 2014
For Contracts:
7-Day Annualized Yield
7-Day Effective Yield
without a surrender charge or a Purchase Payment Credit Rider
-1.42%
-1.41%
with a surrender charge but without a Purchase Payment Credit Rider
-7.42%
-7.41%
without a surrender charge but with a Purchase Payment Credit Rider
-2.02%
-2.01%
Also, from time to time, the Separate Account will advertise the average annual total return of its various divisions. The average annual total return for any of the divisions is computed by calculating the average annual compounded rate of return over the stated period that would equate an initial $1,000 investment to the ending redeemable Contract value. In this calculation for the Contract without the Premium Payment Credit Rider, the ending value is reduced by a surrender charge that decreases from 6% to 0% over a period of 7 years. For the calculations relating to the Contract with the Premium Payment Credit Rider, the ending value is reduced by a surrender charge that decreases from 8% to 0% over a period of 9 years. The Separate Account may also advertise total return figures for its divisions for a specified period that does not take into account the surrender charge in order to illustrate the change in the division’s unit value over time. See “Charges and Deductions” in the Prospectus for a discussion of surrender charges.
Following are the hypothetical average annual total returns for the period ending December 31, 2014 assuming the Contract had been offered as of the effective dates of the underlying mutual funds in which the divisions invest (the performance calculations with Surrender Charge are in accordance with the SEC standard, while the performance calculations without the Surrender Charge are not in accordance with the SEC standard):
 
For Contracts without the Premium Payment
Credit Rider and with Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
AllianceBernstein Small Cap Growth
08/05/1996
-9.20%
16.67%
7.65%
 
AllianceBernstein Small/Mid Cap Value
05/02/2001
1.66%
13.80%
7.52%
 
American Century VP Capital Appreciation
11/20/1987
0.61%
13.07%
10.40%
 
American Century VP Inflation Protection
12/31/2002
-4.16%
1.56%
2.38%
 
American Century VP Mid Cap Value
10/29/2004
8.60%
13.68%
8.47%
 
American Century VP Ultra
05/01/2001
2.28%
12.87%
4.93%
 
Bond & Mortgage Securities
12/18/1987
-2.25%
4.04%
2.60%
 
Delaware VIP Small Cap Value
05/01/2000
-1.87%
13.73%
6.91%
 
Diversified Balanced
12/30/2009
-0.11%
6.74%
 
6.89%
Diversified Balanced Managed Volatility
10/31/2013
-0.62%
 
 
0.86%
Diversified Growth
12/30/2009
0.31%
8.17%
 
8.31%
Diversified Growth Managed Volatility
10/31/2013
-0.45%
 
 
1.81%
Diversified Income
05/15/2012
-0.62%
 
 
4.53%
Diversified International
05/02/1994
-10.58%
4.64%
4.30%
 
Dreyfus Technology Growth
08/31/1999
-0.93%
12.21%
6.70%
 
DWS Small Mid Cap Value
05/01/1996
-2.39%
11.03%
6.76%
 
Equity Income
04/28/1998
5.21%
12.74%
6.47%
 

4

 
For Contracts without the Premium Payment
Credit Rider and with Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
Fidelity VIP Contrafund
01/03/1995
4.08%
12.07%
7.07%
 
Fidelity VIP Equity-Income
10/09/1986
0.95%
11.44%
4.47%
 
Fidelity VIP Growth
10/09/1986
3.45%
14.43%
5.93%
 
Fidelity VIP Mid Cap
12/28/1998
-1.47%
11.61%
7.79%
 
Fidelity VIP Overseas
01/28/1987
-15.60%
4.09%
3.04%
 
Franklin Small Cap Value VIP
04/30/1998
-6.85%
12.90%
6.42%
 
Goldman Sachs Mid Cap Value
05/01/1998
5.97%
13.92%
7.47%
 
Goldman Sachs Small Cap Equity Insights
02/13/1998
-0.58%
14.48%
4.51%
 
Government & High Quality Bond
05/06/1993
-2.41%
1.95%
2.94%
 
International Emerging Markets
10/24/2000
-11.11%
-0.29%
6.70%
 
Invesco Van Kampen VI Value Opportunities
09/10/2001
-0.89%
9.81%
2.75%
 
Invesco VI International Growth
05/05/1993
-7.09%
5.85%
5.87%
 
Invesco VI Small Cap Equity
08/29/2003
-5.09%
13.39%
7.02%
 
LargeCap Blend II
05/01/2002
3.73%
11.78%
5.67%
 
LargeCap Growth
05/02/1994
3.55%
12.55%
6.47%
 
LargeCap Growth I
06/01/1994
1.08%
13.47%
7.17%
 
LargeCap S&P 500 Index
05/03/1999
5.69%
13.06%
5.82%
 
LargeCap Value
05/13/1970
3.60%
12.77%
5.22%
 
MFS VIT New Discovery
05/01/1998
-14.80%
11.97%
7.12%
 
MFS VIT Utilities
01/03/1995
4.88%
11.11%
9.95%
 
MFS VIT Value
01/02/2002
2.65%
11.91%
6.56%
 
MidCap
12/18/1987
5.39%
17.43%
9.77%
 
Money Market
03/18/1983
-7.41%
-2.06%
0.04%
 
Neuberger Berman AMT Large Cap Value
03/22/1994
2.30%
9.49%
4.85%
 
Neuberger Berman AMT Small-Cap Growth
07/12/2002
-3.99%
12.22%
3.13%
 
Neuberger Berman AMT Socially Responsive
02/18/1999
2.82%
12.96%
6.11%
 
PIMCO VIT All Asset
04/30/2003
-6.95%
3.95%
3.61%
 
PIMCO VIT High Yield Portfolio
04/30/1998
-4.11%
6.14%
4.92%
 
PIMCO VIT Total Return
12/31/1997
-3.19%
2.63%
4.17%
 
Principal Capital Appreciation
04/28/1998
4.87%
12.44%
6.88%
 
Principal LifeTime 2010
08/30/2004
-2.68%
6.47%
3.30%
 
Principal LifeTime 2020
08/30/2004
-1.75%
7.90%
4.16%
 
Principal LifeTime 2030
08/30/2004
-1.44%
8.49%
4.21%
 
Principal LifeTime 2040
08/30/2004
-1.29%
9.24%
4.51%
 
Principal LifeTime 2050
08/30/2004
-1.29%
9.45%
4.56%
 
Principal LifeTime Strategic Income
08/30/2004
-2.91%
4.77%
2.55%
 
Real Estate Securities
05/01/1998
24.95%
15.29%
8.04%
 
SAM Balanced
06/03/1997
-0.69%
8.23%
5.08%
 
SAM Conservative Balanced
04/23/1998
-1.28%
6.55%
4.58%
 
SAM Conservative Growth
06/03/1997
-0.09%
9.62%
5.17%
 
SAM Flexible Income
09/09/1997
-1.47%
5.63%
4.26%
 
SAM Strategic Growth
06/03/1997
1.14%
10.83%
5.36%
 
Short-Term Income
01/12/1994
-5.71%
0.64%
1.85%
 
SmallCap Blend
05/01/1998
-2.59%
14.85%
5.98%
 
SmallCap Growth II
05/01/1998
-0.74%
15.32%
6.18%
 
SmallCap Value I
05/01/1998
-0.35%
15.24%
5.65%
 
T. Rowe Price Blue Chip Growth
12/29/2000
1.30%
14.28%
6.88%
 
T. Rowe Price Health Sciences
12/29/2000
23.38%
24.88%
14.39%
 
Van Eck VIP Global Hard Assets
05/01/2006
-26.49%
-2.40%
 
0.72%

5

 
For Contracts without the Premium Payment
Credit Rider and without Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
AllianceBernstein Small Cap Growth
08/05/1996
-3.20%
16.99%
7.65%
 
AllianceBernstein Small/Mid Cap Value
05/02/2001
7.66%
14.16%
7.52%
 
American Century VP Capital Appreciation
11/20/1987
6.61%
13.43%
10.40%
 
American Century VP Inflation Protection
12/31/2002
1.84%
2.11%
2.38%
 
American Century VP Mid Cap Value
10/29/2004
14.60%
14.03%
8.47%
 
American Century VP Ultra
05/01/2001
8.28%
13.23%
4.93%
 
Bond & Mortgage Securities
12/18/1987
3.75%
4.55%
2.60%
 
Delaware VIP Small Cap Value
05/01/2000
4.13%
14.09%
6.91%
 
Diversified Balanced
12/30/2009
5.89%
7.20%
 
7.19%
Diversified Balanced Managed Volatility
10/31/2013
5.38%
 
 
5.97%
Diversified Growth
12/30/2009
6.31%
8.60%
 
8.59%
Diversified Growth Managed Volatility
10/31/2013
5.55%
 
 
6.92%
Diversified Income
05/15/2012
5.38%
 
 
6.27%
Diversified International
05/02/1994
-4.58%
5.14%
4.30%
 
Dreyfus Technology Growth
08/31/1999
5.07%
12.58%
6.70%
 
DWS Small Mid Cap Value
05/01/1996
3.61%
11.42%
6.76%
 
Equity Income
04/28/1998
11.21%
13.11%
6.47%
 
Fidelity VIP Contrafund
01/03/1995
10.08%
12.45%
7.07%
 
Fidelity VIP Equity-Income
10/09/1986
6.95%
11.83%
4.47%
 
Fidelity VIP Growth
10/09/1986
9.45%
14.78%
5.93%
 
Fidelity VIP Mid Cap
12/28/1998
4.53%
11.99%
7.79%
 
Fidelity VIP Overseas
01/28/1987
-9.60%
4.60%
3.04%
 
Franklin Small Cap Value VIP
04/30/1998
-0.85%
13.27%
6.42%
 
Goldman Sachs Mid Cap Value
05/01/1998
11.97%
14.28%
7.47%
 
Goldman Sachs Small Cap Equity Insights
02/13/1998
5.42%
14.83%
4.51%
 
Government & High Quality Bond
05/06/1993
3.59%
2.50%
2.94%
 
International Emerging Markets
10/24/2000
-5.11%
0.31%
6.70%
 
Invesco Van Kampen VI Value Opportunities
09/10/2001
5.11%
10.22%
2.75%
 
Invesco VI International Growth
05/05/1993
-1.09%
6.33%
5.87%
 
Invesco VI Small Cap Equity
08/29/2003
0.91%
13.76%
7.02%
 
LargeCap Blend II
05/01/2002
9.73%
12.16%
5.67%
 
LargeCap Growth
05/02/1994
9.55%
12.92%
6.47%
 
LargeCap Growth I
06/01/1994
7.08%
13.83%
7.17%
 
LargeCap S&P 500 Index
05/03/1999
11.69%
13.42%
5.82%
 
LargeCap Value
05/13/1970
9.60%
13.14%
5.22%
 
MFS VIT New Discovery
05/01/1998
-8.80%
12.35%
7.12%
 
MFS VIT Utilities
01/03/1995
10.88%
11.50%
9.95%
 
MFS VIT Value
01/02/2002
8.65%
12.29%
6.56%
 
MidCap
12/18/1987
11.39%
17.74%
9.77%
 
Money Market
03/18/1983
-1.41%
-1.42%
0.04%
 
Neuberger Berman AMT Large Cap Value
03/22/1994
8.30%
9.91%
4.85%
 
Neuberger Berman AMT Small-Cap Growth
07/12/2002
2.01%
12.60%
3.13%
 
Neuberger Berman AMT Socially Responsive
02/18/1999
8.82%
13.33%
6.11%
 
PIMCO VIT All Asset
04/30/2003
-0.95%
4.45%
3.61%
 
PIMCO VIT High Yield Portfolio
04/30/1998
1.89%
6.61%
4.92%
 
PIMCO VIT Total Return
12/31/1997
2.81%
3.17%
4.17%
 
Principal Capital Appreciation
04/28/1998
10.87%
12.81%
6.88%
 
Principal LifeTime 2010
08/30/2004
3.32%
6.93%
3.30%
 
Principal LifeTime 2020
08/30/2004
4.25%
8.34%
4.16%
 
Principal LifeTime 2030
08/30/2004
4.56%
8.92%
4.21%
 
Principal LifeTime 2040
08/30/2004
4.71%
9.66%
4.51%
 

6

 
For Contracts without the Premium Payment
Credit Rider and without Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
Principal LifeTime 2050
08/30/2004
4.71%
9.86%
4.56%
 
Principal LifeTime Strategic Income
08/30/2004
3.09%
5.27%
2.55%
 
Real Estate Securities
05/01/1998
30.95%
15.62%
8.04%
 
SAM Balanced
06/03/1997
5.31%
8.66%
5.08%
 
SAM Conservative Balanced
04/23/1998
4.72%
7.02%
4.58%
 
SAM Conservative Growth
06/03/1997
5.91%
10.04%
5.17%
 
SAM Flexible Income
09/09/1997
4.53%
6.11%
4.26%
 
SAM Strategic Growth
06/03/1997
7.14%
11.22%
5.36%
 
Short-Term Income
01/12/1994
0.29%
1.22%
1.85%
 
SmallCap Blend
05/01/1998
3.41%
15.19%
5.98%
 
SmallCap Growth II
05/01/1998
5.26%
15.66%
6.18%
 
SmallCap Value I
05/01/1998
5.65%
15.58%
5.65%
 
T. Rowe Price Blue Chip Growth
12/29/2000
7.30%
14.63%
6.88%
 
T. Rowe Price Health Sciences
12/29/2000
29.38%
25.13%
14.39%
 
Van Eck VIP Global Hard Assets
05/01/2006
-20.49%
-1.75%
 
0.72%
 
For Contracts with the Premium Payment
Credit Rider and with Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
AllianceBernstein Small Cap Growth
08/05/1996
-11.78%
15.85%
7.01%
 
AllianceBernstein Small/Mid Cap Value
05/02/2001
-0.99%
12.98%
6.88%
 
American Century VP Capital Appreciation
11/20/1987
-2.02%
12.25%
9.74%
 
American Century VP Inflation Protection
12/31/2002
-6.77%
0.74%
1.77%
 
American Century VP Mid Cap Value
10/29/2004
5.91%
12.87%
7.82%
 
American Century VP Ultra
05/01/2001
-0.37%
12.05%
4.30%
 
Bond & Mortgage Securities
12/18/1987
-4.87%
3.23%
1.98%
 
Delaware VIP Small Cap Value
05/01/2000
-4.50%
12.91%
6.27%
 
Diversified Balanced
12/30/2009
-2.74%
5.93%
 
6.08%
Diversified Balanced Managed Volatility
10/31/2013
-3.25%
 
 
-0.63%
Diversified Growth
12/30/2009
-2.33%
7.35%
 
7.50%
Diversified Growth Managed Volatility
10/31/2013
-3.08%
 
 
0.31%
Diversified Income
05/15/2012
-3.25%
 
 
6.02%
Diversified International
05/02/1994
-13.15%
3.83%
3.68%
 
Dreyfus Technology Growth
08/31/1999
-3.56%
11.40%
6.06%
 
DWS Small Mid Cap Value
05/01/1996
-5.01%
10.22%
6.12%
 
Equity Income
04/28/1998
2.54%
11.93%
5.83%
 
Fidelity VIP Contrafund
01/03/1995
1.42%
11.26%
6.43%
 
Fidelity VIP Equity-Income
10/09/1986
-1.69%
10.63%
3.85%
 
Fidelity VIP Growth
10/09/1986
0.79%
13.62%
5.29%
 
Fidelity VIP Mid Cap
12/28/1998
-4.09%
10.80%
7.14%
 
Fidelity VIP Overseas
01/28/1987
-18.14%
3.28%
2.42%
 
Franklin Small Cap Value VIP
04/30/1998
-9.44%
12.09%
5.79%
 
Goldman Sachs Mid Cap Value
05/01/1998
3.30%
13.11%
6.83%
 
Goldman Sachs Small Cap Equity Insights
02/13/1998
-3.21%
13.67%
3.89%
 
Government & High Quality Bond
05/06/1993
-5.03%
1.13%
2.32%
 
International Emerging Markets
10/24/2000
-13.68%
-1.11%
6.06%
 
Invesco Van Kampen VI Value Opportunities
09/10/2001
-3.52%
9.00%
2.14%
 
Invesco VI International Growth
05/05/1993
-9.68%
5.04%
5.24%
 
Invesco VI Small Cap Equity
08/29/2003
-7.69%
12.58%
6.38%
 
LargeCap Blend II
05/01/2002
1.08%
10.97%
5.04%
 
LargeCap Growth I
06/01/1994
-1.56%
12.65%
6.53%
 

7

 
For Contracts with the Premium Payment
Credit Rider and with Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
LargeCap Growth
05/02/1994
0.89%
11.73%
5.83%
 
LargeCap S&P 500 Index
05/03/1999
3.02%
12.25%
5.19%
 
LargeCap Value
05/13/1970
0.95%
11.96%
4.59%
 
MFS VIT New Discovery
05/01/1998
-17.35%
11.16%
6.48%
 
MFS VIT Utilities
01/03/1995
2.22%
10.30%
9.29%
 
MFS VIT Value
01/02/2002
0.00%
11.10%
5.92%
 
MidCap
12/18/1987
2.72%
16.61%
9.11%
 
Money Market
03/18/1983
-10.00%
-2.89%
-0.56%
 
Neuberger Berman AMT Large Cap Value
03/22/1994
-0.35%
8.68%
4.22%
 
Neuberger Berman AMT Small-Cap Growth
07/12/2002
-6.60%
11.41%
2.51%
 
Neuberger Berman AMT Socially Responsive
02/18/1999
0.17%
12.15%
5.47%
 
PIMCO VIT All Asset
04/30/2003
-9.54%
3.13%
2.99%
 
PIMCO VIT High Yield Portfolio
04/30/1998
-6.72%
5.33%
4.29%
 
PIMCO VIT Total Return
12/31/1997
-5.81%
1.82%
3.55%
 
Principal Capital Appreciation
04/28/1998
2.20%
11.63%
6.24%
 
Principal LifeTime 2010
08/30/2004
-5.29%
5.65%
2.68%
 
Principal LifeTime 2020
08/30/2004
-4.37%
7.09%
3.53%
 
Principal LifeTime 2030
08/30/2004
-4.06%
7.68%
3.58%
 
Principal LifeTime 2040
08/30/2004
-3.92%
8.43%
3.88%
 
Principal LifeTime 2050
08/30/2004
-3.92%
8.63%
3.94%
 
Principal LifeTime Strategic Income
08/30/2004
-5.52%
3.96%
1.94%
 
Real Estate Securities
05/01/1998
22.17%
14.47%
7.40%
 
SAM Balanced
06/03/1997
-3.32%
7.42%
4.45%
 
SAM Conservative Balanced
04/23/1998
-3.91%
5.74%
3.95%
 
SAM Conservative Growth
06/03/1997
-2.72%
8.81%
4.54%
 
SAM Flexible Income
09/09/1997
-4.09%
4.82%
3.63%
 
SAM Strategic Growth
06/03/1997
-1.50%
10.01%
4.73%
 
Short-Term Income
01/12/1994
-8.31%
-0.18%
1.24%
 
SmallCap Blend
05/01/1998
-5.21%
14.03%
5.35%
 
SmallCap Growth II
05/01/1998
-3.37%
14.50%
5.54%
 
SmallCap Value I
05/01/1998
-2.98%
14.42%
5.02%
 
T. Rowe Price Blue Chip Growth
12/29/2000
-1.34%
13.47%
6.24%
 
T. Rowe Price Health Sciences
12/29/2000
20.60%
24.05%
13.70%
 
Van Eck VIP Global Hard Assets
05/01/2006
-28.97%
-3.24%
 
0.12%
 
For Contracts with the Premium Payment
Credit Rider and without Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
AllianceBernstein Small Cap Growth
08/05/1996
-3.78%
16.29%
7.01%
 
AllianceBernstein Small/Mid Cap Value
05/02/2001
7.01%
13.47%
6.88%
 
American Century VP Capital Appreciation
11/20/1987
5.98%
12.75%
9.74%
6.61%
American Century VP Inflation Protection
12/31/2002
1.23%
1.50%
1.77%
 
American Century VP Mid Cap Value
10/29/2004
13.91%
13.36%
7.82%
 
American Century VP Ultra
05/01/2001
7.63%
12.56%
4.30%
 
Bond & Mortgage Securities
12/18/1987
3.13%
3.92%
1.98%
 
Delaware VIP Small Cap Value
05/01/2000
3.50%
13.40%
6.27%
 
Diversified Balanced
12/30/2009
5.26%
6.55%
 
6.55%
Diversified Balanced Managed Volatility
10/31/2013
4.75%
 
 
5.34%
Diversified Growth
12/30/2009
5.67%
7.95%
 
7.94%
Diversified Growth Managed Volatility
10/31/2013
4.92%
 
 
6.28%
Diversified Income
05/15/2012
4.75%
 
 
5.64%

8

 
For Contracts with the Premium Payment
Credit Rider and without Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
Diversified International
05/02/1994
-5.15%
4.51%
3.68%
 
Dreyfus Technology Growth
08/31/1999
4.44%
11.91%
6.06%
 
DWS Small Mid Cap Value
05/01/1996
2.99%
10.76%
6.12%
 
Equity Income
04/28/1998
10.54%
12.43%
5.83%
 
Fidelity VIP Contrafund
01/03/1995
9.42%
11.77%
6.43%
 
Fidelity VIP Equity-Income
10/09/1986
6.31%
11.16%
3.85%
 
Fidelity VIP Growth
10/09/1986
8.79%
14.09%
5.29%
 
Fidelity VIP Mid Cap
12/28/1998
3.91%
11.32%
7.14%
 
Fidelity VIP Overseas
01/28/1987
-10.14%
3.97%
2.42%
 
Franklin Small Cap Value VIP
04/30/1998
-1.44%
12.59%
5.79%
 
Goldman Sachs Mid Cap Value
02/13/1998
4.79%
14.14%
3.89%
 
Goldman Sachs Small Cap Equity Insights
05/01/1998
11.30%
13.59%
6.83%
 
Government & High Quality Bond
05/06/1993
2.97%
1.89%
2.32%
 
International Emerging Markets
10/24/2000
-5.68%
-0.29%
6.06%
 
Invesco Van Kampen VI Value Opportunities
09/10/2001
4.48%
9.56%
2.14%
 
Invesco VI International Growth
05/05/1993
-1.68%
5.69%
5.24%
 
Invesco VI Small Cap Equity
08/29/2003
0.31%
13.07%
6.38%
 
LargeCap Blend II
05/01/2002
9.08%
11.49%
5.04%
 
LargeCap Growth I
06/01/1994
6.44%
13.14%
6.53%
 
LargeCap Growth
05/02/1994
8.89%
12.24%
5.83%
 
LargeCap S&P 500 Index
05/03/1999
11.02%
12.75%
5.19%
 
LargeCap Value
05/13/1970
8.95%
12.46%
4.59%
 
MFS VIT New Discovery
05/01/1998
-9.35%
11.68%
6.48%
 
MFS VIT Utilities
01/03/1995
10.22%
10.83%
9.29%
 
MFS VIT Value
01/02/2002
8.00%
11.62%
5.92%
 
MidCap
12/18/1987
10.72%
17.03%
9.11%
 
Money Market
03/18/1983
-2.00%
-2.01%
-0.56%
 
Neuberger Berman AMT Large Cap Value
03/22/1994
7.65%
9.25%
4.22%
 
Neuberger Berman AMT Small-Cap Growth
07/12/2002
1.40%
11.92%
2.51%
 
Neuberger Berman AMT Socially Responsive
02/18/1999
8.17%
12.65%
5.47%
 
PIMCO VIT All Asset
04/30/2003
-1.54%
3.83%
2.99%
 
PIMCO VIT High Yield Portfolio
04/30/1998
1.28%
5.97%
4.29%
 
PIMCO VIT Total Return
12/31/1997
2.19%
2.55%
3.55%
 
Principal Capital Appreciation
04/28/1998
10.20%
12.14%
6.24%
 
Principal LifeTime 2010
08/30/2004
2.71%
6.29%
2.68%
 
Principal LifeTime 2020
08/30/2004
3.63%
7.69%
3.53%
 
Principal LifeTime 2030
08/30/2004
3.94%
8.27%
3.58%
 
Principal LifeTime 2040
08/30/2004
4.08%
9.00%
3.88%
 
Principal LifeTime 2050
08/30/2004
4.08%
9.20%
3.94%
 
Principal LifeTime Strategic Income
08/30/2004
2.48%
4.64%
1.94%
 
Real Estate Securities
05/01/1998
30.17%
14.93%
7.40%
 
SAM Balanced
06/03/1997
4.68%
8.01%
4.45%
 
SAM Conservative Balanced
04/23/1998
4.09%
6.37%
3.95%
 
SAM Conservative Growth
06/03/1997
5.28%
9.38%
4.54%
 
SAM Flexible Income
09/09/1997
3.91%
5.47%
3.63%
 
SAM Strategic Growth
06/03/1997
6.50%
10.55%
4.73%
 
Short-Term Income
01/12/1994
-0.31%
0.61%
1.24%
 
SmallCap Blend
05/01/1998
2.79%
14.50%
5.35%
 
SmallCap Growth II
05/01/1998
4.63%
14.96%
5.54%
 
SmallCap Value I
05/01/1998
5.02%
14.89%
5.02%
 
T. Rowe Price Blue Chip Growth
12/29/2000
6.66%
13.95%
6.24%
 
T. Rowe Price Health Sciences
12/29/2000
28.60%
24.38%
13.70%
 
Van Eck VIP Global Hard Assets
05/01/2006
-20.97%
-2.34%
 
0.12%

9

TAXATION UNDER CERTAIN RETIREMENT PLANS

INDIVIDUAL RETIREMENT ANNUITIES
Contributions. Individuals may make contributions for individual retirement annuity (IRA) contracts. Individuals may make deductible contributions (for any year) up to the lesser of the amount shown in the chart or 100% of compensation.
Individuals age 50 or over are also permitted to make additional “catch-up” contributions. The additional contribution is $1,000 in 2014 and 2015.
Such individuals may establish a traditional IRA for a non-working spouse (if they file a joint return). The annual contribution for both spouses’ contracts cannot exceed the lesser of the amount shown in the chart or 100% of the working spouse’s compensation. No more than the individual IRA limit may be contributed to either spouse’s IRA for any year.
IRA- Maximum Annual Contribution
Year
Individual IRA
Individual IRA + Spousal IRA
2014
$5,500
$11,000
2015
$5,500
$11,000
For succeeding years, limits are indexed to inflation.
Contributions may be tax deductible. If an individual and his/her spouse do not participate in a qualified retirement plan, the contributions to an IRA are fully tax deductible regardless of income. If an individual is an active participant in a qualified retirement plan, his/her ability to deduct the contributions depends upon his/her income level.
For individuals who are not active participants but whose spouses are, deductibility of traditional IRA contributions is phased out if the couple files a joint return and the Adjusted Gross Income is between $183,000 and $193,000 in 2015.
Deductibility of Traditional IRA Contributions for Active Participants
Married Individuals (Filing Jointly)
Single Individual
Year
Limited
Deduction
No
Deduction
Year
Limited
Deduction
No
Deduction
2014
$96,000
$116,000
2014
$60,000
$70,000
2015
$98,000
$118,000
2015
$61,000
$71,000
An individual may make non-deductible IRA contributions to the extent of the excess of:
(1)    The lesser of maximum annual contribution or 100% of compensation, over
(2)    The IRA deductible contributions made with respect to the individual.

A person whose filing status is "married, filing separately" may not make a full Traditional IRA deduction contribution, unless the couple are separated and have been living apart for the entire year. Only a partial deductible contribution is allowed if the Modified Adjusted Gross Income is less than $10,000.
An individual may not make any contribution to his/her own IRA for the year in which he/she reaches age 70 ½ or for any year thereafter.
Taxation of Distributions. Distributions from IRA Contracts are taxed as ordinary income to the recipient, although special rules exist for the tax-free return of non-deductible contributions. In addition, taxable distributions received under an IRA Contract prior to age 59 ½ are subject to a 10% penalty tax in addition to regular income tax. Exempted from this 10% tax penalty are the following distributions: death; disability; if the distribution is paid as part of a series of substantially equal periodic payments made for the life (or life expectancy) of the Owner or the joint lives (or joint life expectancies) of the Owner and the Owner's designated Beneficiary; distributions to pay medical expenses; distributions for medical insurance premiums after losing job; distributions for first-time home purchases (up to $10,000) and distributions for higher education expenses and distributions for certain natural disaster victims.
Required Distributions. Generally, distributions from IRA Contracts must commence not later than April 1 of the calendar year following the calendar year in which the owner attains age 70 ½, and such distributions must be made over a period that does not exceed the uniform life distribution period established by the IRS. A penalty tax of 50% may be imposed on any amount by which the minimum required distribution in any year exceeded the amount actually distributed in that year. In addition, in the event that the owner dies before his or her entire interest in the

10

Contract has been distributed, the owner’s entire interest must be distributed in accordance with rules similar to those applicable upon the death of the Contract Owner in the case of a non-qualified Contract, as described in the Prospectus.
Tax-Free Rollovers. The Internal Revenue Code (the “Code”) permits the taxable portion of funds to be transferred in a tax-free rollover from a qualified retirement plan, tax-deferred annuity plan or governmental 457(b) plan to an IRA Contract if certain conditions are met, and if the rollover of assets is completed within 60 days after the distribution from the qualified plan is received. A direct rollover of funds may avoid a 20% federal tax withholding generally applicable to qualified plans, tax-deferred annuity plan, or governmental 457(b) plan distributions. In addition, not more frequently than once every twelve months, an individual may execute one tax-free rollover from one IRA to another, subject to the 60-day limitation and other requirements. The once-per-year limitation on rollovers does not apply to direct transfers of funds between IRA custodians or trustees or to Roth IRA conversions.
SIMPLIFIED EMPLOYEE PENSION (SEP) PLANS AND SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION (SAR/SEP) PLANS
Contributions. Under Section 408(k) of the Code, employers may establish a type of IRA plan referred to as a simplified employee pension plan (SEP). Employer contributions to a SEP cannot exceed the lesser of 25% of compensation or $53,000 for 2015.
Employees of certain small employers may have contributions made to the salary reduction simplified employee pension plan (SAR/SEP) on their behalf on a salary reduction basis. The amount that an employee chooses to defer and contribute to the SAR/SEP is referred to as an elective deferral.
These elective deferrals are subject to the same cap as elective deferrals to IRC Section 401(k) plans, see table below. In addition to the elective deferrals, SAR/SEP may permit additional elective deferrals by individuals age 50 or over, referred to as “catch-up contributions”.
No new SAR/SEP are permitted after 1996 for any employer, but those in effect prior to 1997 may continue to operate, receive contributions, and add new employees.
Employees of tax-exempt organizations and state and local government agencies are not eligible for SAR/SEPs.
Salary Reduction Simplified Employee Pension Plan (SAR/SEP)
Year
Elective Deferral
Catch-up Contribution
2014
$17,500
$5,500
2015
$17,500
$6,000
Taxation of Distributions. Generally, distribution payments from SEPs and SAR/SEPs are subject to the same distribution rules described above for IRAs.
Required Distributions. SEPs and SAR/SEPs are subject to the same minimum required distribution rules described above for IRAs.
Tax-Free Rollovers. Generally, rollovers and direct transfers may be made to and from SEPs and SAR/SEPs in the same manner as described above for IRAs, subject to the same conditions and limitations.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE IRA)
Contributions. Under Section 408(p) of the Code, employers may establish a type of IRA plan known as a SIMPLE IRA. Employees may have contributions made to the SIMPLE IRA on a salary reduction basis. The amount that an employee chooses to defer and contribute to the SIMPLE IRA is referred to as an elective deferral.
These elective deferrals cannot exceed the amounts shown in the chart. In addition to the elective deferrals, SIMPLE IRA may permit additional elective deferrals by individuals age 50 or over, referred to as “catch-up contributions” in an amount equal to $3,000 for 2015.
Elective contribution amounts made under the salary reduction portions (i.e., those subject to the $12,500 limit in 2015) of a SIMPLE IRA plan are counted in the overall limit on elective deferrals by any individual. For example, an individual under age 50 who defers the maximum of $12,500 to a SIMPLE IRA of one employer and also participates in a 401(k) plan of another employer, would be limited to an elective deferral of $5,500 in 2015 ($18,000 – $12,500) to the 401(k) plan.
The employer generally must match either 100% of the employee’s elective deferral, up to 3% of the employee’s compensation or fixed nonelective contributions of 2% of compensation.

11

Savings Incentive Match Plan for Employees (SIMPLE IRA)
Year
Elective Deferral
Catch-up Contribution
401(k) Elective
Deferral
2014
$12,000
$2,500
$17,500
2015
$12,500
$3,000
$18,000
Taxation of Distributions. Generally, distribution payments from SIMPLE IRAs are subject to the same distribution rules described above for IRAs, except that distributions made within two years of the date of an employee’s first participation in a SIMPLE IRA of an employer are subject to a 25% penalty tax instead of the 10% penalty tax discussed previously.
Required Distributions. SIMPLE IRAs are subject to the same minimum required distribution rules described above for IRAs.
Tax-Free Rollovers. Direct transfers may be made among SIMPLE IRAs in the same manner as described above for IRAs, subject to the same conditions and limitations. Rollovers from SIMPLE IRAs to other types of IRAs and certain qualified plans are permitted after two years have elapsed from the date of an employee’s first participation in a SIMPLE IRA of the employer. Rollovers to SIMPLE IRAs from other plans are not permitted.
ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRA)
Contribution. Under Section 408A of the Code, individuals may contribute to a Roth IRA on his/her own behalf up to the lesser of maximum annual contribution limit as shown in the chart or 100% of compensation. In addition, the contribution must be reduced by the amount of any contributions made to other IRAs for the benefit of the same individual.
Individuals age 50 or over are also permitted to make additional “catch-up” contributions. The additional contribution is $1,000 for 2014 and 2015.
Roth IRA - Maximum Annual Contribution
Year
Individual Roth IRA
Catch-up Contribution
2014
$5,500
$1,000
2015
$5,500
$1,000
For succeeding years, individual Roth IRA limits are indexed for cost-of-living.
For 2015, the maximum contribution is phased out for single taxpayers with adjusted gross income between $116,000 and $131,000 and for joint filers with adjusted gross income between $183,000 and $193,000 (see chart below).
Modified Adjusted Gross Income Limits - 2015
Single
Married Filing Joint
ROTH IRA Contribution
$116,000 or less
$183,000 or less
Full Contribution
$116,000 – $131,000
$183,000 – $193,000
Partial Contribution*
$131,000 & over
$193,000 & over
No Contribution
*
Those entitled to only a partial contribution should check with a tax advisor to determine the allowable contribution.
A person whose filing status is “married, filing separately” may not make a full Roth IRA contribution, unless the couple are separated and have been living apart for the entire year. Only a partial contribution is allowed if the Modified Adjusted Gross Income is less than $10,000.
Taxation of Distribution. Qualified distributions are received income-tax free by the Roth IRA owner, or beneficiary in case of the Roth IRA owner’s death. A qualified distribution is any distribution made after five years if the IRA owner is over age 59½, dies, becomes disabled, or uses the funds for first-time home buyer expenses at the time of distribution. The five-year period for converted amounts begins from the year of the conversion.


12
 




Report of Independent Registered Public Accounting Firm
The Board of Directors and Participants
Principal Life Insurance Company

We have audited the accompanying statements of assets and liabilities of Principal Life Insurance Company Separate Account B (“Separate Account”), comprised of subaccounts as listed in the accompanying statements of assets and liabilities, as of December 31, 2014, and the related statements of operations for the year or period then ended, and the statements of changes in net assets for the years or periods ended December 31, 2014 and 2013. These financial statements are the responsibility of the Separate Account’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Separate Account’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Separate Account’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2014, by correspondence with the fund companies or their transfer agents. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of each of the respective subaccounts of Principal Life Insurance Company Separate Account B at December 31, 2014, the results of its operations for the year or period then ended, and the changes in its net assets for the years or periods ended December 31, 2014 and 2013, in conformity with U.S. generally accepted accounting principles.

/s/Ernst & Young LLP


Des Moines, Iowa
April 29, 2015


13

Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
AllianceBernstein Small Cap Growth Class A Division
 
AllianceBernstein Small/Mid Cap Value Class A Division
 
American Century VP Capital Appreciation Class I Division
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
4,944,580

 
$
2,320,465

 
$
2,603,507

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
4,944,580

 
$
2,320,465

 
$
2,603,507

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
266,096

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
4,082,426

 
 
1,604,388

 
 
2,147,021

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
862,154

 
 
449,981

 
 
456,486

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Applicable to contracts in annuitization period:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
4,944,580

 
$
2,320,465

 
$
2,603,507

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
4,587,741

 
$
2,358,989

 
$
2,353,474

Shares of mutual fund owned
 
235,793

 
 
105,716

 
 
165,618

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
21,709

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
158,381

 
 
131,078

 
 
198,851

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
35,596

 
 
37,123

 
 
42,453

 
Principal Lifetime Income Solutions
 



 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
12.26

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
12.14

 
 
—

 
Principal Investment Plus Variable Annuity
 
25.78

 
 
12.24

 
 
10.80

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
24.22

 
 
12.12

 
 
10.75

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

14


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Inflation Protection Class II Division
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Blue Chip Income & Growth Fund Class 4 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Income & Growth Class I Division
 
 
American Century VP MidCap Value Class II Division
 
American Century VP Ultra Class I Division
 
American Century VP Ultra Class II Division
 
American Century VP Value Class II Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
14,435,615

 
$
65,192,081

 
$
5,329,347

 
$
3,695,933

 
$
44,865,140

 
$
18,210,559

 
$
103,521

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
14,435,615

 
$
65,192,081

 
$
5,329,347

 
$
3,695,933

 
$
44,865,140

 
$
18,210,559

 
$
103,521

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
3,210,398

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
128,544

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
11,093,447

 
 
—

 
 
1,462,326

 
 
3,668,823

 
 
—

 
 
18,121,383

 
 
—

 
3,226

 
 
—

 
 
—

 
 
27,110

 
 
—

 
 
53,904

 
 
—

 
—

 
 
59,045,213

 
 
3,204,163

 
 
—

 
 
39,840,849

 
 
—

 
 
—

 
—

 
 
6,131,145

 
 
662,858

 
 
—

 
 
5,024,291

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
21,234

 
 
74,931

 
—

 
 
15,723

 
 
—

 
 
—

 
 
—

 
 
14,038

 
 
28,590

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
14,435,615

 
$
65,192,081

 
$
5,329,347

 
$
3,695,933

 
$
44,865,140

 
$
18,210,559

 
$
103,521

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
9,037,539

 
$
69,642,854

 
$
4,545,534

 
$
2,043,897

 
$
23,459,912

 
$
12,637,215

 
$
104,412

 
1,427,855

 
 
6,274,503

 
 
268,481

 
 
229,134

 
 
2,819,933

 
 
1,933,180

 
 
7,076

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
174,245

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
7,737

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
633,406

 
 
—

 
 
76,359

 
 
233,744

 
 
—

 
 
852,509

 
 
—

 
200

 
 
—

 
 
—

 
 
1,874

 
 
—

 
 
2,736

 
 
—

 
—

 
 
4,503,766

 
 
167,550

 
 
—

 
 
2,159,444

 
 
—

 
 
—

 
—

 
 
497,678

 
 
35,635

 
 
—

 
 
289,806

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
2,093

 
 
7,327

 
—

 
 
1,583

 
 
—

 
 
—

 
 
—

 
 
1,385

 
 
2,798

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
18.42

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
16.61

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
17.51

 
 
—

 
 
19.15

 
 
15.69

 
 
—

 
 
21.26

 
 
—

 
16.14

 
 
—

 
 
18.63

 
 
14.46

 
 
—

 
 
19.70

 
 
—

 
—

 
 
13.11

 
 
19.12

 
 
—

 
 
18.45

 
 
—

 
 
—

 
—

 
 
12.32

 
 
18.60

 
 
—

 
 
17.34

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
9.94

 
 
—

 
 
—

 
 
—

 
 
10.15

 
 
10.23

 
—

 
 
9.93

 
 
—

 
 
—

 
 
—

 
 
10.14

 
 
10.22

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


15



Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
American Funds Insurance Series Global Small Capitalization Fund Class 2 Division
 
American Funds Insurance Series Global Small Capitalization Fund Class 4 Division
 
American Funds Insurance Series High-Income Bond Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
95,978

 
$
7,865

 
$
210,998

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
95,978

 
$
7,865

 
$
210,998

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
95,978

 
 
—

 
 
210,998

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
7,865

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Applicable to contracts in annuitization period:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
95,978

 
$
7,865

 
$
210,998

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
96,350

 
$
7,840

 
$
226,336

Shares of mutual fund owned
 
3,743

 
 
303

 
 
20,269

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
9,378

 
 
—

 
 
21,793

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
798

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
10.23

 
 
—

 
 
9.69

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
10.20

 
 
—

 
 
9.65

 
Principal Investment Plus Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
9.86

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
9.85

 
 
—

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

16



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk Asset Allocation Fund Class P2 Division
 
American Funds Insurance Series Managed Risk Growth Fund Class P2 Division
 
American Funds Insurance Series Managed Risk International Fund Class P2 Division
 
American Funds Insurance Series New World Fund Class 2 Division
 
American Funds Insurance Series New World Fund Class 4 Division
 
Balanced Class 1 Division
 
Bond & Mortgage Securities Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
29,899

 
$
17,896

 
$
152,357

 
$
51,966

 
$
34,954,263

 
$
180,940,143

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
—

 
$
29,899

 
$
17,896

 
$
152,357

 
$
51,966

 
$
34,954,263

 
$
180,940,143

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
550,062

 
 
214,444

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
2,934,966

 
 
2,668,003

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
6,037,998

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
362,523

 
—

 
 
—

 
 
—

 
 
152,357

 
 
—

 
 
31,422,320

 
 
74,701,608

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
46,915

 
 
211,459

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
85,794,405

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
10,949,703

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
29,899

 
 
17,896

 
 
—

 
 
51,966

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
—

 
$
29,899

 
$
17,896

 
$
152,357

 
$
51,966

 
$
34,954,263

 
$
180,940,143

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
30,012

 
$
17,996

 
$
174,741

 
$
52,403

 
$
25,509,534

 
$
171,159,951

 
—

 
 
2,634

 
 
1,774

 
 
7,418

 
 
2,528

 
 
1,814,863

 
 
15,788,844

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
174,254

 
 
79,156

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
889,353

 
 
941,861

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
337,521

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
27,158

 
—

 
 
—

 
 
—

 
 
16,758

 
 
—

 
 
1,102,088

 
 
3,139,989

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
1,791

 
 
9,673

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
3,611,465

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
501,632

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
3,056

 
 
1,897

 
 
—

 
 
5,772

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
3.16

 
 
2.71

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
3.30

 
 
2.83

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
17.89

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
13.35

 
—

 
 
—

 
 
—

 
 
9.09

 
 
—

 
 
28.51

 
 
23.79

 
—

 
 
—

 
 
—

 
 
9.06

 
 
—

 
 
26.20

 
 
21.86

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
23.76

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
21.83

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
9.91

 
 
9.78

 
 
9.43

 
 
—

 
 
9.00

 
 
—

 
 
—

 
9.90

 
 
9.78

 
 
9.43

 
 
—

 
 
9.00

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


17



Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Calvert EAFE International Index Class F Division
 
Calvert Russell 2000 Small Cap Index Class F Division
 
Calvert S&P MidCap 400 Index Class F Division
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
5,480

 
$
21,466

 
$
35,720

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
5,480

 
$
21,466

 
$
35,720

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
12,656

 
 
25,114

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
5,480

 
 
8,810

 
 
10,606

Applicable to contracts in annuitization period:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
5,480

 
$
21,466

 
$
35,720

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
5,764

 
$
23,608

 
$
38,543

Shares of mutual fund owned
 
69

 
 
281

 
 
367

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
1,208

 
 
2,456

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
593

 
 
841

 
 
1,038

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
9.25

 
 
10.48

 
 
10.23

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
9.25

 
 
10.47

 
 
10.22

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

18



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Delaware Small Cap Value Service Class Division
 
Diversified Balanced Class 2 Division
 
Diversified Balanced Managed Volatility Class 2 Division
 
Diversified Growth Class 2 Division
 
Diversified Growth Managed Volatility Class 2 Division
 
Diversified Income Class 2 Division
 
Diversified International Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
745,584

 
$
1,011,135,001

 
$
84,544,416

 
$
2,881,637,488

 
$
151,625,281

 
$
168,519,198

 
$
154,008,936

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
745,584

 
$
1,011,135,001

 
$
84,544,416

 
$
2,881,637,488

 
$
151,625,281

 
$
168,519,198

 
$
154,008,936

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
283,524

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
3,015,047

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
2,343,521

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
454,751

 
35,503

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
96,587,048

 
1,722

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
295,438

 
567,937

 
 
900,939,050

 
 
65,148,483

 
 
2,644,417,036

 
 
120,826,299

 
 
152,880,589

 
 
44,445,227

 
140,422

 
 
76,840,511

 
 
4,132,445

 
 
199,270,837

 
 
10,644,293

 
 
8,641,699

 
 
6,584,380

 
—

 
 
33,355,440

 
 
15,255,933

 
 
37,949,615

 
 
20,127,908

 
 
6,996,910

 
 
—

 
—

 
 
—

 
 
7,555

 
 
—

 
 
26,781

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
745,584

 
$
1,011,135,001

 
$
84,544,416

 
$
2,881,637,488

 
$
151,625,281

 
$
168,519,198

 
$
154,008,936

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
751,835

 
$
848,453,349

 
$
81,731,222

 
$
2,385,832,008

 
$
146,005,627

 
$
157,235,628

 
$
122,946,921

 
18,602

 
 
70,266,504

 
 
7,770,627

 
 
187,119,317

 
 
13,796,659

 
 
14,008,246

 
 
10,938,135

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
92,648

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
942,451

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
138,918

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
36,724

 
2,988

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
3,555,571

 
146

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
11,837

 
47,866

 
 
63,234,861

 
 
6,136,999

 
 
173,923,019

 
 
11,309,355

 
 
12,955,006

 
 
1,638,464

 
11,951

 
 
5,557,552

 
 
391,915

 
 
13,505,234

 
 
1,003,060

 
 
743,899

 
 
264,181

 
—

 
 
2,341,194

 
 
1,437,110

 
 
2,495,985

 
 
1,883,972

 
 
592,919

 
 
—

 
—

 
 
—

 
 
743

 
 
—

 
 
2,641

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
3.06

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
3.20

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
16.87

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
12.38

 
11.88

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
27.16

 
11.77

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
24.96

 
11.87

 
 
14.25

 
 
10.62

 
 
15.20

 
 
10.68

 
 
11.80

 
 
27.13

 
11.75

 
 
13.83

 
 
10.54

 
 
14.76

 
 
10.61

 
 
11.62

 
 
24.92

 
—

 
 
14.25

 
 
10.62

 
 
15.20

 
 
10.68

 
 
11.80

 
 
—

 
—

 
 
—

 
 
10.16

 
 
—

 
 
10.14

 
 
—

 
 
—

 
—

 
 
—

 
 
10.16

 
 
—

 
 
10.14

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


19



Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
Diversified International Class 2 Division
 
Dreyfus Investment Portfolio Technology Growth Service Shares Division
 
DWS Alternative Asset Allocation Class B Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
26,006

 
$
5,040,592

 
$
—

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
26,006

 
$
5,040,592

 
$
—

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
4,016,688

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
1,023,904

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
26,006

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Applicable to contracts in annuitization period:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
26,006

 
$
5,040,592

 
$
—

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
26,239

 
$
4,319,488

 
$
—

Shares of mutual fund owned
 
1,833

 
 
279,877

 
 
—

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
178,164

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
48,332

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
2,773

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
22.55

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
21.19

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
9.38

 
 
—

 
 
9.83

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
9.37

 
 
—

 
 
9.82

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

20



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Equity 500 Index Class B2 Division
 
DWS Small Mid Cap Value Class B Division
 
Equity Income Class 1 Division
 
Equity Income Class 2 Division
 
Fidelity VIP Contrafund Service Class Division
 
Fidelity VIP Contrafund Service Class 2 Division
 
Fidelity VIP Equity-Income Service Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
59,239

 
$
615,048

 
$
258,966,881

 
$
81,145

 
$
48,139,718

 
$
55,141,526

 
$
37,543,510

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
59,239

 
$
615,048

 
$
258,966,880

 
$
81,145

 
$
48,139,718

 
$
55,141,526

 
$
37,543,510

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
55,837

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
39,503

 
 
57,897,951

 
 
—

 
 
47,938,340

 
 
—

 
 
25,687,491

 
—

 
 
—

 
 
159,802

 
 
—

 
 
201,378

 
 
—

 
 
147,067

 
—

 
 
461,364

 
 
179,749,113

 
 
—

 
 
—

 
 
48,873,294

 
 
9,829,292

 
—

 
 
114,181

 
 
21,104,177

 
 
—

 
 
—

 
 
6,141,255

 
 
1,879,660

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
17,464

 
 
—

 
 
—

 
 
59,800

 
 
—

 
 
100,619

 
 
—

 
41,775

 
 
—

 
 
—

 
 
21,345

 
 
—

 
 
26,358

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
59,239

 
$
615,048

 
$
258,966,880

 
$
81,145

 
$
48,139,718

 
$
55,141,526

 
$
37,543,510

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
58,463

 
$
583,254

 
$
179,421,258

 
$
79,811

 
$
32,847,200

 
$
34,273,234

 
$
32,126,422

 
2,904

 
 
34,612

 
 
11,200,990

 
 
3,534

 
 
1,293,036

 
 
1,502,494

 
 
1,575,472

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
28,395

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
3,344

 
 
3,866,826

 
 
—

 
 
2,015,034

 
 
—

 
 
1,441,966

 
—

 
 
—

 
 
11,197

 
 
—

 
 
9,213

 
 
—

 
 
8,906

 
—

 
 
39,112

 
 
12,022,063

 
 
—

 
 
—

 
 
2,136,393

 
 
552,596

 
—

 
 
9,774

 
 
1,480,866

 
 
—

 
 
—

 
 
285,686

 
 
113,995

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
1,704

 
 
—

 
 
—

 
 
5,845

 
 
—

 
 
9,898

 
 
—

 
4,079

 
 
—

 
 
—

 
 
2,088

 
 
—

 
 
2,595

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
1.97

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
11.81

 
 
14.97

 
 
—

 
 
23.79

 
 
—

 
 
17.81

 
—

 
 
11.70

 
 
14.27

 
 
—

 
 
21.86

 
 
—

 
 
16.51

 
—

 
 
11.80

 
 
14.95

 
 
—

 
 
—

 
 
22.88

 
 
17.79

 
—

 
 
11.68

 
 
14.25

 
 
—

 
 
—

 
 
21.50

 
 
16.49

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
10.25

 
 
10.09

 
 
—

 
 
10.23

 
 
—

 
 
10.17

 
 
—

 
10.24

 
 
10.08

 
 
—

 
 
10.22

 
 
—

 
 
10.16

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


21



Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Growth Service Class Division
 
Fidelity VIP Growth Service Class 2 Division
 
Fidelity VIP Mid Cap Service Class Division
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
15,184,681

 
$
9,441,585

 
$
71,177

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
15,184,681

 
$
9,441,585

 
$
71,177

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
71,177

 
The Principal Variable Annuity
 
15,158,337

 
 
—

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
26,344

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
7,636,342

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
1,805,243

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Applicable to contracts in annuitization period:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
15,184,681

 
$
9,441,585

 
$
71,177

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
9,715,036

 
$
6,172,918

 
$
70,374

Shares of mutual fund owned
 
239,809

 
 
150,344

 
 
1,901

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
6,676

 
The Principal Variable Annuity
 
1,035,058

 
 
—

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
1,958

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
384,395

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
96,705

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
10.66

 
The Principal Variable Annuity
 
14.64

 
 
—

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
13.46

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
19.87

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
18.67

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

22



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class 2 Division
 
Fidelity VIP Overseas Service Class 2 Division
 
Franklin Global Real Estate VIP Class 2 Division
 
Franklin Rising Dividends VIP Class 4 Division
 
Franklin Small Cap Value VIP Class 2 Division
 
Goldman Sachs VIT Mid Cap Value Institutional Shares Division
 
Goldman Sachs VIT Mid Cap Value Service Shares Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
17,955,535

 
$
37,741,368

 
$
41,510

 
$
71,380

 
$
3,577,341

 
$
18,542,627

 
$
17,462

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
17,955,535

 
$
37,741,368

 
$
41,510

 
$
71,380

 
$
3,577,341

 
$
18,542,627

 
$
17,462

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
193,426

 
 
166,504

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
5,747

 
 
—

 
 
—

 
15,658,678

 
 
32,486,844

 
 
—

 
 
—

 
 
3,000,102

 
 
16,002,633

 
 
—

 
2,140,462

 
 
5,250,276

 
 
—

 
 
—

 
 
378,066

 
 
2,373,490

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
142,684

 
 
1,464

 
 
15,998

 
 
10,234

 
 
—

 
 
—

 
 
10,007

 
13,711

 
 
2,784

 
 
25,512

 
 
61,146

 
 
—

 
 
—

 
 
7,455

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
17,955,535

 
$
37,741,368

 
$
41,510

 
$
71,380

 
$
3,577,341

 
$
18,542,627

 
$
17,462

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
15,631,033

 
$
29,302,241

 
$
41,441

 
$
70,785

 
$
3,345,344

 
$
16,370,949

 
$
17,455

 
487,392

 
 
2,034,575

 
 
2,603

 
 
2,445

 
 
160,275

 
 
1,063,834

 
 
1,001

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
10,294

 
 
6,846

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
315

 
 
—

 
 
—

 
603,840

 
 
2,019,822

 
 
—

 
 
—

 
 
159,896

 
 
658,856

 
 
—

 
87,841

 
 
347,387

 
 
—

 
 
—

 
 
20,764

 
 
103,994

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
14,187

 
 
155

 
 
1,516

 
 
989

 
 
—

 
 
—

 
 
976

 
1,364

 
 
295

 
 
2,418

 
 
5,916

 
 
—

 
 
—

 
 
728

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
18.79

 
 
24.32

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
18.23

 
 
22.86

 
 
—

 
25.94

 
 
16.08

 
 
—

 
 
—

 
 
18.76

 
 
24.29

 
 
—

 
24.37

 
 
15.11

 
 
—

 
 
—

 
 
18.21

 
 
22.82

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
10.06

 
 
9.43

 
 
10.56

 
 
10.34

 
 
—

 
 
—

 
 
10.25

 
10.05

 
 
9.43

 
 
10.55

 
 
10.34

 
 
—

 
 
—

 
 
10.24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


23



Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division
 
Goldman Sachs VIT Small Cap Equity Insights Service Shares Division
 
Government & High Quality Bond Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
6,977,815

 
$
5,178

 
$
141,358,649

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
6,977,815

 
$
5,178

 
$
141,358,650

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
75,530

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
32,371

 
Personal Variable
 
—

 
 
—

 
 
156,903

 
Premier Variable
 
—

 
 
—

 
 
2,722,771

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
2,734,040

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
272,007

 
The Principal Variable Annuity
 
97,939

 
 
—

 
 
75,647,716

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
175,154

 
Principal Investment Plus Variable Annuity
 
6,278,479

 
 
—

 
 
52,011,564

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
601,397

 
 
—

 
 
7,530,594

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
5,178

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Applicable to contracts in annuitization period:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
6,977,815

 
$
5,178

 
$
141,358,650

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
6,360,979

 
$
5,732

 
$
143,197,487

Shares of mutual fund owned
 
510,447

 
 
381

 
 
13,540,100

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
22,861

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
8,547

 
Personal Variable
 
—

 
 
—

 
 
59,162

 
Premier Variable
 
—

 
 
—

 
 
977,174

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
220,208

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
22,044

 
The Principal Variable Annuity
 
5,329

 
 
—

 
 
6,248,035

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
15,007

 
Principal Investment Plus Variable Annuity
 
342,105

 
 
—

 
 
4,302,018

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
34,873

 
 
—

 
 
646,137

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
488

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
3.30

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
3.79

 
Personal Variable
 
—

 
 
—

 
 
2.65

 
Premier Variable
 
—

 
 
—

 
 
2.79

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
12.42

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
12.34

 
The Principal Variable Annuity
 
18.38

 
 
—

 
 
12.11

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
17.27

 
 
—

 
 
11.67

 
Principal Investment Plus Variable Annuity
 
18.35

 
 
—

 
 
12.09

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
17.25

 
 
—

 
 
11.65

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
10.62

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
10.61

 
 
—

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
8,547

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

24



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government & High Quality Bond Class 2 Division
 
Guggenheim Floating Rate Strategies Series F Division
 
Guggenheim Investments Global Managed Futures Strategy Division
 
Guggenheim Investments Long Short Equity Division
 
Guggenheim Investments Multi-Hedge Strategies Division
 
Guggenheim Macro Opportunities
Series M Division
 
International Emerging Markets Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
19,924

 
$
12,908

 
$
21.331

 
$
42,859

 
$
7,869

 
$
—

 
$
64,254,651

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
19,924

 
$
12,908

 
$
21.331

 
$
42,859

 
$
7,869

 
$
—

 
$
64,254,651

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
428,963

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
26,768,311

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
233,393

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
31,934,017

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
4,889,967

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
11,870

 
 
2,242

 
 
21,331

 
 
37,393

 
 
4,194

 
 
—

 
 
—

 
8,054

 
 
10,666

 
 
—

 
 
5,466

 
 
3,675

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
19,924

 
$
12,908

 
$
21,331

 
$
42,859

 
$
7,869

 
$
—

 
$
64,254,651

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
19,906

 
$
12,983

 
$
20,994

 
$
42,859

 
$
7,754

 
$
—

 
$
65,784,618

 
1,907

 
 
492

 
 
1,022

 
 
2,842

 
 
330

 
 
—

 
 
4,224,501

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
118,613

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
841,063

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
7,981

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
1,004,867

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
167,468

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
1,173

 
 
226

 
 
1,984

 
 
3,580

 
 
409

 
 
—

 
 
—

 
796

 
 
1,074

 
 
—

 
 
524

 
 
358

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
3.62

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
31.82

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
29.24

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
31.78

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
29.20

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
10.12

 
 
9.94

 
 
10.75

 
 
10.45

 
 
10.26

 
 
10.06

 
 
—

 
10.12

 
 
9.93

 
 
10.74

 
 
10.44

 
 
10.25

 
 
10.05

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


25



Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Invesco American Franchise Series I Division
 
Invesco Balanced-Risk Allocation Series II Division
 
Invesco Core Equity Series I Division
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
4,607,004

 
$
—

 
$
21,496,633

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
4,607,004

 
$
—

 
$
21,496,633

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
4,589,585

 
 
—

 
 
21,487,012

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
17,419

 
 
—

 
 
9,621

 
Principal Investment Plus Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Applicable to contracts in annuitization period:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
4,607,004

 
$
—

 
$
21,496,633

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
3,182,485

 
$
—

 
$
13,682,968

Shares of mutual fund owned
 
83,947

 
 
—

 
 
524,180

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
320,260

 
 
—

 
 
1,368,655

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
1,235

 
 
—

 
 
667

 
Principal Investment Plus Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
14.33

 
 
—

 
 
15.70

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
14.10

 
 
—

 
 
14.42

 
Principal Investment Plus Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
—

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
10.08

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
10.08

 
 
—

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

26



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Global Health Care Series I Division
 
Invesco Global Health Care Series II Division
 
Invesco International Growth Series I Division
 
Invesco International Growth Series II Division
 
Invesco Mid Cap Growth Series I Division
 
Invesco Small Cap Equity Series I Division
 
Invesco Technology Series I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
10,917,261

 
$
71,400

 
$
10,425,490

 
$
32,230

 
$
1,553,721

 
$
9,327,320

 
$
3,772,446

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
10,917,261

 
$
71,400

 
$
10,425,490

 
$
32,230

 
$
1,553,721

 
$
9,327,320

 
$
3,772,446

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
10,854,882

 
 
—

 
 
—

 
 
—

 
 
1,505,029

 
 
2,818,107

 
 
3,750,932

 
62,379

 
 
—

 
 
—

 
 
—

 
 
48,692

 
 
21,479

 
 
21,514

 
—

 
 
—

 
 
9,468,131

 
 
—

 
 
—

 
 
5,606,492

 
 
—

 
—

 
 
—

 
 
957,359

 
 
—

 
 
—

 
 
881,242

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
66,990

 
 
—

 
 
26,583

 
 
—

 
 
—

 
 
—

 
—

 
 
4,410

 
 
—

 
 
5,647

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
10,917,261

 
$
71,400

 
$
10,425,490

 
$
32,230

 
$
1,553,721

 
$
9,327,320

 
$
3,772,446

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
6,793,229

 
$
71,797

 
$
9,230,540

 
$
32,306

 
$
389,552

 
$
7,587,132

 
$
3,159,289

 
323,187

 
 
2,177

 
 
298,982

 
 
936

 
 
268,810

 
 
394,557

 
 
191,010

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
482,186

 
 
—

 
 
—

 
 
—

 
 
106,512

 
 
122,382

 
 
408,638

 
3,007

 
 
—

 
 
—

 
 
—

 
 
3,502

 
 
993

 
 
2,544

 
—

 
 
—

 
 
852,944

 
 
—

 
 
—

 
 
243,845

 
 
—

 
—

 
 
—

 
 
89,745

 
 
—

 
 
—

 
 
40,789

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
6,479

 
 
—

 
 
2,766

 
 
—

 
 
—

 
 
—

 
—

 
 
427

 
 
—

 
 
588

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
22.51

 
 
—

 
 
—

 
 
—

 
 
14.13

 
 
23.03

 
 
9.18

 
20.74

 
 
—

 
 
—

 
 
—

 
 
13.90

 
 
21.64

 
 
8.46

 
—

 
 
—

 
 
11.10

 
 
—

 
 
—

 
 
22.99

 
 
—

 
—

 
 
—

 
 
10.67

 
 
—

 
 
—

 
 
21.61

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
10.34

 
 
—

 
 
9.61

 
 
—

 
 
—

 
 
—

 
—

 
 
10.33

 
 
—

 
 
9.60

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


27



Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Value Opportunities Series I Division
 
Janus Aspen Enterprise Service Shares Division
 
Janus Aspen Flexible Bond Service Shares Division
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
5,347,559

 
$
9,503,129

 
$
72,658

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
5,347,559

 
$
9,503,129

 
$
72,658

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
9,440,460

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
62,669

 
 
—

 
Principal Investment Plus Variable Annuity
 
4,575,116

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
772,443

 
 
—

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
24,203

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
48,455

Applicable to contracts in annuitization period:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
5,347,559

 
$
9,503,129

 
$
72,658

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
3,649,084

 
$
5,002,811

 
$
72,735

Shares of mutual fund owned
 
543,451

 
 
160,363

 
 
5,598

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
638,080

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
4,610

 
 
—

 
Principal Investment Plus Variable Annuity
 
305,103

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
54,820

 
 
—

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
2,408

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
4,825

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
14.79

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
13.59

 
 
—

 
Principal Investment Plus Variable Annuity
 
15.00

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
14.09

 
 
—

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
10.05

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
10.04

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

28



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Blend II Class 1 Division
 
LargeCap Blend II Class 2 Division
 
LargeCap Growth Class 1 Division
 
LargeCap Growth Class 2 Division
 
LargeCap Growth I Class 1 Division
 
LargeCap S&P 500 Index Class 1 Division
 
LargeCap Value Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
118,690,704

 
$
—

 
$
53,469,496

 
$
5,974

 
$
109,225,666

 
$
102,363,487

 
$
91,485,357

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
118,690,704

 
$
—

 
$
53,469,495

 
$
5,974

 
$
109,225,666

 
$
102,363,487

 
$
91,485,357

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
901,394

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
2,172,625

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
112,254

 
—

 
 
—

 
 
774,712

 
 
—

 
 
—

 
 
—

 
 
353,074

 
—

 
 
—

 
 
4,250,492

 
 
—

 
 
480,796

 
 
327,958

 
 
6,354,081

 
—

 
 
—

 
 
—

 
 
—

 
 
1,733,168

 
 
8,796,671

 
 
2,942,737

 
—

 
 
—

 
 
—

 
 
—

 
 
187,729

 
 
538,761

 
 
367,031

 
41,648,973

 
 
—

 
 
34,559,321

 
 
—

 
 
88,625,941

 
 
49,318,934

 
 
59,370,502

 
65,517

 
 
—

 
 
69,963

 
 
—

 
 
99,682

 
 
159,649

 
 
28,925

 
68,321,071

 
 
—

 
 
11,302,092

 
 
—

 
 
16,167,279

 
 
38,192,637

 
 
15,491,489

 
8,655,143

 
 
—

 
 
2,512,915

 
 
—

 
 
1,931,071

 
 
5,028,877

 
 
3,277,243

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
5,974

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
(6)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
114,008

$
118,690,704

 
$
—

 
$
53,469,495

 
$
5,974

 
$
109,225,666

 
$
102,363,487

 
$
91,485,357

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
81,508,866

 
$
—

 
$
34,635,612

 
$
6,047

 
$
78,742,999

 
$
62,432,717

 
$
76,841,725

 
10,702,498

 
 
—

 
 
2,173,557

 
 
244

 
 
3,805,772

 
 
6,996,821

 
 
2,706,668

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
14,702

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
223,361

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
9,622

 
—

 
 
—

 
 
244,464

 
 
—

 
 
—

 
 
—

 
 
70,148

 
—

 
 
—

 
 
1,282,924

 
 
—

 
 
232,508

 
 
164,719

 
 
1,201,666

 
—

 
 
—

 
 
—

 
 
—

 
 
97,383

 
 
512,917

 
 
171,511

 
—

 
 
—

 
 
—

 
 
—

 
 
10,629

 
 
31,142

 
 
23,378

 
2,143,051

 
 
—

 
 
1,181,047

 
 
—

 
 
1,616,063

 
 
3,063,992

 
 
1,490,438

 
3,637

 
 
—

 
 
2,602

 
 
—

 
 
1,978

 
 
10,795

 
 
790

 
3,520,453

 
 
—

 
 
386,818

 
 
—

 
 
295,225

 
 
2,376,213

 
 
389,455

 
481,103

 
 
—

 
 
93,606

 
 
—

 
 
38,379

 
 
340,524

 
 
89,669

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
591

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
61.32

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
9.73

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
11.67

 
—

 
 
—

 
 
3.17

 
 
—

 
 
—

 
 
—

 
 
5.03

 
—

 
 
—

 
 
3.31

 
 
—

 
 
2.07

 
 
1.99

 
 
5.29

 
—

 
 
—

 
 
—

 
 
—

 
 
17.80

 
 
17.15

 
 
17.16

 
—

 
 
—

 
 
—

 
 
—

 
 
17.66

 
 
17.30

 
 
15.70

 
19.43

 
 
—

 
 
29.26

 
 
—

 
 
54.84

 
 
16.10

 
 
39.83

 
18.02

 
 
—

 
 
26.88

 
 
—

 
 
50.39

 
 
14.79

 
 
36.60

 
19.41

 
 
—

 
 
29.22

 
 
—

 
 
54.76

 
 
16.07

 
 
39.78

 
17.99

 
 
—

 
 
26.85

 
 
—

 
 
50.32

 
 
14.77

 
 
36.55

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
10.13

 
 
—

 
 
10.12

 
 
—

 
 
—

 
 
—

 
—

 
 
10.12

 
 
—

 
 
10.11

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
9,773

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
61.32

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
11.67


29



Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT International Value Service Class Division
 
MFS VIT New Discovery Service Class Division
 
MFS VIT Utilities Service Class Division
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
61,084

 
$
943,807

 
$
12,181,402

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
61,084

 
$
943,807

 
$
12,181,402

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
221,490

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
5,765

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
604,871

 
 
10,306,073

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
111,681

 
 
1,728,089

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
57,608

 
 
—

 
 
110,525

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
3,476

 
 
—

 
 
36,715

Applicable to contracts in annuitization period:
 
—

 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
61,084

 
$
943,807

 
$
12,181,402

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
61,667

 
$
1,113,730

 
$
11,446,994

Shares of mutual fund owned
 
2,849

 
 
61,687

 
 
363,841

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
20,488

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
539

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
56,031

 
 
456,080

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
10,447

 
 
79,101

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
5,858

 
 
—

 
 
11,274

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
354

 
 
—

 
 
3,748

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
—

 
 
10.81

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
10.71

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
10.80

 
 
22.60

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
10.69

 
 
21.85

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
9.83

 
 
—

 
 
9.80

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
9.83

 
 
—

 
 
9.80

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

30



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT Value Service Class Division
 
MidCap Class 1 Division
 
Money Market Class 1 Division
 
Money Market Class 2 Division
 
Neuberger Berman AMT Large Cap Value I Class Division
 
Neuberger Berman AMT Small-Cap Growth S Class Division
 
Neuberger Berman AMT Socially Responsive I Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
5,175,047

 
$
389,291,120

 
$
55,230,360

 
$
217,310

 
$
5,241,195

 
$
3,087,692

 
$
6,077,273

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
5,175,047

 
$
389,291,120

 
$
55,230,360

 
$
217,310

 
$
5,241,195

 
$
3,087,692

 
$
6,077,273

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
95,763

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
1

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
1,108,009

 
 
475,529

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
6,977,891

 
 
4,299,647

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
9,751,806

 
 
1,695,142

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
700,361

 
 
222,735

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
226,683,020

 
 
24,287,406

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
630,448

 
 
30,673

 
 
—

 
 
—

 
 
—

 
 
—

 
4,368,519

 
 
126,963,940

 
 
21,374,104

 
 
—

 
 
4,718,383

 
 
2,492,195

 
 
5,196,101

 
806,528

 
 
16,475,645

 
 
2,624,616

 
 
—

 
 
522,812

 
 
595,497

 
 
881,172

 
—

 
 
—

 
 
124,744

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
217,310

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
5,175,047

 
$
389,291,120

 
$
55,230,360

 
$
217,310

 
$
5,241,195

 
$
3,087,692

 
$
6,077,273

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
4,291,602

 
$
238,836,309

 
$
55,230,360

 
$
217,310

 
$
3,658,318

 
$
2,310,156

 
$
3,930,003

 
258,107

 
 
6,403,868

 
 
55,230,360

 
 
217,310

 
 
319,780

 
 
172,208

 
 
254,492

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
44,972

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
122,417

 
 
298,716

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
737,304

 
 
2,568,603

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
219,342

 
 
142,508

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
29,057

 
 
21,636

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
2,777,142

 
 
1,806,788

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
8,406

 
 
2,483

 
 
—

 
 
—

 
 
—

 
 
—

 
200,153

 
 
1,557,678

 
 
1,592,459

 
 
—

 
 
246,607

 
 
164,299

 
 
245,886

 
38,222

 
 
219,991

 
 
212,819

 
 
—

 
 
29,079

 
 
41,779

 
 
44,375

 
—

 
 
—

 
 
9,295

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
21,802

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
2.13

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
9.05

 
 
1.59

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
9.46

 
 
1.67

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
44.46

 
 
11.89

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
24.10

 
 
10.32

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
81.62

 
 
13.44

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
75.00

 
 
12.35

 
 
—

 
 
—

 
 
—

 
 
—

 
21.83

 
 
81.51

 
 
13.42

 
 
—

 
 
19.13

 
 
15.17

 
 
21.13

 
21.10

 
 
74.89

 
 
12.33

 
 
—

 
 
17.98

 
 
14.25

 
 
19.86

 
—

 
 
—

 
 
13.42

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
9.97

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
9.96

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


31



Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Oppenheimer Main Street Small Cap Service Shares Division
 
PIMCO All Asset Administrative Class Division
 
PIMCO High Yield Administrative Class Division
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
658,213

 
$
5,246,587

 
$
16,014,793

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
658,213

 
$
5,246,587

 
$
16,014,793

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
656,447

 
 
—

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
1,766

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
4,722,314

 
 
14,538,298

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
524,273

 
 
1,456,546

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
1,944

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
18,005

Applicable to contracts in annuitization period:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
658,213

 
$
5,246,587

 
$
16,014,793

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
662,330

 
$
5,729,392

 
$
16,341,183

Shares of mutual fund owned
 
25,065

 
 
506,427

 
 
2,024,626

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
51,640

 
 
—

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
140

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
328,397

 
 
1,049,667

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
37,712

 
 
108,367

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
197

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
1,823

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
—

 
 
—

 
The Principal Variable Annuity
 
12.71

 
 
—

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
12.59

 
 
—

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
14.38

 
 
13.86

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
13.90

 
 
13.45

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
9.88

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
9.88

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

32



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO Total Return Administrative Class Division
 
Principal Capital Appreciation Class 1 Division
 
Principal Capital Appreciation Class 2 Division
 
Principal LifeTime Strategic Income Class 1 Division
 
Principal LifeTime 2010 Class 1 Division
 
Principal LifeTime 2020 Class 1 Division
 
Principal LifeTime 2030 Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
29,159,222

 
$
18,505,464

 
$
192,372

 
$
21,738,392

 
$
33,742,664

 
$
143,694,951

 
$
73,233,074

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
29,159,222

 
$
18,505,464

 
$
192,372

 
$
21,738,392

 
$
33,742,664

 
$
143,694,951

 
$
73,233,074

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
46,437

 
 
—

 
 
777,981

 
 
1,529,479

 
 
4,709,130

 
 
2,925,229

 
—

 
 
—

 
 
—

 
 
3,508,882

 
 
1,942,472

 
 
5,223,151

 
 
2,082,336

 
—

 
 
—

 
 
—

 
 
48,538

 
 
—

 
 
—

 
 
—

 
27,084,861

 
 
15,030,987

 
 
—

 
 
15,427,899

 
 
28,776,857

 
 
117,194,099

 
 
56,992,820

 
2,038,999

 
 
3,428,040

 
 
—

 
 
1,975,092

 
 
1,493,856

 
 
16,568,571

 
 
11,232,689

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
192,372

 
 
—

 
 
—

 
 
—

 
 
—

 
35,362

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
29,159,222

 
$
18,505,464

 
$
192,372

 
$
21,738,392

 
$
33,742,664

 
$
143,694,951

 
$
73,233,074

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
29,935,797

 
$
18,381,635

 
$
191,074

 
$
19,225,395

 
$
27,993,252

 
$
116,597,668

 
$
61,337,286

 
2,603,502

 
 
829,469

 
 
8,701

 
 
1,888,653

 
 
2,677,989

 
 
10,435,363

 
 
5,934,609

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
2,817

 
 
—

 
 
61,069

 
 
113,004

 
 
326,250

 
 
201,665

 
—

 
 
—

 
 
—

 
 
249,923

 
 
126,672

 
 
310,014

 
 
123,003

 
—

 
 
—

 
 
—

 
 
3,678

 
 
—

 
 
—

 
 
—

 
2,158,504

 
 
935,167

 
 
—

 
 
1,100,408

 
 
1,879,636

 
 
6,965,432

 
 
3,371,186

 
168,081

 
 
223,333

 
 
—

 
 
149,893

 
 
103,821

 
 
1,047,796

 
 
706,962

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
18,646

 
 
—

 
 
—

 
 
—

 
 
—

 
3,500

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
16.48

 
 
—

 
 
12.74

 
 
13.54

 
 
14.43

 
 
14.51

 
—

 
 
—

 
 
—

 
 
14.04

 
 
15.33

 
 
16.85

 
 
16.93

 
—

 
 
—

 
 
—

 
 
13.20

 
 
14.41

 
 
15.84

 
 
15.91

 
12.55

 
 
16.07

 
 
—

 
 
14.02

 
 
15.31

 
 
16.82

 
 
16.91

 
12.13

 
 
15.35

 
 
—

 
 
13.18

 
 
14.39

 
 
15.81

 
 
15.89

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
10.11

 
 
—

 
 
10.32

 
 
—

 
 
—

 
 
—

 
 
—

 
10.10

 
 
—

 
 
10.31

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


33



Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 1 Division
 
Principal LifeTime 2050 Class 1 Division
 
Real Estate Securities Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
14,503,892

 
$
8,617,890

 
$
87,932,182

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
14,503,892

 
$
8,617,890

 
$
87,932,182

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
263,552

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
367,042

 
 
168,840

 
 
225,446

 
The Principal Variable Annuity
 
567,102

 
 
353,862

 
 
48,624,884

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
233,279

 
Principal Investment Plus Variable Annuity
 
12,415,617

 
 
7,176,447

 
 
32,059,534

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,154,131

 
 
918,741

 
 
6,525,487

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Applicable to contracts in annuitization period:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
14,503,892

 
$
8,617,890

 
$
87,932,182

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
12,172,685

 
$
7,375,290

 
$
56,566,011

Shares of mutual fund owned
 
1,000,268

 
 
607,750

 
 
3,937,850

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
54,232

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
24,755

 
 
11,383

 
 
12,390

 
The Principal Variable Annuity
 
32,197

 
 
19,994

 
 
935,350

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
—

 
 
4,884

 
Principal Investment Plus Variable Annuity
 
705,872

 
 
406,045

 
 
617,609

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
69,818

 
 
55,311

 
 
136,815

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
4.86

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
14.83

 
 
14.83

 
 
18.20

 
The Principal Variable Annuity
 
17.61

 
 
17.70

 
 
51.98

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
16.55

 
 
16.63

 
 
47.76

 
Principal Investment Plus Variable Annuity
 
17.59

 
 
17.67

 
 
51.91

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
16.53

 
 
16.61

 
 
47.70

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

34



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate Securities Class 2 Division
 
Rydex Commodities Strategy Division
 
Rydex NASDAQ 100 Division
 
SAM Balanced Portfolio Class 1 Division
 
SAM Balanced Portfolio Class 2 Division
 
SAM Conservative Balanced Portfolio Class 1 Division
 
SAM Conservative Balanced Portfolio Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
180,905

 
$
11,373

 
$
97,315

 
$
687,747,541

 
$
634,173

 
$
168,581,522

 
$
553,159

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
180,905

 
$
11,373

 
$
97,315

 
$
687,747,541

 
$
634,173

 
$
168,581,522

 
$
553,159

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
304,513

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
1,758,410

 
 
—

 
 
1,476,168

 
 
—

 
—

 
 
—

 
 
—

 
 
65,708,407

 
 
—

 
 
17,897,624

 
 
—

 
—

 
 
—

 
 
—

 
 
386,763

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
551,309,446

 
 
—

 
 
129,222,136

 
 
—

 
—

 
 
—

 
 
—

 
 
68,280,002

 
 
—

 
 
19,985,594

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
166,400

 
 
6,808

 
 
97,315

 
 
—

 
 
547,917

 
 
—

 
 
244,672

 
14,505

 
 
4,565

 
 
—

 
 
—

 
 
86,256

 
 
—

 
 
308,487

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
180,905

 
$
11,373

 
$
97,315

 
$
687,747,541

 
$
634,173

 
$
168,581,522

 
$
553,159

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
178,979

 
$
13,581

 
$
97,832

 
$
594,998,280

 
$
635,617

 
$
155,510,110

 
$
555,023

 
8,058

 
 
1,588

 
 
2,888

 
 
41,656,423

 
 
38,740

 
 
13,379,486

 
 
44,324

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
150,628

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
122,305

 
 
—

 
 
103,779

 
 
—

 
—

 
 
—

 
 
—

 
 
4,679,921

 
 
—

 
 
1,288,426

 
 
—

 
—

 
 
—

 
 
—

 
 
28,845

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
39,321,138

 
 
—

 
 
9,315,838

 
 
—

 
—

 
 
—

 
 
—

 
 
5,099,498

 
 
—

 
 
1,508,708

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
14,612

 
 
962

 
 
9,463

 
 
—

 
 
54,569

 
 
—

 
 
24,371

 
1,275

 
 
645

 
 
—

 
 
—

 
 
8,597

 
 
—

 
 
30,749

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
2.02

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
14.38

 
 
—

 
 
14.22

 
 
—

 
—

 
 
—

 
 
—

 
 
14.04

 
 
—

 
 
13.89

 
 
—

 
—

 
 
—

 
 
—

 
 
13.41

 
 
—

 
 
13.27

 
 
—

 
—

 
 
—

 
 
—

 
 
14.02

 
 
—

 
 
13.87

 
 
—

 
—

 
 
—

 
 
—

 
 
13.39

 
 
—

 
 
13.25

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
11.39

 
 
7.08

 
 
10.28

 
 
—

 
 
10.04

 
 
—

 
 
10.04

 
11.38

 
 
7.07

 
 
10.28

 
 
—

 
 
10.03

 
 
—

 
 
10.03

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


35



Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 1 Division
 
SAM Conservative Growth Portfolio Class 2 Division
 
SAM Flexible Income Portfolio Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
101,757,493

 
$
430,365

 
$
185,235,460

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
101,757,493

 
$
430,365

 
$
185,235,460

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
1,727,646

 
 
—

 
 
1,729,151

 
The Principal Variable Annuity
 
15,110,946

 
 
—

 
 
34,435,411

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
102,382

 
 
—

 
 
69,606

 
Principal Investment Plus Variable Annuity
 
68,060,093

 
 
—

 
 
126,793,331

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
16,756,426

 
 
—

 
 
22,207,961

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
421,082

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
9,283

 
 
—

Applicable to contracts in annuitization period:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
101,757,493

 
$
430,365

 
$
185,235,460

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
87,735,593

 
$
431,052

 
$
177,895,995

Shares of mutual fund owned
 
5,350,026

 
 
22,867

 
 
14,011,759

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
122,687

 
 
—

 
 
120,766

 
The Principal Variable Annuity
 
1,098,867

 
 
—

 
 
2,462,743

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
7,796

 
 
—

 
 
5,213

 
Principal Investment Plus Variable Annuity
 
4,956,304

 
 
—

 
 
9,080,769

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,277,773

 
 
—

 
 
1,665,469

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
41,887

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
924

 
 
—

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
14.08

 
 
—

 
 
14.32

 
The Principal Variable Annuity
 
13.75

 
 
—

 
 
13.98

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
13.13

 
 
—

 
 
13.35

 
Principal Investment Plus Variable Annuity
 
13.73

 
 
—

 
 
13.96

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
13.11

 
 
—

 
 
13.33

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
—

 
 
10.05

 
 
—

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
10.05

 
 
—

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

36



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 2 Division
 
SAM Strategic Growth Portfolio Class 1 Division
 
SAM Strategic Growth Portfolio Class 2 Division
 
Short-Term Income Class 1 Division
 
Short-Term Income Class 2 Division
 
SmallCap Blend Class 1 Division
 
SmallCap Growth II Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
418,129

 
$
65,972,384

 
$
624,127

 
$
131,611,548

 
$
93,629

 
$
33,528,364

 
$
30,427,185

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
418,129

 
$
65,972,384

 
$
624,127

 
$
131,611,548

 
$
93,629

 
$
33,528,364

 
$
30,427,185

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
124,143

 
 
77,318

 
—

 
 
—

 
 
—

 
 
1,594,461

 
 
—

 
 
3,261,081

 
 
958,205

 
—

 
 
948,573

 
 
—

 
 
82,284

 
 
—

 
 
73,462

 
 
49,949

 
—

 
 
9,689,724

 
 
—

 
 
20,170,634

 
 
—

 
 
25,948,021

 
 
18,720,163

 
—

 
 
9,476

 
 
—

 
 
32,571

 
 
—

 
 
31,830

 
 
73,079

 
—

 
 
40,589,476

 
 
—

 
 
99,252,045

 
 
—

 
 
3,417,648

 
 
9,185,134

 
—

 
 
14,735,135

 
 
—

 
 
10,479,553

 
 
—

 
 
672,179

 
 
1,363,337

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
20,398

 
 
—

 
 
608,866

 
 
—

 
 
14,459

 
 
—

 
 
—

 
397,731

 
 
—

 
 
15,261

 
 
—

 
 
79,170

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
418,129

 
$
65,972,384

 
$
624,127

 
$
131,611,548

 
$
93,629

 
$
33,528,364

 
$
30,427,185

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
416,848

 
$
56,106,355

 
$
625,267

 
$
130,471,586

 
$
93,706

 
$
22,177,265

 
$
18,884,798

 
31,870

 
 
3,141,542

 
 
30,006

 
 
50,815,269

 
 
36,290

 
 
2,396,595

 
 
1,556,378

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
57,170

 
 
55,578

 
—

 
 
—

 
 
—

 
 
133,875

 
 
—

 
 
120,705

 
 
58,703

 
—

 
 
67,351

 
 
—

 
 
6,953

 
 
—

 
 
4,429

 
 
2,994

 
—

 
 
704,522

 
 
—

 
 
1,736,672

 
 
—

 
 
1,251,815

 
 
1,064,323

 
—

 
 
721

 
 
—

 
 
2,909

 
 
—

 
 
1,671

 
 
4,522

 
—

 
 
2,955,323

 
 
—

 
 
8,557,972

 
 
—

 
 
165,119

 
 
522,984

 
—

 
 
1,123,451

 
 
—

 
 
937,346

 
 
—

 
 
35,345

 
 
84,488

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
2,034

 
 
—

 
 
60,353

 
 
—

 
 
1,445

 
 
—

 
 
—

 
39,689

 
 
—

 
 
1,514

 
 
—

 
 
7,918

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
2.17

 
 
1.39

 
—

 
 
—

 
 
—

 
 
11.91

 
 
—

 
 
27.02

 
 
16.32

 
—

 
 
14.08

 
 
—

 
 
11.84

 
 
—

 
 
16.59

 
 
16.68

 
—

 
 
13.75

 
 
—

 
 
11.61

 
 
—

 
 
20.73

 
 
17.59

 
—

 
 
13.13

 
 
—

 
 
11.20

 
 
—

 
 
19.05

 
 
16.16

 
—

 
 
13.73

 
 
—

 
 
11.60

 
 
—

 
 
20.70

 
 
17.56

 
—

 
 
13.12

 
 
—

 
 
11.18

 
 
—

 
 
19.02

 
 
16.14

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
10.03

 
 
—

 
 
10.09

 
 
—

 
 
10.01

 
 
—

 
 
—

 
10.02

 
 
—

 
 
10.08

 
 
—

 
 
10.00

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


37



Principal Life Insurance Company - Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Growth II Class 2 Division
 
SmallCap Value I Class 1 Division
 
SmallCap Value I Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at market
$
6,829

 
$
72,971,660

 
$
30,106

 
 
 
 
 
 
 
 
 
 
Liabilities
 
—

 
 
—

 
 
—

Net assets
$
6,829

 
$
72,971,660

 
$
30,106

 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
313,868

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
207,199

 
 
—

 
The Principal Variable Annuity
 
—

 
 
29,355,878

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
127,642

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
38,199,231

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
4,767,842

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
6,829

 
 
—

 
 
30,106

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Applicable to contracts in annuitization period:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Total net assets
$
6,829

 
$
72,971,660

 
$
30,106

 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
6,865

 
$
45,713,059

 
$
29,907

Shares of mutual fund owned
 
356

 
 
3,544,034

 
 
1,472

Accumulation units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
101,751

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
12,998

 
 
—

 
The Principal Variable Annuity
 
—

 
 
787,119

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
3,725

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
1,025,675

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
139,330

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
633

 
 
—

 
 
2,840

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
 
—

 
 
—

Accumulation unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
$
—

 
$
—

 
$
—

 
Pension Builder Plus
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
Personal Variable
 
—

 
 
—

 
 
—

 
Premier Variable
 
—

 
 
3.08

 
 
—

 
Principal Freedom Variable Annuity
 
—

 
 
—

 
 
—

 
Principal Freedom Variable Annuity 2
 
—

 
 
15.94

 
 
—

 
The Principal Variable Annuity
 
—

 
 
37.30

 
 
—

 
The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
 
34.27

 
 
—

 
Principal Investment Plus Variable Annuity
 
—

 
 
37.24

 
 
—

 
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
—

 
 
34.22

 
 
—

 
Principal Lifetime Income Solutions
 
—

 
 
—

 
 
—

 
Principal Pivot Series Variable Annuity
 
10.80

 
 
—

 
 
10.60

 
Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
10.79

 
 
—

 
 
10.59

Annuitized units outstanding:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

Annuitized unit value:
 
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
 
—

 
 
—

 
Pension Builder Plus – Rollover IRA
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 

38



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
T. Rowe Price Blue Chip Growth Portfolio II Division
 
T. Rowe Price Health Sciences Portfolio II Division
 
Templeton Global Bond VIP Class 4 Division
 
Templeton Growth VIP Class 2 Division
 
Van Eck Global Hard Assets Class S Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
12,612,679

 
$
30,107,162

 
$
67,554

 
$
960,023

 
$
7,087,059

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
12,612,679

 
$
30,107,162

 
$
67,554

 
$
960,023

 
$
7,087,059

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
960,023

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
1,505,107

 
—

 
 
—

 
 
—

 
 
—

 
 
1,969

 
10,698,020

 
 
25,338,209

 
 
—

 
 
—

 
 
4,636,210

 
1,914,659

 
 
4,768,953

 
 
—

 
 
—

 
 
834,729

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
14,825

 
 
—

 
 
96,273

 
—

 
 
—

 
 
52,729

 
 
—

 
 
12,771

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

$
12,612,679

 
$
30,107,162

 
$
67,554

 
$
960,023

 
$
7,087,059

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
8,498,940

 
$
20,908,380

 
$
68,342

 
$
769,863

 
$
8,461,192

 
624,699

 
 
830,542

 
 
3,675

 
 
65,710

 
 
287,624

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
45,409

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
123,789

 
—

 
 
—

 
 
—

 
 
—

 
 
168

 
487,904

 
 
571,286

 
 
—

 
 
—

 
 
381,855

 
92,928

 
 
114,424

 
 
—

 
 
—

 
 
71,115

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
1,520

 
 
—

 
 
12,646

 
—

 
 
—

 
 
5,412

 
 
—

 
 
1,679

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
21.14

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
12.16

 
—

 
 
—

 
 
—

 
 
—

 
 
11.75

 
21.93

 
 
44.36

 
 
—

 
 
—

 
 
12.14

 
20.61

 
 
41.68

 
 
—

 
 
—

 
 
11.74

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
9.75

 
 
—

 
 
7.61

 
—

 
 
—

 
 
9.74

 
 
—

 
 
7.61

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—



39



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein Small Cap Growth Class A Division
 
AllianceBernstein Small/Mid Cap Value Class A Division
 
American Century VP Capital Appreciation Class I Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
—

 
$
13,887

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
67,486

 
 
21,896

 
 
22,698

 
 
Administrative charges
 
8,099

 
 
2,393

 
 
2,738

 
 
Separate account rider charges
 
7,268

 
 
2,061

 
 
2,262

 
Net investment income (loss)
 
(82,853)

 
 
(12,463)

 
 
(27,698)

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
254,764

 
 
26,279

 
 
21,929

 
Capital gains distributions
 
457,169

 
 
229,054

 
 
—

 
Total realized gains (losses) on investments
 
711,933

 
 
255,333

 
 
21,929

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
(834,462)

 
 
(103,979)

 
 
250,033

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(205,382)

 
 
138,891

 
 
244,264

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(205,382)

 
$
138,891

 
$
244,264

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations April 24, 2014.
(2) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 
 

40



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Income & Growth Class I Division
 
American Century VP Inflation Protection Class II Division
 
American Century VP MidCap Value Class II Division
 
American Century VP Ultra Class I Division
 
American Century VP Ultra Class II Division
 
American Century VP Value Class II Division
 
American Funds Insurance Series Blue Chip Income & Growth Fund Class 4 Division (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
292,182

 
$
909,286

 
$
45,930

 
$
14,572

 
$
119,348

 
$
264,784

 
$
558

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
167,233

 
 
902,991

 
 
55,426

 
 
47,296

 
 
619,483

 
 
237,559

 
 
32

 
5,586

 
 
108,371

 
 
5,342

 
 
1,893

 
 
74,347

 
 
9,505

 
 
4

 
185

 
 
59,281

 
 
3,753

 
 
238

 
 
45,825

 
 
1,248

 
 
—

 
119,178

 
 
(161,357)

 
 
(18,591)

 
 
(34,855)

 
 
(620,307)

 
 
16,472

 
 
522

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
811,414

 
 
425,744

 
 
245,107

 
 
330,844

 
 
5,452,590

 
 
703,639

 
 
(235)

 
—

 
 
1,885,718

 
 
257,438

 
 
—

 
 
—

 
 
—

 
 
—

 
811,414

 
 
2,311,462

 
 
502,545

 
 
330,844

 
 
5,452,590

 
 
703,639

 
 
(235)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
588,288

 
 
(569,158)

 
 
122,659

 
 
5,663

 
 
(1,063,112)

 
 
1,330,760

 
 
(891)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,518,880

 
 
1,580,947

 
 
606,613

 
 
301,652

 
 
3,769,171

 
 
2,050,871

 
 
(604)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,518,880

 
$
1,580,947

 
$
606,613

 
$
301,652

 
$
3,769,171

 
$
2,050,871

 
$
(604)


41



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Global Small Capitalization Fund Class 2 Division (1)
 
American Funds Insurance Series Global Small Capitalization Fund Class 4 Division (2)
 
American Funds Insurance Series High-Income Bond Class 2 Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
124

 
$
1

 
$
11,462

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
513

 
 
2

 
 
1,351

 
 
Administrative charges
 
21

 
 
—

 
 
54

 
 
Separate account rider charges
 
—

 
 
—

 
 
—

 
Net investment income (loss)
 
(410)

 
 
(1)

 
 
10,057

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
266

 
 
—

 
 
(2,174)

 
Capital gains distributions
 
150

 
 
—

 
 
—

 
Total realized gains (losses) on investments
 
416

 
 
—

 
 
(2,174)

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
(372)

 
 
25

 
 
(15,338)

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(366)

 
 
24

 
 
(7,455)

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(366)

 
$
24

 
$
(7,455)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations May 17, 2014.
(2) Commenced operations November 10, 2014.


See accompanying notes.

 
 
 
 
 

42



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk Asset Allocation Fund Class P2 Division (2)
 
American Funds Insurance Series Managed Risk Growth Fund Class P2 Division (2)
 
American Funds Insurance Series Managed Risk International Fund Class P2
Division (2)
 
American Funds Insurance Series New World Fund Class 2 Division (1)
 
American Funds Insurance Series New World Fund Class 4 Division (2)
 
Balanced Class 1 Division
 
Bond & Mortgage Securities Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
1,543

 
$
375

 
$
615,270

 
$
5,952,369

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
6

 
 
3

 
 
900

 
 
25

 
 
419,506

 
 
2,349,673

 
—

 
 
1

 
 
1

 
 
36

 
 
4

 
 
16,155

 
 
194,768

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
716

 
 
97,428

 
—

 
 
(7)

 
 
(4)

 
 
607

 
 
346

 
 
178,893

 
 
3,310,500

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
(1,229)

 
 
(632)

 
 
1,285,488

 
 
(697,163)

 
—

 
 
—

 
 
—

 
 
4,960

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
3,731

 
 
(632)

 
 
1,285,488

 
 
(697,163)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
(113)

 
 
(100)

 
 
(22,384)

 
 
(437)

 
 
1,105,685

 
 
4,749,114

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
(120)

 
 
(104)

 
 
(18,046)

 
 
(723)

 
 
2,570,066

 
 
7,362,451

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
(120)

 
$
(104)

 
$
(18,046)

 
$
(723)

 
$
2,570,066

 
$
7,362,451


43



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert EAFE International Index Class F Division (1)
 
Calvert Russell 2000 Small Cap Index Class F Division (1)
 
Calvert S&P MidCap 400 Index Class F Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
120

 
$
71

 
$
210

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
4

 
 
18

 
 
28

 
 
Administrative charges
 
—

 
 
2

 
 
4

 
 
Separate account rider charges
 
—

 
 
—

 
 
—

 
Net investment income (loss)
 
116

 
 
51

 
 
178

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(1)

 
 
(1)

 
 
—

 
Capital gains distributions
 
—

 
 
2,375

 
 
2,812

 
Total realized gains (losses) on investments
 
(1)

 
 
2,374

 
 
2,812

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
(284)

 
 
(2,142)

 
 
(2,823)

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(169)

 
 
283

 
 
167

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(169)

 
$
283

 
$
167

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 
 

44



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Delaware Small Cap Value Service Class Division
 
Diversified Balanced Class 2 Division
 
Diversified Balanced Managed Volatility Class 2 Division
 
Diversified Growth Class 2 Division
 
Diversified Growth Managed Volatility Class 2 Division
 
Diversified Income Class 2 Division
 
Diversified International
Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,698

 
$
8,430,900

 
$
2,646

 
$
24,839,166

 
$
15,221

 
$
783,964

 
$
3,691,678

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,154

 
 
11,710,349

 
 
501,209

 
 
31,908,827

 
 
959,642

 
 
1,714,369

 
 
2,090,539

 
825

 
 
1,405,406

 
 
60,152

 
 
3,829,506

 
 
115,171

 
 
205,749

 
 
137,258

 
665

 
 
418,393

 
 
12,431

 
 
1,079,082

 
 
31,995

 
 
47,240

 
 
60,469

 
(6,946)

 
 
(5,103,248)

 
 
(571,146)

 
 
(11,978,249)

 
 
(1,091,587)

 
 
(1,183,394)

 
 
1,403,412

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,322

 
 
7,126,463

 
 
63,848

 
 
7,197,606

 
 
137,598

 
 
2,002,444

 
 
2,123,040

 
43,231

 
 
10,099,586

 
 
5,293

 
 
32,951,679

 
 
28,652

 
 
824,450

 
 
—

 
50,553

 
 
17,226,049

 
 
69,141

 
 
40,149,285

 
 
166,250

 
 
2,826,894

 
 
2,123,040

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(24,718)

 
 
41,256,299

 
 
2,805,987

 
 
129,051,299

 
 
5,573,416

 
 
5,516,168

 
 
(10,768,603)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18,889

 
 
53,379,100

 
 
2,303,982

 
 
157,222,335

 
 
4,648,079

 
 
7,159,668

 
 
(7,242,151)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
18,889

 
$
53,379,100

 
$
2,303,982

 
$
157,222,335

 
$
4,648,079

 
$
7,159,668

 
$
(7,242,151)


45



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified International
Class 2 Division (1)
 
Dreyfus Investment Portfolio Technology Growth Service Shares Division
 
DWS Alternative Asset Allocation Class B Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
9

 
 
60,480

 
 
—

 
 
Administrative charges
 
1

 
 
7,258

 
 
—

 
 
Separate account rider charges
 
—

 
 
6,664

 
 
—

 
Net investment income (loss)
 
(10)

 
 
(74,402)

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
—

 
 
339,304

 
 
—

 
Capital gains distributions
 
—

 
 
262,615

 
 
—

 
Total realized gains (losses) on investments
 
—

 
 
601,919

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
(233)

 
 
(337,264)

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(243)

 
 
190,253

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(243)

 
$
190,253

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 
 

46



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Equity 500 Index Class B2 Division (1)
 
DWS Small Mid Cap Value Class B Division
 
Equity Income Class 1 Division
 
Equity Income Class 2 Division (1)
 
Fidelity VIP Contrafund Service Class Division
 
Fidelity VIP Contrafund Service Class 2 Division
 
Fidelity VIP Equity-Income Service Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
1,805

 
$
6,443,295

 
$
—

 
$
403,224

 
$
393,828

 
$
983,744

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
34

 
 
5,335

 
 
3,434,427

 
 
49

 
 
613,391

 
 
684,809

 
 
480,342

 
4

 
 
615

 
 
352,825

 
 
7

 
 
24,538

 
 
82,189

 
 
30,774

 
—

 
 
492

 
 
184,797

 
 
—

 
 
1,775

 
 
44,701

 
 
14,953

 
(38)

 
 
(4,637)

 
 
2,471,246

 
 
(56)

 
 
(236,480)

 
 
(417,871)

 
 
457,675

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
4,319

 
 
21,436,943

 
 
—

 
 
2,426,899

 
 
1,591,267

 
 
337,882

 
—

 
 
1,919

 
 
—

 
 
—

 
 
943,796

 
 
1,096,570

 
 
534,938

 
—

 
 
6,238

 
 
21,436,943

 
 
—

 
 
3,370,695

 
 
2,687,837

 
 
872,820

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
776

 
 
18,717

 
 
5,170,721

 
 
1,334

 
 
1,670,519

 
 
2,939,300

 
 
1,250,674

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
738

 
 
20,318

 
 
29,078,910

 
 
1,278

 
 
4,804,734

 
 
5,209,266

 
 
2,581,169

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
738

 
$
20,318

 
$
29,078,910

 
$
1,278

 
$
4,804,734

 
$
5,209,266

 
$
2,581,169


47



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Growth Service Class Division
 
Fidelity VIP Growth Service Class 2 Division
 
Fidelity VIP Mid Cap Service Class Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
13,941

 
$
—

 
$
113

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
200,518

 
 
110,768

 
 
280

 
 
Administrative charges
 
8,022

 
 
13,294

 
 
—

 
 
Separate account rider charges
 
361

 
 
12,387

 
 
—

 
Net investment income (loss)
 
(194,960)

 
 
(136,449)

 
 
(167)

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
1,066,857

 
 
653,557

 
 
(2)

 
Capital gains distributions
 
—

 
 
—

 
 
543

 
Total realized gains (losses) on investments
 
1,066,857

 
 
653,557

 
 
541

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
627,231

 
 
258,174

 
 
803

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
1,499,128

 
 
775,282

 
 
1,177

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
1,499,128

 
$
775,282

 
$
1,177

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations May 17, 2014.
(2) Commenced operations November 10, 2014.
(3) Represented the operations of Franklin Small Cap Value Securities Class 2 Division until May 17, 2014.


See accompanying notes.
 
 
 
 
 

48



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class 2 Division
 
Fidelity VIP Overseas Service Class 2 Division
 
Franklin Global Real Estate VIP Class 2 Division (2)
 
Franklin Rising Dividends VIP Class 4 Division (2)
 
Franklin Small Cap Value VIP Class 2 Division (3)
 
Goldman Sachs VIT Mid Cap Value Institutional Shares Division
 
Goldman Sachs VIT Mid Cap Value Service Shares Division (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
3,376

 
$
425,690

 
$
—

 
$
—

 
$
21,644

 
$
181,922

 
$
74

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
207,542

 
 
512,581

 
 
20

 
 
41

 
 
43,791

 
 
228,996

 
 
9

 
24,911

 
 
61,517

 
 
3

 
 
5

 
 
5,067

 
 
27,354

 
 
1

 
13,248

 
 
43,542

 
 
—

 
 
—

 
 
2,529

 
 
20.207

 
 
—

 
(242,325)

 
 
(191,950)

 
 
(23)

 
 
(46)

 
 
(29,743)

 
 
(94,635)

 
 
64

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
537,080

 
 
(207,218)

 
 
—

 
 
502

 
 
268,983

 
 
748,878

 
 
(1,240)

 
384,657

 
 
10,870

 
 
—

 
 
—

 
 
260,997

 
 
3,029,537

 
 
1,603

 
921,737

 
 
(196,348)

 
 
—

 
 
502

 
 
529,980

 
 
3,778,415

 
 
363

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
71,824

 
 
(3,762,189)

 
 
69

 
 
595

 
 
(547,683)

 
 
(1,635,687)

 
 
7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
751,236

 
 
(4,150,487)

 
 
46

 
 
1,051

 
 
(47,446)

 
 
2,048,093

 
 
434

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
751,236

 
$
(4,150,487)

 
$
46

 
$
1,051

 
$
(47,446)

 
$
2,048,093

 
$
434


49



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division (1)
 
Goldman Sachs VIT Small Cap Equity Insights Service Shares Division (2)
 
Government & High Quality Bond Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
52,395

 
$
26

 
$
5,632,839

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
85,784

 
 
4

 
 
1,837,475

 
 
Administrative charges
 
10,202

 
 
1

 
 
134,849

 
 
Separate account rider charges
 
6,067

 
 
—

 
 
61,629

 
Net investment income (loss)
 
(49,658)

 
 
21

 
 
3,598,886

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
404,975

 
 
—

 
 
(203,842)

 
Capital gains distributions
 
983,827

 
 
733

 
 
—

 
Total realized gains (losses) on investments
 
1,388,802

 
 
733

 
 
(203,842)

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
(984,276)

 
 
(554)

 
 
2,078,450

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
354,868

 
 
200

 
 
5,473,494

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
354,868

 
$
200

 
$
5,473,494

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of Goldman Sachs VIT Structured Small Cap Equity Service Class I Division until May 17, 2014.
(2) Commenced operations until November 10, 2014.


See accompanying notes.
 
 
 
 
 

50



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government & High Quality Bond Class 2 Division (2)
 
Guggenheim Floating Rate Strategies Series F Division (2)
 
Guggenheim Investments Global Managed Future Strategy
Division (2)
 
Guggenheim Investments Long Short Equity Division (2)
 
Guggenheim Investments Multi-Hedge Strategies Division (2)
 
Guggenheim Macro Opportunities Series M
Division (2)
 
International Emerging Markets Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
645,301

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12

 
 
13

 
 
5

 
 
13

 
 
5

 
 
1

 
 
883,399

 
2

 
 
1

 
 
1

 
 
2

 
 
1

 
 
—

 
 
74,905

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
40,626

 
(14)

 
 
(14)

 
 
(6)

 
 
(15)

 
 
(6)

 
 
(1)

 
 
(353,629)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(12)

 
 
—

 
 
—

 
 
—

 
 
—

 
 
(6)

 
 
(1,258,213)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
(12)

 
 
—

 
 
—

 
 
—

 
 
—

 
 
(6)

 
 
(1,258,213)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18

 
 
(75)

 
 
337

 
 
—

 
 
115

 
 
—

 
 
(1,840,421)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(8)

 
 
(89)

 
 
331

 
 
(15)

 
 
109

 
 
(7)

 
 
(3,452,263)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(8)

 
$
(89)

 
$
331

 
$
(15)

 
$
109

 
$
(7)

 
$
(3,452,263)


51



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco American Franchise Series I Division
 
Invesco Balanced-Risk Allocation Series II
Division (1)
 
Invesco Core Equity Series I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
1,979

 
$
—

 
$
188,893

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
59,321

 
 
—

 
 
283,309

 
 
Administrative charges
 
2,374

 
 
—

 
 
11,333

 
 
Separate account rider charges
 
131

 
 
—

 
 
68

 
Net investment income (loss)
 
(59,847)

 
 
—

 
 
(105,817)

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
290,027

 
 
—

 
 
1,508,836

 
Capital gains distributions
 
—

 
 
—

 
 
105,462

 
Total realized gains (losses) on investments
 
290,027

 
 
—

 
 
1,614,298

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
76,495

 
 
—

 
 
(7,629)

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
306,675

 
 
—

 
 
1,500,852

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
306,675

 
$
—

 
$
1,500,852

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 
 

52



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Global Health Care Series I Division
 
Invesco Global Health Care
Series II
Division (1)
 
Invesco International Growth Series I Division
 
Invesco International Growth Series II Division (1)
 
Invesco Mid Cap Growth Series I Division
 
Invesco Small Cap Equity Series I Division
 
Invesco Technology Series I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
165,226

 
$
—

 
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
129,426

 
 
40

 
 
121,724

 
 
21

 
 
20,129

 
 
120,110

 
 
45,422

 
5,178

 
 
6

 
 
14,608

 
 
3

 
 
806

 
 
11,217

 
 
1,817

 
861

 
 
—

 
 
5,111

 
 
—

 
 
538

 
 
6,257

 
 
329

 
(135,465)

 
 
(46)

 
 
23,783

 
 
(24)

 
 
(21,473)

 
 
(137,584)

 
 
(47,568)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,138,696

 
 
237

 
 
337,819

 
 
(220)

 
 
375,481

 
 
811,599

 
 
229,883

 
391,059

 
 
—

 
 
—

 
 
—

 
 
—

 
 
831,129

 
 
310,119

 
1,529,755

 
 
237

 
 
337,819

 
 
(220)

 
 
375,481

 
 
1,642,728

 
 
540,002

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
294,532

 
 
(397)

 
 
(512,905)

 
 
(76)

 
 
(250,833)

 
 
(1,438,151)

 
 
(177,191)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,688,822

 
 
(206)

 
 
(151,303)

 
 
(320)

 
 
103,175

 
 
66,993

 
 
315,243

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,688,822

 
$
(206)

 
$
(151,303)

 
$
(320)

 
$
103,175

 
$
66,993

 
$
315,243


53



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Value Opportunities Series I Division
 
Janus Aspen Enterprise Service Shares Division
 
Janus Aspen Flexible Bond Service Shares Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
75,193

 
$
3,172

 
$
384

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
68,648

 
 
116,796

 
 
60

 
 
Administrative charges
 
8,239

 
 
4,672

 
 
8

 
 
Separate account rider charges
 
5,422

 
 
418

 
 
—

 
Net investment income (loss)
 
(7,116)

 
 
(118,714)

 
 
316

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
357,914

 
 
840,446

 
 
(260)

 
Capital gains distributions
 
—

 
 
662,365

 
 
—

 
Total realized gains (losses) on investments
 
357,914

 
 
1,502,811

 
 
(260)

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
(76,879)

 
 
(428,379)

 
 
(77)

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
273,919

 
 
955,718

 
 
(21)

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
273,919

 
$
955,718

 
$
(21)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 
 

54



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Blend II Class 1 Division
 
LargeCap Blend II Class 2 Division (1)
 
LargeCap Growth Class 1 Division
 
LargeCap Growth Class 2 Division (1)
 
LargeCap Growth I Class 1 Division
 
LargeCap S&P 500 Index Class 1 Division
 
LargeCap Value Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,553,497

 
$
—

 
$
292,664

 
$
—

 
$
130,790

 
$
1,253,552

 
$
2,046,187

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,574,714

 
 
—

 
 
634,231

 
 
7

 
 
1,359,557

 
 
1,218,528

 
 
1,082,261

 
146,069

 
 
—

 
 
38,740

 
 
1

 
 
70,979

 
 
86,732

 
 
57,964

 
146,069

 
 
—

 
 
18,566

 
 
—

 
 
15,799

 
 
36,149

 
 
24,572

 
(248,147)

 
 
—

 
 
(398,873)

 
 
(8)

 
 
(1,315,545)

 
 
(87,857)

 
 
881,390

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,749,207

 
 
—

 
 
4,042,057

 
 
(46)

 
 
7,280,733

 
 
5,786,595

 
 
3,834,804

 
—

 
 
—

 
 
—

 
 
—

 
 
20,386,747

 
 
2,239,839

 
 
12,377,048

 
2,749,207

 
 
—

 
 
4,042,057

 
 
(46)

 
 
27,667,480

 
 
8,026,434

 
 
16,211,852

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
9,029,903

 
 
—

 
 
1,327,791

 
 
(73)

 
 
(18,840,451)

 
 
3,249,988

 
 
(8,506,475)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11,530,963

 
 
—

 
 
4,970,975

 
 
(127)

 
 
7,511,484

 
 
11,188,565

 
 
8,586,767

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
11,530,963

 
$
—

 
$
4,970,975

 
$
(127)

 
$
7,511,484

 
$
11,188,565

 
$
8,586,767


55



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT International Value Service Class Division (1)
 
MFS VIT New Discovery Service Class Division
 
MFS VIT Utilities Service Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
—

 
$
—

 
$
222,043

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
46

 
 
10,522

 
 
133,797

 
 
Administrative charges
 
7

 
 
1,018

 
 
16,060

 
 
Separate account rider charges
 
—

 
 
802

 
 
9,651

 
Net investment income (loss)
 
(53)

 
 
(12,342)

 
 
62,535

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(233)

 
 
(45,072)

 
 
552,605

 
Capital gains distributions
 
—

 
 
198,958

 
 
427,991

 
Total realized gains (losses) on investments
 
(233)

 
 
153,886

 
 
980,596

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
(582)

 
 
(212,134)

 
 
(93,732)

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(868)

 
 
(70,590)

 
 
949,399

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(868)

 
$
(70,590)

 
$
949,399

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 
 

56



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT Value Service Class Division
 
MidCap Class 1 Division
 
Money Market Class 1 Division
 
Money Market Class 2 Division (1)
 
Neuberger Berman AMT Large Cap Value I Class Division
 
Neuberger Berman AMT Small-Cap Growth S Class Division
 
Neuberger Berman AMT Socially Responsive I Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
65,149

 
$
2,000,205

 
$
19

 
$
—

 
$
38,594

 
$
—

 
$
22,788

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
60,363

 
 
4,825,123

 
 
683,708

 
 
233

 
 
66,455

 
 
39,956

 
 
81,544

 
7,244

 
 
336,448

 
 
50,247

 
 
35

 
 
7,976

 
 
4,795

 
 
9,786

 
4,571

 
 
134,207

 
 
21,466

 
 
—

 
 
4,211

 
 
4,438

 
 
6,240

 
(7,029)

 
 
(3,295,573)

 
 
(755,402)

 
 
(268)

 
 
(40,048)

 
 
(49,189)

 
 
(74,782)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
272,320

 
 
33,897,048

 
 
—

 
 
—

 
 
396,207

 
 
380,243

 
 
1,076,131

 
152,855

 
 
34,755,353

 
 
—

 
 
—

 
 
—

 
 
280,357

 
 
—

 
425,175

 
 
68,652,401

 
 
—

 
 
—

 
 
396,207

 
 
660,600

 
 
1,076,131

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,797)

 
 
(22,942,508)

 
 
—

 
 
—

 
 
65,815

 
 
(569,384)

 
 
(496,844)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
410,349

 
 
42,414,320

 
 
(755,402)

 
 
(268)

 
 
421,974

 
 
42,027

 
 
504,505

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
410,349

 
$
42,414,320

 
$
(755,402)

 
$
(268)

 
$
421,974

 
$
42,027

 
$
504,505


57



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oppenheimer Main Street Small Cap Service Shares Division
 
PIMCO All Asset Administrative Class Division
 
PIMCO High Yield Administrative Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
4,221

 
$
280,007

 
$
835,675

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
7,683

 
 
66,834

 
 
197,871

 
 
Administrative charges
 
307

 
 
8,021

 
 
23,748

 
 
Separate account rider charges
 
14

 
 
3,727

 
 
9,701

 
Net investment income (loss)
 
(3,783)

 
 
201,425

 
 
604,355

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(298)

 
 
(10,798)

 
 
79,195

 
Capital gains distributions
 
93,683

 
 
—

 
 
—

 
Total realized gains (losses) on investments
 
93,385

 
 
(10,798)

 
 
79,195

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
(27,039)

 
 
(271,826)

 
 
(431,109)

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
62,563

 
 
(81,199)

 
 
252,441

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
62,563

 
$
(81,199)

 
$
252,441

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 
 

58



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO Total Return Administrative Class Division
 
Principal Capital Appreciation Class 1 Division
 
Principal Capital Appreciation Class 2 Division (1)
 
Principal LifeTime Strategic Income Class 1 Division
 
Principal LifeTime 2010 Class 1 Division
 
Principal LifeTime 2020 Class 1 Division
 
Principal LifeTime 2030 Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
659,220

 
$
548,129

 
$
—

 
$
569,834

 
$
764,659

 
$
3,680,713

 
$
1,581,273

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
377,111

 
 
217,144

 
 
167

 
 
282,198

 
 
435,959

 
 
1,983,509

 
 
908,012

 
45,259

 
 
26,008

 
 
25

 
 
29,366

 
 
48,407

 
 
226,881

 
 
103,191

 
12,070

 
 
19,284

 
 
—

 
 
14,126

 
 
13,369

 
 
147,188

 
 
67,653

 
224,780

 
 
285,693

 
 
(192)

 
 
244,144

 
 
266,924

 
 
1,323,135

 
 
502,417

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(18,070)

 
 
389,106

 
 
1

 
 
593,959

 
 
310,635

 
 
3,935,672

 
 
2,323,775

 
—

 
 
2,777,041

 
 
—

 
 
—

 
 
—

 
 
3,234,566

 
 
11,158,103

 
(18,070)

 
 
3,166,147

 
 
1

 
 
593,959

 
 
310,635

 
 
7,170,238

 
 
13,481,878

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
629,305

 
 
(1,656,566)

 
 
1,298

 
 
(133,715)

 
 
607,302

 
 
(1,951,174)

 
 
(10,747,978)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
836,015

 
 
1,795,274

 
 
1,107

 
 
704,388

 
 
1,184,861

 
 
6,542,199

 
 
3,236,317

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
836,015

 
$
1,795,274

 
$
1,107

 
$
704,388

 
$
1,184,861

 
$
6,542,199

 
$
3,236,317


59



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 1 Division
 
Principal LifeTime 2050 Class 1 Division
 
Real Estate Securities Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
283,536

 
$
189,454

 
$
1,290,021

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
175,042

 
 
107,289

 
 
1,003,398

 
 
Administrative charges
 
20,076

 
 
12,225

 
 
73,815

 
 
Separate account rider charges
 
8,603

 
 
6,645

 
 
40,002

 
Net investment income (loss)
 
79,815

 
 
63,295

 
 
172,806

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
194,842

 
 
178,007

 
 
2,192,506

 
Capital gains distributions
 
950,286

 
 
743,613

 
 
—

 
Total realized gains (losses) on investments
 
1,145,128

 
 
921,620

 
 
2,192,506

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
(574,127)

 
 
(587,998)

 
 
19,163,492

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
650,816

 
 
396,917

 
 
21,528,804

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
650,816

 
$
396,917

 
$
21,528,804

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 
 

60



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate Securities Class 2 Division (1)
 
Rydex Commodities Strategy
Division (1)
 
Rydex NASDAQ 100 Division (1)
 
SAM Balanced Portfolio Class 1 Division
 
SAM Balanced Portfolio Class 2 Division (1)
 
SAM Conservative Balanced Portfolio Class 1 Division
 
SAM Conservative Balanced Portfolio Class 2 Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
19,449,599

 
$
—

 
$
5,172,643

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
131

 
 
13

 
 
88

 
 
9,152,642

 
 
321

 
 
2,169,071

 
 
122

 
19

 
 
2

 
 
13

 
 
1,027,666

 
 
47

 
 
240,028

 
 
17

 
—

 
 
—

 
 
—

 
 
457,946

 
 
—

 
 
129,305

 
 
—

 
(150)

 
 
(15)

 
 
(101)

 
 
8,811,345

 
 
(368)

 
 
2,634,239

 
 
(139)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
585

 
 
(1)

 
 
—

 
 
36,719,553

 
 
1

 
 
7,981,626

 
 
(1)

 
—

 
 
—

 
 
—

 
 
100,364,250

 
 
—

 
 
14,699,102

 
 
—

 
585

 
 
(1)

 
 
—

 
 
137,083,803

 
 
1

 
 
22,680,728

 
 
(1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,926

 
 
(2,208)

 
 
(517)

 
 
(108,056,045)

 
 
(1,444)

 
 
(17,320,821)

 
 
(1,863)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,361

 
 
(2,224)

 
 
(618)

 
 
37,839,103

 
 
(1,811)

 
 
7,994,146

 
 
(2,003)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
2,361

 
$
(2,224)

 
$
(618)

 
$
37,839,103

 
$
(1,811)

 
$
7,994,146

 
$
(2,003)


61



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 1 Division
 
SAM Conservative Growth Portfolio Class 2 Division (1)
 
SAM Flexible Income Portfolio Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
1,737,071

 
$
—

 
$
6,695,294

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
1,181,179

 
 
244

 
 
2,314,725

 
 
Administrative charges
 
124,067

 
 
36

 
 
241,703

 
 
Separate account rider charges
 
96,936

 
 
—

 
 
145,106

 
Net investment income (loss)
 
334,889

 
 
(280)

 
 
3,993,760

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
3,308,287

 
 
—

 
 
4,814,188

 
Capital gains distributions
 
11,629,521

 
 
—

 
 
10,352,104

 
Total realized gains (losses) on investments
 
14,937,808

 
 
—

 
 
15,166,292

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
(9,886,503)

 
 
(687)

 
 
(11,000,369)

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
5,386,194

 
 
(967)

 
 
8,159,683

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
5,386,194

 
$
(967)

 
$
8,159,683

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 
 

62



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 2 Division (1)
 
SAM Strategic Growth Portfolio Class 1 Division
 
SAM Strategic Growth Portfolio Class 2 Division (1)
 
Short-Term Income Class 1 Division
 
Short-Term Income Class 2 Division (1)
 
SmallCap Blend Class 1 Division
 
SmallCap Growth II Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
938,567

 
$
—

 
$
2,358,328

 
$
—

 
$
119,026

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
284

 
 
761,902

 
 
412

 
 
1,752,524

 
 
45

 
 
409,307

 
 
381,487

 
34

 
 
80,114

 
 
61

 
 
186,362

 
 
6

 
 
18,256

 
 
25,384

 
—

 
 
83,088

 
 
—

 
 
91,937

 
 
—

 
 
4,707

 
 
10,033

 
(318)

 
 
13,463

 
 
(473)

 
 
327,505

 
 
(51)

 
 
(313,244)

 
 
(416,904)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)

 
 
2,381,192

 
 
(3)

 
 
997,364

 
 
—

 
 
2,187,088

 
 
2,433,205

 
—

 
 
9,953,221

 
 
—

 
 
—

 
 
—

 
 
991,070

 
 
—

 
(1)

 
 
12,334,413

 
 
(3)

 
 
997,364

 
 
—

 
 
3,178,158

 
 
2,433,205

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,281

 
 
(8,132,619)

 
 
(1,140)

 
 
(890,451)

 
 
(77)

 
 
(1,699,886)

 
 
(598,320)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
962

 
 
4,215,257

 
 
(1,616)

 
 
434,418

 
 
(128)

 
 
1,165,028

 
 
1,417,981

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
962

 
$
4,215,257

 
$
(1,616)

 
$
434,418

 
$
(128)

 
$
1,165,028

 
$
1,417,981


63



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Growth II Class 2
Division (1)
 
SmallCap Value I Class 1 Division
 
SmallCap Value I Class 2 Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment income (loss)
 
 
 
 
 
 
 
 
 
Income
 
 
 
 
 
 
 
 
 
 
Dividends
$
—

 
$
567,482

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
5

 
 
951,667

 
 
9

 
 
Administrative charges
 
1

 
 
83,558

 
 
1

 
 
Separate account rider charges
 
—

 
 
40,788

 
 
—

 
Net investment income (loss)
 
(6)

 
 
(508,531)

 
 
(10)

 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
360

 
 
4,928,938

 
 
541

 
Capital gains distributions
 
—

 
 
8,032,051

 
 
—

 
Total realized gains (losses) on investments
 
360

 
 
12,960,989

 
 
541

 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
(36)

 
 
(8,377,893)

 
 
199

 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
318

 
 
4,074,565

 
 
730

 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
318

 
$
4,074,565

 
$
730

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.
(2) Represented the operations of Templeton Growth Securities Class 2 Division until May 17, 2014.


See accompanying notes.
 
 
 
 
 

64



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
T. Rowe Price Blue Chip Growth Portfolio II Division
 
T. Rowe Price Health Sciences Portfolio II Division
 
Templeton Global Bond VIP Class 4 Division (1)
 
Templeton Growth VIP Class 2 Division (2)
 
Van Eck Global Hard Assets Class S Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
13,877

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
151,010

 
 
314,997

 
 
62

 
 
8,825

 
 
109,796

 
18,123

 
 
37,804

 
 
8

 
 
—

 
 
10,985

 
11,195

 
 
26,826

 
 
—

 
 
—

 
 
6,181

 
(180,328)

 
 
(379,627)

 
 
(70)

 
 
5,052

 
 
(126,962)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
994,904

 
 
2,459,600

 
 
(1)

 
 
21,912

 
 
(449,127)

 
—

 
 
2,172,933

 
 
—

 
 
—

 
 
—

 
994,904

 
 
4,632,533

 
 
(1)

 
 
21,912

 
 
(449,127)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
49,729

 
 
2,222,956

 
 
(788)

 
 
(61,483)

 
 
(1,185,645)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
864,305

 
 
6,475,862

 
 
(859)

 
 
(34,519)

 
 
(1,761,734)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
864,305

 
$
6,475,862

 
$
(859)

 
$
(34,519)

 
$
(1,761,734)



65



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein Small Cap Growth Class A Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
(82,853)

 
$
(74,085)

 
 
Total realized gains (losses) on investments
 
711,933

 
 
939,697

 
 
Change in net unrealized appreciation or depreciation of investments
 
(834,462)

 
 
953,491

 
 
Net gains (losses) from investments
 
(205,382)

 
 
1,819,103

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(205,382)

 
 
1,819,103

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
883,376

 
 
1,367,497

 
 
Administration charges
 
(575)

 
 
(697)

 
 
Contingent sales charges
 
(5,340)

 
 
(4,681)

 
 
Contract terminations
 
(515,559)

 
 
(329,539)

 
 
Death benefit payments
 
(32,960)

 
 
—

 
 
Flexible withdrawal option payments
 
(16,721)

 
 
(19,931)

 
 
Transfers to other contracts
 
(1,345,012)

 
 
(796,987)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(1,032,791)

 
 
215,662

 
Total increase (decrease)
 
(1,238,173)

 
 
2,034,765

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
6,182,753

 
 
4,147,988

 
Net assets at end of period
$
4,944,580

 
$
6,182,753

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations May 20, 2013.
(2) Commenced operations April 24, 2014.


See accompanying notes.
 
 
 
 

66



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein Small/Mid Cap Value Class A Division (1)
 
American Century VP Capital Appreciation Class I Division (2)
 
American Century VP Income & Growth Class I Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(12,463)

 
$
(2,783)

 
$
(27,698)

 
$
119,178

 
$
139,876

 
255,333

 
 
10,666

 
 
21,929

 
 
811,414

 
 
566,865

 
(103,979)

 
 
65,455

 
 
250,033

 
 
588,288

 
 
3,377,547

 
138,891

 
 
73,338

 
 
244,264

 
 
1,518,880

 
 
4,084,288

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
138,891

 
 
73,338

 
 
244,264

 
 
1,518,880

 
 
4,084,288

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,756,451

 
 
1,018,060

 
 
3,015,252

 
 
624,667

 
 
2,135,473

 
(60)

 
 
—

 
 
(1,154)

 
 
(1,891)

 
 
(1,855)

 
(375)

 
 
(4)

 
 
(2,204)

 
 
(2,062)

 
 
(3,559)

 
(76,395)

 
 
(887)

 
 
(212,790)

 
 
(1,528,791)

 
 
(1,879,657)

 
(10,551)

 
 
—

 
 
(18,522)

 
 
(111,850)

 
 
(74,554)

 
(13,164)

 
 
(1,324)

 
 
(13,909)

 
 
(164,308)

 
 
(181,392)

 
(549,664)

 
 
(13,851)

 
 
(407,430)

 
 
(884,451)

 
 
(1,838,559)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
1,106,242

 
 
1,001,994

 
 
2,359,243

 
 
(2,068,686)

 
 
(1,844,103)

 
1,245,133

 
 
1,075,332

 
 
2,603,507

 
 
(549,806)

 
 
2,240,185

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,075,332

 
 
—

 
 
—

 
 
14,985,421

 
 
12,745,236

$
2,320,465

 
$
1,075,332

 
$
2,603,507

 
$
14,435,615

 
$
14,985,421


67



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Inflation Protection Class II Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
(161,357)

 
$
155,755

 
 
Total realized gains (losses) on investments
 
2,311,462

 
 
4,336,669

 
 
Change in net unrealized appreciation or depreciation of investments
 
(569,158)

 
 
(12,950,643)

 
 
Net gains (losses) from investments
 
1,580,947

 
 
(8,458,219)

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
1,580,947

 
 
(8,458,219)

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
13,312,143

 
 
25,339,967

 
 
Administration charges
 
(368,840)

 
 
(438,184)

 
 
Contingent sales charges
 
(83,724)

 
 
(90,331)

 
 
Contract terminations
 
(8,083,732)

 
 
(6,359,227)

 
 
Death benefit payments
 
(456,869)

 
 
(303,050)

 
 
Flexible withdrawal option payments
 
(2,013,619)

 
 
(2,108,167)

 
 
Transfers to other contracts
 
(17,534,228)

 
 
(17,902,858)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(15,228,869)

 
 
(1,861,850)

 
Total increase (decrease)
 
(13,647,922)

 
 
(10,320,069)

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
78,840,003

 
 
89,160,072

 
Net assets at end of period
$
65,192,081

 
$
78,840,003

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 

68



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP MidCap Value Class II Division
 
American Century VP Ultra Class I Division
 
American Century VP Ultra Class II Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(18,591)

 
$
(9,838)

 
$
(34,855)

 
$
(28,477)

 
$
(620,307)

 
$
(575,059)

 
502,545

 
 
230,648

 
 
330,844

 
 
296,679

 
 
5,452,590

 
 
4,590,171

 
122,659

 
 
548,170

 
 
5,663

 
 
900,103

 
 
(1,063,112)

 
 
12,826,675

 
606,613

 
 
768,980

 
 
301,652

 
 
1,168,305

 
 
3,769,171

 
 
16,841,787

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
606,613

 
 
768,980

 
 
301,652

 
 
1,168,305

 
 
3,769,171

 
 
16,841,787

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,495,268

 
 
2,001,893

 
 
213,536

 
 
511,488

 
 
6,983,627

 
 
5,026,808

 
(517)

 
 
(321)

 
 
(846)

 
 
(607)

 
 
(283,549)

 
 
(347,785)

 
(3,227)

 
 
(3,785)

 
 
(700)

 
 
(1,007)

 
 
(65,566)

 
 
(64,968)

 
(446,735)

 
 
(450,282)

 
 
(567,666)

 
 
(513,202)

 
 
(6,330,547)

 
 
(4,573,711)

 
(92,761)

 
 
(5,577)

 
 
(18,560)

 
 
(34,953)

 
 
(281,760)

 
 
(167,401)

 
(27,075)

 
 
(19,048)

 
 
(54,106)

 
 
(61,911)

 
 
(1,480,963)

 
 
(1,501,761)

 
(1,016,734)

 
 
(1,069,551)

 
 
(276,896)

 
 
(684,119)

 
 
(11,843,761)

 
 
(16,186,129)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
908,219

 
 
453,329

 
 
(705,238)

 
 
(784,311)

 
 
(13,302,519)

 
 
(17,814,947)

 
1,514,832

 
 
1,222,309

 
 
(403,586)

 
 
383,994

 
 
(9,533,348)

 
 
(973,160)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,814,515

 
 
2,592,206

 
 
4,099,519

 
 
3,715,525

 
 
54,398,488

 
 
55,371,648

$
5,329,347

 
$
3,814,515

 
$
3,695,933

 
$
4,099,519

 
$
44,865,140

 
$
54,398,488


69



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Value Class II Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
16,472

 
$
34,980

 
 
Total realized gains (losses) on investments
 
703,639

 
 
109,311

 
 
Change in net unrealized appreciation or depreciation of investments
 
1,330,760

 
 
4,970,892

 
 
Net gains (losses) from investments
 
2,050,871

 
 
5,115,183

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
2,050,871

 
 
5,115,183

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
1,607,095

 
 
2,765,007

 
 
Administration charges
 
(3,393)

 
 
(3,991)

 
 
Contingent sales charges
 
(3,965)

 
 
(6,457)

 
 
Contract terminations
 
(3,215,888)

 
 
(3,291,486)

 
 
Death benefit payments
 
(93,993)

 
 
(133,904)

 
 
Flexible withdrawal option payments
 
(216,110)

 
 
(215,425)

 
 
Transfers to other contracts
 
(1,627,230)

 
 
(3,389,138)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(3,553,484)

 
 
(4,275,394)

 
Total increase (decrease)
 
(1,502,613)

 
 
839,789

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
19,713,172

 
 
18,873,383

 
Net assets at end of period
$
18,210,559

 
$
19,713,172

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.
(2) Commenced operations May 17, 2014.


See accompanying notes.
 
 
 
 

70



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Blue Chip Income & Growth Fund Class 4 Division (1)
 
American Funds Insurance Series Global Small Capitalization Fund Class 2 Division (2)
 
American Funds Insurance Series Global Small Capitalization Fund Class 4 Division (1)
 
 
 
 
 
 
 
 
2014
 
2014
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
522

 
$
(410)

 
$
(1)

 
(235)

 
 
416

 
 
—

 
(891)

 
 
(372)

 
 
25

 
(604)

 
 
(366)

 
 
24

 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
(604)

 
 
(366)

 
 
24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
104,128

 
 
113,699

 
 
7,841

 
(3)

 
 
—

 
 
—

 
—

 
 
(5)

 
 
—

 
—

 
 
(3,834)

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
(13,516)

 
 
—

 
—

 
 
—

 
 
—

 
104,125

 
 
96,344

 
 
7,841

 
103,521

 
 
95,978

 
 
7,865

 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

$
103,521

 
$
95,978

 
$
7,865


71



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series High-Income Bond Class 2 Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Increase (decrease) in net assets
 
 
 
Operations:
 
 
 
 
Net investment income (loss)
$
10,057

 
 
Total realized gains (losses) on investments
 
(2,174)

 
 
Change in net unrealized appreciation or depreciation of investments
 
(15,338)

 
 
Net gains (losses) from investments
 
(7,455)

 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(7,455)

 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
318,020

 
 
Administration charges
 
(1)

 
 
Contingent sales charges
 
(74)

 
 
Contract terminations
 
(60,154)

 
 
Death benefit payments
 
—

 
 
Flexible withdrawal option payments
 
(1,200)

 
 
Transfers to other contracts
 
(38,138)

 
 
Annuity payments
 
—

 
Increase (decrease) in net assets from policy related transactions
 
218,453

 
Total increase (decrease)
 
210,998

 
 
 
 
 
 
 
Net assets at beginning of period
 
—

 
Net assets at end of period
$
210,998

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations May 17, 2014.
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

72



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk Asset Allocation Fund Class P2 Division (2)
 
American Funds Insurance Series Managed Risk Growth Fund Class P2 Division (2)
 
American Funds Insurance Series Managed Risk International Fund Class P2 Division (2)
 
 
 
 
 
 
 
 
2014
 
2014
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
(7)

 
$
(4)

 
—

 
 
—

 
 
—

 
—

 
 
(113)

 
 
(100)

 
—

 
 
(120)

 
 
(104)

 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
—

 
 
(120)

 
 
(104)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
30,019

 
 
18,000

 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
30,019

 
 
18,000

 
—

 
 
29,899

 
 
17,896

 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

$
—

 
$
29,899

 
$
17,896


73



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series New World Fund Class 2 Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Increase (decrease) in net assets
 
 
 
Operations:
 
 
 
 
Net investment income (loss)
$
607

 
 
Total realized gains (losses) on investments
 
3,731

 
 
Change in net unrealized appreciation or depreciation of investments
 
(22,384)

 
 
Net gains (losses) from investments
 
(18,046)

 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(18,046)

 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
176,734

 
 
Administration charges
 
—

 
 
Contingent sales charges
 
(4)

 
 
Contract terminations
 
(3,547)

 
 
Death benefit payments
 
—

 
 
Flexible withdrawal option payments
 
—

 
 
Transfers to other contracts
 
(2,780)

 
 
Annuity payments
 
—

 
Increase (decrease) in net assets from policy related transactions
 
170,403

 
Total increase (decrease)
 
152,357

 
 
 
 
 
 
 
Net assets at beginning of period
 
—

 
Net assets at end of period
$
152,357

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations May 17, 2014.
(2) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

74



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series New World Fund Class 4 Division (2)
 
Balanced Class 1 Division
 
Bond & Mortgage Securities Class 1 Division
 
 
 
 
 
 
 
 
2014
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
346

 
$
178,893

 
$
204,517

 
$
3,310,500

 
$
4,196,792

 
(632)

 
 
1,285,488

 
 
840,371

 
 
(697,163)

 
 
(797,542)

 
(437)

 
 
1,105,685

 
 
4,978,572

 
 
4,749,114

 
 
(8,309,052)

 
(723)

 
 
2,570,066

 
 
6,023,460

 
 
7,362,451

 
 
(4,909,802)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(723)

 
 
2,570,066

 
 
6,023,460

 
 
7,362,451

 
 
(4,909,802)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
52,693

 
 
1,615,675

 
 
2,864,886

 
 
27,844,763

 
 
39,895,677

 
(4)

 
 
(13,308)

 
 
(13,980)

 
 
(453,229)

 
 
(529,368)

 
—

 
 
(3,904)

 
 
(8,253)

 
 
(135,527)

 
 
(157,531)

 
—

 
 
(3,825,292)

 
 
(5,024,275)

 
 
(23,038,674)

 
 
(25,488,711)

 
—

 
 
(328,687)

 
 
(709,236)

 
 
(975,504)

 
 
(1,190,731)

 
—

 
 
(621,682)

 
 
(625,647)

 
 
(4,266,564)

 
 
(4,632,691)

 
—

 
 
(945,275)

 
 
(1,867,013)

 
 
(27,083,716)

 
 
(37,560,967)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
52,689

 
 
(4,122,473)

 
 
(5,383,518)

 
 
(28,108,451)

 
 
(29,664,322)

 
51,966

 
 
(1,552,407)

 
 
639,942

 
 
(20,746,000)

 
 
(34,574,124)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
36,506,670

 
 
35,866,728

 
 
201,686,143

 
 
236,260,267

$
51,966

 
$
34,954,263

 
$
36,506,670

 
$
180,940,143

 
$
201,686,143


75



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert EAFE International Index Class F Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Increase (decrease) in net assets
 
 
 
Operations:
 
 
 
 
Net investment income (loss)
$
116

 
 
Total realized gains (losses) on investments
 
(1)

 
 
Change in net unrealized appreciation or depreciation of investments
 
(284)

 
 
Net gains (losses) from investments
 
(169)

 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(169)

 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
5,650

 
 
Administration charges
 
(1)

 
 
Contingent sales charges
 
—

 
 
Contract terminations
 
—

 
 
Death benefit payments
 
—

 
 
Flexible withdrawal option payments
 
—

 
 
Transfers to other contracts
 
—

 
 
Annuity payments
 
—

 
Increase (decrease) in net assets from policy related transactions
 
5,649

 
Total increase (decrease)
 
5,480

 
 
 
 
 
 
 
Net assets at beginning of period
 
—

 
Net assets at end of period
$
5,480

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.
(2) Commenced operations May 20, 2013.


See accompanying notes.
 
 
 
 

76



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert Russell 2000 Small Cap Index Class F Division (1)
 
Calvert S&P MidCap 400 Index Class F Division (1)
 
Delaware Small Cap Value Service Class Division (2)
 
 
 
 
 
 
 
 
2014
 
2014
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
51

 
$
178

 
$
(6,946)

 
$
(942)

 
2,374

 
 
2,812

 
 
50,553

 
 
129

 
(2,142)

 
 
(2,823)

 
 
(24,718)

 
 
18,467

 
283

 
 
167

 
 
18,889

 
 
17,654

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
283

 
 
167

 
 
18,889

 
 
17,654

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
21,184

 
 
35,556

 
 
805,377

 
 
254,157

 
(1)

 
 
(3)

 
 
(7)

 
 
—

 
—

 
 
—

 
 
(415)

 
 
(11)

 
—

 
 
—

 
 
(44,694)

 
 
(763)

 
—

 
 
—

 
 
(686)

 
 
—

 
—

 
 
—

 
 
(2,147)

 
 
(94)

 
—

 
 
—

 
 
(292,798)

 
 
(8,878)

 
—

 
 
—

 
 
—

 
 
—

 
21,183

 
 
35,553

 
 
464,630

 
 
244,411

 
21,466

 
 
35,720

 
 
483,519

 
 
262,065

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
262,065

 
 
—

$
21,466

 
$
35,720

 
$
745,584

 
$
262,065


77



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Balanced Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
(5,103,248)

 
$
(7,452,555)

 
 
Total realized gains (losses) on investments
 
17,226,049

 
 
13,272,702

 
 
Change in net unrealized appreciation or depreciation of investments
 
41,256,299

 
 
71,783,424

 
 
Net gains (losses) from investments
 
53,379,100

 
 
77,603,571

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
53,379,100

 
 
77,603,571

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
204,475,928

 
 
271,823,146

 
 
Administration charges
 
(8,816,823)

 
 
(6,857,010)

 
 
Contingent sales charges
 
(321,133)

 
 
(225,064)

 
 
Contract terminations
 
(29,923,921)

 
 
(15,802,606)

 
 
Death benefit payments
 
(4,446,014)

 
 
(1,817,652)

 
 
Flexible withdrawal option payments
 
(11,235,966)

 
 
(7,121,027)

 
 
Transfers to other contracts
 
(48,479,767)

 
 
(42,819,384)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
101,252,304

 
 
197,180,403

 
Total increase (decrease)
 
154,631,404

 
 
274,783,974

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
856,503,597

 
 
581,719,623

 
Net assets at end of period
$
1,011,135,001

 
$
856,503,597

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations December 2, 2013.


See accompanying notes.
 
 
 
 

78



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Balanced Managed Volatility Class 2 Division (1)
 
Diversified Growth Class 2 Division
 
Diversified Growth Managed Volatility Class 2 Division (1)
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(571,146)

 
$
(442)

 
$
(11,978,249)

 
$
(15,136,825)

 
$
(1,091,587)

 
$
(1,624)

 
69,141

 
 
2

 
 
40,149,285

 
 
17,790,727

 
 
166,250

 
 
1,546

 
2,805,987

 
 
7,207

 
 
129,051,299

 
 
248,211,765

 
 
5,573,416

 
 
46,239

 
2,303,982

 
 
6,767

 
 
157,222,335

 
 
250,865,667

 
 
4,648,079

 
 
46,161

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,303,982

 
 
6,767

 
 
157,222,335

 
 
250,865,667

 
 
4,648,079

 
 
46,161

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
85,991,855

 
 
870,582

 
 
707,153,835

 
 
835,748,039

 
 
151,901,026

 
 
3,935,060

 
(432,397)

 
 
(461)

 
 
(24,520,132)

 
 
(15,808,785)

 
 
(842,149)

 
 
(2,022)

 
(3,771)

 
 
—

 
 
(663,488)

 
 
(503,201)

 
 
(11,131)

 
 
—

 
(364,095)

 
 
—

 
 
(61,042,314)

 
 
(35,377,246)

 
 
(1,020,805)

 
 
—

 
(83,506)

 
 
—

 
 
(7,369,365)

 
 
(3,080,922)

 
 
—

 
 
—

 
(426,709)

 
 
—

 
 
(23,673,228)

 
 
(10,994,748)

 
 
(597,960)

 
 
—

 
(3,317,816)

 
 
(15)

 
 
(67,768,174)

 
 
(37,206,902)

 
 
(6,430,729)

 
 
(249)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
81,363,561

 
 
870,106

 
 
522,117,134

 
 
732,776,235

 
 
142,998,252

 
 
3,932,789

 
83,667,543

 
 
876,873

 
 
679,339,469

 
 
983,641,902

 
 
147,646,331

 
 
3,978,950

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
876,873

 
 
—

 
 
2,202,298,019

 
 
1,218,656,117

 
 
3,978,950

 
 
—

$
84,544,416

 
$
876,873

 
$
2,881,637,488

 
$
2,202,298,019

 
$
151,625,281

 
$
3,978,950


79



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Income Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
(1,183,394)

 
$
(1,028,146)

 
 
Total realized gains (losses) on investments
 
2,826,894

 
 
930,170

 
 
Change in net unrealized appreciation or depreciation of investments
 
5,516,168

 
 
5,186,608

 
 
Net gains (losses) from investments
 
7,159,668

 
 
5,088,632

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
7,159,668

 
 
5,088,632

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
88,489,565

 
 
81,818,875

 
 
Administration charges
 
(1,327,401)

 
 
(773,702)

 
 
Contingent sales charges
 
(66,865)

 
 
(48,957)

 
 
Contract terminations
 
(5,030,610)

 
 
(3,446,527)

 
 
Death benefit payments
 
(307,790)

 
 
(24,240)

 
 
Flexible withdrawal option payments
 
(1,893,484)

 
 
(835,855)

 
 
Transfers to other contracts
 
(30,584,567)

 
 
(24,488,064)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
49,278,848

 
 
52,201,530

 
Total increase (decrease)
 
56,438,516

 
 
57,290,162

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
112,080,682

 
 
54,790,520

 
Net assets at end of period
$
168,519,198

 
$
112,080,682

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

80



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified International Class 1 Division
 
Diversified International Class 2 Division (1)
 
Dreyfus Investment Portfolio Technology Growth Service Shares Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,403,412

 
$
2,740,914

 
$
(10)

 
$
(74,402)

 
$
(53,308)

 
2,123,040

 
 
(3,372,412)

 
 
—

 
 
601,919

 
 
167,341

 
(10,768,603)

 
 
29,465,643

 
 
(233)

 
 
(337,264)

 
 
901,028

 
(7,242,151)

 
 
28,834,145

 
 
(243)

 
 
190,253

 
 
1,015,061

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(7,242,151)

 
 
28,834,145

 
 
(243)

 
 
190,253

 
 
1,015,061

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18,781,531

 
 
16,841,519

 
 
26,250

 
 
2,026,813

 
 
1,364,853

 
(131,204)

 
 
(152,518)

 
 
(1)

 
 
(458)

 
 
(294)

 
(78,131)

 
 
(108,428)

 
 
—

 
 
(3,956)

 
 
(3,814)

 
(21,015,046)

 
 
(22,904,761)

 
 
—

 
 
(381,970)

 
 
(268,507)

 
(934,159)

 
 
(724,731)

 
 
—

 
 
(35,378)

 
 
—

 
(1,745,516)

 
 
(1,814,928)

 
 
—

 
 
(33,686)

 
 
(31,369)

 
(16,641,375)

 
 
(19,304,059)

 
 
—

 
 
(1,326,074)

 
 
(770,783)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
(21,763,900)

 
 
(28,167,906)

 
 
26,249

 
 
245,291

 
 
290,086

 
(29,006,051)

 
 
666,239

 
 
26,006

 
 
435,544

 
 
1,305,147

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
183,014,987

 
 
182,348,748

 
 
—

 
 
4,605,048

 
 
3,299,901

$
154,008,936

 
$
183,014,987

 
$
26,006

 
$
5,040,592

 
$
4,605,048


81



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Alternative Asset Allocation Class B Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Increase (decrease) in net assets
 
 
 
Operations:
 
 
 
 
Net investment income (loss)
$
—

 
 
Total realized gains (losses) on investments
 
—

 
 
Change in net unrealized appreciation or depreciation of investments
 
—

 
 
Net gains (losses) from investments
 
—

 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
—

 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
—

 
 
Administration charges
 
—

 
 
Contingent sales charges
 
—

 
 
Contract terminations
 
—

 
 
Death benefit payments
 
—

 
 
Flexible withdrawal option payments
 
—

 
 
Transfers to other contracts
 
—

 
 
Annuity payments
 
—

 
Increase (decrease) in net assets from policy related transactions
 
—

 
Total increase (decrease)
 
—

 
 
 
 
 
 
 
Net assets at beginning of period
 
—

 
Net assets at end of period
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.
(2) Commenced operations May 20, 2013.


See accompanying notes.
 
 
 
 

82



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Equity 500 Index Class B2 Division (1)
 
DWS Small Mid Cap Value Class B
Division (2)
 
Equity Income Class 1 Division
 
 
 
 
 
 
 
 
2014
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(38)

 
$
(4,637)

 
$
(578)

 
$
2,471,246

 
$
4,900,116

 
—

 
 
6,238

 
 
(5)

 
 
21,436,943

 
 
5,435,449

 
776

 
 
18,717

 
 
13,077

 
 
5,170,721

 
 
56,391,519

 
738

 
 
20,318

 
 
12,494

 
 
29,078,910

 
 
66,727,084

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
738

 
 
20,318

 
 
12,494

 
 
29,078,910

 
 
66,727,084

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
58,505

 
 
469,603

 
 
147,241

 
 
31,779,340

 
 
34,160,205

 
(4)

 
 
—

 
 
—

 
 
(998,503)

 
 
(1,205,871)

 
—

 
 
(145)

 
 
—

 
 
(262,012)

 
 
(259,977)

 
—

 
 
(13,984)

 
 
—

 
 
(32,445,348)

 
 
(25,890,673)

 
—

 
 
—

 
 
—

 
 
(1,887,061)

 
 
(1,497,481)

 
—

 
 
(535)

 
 
—

 
 
(6,229,853)

 
 
(6,334,731)

 
—

 
 
(6,630)

 
 
(13,314)

 
 
(53,668,427)

 
 
(55,096,787)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
58,501

 
 
448,309

 
 
133,927

 
 
(63,711,864)

 
 
(56,125,315)

 
59,239

 
 
468,627

 
 
146,421

 
 
(34,632,954)

 
 
10,601,769

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
146,421

 
 
—

 
 
293,599,834

 
 
282,998,065

$
59,239

 
$
615,048

 
$
146,421

 
$
258,966,880

 
$
293,599,834


83



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Income Class 2 Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Increase (decrease) in net assets
 
 
 
Operations:
 
 
 
 
Net investment income (loss)
$
(56)

 
 
Total realized gains (losses) on investments
 
—

 
 
Change in net unrealized appreciation or depreciation of investments
 
1,334

 
 
Net gains (losses) from investments
 
1,278

 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
1,278

 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
79,875

 
 
Administration charges
 
(8)

 
 
Contingent sales charges
 
—

 
 
Contract terminations
 
—

 
 
Death benefit payments
 
—

 
 
Flexible withdrawal option payments
 
—

 
 
Transfers to other contracts
 
—

 
 
Annuity payments
 
—

 
Increase (decrease) in net assets from policy related transactions
 
79,867

 
Total increase (decrease)
 
81,145

 
 
 
 
 
 
 
Net assets at beginning of period
 
—

 
Net assets at end of period
$
81,145

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

84



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Contrafund Service Class Division
 
Fidelity VIP Contrafund Service Class 2 Division
 
Fidelity VIP Equity-Income Service Class 2 Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(236,480)

 
$
(175,397)

 
$
(417,871)

 
$
(323,190)

 
$
457,675

 
$
330,337

 
3,370,695

 
 
1,496,741

 
 
2,687,837

 
 
535,422

 
 
872,820

 
 
2,460,377

 
1,670,519

 
 
11,345,847

 
 
2,939,300

 
 
13,331,309

 
 
1,250,674

 
 
6,221,646

 
4,804,734

 
 
12,667,191

 
 
5,209,266

 
 
13,543,541

 
 
2,581,169

 
 
9,012,360

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,804,734

 
 
12,667,191

 
 
5,209,266

 
 
13,543,541

 
 
2,581,169

 
 
9,012,360

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2,487,812

 
 
3,900,598

 
 
9,210,767

 
 
6,028,034

 
 
3,512,477

 
 
5,669,130

 
(10,159)

 
 
(10,810)

 
 
(128,019)

 
 
(145,409)

 
 
(6,690)

 
 
(7,870)

 
(7,420)

 
 
(14,910)

 
 
(48,448)

 
 
(49,561)

 
 
(17,558)

 
 
(26,544)

 
(6,018,328)

 
 
(7,600,179)

 
 
(4,677,758)

 
 
(3,489,034)

 
 
(4,752,614)

 
 
(6,216,860)

 
(210,974)

 
 
(194,550)

 
 
(554,403)

 
 
(65,325)

 
 
(210,028)

 
 
(169,676)

 
(537,444)

 
 
(527,386)

 
 
(768,536)

 
 
(782,597)

 
 
(397,723)

 
 
(407,039)

 
(3,444,101)

 
 
(4,327,259)

 
 
(8,941,072)

 
 
(8,374,845)

 
 
(2,873,880)

 
 
(5,098,409)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
(7,740,614)

 
 
(8,774,496)

 
 
(5,907,469)

 
 
(6,878,737)

 
 
(4,746,016)

 
 
(6,257,268)

 
(2,935,880)

 
 
3,892,695

 
 
(698,203)

 
 
6,664,804

 
 
(2,164,847)

 
 
2,755,092

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
51,075,598

 
 
47,182,903

 
 
55,839,729

 
 
49,174,925

 
 
39,708,357

 
 
36,953,265

$
48,139,718

 
$
51,075,598

 
$
55,141,526

 
$
55,839,729

 
$
37,543,510

 
$
39,708,357


85



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Growth Service Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
(194,960)

 
$
(169,084)

 
 
Total realized gains (losses) on investments
 
1,066,857

 
 
457,357

 
 
Change in net unrealized appreciation or depreciation of investments
 
627,231

 
 
4,285,177

 
 
Net gains (losses) from investments
 
1,499,128

 
 
4,573,450

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
1,499,128

 
 
4,573,450

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
754,685

 
 
1,182,465

 
 
Administration charges
 
(4,015)

 
 
(3,137)

 
 
Contingent sales charges
 
(2,434)

 
 
(4,095)

 
 
Contract terminations
 
(1,973,920)

 
 
(2,087,351)

 
 
Death benefit payments
 
(269,572)

 
 
(123,544)

 
 
Flexible withdrawal option payments
 
(152,175)

 
 
(146,602)

 
 
Transfers to other contracts
 
(1,304,407)

 
 
(1,301,322)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(2,951,838)

 
 
(2,483,586)

 
Total increase (decrease)
 
(1,452,710)

 
 
2,089,864

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
16,637,391

 
 
14,547,527

 
Net assets at end of period
$
15,184,681

 
$
16,637,391

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations May 17, 2014.


See accompanying notes.
 
 
 
 

86



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Growth Service Class 2 Division
 
Fidelity VIP Mid Cap Service Class
Division (1)
 
Fidelity VIP Mid Cap Service Class 2 Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(136,449)

 
$
(108,034)

 
$
(167)

 
$
(242,325)

 
$
(141,028)

 
653,557

 
 
307,658

 
 
541

 
 
921,737

 
 
2,206,907

 
258,174

 
 
1,986,013

 
 
803

 
 
71,824

 
 
1,625,887

 
775,282

 
 
2,185,637

 
 
1,177

 
 
751,236

 
 
3,691,766

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
775,282

 
 
2,185,637

 
 
1,177

 
 
751,236

 
 
3,691,766

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,479,922

 
 
1,182,478

 
 
70,000

 
 
5,110,604

 
 
3,437,254

 
(1,314)

 
 
(1,216)

 
 
—

 
 
(1,449)

 
 
(1,425)

 
(11,418)

 
 
(10,047)

 
 
—

 
 
(16,516)

 
 
(11,827)

 
(1,102,425)

 
 
(707,295)

 
 
—

 
 
(1,594,709)

 
 
(832,639)

 
(3,814)

 
 
(28,359)

 
 
—

 
 
(20,631)

 
 
(7,359)

 
(36,420)

 
 
(27,687)

 
 
—

 
 
(102,057)

 
 
(85,440)

 
(2,004,111)

 
 
(913,419)

 
 
—

 
 
(1,494,401)

 
 
(1,721,737)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
320,420

 
 
(505,545)

 
 
70,000

 
 
1,880,841

 
 
776,827

 
1,095,702

 
 
1,680,092

 
 
71,177

 
 
2,632,077

 
 
4,468,593

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,345,883

 
 
6,665,791

 
 
—

 
 
15,323,458

 
 
10,854,865

$
9,441,585

 
$
8,345,883

 
$
71,177

 
$
17,955,535

 
$
15,323,458


87



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Overseas Service Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
(191,950)

 
$
(162,246)

 
 
Total realized gains (losses) on investments
 
(196,348)

 
 
(1,000,217)

 
 
Change in net unrealized appreciation or depreciation of investments
 
(3,762,189)

 
 
12,489,974

 
 
Net gains (losses) from investments
 
(4,150,487)

 
 
11,327,511

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(4,150,487)

 
 
11,327,511

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
10,194,179

 
 
4,762,307

 
 
Administration charges
 
(160,352)

 
 
(195,191)

 
 
Contingent sales charges
 
(49,635)

 
 
(50,954)

 
 
Contract terminations
 
(4,792,388)

 
 
(3,587,130)

 
 
Death benefit payments
 
(181,974)

 
 
(185,766)

 
 
Flexible withdrawal option payments
 
(845,535)

 
 
(841,138)

 
 
Transfers to other contracts
 
(8,034,475)

 
 
(9,527,285)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(3,870,180)

 
 
(9,625,157)

 
Total increase (decrease)
 
(8,020,667)

 
 
1,702,354

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
45,762,035

 
 
44,059,681

 
Net assets at end of period
$
37,741,368

 
$
45,762,035

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.
(2) Represented the operations of Franklin Small Cap Value Securities Class 2 Division May 17, 2014.


See accompanying notes.                                                                         
 
 
 
 

88



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Global Real Estate VIP Class 2 Division (1)
 
Franklin Rising Dividends VIP Class 4 Division (1)
 
Franklin Small Cap Value VIP Class 2 Division (2)
 
 
 
 
 
 
 
 
2014
 
2014
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(23)

 
$
(46)

 
$
(29,743)

 
$
(4,820)

 
—

 
 
502

 
 
529,980

 
 
239,390

 
69

 
 
595

 
 
(547,683)

 
 
515,433

 
46

 
 
1,051

 
 
(47,446)

 
 
750,003

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
46

 
 
1,051

 
 
(47,446)

 
 
750,003

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
41,465

 
 
70,331

 
 
1,346,893

 
 
2,014,923

 
(1)

 
 
(2)

 
 
(183)

 
 
(226)

 
—

 
 
—

 
 
(2,891)

 
 
(1,820)

 
—

 
 
—

 
 
(328,142)

 
 
(128,714)

 
—

 
 
—

 
 
(23,159)

 
 
—

 
—

 
 
—

 
 
(8,950)

 
 
(4,916)

 
—

 
 
—

 
 
(853,228)

 
 
(1,125,032)

 
—

 
 
—

 
 
—

 
 
—

 
41,464

 
 
70,329

 
 
130,340

 
 
754,215

 
41,510

 
 
71,380

 
 
82,894

 
 
1,504,218

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
3,494,447

 
 
1,990,229

$
41,510

 
$
71,380

 
$
3,577,341

 
$
3,494,447


89



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Mid Cap Value Institutional Shares Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
(94,635)

 
$
(108,492)

 
 
Total realized gains (losses) on investments
 
3,778,415

 
 
1,786,824

 
 
Change in net unrealized appreciation or depreciation of investments
 
(1,635,687)

 
 
2,866,707

 
 
Net gains (losses) from investments
 
2,048,093

 
 
4,545,039

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
2,048,093

 
 
4,545,039

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
5,232,222

 
 
2,340,951

 
 
Administration charges
 
(1,732)

 
 
(1,727)

 
 
Contingent sales charges
 
(22,162)

 
 
(22,397)

 
 
Contract terminations
 
(2,147,707)

 
 
(1,577,057)

 
 
Death benefit payments
 
(60,524)

 
 
(55,533)

 
 
Flexible withdrawal option payments
 
(122,263)

 
 
(121,185)

 
 
Transfers to other contracts
 
(4,398,344)

 
 
(2,810,600)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(1,520,510)

 
 
(2,247,548)

 
Total increase (decrease)
 
527,583

 
 
2,297,491

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
18,015,044

 
 
15,717,553

 
Net assets at end of period
$
18,542,627

 
$
18,015,044

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.
(2) Represented the operations of Goldman Sachs VIT Structured Small Cap Equity Service Class I Division until May 17, 2014.


See accompanying notes.
 
 
 
 

90



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Mid Cap Value Service Shares Division (1)
 
Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division (2)
 
Goldman Sachs VIT Small Cap Equity Insights Service Shares Division (1)
 
 
 
 
 
 
 
 
2014
 
2014
 
2013
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
64

 
$
(49,658)

 
$
(30,338)

 
$
21

 
363

 
 
1,388,802

 
 
1,376,492

 
 
733

 
7

 
 
(984,276)

 
 
545,201

 
 
(554)

 
434

 
 
354,868

 
 
1,891,355

 
 
200

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
434

 
 
354,868

 
 
1,891,355

 
 
200

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17,029

 
 
1,391,718

 
 
1,098,323

 
 
4,978

 
(1)

 
 
(220)

 
 
(151)

 
 
—

 
—

 
 
(5,518)

 
 
(8,533)

 
 
—

 
—

 
 
(532,771)

 
 
(600,708)

 
 
—

 
—

 
 
(132,235)

 
 
(11,729)

 
 
—

 
—

 
 
(46,428)

 
 
(44,986)

 
 
—

 
—

 
 
(1,215,324)

 
 
(1,027,668)

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
17,028

 
 
(540,778)

 
 
(595,452)

 
 
4,978

 
17,462

 
 
(185,910)

 
 
1,295,903

 
 
5,178

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
7,163,725

 
 
5,867,822

 
 
—

$
17,462

 
$
6,977,815

 
$
7,163,725

 
$
5,178


91



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government & High Quality Bond Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
3,598,886

 
$
4,471,980

 
 
Total realized gains (losses) on investments
 
(203,842)

 
 
304,154

 
 
Change in net unrealized appreciation or depreciation of investments
 
2,078,450

 
 
(9,029,643)

 
 
Net gains (losses) from investments
 
5,473,494

 
 
(4,253,509)

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
5,473,494

 
 
(4,253,509)

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
18,915,882

 
 
27,222,387

 
 
Administration charges
 
(222,428)

 
 
(254,016)

 
 
Contingent sales charges
 
(72,910)

 
 
(91,407)

 
 
Contract terminations
 
(18,735,952)

 
 
(20,550,032)

 
 
Death benefit payments
 
(1,334,777)

 
 
(1,338,626)

 
 
Flexible withdrawal option payments
 
(3,288,604)

 
 
(3,905,842)

 
 
Transfers to other contracts
 
(19,320,034)

 
 
(33,050,827)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(24,058,823)

 
 
(31,968,363)

 
Total increase (decrease)
 
(18,585,329)

 
 
(36,221,872)

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
159,943,979

 
 
196,165,851

 
Net assets at end of period
$
141,358,650

 
$
159,943,979

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

92



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government & High Quality Bond Class 2 Division (1)
 
Guggenheim Floating Rate Strategies Series F Division (1)
 
Guggenheim Global Management Futures Strategy Division (1)
 
 
 
 
 
 
 
 
2014
 
2014
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(14)

 
$
(14)

 
$
(6)

 
(12)

 
 
—

 
 
—

 
18

 
 
(75)

 
 
337

 
(8)

 
 
(89)

 
 
331

 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
(8)

 
 
(89)

 
 
331

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
19,934

 
 
12,997

 
 
21,000

 
(2)

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
19,932

 
 
12,997

 
 
21,000

 
19,924

 
 
12,908

 
 
21,331

 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

$
19,924

 
$
12,908

 
$
21,331


93



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Long Short Equity
Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Increase (decrease) in net assets
 
 
 
Operations:
 
 
 
 
Net investment income (loss)
$
(15)

 
 
Total realized gains (losses) on investments
 
—

 
 
Change in net unrealized appreciation or depreciation of investments
 
—

 
 
Net gains (losses) from investments
 
(15)

 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(15)

 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
42,874

 
 
Administration charges
 
—

 
 
Contingent sales charges
 
—

 
 
Contract terminations
 
—

 
 
Death benefit payments
 
—

 
 
Flexible withdrawal option payments
 
—

 
 
Transfers to other contracts
 
—

 
 
Annuity payments
 
—

 
Increase (decrease) in net assets from policy related transactions
 
42,874

 
Total increase (decrease)
 
42,859

 
 
 
 
 
 
 
Net assets at beginning of period
 
—

 
Net assets at end of period
$
42,859

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

94



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Investments Multi-Hedge Strategies Division (1)
 
Guggenheim Macro Opportunities
Series M
Division (1)
 
International Emerging Markets Class 1 Division
 
 
 
 
 
 
 
 
2014
 
2014
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(6)

 
$
(1)

 
$
(353,629)

 
$
773,585

 
—

 
 
(6)

 
 
(1,258,213)

 
 
(786,418)

 
115

 
 
—

 
 
(1,840,421)

 
 
(4,916,429)

 
109

 
 
(7)

 
 
(3,452,263)

 
 
(4,929,262)

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
109

 
 
(7)

 
 
(3,452,263)

 
 
(4,929,262)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,761

 
 
7

 
 
12,499,886

 
 
16,654,206

 
(1)

 
 
—

 
 
(9,693)

 
 
(11,881)

 
—

 
 
—

 
 
(45,835)

 
 
(62,021)

 
—

 
 
—

 
 
(8,523,548)

 
 
(9,994,501)

 
—

 
 
—

 
 
(344,250)

 
 
(241,483)

 
—

 
 
—

 
 
(478,249)

 
 
(505,137)

 
—

 
 
—

 
 
(10,379,824)

 
 
(12,234,290)

 
—

 
 
—

 
 
—

 
 
—

 
7,760

 
 
7

 
 
(7,281,513)

 
 
(6,395,107)

 
7,869

 
 
—

 
 
(10,733,776)

 
 
(11,324,369)

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
74,988,427

 
 
86,312,796

$
7,869

 
$
—

 
$
64,254,651

 
$
74,988,427


95



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco American Franchise Series I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
(59,847)

 
$
(39,680)

 
 
Total realized gains (losses) on investments
 
290,027

 
 
114,082

 
 
Change in net unrealized appreciation or depreciation of investments
 
76,495

 
 
1,455,481

 
 
Net gains (losses) from investments
 
306,675

 
 
1,529,883

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
306,675

 
 
1,529,883

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
221,988

 
 
299,690

 
 
Administration charges
 
(1,074)

 
 
(1,069)

 
 
Contingent sales charges
 
(627)

 
 
(1,233)

 
 
Contract terminations
 
(508,232)

 
 
(628,479)

 
 
Death benefit payments
 
(42,280)

 
 
(55,717)

 
 
Flexible withdrawal option payments
 
(51,427)

 
 
(49,643)

 
 
Transfers to other contracts
 
(478,140)

 
 
(365,709)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(859,792)

 
 
(802,160)

 
Total increase (decrease)
 
(553,117)

 
 
727,723

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
5,160,121

 
 
4,432,398

 
Net assets at end of period
$
4,607,004

 
$
5,160,121

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

96



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Balanced-Risk Allocation Series II Division (1)
 
Invesco Core Equity Series I Division
 
Invesco Global Health Care Series I Division
 
 
 
 
 
 
 
 
2014
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
(105,817)

 
$
14,885

 
$
(135,465)

 
$
(55,346)

 
—

 
 
1,614,298

 
 
1,222,944

 
 
1,529,755

 
 
803,614

 
—

 
 
(7,629)

 
 
4,405,622

 
 
294,532

 
 
2,224,613

 
—

 
 
1,500,852

 
 
5,643,451

 
 
1,688,822

 
 
2,972,881

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
1,500,852

 
 
5,643,451

 
 
1,688,822

 
 
2,972,881

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
1,230,692

 
 
969,204

 
 
1,709,369

 
 
3,331,626

 
—

 
 
(4,519)

 
 
(5,476)

 
 
(2,385)

 
 
(2,339)

 
—

 
 
(3,310)

 
 
(6,088)

 
 
(1,358)

 
 
(2,482)

 
—

 
 
(2,685,101)

 
 
(3,103,624)

 
 
(1,101,342)

 
 
(1,265,387)

 
—

 
 
(245,338)

 
 
(163,999)

 
 
(48,851)

 
 
(55,203)

 
—

 
 
(313,019)

 
 
(322,660)

 
 
(149,142)

 
 
(132,761)

 
—

 
 
(1,606,399)

 
 
(1,651,257)

 
 
(1,656,924)

 
 
(1,914,008)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
(3,626,994)

 
 
(4,283,900)

 
 
(1,250,633)

 
 
(40,554)

 
—

 
 
(2,126,142)

 
 
1,359,551

 
 
438,189

 
 
2,932,327

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
23,622,775

 
 
22,263,224

 
 
10,479,072

 
 
7,546,745

$
—

 
$
21,496,633

 
$
23,622,775

 
$
10,917,261

 
$
10,479,072


97



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Global Health Care Series II
Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Increase (decrease) in net assets
 
 
 
Operations:
 
 
 
 
Net investment income (loss)
$
(46)

 
 
Total realized gains (losses) on investments
 
237

 
 
Change in net unrealized appreciation or depreciation of investments
 
(397)

 
 
Net gains (losses) from investments
 
(206)

 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(206)

 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
71,609

 
 
Administration charges
 
(3)

 
 
Contingent sales charges
 
—

 
 
Contract terminations
 
—

 
 
Death benefit payments
 
—

 
 
Flexible withdrawal option payments
 
—

 
 
Transfers to other contracts
 
—

 
 
Annuity payments
 
—

 
Increase (decrease) in net assets from policy related transactions
 
71,606

 
Total increase (decrease)
 
71,400

 
 
 
 
 
 
 
Net assets at beginning of period
 
—

 
Net assets at end of period
$
71,400

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

98



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco International Growth Series I Division
 
Invesco International Growth Series II Division (1)
 
Invesco Mid Cap Growth Series I Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
23,783

 
$
(964)

 
$
(24)

 
$
(21,473)

 
$
(14,072)

 
337,819

 
 
163,042

 
 
(220)

 
 
375,481

 
 
(120,251)

 
(512,905)

 
 
1,131,331

 
 
(76)

 
 
(250,833)

 
 
589,044

 
(151,303)

 
 
1,293,409

 
 
(320)

 
 
103,175

 
 
454,721

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(151,303)

 
 
1,293,409

 
 
(320)

 
 
103,175

 
 
454,721

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,896,646

 
 
2,695,801

 
 
32,552

 
 
235,114

 
 
372,542

 
(23,486)

 
 
(24,600)

 
 
(2)

 
 
(252)

 
 
(330)

 
(7,339)

 
 
(4,706)

 
 
—

 
 
(239)

 
 
(837)

 
(708,622)

 
 
(331,272)

 
 
—

 
 
(193,773)

 
 
(426,668)

 
(48,573)

 
 
(19,991)

 
 
—

 
 
(12,755)

 
 
(2,398)

 
(60,613)

 
 
(55,607)

 
 
—

 
 
(17,669)

 
 
(14,499)

 
(1,324,604)

 
 
(1,698,586)

 
 
—

 
 
(231,937)

 
 
(299,762)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
1,723,409

 
 
561,039

 
 
32,550

 
 
(221,511)

 
 
(371,952)

 
1,572,106

 
 
1,854,448

 
 
32,230

 
 
(118,336)

 
 
82,769

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,853,384

 
 
6,998,936

 
 
—

 
 
1,672,057

 
 
1,589,288

$
10,425,490

 
$
8,853,384

 
$
32,230

 
$
1,553,721

 
$
1,672,057


99



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Small Cap Equity Series I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
(137,584)

 
$
(130,668)

 
 
Total realized gains (losses) on investments
 
1,642,728

 
 
982,539

 
 
Change in net unrealized appreciation or depreciation of investments
 
(1,438,151)

 
 
2,058,859

 
 
Net gains (losses) from investments
 
66,993

 
 
2,910,730

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
66,993

 
 
2,910,730

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
1,691,034

 
 
2,023,949

 
 
Administration charges
 
(10,869)

 
 
(11,817)

 
 
Contingent sales charges
 
(5,584)

 
 
(6,105)

 
 
Contract terminations
 
(925,774)

 
 
(974,488)

 
 
Death benefit payments
 
(60,353)

 
 
(20,190)

 
 
Flexible withdrawal option payments
 
(91,960)

 
 
(93,222)

 
 
Transfers to other contracts
 
(1,958,863)

 
 
(1,707,831)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(1,362,369)

 
 
(789,704)

 
Total increase (decrease)
 
(1,295,376)

 
 
2,121,026

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
10,622,696

 
 
8,501,670

 
Net assets at end of period
$
9,327,320

 
$
10,622,696

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 

100



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Technology Series I Division
 
Invesco Value Opportunities Series I Division
 
Janus Aspen Enterprise Service Shares Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(47,568)

 
$
(42,645)

 
$
(7,116)

 
$
2,014

 
$
(118,714)

 
$
(87,817)

 
540,002

 
 
654,013

 
 
357,914

 
 
335,007

 
 
1,502,811

 
 
1,023,234

 
(177,191)

 
 
82,670

 
 
(76,879)

 
 
1,099,438

 
 
(428,379)

 
 
1,599,808

 
315,243

 
 
694,038

 
 
273,919

 
 
1,436,459

 
 
955,718

 
 
2,535,225

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
315,243

 
 
694,038

 
 
273,919

 
 
1,436,459

 
 
955,718

 
 
2,535,225

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
816,865

 
 
679,213

 
 
636,415

 
 
931,326

 
 
312,129

 
 
1,097,137

 
(352)

 
 
(354)

 
 
(19,404)

 
 
(20,514)

 
 
(2,494)

 
 
(2,697)

 
(318)

 
 
(838)

 
 
(2,892)

 
 
(4,315)

 
 
(1,169)

 
 
(3,029)

 
(258,213)

 
 
(427,236)

 
 
(279,217)

 
 
(303,766)

 
 
(948,308)

 
 
(1,544,086)

 
(3,379)

 
 
(2,639)

 
 
(20,338)

 
 
(7,806)

 
 
(21,439)

 
 
(51,440)

 
(41,124)

 
 
(27,379)

 
 
(63,939)

 
 
(63,298)

 
 
(54,608)

 
 
(58,803)

 
(481,811)

 
 
(839,748)

 
 
(842,922)

 
 
(884,264)

 
 
(667,269)

 
 
(1,125,140)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
31,668

 
 
(618,981)

 
 
(592,297)

 
 
(352,637)

 
 
(1,383,158)

 
 
(1,688,058)

 
346,911

 
 
75,057

 
 
(318,378)

 
 
1,083,822

 
 
(427,440)

 
 
847,167

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,425,535

 
 
3,350,478

 
 
5,665,937

 
 
4,582,115

 
 
9,930,569

 
 
9,083,402

$
3,772,446

 
$
3,425,535

 
$
5,347,559

 
$
5,665,937

 
$
9,503,129

 
$
9,930,569


101



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Janus Aspen Flexible Bond Service Shares Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Increase (decrease) in net assets
 
 
 
Operations:
 
 
 
 
Net investment income (loss)
$
316

 
 
Total realized gains (losses) on investments
 
(260)

 
 
Change in net unrealized appreciation or depreciation of investments
 
(77)

 
 
Net gains (losses) from investments
 
(21)

 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(21)

 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
72,683

 
 
Administration charges
 
(4)

 
 
Contingent sales charges
 
—

 
 
Contract terminations
 
—

 
 
Death benefit payments
 
—

 
 
Flexible withdrawal option payments
 
—

 
 
Transfers to other contracts
 
—

 
 
Annuity payments
 
—

 
Increase (decrease) in net assets from policy related transactions
 
72,679

 
Total increase (decrease)
 
72,658

 
 
 
 
 
 
 
Net assets at beginning of period
 
—

 
Net assets at end of period
$
72,658

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

102



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Blend II Class 1 Division
 
LargeCap Blend II Class 2 Division (1)
 
LargeCap Growth Class 1 Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(248,147)

 
$
9,129

 
$
—

 
$
(398,873)

 
$
101,618

 
2,749,207

 
 
(1,917,902)

 
 
—

 
 
4,042,057

 
 
3,119,062

 
9,029,903

 
 
37,257,959

 
 
—

 
 
1,327,791

 
 
11,305,021

 
11,530,963

 
 
35,349,186

 
 
—

 
 
4,970,975

 
 
14,525,701

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
11,530,963

 
 
35,349,186

 
 
—

 
 
4,970,975

 
 
14,525,701

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12,209,412

 
 
10,616,163

 
 
—

 
 
6,099,882

 
 
5,967,596

 
(361,951)

 
 
(436,445)

 
 
—

 
 
(40,340)

 
 
(41,114)

 
(108,967)

 
 
(114,829)

 
 
—

 
 
(20,968)

 
 
(21,715)

 
(15,565,521)

 
 
(13,896,972)

 
 
—

 
 
(8,451,196)

 
 
(8,453,832)

 
(746,766)

 
 
(515,086)

 
 
—

 
 
(526,612)

 
 
(351,611)

 
(2,493,690)

 
 
(2,543,032)

 
 
—

 
 
(666,129)

 
 
(663,757)

 
(21,474,149)

 
 
(25,390,625)

 
 
—

 
 
(3,418,017)

 
 
(3,452,788)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
(28,541,632)

 
 
(32,280,826)

 
 
—

 
 
(7,023,380)

 
 
(7,017,221)

 
(17,010,669)

 
 
3,068,360

 
 
—

 
 
(2,052,405)

 
 
7,508,480

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
135,701,373

 
 
132,633,013

 
 
—

 
 
55,521,900

 
 
48,013,420

$
118,690,704

 
$
135,701,373

 
$
—

 
$
53,469,495

 
$
55,521,900


103



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth Class 2 Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Increase (decrease) in net assets
 
 
 
Operations:
 
 
 
 
Net investment income (loss)
$
(8)

 
 
Total realized gains (losses) on investments
 
(46)

 
 
Change in net unrealized appreciation or depreciation of investments
 
(73)

 
 
Net gains (losses) from investments
 
(127)

 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(127)

 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
6,102

 
 
Administration charges
 
(1)

 
 
Contingent sales charges
 
—

 
 
Contract terminations
 
—

 
 
Death benefit payments
 
—

 
 
Flexible withdrawal option payments
 
—

 
 
Transfers to other contracts
 
—

 
 
Annuity payments
 
—

 
Increase (decrease) in net assets from policy related transactions
 
6,101

 
Total increase (decrease)
 
5,974

 
 
 
 
 
 
 
Net assets at beginning of period
 
—

 
Net assets at end of period
$
5,974

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

104



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth I Class 1 Division
 
LargeCap S&P 500 Index Class 1 Division
 
LargeCap Value Class 1 Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(1,315,545)

 
$
(958,234)

 
$
(87,857)

 
$
(69,089)

 
$
881,390

 
$
1,185,391

 
27,667,480

 
 
9,638,907

 
 
8,026,434

 
 
4,518,457

 
 
16,211,853

 
 
1,162,324

 
(18,840,451)

 
 
22,384,228

 
 
3,249,988

 
 
20,455,869

 
 
(8,506,475)

 
 
20,967,543

 
7,511,484

 
 
31,064,901

 
 
11,188,565

 
 
24,905,237

 
 
8,586,768

 
 
23,315,258

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,511,484

 
 
31,064,901

 
 
11,188,565

 
 
24,905,237

 
 
8,586,768

 
 
23,315,258

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,206,865

 
 
8,351,296

 
 
12,948,268

 
 
12,730,081

 
 
7,323,348

 
 
8,208,233

 
(34,261)

 
 
(36,084)

 
 
(78,673)

 
 
(84,151)

 
 
(80,393)

 
 
(87,281)

 
(25,671)

 
 
(37,032)

 
 
(41,253)

 
 
(50,840)

 
 
(24,385)

 
 
(31,891)

 
(10,905,256)

 
 
(12,445,589)

 
 
(11,230,074)

 
 
(10,199,220)

 
 
(10,408,631)

 
 
(10,078,969)

 
(584,928)

 
 
(621,243)

 
 
(309,060)

 
 
(409,167)

 
 
(985,462)

 
 
(777,249)

 
(1,036,617)

 
 
(975,229)

 
 
(1,338,106)

 
 
(1,291,000)

 
 
(1,314,265)

 
 
(1,257,940)

 
(7,423,740)

 
 
(7,967,738)

 
 
(9,965,557)

 
 
(10,239,324)

 
 
(7,136,991)

 
 
(8,094,644)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
(12,803,608)

 
 
(13,731,619)

 
 
(10,014,455)

 
 
(9,543,621)

 
 
(12,626,779)

 
 
(12,119,741)

 
(5,292,124)

 
 
17,333,282

 
 
1,174,110

 
 
15,361,616

 
 
(4,040,011)

 
 
11,195,517

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
114,517,790

 
 
97,184,508

 
 
101,189,377

 
 
85,827,761

 
 
95,525,368

 
 
84,329,851

$
109,225,666

 
$
114,517,790

 
$
102,363,487

 
$
101,189,377

 
$
91,485,357

 
$
95,525,368


105



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT International Value Service Class
Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Increase (decrease) in net assets
 
 
 
Operations:
 
 
 
 
Net investment income (loss)
$
(53)

 
 
Total realized gains (losses) on investments
 
(233)

 
 
Change in net unrealized appreciation or depreciation of investments
 
(582)

 
 
Net gains (losses) from investments
 
(868)

 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(868)

 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
61,956

 
 
Administration charges
 
(4)

 
 
Contingent sales charges
 
—

 
 
Contract terminations
 
—

 
 
Death benefit payments
 
—

 
 
Flexible withdrawal option payments
 
—

 
 
Transfers to other contracts
 
—

 
 
Annuity payments
 
—

 
Increase (decrease) in net assets from policy related transactions
 
61,952

 
Total increase (decrease)
 
61,084

 
 
 
 
 
 
 
Net assets at beginning of period
 
—

 
Net assets at end of period
$
61,084

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.
(2) Commenced operations May 20, 2013.


See accompanying notes.
 
 
 
 

106



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT New Discovery Service Class Division (2)
 
MFS VIT Utilities Service Class Division
 
MFS VIT Value Service Class Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(12,342)

 
$
(2,063)

 
$
62,535

 
$
46,295

 
$
(7,029)

 
$
(11,220)

 
153,886

 
 
2,968

 
 
980,596

 
 
443,292

 
 
425,175

 
 
255,574

 
(212,134)

 
 
42,211

 
 
(93,732)

 
 
632,778

 
 
(7,797)

 
 
755,665

 
(70,590)

 
 
43,116

 
 
949,399

 
 
1,122,365

 
 
410,349

 
 
1,000,019

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(70,590)

 
 
43,116

 
 
949,399

 
 
1,122,365

 
 
410,349

 
 
1,000,019

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
743,637

 
 
647,917

 
 
6,322,669

 
 
5,465,498

 
 
1,423,174

 
 
2,942,627

 
(17)

 
 
—

 
 
(665)

 
 
(828)

 
 
(60)

 
 
(60)

 
(516)

 
 
(38)

 
 
(5,339)

 
 
(7,742)

 
 
(4,289)

 
 
(2,882)

 
(97,304)

 
 
(2,642)

 
 
(515,510)

 
 
(545,050)

 
 
(414,160)

 
 
(202,882)

 
(306)

 
 
(6,731)

 
 
(96,829)

 
 
(8,606)

 
 
(29,188)

 
 
—

 
(5,371)

 
 
(1,398)

 
 
(73,552)

 
 
(63,208)

 
 
(33,796)

 
 
(39,250)

 
(223,902)

 
 
(82,048)

 
 
(3,029,538)

 
 
(2,655,613)

 
 
(619,446)

 
 
(1,241,696)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
416,221

 
 
555,060

 
 
2,601,236

 
 
2,184,451

 
 
322,235

 
 
1,455,857

 
345,631

 
 
598,176

 
 
3,550,635

 
 
3,306,816

 
 
732,584

 
 
2,455,876

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
598,176

 
 
—

 
 
8,630,767

 
 
5,323,951

 
 
4,442,463

 
 
1,986,587

$
943,807

 
$
598,176

 
$
12,181,402

 
$
8,630,767

 
$
5,175,047

 
$
4,442,463


107



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MidCap Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
(3,295,573)

 
$
525,502

 
 
Total realized gains (losses) on investments
 
68,652,401

 
 
41,359,521

 
 
Change in net unrealized appreciation or depreciation of investments
 
(22,942,508)

 
 
67,513,872

 
 
Net gains (losses) from investments
 
42,414,320

 
 
109,398,895

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
42,414,320

 
 
109,398,895

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
25,177,450

 
 
40,410,092

 
 
Administration charges
 
(472,341)

 
 
(561,585)

 
 
Contingent sales charges
 
(182,089)

 
 
(214,158)

 
 
Contract terminations
 
(42,965,965)

 
 
(42,382,256)

 
 
Death benefit payments
 
(2,723,449)

 
 
(1,790,109)

 
 
Flexible withdrawal option payments
 
(5,144,788)

 
 
(5,028,529)

 
 
Transfers to other contracts
 
(39,131,074)

 
 
(50,370,748)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(65,442,256)

 
 
(59,937,293)

 
Total increase (decrease)
 
(23,027,936)

 
 
49,461,602

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
412,319,056

 
 
362,857,454

 
Net assets at end of period
$
389,291,120

 
$
412,319,056

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

108



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money Market Class 1 Division
 
Money Market Class 2 Division (1)
 
Neuberger Berman AMT Large Cap Value I Class Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(755,402)

 
$
(898,986)

 
$
(268)

 
$
(40,048)

 
$
(18,316)

 
—

 
 
—

 
 
—

 
 
396,207

 
 
368,928

 
—

 
 
—

 
 
—

 
 
65,815

 
 
1,032,904

 
(755,402)

 
 
(898,986)

 
 
(268)

 
 
421,974

 
 
1,383,516

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(755,402)

 
 
(898,986)

 
 
(268)

 
 
421,974

 
 
1,383,516

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
57,849,237

 
 
87,369,403

 
 
294,359

 
 
1,006,877

 
 
849,016

 
(57,648)

 
 
(66,155)

 
 
(42)

 
 
(1,049)

 
 
(1,103)

 
(78,725)

 
 
(106,511)

 
 
—

 
 
(6,694)

 
 
(12,382)

 
(19,811,398)

 
 
(25,396,285)

 
 
—

 
 
(646,360)

 
 
(871,697)

 
(1,073,801)

 
 
(719,282)

 
 
—

 
 
(104,705)

 
 
—

 
(1,140,987)

 
 
(1,449,537)

 
 
—

 
 
(42,014)

 
 
(43,473)

 
(45,340,272)

 
 
(74,100,192)

 
 
(76,739)

 
 
(830,038)

 
 
(1,177,530)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
(9,653,594)

 
 
(14,468,559)

 
 
217,578

 
 
(623,983)

 
 
(1,257,169)

 
(10,408,996)

 
 
(15,367,545)

 
 
217,310

 
 
(202,009)

 
 
126,347

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
65,639,356

 
 
81,006,901

 
 
—

 
 
5,443,204

 
 
5,316,857

$
55,230,360

 
$
65,639,356

 
$
217,310

 
$
5,241,195

 
$
5,443,204


109



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Small-Cap Growth S Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
(49,189)

 
$
(51,137)

 
 
Total realized gains (losses) on investments
 
660,600

 
 
402,088

 
 
Change in net unrealized appreciation or depreciation of investments
 
(569,384)

 
 
890,343

 
 
Net gains (losses) from investments
 
42,027

 
 
1,241,294

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
42,027

 
 
1,241,294

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
542,837

 
 
705,642

 
 
Administration charges
 
(4,701)

 
 
(5,068)

 
 
Contingent sales charges
 
(3,977)

 
 
(4,753)

 
 
Contract terminations
 
(383,969)

 
 
(334,604)

 
 
Death benefit payments
 
—

 
 
(18,490)

 
 
Flexible withdrawal option payments
 
(29,067)

 
 
(30,102)

 
 
Transfers to other contracts
 
(823,527)

 
 
(844,167)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(702,404)

 
 
(531,542)

 
Total increase (decrease)
 
(660,377)

 
 
709,752

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
3,748,069

 
 
3,038,317

 
Net assets at end of period
$
3,087,692

 
$
3,748,069

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations May 20, 2013.


See accompanying notes.
 
 
 
 

110



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Socially Responsive I Class Division
 
Oppenheimer Main Street Small Cap Service Shares Division (1)
 
PIMCO All Asset Administrative Class Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(74,782)

 
$
(53,322)

 
$
(3,783)

 
$
(1,223)

 
$
201,425

 
$
167,752

 
1,076,131

 
 
902,466

 
 
93,385

 
 
2,201

 
 
(10,798)

 
 
66,220

 
(496,844)

 
 
1,328,000

 
 
(27,039)

 
 
22,922

 
 
(271,826)

 
 
(354,729)

 
504,505

 
 
2,177,144

 
 
62,563

 
 
23,900

 
 
(81,199)

 
 
(120,757)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
504,505

 
 
2,177,144

 
 
62,563

 
 
23,900

 
 
(81,199)

 
 
(120,757)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,111,514

 
 
1,068,352

 
 
426,860

 
 
398,977

 
 
1,666,391

 
 
4,199,092

 
(26,153)

 
 
(31,812)

 
 
(237)

 
 
(42)

 
 
(117)

 
 
(261)

 
(7,665)

 
 
(4,298)

 
 
(14)

 
 
(2)

 
 
(5,294)

 
 
(6,720)

 
(740,098)

 
 
(302,557)

 
 
(11,585)

 
 
(968)

 
 
(511,190)

 
 
(473,104)

 
(11,223)

 
 
(2,113)

 
 
—

 
 
—

 
 
(33,270)

 
 
(22,206)

 
(119,842)

 
 
(111,868)

 
 
(6,693)

 
 
(1,404)

 
 
(50,959)

 
 
(56,050)

 
(2,072,490)

 
 
(1,872,530)

 
 
(190,287)

 
 
(42,855)

 
 
(731,550)

 
 
(3,229,006)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
(1,865,957)

 
 
(1,256,826)

 
 
218,044

 
 
353,706

 
 
334,011

 
 
411,745

 
(1,361,452)

 
 
920,318

 
 
280,607

 
 
377,606

 
 
252,812

 
 
290,988

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
7,438,725

 
 
6,518,407

 
 
377,606

 
 
—

 
 
4,993,775

 
 
4,702,787

$
6,077,273

 
$
7,438,725

 
$
658,213

 
$
377,606

 
$
5,246,587

 
$
4,993,775


111



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO High Yield Administrative Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
604,355

 
$
647,631

 
 
Total realized gains (losses) on investments
 
79,195

 
 
390,539

 
 
Change in net unrealized appreciation or depreciation of investments
 
(431,109)

 
 
(644,617)

 
 
Net gains (losses) from investments
 
252,441

 
 
393,553

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
252,441

 
 
393,553

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
4,945,263

 
 
11,224,100

 
 
Administration charges
 
(1,212)

 
 
(1,224)

 
 
Contingent sales charges
 
(11,530)

 
 
(26,863)

 
 
Contract terminations
 
(1,113,259)

 
 
(1,891,159)

 
 
Death benefit payments
 
(195,708)

 
 
(84,033)

 
 
Flexible withdrawal option payments
 
(176,766)

 
 
(252,547)

 
 
Transfers to other contracts
 
(1,888,293)

 
 
(9,755,214)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
1,558,495

 
 
(786,940)

 
Total increase (decrease)
 
1,810,936

 
 
(393,387)

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
14,203,857

 
 
14,597,244

 
Net assets at end of period
$
16,014,793

 
$
14,203,857

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

112



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO Total Return Administrative Class Division
 
Principal Capital Appreciation Class 1 Division
 
Principal Capital Appreciation Class 2 Division (1)
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
224,780

 
$
296,660

 
$
285,693

 
$
753,057

 
$
(192)

 
(18,070)

 
 
238,300

 
 
3,166,147

 
 
2,547,961

 
 
1

 
629,305

 
 
(1,931,417)

 
 
(1,656,566)

 
 
407,023

 
 
1,298

 
836,015

 
 
(1,396,457)

 
 
1,795,274

 
 
3,708,041

 
 
1,107

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
836,015

 
 
(1,396,457)

 
 
1,795,274

 
 
3,708,041

 
 
1,107

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
6,646,375

 
 
8,711,032

 
 
3,393,463

 
 
3,889,231

 
 
191,275

 
(3,119)

 
 
(3,216)

 
 
(1,388)

 
 
(1,174)

 
 
(10)

 
(27,784)

 
 
(26,046)

 
 
(12,775)

 
 
(7,354)

 
 
—

 
(2,682,587)

 
 
(1,833,583)

 
 
(1,236,387)

 
 
(526,401)

 
 
—

 
(474,172)

 
 
(179,535)

 
 
(226,076)

 
 
(51,804)

 
 
—

 
(286,408)

 
 
(379,217)

 
 
(90,028)

 
 
(65,598)

 
 
—

 
(5,965,401)

 
 
(19,267,125)

 
 
(1,933,969)

 
 
(1,545,635)

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
(2,793,096)

 
 
(12,977,690)

 
 
(107,160)

 
 
1,691,265

 
 
191,265

 
(1,957,081)

 
 
(14,374,147)

 
 
1,688,114

 
 
5,399,306

 
 
192,372

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
31,116,303

 
 
45,490,450

 
 
16,817,350

 
 
11,418,044

 
 
—

$
29,159,222

 
$
31,116,303

 
$
18,505,464

 
$
16,817,350

 
$
192,372


113



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime Strategic Income Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
244,144

 
$
338,978

 
 
Total realized gains (losses) on investments
 
593,959

 
 
(13,705)

 
 
Change in net unrealized appreciation or depreciation of investments
 
(133,715)

 
 
558,681

 
 
Net gains (losses) from investments
 
704,388

 
 
883,954

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
704,388

 
 
883,954

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
2,410,807

 
 
3,459,823

 
 
Administration charges
 
(64,619)

 
 
(78,752)

 
 
Contingent sales charges
 
(10,780)

 
 
(13,103)

 
 
Contract terminations
 
(1,451,603)

 
 
(1,234,356)

 
 
Death benefit payments
 
(389,106)

 
 
(100,283)

 
 
Flexible withdrawal option payments
 
(913,567)

 
 
(1,023,662)

 
 
Transfers to other contracts
 
(2,952,774)

 
 
(3,142,319)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(3,371,642)

 
 
(2,132,652)

 
Total increase (decrease)
 
(2,667,254)

 
 
(1,248,698)

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
24,405,646

 
 
25,654,344

 
Net assets at end of period
$
21,738,392

 
$
24,405,646

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 

114



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2010 Class 1 Division
 
Principal LifeTime 2020 Class 1 Division
 
Principal LifeTime 2030 Class 1 Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
266,924

 
$
382,630

 
$
1,323,135

 
$
1,237,782

 
$
502,417

 
$
376,827

 
310,635

 
 
4,592

 
 
7,170,238

 
 
719,851

 
 
13,481,878

 
 
1,263,194

 
607,302

 
 
2,957,518

 
 
(1,951,174)

 
 
21,489,175

 
 
(10,747,978)

 
 
9,357,480

 
1,184,861

 
 
3,344,740

 
 
6,542,199

 
 
23,446,808

 
 
3,236,317

 
 
10,997,501

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,184,861

 
 
3,344,740

 
 
6,542,199

 
 
23,446,808

 
 
3,236,317

 
 
10,997,501

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
3,316,071

 
 
5,181,775

 
 
16,927,771

 
 
14,023,102

 
 
4,769,941

 
 
4,810,585

 
(133,752)

 
 
(153,508)

 
 
(802,934)

 
 
(966,812)

 
 
(383,742)

 
 
(361,719)

 
(20,977)

 
 
(30,565)

 
 
(163,496)

 
 
(124,072)

 
 
(37,413)

 
 
(57,959)

 
(2,927,568)

 
 
(2,315,306)

 
 
(17,496,600)

 
 
(9,667,525)

 
 
(4,312,357)

 
 
(4,660,680)

 
(286,246)

 
 
(244,129)

 
 
(776,485)

 
 
(2,289,224)

 
 
(22,361)

 
 
(47,718)

 
(1,205,714)

 
 
(1,205,317)

 
 
(3,685,547)

 
 
(3,583,733)

 
 
(661,839)

 
 
(529,267)

 
(3,177,576)

 
 
(5,617,217)

 
 
(32,943,639)

 
 
(16,417,861)

 
 
(1,588,524)

 
 
(1,841,125)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
(4,435,762)

 
 
(4,384,267)

 
 
(38,940,930)

 
 
(19,026,125)

 
 
(2,236,295)

 
 
(2,687,883)

 
(3,250,901)

 
 
(1,039,527)

 
 
(32,398,731)

 
 
4,420,683

 
 
1,000,022

 
 
8,309,618

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
36,993,565

 
 
38,033,092

 
 
176,093,682

 
 
171,672,999

 
 
72,233,052

 
 
63,923,434

$
33,742,664

 
$
36,993,565

 
$
143,694,951

 
$
176,093,682

 
$
73,233,074

 
$
72,233,052


115



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
79,815

 
$
23,937

 
 
Total realized gains (losses) on investments
 
1,145,128

 
 
158,490

 
 
Change in net unrealized appreciation or depreciation of investments
 
(574,127)

 
 
2,183,099

 
 
Net gains (losses) from investments
 
650,816

 
 
2,365,526

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
650,816

 
 
2,365,526

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
3,041,037

 
 
1,818,346

 
 
Administration charges
 
(5,266)

 
 
(4,916)

 
 
Contingent sales charges
 
(12,946)

 
 
(25,356)

 
 
Contract terminations
 
(1,310,814)

 
 
(1,852,516)

 
 
Death benefit payments
 
(77,304)

 
 
(15,089)

 
 
Flexible withdrawal option payments
 
(42,760)

 
 
(25,298)

 
 
Transfers to other contracts
 
(791,531)

 
 
(909,776)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
800,416

 
 
(1,014,605)

 
Total increase (decrease)
 
1,451,232

 
 
1,350,921

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
13,052,660

 
 
11,701,739

 
Net assets at end of period
$
14,503,892

 
$
13,052,660

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

116



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2050 Class 1 Division
 
Real Estate Securities Class 1 Division
 
Real Estate Securities Class 2 Division (1)
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2013
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
63,295

 
$
13,405

 
$
172,806

 
$
(56,764)

 
$
(150)

 
921,620

 
 
44,470

 
 
2,192,506

 
 
1,306,500

 
 
585

 
(587,998)

 
 
1,416,208

 
 
19,163,492

 
 
894,250

 
 
1,926

 
396,917

 
 
1,474,083

 
 
21,528,804

 
 
2,143,986

 
 
2,361

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
396,917

 
 
1,474,083

 
 
21,528,804

 
 
2,143,986

 
 
2,361

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1,389,803

 
 
1,186,897

 
 
15,004,806

 
 
17,187,195

 
 
178,553

 
(4,424)

 
 
(4,479)

 
 
(22,235)

 
 
(24,215)

 
 
(9)

 
(7,056)

 
 
(7,144)

 
 
(36,790)

 
 
(46,765)

 
 
—

 
(790,793)

 
 
(509,652)

 
 
(9,031,964)

 
 
(10,101,489)

 
 
—

 
(26,773)

 
 
(7,679)

 
 
(679,382)

 
 
(198,450)

 
 
—

 
(15,293)

 
 
(9,374)

 
 
(798,019)

 
 
(834,721)

 
 
—

 
(678,352)

 
 
(386,635)

 
 
(10,430,931)

 
 
(12,634,209)

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
(132,888)

 
 
261,934

 
 
(5,994,515)

 
 
(6,652,654)

 
 
178,544

 
264,029

 
 
1,736,017

 
 
15,534,289

 
 
(4,508,668)

 
 
180,905

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,353,861

 
 
6,617,844

 
 
72,397,893

 
 
76,906,561

 
 
—

$
8,617,890

 
$
8,353,861

 
$
87,932,182

 
$
72,397,893

 
$
180,905


117



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rydex Commodities Strategy Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Increase (decrease) in net assets
 
 
 
Operations:
 
 
 
 
Net investment income (loss)
$
(15)

 
 
Total realized gains (losses) on investments
 
(1)

 
 
Change in net unrealized appreciation or depreciation of investments
 
(2,208)

 
 
Net gains (losses) from investments
 
(2,224)

 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(2,224)

 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
13,597

 
 
Administration charges
 
—

 
 
Contingent sales charges
 
—

 
 
Contract terminations
 
—

 
 
Death benefit payments
 
—

 
 
Flexible withdrawal option payments
 
—

 
 
Transfers to other contracts
 
—

 
 
Annuity payments
 
—

 
Increase (decrease) in net assets from policy related transactions
 
13,597

 
Total increase (decrease)
 
11,373

 
 
 
 
 
 
 
Net assets at beginning of period
 
—

 
Net assets at end of period
$
11,373

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

118



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rydex NASDAQ 100 Division (1)
 
SAM Balanced Portfolio Class 1 Division
 
SAM Balanced Portfolio Class 2 Division (1)
 
 
 
 
 
 
 
 
2014
 
2014
 
2013
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(101)

 
$
8,811,345

 
$
8,032,875

 
$
(368)

 
—

 
 
137,083,803

 
 
24,225,288

 
 
1

 
(517)

 
 
(108,056,045)

 
 
79,238,189

 
 
(1,444)

 
(618)

 
 
37,839,103

 
 
111,496,352

 
 
(1,811)

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
(618)

 
 
37,839,103

 
 
111,496,352

 
 
(1,811)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
97,933

 
 
41,302,687

 
 
94,742,603

 
 
636,008

 
—

 
 
(4,206,262)

 
 
(4,526,460)

 
 
(24)

 
—

 
 
(345,560)

 
 
(447,751)

 
 
—

 
—

 
 
(41,025,690)

 
 
(40,040,639)

 
 
—

 
—

 
 
(4,186,225)

 
 
(1,724,592)

 
 
—

 
—

 
 
(13,722,382)

 
 
(12,438,174)

 
 
—

 
—

 
 
(103,810,768)

 
 
(68,516,534)

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
97,933

 
 
(125,994,200)

 
 
(32,951,547)

 
 
635,984

 
97,315

 
 
(88,155,097)

 
 
78,544,805

 
 
634,173

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
775,902,638

 
 
697,357,833

 
 
—

$
97,315

 
$
687,747,541

 
$
775,902,638

 
$
634,173


119



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
2,634,239

 
$
2,565,452

 
 
Total realized gains (losses) on investments
 
22,680,728

 
 
7,725,343

 
 
Change in net unrealized appreciation or depreciation of investments
 
(17,320,821)

 
 
6,022,942

 
 
Net gains (losses) from investments
 
7,994,146

 
 
16,313,737

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
7,994,146

 
 
16,313,737

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
22,652,606

 
 
33,135,119

 
 
Administration charges
 
(641,303)

 
 
(741,932)

 
 
Contingent sales charges
 
(90,288)

 
 
(89,749)

 
 
Contract terminations
 
(11,942,225)

 
 
(9,767,863)

 
 
Death benefit payments
 
(567,833)

 
 
(446,800)

 
 
Flexible withdrawal option payments
 
(3,692,453)

 
 
(3,493,013)

 
 
Transfers to other contracts
 
(23,007,231)

 
 
(19,507,849)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(17,288,727)

 
 
(912,087)

 
Total increase (decrease)
 
(9,294,581)

 
 
15,401,650

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
177,876,103

 
 
162,474,453

 
Net assets at end of period
$
168,581,522

 
$
177,876,103

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

120



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 2 Division (1)
 
SAM Conservative Growth Portfolio Class 1 Division
 
SAM Conservative Growth Portfolio Class 2 Division (1)
 
 
 
 
 
 
 
 
2014
 
2014
 
2013
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(139)

 
$
334,889

 
$
330,267

 
$
(280)

 
(1)

 
 
14,937,808

 
 
2,286,381

 
 
—

 
(1,863)

 
 
(9,886,503)

 
 
12,434,806

 
 
(687)

 
(2,003)

 
 
5,386,194

 
 
15,051,454

 
 
(967)

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
(2,003)

 
 
5,386,194

 
 
15,051,454

 
 
(967)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
555,186

 
 
19,065,877

 
 
17,364,595

 
 
459,694

 
(24)

 
 
(15,131)

 
 
(14,179)

 
 
(46)

 
—

 
 
(50,966)

 
 
(35,397)

 
 
—

 
—

 
 
(6,746,140)

 
 
(4,597,380)

 
 
—

 
—

 
 
(241,358)

 
 
(172,539)

 
 
—

 
—

 
 
(668,476)

 
 
(591,953)

 
 
—

 
—

 
 
(4,614,487)

 
 
(5,271,329)

 
 
(28,316)

 
—

 
 
—

 
 
—

 
 
—

 
555,162

 
 
6,729,319

 
 
6,681,818

 
 
431,332

 
553,159

 
 
12,115,513

 
 
21,733,272

 
 
430,365

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
89,641,980

 
 
67,908,708

 
 
—

$
553,159

 
$
101,757,493

 
$
89,641,980

 
$
430,365


121



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
3,993,760

 
$
3,861,706

 
 
Total realized gains (losses) on investments
 
15,166,292

 
 
10,243,140

 
 
Change in net unrealized appreciation or depreciation of investments
 
(11,000,369)

 
 
(2,827,391)

 
 
Net gains (losses) from investments
 
8,159,683

 
 
11,277,455

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
8,159,683

 
 
11,277,455

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
30,551,547

 
 
43,692,410

 
 
Administration charges
 
(443,286)

 
 
(551,867)

 
 
Contingent sales charges
 
(97,156)

 
 
(129,129)

 
 
Contract terminations
 
(14,457,804)

 
 
(13,279,976)

 
 
Death benefit payments
 
(2,027,725)

 
 
(2,333,983)

 
 
Flexible withdrawal option payments
 
(3,936,033)

 
 
(3,927,719)

 
 
Transfers to other contracts
 
(18,150,196)

 
 
(34,826,796)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(8,560,653)

 
 
(11,357,060)

 
Total increase (decrease)
 
(400,970)

 
 
(79,605)

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
185,636,430

 
 
185,716,035

 
Net assets at end of period
$
185,235,460

 
$
185,636,430

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

122



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 2 Division (1)
 
SAM Strategic Growth Portfolio Class 1 Division
 
SAM Strategic Growth Portfolio Class 2 Division (1)
 
 
 
 
 
 
 
 
2014
 
2014
 
2013
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(318)

 
$
13,463

 
$
3,000

 
$
(473)

 
(1)

 
 
12,334,413

 
 
1,108,086

 
 
(3)

 
1,281

 
 
(8,132,619)

 
 
10,293,258

 
 
(1,140)

 
962

 
 
4,215,257

 
 
11,404,344

 
 
(1,616)

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
962

 
 
4,215,257

 
 
11,404,344

 
 
(1,616)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
417,182

 
 
12,760,354

 
 
10,568,485

 
 
654,126

 
(15)

 
 
(11,823)

 
 
(11,591)

 
 
(31)

 
—

 
 
(33,416)

 
 
(28,639)

 
 
—

 
—

 
 
(4,951,685)

 
 
(2,857,543)

 
 
—

 
—

 
 
(133,544)

 
 
(158,066)

 
 
—

 
—

 
 
(298,078)

 
 
(244,854)

 
 
—

 
—

 
 
(3,229,092)

 
 
(3,205,257)

 
 
(28,352)

 
—

 
 
—

 
 
—

 
 
—

 
417,167

 
 
4,102,716

 
 
4,062,535

 
 
625,743

 
418,129

 
 
8,317,973

 
 
15,466,879

 
 
624,127

 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
57,654,411

 
 
42,187,532

 
 
—

$
418,129

 
$
65,972,384

 
$
57,654,411

 
$
624,127


123



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-Term Income Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
327,505

 
$
777,802

 
 
Total realized gains (losses) on investments
 
997,364

 
 
1,251,473

 
 
Change in net unrealized appreciation or depreciation of investments
 
(890,451)

 
 
(2,420,046)

 
 
Net gains (losses) from investments
 
434,418

 
 
(390,771)

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
434,418

 
 
(390,771)

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
31,531,632

 
 
46,084,233

 
 
Administration charges
 
(550,115)

 
 
(640,566)

 
 
Contingent sales charges
 
(135,202)

 
 
(178,858)

 
 
Contract terminations
 
(16,659,536)

 
 
(18,677,383)

 
 
Death benefit payments
 
(957,367)

 
 
(586,473)

 
 
Flexible withdrawal option payments
 
(4,059,124)

 
 
(4,400,320)

 
 
Transfers to other contracts
 
(31,209,003)

 
 
(34,180,790)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
(22,038,715)

 
 
(12,580,157)

 
Total increase (decrease)
 
(21,604,297)

 
 
(12,970,928)

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
153,215,845

 
 
166,186,773

 
Net assets at end of period
$
131,611,548

 
$
153,215,845

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

124



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-Term Income Class 2 Division (1)
 
SmallCap Blend Class 1 Division
 
SmallCap Growth II Class 1 Division
 
 
 
 
 
 
 
 
2014
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(51)

 
$
(313,244)

 
$
(280,255)

 
$
(416,904)

 
$
(391,877)

 
—

 
 
3,178,158

 
 
1,474,158

 
 
2,433,205

 
 
1,265,464

 
(77)

 
 
(1,699,886)

 
 
10,375,393

 
 
(598,320)

 
 
10,184,722

 
(128)

 
 
1,165,028

 
 
11,569,296

 
 
1,417,981

 
 
11,058,309

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(128)

 
 
1,165,028

 
 
11,569,296

 
 
1,417,981

 
 
11,058,309

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
93,765

 
 
4,816,866

 
 
4,475,144

 
 
3,244,020

 
 
5,461,131

 
(8)

 
 
(5,073)

 
 
(5,204)

 
 
(3,370)

 
 
(3,848)

 
—

 
 
(4,823)

 
 
(7,963)

 
 
(14,794)

 
 
(17,970)

 
—

 
 
(3,694,446)

 
 
(3,877,297)

 
 
(3,647,669)

 
 
(4,131,424)

 
—

 
 
(191,768)

 
 
(129,266)

 
 
(142,423)

 
 
(90,042)

 
—

 
 
(374,693)

 
 
(361,106)

 
 
(236,831)

 
 
(231,931)

 
—

 
 
(2,827,031)

 
 
(3,693,408)

 
 
(4,069,277)

 
 
(3,880,766)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
93,757

 
 
(2,280,968)

 
 
(3,599,100)

 
 
(4,870,344)

 
 
(2,894,850)

 
93,629

 
 
(1,115,940)

 
 
7,970,196

 
 
(3,452,363)

 
 
8,163,459

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
34,644,304

 
 
26,674,108

 
 
33,879,548

 
 
25,716,089

$
93,629

 
$
33,528,364

 
$
34,644,304

 
$
30,427,185

 
$
33,879,548


125



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Growth II Class 2 Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
Increase (decrease) in net assets
 
 
 
Operations:
 
 
 
 
Net investment income (loss)
$
(6)

 
 
Total realized gains (losses) on investments
 
360

 
 
Change in net unrealized appreciation or depreciation of investments
 
(36)

 
 
Net gains (losses) from investments
 
318

 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
318

 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
6,511

 
 
Administration charges
 
—

 
 
Contingent sales charges
 
—

 
 
Contract terminations
 
—

 
 
Death benefit payments
 
—

 
 
Flexible withdrawal option payments
 
—

 
 
Transfers to other contracts
 
—

 
 
Annuity payments
 
—

 
Increase (decrease) in net assets from policy related transactions
 
6,511

 
Total increase (decrease)
 
6,829

 
 
 
 
 
 
 
Net assets at beginning of period
 
—

 
Net assets at end of period
$
6,829

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.


See accompanying notes.
 
 
 
 

126



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Value I Class 1 Division
 
SmallCap Value I Class 2 Division (1)
 
T. Rowe Price Blue Chip Growth Portfolio II Division
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(508,531)

 
$
(263,614)

 
$
(10)

 
$
(180,328)

 
$
(134,416)

 
12,960,989

 
 
3,523,697

 
 
541

 
 
994,904

 
 
742,074

 
(8,377,893)

 
 
22,658,070

 
 
199

 
 
49,729

 
 
2,585,049

 
4,074,565

 
 
25,918,153

 
 
730

 
 
864,305

 
 
3,192,707

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
4,074,565

 
 
25,918,153

 
 
730

 
 
864,305

 
 
3,192,707

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
8,848,717

 
 
9,468,049

 
 
29,379

 
 
3,421,556

 
 
2,794,710

 
(169,185)

 
 
(206,429)

 
 
(3)

 
 
(26,832)

 
 
(28,933)

 
(55,608)

 
 
(65,405)

 
 
—

 
 
(6,035)

 
 
(6,008)

 
(8,980,704)

 
 
(8,697,592)

 
 
—

 
 
(582,701)

 
 
(422,992)

 
(425,837)

 
 
(342,688)

 
 
—

 
 
(60,017)

 
 
(12,308)

 
(1,212,331)

 
 
(1,226,100)

 
 
—

 
 
(129,539)

 
 
(116,236)

 
(12,539,761)

 
 
(16,777,647)

 
 
—

 
 
(2,324,302)

 
 
(2,222,607)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
(14,534,709)

 
 
(17,847,812)

 
 
29,376

 
 
292,130

 
 
(14,374)

 
(10,460,144)

 
 
8,070,341

 
 
30,106

 
 
1,156,435

 
 
3,178,333

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
83,431,804

 
 
75,361,463

 
 
—

 
 
11,456,244

 
 
8,277,911

$
72,971,660

 
$
83,431,804

 
$
30,106

 
$
12,612,679

 
$
11,456,244


127



 
Principal Life Insurance Company
 
Separate Account B
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2014 and 2013, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
T. Rowe Price Health Sciences Portfolio II Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
Increase (decrease) in net assets
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
Net investment income (loss)
$
(379,627)

 
$
(246,216)

 
 
Total realized gains (losses) on investments
 
4,632,533

 
 
2,440,684

 
 
Change in net unrealized appreciation or depreciation of investments
 
2,222,956

 
 
4,258,517

 
 
Net gains (losses) from investments
 
6,475,862

 
 
6,452,985

 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
6,475,862

 
 
6,452,985

 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and applicable premium taxes
 
11,371,091

 
 
9,276,923

 
 
Administration charges
 
(16,773)

 
 
(18,303)

 
 
Contingent sales charges
 
(14,216)

 
 
(8,397)

 
 
Contract terminations
 
(1,372,608)

 
 
(591,159)

 
 
Death benefit payments
 
(134,766)

 
 
(12,537)

 
 
Flexible withdrawal option payments
 
(193,971)

 
 
(135,669)

 
 
Transfers to other contracts
 
(7,400,018)

 
 
(5,313,948)

 
 
Annuity payments
 
—

 
 
—

 
Increase (decrease) in net assets from policy related transactions
 
2,238,739

 
 
3,196,910

 
Total increase (decrease)
 
8,714,601

 
 
9,649,895

 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
21,392,561

 
 
11,742,666

 
Net assets at end of period
$
30,107,162

 
$
21,392,561

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations November 10, 2014.
(2) Represented the operations of Templeton Growth Securities Class 2 Division until May 17, 2014.


See accompanying notes.
 
 
 
 

128



 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Templeton Global Bond VIP Class 4 Division (1)
 
Templeton Growth VIP Class 2 Division (2)
 
Van Eck Global Hard Assets Class S Division
 
 
 
 
 
 
 
 
2014
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
(70)

 
$
5,052

 
$
18,375

 
$
(126,962)

 
$
(72,252)

 
(1)

 
 
21,912

 
 
17,674

 
 
(449,127)

 
 
(417,271)

 
(788)

 
 
(61,483)

 
 
236,298

 
 
(1,185,645)

 
 
1,189,309

 
(859)

 
 
(34,519)

 
 
272,347

 
 
(1,761,734)

 
 
699,786

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(859)

 
 
(34,519)

 
 
272,347

 
 
(1,761,734)

 
 
699,786

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
68,416

 
 
52,531

 
 
41,431

 
 
3,163,554

 
 
2,468,486

 
(3)

 
 
—

 
 
—

 
 
(574)

 
 
(812)

 
—

 
 
(142)

 
 
(376)

 
 
(4,814)

 
 
(5,184)

 
—

 
 
(76,572)

 
 
(228,519)

 
 
(612,679)

 
 
(650,656)

 
—

 
 
(31,267)

 
 
—

 
 
(39,541)

 
 
(27,310)

 
—

 
 
(12,689)

 
 
(17,353)

 
 
(79,453)

 
 
(62,584)

 
—

 
 
(8,405)

 
 
(28,164)

 
 
(2,462,866)

 
 
(1,439,033)

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
68,413

 
 
(76,544)

 
 
(232,981)

 
 
(36,373)

 
 
282,907

 
67,554

 
 
(111,063)

 
 
39,366

 
 
(1,798,107)

 
 
982,693

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
1,071,086

 
 
1,031,720

 
 
8,885,166

 
 
7,902,473

$
67,554

 
$
960,023

 
$
1,071,086

 
$
7,087,059

 
$
8,885,166



129



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014

1. Nature of Operations and Significant Accounting Policies

Principal Life Insurance Company Separate Account B (“Separate Account B”) is a segregated investment account of Principal Life Insurance Company (“Principal Life”) and is registered under the Investment Company Act of 1940 as a unit investment trust, with no stated limitations on the number of authorized units. As directed by eligible contractholders, each division of Separate Account B invests exclusively in shares representing interests in a corresponding investment option. As of December 31, 2014, contractholder investment options include the following open-end management investment companies:

Principal Variable Contracts Funds, Inc. – Class 1 (1)
Balanced Account
Bond & Mortgage Securities Account
Diversified International Account
Equity Income Account
Government & High Quality Bond Account
International Emerging Markets Account
LargeCap Blend Account II
LargeCap Growth Account
LargeCap Growth Account I
LargeCap S&P 500 Index Account
LargeCap Value Account
MidCap Account
Money Market Account
Principal Capital Appreciation Account
Principal LifeTime Strategic Income Account
Principal LifeTime 2010 Account
Principal LifeTime 2020 Account
Principal LifeTime 2030 Account
Principal LifeTime 2040 Account
Principal LifeTime 2050 Account
Real Estate Securities Account
Short-Term Income Account
SmallCap Blend Account
SmallCap Growth Account II
SmallCap Value Account I
Strategic Asset Management (“SAM”) Balanced Portfolio
Strategic Asset Management (“SAM”) Conservative Balanced Portfolio
Strategic Asset Management (“SAM”) Conservative Growth Portfolio
Strategic Asset Management (“SAM”) Flexible Income Portfolio
Strategic Asset Management (“SAM”) Strategic Growth Portfolio


130



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014

Principal Variable Contracts Funds, Inc. – Class 2 (1)
Diversified Balanced Account (2)
Diversified Balanced Managed Volatility Account (7)
Diversified Growth Account (2)
Diversified Growth Managed Volatility Account (7)
Diversified Income Account (5)
Diversified International Account (10)
Equity Income Account (10)
Government & High Quality Bond Account (10)
LargeCap Blend II Account (10)
LargeCap Growth Account (10)
Money Market Account (10)
Principal Capital Appreciation Account (10)
Real Estate Securities Account (10)
SmallCap Growth Account II (10)
SmallCap Value Account I (10)
Strategic Asset Management (“SAM”) Balanced Portfolio (10)
Strategic Asset Management (“SAM”) Conservative Balanced Portfolio (10)
Strategic Asset Management (“SAM”) Conservative Growth Portfolio (10)
Strategic Asset Management (“SAM”) Flexible Income Portfolio (10)
Strategic Asset Management (“SAM”) Strategic Growth Portfolio (10)
Short-Term Income Account (10)
AllianceBernstein Variable Product Series Fund, Inc.:
Small Cap Growth Portfolio – Class A
Small/Mid Cap Value Portfolio – Class A (6)
American Century Investments®:
VP Capital Appreciation – Class I (8)
VP Income & Growth Fund – Class I
VP Inflation Protection Fund – Class II
VP MidCap Value Fund – Class II (3)
VP Ultra® Fund – Class I
VP Ultra® Fund – Class II
VP Value Fund – Class II
American Funds Insurance Series:
Blue Chip Income and Growth Fund – Class 4 (10)
Global Small Capitalization Fund – Class 2 (9)
Global Small Capitalization Fund – Class 4 (10)
High-Income Bond – Class 2 (9)
Managed Risk Asset Allocation Fund – Class P2 (10)
Managed Risk Growth Fund – Class P2 (10)
Managed Risk International Fund – Class P2 (10)
New World Fund – Class 2 (9)
New World Fund – Class 4 (10)
Calvert Investment:
VP EAFE International Index – Class F (10)
VP Russell 2000 Small Cap Index Portfolio – Class F (10)
VP S&P MidCap 400 Index Portfolio – Class F (10)
Delaware Small Cap Value – Service Shares (6)
Dreyfus Investment Portfolios:
Technology Growth Portfolio – Service Shares

131



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014

DWS Funds:
Alternative Asset Allocation VIP – Class B (10)
Equity 500 Index VIP – Class B2 (10)
Small Mid Cap Value VIP – Class B (6)
Fidelity® Variable Insurance Products Fund:
Contrafund® Portfolio – Service Class
Contrafund® Portfolio – Service Class 2
Equity-Income Portfolio – Service Class 2
Growth Portfolio – Service Class
Growth Portfolio – Service Class 2
Mid Cap Portfolio – Service Class (9)
Mid Cap Portfolio – Service Class 2
Overseas Portfolio – Service Class 2
Franklin Templeton Variable Insurance Products Trust:
Global Real Estate VIP Fund – Class 2 (10)
Rising Dividends VIP Fund – Class 4 (10)
Small Cap Value VIP Fund – Class 2 (11)
Templeton Global Bond VIP Fund – Class 4 (10)
Templeton Growth VIP Fund – Class 2 (12)
Goldman Sachs Variable Insurance Trust:
Mid Cap Value Fund – Institutional Shares
Mid Cap Value Fund – Service Shares (10)
Small Cap Equity Insights Fund – Institutional Shares (13)
Small Cap Equity Insights Fund – Service Shares (10)
Guggenheim Investments:
Floating Rate Strategies – Series F (10)
Global Managed Futures Strategy (10)
Long Short Equity Fund (10)
Macro Opportunities – Series M (10)
Multi-Hedge Strategies (10)
Invesco Variable Insurance Fund:
American Franchise – Series I Shares (4)
Balanced-Risk Allocation – Series II Shares (10)
Core Equity Fund – Series I Shares
Global Health Care Fund – Series I Shares
Global Health Care Fund – Series II Shares (10)
International Growth Fund – Series I Shares
International Growth Fund – Series II Shares (10)
MidCap Growth – Series I Shares (4)
Small Cap Equity Fund – Series I Shares
Technology Fund – Series I Shares
Value Opportunities – Series I Shares
Janus Aspen Series:
Janus Aspen Series Enterprise Portfolio – Service Shares
Janus Aspen Series Flexible Bond Portfolio – Service Shares (10)
MFS® Variable Insurance Trust:
International Value – Service Class (10)
New Discovery – Service Class (6)
Utilities Series – Service Class
Value Series – Service Class

132



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014

Neuberger Berman Advisors Management Trust:
Large Cap Value Portfolio – I Class Shares
Small-Cap Growth Portfolio – S Class Shares
Socially Responsive Portfolio – I Class Shares
Oppenheimer Main Street Small Cap Fund®/VA - Service Shares (6)
PIMCO Variable Insurance Trust:
All Asset Portfolio Administrative Class
High Yield Portfolio Administrative Class (2)
Total Return Portfolio Administrative Class
Rydex Funds:
Commodities Strategy (10)
NASDAQ 100 (10)
T. Rowe Price Equity Series, Inc.
Blue Chip Growth Portfolio – II
Health Sciences Portfolio – II
Van Eck VIP Trust:
Global Hard Assets Fund –Class S Shares

(1)    Organized by Principal Life Insurance Company.
(2)
Commencement of operations, January 4, 2010.
(3)
Commencement of operations, May 24, 2010.
(4)
Commencement of operations, April 27, 2012.
(5)
Commencement of operations, May 21, 2012.
(6)
Commencement of operations, May 20, 2013.
(7)
Commencement of operations, December 2, 2013
(8)
Commencement of operations, April 24, 2014.
(9)
Commencement of operations, May 17, 2014.
(10)
Commencement of operations, November 10, 2014.
(11) Represented the operations of Franklin Small Cap Value VIP Class 2 Division until May 17, 2014.
(12) Represented the operations of Templeton Growth VIP Class 2 Division until May 17, 2014.
(13) Represented the operations of Goldman Sachs VIT Structured Small Cap Equity Service Class I Division until May 17, 2014.

Commencement of operations date is the date that the division became available to contractholders.

The assets of Separate Account B are owned by Principal Life. The assets of Separate Account B support the following variable annuity contracts of Principal Life and may not be used to satisfy the liabilities arising from any other business of Principal Life: Bankers Flexible Annuity; Pension Builder Plus; Pension Builder Plus-Rollover IRA; Personal Variable; Premier Variable; Principal Freedom Variable Annuity; Principal Freedom Variable Annuity 2; The Principal Variable Annuity; The Principal Variable Annuity with Purchase Payment Credit Rider; Principal Investment Plus Variable Annuity; Principal Investment Plus Variable Annuity with Premium Payment Credit Rider; Principal Lifetime Income Solutions; The Principal Pivot Series Variable Annuity and The Principal Pivot Series Variable Annuity with Liquidity Max Rider. Principal Life no longer accepts contributions for Bankers Flexible Annuity contracts, Pension Builder Plus contracts and Pension Builder Plus-Rollover IRA contracts. Contractholders are given the option of withdrawing their funds or transferring to another contract. Contributions to the Personal Variable contracts are no longer accepted from new customers, only from existing customers beginning January 1998.


133



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements and accompanying notes of Separate Account B in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported and disclosed. These estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed in the financial statements and accompanying notes.

Investments

Investments are stated at the closing net asset value (“NAV”) per share on December 31, 2014. Net realized gains and losses on sales of investments are determined on the basis of the first-in, first-out (“FIFO”) method. Dividends are taken into income on an accrual basis as of the ex-dividend date. Investment transactions are accounted for on a trade date basis.


Fair Value Measurements

Fair value is defined as 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 (an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels:

•
Level 1 – Fair values are based on unadjusted quoted prices in active markets for identical assets or liabilities.
•
Level 2 – Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.
•
Level 3 – Fair values are based on significant unobservable inputs for the asset or liability.

All investments of the open-end management investment companies listed above represent investments in mutual funds for which a daily NAV is calculated and published. Therefore, all investments are reflected in Level 1 of the fair value hierarchy.

2. Expenses and Related Party Transactions

Principal Life is compensated for the following expenses:

Bankers Flexible Annuity contracts – Mortality and expense risks assumed by Principal Life are compensated for by a daily charge resulting in a reduction of the unit value equivalent to an annual rate of 0.48% of the asset value of each contract. An annual administration charge of $7 for each participant’s account is deducted as compensation for administrative expenses. This charge is collected by redeeming units of the separate account.

Pension Builder Plus and Pension Builder Plus – Rollover IRA contracts – Mortality and expense risks assumed by Principal Life are compensated for by a daily charge resulting in a reduction of the unit value equivalent to an annual rate of 1.50% (1.0% for a Rollover Individual Retirement Annuity) of the asset value of each contract. A contingent sales charge of up to 7.0% may be deducted from withdrawals made during the first ten years of a contract, except for withdrawals related to death or permanent disability. An annual administration charge will be deducted ranging from a minimum of $25 to a maximum of $275 depending upon a participant’s investment account values and the number of participants under the retirement plan and their participant investment account value.

Personal Variable contracts – Mortality and expense risks assumed by Principal Life are compensated for by a daily charge resulting in a reduction of the unit value equivalent to an annual rate of 0.64% of the asset value of each contract. The contract provides for recordkeeping and other services and allows the contractholders, in their sole discretion, a customized plan-level service package and charges. An annual administration charge of $34 (increases to $37 if the benefit plan reports are distributed directly to the homes of plan participants) for each participant’s account plus 0.35% of the annual average balance of investment account values that correlate to a plan participant will be deducted on a quarterly basis.

134



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014

Premier Variable contracts – Mortality and expense risks assumed by Principal Life are compensated for by a daily charge resulting in a reduction of the unit value equivalent to an annual rate of 0.42% of the asset value of each contract. The contract provides for recordkeeping and other services and allows the contractholders, in their sole discretion, a customized plan-level service package and charges. The amount varies by plan document and account balance of contract. Recordkeeping charges are also paid by the contractholder. The annual charge ranges from $2,250 to $25,316 plus $10 per participant. The amount varies by total plan participants. There were no contingent sales charges provided for in these contracts.

Principal Freedom Variable Annuity – Mortality and expenses risk assumed by Principal Life are compensated for by a daily charge resulting in a reduction of the unit value equivalent to an annual rate of 0.85% of the asset value of each contract. Principal Life reserves the right to increase this charge but guarantees that it will not exceed 1.25% per year. A surrender charge up to 6.0% may be deducted from the withdrawals made during the first six years of a contract, except for withdrawals related to death, annuitization, permanent disability, confinement in a health facility, or terminal illness. Principal Life reserves the right to charge an additional administrative fee of up to 0.15% of the asset value of each division. This fee is currently being waived.

Principal Freedom Variable Annuity 2 – Mortality and expenses risk assumed by Principal Life are compensated for by a daily charge resulting in a reduction of the unit value equivalent to an annual rate of 0.95% of the asset value of each contract. Principal Life reserves the right to increase this charge but guarantees that it will not exceed 1.25% per year. A surrender charge up to 3.0% may be deducted from the withdrawals made during the first three years of a contract, except for death, annuitization, permanent disability, confinement in a health facility, or terminal illness. Principal Life reserves the right to charge an additional administrative fee of up to 0.15% of the asset value of each division. This fee is currently being waived.

The Principal Variable Annuity – Mortality and expense risks assumed by Principal Life are compensated for by a daily charge resulting in a reduction of the unit value equivalent to an annual rate of 1.25% of the asset value of each contract. A surrender charge of up to 6.0% may be deducted from the withdrawals made during the first six years of a contract, except for death, annuitization, permanent disability, confinement in a health care facility, or terminal illness. Principal Life reserves the right to charge an additional administrative fee of up to 0.15% of the asset value of each division. Currently, Principal Life is charging an annual rate of 0.05% of the asset value of each contract. This charge is deducted from the daily unit value. The product also contains an optional purchase payment credit rider, which charges an annual rate of 0.6%. For electing participants, the rider is deducted from the daily unit value. For contracts with the purchase payment credit rider, the maximum surrender charge is 8.0% from withdrawals made during the first eight years.

The Principal Investment Plus Variable Annuity - Mortality and expense risks assumed by Principal Life are compensated for by a daily charge resulting in a reduction of the unit value equivalent to an annual rate of 1.25% of the asset value of each contract. A surrender charge of up to 6.0% may be deducted from the withdrawals made during the first six years of a contract, except for death, annuitization, permanent disability, confinement in a health care facility, or terminal illness. An annual administration charge of the lesser of 2.0% of the accumulated value or $30 is deducted at the end of the contract year. Principal Life reserves the right to charge an additional administrative fee of up to 0.15% of the asset value of each division. Currently, Principal Life is charging an annual rate of 0.15% of the asset value of each contract. This charge is deducted from the daily unit value. The product also contains an optional premium payment credit rider, which charges an annual rate of 0.6%. For electing participants, the rider is deducted from the daily unit value. For contracts with the premium payment credit rider, the maximum surrender charge is 8.0% from withdrawals made during the first eight years.


135



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014

Principal Lifetime Income SolutionsSM Variable Annuity – Mortality and expense risks assumed by Principal Life are compensated for by a daily charge resulting in a reduction of the unit value equivalent to an annual rate of 1.25% of the asset value of each contract. A surrender charge of up to 6% may be deducted from the withdrawals made during the first six years of a contract, except for death, annuitization, permanent disability, confinement in a health care facility or terminal illness. Principal Life reserves the right to charge an additional administration fee of up to 0.15% of the average daily net asset value of each division. Currently, Principal Life is charging an annual rate of 0.15% of the asset value of each contract. This charge is deducted from the daily unit value.

The Principal Pivot Series Variable Annuity - Mortality and expense risks assumed by Principal Life are compensated for by a daily charge resulting in a reduction of the unit value equivalent to an annual rate of 1.00% of the asset value of each contract. A surrender charge of up to 6.0% may be deducted from the withdrawals made during the first six years of a contract, except for death, annuitization, permanent disability, confinement in a health care facility, or terminal illness. An annual administration charge of the lesser of 2.0% of the accumulated value or $30 is deducted at the end of the contract year. Principal Life reserves the right to charge an additional administrative fee of up to 0.30% of the asset value of each division. Currently, Principal Life is charging an annual rate of 0.15% of the asset value of each contract. This charge is deducted from the daily unit value. The product also contains an optional liquidity max rider, which charges an annual rate of 0.25%. For electing participants, the rider is deducted from the daily unit value.

During the year ended December 31, 2014, management fees were paid indirectly to Principal Management Corporation (“Manager”) (wholly owned by Principal Financial Services, Inc.), an affiliate of Principal Life, in its capacity as advisor to Principal Variable Contracts Funds, Inc. Investment advisory and management fees are computed on an annual rate of 0.03% of each of the Principal LifeTime Accounts’ average daily net assets. The annual rate paid by the SAM Portfolios is based upon the aggregate average daily net assets (“aggregate net assets”) of the SAM Portfolios. The investment advisory and management fee schedule for the SAM Portfolios is 0.25% of aggregate net assets up to the first $1 billion and 0.20% of aggregate net assets over $1 billion.

The annual rates used in this calculation for each of the other Accounts are as shown in the following tables.
 
 
Net Assets of Accounts (in millions)
 
First $100
Next $100
Next $100
Next $100
Over $400
Balanced Account
 
0.60%
 
0.55%
 
0.50%
 
0.45%
 
0.40%
Bond & Mortgage Securities Account
 
0.50
 
0.45
 
0.40
 
0.35
 
0.30
Equity Income Account
 
0.60
 
0.55
 
0.50
 
0.45
 
0.40
LargeCap Growth Account I
 
0.80
 
0.75
 
0.70
 
0.65
 
0.60
MidCap Account
 
0.65
 
0.60
 
0.55
 
0.50
 
0.45
Money Market Account
 
0.50
 
0.45
 
0.40
 
0.35
 
0.30
Real Estate Securities Account
 
0.90
 
0.85
 
0.80
 
0.75
 
0.70
SmallCap Blend Account
 
0.85
 
0.80
 
0.75
 
0.70
 
0.65
SmallCap Growth Account II
 
1.00
 
0.95
 
0.90
 
0.85
 
0.80
SmallCap Value Account I
 
1.10
 
1.05
 
1.00
 
0.95
 
0.90
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Assets of Accounts (in millions)
 
First $250
Next $250
Next $250
Next $250
Over $1,000
Diversified International Account
 
0.85%
 
0.80%
 
0.75%
 
0.70%
 
0.65%
International Emerging Markets Account
 
1.25
 
1.20
 
1.15
 
1.10
 
1.05
LargeCap Blend Account II
 
0.75
 
0.70
 
0.65
 
0.60
 
0.55
LargeCap Value Account
 
0.60
 
0.55
 
0.50
 
0.45
 
0.40

136



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014

 
Net Assets of Accounts
 
 
Net Assets of Accounts
 
(in millions)
 
 
(in millions)
 
First $500
Next $500
Next $1 billion
Next $1 billion
Over $3 billion
 
 
First $500
Over $500
LargeCap Growth Account
0.68%
0.63%
0.61%
0.56%
0.51%
 
Principal Capital Appreciation Account
0.625%
0.500%


 
Net Assets of Accounts
 
 
Net Assets of Accounts
 
First $2 billion
Over $2 billion
 
 
First $200
Next $300
Over $500
Government & High Quality Bond Account
0.50%
0.45%
 
Short-Term Income Account
0.50%
0.45%
0.40%

 
All Net Assets
Diversified Balanced Account
0.05%
Diversified Balanced Managed Volatility Account
0.05
Diversified Growth Account
0.05
Diversified Growth Managed Volatility Account
0.05
Diversified Income Account
0.05
LargeCap S&P 500 Index Account
0.25

The Manager has contractually agreed to limit the Separate Account’s management and investment advisory fees for certain of the Separate Accounts through the period ended April 30, 2015. The expense limit will reduce the Separate Account’s management and investment advisory fees by the following amounts:
LargeCap Blend Account II
0.018%
LargeCap Growth Account I
0.016
SmallCap Value Account I
0.020

In addition, the Manager has contractually agreed to limit the management and investment advisory fees for SmallCap Growth Account II. The expense limit will reduce the Separate Account’s management fees by 0.100% through the period ended April 30, 2015.

The Manager has contractually agreed to limit the expenses (excluding interest the Separate Accounts incur in connection with investments they make) for certain classes of shares of certain of the Separate Accounts. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits. The limits are expressed as a percentage of average daily net assets attributable to each class of shares on an annualized basis during the reporting period. The operating expense limits are as follows:
 
From January 1, 2014 through December 31, 2014
 
Class 1
Class 2
Expiration
Diversified Balanced Managed Volatility Account
N/A
0.31%
April 30, 2015
Diversified Growth Managed Volatility Account
N/A
0.31
April 30, 2015
SmallCap Value Account I
0.99%
1.24
April 30, 2015

137



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014

The Manager has contractually agreed to limit Short-Term Income Account’s expenses by 0.01% through the period ended April 30, 2015.

In addition, the Manager has voluntarily agreed to limit the expenses (excluding interest the Separate Accounts incur in connection with investments they make and acquired fund fees and expenses) attributable to Class 2 shares of certain of the Separate Accounts. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits. The limits are expressed as a percentage of average daily net assets on an annualized basis during the reporting period. The expense limit may be terminated at any time. The operating expense limits are as follows:
 
Expense Limit
Diversified Balanced Account
0.31%
Diversified Growth Account
0.31
Diversified Income Account
0.31

In addition, the Manager has voluntarily agreed to limit the Money Market Account’s expenses to the extent necessary to maintain a 0% yield. The voluntary expense limit may be terminated at any time.

3. Federal Income Taxes
    
The operations of the Separate Account are a part of the operations of Principal Life. Under current practice, no federal income taxes are allocated by Principal Life to the operations of the Separate Account.


138



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014

4. Purchases and Sales of Investments

The aggregate cost of purchases and proceeds from sales of investments were as follows for the period ended December 31, 2014:

Division
 
Purchases
 
Sales
AllianceBernstein Small Cap Growth Class A Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
1,270,863
 
$
1,270,248

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
69,682
 
 
728,773

 
 
 
 
 
AllianceBernstein Small/Mid Cap Value Class A Division:
 
 
 
 
The Principal Variable Annuity
$
162,425
 
$
86,128

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—
 
 
—

Principal Investment Plus Variable Annuity
 
1,508,785
 
 
492,740

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
328,182
 
 
97,691

 
 
 
 
 
American Century VP Capital Appreciation Class I Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
2,275,815
 
$
338,104

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
739,438
 
 
345,604

 
 
 
 
 
American Century VP Income & Growth Class I Division:
 
 
 
 
Principal Freedom Variable Annuity
$
232,194
 
$
546,131

Principal Freedom Variable Annuity 2
 
65,177
 
 
8,394

The Principal Variable Annuity
 
617,472
 
 
2,199,836

The Principal Variable Annuity with Purchase Payment Credit Rider
 
2,006
 
 
111,997

 
 
 
 
 
American Century VP Inflation Protection Class II Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
14,862,758
 
$
20,344,875

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,228,577
 
 
9,266,766

Principal Pivot Series Variable Annuity
 
—
 
 
12

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
15,811
 
 
1

 
 
 
 
 
American Century VP MidCap Value Class II Division:
 
 
 
 
The Principal Variable Annuity
$
696,993
 
$
542,910

The Principal Variable Annuity with Purchase Payment Credit Rider
 
414
 
 
78,386

Principal Investment Plus Variable Annuity
 
1,677,506
 
 
703,279

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
423,722
 
 
326,994

 
 
 
 
 
American Century VP Ultra Class I Division:
 
 
 
 
The Principal Variable Annuity
$
228,124
 
$
900,234

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—
 
 
67,983

 
 
 
 
 
American Century VP Ultra Class II Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
6,446,778
 
$
14,258,429

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
656,197
 
 
6,767,372

 
 
 
 
 
American Century VP Value Class II Division:
 
 
 
 
The Principal Variable Annuity
$
1,820,641
 
$
4,860,333

The Principal Variable Annuity with Purchase Payment Credit Rider
 
16,567
 
 
548,537

Principal Pivot Series Variable Annuity
 
20,865
 
 
21

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
13,807
 
 
—


139



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
Division
 
Purchases
 
Sales
American Funds Insurance Series Blue Chip Income & Growth Fund Class 4 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
75,757
 
$
40

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
28,930
 
 
—

 
 
 
 
 
American Funds Insurance Series Global Small Capitalization Fund Class 2 Division:
 
 
 
 
The Principal Variable Annuity
$
113,973
 
$
17,890

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—
 
 
—

 
 
 
 
 
American Funds Insurance Series Global Small Capitalization Fund Class 4 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
7,842
 
$
2

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—
 
 
—

 
 
 
 
 
American Funds Insurance Series High-Income Bond Class 2 Division:
 
 
 
 
The Principal Variable Annuity
$
329,483
 
$
100,972

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—
 
 
—

 
 
 
 
 
American Funds Insurance Series Managed Risk Asset Allocation Fund Class P2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
—
 
$
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—
 
 
—

 
 
 
 
 
American Funds Insurance Series Managed Risk Growth Fund Class P2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
30,020
 
$
8

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—
 
 
—

 
 
 
 
 
American Funds Insurance Series Managed Risk International Fund Class P2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
18,000
 
$
4

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—
 
 
—

 
 
 
 
 
American Funds Insurance Series New World Fund Class 2 Division:
 
 
 
 
The Principal Variable Annuity
$
183,238
 
$
7,267

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—
 
 
—

 
 
 
 
 
American Funds Insurance Series New World Fund Class 4 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
53,068
 
$
33

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—
 
 
—

 
 
 
 
 
Balanced Class 1 Division:
 
 
 
 
Personal Variable
$
47,008
 
$
106,629

Premier Variable
 
496,397
 
 
572,645

The Principal Variable Annuity
 
1,679,305
 
 
5,249,487

The Principal Variable Annuity with Purchase Payment Credit Rider
 
8,235
 
 
245,763

 
 
 
 
 

140



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
Division
 
Purchases
 
Sales
Bond & Mortgage Securities Class 1 Division:
 
 
 
 
Personal Variable
$
33,250

$
78,893

Premier Variable
 
474,811

 
570,857

Principal Freedom Variable Annuity
 
915,227

 
1,120,187

Principal Freedom Variable Annuity 2
 
101,366

 
135,786

The Principal Variable Annuity
 
9,885,056

 
16,719,750

The Principal Variable Annuity with Purchase Payment Credit Rider
 
118,972

 
1,753,118

Principal Investment Plus Variable Annuity
 
20,171,250

 
26,041,940

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
2,097,200

 
12,174,551

 
 
 
 
 
Calvert EAFE International Index Class F Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
—

$
6

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
5,770

 
—

 
 
 
 
 
Calvert Russell 2000 Small Cap Index Class F Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
13,931

$
21

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
9,699

 
—

 
 
 
 
 
Calvert S&P MidCap 400 Index Class F Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
27,117

$
34

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
11,460

 
—

 
 
 
 
 
Delaware Small Cap Value Service Class Division:
 
 
 
 
The Principal Variable Annuity
$
42,601

$
20,224

The Principal Variable Annuity with Purchase Payment Credit Rider
 
2,080

 
5,290

Principal Investment Plus Variable Annuity
 
736,646

 
316,887

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
68,980

 
6,991

 
 
 
 
 
Diversified Balanced Class 2 Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
197,512,885

$
98,411,076

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
23,739,767

 
15,907,946

Principal Lifetime Income Solutions
 
1,753,763

 
2,438,750

Principal Pivot Series Variable Annuity
 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
Diversified Balanced Managed Volatility Class 2 Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
66,311,252

$
3,961,584

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
4,577,937

 
589,516

Principal Lifetime Income Solutions
 
15,103,105

 
650,980

Principal Pivot Series Variable Annuity
 
7,500

 
6

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
Diversified Growth Class 2 Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
707,121,970

$
198,924,613

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
55,688,974

 
19,646,969

Principal Lifetime Income Solutions
 
2,133,735

 
3,282,534

Principal Pivot Series Variable Annuity
 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 

141



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
Division
 
Purchases
 
Sales
Diversified Growth Managed Volatility Class 2 Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
120,381,234

$
7,188,616

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
12,003,230

 
2,101,268

Principal Lifetime Income Solutions
 
19,533,726

 
719,680

Principal Pivot Series Variable Annuity
 
26,710

 
19

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
Diversified Income Class 2 Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
84,853,497

$
38,114,226

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
2,951,292

 
2,119,243

Principal Lifetime Income Solutions
 
2,293,190

 
944,606

 
 
 
 
 
Diversified International Class 1 Division:
 
 
 
 
Personal Variable
$
44,327

$
100,109

Premier Variable
 
308,851

 
687,121

Principal Freedom Variable Annuity
 
124,636

 
388,745

Principal Freedom Variable Annuity 2
 
99,434

 
153,069

The Principal Variable Annuity
 
9,175,794

 
22,600,307

The Principal Variable Annuity with Purchase Payment Credit Rider
 
138,648

 
1,788,860

Principal Investment Plus Variable Annuity
 
11,250,647

 
10,617,597

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,330,873

 
6,497,891

 
 
 
 
 
Diversified International Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
26,250

$
11

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
Dreyfus Investment Portfolio Technology Growth Service Shares Division:
 
 
 
 
Principal Investment Plus Variable Annuity
 
1,777,004

 
1,410,569

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
512,424

 
445,355

 
 
 
 
 
DWS Alternative Asset Allocation Class B Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
—

$
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
DWS Equity 500 Index Class B2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
 
17,239

 
42

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
41,266

 
—

 
 
 
 
 
DWS Small Mid Cap Value Class B Division:
 
 
 
 
The Principal Variable Annuity
$
26,173

$
543

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
—

Principal Investment Plus Variable Annuity
 
372,810

 
16,766

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
74,344

 
10,427

Principal Pivot Series Variable Annuity
 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 

142



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
Division
 
Purchases
 
Sales
Equity Income Class 1 Division:
 
 
 
 
Premier Variable
$
76,706
$
94,357

The Principal Variable Annuity
 
5,369,571
 
13,953,835

The Principal Variable Annuity with Purchase Payment Credit Rider
 
57,238
 
883,313

Principal Investment Plus Variable Annuity
 
30,216,547
 
58,670,999

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
2,502,573
 
25,860,748

 
 
 
 
 
Equity Income Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
58,854
$
64

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
21,021
 
—

 
 
 
 
 
Fidelity VIP Contrafund Service Class Division:
 
 
 
 
The Principal Variable Annuity
$
3,789,588
$
10,386,815

The Principal Variable Annuity with Purchase Payment Credit Rider
 
45,244
 
481,315

 
 
 
 
 
Fidelity VIP Contrafund Service Class 2 Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
9,743,570
$
11,420,853

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
827,829
 
4,508,993

Principal Pivot Series Variable Annuity
 
102,813
 
89

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
26,953
 
—

 
 
 
 
 
Fidelity VIP Equity-Income Service Class 2 Division:
 
 
 
 
The Principal Variable Annuity
$
2,222,962
$
5,388,104

The Principal Variable Annuity with Purchase Payment Credit Rider
 
65,026
 
430,858

Principal Investment Plus Variable Annuity
 
2,348,419
 
1,976,568

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
394,753
 
989,033

 
 
 
 
 
Fidelity VIP Growth Service Class Division:
 
 
 
 
The Principal Variable Annuity
$
768,152
$
3,812,420

The Principal Variable Annuity with Purchase Payment Credit Rider
 
473
 
103,003

 
 
 
 
 
Fidelity VIP Growth Service Class 2 Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
2,818,222
$
1,954,680

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
661,701
 
1,341,272

 
 
 
 
 
Fidelity VIP Mid Cap Service Class Division:
 
 
 
 
Principal Freedom Variable Annuity 2
$
70,656
$
280

 
 
 
 
 
Fidelity VIP Mid Cap Service Class 2 Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
4,835,260
$
2,693,060

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
506,556
 
782,263

Principal Pivot Series Variable Annuity
 
143,067
 
141

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
13,754
 
—

 
 
 
 
 
Fidelity VIP Overseas Service Class 2 Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
9,498,533
$
9,358,342

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,127,821
 
5,323,653

Principal Pivot Series Variable Annuity
 
1,511
 
5

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
2,875
 
—

 
 
 
 
 

143



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
Division
 
Purchases
 
Sales
Franklin Global Real Estate VIP Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
15,979

$
25

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
25,487

 
—

 
 
 
 
 
Franklin Rising Dividends VIP Class 4 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
10,073

$
48

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
60,257

 
—

 
 
 
 
 
Franklin Small Cap Value VIP Class 2 Division:
 
 
 
 
The Principal Variable Annuity
$
202,766

$
152,266

The Principal Variable Annuity with Purchase Payment Credit Rider
 
7,215

 
2,029

Principal Investment Plus Variable Annuity
 
1,225,157

 
888,946

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
194,397

 
224,700

 
 
 
 
 
Goldman Sachs VIT Mid Cap Value Institutional Shares Division:
 
 
 
 
The Principal Variable Annuity
$
161,346

$
39,349

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
—

Principal Investment Plus Variable Annuity
 
7,570,010

 
3,986,821

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
712,326

 
3,003,119

 
 
 
 
 
Goldman Sachs VIT Mid Cap Value Service Shares Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
10,713

$
10

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
7,991

 
—

 
 
 
 
 
Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division:
 
 
 
 
The Principal Variable Annuity
$
16,893

$
6,298

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
—

Principal Investment Plus Variable Annuity
 
2,240,586

 
847,538

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
170,461

 
1,180,713

 
 
 
 
 
Goldman Sachs VIT Small Cap Equity Insights Service Shares Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
5,737

$
5

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
Government & High Quality Bond Class 1 Division:
 
 
 
 
Pension Builder Plus
$
4,370

$
41,332

Pension Builder Plus – Rollover IRA
 
1,226

 
465

Personal Variable
 
23,875

 
28,700

Premier Variable
 
501,019

 
582,780

Principal Freedom Variable Annuity
 
528,505

 
853,757

Principal Freedom Variable Annuity 2
 
68,765

 
119,331

The Principal Variable Annuity
 
9,777,947

 
19,826,360

The Principal Variable Annuity with Purchase Payment Credit Rider
 
111,643

 
1,373,475

Principal Investment Plus Variable Annuity
 
11,790,040

 
15,717,457

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,741,332

 
6,465,001

 
 
 
 
 
Government & High Quality Bond Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
11,875

$
15

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
8,058

 
—

 
 
 
 
 

144



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
Division
 
Purchases
 
Sales
Guggenheim Floating Rate Strategies Series F Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
2,259

$
14

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
10,738

 
—

 
 
 
 
 
Guggenheim Investments Global Managed Futures Strategy Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
21,000

$
7

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
Guggenheim Investments Long Short Equity Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
37,400

$
16

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
5,474

 
—

 
 
 
 
 
Guggenheim Investments Multi-Hedge Strategies Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
4,138

$
7

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
3,623

 
—

 
 
 
 
 
Guggenheim Macro Opportunities Series M Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
7

$
1

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
International Emerging Markets Class 1 Division:
 
 
 
 
Premier Variable
$
60,755

$
69,549

The Principal Variable Annuity
 
3,933,268

 
8,468,927

The Principal Variable Annuity with Purchase Payment Credit Rider
 
114,042

 
1,036,229

Principal Investment Plus Variable Annuity
 
8,076,898

 
7,304,769

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
960,224

 
3,900,856

 
 
 
 
 
Invesco American Franchise Series I Division:
 
 
 
 
The Principal Variable Annuity
$
223,774

$
1,126,762

The Principal Variable Annuity with Purchase Payment Credit Rider
 
194

 
16,844

 
 
 
 
 
Invesco Balanced-Risk Allocation Series II Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
—

$
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
Invesco Core Equity Series I Division:
 
 
 
 
The Principal Variable Annuity
$
1,523,537

$
5,138,470

The Principal Variable Annuity with Purchase Payment Credit Rider
 
1,510

 
13,926

 
 
 
 
 
Invesco Global Health Care Series I Division:
 
 
 
 
The Principal Variable Annuity
$
2,077,496

$
2,922,919

The Principal Variable Annuity with Purchase Payment Credit Rider
 
22,932

 
172,549

 
 
 
 
 
Invesco Global Health Care Series II Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
67,181

$
49

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
4,428

 
—

 
 
 
 
 
Invesco International Growth Series I Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
3,566,718

$
2,031,915

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
495,154

 
282,765

 
 
 
 
 

145



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
Division
 
Purchases
 
Sales
Invesco International Growth Series II Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
26,846

$
26

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
5,707

 
—

 
 
 
 
 
Invesco Mid Cap Growth Series I Division:
 
 
 
 
The Principal Variable Annuity
$
233,609

$
400,809

The Principal Variable Annuity with Purchase Payment Credit Rider
 
1,506

 
77,289

 
 
 
 
 
Invesco Small Cap Equity Series I Division:
 
 
 
 
The Principal Variable Annuity
$
508,263

$
1,403,777

The Principal Variable Annuity with Purchase Payment Credit Rider
 
90

 
40,505

Principal Investment Plus Variable Annuity
 
1,635,576

 
1,208,301

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
378,235

 
538,405

 
 
 
 
 
Invesco Technology Series I Division:
 
 
 
 
The Principal Variable Annuity
$
1,123,666

$
746,655

The Principal Variable Annuity with Purchase Payment Credit Rider
 
3,318

 
86,111

 
 
 
 
 
Invesco Value Opportunities Series I Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
613,748

$
881,012

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
97,859

 
430,008

 
 
 
 
 
Janus Aspen Enterprise Service Shares Division:
 
 
 
 
The Principal Variable Annuity
$
952,285

$
1,771,121

The Principal Variable Annuity with Purchase Payment Credit Rider
 
25,380

 
46,051

 
 
 
 
 
Janus Aspen Flexible Bond Service Shares Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
24,325

$
72

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
48,742

 
—

 
 
 
 
 
LargeCap Blend II Class 1 Division:
 
 
 
 
The Principal Variable Annuity
$
2,336,710

$
9,256,771

The Principal Variable Annuity with Purchase Payment Credit Rider
 
42,776

 
1,201,820

Principal Investment Plus Variable Annuity
 
10,613,103

 
20,605,846

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
770,320

 
11,488,252

Principal Pivot Series Variable Annuity
 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
LargeCap Blend II Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
—

$
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
LargeCap Growth Class 1 Division:
 
 
 
 
Personal Variable
$
74,885

$
148,145

Premier Variable
 
2,931,934

 
3,262,986

The Principal Variable Annuity
 
1,173,286

 
5,898,958

The Principal Variable Annuity with Purchase Payment Credit Rider
 
12,237

 
156,830

Principal Investment Plus Variable Annuity
 
1,892,768

 
3,102,209

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
307,436

 
1,245,670

 
 
 
 
 


146



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
Division
 
Purchases
 
Sales
LargeCap Growth Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
—

$
10

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
6,102

 
—
 
 
 
 
 
LargeCap Growth I Class 1 Division:
 
 
 
 
Premier Variable
$
129,801

$
90,042

Principal Freedom Variable Annuity
 
371,018

 
323,697

Principal Freedom Variable Annuity 2
 
89,774

 
11,763

The Principal Variable Annuity
 
19,860,613

 
16,348,352

The Principal Variable Annuity with Purchase Payment Credit Rider
 
145,626

 
522,745

Principal Investment Plus Variable Annuity
 
6,373,798

 
2,399,719

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
753,772

 
1,760,490

 
 
 
 
 
LargeCap S&P 500 Index Class 1 Division:
 
 
 
 
Premier Variable
$
159,210

$
191,464

Principal Freedom Variable Annuity
 
524,936

 
1,099,258

Principal Freedom Variable Annuity 2
 
217,928

 
260,698

The Principal Variable Annuity
 
4,654,271

 
11,240,769

The Principal Variable Annuity with Purchase Payment Credit Rider
 
11,687

 
429,300

Principal Investment Plus Variable Annuity
 
9,671,055

 
7,393,877

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,202,572

 
3,688,766

 
 
 
 
 
LargeCap Value Class 1 Division:
 
 
 
 
Bankers Flexible Annuity
$
135,282

$
228,421

Pension Builder Plus
 
333,814

 
169,669

Pension Builder Plus – Rollover IRA
 
34,477

 
109,390

Personal Variable
 
95,259

 
126,897

Premier Variable
 
1,347,207

 
1,205,461

Principal Freedom Variable Annuity
 
718,161

 
777,841

Principal Freedom Variable Annuity 2
 
56,442

 
29,766

The Principal Variable Annuity
 
11,126,873

 
11,378,053

The Principal Variable Annuity with Purchase Payment Credit Rider
 
69,772

 
381,777

Principal Investment Plus Variable Annuity
 
6,955,077

 
4,295,144

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
874,213

 
2,412,499

 
 
 
 
 
MFS VIT International Value Service Class Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
58,426

$
57

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
3,531

 
—

 
 
 
 
 
MFS VIT New Discovery Service Class Division:
 
 
 
 
The Principal Variable Annuity
$
266,709

$
196,344

The Principal Variable Annuity with Purchase Payment Credit Rider
 
8,002

 
5,077

Principal Investment Plus Variable Annuity
 
615,562

 
98,836

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
52,321

 
39,500

 
 
 
 
 
MFS VIT Utilities Service Class Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
5,539,968

$
2,931,293

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,283,445

 
949,537

Principal Pivot Series Variable Annuity
 
112,042

 
112

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
37,248

 
—


147



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
Division
 
Purchases
 
Sales
MFS VIT Value Service Class Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
1,505,782

$
1,038,560

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
135,396

 
134,557

 
 
 
 
 
MidCap Class 1 Division:
 
 
 
 
Personal Variable
$
177,032

$
242,266

Premier Variable
 
997,664

 
1,239,998

Principal Freedom Variable Annuity
 
1,049,952

 
1,371,165

Principal Freedom Variable Annuity 2
 
179,555

 
202,431

The Principal Variable Annuity
 
28,796,539

 
43,504,663

The Principal Variable Annuity with Purchase Payment Credit Rider
 
546,907

 
2,354,348

Principal Investment Plus Variable Annuity
 
28,405,096

 
32,744,324

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,780,263

 
14,256,289

 
 
 
 
 
Money Market Class 1 Division:
 
 
 
 
Pension Builder Plus
$
—

$
2,864

Pension Builder Plus – Rollover IRA
 
—

 
1

Personal Variable
 
80,196

 
65,781

Premier Variable
 
4,685,048

 
3,806,702

Principal Freedom Variable Annuity
 
48,089

 
618,084

Principal Freedom Variable Annuity 2
 
3,015

 
46,692

The Principal Variable Annuity
 
10,220,782

 
15,117,489

The Principal Variable Annuity with Purchase Payment Credit Rider
 
(36,501)

 
673,928

Principal Investment Plus Variable Annuity
 
36,270,848

 
39,704,072

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
6,264,900

 
8,034,506

Principal Lifetime Income Solutions
 
312,877

 
188,133

 
 
 
 
 
Money Market Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
294,359

$
77,049

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
Neuberger Berman AMT Large Cap Value I Class Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
985,979

$
995,846

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
59,492

 
713,655

 
 
 
 
 
Neuberger Berman AMT Small-Cap Growth S Class Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
737,745

$
769,730

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
85,449

 
524,700

 
 
 
 
 
Neuberger Berman AMT Socially Responsive I Class Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
1,009,523

$
2,400,046

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
124,779

 
674,995

 
 
 
 
 
Oppenheimer Main Street Small Cap Service Shares Division:
 
 
 
 
The Principal Variable Annuity
$
521,936

$
210,962

The Principal Variable Annuity with Purchase Payment Credit Rider
 
2,828

 
5,857

 
 
 
 
 
PIMCO All Asset Administrative Class Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
1,861,685

$
1,084,910

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
84,712

 
326,052


148



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
Division
 
Purchases
 
Sales
PIMCO High Yield Administrative Class Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
5,066,572

$
2,879,008

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
694,264

 
739,056

Principal Pivot Series Variable Annuity
 
1,961

 
23

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
18,141

 
—

 
 
 
 
 
PIMCO Total Return Administrative Class Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
6,368,403

$
8,459,975

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
901,529

 
1,413,897

Principal Pivot Series Variable Annuity
 
—

 
37

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
35,663

 
1

 
 
 
 
 
Principal Capital Appreciation Class 1 Division:
 
 
 
 
Principal Freedom Variable Annuity 2
$
8,852

$
3,650

Principal Investment Plus Variable Annuity
 
5,597,528

 
3,029,417

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,112,253

 
729,992

 
 
 
 
 
Principal Capital Appreciation Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
191,275

$
201

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
Principal LifeTime Strategic Income Class 1 Division:
 
 
 
 
Principal Freedom Variable Annuity 2
$
19,899

$
77,537

The Principal Variable Annuity
 
499,855

 
683,604

The Principal Variable Annuity with Purchase Payment Credit Rider
 
61,192

 
641

Principal Investment Plus Variable Annuity
 
2,047,315

 
4,076,349

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
352,380

 
1,270,008

 
 
 
 
 
Principal LifeTime 2010 Class 1 Division:
 
 
 
 
Principal Freedom Variable Annuity 2
$
42,689

$
863,465

The Principal Variable Annuity
 
217,083

 
255,146

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
686

Principal Investment Plus Variable Annuity
 
3,546,948

 
4,871,638

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
274,010

 
2,258,633

 
 
 
 
 
Principal LifeTime 2020 Class 1 Division:
 
 
 
 
Principal Freedom Variable Annuity 2
$
328,731

$
396,797

The Principal Variable Annuity
 
600,229

 
1,789,289

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
666

Principal Investment Plus Variable Annuity
 
21,867,808

 
37,495,861

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,046,282

 
18,543,665

 
 
 
 
 
Principal LifeTime 2030 Class 1 Division:
 
 
 
 
Principal Freedom Variable Annuity 2
$
943,787

$
545,596

The Principal Variable Annuity
 
584,858

 
443,774

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
709

Principal Investment Plus Variable Annuity
 
13,485,805

 
5,711,184

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
2,494,865

 
1,383,828

 
 
 
 
 

149



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
Division
 
Purchases
 
Sales
Principal LifeTime 2040 Class 1 Division:
 
 
 
 
Principal Freedom Variable Annuity 2
$
43,718

$
12,396

The Principal Variable Annuity
 
279,744

 
128,610

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
697

Principal Investment Plus Variable Annuity
 
3,658,603

 
1,413,079

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
292,794

 
889,560

 
 
 
 
 
Principal LifeTime 2050 Class 1 Division:
 
 
 
 
Principal Freedom Variable Annuity 2
$
18,937

$
37,640

The Principal Variable Annuity
 
69,534

 
329,206

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
15,016

Principal Investment Plus Variable Annuity
 
2,071,638

 
768,213

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
162,761

 
498,775

 
 
 
 
 
Real Estate Securities Class 1 Division:
 
 
 
 
Premier Variable
$
184,149

$
91,250

Principal Freedom Variable Annuity 2
 
60,407

 
80,607

The Principal Variable Annuity
 
5,286,407

 
10,693,205

The Principal Variable Annuity with Purchase Payment Credit Rider
 
65,104

 
1,010,136

Principal Investment Plus Variable Annuity
 
8,766,539

 
7,269,234

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,932,220

 
2,972,103

 
 
 
 
 
Real Estate Securities Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
164,224

$
159

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
14,329

 
—

 
 
 
 
 
Rydex Commodities Strategy Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
8,139

$
15

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
5,458

 
—

 
 
 
 
 
Rydex NASDAQ 100 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
97,933

$
101

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
SAM Balanced Portfolio Class 1 Division:
 
 
 
 
Premier Variable
$
244,807

$
222,291

Principal Freedom Variable Annuity
 
—

 
—

Principal Freedom Variable Annuity 2
 
500,995

 
344,676

The Principal Variable Annuity
 
18,032,042

 
13,361,023

The Principal Variable Annuity with Purchase Payment Credit Rider
 
313,771

 
1,485,638

Principal Investment Plus Variable Annuity
 
121,276,665

 
139,199,872

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
20,748,255

 
23,321,640

 
 
 
 
 
SAM Balanced Portfolio Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
549,449

$
392

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
86,559

 
—

 
 
 
 
 

150



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
Division
 
Purchases
 
Sales
SAM Conservative Balanced Portfolio Class 1 Division:
 
 
 
 
Principal Freedom Variable Annuity 2
$
178,305

$
339,396

The Principal Variable Annuity
 
5,099,390

 
4,353,454

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
392,419

Principal Investment Plus Variable Annuity
 
31,456,707

 
32,389,008

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
5,789,949

 
5,005,460

 
 
 
 
 
SAM Conservative Balanced Portfolio Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
245,464

$
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
309,723

 
163

 
 
 
 
 
SAM Conservative Growth Portfolio Class 1 Division:
 
 
 
 
Principal Freedom Variable Annuity 2
$
365,469

$
36,872

The Principal Variable Annuity
 
4,230,010

 
3,424,483

The Principal Variable Annuity with Purchase Payment Credit Rider
 
5,817

 
374,654

Principal Investment Plus Variable Annuity
 
23,535,762

 
7,365,465

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
4,295,411

 
2,537,266

 
 
 
 
 
SAM Conservative Growth Portfolio Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
450,381

$
28,642

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
9,313

 
—

 
 
 
 
 
SAM Flexible Income Portfolio Class 1 Division:
 
 
 
 
Principal Freedom Variable Annuity 2
$
180,806

$
547,860

The Principal Variable Annuity
 
10,538,414

 
8,297,693

The Principal Variable Annuity with Purchase Payment Credit Rider
 
51,240

 
784,355

Principal Investment Plus Variable Annuity
 
33,784,939

 
25,734,709

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
3,043,545

 
6,449,116

 
 
 
 
 
SAM Flexible Income Portfolio Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
20,337

$
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
396,846

 
334

 
 
 
 
 
SAM Strategic Growth Portfolio Class 1 Division:
 
 
 
 
Principal Freedom Variable Annuity 2
 
210,696

 
202,535

The Principal Variable Annuity
 
2,264,402

 
2,460,537

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
33,298

Principal Investment Plus Variable Annuity
 
14,948,099

 
3,733,175

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
6,228,998

 
3,153,250

 
 
 
 
 
SAM Strategic Growth Portfolio Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
638,808

$
28,857

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
15,319

 
—

 
 
 
 
 
Short-Term Income Class 1 Division:
 
 
 
 
Principal Freedom Variable Annuity
$
228,755

$
508,478

Principal Freedom Variable Annuity 2
 
3,963

 
13,060

The Principal Variable Annuity
 
4,624,609

 
7,777,443

The Principal Variable Annuity with Purchase Payment Credit Rider
 
18,718

 
564,934

Principal Investment Plus Variable Annuity
 
27,093,210

 
34,849,025

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,920,705

 
11,888,230


151



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
Division
 
Purchases
 
Sales
Short-Term Income Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
14,470

$
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
79,296

 
59

 
 
 
 
 
SmallCap Blend Class 1 Division:
 
 
 
 
Premier Variable
$
78,482

$
48,747

Principal Freedom Variable Annuity
 
210,511

 
456,841

Principal Freedom Variable Annuity 2
 
40,409

 
79,841

The Principal Variable Annuity
 
2,346,358

 
6,142,992

The Principal Variable Annuity with Purchase Payment Credit Rider
 
50,846

 
327,194

Principal Investment Plus Variable Annuity
 
2,853,007

 
315,933

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
347,349

 
158,556

 
 
 
 
 
SmallCap Growth II Class 1 Division:
 
 
 
 
Premier Variable
$
37,796

$
120,807

Principal Freedom Variable Annuity
 
28,453

 
76,978

Principal Freedom Variable Annuity 2
 
2,480

 
1,197

The Principal Variable Annuity
 
951,026

 
4,724,484

The Principal Variable Annuity with Purchase Payment Credit Rider
 
7,653

 
136,144

Principal Investment Plus Variable Annuity
 
1,995,935

 
2,512,886

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
220,677

 
958,772

 
 
 
 
 
SmallCap Growth II Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
6,511

$
6

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
SmallCap Value I Class 1 Division:
 
 
 
 
Premier Variable
$
90,996

$
112,224

Principal Freedom Variable Annuity 2
 
24,531

 
21,199

The Principal Variable Annuity
 
4,636,012

 
6,595,406

The Principal Variable Annuity with Purchase Payment Credit Rider
 
45,152

 
357,480

Principal Investment Plus Variable Annuity
 
11,445,377

 
12,257,547

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,206,181

 
5,115,583

 
 
 
 
 
SmallCap Value I Class 2 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
29,378

$
12

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
 
 
 
 
T. Rowe Price Blue Chip Growth Portfolio II Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
2,519,744

$
2,455,641

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
901,812

 
854,113

 
 
 
 
 
T. Rowe Price Health Sciences Portfolio II Division:
 
 
 
 
Principal Investment Plus Variable Annuity
$
10,534,270

$
6,143,590

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
3,009,753

 
3,368,389

 
 
 
 
 
Templeton Global Bond VIP Class 4 Division:
 
 
 
 
Principal Pivot Series Variable Annuity
$
15,002

$
74

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
53,414

 
—

 
 
 
 
 
 
 
 
 
 

152



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
Division
 
Purchases
 
Sales
Templeton Growth VIP Class 2 Division:
 
 
 
 
Principal Freedom Variable Annuity
$
66,409

$
137,901

 
 
 
 
 
Van Eck Global Hard Assets Class S Division:
 
 
 
 
The Principal Variable Annuity
$
686,509

$
1,099,713

The Principal Variable Annuity with Purchase Payment Credit Rider
 
728

 
17,603

Principal Investment Plus Variable Annuity
 
2,083,173

 
1,924,861

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
283,391

 
284,680

Principal Pivot Series Variable Annuity
 
96,889

 
32

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
12,864

 
—



153



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014

5. Changes in Units Outstanding

Transactions in units were as follows for each of the periods ended December 31:
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
 
 
 
 
 
 
 
 
 
AllianceBernstein Small Cap Growth Class A Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
31,807

 
47,758

 
46,073

 
36,011

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,744

 
27,400

 
14,481

 
16,029

 
 
 
 
 
 
 
 
 
AllianceBernstein Small/Mid Cap Value Class A Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
11,477

 
7,185

 
17,834

 
417

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
—

 
—

 
—

Principal Investment Plus Variable Annuity
 
113,956

 
39,887

 
57,039

 
30

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
24,787

 
7,908

 
21,270

 
1,026

 
 
 
 
 
 
 
 
 
American Century VP Capital Appreciation Class I Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
230,626

 
31,775

 
—

 
—

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
74,933

 
32,480

 
—

 
—

 
 
 
 
 
 
 
 
 
American Century VP Income & Growth Class I Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity
 
9,549

 
29,998

 
11,636

 
43,831

Principal Freedom Variable Annuity 2
 
3,953

 
478

 
499

 
275

The Principal Variable Annuity
 
24,011

 
126,769

 
141,847

 
189,862

The Principal Variable Annuity with Purchase Payment Credit Rider
 
78

 
6,454

 
960

 
57,836

 
 
 
 
 
 
 
 
 
American Century VP Inflation Protection Class II Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
933,410

 
1,508,391

 
1,590,495

 
1,479,340

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
77,157

 
687,048

 
324,114

 
572,917

Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
1,583

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
American Century VP MidCap Value Class II Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
33,670

 
30,094

 
44,860

 
37,733

The Principal Variable Annuity with Purchase Payment Credit Rider
 
20

 
4,345

 
4,006

 
3,832

Principal Investment Plus Variable Annuity
 
84,920

 
37,853

 
71,395

 
62,199

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
21,450

 
17,600

 
14,649

 
1,316

 
 
 
 
 
 
 
 
 
American Century VP Ultra Class I Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
14,519

 
58,530

 
40,018

 
86,908

The Principal Variable Annuity with Purchase Payment Credit Rider
 
---

 
4,420

 
1,254

 
19,873

 
 
 
 
 
 
 
 
 
American Century VP Ultra Class II Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
369,714

 
804,296

 
321,488

 
1,094,339

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
37,632

 
381,737

 
17,808

 
462,250

 
 
 
 
 
 
 
 
 
American Century VP Value Class II Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
79,127

 
233,617

 
159,697

 
294,539

The Principal Variable Annuity with Purchase Payment Credit Rider
 
720

 
26,366

 
2,559

 
126,260

Principal Pivot Series Variable Annuity
 
2,093

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
1,385

 
—

 
—

 
—


154



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
American Funds Insurance Series Blue Chip Income & Growth Fund Class 4 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
7,327

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
2,798

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
American Funds Insurance Series Global Small Capitalization Fund Class 2 Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
11,077

 
1,699

 
—

 
—

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
American Funds Insurance Series Global Small Capitalization Fund Class 4 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
798

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
American Funds Insurance Series High-Income Bond Class 2 Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
31,820

 
10,027

 
—

 
—

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk Asset Allocation Fund Class P2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk Growth Fund Class P2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
3,056

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk International Fund Class P2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
1,897

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
American Funds Insurance Series New World Fund Class 2 Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
17,429

 
671

 
—

 
—

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
American Funds Insurance Series New World Fund Class 4 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
5,772

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Balanced Class 1 Division:
 
 
 
 
 
 
 
 
Personal Variable
 
12,099

 
33,836

 
12,590

 
18,386

Premier Variable
 
143,248

 
178,933

 
239,363

 
280,348

The Principal Variable Annuity
 
41,599

 
177,907

 
87,048

 
268,554

The Principal Variable Annuity with Purchase Payment Credit Rider
 
204

 
8,329

 
1,517

 
36,917

 
 
 
 
 
 
 
 
 
Bond & Mortgage Securities Class 1 Division:
 
 
 
 
 
 
 
 
Personal Variable
 
9,341

 
28,745

 
7,845

 
3,415

Premier Variable
 
137,940

 
199,154

 
457,170

 
664,021

Principal Freedom Variable Annuity
 
40,860

 
60,236

 
26,341

 
71,009

Principal Freedom Variable Annuity 2
 
6,715

 
9,954

 
7,480

 
18,246

The Principal Variable Annuity
 
317,975

 
675,917

 
476,370

 
1,098,635

The Principal Variable Annuity with Purchase Payment Credit Rider
 
3,827

 
70,872

 
13,572

 
224,526

Principal Investment Plus Variable Annuity
 
739,215

 
1,089,990

 
985,508

 
1,120,891

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
76,856

 
509,568

 
190,388

 
480,547


155



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
Calvert EAFE International Index Class F Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
593

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Calvert Russell 2000 Small Cap Index Class F Division
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
1,208

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
841

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Calvert S&P MidCap 400 Index Class F Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
2,456

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
1,038

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Delaware Small Cap Value Service Class Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
3,420

 
1,690

 
1,258

 
—

The Principal Variable Annuity with Purchase Payment Credit Rider
 
167

 
442

 
421

 
—

Principal Investment Plus Variable Annuity
 
59,953

 
26,516

 
14,581

 
152

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
5,614

 
585

 
7,696

 
774

 
 
 
 
 
 
 
 
 
Diversified Balanced Class 2 Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
13,176,718

 
6,333,753

 
17,780,210

 
5,009,850

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,583,756

 
1,023,838

 
1,908,418

 
604,332

Principal Lifetime Income Solutions
 
82,089

 
142,995

 
1,589,704

 
151,583

Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Diversified Balanced Managed Volatility Class 2 Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
6,414,941

 
342,414

 
64,506

 
34

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
442,869

 
50,954

 
—

 
—

Principal Lifetime Income Solutions
 
1,466,513

 
52,000

 
22,610

 
13

Principal Pivot Series Variable Annuity
 
743

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Diversified Growth Class 2 Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
44,630,770

 
11,290,992

 
55,597,020

 
6,793,866

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
3,514,870

 
1,115,165

 
4,758,787

 
803,317

Principal Lifetime Income Solutions
 
91,547

 
189,499

 
2,249,024

 
82,331

Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Diversified Growth Managed Volatility Class 2 Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
11,620,242

 
619,952

 
309,245

 
180

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
1,158,656

 
181,215

 
25,639

 
20

Principal Lifetime Income Solutions
 
1,880,856

 
55,399

 
58,539

 
24

Principal Pivot Series Variable Annuity
 
2,641

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Diversified Income Class 2 Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
7,244,955

 
3,165,366

 
6,565,483

 
2,415,060

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
251,987

 
176,002

 
548,855

 
287,042

Principal Lifetime Income Solutions
 
192,860

 
73,862

 
400,339

 
20,057


156



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
Diversified International Class 1 Division:
 
 
 
 
 
 
 
 
Personal Variable
 
11,312

 
30,733

 
10,167

 
7,999

Premier Variable
 
71,509

 
200,863

 
148,103

 
242,862

Principal Freedom Variable Annuity
 
3,984

 
20,971

 
7,073

 
53,408

Principal Freedom Variable Annuity 2
 
6,771

 
11,591

 
7,483

 
12,070

The Principal Variable Annuity
 
242,883

 
754,308

 
349,317

 
928,518

The Principal Variable Annuity with Purchase Payment Credit Rider
 
3,670

 
59,705

 
8,549

 
225,503

Principal Investment Plus Variable Annuity
 
363,166

 
367,243

 
237,102

 
390,104

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
42,960

 
224,750

 
31,477

 
146,592

 
 
 
 
 
 
 
 
 
Diversified International Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
2,773

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Dreyfus Investment Portfolio Technology Growth Service Shares Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
71,968

 
63,463

 
63,566

 
52,654

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
20,753

 
20,037

 
9,381

 
6,355

 
 
 
 
 
 
 
 
 
DWS Alternative Asset Allocation Class B Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
DWS Equity 500 Index Class B2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
1,704

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
4,079

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
DWS Small Mid Cap Value Class B Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
2,295

 
17

 
2,422

 
1,356

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
—

 
—

 
—

Principal Investment Plus Variable Annuity
 
32,430

 
1,124

 
7,832

 
26

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
6,467

 
699

 
4,006

 
—

Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Equity Income Class 1 Division:
 
 
 
 
 
 
 
 
Premier Variable
 
39,296

 
50,758

 
40,003

 
13,628

The Principal Variable Annuity
 
283,778

 
944,386

 
612,812

 
1,214,354

The Principal Variable Annuity with Purchase Payment Credit Rider
 
3,025

 
59,782

 
5,403

 
301,254

Principal Investment Plus Variable Annuity
 
1,822,346

 
4,054,169

 
1,949,078

 
4,227,026

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
150,929

 
1,786,979

 
224,576

 
1,708,605

 
 
 
 
 
 
 
 
 
Equity Income Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
5,846

 
1

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
2,088

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Fidelity VIP Contrafund Service Class Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
110,980

 
439,435

 
201,796

 
581,531

The Principal Variable Annuity with Purchase Payment Credit Rider
 
1,325

 
20,363

 
4,402

 
95,858

 
 
 
 
 
 
 
 
 
Fidelity VIP Contrafund Service Class 2 Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
389,788

 
511,310

 
297,205

 
552,961

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
33,117

 
201,867

 
33,206

 
152,070

Principal Pivot Series Variable Annuity
 
9,899

 
1

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
2,595

 
—

 
—

 
—


157



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
Fidelity VIP Equity-Income Service Class 2 Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
70,388

 
297,369

 
212,859

 
477,606

The Principal Variable Annuity with Purchase Payment Credit Rider
 
2,059

 
23,779

 
2,312

 
137,872

Principal Investment Plus Variable Annuity
 
113,925

 
110,826

 
134,061

 
131,180

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
19,150

 
55,455

 
26,611

 
54,665

 
 
 
 
 
 
 
 
 
Fidelity VIP Growth Service Class Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
53,615

 
257,201

 
100,100

 
291,111

The Principal Variable Annuity with Purchase Payment Credit Rider
 
33

 
6,949

 
1,159

 
31,562

 
 
 
 
 
 
 
 
 
Fidelity VIP Growth Service Class 2 Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
148,377

 
100,317

 
64,369

 
67,557

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
34,838

 
68,836

 
10,392

 
41,103

 
 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity 2
 
6,676

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class 2 Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
180,264

 
101,276

 
129,801

 
89,195

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
18,885

 
29,418

 
25,384

 
34,958

Principal Pivot Series Variable Annuity
 
14,188

 
1

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
1,364

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Fidelity VIP Overseas Service Class 2 Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
543,810

 
539,423

 
275,223

 
647,101

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
64,570

 
306,860

 
32,774

 
281,333

Principal Pivot Series Variable Annuity
 
155

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
295

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Franklin Global Real Estate VIP Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
1,516

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
2,418

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Franklin Rising Dividends VIP Class 4 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
989

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
5,916

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Franklin Small Cap Value VIP Class 2 Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
9,921

 
8,029

 
8,482

 
80

The Principal Variable Annuity with Purchase Payment Credit Rider
 
353

 
107

 
69

 
—

Principal Investment Plus Variable Annuity
 
53,173

 
46,097

 
96,587

 
64,964

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
8,437

 
11,652

 
17,196

 
13,835

 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Mid Cap Value Institutional Shares Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
5,805

 
1,608

 
2,670

 
21

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
—

 
—

 
—

Principal Investment Plus Variable Annuity
 
205,487

 
172,073

 
106,295

 
166,496

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
19,336

 
129,616

 
10,347

 
74,614

 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Mid Cap Value Service Shares Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
976

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
728

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

158



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
136

 
289

 
5,555

 
73

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
—

 
—

 
—

Principal Investment Plus Variable Annuity
 
74,699

 
47,951

 
51,562

 
81,915

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
5,683

 
66,801

 
14,454

 
29,452

 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Small Cap Equity Insights Service Shares Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
488

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Government & High Quality Bond Class 1 Division:
 
 
 
 
 
 
 
 
Pension Builder Plus
 
—

 
12,053

 
6

 
3,520

Pension Builder Plus – Rollover IRA
 
—

 
39

 
—

 
42

Personal Variable
 
6,702

 
10,668

 
9,088

 
4,044

Premier Variable
 
143,540

 
208,680

 
340,833

 
423,903

Principal Freedom Variable Annuity
 
34,200

 
67,835

 
24,629

 
56,859

Principal Freedom Variable Annuity 2
 
4,662

 
9,544

 
5,115

 
5,573

The Principal Variable Annuity
 
571,823

 
1,585,012

 
787,654

 
2,481,389

The Principal Variable Annuity with Purchase Payment Credit Rider
 
6,529

 
109,802

 
15,180

 
304,855

Principal Investment Plus Variable Annuity
 
805,260

 
1,265,587

 
1,141,355

 
1,466,577

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
118,933

 
520,569

 
252,244

 
622,522

 
 
 
 
 
 
 
 
 
Government & High Quality Bond Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
1,173

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
796

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Guggenheim Floating Rate Strategies Series F Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
226

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
1,074

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Guggenheim Investments Global Managed Futures Strategy Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
1,984

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Guggenheim Investments Long Short Equity Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
3,580

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
524

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Guggenheim Investments Multi-Hedge Strategies Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
409

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
358

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Guggenheim Macro Opportunities Series M Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
International Emerging Markets Class 1 Division:
 
 
 
 
 
 
 
 
Premier Variable
 
14,755

 
18,267

 
50,146

 
67,246

The Principal Variable Annuity
 
112,574

 
247,367

 
187,950

 
317,526

The Principal Variable Annuity with Purchase Payment Credit Rider
 
3,264

 
30,267

 
12,783

 
86,558

Principal Investment Plus Variable Annuity
 
237,683

 
215,155

 
243,804

 
206,059

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
28,257

 
114,896

 
48,464

 
73,008


159



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
Invesco American Franchise Series I Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
16,164

 
78,933

 
26,360

 
96,211

The Principal Variable Annuity with Purchase Payment Credit Rider
 
14

 
1,180

 
471

 
3,270

 
 
 
 
 
 
 
 
 
Invesco Balanced-Risk Allocation Series II Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Invesco Core Equity Series I Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
80,693

 
316,964

 
73,745

 
377,704

The Principal Variable Annuity with Purchase Payment Credit Rider
 
80

 
859

 
25

 
23,323

 
 
 
 
 
 
 
 
 
Invesco Global Health Care Series I Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
80,899

 
139,007

 
204,498

 
186,215

The Principal Variable Annuity with Purchase Payment Credit Rider
 
893

 
8,206

 
2,265

 
21,428

 
 
 
 
 
 
 
 
 
Invesco Global Health Care Series II Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
6,479

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
427

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Invesco International Growth Series I Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
302,882

 
170,032

 
248,145

 
189,479

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
42,048

 
23,662

 
14,495

 
17,172

 
 
 
 
 
 
 
 
 
Invesco International Growth Series II Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
2,766

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
588

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Invesco Mid Cap Growth Series I Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
17,369

 
28,294

 
32,259

 
56,439

The Principal Variable Annuity with Purchase Payment Credit Rider
 
112

 
5,456

 
85

 
11,981

 
 
 
 
 
 
 
 
 
Invesco Small Cap Equity Series I Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
11,239

 
61,481

 
47,661

 
60,192

The Principal Variable Annuity with Purchase Payment Credit Rider
 
2

 
1,774

 
579

 
17,677

Principal Investment Plus Variable Annuity
 
53,854

 
52,241

 
35,908

 
45,934

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
12,454

 
23,278

 
19,420

 
20,440

 
 
 
 
 
 
 
 
 
Invesco Technology Series I Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
92,795

 
82,330

 
89,848

 
131,932

The Principal Variable Annuity with Purchase Payment Credit Rider
 
274

 
9,495

 
3,332

 
49,634

 
 
 
 
 
 
 
 
 
Invesco Value Opportunities Series I Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
38,007

 
57,523

 
51,698

 
78,589

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
6,060

 
28,076

 
22,913

 
22,407

 
 
 
 
 
 
 
 
 
Janus Aspen Enterprise Service Shares Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
22,438

 
121,380

 
91,461

 
218,296

The Principal Variable Annuity with Purchase Payment Credit Rider
 
598

 
3,156

 
1,806

 
19,308

 
 
 
 
 
 
 
 
 
Janus Aspen Flexible Bond Service Shares Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
2,408

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
4,825

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

160



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
LargeCap Blend II Class 1 Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
100,077

 
484,921

 
248,250

 
669,357

The Principal Variable Annuity with Purchase Payment Credit Rider
 
1,832

 
62,958

 
2,883

 
224,311

Principal Investment Plus Variable Annuity
 
531,606

 
1,107,870

 
392,786

 
1,289,754

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
38,585

 
617,664

 
29,798

 
586,944

Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
LargeCap Blend II Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
LargeCap Growth Class 1 Division:
 
 
 
 
 
 
 
 
Personal Variable
 
23,452

 
46,918

 
127,907

 
116,168

Premier Variable
 
933,973

 
1,047,935

 
1,029,535

 
1,090,870

The Principal Variable Annuity
 
36,529

 
198,939

 
56,530

 
280,709

The Principal Variable Annuity with Purchase Payment Credit Rider
 
381

 
5,289

 
2,016

 
11,560

Principal Investment Plus Variable Annuity
 
66,664

 
108,499

 
57,402

 
102,451

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
10,828

 
43,567

 
9,814

 
26,214

 
 
 
 
 
 
 
 
 
LargeCap Growth Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
591

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
LargeCap Growth I Class 1 Division:
 
 
 
 
 
 
 
 
Premier Variable
 
20,383

 
44,086

 
247,165

 
192,379

Principal Freedom Variable Annuity
 
2,907

 
18,504

 
6,848

 
18,401

Principal Freedom Variable Annuity 2
 
3,918

 
615

 
67

 
321

The Principal Variable Annuity
 
61,644

 
293,976

 
101,382

 
370,995

The Principal Variable Annuity with Purchase Payment Credit Rider
 
452

 
9,400

 
888

 
54,838

Principal Investment Plus Variable Annuity
 
66,683

 
44,835

 
70,277

 
51,441

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
7,886

 
32,892

 
6,784

 
19,750

 
 
 
 
 
 
 
 
 
LargeCap S&P 500 Index Class 1 Division:
 
 
 
 
 
 
 
 
Premier Variable
 
78,341

 
103,055

 
204,267

 
127,823

Principal Freedom Variable Annuity
 
13,646

 
64,426

 
16,901

 
92,203

Principal Freedom Variable Annuity 2
 
12,557

 
15,731

 
15,701

 
16,923

The Principal Variable Annuity
 
195,145

 
710,188

 
360,582

 
777,913

The Principal Variable Annuity with Purchase Payment Credit Rider
 
490

 
27,123

 
3,108

 
178,405

Principal Investment Plus Variable Annuity
 
561,507

 
475,443

 
508,457

 
494,943

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
69,822

 
237,196

 
72,238

 
184,415

 
 
 
 
 
 
 
 
 
LargeCap Value Class 1 Division:
 
 
 
 
 
 
 
 
Bankers Flexible Annuity
 
—

 
3,653

 
—

 
3,817

Pension Builder Plus
 
50

 
15,269

 
4

 
13,655

Pension Builder Plus – Rollover IRA
 
—

 
9,806

 
781

 
309

Personal Variable
 
7,142

 
25,816

 
5,586

 
10,708

Premier Variable
 
72,897

 
242,157

 
165,907

 
263,892

Principal Freedom Variable Annuity
 
13,770

 
46,330

 
41,456

 
37,633

Principal Freedom Variable Annuity 2
 
11

 
1,753

 
1,978

 
6,394

The Principal Variable Annuity
 
47,045

 
282,621

 
97,513

 
359,150

The Principal Variable Annuity with Purchase Payment Credit Rider
 
295

 
9,483

 
1,932

 
30,659

Principal Investment Plus Variable Annuity
 
117,046

 
112,256

 
90,309

 
123,637

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
14,712

 
63,052

 
24,193

 
52,228


161



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
MFS VIT International Value Service Class Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
5,858

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
354

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
MFS VIT New Discovery Service Class Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
19,365

 
17,556

 
21,364

 
2,685

The Principal Variable Annuity with Purchase Payment Credit Rider
 
581

 
454

 
477

 
65

Principal Investment Plus Variable Annuity
 
43,307

 
8,570

 
25,674

 
4,380

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
3,681

 
3,425

 
11,490

 
1,299

 
 
 
 
 
 
 
 
 
MFS VIT Utilities Service Class Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
224,837

 
126,283

 
239,415

 
140,826

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
52,088

 
40,907

 
48,928

 
33,209

Principal Pivot Series Variable Annuity
 
11,274

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
3,748

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
MFS VIT Value Service Class Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
63,970

 
47,445

 
149,382

 
67,707

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
5,752

 
6,147

 
21,732

 
14,202

 
 
 
 
 
 
 
 
 
MidCap Class 1 Division:
 
 
 
 
 
 
 
 
Personal Variable
 
9,089

 
28,270

 
8,592

 
5,197

Premier Variable
 
43,072

 
141,811

 
122,806

 
156,888

Principal Freedom Variable Annuity
 
3,420

 
31,278

 
13,544

 
62,553

Principal Freedom Variable Annuity 2
 
5,029

 
8,615

 
7,784

 
10,434

The Principal Variable Annuity
 
106,360

 
540,716

 
253,072

 
699,996

The Principal Variable Annuity with Purchase Payment Credit Rider
 
2,020

 
29,262

 
3,649

 
131,896

Principal Investment Plus Variable Annuity
 
205,013

 
421,152

 
303,209

 
492,587

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
12,849

 
183,362

 
49,978

 
194,435

 
 
 
 
 
 
 
 
 
Money Market Class 1 Division:
 
 
 
 
 
 
 
 
Pension Builder Plus
 
—

 
657

 
6

 
8,358

Pension Builder Plus – Rollover IRA
 
—

 
—

 
—

 
—

Personal Variable
 
50,198

 
39,295

 
230,272

 
272,705

Premier Variable
 
2,793,612

 
2,260,325

 
2,445,022

 
2,595,321

Principal Freedom Variable Annuity
 
4,029

 
50,339

 
71,432

 
114,865

Principal Freedom Variable Annuity 2
 
290

 
4,280

 
360

 
12,500

The Principal Variable Annuity
 
755,485

 
1,096,247

 
1,198,478

 
1,979,507

The Principal Variable Annuity with Purchase Payment Credit Rider
 
(2,698)

 
48,870

 
14,747

 
192,450

Principal Investment Plus Variable Annuity
 
2,713,589

 
2,951,076

 
3,919,460

 
3,760,485

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
468,706

 
597,179

 
774,385

 
983,173

Principal Lifetime Income Solutions
 
23,121

 
13,826

 
128,316

 
128,316

 
 
 
 
 
 
 
 
 
Money Market Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
29,505

 
7,703

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Large Cap Value I Class Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
52,753

 
53,559

 
50,686

 
107,853

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
3,183

 
38,382

 
3,820

 
28,947

 
 
 
 
 
 
 
 
 

162



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
Neuberger Berman AMT Small-Cap Growth S Class Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
34,440

 
52,624

 
40,460

 
64,174

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
3,989

 
35,872

 
14,958

 
33,792

 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Socially Responsive I Class Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
51,342

 
120,597

 
44,908

 
103,743

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
6,346

 
33,917

 
18,583

 
32,859

 
 
 
 
 
 
 
 
 
Oppenheimer Main Street Small Cap Service Shares Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
36,352

 
17,036

 
36,653

 
4,329

The Principal Variable Annuity with Purchase Payment Credit Rider
 
197

 
473

 
416

 
—

 
 
 
 
 
 
 
 
 
PIMCO All Asset Administrative Class Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
105,927

 
69,340

 
235,730

 
206,943

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
4,820

 
20,839

 
50,880

 
56,064

 
 
 
 
 
 
 
 
 
PIMCO High Yield Administrative Class Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
311,483

 
194,141

 
712,231

 
631,534

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
42,682

 
49,837

 
133,961

 
292,490

Principal Pivot Series Variable Annuity
 
197

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
1,823

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
PIMCO Total Return Administrative Class Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
467,065

 
653,099

 
636,408

 
1,405,014

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
66,119

 
109,151

 
58,080

 
351,484

Principal Pivot Series Variable Annuity
 
—

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
3,500

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Principal Capital Appreciation Class 1 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity 2
 
---

 
202

 
45

 
921

Principal Investment Plus Variable Annuity
 
188,783

 
188,602

 
232,162

 
139,651

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
37,512

 
45,447

 
69,523

 
29,550

 
 
 
 
 
 
 
 
 
Principal Capital Appreciation Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
18,647

 
1

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Principal LifeTime Strategic Income Class 1 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity 2
 
—

 
5,534

 
—

 
4,971

The Principal Variable Annuity
 
30,044

 
45,858

 
75,979

 
59,675

The Principal Variable Annuity with Purchase Payment Credit Rider
 
3,678

 
43

 
53

 
13,516

Principal Investment Plus Variable Annuity
 
120,737

 
283,587

 
158,283

 
300,102

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
20,781

 
88,353

 
26,247

 
46,222

 
 
 
 
 
 
 
 
 
Principal LifeTime 2010 Class 1 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity 2
 
485

 
63,731

 
3,159

 
8,329

The Principal Variable Annuity
 
11,531

 
15,259

 
53,644

 
29,738

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
41

 
—

 
—

Principal Investment Plus Variable Annuity
 
193,043

 
306,577

 
301,419

 
456,139

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
14,913

 
142,138

 
9,096

 
193,399

 
 
 
 
 
 
 
 
 

163



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
Principal LifeTime 2020 Class 1 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity 2
 
8,309

 
24,697

 
3,875

 
37,695

The Principal Variable Annuity
 
22,058

 
104,753

 
119,487

 
68,041

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
39

 
172

 
19,058

Principal Investment Plus Variable Annuity
 
955,654

 
2,228,842

 
759,779

 
1,373,012

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
45,724

 
1,102,279

 
49,366

 
733,184

 
 
 
 
 
 
 
 
 
Principal LifeTime 2030 Class 1 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity 2
 
26,520

 
35,684

 
1

 
20,583

The Principal Variable Annuity
 
12,875

 
25,020

 
61,216

 
36,562

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
40

 
176

 
1,072

Principal Investment Plus Variable Annuity
 
215,217

 
298,170

 
215,285

 
354,717

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
39,815

 
72,247

 
49,070

 
91,173

 
 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 1 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity 2
 
892

 
630

 
5,432

 
2,950

The Principal Variable Annuity
 
13,635

 
7,199

 
8,039

 
5,258

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
39

 
—

 
—

Principal Investment Plus Variable Annuity
 
152,495

 
77,089

 
96,844

 
141,963

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
12,204

 
48,529

 
8,086

 
33,716

 
 
 
 
 
 
 
 
 
Principal LifeTime 2050 Class 1 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity 2
 
71

 
2,537

 
—

 
—

The Principal Variable Annuity
 
1,766

 
18,833

 
23,445

 
4,448

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
859

 
112

 
1,102

Principal Investment Plus Variable Annuity
 
73,861

 
41,245

 
44,696

 
31,575

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
5,803

 
26,779

 
8,688

 
24,415

 
 
 
 
 
 
 
 
 
Real Estate Securities Class 1 Division:
 
 
 
 
 
 
 
 
Premier Variable
 
41,489

 
21,416

 
64,242

 
62,431

Principal Freedom Variable Annuity 2
 
3,722

 
4,816

 
5,315

 
6,781

The Principal Variable Annuity
 
100,687

 
223,712

 
162,602

 
327,244

The Principal Variable Annuity with Purchase Payment Credit Rider
 
1,240

 
21,133

 
4,525

 
74,912

Principal Investment Plus Variable Annuity
 
181,581

 
153,534

 
206,555

 
135,243

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
40,022

 
62,774

 
40,309

 
48,096

 
 
 
 
 
 
 
 
 
Real Estate Securities Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
14,613

 
1

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
1,275

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Rydex Commodities Strategy Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
962

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
645

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Rydex NASDAQ 100 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
9,463

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 

164



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
SAM Balanced Portfolio Class 1 Division:
 
 
 
 
 
 
 
 
Premier Variable
 
96,495

 
112,375

 
290,270

 
123,762

Principal Freedom Variable Annuity 2
 
14,989

 
23,820

 
8,615

 
29,013

The Principal Variable Annuity
 
504,346

 
921,128

 
3,205,300

 
1,231,305

The Principal Variable Annuity with Purchase Payment Credit Rider
 
8,776

 
102,422

 
81,388

 
191,783

Principal Investment Plus Variable Annuity
 
2,124,034

 
9,622,213

 
3,389,717

 
7,485,582

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
363,384

 
1,612,112

 
963,049

 
1,290,592

 
 
 
 
 
 
 
 
 
SAM Balanced Portfolio Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
54,571

 
2

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
8,597

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 1 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity 2
 
365

 
23,916

 
9,760

 
6,713

The Principal Variable Annuity
 
218,060

 
305,326

 
410,178

 
480,936

The Principal Variable Annuity with Purchase Payment Credit Rider
 
—

 
27,522

 
4,567

 
107,816

Principal Investment Plus Variable Annuity
 
1,233,331

 
2,250,567

 
1,884,950

 
1,651,000

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
227,008

 
347,807

 
279,633

 
417,709

 
 
 
 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
24,371

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
30,751

 
2

 
—

 
—

 
 
 
 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 1 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity 2
 
9,398

 
1,575

 
17,281

 
5,377

The Principal Variable Annuity
 
147,622

 
244,524

 
362,470

 
309,796

The Principal Variable Annuity with Purchase Payment Credit Rider
 
203

 
26,752

 
12,138

 
85,772

Principal Investment Plus Variable Annuity
 
1,079,221

 
491,083

 
832,190

 
367,146

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
196,964

 
169,169

 
244,396

 
143,547

 
 
 
 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
44,683

 
2,796

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
924

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 1 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity 2
 
881

 
37,816

 
6,146

 
7,561

The Principal Variable Annuity
 
545,432

 
576,852

 
837,618

 
901,167

The Principal Variable Annuity with Purchase Payment Credit Rider
 
2,652

 
54,528

 
79,931

 
394,026

Principal Investment Plus Variable Annuity
 
1,539,032

 
1,757,754

 
1,930,245

 
2,489,870

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
138,645

 
440,493

 
536,283

 
486,335

 
 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
2,034

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
39,690

 
1

 
—

 
—

 
 
 
 
 
 
 
 
 
SAM Strategic Growth Portfolio Class 1 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity 2
 
1,737

 
14,277

 
17,318

 
9,517

The Principal Variable Annuity
 
41,999

 
176,823

 
178,974

 
148,216

The Principal Variable Annuity with Purchase Payment Credit Rider
 
---

 
2,390

 
303

 
25,200

Principal Investment Plus Variable Annuity
 
657,215

 
253,966

 
467,440

 
276,397

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
273,867

 
214,514

 
267,701

 
104,841

 
 
 
 
 
 
 
 
 

165



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
SAM Strategic Growth Portfolio Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
63,135

 
2,782

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
1,514

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Short-Term Income Class 1 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity
 
16,758

 
41,521

 
17,829

 
38,792

Principal Freedom Variable Annuity 2
 
208

 
1,034

 
563

 
11,504

The Principal Variable Annuity
 
366,408

 
647,792

 
597,147

 
1,015,451

The Principal Variable Annuity with Purchase Payment Credit Rider
 
1,483

 
47,054

 
8,089

 
108,200

Principal Investment Plus Variable Annuity
 
2,174,462

 
2,910,705

 
2,864,928

 
3,011,502

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
154,153

 
992,944

 
469,223

 
870,923

 
 
 
 
 
 
 
 
 
Short-Term Income Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
1,445

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
7,919

 
1

 
—

 
—

 
 
 
 
 
 
 
 
 
SmallCap Blend Class 1 Division:
 
 
 
 
 
 
 
 
Premier Variable
 
35,154

 
23,062

 
31,464

 
12,533

Principal Freedom Variable Annuity
 
4,050

 
16,455

 
7,384

 
25,857

Principal Freedom Variable Annuity 2
 
2,320

 
4,941

 
3,158

 
4,103

The Principal Variable Annuity
 
74,942

 
291,929

 
156,136

 
350,001

The Principal Variable Annuity with Purchase Payment Credit Rider
 
1,624

 
15,549

 
4,250

 
71,432

Principal Investment Plus Variable Annuity
 
139,739

 
15,014

 
64,450

 
24,056

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
17,013

 
7,535

 
31,053

 
5,186

 
 
 
 
 
 
 
 
 
SmallCap Growth II Class 1 Division:
 
 
 
 
 
 
 
 
Premier Variable
 
27,709

 
93,312

 
113,958

 
49,795

Principal Freedom Variable Annuity
 
2,050

 
4,583

 
2,971

 
9,486

Principal Freedom Variable Annuity 2
 
162

 
49

 
7

 
1,367

The Principal Variable Annuity
 
57,906

 
274,668

 
158,225

 
359,165

The Principal Variable Annuity with Purchase Payment Credit Rider
 
466

 
7,915

 
573

 
52,429

Principal Investment Plus Variable Annuity
 
121,324

 
149,412

 
181,535

 
128,150

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
13,414

 
57,007

 
27,254

 
42,460

 
 
 
 
 
 
 
 
 
SmallCap Growth II Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
633

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
SmallCap Value I Class 1 Division:
 
 
 
 
 
 
 
 
Premier Variable
 
18,049

 
37,968

 
101,743

 
59,235

Principal Freedom Variable Annuity 2
 
82

 
1,264

 
1,988

 
4,499

The Principal Variable Annuity
 
35,423

 
176,933

 
116,718

 
253,459

The Principal Variable Annuity with Purchase Payment Credit Rider
 
345

 
9,590

 
2,945

 
69,991

Principal Investment Plus Variable Annuity
 
196,421

 
340,237

 
161,618

 
422,458

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
20,700

 
141,995

 
24,796

 
157,951

 
 
 
 
 
 
 
 
 
SmallCap Value I Class 2 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
2,840

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
T. Rowe Price Blue Chip Growth Portfolio II Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
124,080

 
113,695

 
128,910

 
138,317

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
44,408

 
39,545

 
30,008

 
22,221

 
 
 
 
 
 
 
 
 

166



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
Division:
 
Purchases
 
Redemptions
 
Purchases
 
Redemptions
T. Rowe Price Health Sciences Portfolio II Division:
 
 
 
 
 
 
 
 
Principal Investment Plus Variable Annuity
 
233,425

 
158,823

 
235,820

 
133,971

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
66,692

 
87,079

 
95,654

 
80,797

 
 
 
 
 
 
 
 
 
Templeton Global Bond VIP Class 4 Division:
 
 
 
 
 
 
 
 
Principal Pivot Series Variable Annuity
 
1,520

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
5,412

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
Templeton Growth VIP Class 2 Division:
 
 
 
 
 
 
 
 
Principal Freedom Variable Annuity
 
2,480

 
5,891

 
2,002

 
14,236

 
 
 
 
 
 
 
 
 
Van Eck Global Hard Assets Class S Division:
 
 
 
 
 
 
 
 
The Principal Variable Annuity
 
45,291

 
72,470

 
29,404

 
61,413

The Principal Variable Annuity with Purchase Payment Credit Rider
 
48

 
1,160

 
166

 
5,288

Principal Investment Plus Variable Annuity
 
141,497

 
121,470

 
119,111

 
68,178

Principal Investment Plus Variable Annuity with Premium Payment Credit Rider
 
19,249

 
17,965

 
23,156

 
18,081

Principal Pivot Series Variable Annuity
 
12,646

 
—

 
—

 
—

Principal Pivot Series Variable Annuity with Liquidity Max Rider
 
1,679

 
—

 
—

 
—



167



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014

6. Financial Highlights

Principal Life sells a number of variable life insurance products, which have unique combinations of features and fees that are charged against the contractholder’ s account balance. Differences in the fee structures results in a variety of unit values, expense ratios, and total returns.

The Separate Account has presented the following disclosures for 2014, 2013, 2012, 2011, and 2010 in accordance with the AICPA Audit and Accounting Guide for Investment Companies. The following table was developed by determining which products issued by Principal Life have the lowest and highest total return. Only product designs within each division that had units outstanding during the respective periods were considered when determining the lowest and highest total return. The summary may not reflect the minimum and maximum contract charges offered by Principal Life as the contractholder may not have selected all available and applicable contact options as discussed in Note 2.

 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
Except as Noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3)
Corresponding to Lowest to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein Small Cap
  Growth Class A Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
194
 
$25.78 to $24.22
 

$4,945

 
–%
 
1.40% to 2.00%
 
(3.16)% to (3.77)%
 
2013
236
 
$26.62 to $25.17
 

$6,183

 
–%
 
1.40% to 2.00%
 
43.74% to 42.93%
 
2012
227
 
$18.52 to $17.61
 

$4,148

 
–%
 
1.25% to 1.85%
 
13.62% to 12.88%
 
2011
261
 
$16.30 to $15.60
 

$4,184

 
–%
 
1.25% to 1.85%
 
3.16% to 2.56%
 
2010
234
 
$15.80 to $15.21
 

$3,666

 
–%
 
1.25% to 1.85%
 
35.16% to 34.36%
 
 
 
 
 
 
 
 
 
 
 
 
 

168



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest to Highest Expense Ration
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
AllianceBernstein Small/Mid
  Cap Value Class A Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
190
 
$12.26 to $12.12
 

$2,320

 
0.76
%
 
1.30% to 2.00%
 
7.83% to 7.07%
 
2013 (8)
95
 
$11.37 to $11.32
 

$1,075

 
0.35
%
 
1.30% to 2.00%
 
13.25% to 12.75%
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Capital
   Appreciation Class I Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (10)
241.00
 
$10.80 to $10.75
 

$2,604

 
–%

 
1.40% to 2.00%
 
9.87% to 9.36%
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Income &
  Growth Class I Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
816
 
$18.42 to $16.14
 

$14,436

 
2.03
%
 
0.85% to 1.90%
 
11.50% to 10.40%
 
2013
942
 
$16.52 to $14.62
 

$14,985

 
2.19
%
 
0.85% to 1.90%
 
34.75% to 33.27%
 
2012
1,079
 
$12.26 to $10.97
 

$12,745

 
2.07
%
 
0.85% to 1.85%
 
13.73% to 12.63%
 
2011
1,298
 
$10.78 to $9.74
 

$13,458

 
1.53
%
 
0.85% to 1.85%
 
2.28% to 1.25%
 
2010
1,644
 
$10.54 to $9.62
 

$16,653

 
1.52
%
 
0.85% to 1.85%
 
13.09% to 12.12%
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Inflation
  Protection Class II Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
5,003
 
$9.94 to $12.32
 

$65,192

 
1.26
%
 
1.15% to 2.00%
 
(1.09)% to (1.23)%
 
2013
6,186
 
$12.87 to $12.17
 

$78,840

 
1.62
%
 
1.40% to 2.00%
 
(9.68)% to (10.18)%
 
2012
6,324
 
$14.25 to $13.55
 

$89,160

 
2.43
%
 
1.25% to 1.85%
 
6.03% to 5.37%
 
2011
6,219
 
$13.44 to $12.86
 

$82,771

 
4.11
%
 
1.25% to 1.85%
 
10.44% to 9.73%
 
2010
7,137
 
$12.17 to $11.72
 

$86,144

 
1.68
%
 
1.25% to 1.85%
 
3.75% to 3.17%
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Mid Cap
  Value Class II Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
280
 
$19.15 to $18.60
 

$5,329

 
1.02
%
 
1.30% to 2.00%
 
14.74% to 13.90%
 
2013
229
 
$16.69 to $16.33
 

$3,815

 
1.05
%
 
1.30% to 2.00%
 
28.29% to 27.48%
 
2012
200
 
$13.01 to $12.81
 

$2,592

 
1.87
%
 
1.25% to 1.85%
 
14.73% to 14.07%
 
2011
157
 
$11.34 to $11.23
 

$1,776

 
1.30
%
 
1.25% to 1.85%
 
(2.07)% to (2.69)%
 
2010 (5)
57
 
$11.58 to $11.54
 

$663

 
3.40
%
 
1.25% to 1.85%
 
17.33% to 16.92%
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Ultra
  Class I Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
236
 
$15.69 to $14.46
 

$3,696

 
0.39
%
 
1.30% to 1.90%
 
8.58% to 7.91%
 
2013
284
 
$14.45 to $13.40
 

$4,100

 
0.56
%
 
1.30% to 1.90%
 
35.30% to 34.54%
 
2012
350
 
$10.68 to $9.96
 

$3,716

 
–%

 
1.25% to 1.85%
 
12.54% to 11.78%
 
2011
426
 
$9.49 to $8.91
 

$3,993

 
–%

 
1.25% to 1.85%
 
(0.21)% to (0.78)%
 
2010
526
 
$9.51 to $8.98
 

$4,935

 
0.55
%
 
1.25% to 1.85%
 
14.58% to 13.96%
 
 
 
 
 
 
 
 
 
 
 
 
 

169



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
American Century VP Ultra
  Class II Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
2,449
 
$18.45 to $17.34

 

$44,865

 
0.24
%
 
1.40% to 2.00%
 
8.27% to 7.70%

 
2013
3,228
 
$17.04 to $16.10

 

$54,398

 
0.43
%
 
1.40% to 2.00%
 
35.13% to 34.28%

 
2012
4,445
 
$12.61 to $11.99

 

$55,372

 
–%

 
1.25% to 1.85%
 
12.39% to 11.74%

 
2011
5,075
 
$11.22 to $10.73

 

$56,336

 
–%

 
1.25% to 1.85%
 
(0.36)% to (1.01)%

 
2010
5,256
 
$11.26 to $10.84

 

$58,641

 
0.36
%
 
1.25% to 1.85%
 
14.31% to 13.75%

 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Value
  Class II Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
859
 
$10.15 to $19.70

 

$18,211

 
1.39
%
 
1.15% to 1.90%
 
(0.39)% to 10.74%

 
2013
1,035
 
$19.07 to $17.79

 

$19,713

 
1.49
%
 
1.30% to 1.90%
 
29.82% to 29.10%

 
2012
1,294
 
$14.69 to $13.78

 

$18,873

 
1.75
%
 
1.25% to 1.85%
 
13.09% to 12.40%

 
2011
1,634
 
$12.99 to $12.26

 

$20,924

 
1.86
%
 
1.25% to 1.85%
 
(0.38)% to (0.97)%

 
2010
1,961
 
$13.04 to $12.38

 

$25,180

 
2.05
%
 
1.25% to 1.85%
 
11.64% to 11.03%

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series
   Blue Chip Income & Growth
   Fund Class 4 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
10
 
$10.23 to $10.22

 

$104

 
6.39
%
 
1.15% to 1.40%
 
(1.54)% to (1.64)%

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series
   Global Small Capitalization
   Fund Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (11)
9
 
$10.23 to $10.20

 

$96

 
0.28
%
 
1.30% to 1.90%
 
1.39% to 1.09%

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series
   Global Small Capitalization
   Fund Class 4 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
1
 
$9.86 to $9.85

 

$8

 
0.15
%
 
1.15% to 1.40%
 
0.20% to 0.10%

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series
   High-Income Bond Class 2
   Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (11)
22
 
$9.69 to $9.65

 

$211

 
10.12
%
 
1.30% to 1.90%
 
(3.20)% to (3.60)%

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series
   Managed Risk Asset Allocation
   Fund Class P2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
-
 
$9.91 to 9.90

 
$–

 
–%

 
1.15% to 1.40%
 
(1.10) to (1.20)%

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series
   Managed Risk Growth Fund
   Class P2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
3
 

$9.78

 

$30

 
–%

 
1.15% to 1.40%
 
(1.61)% to (1.51)%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

170



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
American Funds Insurance Series
   Managed Risk International
   Fund Class P2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (11)
2
 

$9.43

 

$18

 
–%

 
1.15% to 1.40%
 
(3.870
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series
   New World Fund Class 2
   Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
17
 
$9.09 to $9.06

 

$152

 
2.00
%
 
1.30% to 1.90%
 
(9.55)% to (9.85)%

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series
   New World Fund Class 4
   Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
6
 

$9.00

 

$52

 
7.63
%
 
1.15% to 1.40%
 
(7.22)% to (7.12)%

 
 
 
 
 
 
 
 
 
 
 
 
 
Balanced Class 1 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
2,167
 
$3.30 to $26.20

 

$34,954

 
1.72
%
 
0.42% to 1.90%
 
8.36% to 6.76%

 
2013
2,369
 
$3.05 to $24.54

 

$36,507

 
1.78
%
 
0.42% to 1.90%
 
18.98% to 17.30%

 
2012
2,633
 
$2.46 to $20.92

 

$35,867

 
2.04
%
 
0.42% to 1.85%
 
12.33% to 10.92%

 
2011
2,890
 
$2.27 to $18.86

 

$36,779

 
2.30
%
 
0.43% to 1.85%
 
3.62% to 2.17%

 
2010
3,334
 
$2.19 to $18.46

 

$42,696

 
2.76
%
 
0.42% to 1.85%
 
13.15% to 11.54%

 
 
 
 
 
 
 
 
 
 
 
 
 
Bond & Mortgage Securities
  Class 1 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
8,648
 
$2.83 to $21.83

 

$180,940

 
3.11
%
 
0.44% to 2.00%
 
4.79% to 3.17%

 
2013
9,961
 
$2.70 to $21.16

 

$201,686

 
3.30
%
 
0.40% to 2.00%
 
(1.27)% to (2.76)%

 
2012
11,477
 
$2.63 to $21.76

 

$236,260

 
3.77
%
 
0.41% to 1.85%
 
6.86% to 5.58%

 
2011
12,019
 
$2.56 to $20.61

 

$235,718

 
0.10
%
 
0.40% to 1.85%
 
6.63% to 5.10%

 
2010
13,628
 
$2.40 to $19.61

 

$253,669

 
5.27
%
 
0.43% to 1.85%
 
11.19% to 9.61%

 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert EAFE International
   Index Class F Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
1
 

$9.25

 

$5

 
26.28
%
 
1.15% to 1.40%
 
(4.05)% to (3.95)%

 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert Russell 2000 Small Cap
   Index Class F Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
2
 
$10.48 to $10.47

 

$21

 
2.65
%
 
1.15% to 1.40%
 
1.45% to 1.36%

 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert S&P MidCap 400
   Index Class F Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
3
 
$10.23 to $10.22

 

$36

 
5.13
%
 
1.15% to 1.40%
 
(0.100
)%
 
 
 
 
 
 
 
 
 
 
 
 
 

171



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
Delaware Small Cap Value
   Service Class Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
63
 
$11.88 to $11.75
 

$746

 
0.29
%
 
1.30% to 2.00%
 
4.21% to 3.52%

 
2013 (8)
23
 
$11.40 to $11.35
 

$262

 
–%

 
1.30% to 2.00%
 
13.66% to 13.16%

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Balanced Class 2
   Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
71,134
 
$14.25 to $13.83
 

$1,011,135

 
0.89
%
 
1.40% to 2.00%
 
5.95% to 5.33%

 
2013
63,792
 
$13.45 to $13.13
 

$856,504

 
0.33
%
 
1.40% to 2.00%
 
11.43% to 10.80%

 
2012
48,279
 
$12.07 to $11.85
 

$581,720

 
0.96
%
 
1.25% to 1.85%
 
8.35% to 7.73%

 
2011
29,822
 
$11.14 to $11.00
 

$331,823

 
0.96
%
 
1.25% to 1.85%
 
(0.71)% to 1.66%

 
2010 (4)
15,601
 
$10.88 to $10.82
 

$169,723

 
–%

 
1.25% to 1.85%
 
7.94% to 7.34%

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Balanced Managed
   Volatility Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
7,967
 
$10.16 to $10.54
 

$84,544

 
0.01
%
 
1.15% to 2.00%
 
(0.20)% to 4.77%

 
2013 (9)
87
 
$10.07 to $10.06
 

$877

 
–%

 
1.40% to 2.00%
 
0.90% to 0.80%

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Growth Class 2
   Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
189,924
 
$15.20 to $14.76
 

$2,881,637

 
0.96
%
 
1.40% to 2.00%
 
6.29% to 5.73%

 
2013
154,283
 
$14.30 to $13.96
 

$2,202,298

 
0.45
%
 
1.40% to 2.00%
 
16.45% to 15.75%

 
2012
99,357
 
$12.28 to $12.06
 

$1,218,656

 
0.85
%
 
1.25% to 1.85%
 
10.23% to 9.54%

 
2011
67,150
 
$11.14 to $11.01
 

$747,474

 
0.75
%
 
1.25% to 1.85%
 
(2.45)% to 0.36%

 
2010 (4)
29,374
 
$11.03 to $10.97
 

$323,912

 
–%

 
1.25% to 1.85%
 
9.10% to 8.51%

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Growth Managed
   Volatility Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
14,199
 
$10.14 to $10.61
 

$151,625

 
0.02
%
 
1.15% to 2.00%
 
(0.39)% to 4.95%

 
2013 (9)
393
 
$10.12 to $10.11
 

$3,979

 
–%

 
1.40% to 2.00%
 
1.40% to 1.30%

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Income Class 2
   Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
14,292
 
$11.80 to $11.62
 

$168,519

 
0.56
%
 
1.40% to 2.00%
 
5.36% to 4.78%

 
2013
10,017
 
$11.20 to $11.09
 

$112,081

 
0.11
%
 
1.40% to 2.00%
 
6.77% to 6.12%

 
2012 (7)
5,225
 
$10.49 to $10.45
 

$54,791

 
–%

 
1.25% to 1.85%
 
4.38% to 3.98%

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified International
   Class 1 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
6,681
 
$3.20 to $24.92
 

$154,009

 
2.17
%
 
0.42% to 2.00%
 
(3.62)% to (5.14)%

 
2013
7,605
 
$3.32 to $26.27
 

$183,015

 
2.83
%
 
0.42% to 2.00%
 
17.90% to 16.55%

 
2012
8,812
 
$2.70 to $22.54
 

$182,349

 
2.10
%
 
0.38% to 1.85%
 
17.68% to 16.25%

 
2011
10,327
 
$2.39 to $19.39
 

$182,722

 
0.44
%
 
0.44% to 1.85%
 
(10.58)% to (12.54)%

 
2010
11,979
 
$2.67 to $22.17
 

$237,656

 
2.09
%
 
0.41% to 1.85%
 
13.25% to 11.63%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

172



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
Diversified International
   Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
3
 
$9.38 to $9.37
 

$26

 
–%

 
1.15% to 1.40%
 
(3.89)% to (4.00)%

 
 
 
 
 
 
 
 
 
 
 
 
 
Dreyfus Investment Portfolio
   Technology Growth Service
   Shares Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
226
 
$22.55 to $21.19
 

$5,041

 
–%

 
1.40% to 2.00%
 
5.13% to 4.49%

 
2013
217
 
$21.45 to $20.28
 

$4,605

 
–%

 
1.40% to 2.00%
 
30.71% to 30.00%

 
2012
203
 
$16.41 to $15.60
 

$3,300

 
–%

 
1.25% to 1.85%
 
13.96% to 13.21%

 
2011
191
 
$14.40 to $13.78
 

$2,726

 
–%

 
1.25% to 1.85%
 
(9.21)% to (9.70)%

 
2010
243
 
$15.86 to $15.26
 

$3,834

 
–%

 
1.25% to 1.85%
 
28.01% to 27.27%

 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Alternative Asset
   Allocation Class B Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
-
 
$9.83 to $9.82
 
$–

 
–%

 
1.15% to 1.40%
 
(1.60)% to (1.70)%

 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Equity 500 Index
   Class B2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
6
 
$10.25 to $10.24
 

$59

 
–%

 
1.15% to 1.40%
 
(0.490
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Small Mid Cap
   Value Class B Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
52
 
$10.09 to $11.68
 

$615

 
0.40
%
 
1.15% to 2.00%
 
(0.69)% to 3.00%

 
2013 (8)
13
 
$11.39 to $11.34
 

$146

 
–%

 
1.30% to 2.00%
 
13.56% to 13.06%

 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Income Class 1
   Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
17,409
 
$1.97 to $14.25
 

$258,967

 
2.35
%
 
0.27% to 2.00%
 
12.33% to 10.55%

 
2013
22,006
 
$1.75 to $12.89
 

$293,600

 
3.07
%
 
0.33% to 2.00%
 
26.77% to 24.90%

 
2012
26,639
 
$1.38 to $10.32
 

$282,998

 
3.01
%
 
0.38% to 1.85%
 
12.54% to 10.97%

 
2011
30,579
 
$1.23 to $9.30
 

$291,224

 
0.55
%
 
0.54% to 1.85%
 
5.00% to 3.45%

 
2010
19,001
 
$1.17 to $8.99
 

$173,784

 
3.26
%
 
0.29% to 1.85%
 
15.69% to 14.09%

 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Income Class 2
   Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
8
 
$10.23 to $10.22
 

$81

 
–%

 
1.15% to 1.40%
 
(0.970
)%
 
 
 
 
 
 
 
 
 
 
 
 
 

173



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
Fidelity VIP Contrafund
  Service Class Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
2,024
 
$23.79 to $21.86

 

$48,140

 
0.82
%
 
1.30% to 1.90%

 
10.39% to 9.74%

 
2013
2,372
 
$21.55 to $19.92

 

$51,076

 
0.93
%
 
1.30% to 1.90%

 
29.43% to 28.68%

 
2012
2,843
 
$16.65 to $15.48

 

$47,183

 
1.16
%
 
1.25% to 1.85%

 
14.91% to 14.16%

 
2011
3,527
 
$14.49 to $13.56

 

$50,818

 
0.85
%
 
1.25% to 1.85%

 
(3.85)% to (4.37)%

 
2010
4,237
 
$15.07 to $14.18

 

$63,341

 
1.05
%
 
1.25% to 1.85%

 
15.66% to 14.91%

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Contrafund
  Service Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
2,435
 
$10.17 to $21.50

 

$55,142

 
0.72
%
 
1.15% to 2.00%

 
(0.78)% to 9.47%

 
2013
2,712
 
$20.78 to $19.64

 

$55,840

 
0.81
%
 
1.40% to 2.00%

 
29.23% to 28.45%

 
2012
3,087
 
$16.08 to $15.29

 

$49,175

 
1.10
%
 
1.25% to 1.85%

 
14.69% to 14.02%

 
2011
3,365
 
$14.02 to $13.41

 

$46,781

 
0.80
%
 
1.25% to 1.85%

 
(3.97)% to (4.56)%

 
2010
3,317
 
$14.60 to $14.05

 

$48,069

 
1.05
%
 
1.25% to 1.85%

 
15.51% to 14.79%

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Equity-Income
  Service Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
2,117
 
$17.81 to $16.49

 

$37,544

 
2.56
%
 
1.30% to 2.00%

 
7.03% to 6.32%

 
2013
2,399
 
$16.64 to $15.51

 

$39,708

 
2.19
%
 
1.30% to 2.00%

 
26.25% to 25.38%

 
2012
2,825
 
$13.18 to $12.37

 

$36,953

 
2.78
%
 
1.25% to 1.85%

 
15.61% to 14.96%

 
2011
3,357
 
$11.40 to $10.76

 

$37,791

 
2.15
%
 
1.25% to 1.85%

 
(0.61)% to (1.19)%

 
2010
3,931
 
$11.47 to $10.89

 

$44,413

 
1.59
%
 
1.25% to 1.85%

 
13.45% to 12.85%

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Growth Service
  Class Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
1,037
 
$14.64 to $13.46

 

$15,185

 
0.09
%
 
1.30% to 1.90%

 
9.75% to 9.16%

 
2013
1,248
 
$13.34 to $12.33

 

$16,637

 
0.18
%
 
1.30% to 1.90%

 
34.48% to 33.59%

 
2012
1,469
 
$9.92 to $9.23

 

$14,548

 
0.47
%
 
1.25% to 1.85%

 
13.11% to 12.42%

 
2011
1,711
 
$8.77 to $8.21

 

$14,924

 
0.24
%
 
1.25% to 1.85%

 
(1.13)% to (1.68)%

 
2010
2,117
 
$8.87 to $8.35

 

$18,620

 
0.17
%
 
1.25% to 1.85%

 
22.51% to 21.90%

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Growth Service
  Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
481
 
$19.87 to $18.67

 

$9,442

 
–%

 
1.40% to 2.00%

 
9.48% to 8.80%

 
2013
467
 
$18.15 to $17.16

 

$8,346

 
0.05
%
 
1.40% to 2.00%

 
34.25% to 33.44%

 
2012
501
 
$13.52 to $12.86

 

$6,666

 
0.34
%
 
1.25% to 1.85%

 
12.95% to 12.31%

 
2011
560
 
$11.97 to $11.45

 

$6,609

 
0.12
%
 
1.25% to 1.85%

 
(1.24)% to (1.89)%

 
2010
666
 
$12.12 to $11.67

 

$7,988

 
0.03
%
 
1.25% to 1.85%

 
22.30% to 21.56%

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service
  Class Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (11)
7
 

$10.66

 

$71

 
0.32
%
 
0.95
%
 
5.75
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

174



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
Fidelity VIP Mid Cap Service
  Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
707
 
$10.06 to $24.37

 

$17,956

 
0.02
%
 
1.15% to 2.00%

 
(0.20)% to 3.92%

 
2013
623
 
$24.80 to $23.45

 

$15,323

 
0.29
%
 
1.40% to 2.00%

 
34.05% to 33.31%

 
2012
592
 
$18.50 to $17.59

 

$10,855

 
0.38
%
 
1.25% to 1.85%

 
13.15% to 12.47%

 
2011
644
 
$16.35 to $15.64

 

$10,432

 
0.02
%
 
1.25% to 1.85%

 
(11.95)% to (12.48)%

 
2010
693
 
$18.57 to $17.87

 

$12,784

 
0.14
%
 
1.25% to 1.85%

 
26.93% to 26.20%

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Overseas Service
  Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
2,368
 
$9.43 to $15.11

 

$37,741

 
1.04
%
 
1.15% to 2.00%

 
(3.38)% to (10.11)%

 
2013
2,605
 
$17.79 to $16.81

 

$45,762

 
1.10
%
 
1.40% to 2.00%

 
28.54% to 27.74%

 
2012
3,226
 
$13.84 to $13.16

 

$44,060

 
1.80
%
 
1.25% to 1.85%

 
19.00% to 18.35%

 
2011
3,580
 
$11.63 to $11.12

 

$41,148

 
1.29
%
 
1.25% to 1.85%

 
(18.27)% to (18.83)%

 
2010
3,425
 
$14.23 to $13.70

 

$48,259

 
1.28
%
 
1.25% to 1.85%

 
11.52% to 10.84%

 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Global Real Estate
   VIP Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
4
 
$10.56 to $10.55

 

$42

 
–%

 
1.15% to 1.40%

 
1.05% to 0.96%

 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Rising Dividends
  VIP Class 4 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
7
 

$10.34

 

$71

 
–%

 
1.15% to 1.40%

 
(0.390
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Small Cap Value
 VIP Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (13)
191
 
$18.79 to $18.21

 

$3,577

 
0.62
%
 
1.30% to 2.00%

 
(0.74)% to (1.41)%

 
2013
185
 
$18.93 to $18.47

 

$3,494

 
1.17
%
 
1.30% to 2.00%

 
17.65% to 33.65%

 
2012
142
 
$14.07 to $13.82

 

$1,990

 
0.68
%
 
1.25% to 1.85%

 
16.86% to 16.23%

 
2011
144
 
$12.04 to $11.89

 

$1,726

 
0.62
%
 
1.25% to 1.85%

 
(4.90)% to (5.56)%

 
2010 (4)
35
 
$12.66 to $12.59

 

$447

 
0.42
%
 
1.25% to 1.85%

 
23.75% to 23.07%

 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Mid Cap
  Value Institutional Shares
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
770
 
$24.32 to $22.82

 

$18,543

 
0.99
%
 
1.30% to 2.00%

 
12.07% to 11.32%

 
2013
842
 
$21.70 to $20.50

 

$18,015

 
0.83
%
 
1.30% to 2.00%

 
10.55% to 30.32%

 
2012
964
 
$16.54 to $15.73

 

$15,718

 
1.12
%
 
1.25% to 1.85%

 
17.06% to 16.35%

 
2011
1,108
 
$14.13 to $13.52

 

$15,462

 
0.75
%
 
1.25% to 1.85%

 
(7.59)% to (8.09)%

 
2010
1,150
 
$15.29 to $14.71

 

$17,385

 
0.67
%
 
1.25% to 1.85%

 
23.51% to 22.69%

 
 
 
 
 
 
 
 
 
 
 
 
 

175



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
Goldman Sachs VIT Mid Cap
  Value Service Shares
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
2
 
$10.25 to $10.24

 

$17

 
5.08
%
 
1.15% to 1.40%
 
0.59% to 0.49%
 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Small Cap
   Equity Insights Institutional
   Shares Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (14)
382
 
$18.38 to $17.25

 

$6,978

 
0.76
%
 
1.30% to 2.00%
 
5.57% to 4.86%
 
2013
417
 
$17.41 to $16.45

 

$7,164

 
0.99
%
 
1.30% to 2.00%
 
14.16% to 32.98%
 
2012
457
 
$13.00 to $12.37

 

$5,868

 
1.15
%
 
1.25% to 1.85%
 
11.40% to 10.74%
 
2011
535
 
$11.67 to $11.17

 

$6,184

 
0.80
%
 
1.25% to 1.85%
 
(0.60)% to (1.15)%
 
2010
516
 
$11.74 to $11.30

 

$6,007

 
0.57
%
 
1.25% to 1.85%
 
28.59% to 27.83%
 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Small
  Cap Equity Insights Service
  Shares Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
-
 
$10.62 to $10.61

 

$5

 
6.02
%
 
1.15% to 1.40%
 
1.63% to 1.53%
 
 
 
 
 
 
 
 
 
 
 
 
 
Government & High Quality
  Bond Class 1 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
12,521
 
$2.79 to $11.65

 

$141,359

 
3.77
%
 
0.43% to 2.00%
 
4.64% to 2.92%
 
2013
14,619
 
$2.66 to $11.32

 

$159,944

 
3.86
%
 
0.42% to 2.00%
 
(1.44)% to (2.83)%
 
2012
17,413
 
$2.58 to $11.65

 

$196,166

 
3.99
%
 
0.40% to 1.85%
 
3.25% to 1.92%
 
2011
18,006
 
$2.61 to $11.43

 

$197,866

 
0.18
%
 
0.39% to 1.85%
 
5.78% to 4.29%
 
2010
20,724
 
$2.47 to $10.96

 

$216,707

 
5.00
%
 
0.44% to 1.85%
 
5.71% to 3.98%
 
 
 
 
 
 
 
 
 
 
 
 
 
Government & High Quality
  Bond Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
2
 

$10.12

 

$20

 
–%

 
1.15% to 1.40%
 
0.00% to 0.10%
 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Floating
   Rate Strategies
   Series F Division
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
1
 
$9.94 to $9.93

 

$13

 
–%

 
1.15% to 1.40%
 
(0.80)% to (0.90)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Investments
   Global Managed Futures
   Strategy Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
2
 
$10.75 to $10.74

 

$21

 
–%

 
1.15% to 1.40%
 
5.50% to 5.40%
 
 
 
 
 
 
 
 
 
 
 
 
 

Guggenheim Investments Long
   Short Equity Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
4
 
$10.45 to $10.44

 

$43

 
–%

 
1.15% to 1.40%
 
2.96% to 2.86%
 
 
 
 
 
 
 
 
 
 
 
 
 

176



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
Guggenheim Investments
   Multi-Hedge Strategies
   Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
1
 
$10.26 to $10.25

 

$8

 
–%

 
1.15% to 1.40%
 
2.29% to 2.30%

 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Macro
   Opportunities Series M
   Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
-
 
$10.06 to $10.05

 
$–

 
–%

 
1.15% to 1.40%
 
–%

 
 
 
 
 
 
 
 
 
 
 
 
 

International Emerging Markets
   Class 1 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
2,140
 
$3.62 to $29.20

 

$64,255

 
0.91
%
 
0.41% to 2.00%
 
(4.15)% to (5.65)%

 
2013
2,369
 
$3.77 to $30.95

 

$74,988

 
2.37
%
 
0.40% to 2.00%
 
(5.42)% to (6.47)%

 
2012
2,577
 
$3.99 to $33.09

 

$86,313

 
1.30
%
 
0.37% to 1.85%
 
20.29% to 18.60%

 
2011
2,866
 
$3.32 to $27.90

 

$80,663

 
0.26
%
 
0.44% to 1.85%
 
(17.77)% to (19.01)%

 
2010
3,189
 
$4.03 to $34.45

 

$108,919

 
1.25
%
 
0.41% to 1.85%
 
18.76% to 17.10%

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco American Franchise
    Series I Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
321
 
$14.33 to $14.10

 

$4,607

 
0.04
%
 
1.30% to 1.90%
 
7.02% to 6.33%

 
2013
385
 
$13.39 to $13.26

 

$5,160

 
0.43
%
 
1.30% to 1.90%
 
38.33% to 37.55%

 
2012 (6)
458
 
$9.68 to $9.64

 

$4,432

 
–%

 
1.25% to 1.85%
 
(3.30)% to (3.70)%

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Balanced-Risk
   Allocation Series II Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
-
 

$10.08

 
$–

 
–%

 
1.15% to 1.40%
 
(0.690
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Core Equity
  Series I Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
1,369
 
$15.70 to $14.42

 

$21,497

 
0.83
%
 
1.30% to 1.90%
 
6.73% to 6.11%

 
2013
1,606
 
$14.71 to $13.59

 

$23,623

 
1.34
%
 
1.30% to 1.90%
 
27.69% to 26.77%

 
2012
1,934
 
$11.52 to $10.72

 

$22,263

 
0.95
%
 
1.25% to 1.85%
 
12.39% to 11.78%

 
2011
2,296
 
$10.25 to $9.59

 

$23,462

 
0.93
%
 
1.25% to 1.85%
 
(1.25)% to (1.84)%

 
2010
2,686
 
$10.38 to $9.77

 

$27,717

 
0.95
%
 
1.25% to 1.85%
 
8.12% to 7.48%

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Global Health Care
  Series I Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
485
 
$22.51 to $20.74

 

$10,917

 
–%

 
1.30% to 1.90%
 
18.10% to 17.37%

 
2013
551
 
$19.06 to $17.67

 

$10,479

 
0.69
%
 
1.30% to 1.90%
 
38.82% to 37.94%

 
2012
551
 
$13.73 to $12.81

 

$7,547

 
–%

 
1.25% to 1.85%
 
19.39% to 18.72%

 
2011
592
 
$11.50 to $10.79

 

$6,751

 
–%

 
1.25% to 1.85%
 
2.68% to 1.98%

 
2010
663
 
$11.20 to $10.58

 

$7,323

 
–%

 
1.25% to 1.85%
 
3.99% to 3.42%

 
 
 
 
 
 
 
 
 
 
 
 
 

177



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
Invesco Global Health Care
  Series II Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
7
 
$10.34 to $10.33

 

$71

 
–%

 
1.15% to 1.40%
 
0.39
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco International Growth
  Series I Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
943
 
$11.10 to $10.67

 

$10,425

 
1.67
%
 
1.40% to 2.00%
 
(1.07)% to (1.66)%

 
2013
791
 
$11.22 to $10.85

 

$8,853

 
1.35
%
 
1.40% to 2.00%
 
17.61% to 16.92%

 
2012
735
 
$9.54 to $9.28

 

$6,999

 
1.65
%
 
1.25% to 1.85%
 
14.25% to 13.59%

 
2011
700
 
$8.35 to $8.17

 

$5,831

 
1.58
%
 
1.25% to 1.85%
 
(7.73)% to (8.20)%

 
2010
503
 
$9.05 to $8.90

 

$4,542

 
2.48
%
 
1.25% to 1.85%
 
11.45% to 10.70%

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco International Growth
  Series II Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
3
 
$9.61 to $9.60

 

$32

 
–%

 
1.15% to 1.40%
 
(3.12)% to (3.23)%

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Mid Cap Growth
  Series I Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
110
 
$14.13 to $13.90

 

$1,554

 
–%

 
1.30% to 1.90%
 
6.64% to 5.95%

 
2013
126
 
$13.25 to $13.12

 

$1,672

 
0.39
%
 
1.30% to 1.90%
 
35.34% to 34.56%

 
2012 (6)
162
 
$9.79 to $9.75

 

$1,589

 
–%

 
1.25% to 1.85%
 
(2.59)% to (2.99)%

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Small Cap Equity
  Series I Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
408
 
$23.03 to $21.61

 

$9,327

 
–%

 
1.30% to 2.00%
 
1.05% to 0.37%

 
2013
469
 
$22.79 to $21.53

 

$10,623

 
0.01
%
 
1.30% to 2.00%
 
35.74% to 34.82%

 
2012
510
 
$16.79 to $15.97

 

$8,502

 
–%

 
1.25% to 1.85%
 
12.46% to 11.83%

 
2011
592
 
$14.93 to $14.28

 

$8,774

 
–%

 
1.25% to 1.85%
 
(1.97)% to (2.59)%

 
2010
498
 
$15.23 to $14.66

 

$7,524

 
–%

 
1.25% to 1.85%
 
27.02% to 26.27%

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Technology
  Series I Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
411
 
$9.18 to $8.46

 

$3,772

 
–%

 
1.30% to 1.90%
 
9.68% to 9.02%

 
2013
410
 
$8.37 to $7.76

 

$3,426

 
–%

 
1.30% to 1.90%
 
23.45% to 22.78%

 
2012
498
 
$6.78 to $6.32

 

$3,350

 
–%

 
1.25% to 1.85%
 
9.89% to 9.15%

 
2011
591
 
$6.17 to $5.79

 

$3,591

 
0.17
%
 
1.25% to 1.85%
 
(6.23)% to (6.76)%

 
2010
772
 
$6.58 to $6.21

 

$4,981

 
–%

 
1.25% to 1.85%
 
19.85% to 19.19%

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Value Opportunities
  Series I Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
360
 
$15.00 to $14.09

 

$5,348

 
1.37
%
 
1.40% to 2.00%
 
5.19% to 4.53%

 
2013
401
 
$14.26 to $13.48

 

$5,666

 
1.46
%
 
1.40% to 2.00%
 
32.04% to 31.13%

 
2012
428
 
$10.80 to $10.28

 

$4,582

 
1.43
%
 
1.25% to 1.85%
 
16.13% to 15.64%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

178



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
Janus Aspen Enterprise
  Service Shares Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
643
 
$14.79 to $13.59

 

$9,503

 
0.03
%
 
1.30% to 1.90%
 
10.79% to 10.13%

 
2013
744
 
$13.35 to $12.34

 

$9,931

 
0.36
%
 
1.30% to 1.90%
 
30.37% to 29.62%

 
2012
889
 
$10.24 to $9.52

 

$9,083

 
–%

 
1.25% to 1.85%
 
15.45% to 14.84%

 
2011
1,085
 
$8.87 to $8.29

 

$9,564

 
–%

 
1.25% to 1.85%
 
(2.85)% to (3.49)%

 
2010
1,395
 
$9.13 to $8.59

 

$12,638

 
–%

 
1.25% to 1.85%
 
24.05% to 23.24%

 
 
 
 
 
 
 
 
 
 
 
 
 
Janus Aspen Flexible Bond
  Service Shares Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
7
 
$10.05 to $10.04

 

$73

 
4.49
%
 
1.15% to 1.40%
 
(0.10)% to (0.20)%

 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Blend II Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
6,148
 
$19.43 to $17.99

 

$118,691

 
1.24
%
 
1.30% to 2.00%
 
9.84% to 9.10%

 
2013
7,750
 
$17.69 to $16.49

 

$135,701

 
1.41
%
 
1.30% to 2.00%
 
29.79% to 28.93%

 
2012
9,846
 
$13.63 to $12.79

 

$132,633

 
1.29
%
 
1.25% to 1.85%
 
13.77% to 13.09%

 
2011
11,823
 
$11.98 to $11.31

 

$139,819

 
0.03
%
 
1.25% to 1.85%
 
(1.40)% to (1.99)%

 
2010
13,116
 
$12.15 to $11.54

 

$157,179

 
2.47
%
 
1.25% to 1.85%
 
11.88% to 11.18%

 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Blend II Class 2
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
-
 
$10.13 to $10.12

 
$–

 
–%

 
1.15% to 1.40%
 
(0.690
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
3,191
 
$3.31 to $26.85

 

$53,469

 
0.54
%
 
0.41% to 2.00%
 
10.65% to 8.92%

 
2013
3,571
 
$2.99 to $24.65

 

$55,522

 
1.44
%
 
0.42% to 2.00%
 
33.35% to 31.40%

 
2012
3,916
 
$2.16 to $18.76

 

$48,013

 
0.29
%
 
0.41% to 1.85%
 
16.10% to 14.67%

 
2011
4,423
 
$1.93 to $16.36

 

$47,766

 
–%

 
0.44% to 1.85%
 
(4.63)% to (5.98)%

 
2010
5,184
 
$2.02 to $17.40

 

$59,163

 
0.06
%
 
0.42% to 1.85%
 
17.88% to 16.23%

 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth Class 2
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
1
 
$10.12 to $10.11

 

$6

 
–%

 
1.15% to 1.40%
 
(0.39)% to (0.49)%

 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth I Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
2,292
 
$2.07 to $50.32

 

$109,226

 
0.12
%
 
0.41% to 2.00%
 
8.16% to 6.47%

 
2013
2,572
 
$1.91 to $47.26

 

$114,518

 
0.38
%
 
0.40% to 2.00%
 
35.57% to 33.54%

 
2012
2,847
 
$1.41 to $35.39

 

$97,185

 
0.07
%
 
0.44% to 1.85%
 
15.89% to 14.23%

 
2011
3,256
 
$1.22 to $30.98

 

$97,585

 
–%

 
0.44% to 1.85%
 
(0.74)% to (2.15)%

 
2010
3,814
 
$1.23 to $31.66

 

$116,970

 
0.13
%
 
0.53% to 1.85%
 
19.10% to 17.43%

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

179



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
LargeCap S&P 500 Index Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
6,500
 
$1.99 to $14.77

 

$102,363

 
1.24
%
 
0.37% to 2.00%
 
12.81% to 11.05%

 
2013
7,202
 
$1.76 to $13.30

 

$101,189

 
1.22
%
 
0.40% to 2.00%
 
31.49% to 29.50%

 
2012
7,893
 
$1.34 to $10.27

 

$85,828

 
1.07
%
 
0.41% to 1.85%
 
15.02% to 13.36%

 
2011
9,228
 
$1.17 to $9.06

 

$88,077

 
0.05
%
 
0.50% to 1.85%
 
1.31% to (0.11)%

 
2010
10,207
 
$1.15 to $9.07

 

$96,644

 
1.44
%
 
0.21% to 1.85%
 
14.19% to 12.67%

 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Value Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
3,695
 
$61.32 to $36.55

 

$91,487

 
2.20
%
 
0.09% to 2.00%
 
10.64% to 8.97%

 
2013
4,234
 
$4.78 to $33.54

 

$95,526

 
2.52
%
 
0.43% to 2.00%
 
30.28% to 28.36%

 
2012
4,706
 
$3.51 to $26.13

 

$84,330

 
1.26
%
 
0.42% to 1.85%
 
17.82% to 16.39%

 
2011
5,519
 
$36.07 to $22.45

 

$83,241

 
–%

 
0.31% to 1.85%
 
0.69% to (0.66)%

 
2010
6,439
 
$35.82 to $22.60

 

$97,515

 
1.77
%
 
0.29% to 1.85%
 
13.54% to 11.99%

 
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT International
  Value Service Class Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
6
 

$9.83

 

$61

 
–%

 
1.15% to 1.40%
 
(2.090
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT New Discovery
  Service Class Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
88
 
$10.81 to $10.69

 

$944

 
–%

 
1.30% to 2.00%
 
(8.70)% to (9.33)%

 
2013 (8)
51
 
$11.84 to $11.79

 

$598

 
–%

 
1.30% to 2.00%
 
17.00% to 16.50%

 
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT Utilities Service Class
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
550
 
$9.80 to $21.85

 

$12,181

 
2.02
%
 
1.15% to 2.00%
 
(2.68)% to 10.24%

 
2013
425
 
$20.38 to $19.82

 

$8,631

 
2.03
%
 
1.40% to 2.00%
 
18.70% to 17.98%

 
2012
311
 
$17.17 to $16.80

 

$5,324

 
6.80
%
 
1.25% to 1.85%
 
11.78% to 11.11%

 
2011
212
 
$15.36 to $15.12

 

$3,243

 
3.24
%
 
1.25% to 1.85%
 
5.21% to 4.56%

 
2010
111
 
$14.60 to $14.46

 

$1,619

 
2.09
%
 
1.25% to 1.85%
 
12.05% to 11.40%

 
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT Value Service Class
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
238
 
$21.83 to $21.10

 

$5,175

 
1.34
%
 
1.40% to 2.00%
 
8.66% to 7.98%

 
2013
222
 
$20.09 to $19.54

 

$4,442

 
1.11
%
 
1.40% to 2.00%
 
33.84% to 33.02%

 
2012
133
 
$15.01 to $14.69

 

$1,987

 
1.32
%
 
1.25% to 1.85%
 
14.41% to 13.79%

 
2011
114
 
$13.12 to $12.91

 

$1,498

 
1.29
%
 
1.25% to 1.85%
 
(1.65)% to (2.27)%

 
2010
109
 
$13.34 to $13.21

 

$1,459

 
1.08
%
 
1.25% to 1.85%
 
9.79% to 9.17%

 
 
 
 
 
 
 
 
 
 
 
 
 

180



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
MidCap Class 1 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
5,671
 
$9.46 to 74.89
 

$389,291

 
0.51
%
 
0.40% to 2.00%
 
12.51% to 10.75%

 
2013
6,669
 
$8.41 to $67.62
 

$412,319

 
1.44
%
 
0.43% to 2.00%
 
33.37% to 31.38%

 
2012
7,660
 
$6.06 to $51.47
 

$362,857

 
0.87
%
 
0.42% to 1.85%
 
18.68% to 17.24%

 
2011
8,881
 
$5.30 to $43.90
 

$355,563

 
–%

 
0.44% to 1.85%
 
7.84% to 6.32%

 
2010
10,174
 
$4.92 to $41.29
 

$378,975

 
2.61
%
 
0.44% to 1.85%
 
23.58% to 21.84%

 
 
 
 
 
 
 
 
 
 
 
 
 
Money Market Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
6,700
 
$0.00 to $12.33
 

$55,230

 
–%

 
0.00% to 2.00%
 
(100.00)% to (1.99)%

 
2013
6,956
 
$2.42 to $12.58
 

$65,639

 
–%

 
0.00% to 2.00%
 
(1.00)% to (1.87)%

 
2012
8,221
 
$2.19 to $12.82
 

$81,007

 
–%

 
0.00% to 1.85%
 
(1.49)% to (1.84)%

 
2011
9,682
 
$2.47 to $13.06
 

$101,686

 
–%

 
0.00% to 1.85%
 
(0.99)% to (1.88)%

 
2010
10,709
 
$1.70 to $13.31
 

$115,064

 
–%

 
0.40% to 1.85%
 
(0.42)% to (1.84)%

 
 
 
 
 
 
 
 
 
 
 
 
 
Money Market Class 2
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
22
 
$9.97 to $9.96
 

$217

 
–%

 
1.15% to 1.40%
 
(0.100
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Large
  Cap Value I Class Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
276
 
$19.13 to $17.98
 

$5,241

 
0.72
%
 
1.40% to 2.00%
 
8.32% to 7.66%

 
2013
312
 
$17.66 to $16.70
 

$5,443

 
1.11
%
 
1.40% to 2.00%
 
29.38% to 28.66%

 
2012
394
 
$13.65 to $12.98
 

$5,317

 
0.41
%
 
1.25% to 1.85%
 
15.19% to 14.46%

 
2011
396
 
$11.85 to $11.34
 

$4,642

 
–%

 
1.25% to 1.85%
 
(12.48)% to (12.97)%

 
2010
395
 
$13.54 to $13.03
 

$5,296

 
0.62
%
 
1.25% to 1.85%
 
14.26% to 13.50%

 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Small
  Cap Growth S Class Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
206
 
$15.17 to $14.25
 

$3,088

 
–%

 
1.40% to 2.00%
 
2.02% to 1.42%

 
2013
256
 
$14.87 to $14.05
 

$3,748

 
–%

 
1.40% to 2.00%
 
43.95% to 43.08%

 
2012
299
 
$10.33 to $9.82
 

$3,038

 
–%

 
1.25% to 1.85%
 
7.49% to 6.74%

 
2011
321
 
$9.61 to $9.20
 

$3,046

 
–%

 
1.25% to 1.85%
 
(2.34)% to (2.85)%

 
2010
330
 
$9.84 to $9.47
 

$3,211

 
–%

 
1.25% to 1.85%
 
18.13% to 17.49%

 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Socially
  Responsive I Class Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
290
 
$21.13 to $19.86
 

$6,077

 
0.35
%
 
1.40% to 2.00%
 
8.81% to 8.23%

 
2013
387
 
$19.42 to $18.35
 

$7,439

 
0.68
%
 
1.40% to 2.00%
 
35.80% to 34.93%

 
2012
460
 
$14.30 to $13.60
 

$6,518

 
0.23
%
 
1.25% to 1.85%
 
9.66% to 8.97%

 
2011
495
 
$13.04 to $12.48
 

$6,401

 
0.35
%
 
1.25% to 1.85%
 
(4.33)% to (4.88)%

 
2010
470
 
$13.63 to $13.12
 

$6,359

 
0.04
%
 
1.25% to 1.85%
 
21.37% to 20.59%

 
 
 
 
 
 
 
 
 
 
 
 
 

181



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
Oppenheimer Main Street Small
  Cap Service Shares Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
52
 
$12.71 to $12.59
 

$658

 
0.67
%
 
1.30% to 1.90%
 
10.23% to 9.57%

 
2013 (10)
33
 
$11.53 to $11.49
 

$378

 
0.06
%
 
1.30% to 1.90%
 
15.07% to 14.67%

 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO All Asset
  Administrative Class Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
366
 
$14.38 to $13.90
 

$5,247

 
5.21
%
 
1.40% to 2.00%
 
(0.90)% to (1.56)%

 
2013
346
 
$14.51 to $14.12
 

$4,994

 
4.45
%
 
1.40% to 2.00%
 
(1.09)% to (1.60)%

 
2012
322
 
$14.67 to $14.35
 

$4,703

 
5.79
%
 
1.25% to 1.85%
 
13.54% to 12.81%

 
2011
201
 
$12.92 to $12.72
 

$2,597

 
6.77
%
 
1.25% to 1.85%
 
0.70% to 0.08%

 
2010
234
 
$12.83 to $12.71
 

$2,994

 
9.57
%
 
1.25% to 1.85%
 
11.66% to 11.00%

 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO High Yield
  Administrative Class Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
1,160
 
$9.88 to $13.45
 

$16,015

 
5.25
%
 
1.15% to 2.00%
 
(1.20)% to 1.28%

 
2013
1,048
 
$13.60 to $13.28
 

$14,204

 
5.56
%
 
1.40% to 2.00%
 
4.37% to 3.75%

 
2012
1,126
 
$13.03 to $12.80
 

$14,597

 
5.82
%
 
1.25% to 1.85%
 
12.91% to 12.18%

 
2011
1,338
 
$11.54 to $11.41
 

$15,396

 
6.67
%
 
1.25% to 1.85%
 
2.03% to 1.51%

 
2010 (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO Total Return
  Administrative Class Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
2,330
 
$10.11 to $12.13
 

$29,159

 
2.19
%
 
1.15% to 2.00%
 
(0.30)% to 2.19%

 
2013
2,556
 
$12.21 to $11.87
 

$31,116

 
2.20
%
 
1.40% to 2.00%
 
(3.17)% to (3.81)%

 
2012
3,618
 
$12.61 to $12.34
 

$45,490

 
2.48
%
 
1.25% to 1.85%
 
8.24% to 7.59%

 
2011
2,292
 
$11.65 to $11.47
 

$26,662

 
2.60
%
 
1.25% to 1.85%
 
2.28% to 1.68%

 
2010
1,460
 
$11.39 to $11.28
 

$16,609

 
2.31
%
 
1.25% to 1.85%
 
6.75% to 6.11%

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal Capital Appreciation
  Class 1 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
1,161
 
$16.48 to $15.35
 

$18,505

 
3.13
%
 
0.95% to 2.00%
 
11.35% to 10.19%

 
2013
1,169
 
$14.80 to $13.93
 

$16,817

 
6.72
%
 
0.95% to 2.00%
 
31.44% to 30.19%

 
2012
1,038
 
$11.26 to $10.70
 

$11,418

 
1.13
%
 
0.95% to 1.85%
 
12.71% to 11.69%

 
2011
936
 
$9.99 to $9.58
 

$9,164

 
–%

 
0.95% to 1.85%
 
(0.79)% to (1.64)%

 
2010
754
 
$10.07 to $9.74
 

$7,466

 
1.80
%
 
0.95% to 1.85%
 
14.30% to 13.26%

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal Capital Appreciation
  Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
19
 
$10.32 to $10.31
 

$192

 
–%

 
1.15% to 1.40%
 
(0.290
)%
 
 
 
 
 
 
 
 
 
 
 
 
 

182



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
Principal LifeTime Strategic
  Income Class 1 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
1,565
 
$12.74 to $13.18
 

$21,738

 
2.51
%
 
0.95% to 2.00%
 
3.58% to 2.49%
 
2013
1,813
 
$12.30 to $12.86
 

$24,406

 
2.72
%
 
0.95% to 2.00%
 
4.15% to 3.21%
 
2012
1,977
 
$11.81 to $12.46
 

$25,654

 
1.77
%
 
0.95% to 1.85%
 
8.65% to 7.60%
 
2011
2,070
 
$10.87 to $11.58
 

$24,819

 
3.13
%
 
0.95% to 1.85%
 
2.45% to 1.58%
 
2010
2,070
 
$10.61 to $11.40
 

$24,280

 
4.80
%
 
0.95% to 1.85%
 
10.29% to 9.20%
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2010 Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
2,223
 
$13.54 to $14.39
 

$33,743

 
2.17
%
 
0.95% to 2.00%
 
3.83% to 2.71%
 
2013
2,531
 
$13.04 to $14.01
 

$36,994

 
2.38
%
 
0.95% to 2.00%
 
9.76% to 8.77%
 
2012
2,851
 
$11.88 to $12.88
 

$38,033

 
1.90
%
 
0.95% to 1.85%
 
10.82% to 9.71%
 
2011
3,124
 
$10.72 to $11.74
 

$37,726

 
2.71
%
 
0.95% to 1.85%
 
0.47% to (0.42)%
 
2010
3,413
 
$10.67 to $11.79
 

$41,055

 
4.30
%
 
0.95% to 1.85%
 
12.79% to 11.86%
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2020 Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
8,649
 
$14.43 to $15.81
 

$143,695

 
2.31
%
 
0.95% to 2.00%
 
4.72% to 3.60%
 
2013
11,078
 
$13.78 to $15.26
 

$176,094

 
2.14
%
 
0.95% to 2.00%
 
14.93% to 13.88%
 
2012
12,377
 
$11.99 to $13.40
 

$171,673

 
1.71
%
 
0.95% to 1.85%
 
13.65% to 12.61%
 
2011
13,310
 
$10.55 to $11.90
 

$163,065

 
2.49
%
 
0.95% to 1.85%
 
(1.95)% to (2.86)%
 
2010
14,045
 
$10.76 to $12.25
 

$176,256

 
3.85
%
 
0.95% to 1.85%
 
13.86% to 12.90%
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2030 Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
4,403
 
$14.51 to $15.89
 

$73,233

 
2.15
%
 
0.95% to 2.00%
 
5.07% to 3.99%
 
2013
4,540
 
$13.81 to $15.28
 

$72,233

 
1.94
%
 
0.95% to 2.00%
 
17.93% to 16.73%
 
2012
4,718
 
$11.71 to $13.09
 

$63,923

 
1.60
%
 
0.95% to 1.85%
 
14.47% to 13.43%
 
2011
4,956
 
$10.23 to $11.54
 

$58,812

 
1.96
%
 
0.95% to 1.85%
 
(3.12)% to (3.99)%
 
2010
5,131
 
$10.56 to $12.02
 

$63,026

 
2.32
%
 
0.95% to 1.85%
 
14.29% to 13.29%
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
833
 
$14.83 to $16.53
 

$14,504

 
2.00
%
 
0.95% to 2.00%
 
5.25% to 4.09%
 
2013
787
 
$14.09 to $15.88
 

$13,053

 
1.57
%
 
0.95% to 2.00%
 
21.26% to 20.21%
 
2012
852
 
$11.62 to $13.21
 

$11,702

 
1.57
%
 
0.95% to 1.85%
 
15.62% to 14.57%
 
2011
874
 
$10.05 to $11.53
 

$10,412

 
1.61
%
 
0.95% to 1.85%
 
(4.10)% to (5.02)%
 
2010
869
 
$10.48 to $12.14
 

$10,823

 
2.23
%
 
0.95% to 1.85%
 
14.79% to 13.78%
 
 
 
 
 
 
 
 
 
 
 
 
 

183



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
Principal LifeTime 2050 Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
493
 
$14.83 to $16.61

 

$8,618

 
2.19
%
 
0.95% to 2.00%
 
5.18% to 4.07%

 
2013
501
 
$14.10 to $15.96

 

$8,354

 
1.58
%
 
0.95% to 2.00%
 
22.61% to 21.46%

 
2012
486
 
$11.50 to $13.14

 

$6,618

 
1.45
%
 
0.95% to 1.85%
 
16.04% to 14.96%

 
2011
470
 
$9.91 to $11.43

 

$5,533

 
1.50
%
 
0.95% to 1.85%
 
(4.89)% to (5.69)%

 
2010
469
 
$10.42 to $12.12

 

$5,830

 
2.13
%
 
0.95% to 1.85%
 
15.14% to 14.02%

 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate Securities Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
1,761
 
$4.86 to $47.70

 

$87,932

 
1.59
%
 
0.38% to 2.00%
 
32.26% to 30.19%

 
2013
1,880
 
$3.67 to $36.64

 

$72,398

 
1.29
%
 
0.49% to 2.00%
 
3.66% to 2.15%

 
2012
2,051
 
$3.54 to $35.87

 

$76,907

 
1.40
%
 
0.48% to 1.85%
 
16.68% to 15.00%

 
2011
2,278
 
$3.04 to $31.19

 

$73,765

 
–%

 
0.66% to 1.85%
 
8.48% to 6.92%

 
2010
2,507
 
$2.80 to $29.17

 

$75,755

 
2.99
%
 
0.67% to 1.85%
 
25.17% to 23.44%

 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate Securities Class 2
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
16
 
$11.39 to $11.38

 

$181

 
–%

 
1.15% to 1.40%
 
3.45% to 3.36%

 
 
 
 
 
 
 
 
 
 
 
 
 
Rydex Commodities Strategy
   Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
2
 
$7.08 to $7.07

 

$11

 
–%

 
1.15% to 1.40%
 
(20.00)% to (20.11)%

 
 
 
 
 
 
 
 
 
 
 
 
 
Rydex NASDAQ 100 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
9
 

$10.28

 

$97

 
–%

 
1.15% to 1.40%
 
(1.340
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Balanced Portfolio
  Class 1 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
49,402
 
$2.02 to $13.39

 

$687,748

 
2.66
%
 
0.48% to 2.00%
 
6.37% to 4.69%

 
2013
58,685
 
$1.90 to $12.79

 

$775,903

 
2.43
%
 
0.57% to 2.00%
 
15.50% to 15.54%

 
2012
61,098
 
$11.65 to $11.07

 

$697,358

 
0.69
%
 
0.95% to 1.85%
 
11.70% to 10.70%

 
2011
64,434
 
$10.43 to $10.00

 

$660,873

 
2.77
%
 
0.95% to 1.85%
 
0.00% to (0.89)%

 
2010
66,480
 
$10.43 to $10.09

 

$684,067

 
3.60
%
 
0.95% to 1.85%
 
12.51% to 11.49%

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Balanced Portfolio
  Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
63
 
$10.04 to $10.03

 

$634

 
–%

 
1.15% to 1.40%
 
(0.69)% to (0.79)%

 
 
 
 
 
 
 
 
 
 
 
 
 

184



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
SAM Conservative Balanced
  Portfolio Class 1 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
12,217
 
$14.22 to $13.25

 

$168,582

 
2.97
%
 
0.95% to 2.00%
 
5.18% to 4.17%

 
2013
13,493
 
$13.52 to $12.72

 

$177,876

 
2.87
%
 
0.95% to 2.00%
 
10.46% to 9.37%

 
2012
13,568
 
$12.24 to $11.63

 

$162,474

 
0.82
%
 
0.95% to 1.85%
 
10.17% to 9.20%

 
2011
14,050
 
$11.11 to $10.65

 

$153,302

 
3.19
%
 
0.95% to 1.85%
 
1.37% to 0.38%

 
2010
14,635
 
$10.96 to $10.61

 

$158,220

 
4.32
%
 
0.95% to 1.85%
 
10.71% to 9.83%

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Balanced
  Portfolio Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
55
 
$10.04 to $10.03

 

$553

 
–%

 
1.15% to 1.40%
 
(0.50)% to (0.59)%

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Growth
  Portfolio Class 1Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
7,463
 
$14.08 to $13.11

 

$101,757

 
1.82
%
 
0.95% to 2.00%
 
6.42% to 5.30%

 
2013
6,963
 
$13.23 to $12.45

 

$89,642

 
1.82
%
 
0.95% to 2.00%
 
21.94% to 20.76%

 
2012
6,406
 
$10.85 to $10.31

 

$67,909

 
0.44
%
 
0.95% to 1.85%
 
13.14% to 12.07%

 
2011
6,161
 
$9.59 to $9.20

 

$57,954

 
2.01
%
 
0.95% to 1.85%
 
(1.44)% to (2.23)%

 
2010
5,760
 
$9.73 to $9.41

 

$55,154

 
3.12
%
 
0.95% to 1.85%
 
14.07% to 13.10%

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Growth
  Portfolio Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
43
 

$10.05

 

$430

 
–%

 
1.15% to 1.40%
 
-0.79
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio
  Class 1 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
13,335
 
$14.32 to $13.33

 

$185,235

 
3.60
%
 
0.95% to 2.00%
 
5.06% to 3.90%

 
2013
13,976
 
$13.63 to $12.83

 

$185,636

 
3.43
%
 
0.95% to 2.00%
 
6.73% to 5.68%

 
2012
14,864
 
$12.77 to $12.14

 

$185,716

 
1.13
%
 
0.95% to 1.85%
 
9.52% to 8.59%

 
2011
14,070
 
$11.66 to $11.18

 

$160,984

 
3.86
%
 
0.95% to 1.85%
 
2.46% to 1.54%

 
2010
14,055
 
$11.38 to $11.01

 

$157,635

 
5.26
%
 
0.95% to 1.85%
 
9.42% to 8.47%

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio
  Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
42
 
$10.03 to $10.02

 

$418

 
–%

 
1.15% to 1.40%
 
(0.500
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Strategic Growth Portfolio
  Class 1 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
4,851
 
$14.08 to $13.12

 

$65,972

 
1.52
%
 
0.95% to 2.00%
 
7.65% to 6.58%

 
2013
4,539
 
$13.08 to $12.31

 

$57,654

 
1.43
%
 
0.95% to 2.00%
 
26.25% to 24.97%

 
2012
4,171
 
$10.36 to $9.85

 

$42,188

 
0.24
%
 
0.95% to 1.85%
 
14.35% to 13.48%

 
2011
4,626
 
$9.06 to $8.68

 

$41,082

 
1.50
%
 
0.95% to 1.85%
 
(2.79)% to (3.77)%

 
2010
4,212
 
$9.32 to $9.02

 

$38,641

 
2.50
%
 
0.95% to 1.85%
 
15.35% to 14.32%

 
 
 
 
 
 
 
 
 
 
 
 
 

185



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
SAM Strategic Growth Portfolio
  Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
62
 
$10.09 to $10.08
 

$624

 
–%

 
1.15% to 1.40%
 
(0.69)% to (0.79)%

 
 
 
 
 
 
 
 
 
 
 
 
 
Short-Term Income Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
11,376
 
$11.91 to $11.18
 

$131,612

 
1.68
%
 
0.85% to 2.00%
 
0.85% to -0.27%

 
2013
13,303
 
$11.81 to $11.21
 

$153,216

 
1.87
%
 
0.85% to 2.00%
 
0.34% to (0.80)%

 
2012
14,402
 
$11.77 to $11.30
 

$166,187

 
2.09
%
 
0.85% to 1.85%
 
4.07% to 3.10%

 
2011
14,110
 
$11.31 to $10.96
 

$157,122

 
0.15
%
 
0.85% to 1.85%
 
0.53% to (0.54)%

 
2010
14,544
 
$11.25 to $11.02
 

$161,858

 
2.79
%
 
0.85% to 1.85%
 
3.31% to 2.32%

 
 
 
 
 
 
 
 
 
 
 
 
 
Short-Term Income Class 2
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
9
 
$10.01 to $10.00
 

$94

 
–%

 
1.15% to 1.40%
 
(0.100
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Blend Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
1,636
 
$2.17 to $19.02
 

$33,528

 
0.35
%
 
0.45% to 2.00%
 
4.45% to 2.81%

 
2013
1,736
 
$2.08 to $18.50
 

$34,644

 
0.33
%
 
0.38% to 2.00%
 
47.19% to 21.95%

 
2012
1,931
 
$1.41 to $12.76
 

$26,674

 
–%

 
0.32% to 1.85%
 
14.22% to 12.62%

 
2011
2,287
 
$1.24 to $11.33
 

$27,780

 
0.35
%
 
0.34% to 1.85%
 
(1.89)% to (3.25)%

 
2010
2,886
 
$1.26 to $11.71
 

$33,079

 
0.50
%
 
0.20% to 1.85%
 
23.74% to 21.98%

 
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Growth II Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
1,794
 
$1.39 to $16.14
 

$30,427

 
–%

 
0.45% to 2.00%
 
6.32% to 4.67%

 
2013
2,157
 
$1.31 to $15.42
 

$33,880

 
–%

 
0.42% to 2.00%
 
46.81% to 44.65%

 
2012
2,316
 
$0.89 to $10.66
 

$25,716

 
–%

 
0.37% to 1.85%
 
15.80% to 14.13%

 
2011
2,639
 
$0.77 to $9.34
 

$25,540

 
–%

 
0.46% to 1.85%
 
(4.79)% to (6.13)%

 
2010
3,144
 
$0.81 to $9.95
 

$31,722

 
–%

 
0.23% to 1.85%
 
26.40% to 24.69%

 
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Growth II Class 2
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
1
 
$10.80 to $10.79
 

$7

 
–%

 
1.15% to 1.40%
 
3.25% to 3.15%

 
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Value I Class 1
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
2,071
 
$3.08 to $34.22
 

$72,972

 
0.74
%
 
0.43% to 2.00%
 
6.72% to 5.03%

 
2013
2,508
 
$2.89 to $32.58
 

$83,432

 
1.05
%
 
0.42% to 2.00%
 
39.18% to 37.12%

 
2012
3,065
 
$2.08 to $23.76
 

$75,361

 
0.81
%
 
0.37% to 1.85%
 
21.21% to 19.52%

 
2011
3,704
 
$1.71 to $19.88
 

$76,201

 
0.04
%
 
0.51% to 1.85%
 
(4.06)% to (5.42)%

 
2010
4,063
 
$1.79 to $21.02
 

$86,698

 
0.84 %

 
0.36% to 1.85%
 
25.53% to 23.72%

 
 
 
 
 
 
 
 
 
 
 
 
 

186



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
 
 
 
 
For the Year Ended December 31,
 
 
December 31
except as noted
 
 
Units
(000's)
 
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
 
Net
Assets
(000's)
 
Investment
Income
Ratio (1)
 
Expense
Ratio (2)
Lowest to
Highest
 
Total Return (3) Corresponding to Lowest
to Highest Expense Ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
 
SmallCap Value I Class 2
  Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
3
 
$10.60 to $10.59

 

$30

 
–%

 
1.15% to 1.40%

 
2.12% to 2.02%

 
 
 
 
 
 
 
 
 
 
 
 
 
T. Rowe Price Blue Chip
  Growth Portfolio II Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
581
 
$21.93 to $20.61

 

$12,613

 
–%

 
1.40% to 2.00%

 
7.34% to 6.73%

 
2013
566
 
$20.43 to $19.31

 

$11,456

 
–%

 
1.40% to 2.00%

 
38.98% to 38.13%

 
2012
567
 
$14.70 to $13.98

 

$8,278

 
–%

 
1.25% to 1.85%

 
16.48% to 15.73%

 
2011
562
 
$12.62 to $12.08

 

$7,052

 
–%

 
1.25% to 1.85%

 
0.08% to (0.49)%

 
2010
535
 
$12.61 to $12.14

 

$6,703

 
–%

 
1.25% to 1.85%

 
14.53% to 13.88%

 
 
 
 
 
 
 
 
 
 
 
 
 
T. Rowe Price Health Sciences
  Portfolio II Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
686
 
$44.36 to $41.68

 

$30,107

 
–%

 
1.40% to 2.00%

 
29.40% to 28.64%

 
2013
631
 
$34.28 to $32.40

 

$21,393

 
–%

 
1.40% to 2.00%

 
48.59% to 47.68%

 
2012
515
 
$23.07 to $21.94

 

$11,743

 
–%

 
1.25% to 1.85%

 
29.32% to 28.53%

 
2011
439
 
$17.84 to $17.07

 

$7,738

 
–%

 
1.25% to 1.85%

 
9.05% to 8.38%

 
2010
396
 
$16.36 to $15.75

 

$6,429

 
–%

 
1.25% to 1.85%

 
13.85% to 13.23%

 
 
 
 
 
 
 
 
 
 
 
 
 
Templeton Global Bond VIP
  Class 4 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (12)
7
 
$9.75 to $9.74

 

$68

 
–%

 
1.15% to 1.40%

 
(2.30)% to (2.31)%

 
 
 
 
 
 
 
 
 
 
 
 
 
Templeton Growth VIP
  Class 2 Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014 (15)
45
 

$21.14

 

$960

 
1.34
%
 
0.85
%
 
(3.650
)%
 
2013
49
 

$21.94

 

$1,071

 
2.65
%
 
0.85
%
 
29.82
 %
 
2012
61
 

$16.90

 

$1,032

 
2.23
%
 
0.85
%
 
20.28
 %
 
2011
69
 

$14.05

 

$964

 
1.35
%
 
0.85
%
 
(7.750
)%
 
2010
79
 

$15.23

 

$1,200

 
1.41
%
 
0.85
%
 
6.43
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
Van Eck Global Hard Assets
  Class S Division:
 
 
 
 
 
 
 
 
 
 
 
 
2014
591
 
$7.61 to $11.74

 

$7,087

 
–%

 
1.15% to 2.00%

 
(13.82)% to (20.94)%

 
2013
584
 
$15.27 to $14.85

 

$8,885

 
0.49
%
 
1.30% to 2.00%

 
8.92% to 8.24%

 
2012
565
 
$14.02 to $13.72

 

$7,902

 
0.68
%
 
1.25% to 1.85%

 
1.82% to 1.18%

 
2011
559
 
$13.77 to $13.56

 

$7,688

 
0.73
%
 
1.25% to 1.85%

 
(17.74)% to (18.21)%

 
2010
323
 
$16.74 to $16.58

 

$5,397

 
0.14
%
 
1.25% to 1.85%

 
27.11% to 41.23%


187



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
(1)
These amounts represent the dividends, excluding distributions of capital gains, received by the division from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the division is affected by the timing of the declaration of dividends by the underlying fund in which the division invests. These ratios are annualized for periods less than one year.
(2)
These ratios represent the annualized contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund are excluded.
(3)
These amounts represent the total return for the periods indicated, including changes in the value of the underlying fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Investment options with a date notation indicate the effective date of that investment option in the variable account. For purposes of the total return calculation the beginning unit value is typically equal to an investment option with a similar expense structure and if no such similar investment option exists then a beginning unit value of ten would typically be used. The total return is calculated for the period indicated or from the effective date through the end of the reporting period. Total returns have not been annualized for periods less than one year. These percentages represent the range of total returns available as of the report date and correspond with the expense ratio lowest to highest.
(4)
Commencement of operations, January 4, 2010. Investment income ratios have been annualized for the period ended December 31, 2010.
(5)
Commencement of operations, May 24, 2010. Investment income ratios have been annualized for the period ended December 31, 2010.
(6)
Commencement of operations, April 27, 2012. Investment income ratios have been annualized for the period ended December 31, 2012.
(7)
Commencement of operations, May 21, 2012. Investment income ratios have been annualized for the period ended December 31, 2012.
(8)
Commencement of operations, May 20, 2013. Investment income ratios have been annualized for the period ended December 31, 2013.
(9)
Commencement of operations, December 2, 2013. Investment income ratios have been annualized for the period December 31, 2013.
(10)
Commencement of operations, April 24, 2014. Investment income ratios have been annualized for the period December 31, 2014.
(11)
Commencement of operations, May 17, 2014. Investment income ratios have been annualized for the period December 31, 2014.
(12)
Commencement of operations, November 10, 2014. Investment income ratios have been annualized for the period December 31, 2014.
(13)
Represented the operations of Franklin Small Cap Value Securities Class 2 Division until May 17, 2014.
(14)
Represented the operations of Goldman Sachs VIT Structured Small Cap Equity Service Class I Division until May 17, 2014.
(15)
Represented the operations of Templeton Growth Securities Class 2 Division until May 17, 2014.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

188



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
 
There are divisions that have total return outside of the ranges indicated above. The following is a list of the divisions and corresponding unit values and total return.
 
 
 
 
Division
2014 Unit
Value ($)
2014 Total
Return (%)
American Century VP Inflation Protection Class II Division
9.93 and 13.11
(1.10) and 1.86
American Century VP Value Class II Division
10.14 and 21.26
11.48
Division
2014 Unit
Value ($)
2014 Total
Return (%)
Balanced Class 1 Division
3.16 and 28.15
–
Bond & Mortgage Securities Class 1 Division
2.71, 21.86, 23.76 and 23.79
–
Diversified Balanced Managed Volatility Class 2 Division
10.62
5.46
Diversified Growth Managed Volatility Class 2 Division
10.68
5.53
Diversified International Class 1 Division
3.06, 24.96, 27.13 and 27.16
–
DWS Small Mid Cap Value Class B Division
10.08, 11.70, 11.80 and 11.81
3.08 and 3.69
Equity Income Class 1 Division
14.27, 14.95 and 14.97
–
Fidelity VIP Contrafund Service Class 2 Division
10.16 and 22.88
10.11
Fidelity VIP Mid Cap Service Class 2 Division
10.05 and 25.94
4.60
Fidelity VIP Overseas Service Class 2 Division
16.08
–
Government & High Quality Bond Class 1 Division
2.65, 11.67, 12.09, 12.11, 12.34 and 12.42
–
International Emerging Markets Class 1 Division
29.24, 31.78 and 31.82
–
LargeCap Growth Class 1 Division
3.17, 26.88, 29.22 and 29.26
–
LargeCap Growth I Class 1 Division
50.39, 54.76 and 54.84
–
LargeCap S&P 500 Index Class 1 Division
14.79, 16.07, 16.10, 17.15 and 17.30
–
LargeCap Value Class 1 Division
5.03, 5.29, 9.73, 11.67, 15.70 and 17.16
10.70
MFS VIT Utilities Service Class Division
22.60
10.89
MidCap Class 1 Division
9.05, 75.00, 81.51 and 81.62
–
Money Market Class 1 Division
12.35, 13.42 and 13.44
(1.91), (1.49), (1.40), (1.32), (0.92), (0.86), (0.64) and (0.42)
PIMCO High Yield Administrative Class Division
13.86
1.91
PIMCO Total Return Administrative Class Division
12.55
2.78
Principal LifeTime Strategic Income Class 1 Division
13.20, 14.02 and 14.04
–
Principal LifeTime 2010 Class 1 Division
14.41, 15.31 and 15.33
–
Principal LifeTime 2020 Class 1 Division
15.84, 16.82 and 16.85
–
Principal LifeTime 2030 Class 1 Division
15.91, 16.91 and 16.93
–
 
 
 
 
 
 

189



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
 
 
 
Division
2014 Unit
Value ($)
2014 Total
Return (%)
Principal LifeTime 2040 Class 1 Division
16.55, 17.59 and 17.61
–
Principal LifeTime 2050 Class 1 Division
16.63, 17.67 and 17.70
–
Real Estate Securities Class 1 Division
47.76, 51.91 and 51.98
–
SAM Balanced Portfolio Class 1 Division
13.41, 14.02, 14.04 and 14.38
–
SAM Strategic Growth Portfolio Class 1 Division
–
6.57
SmallCap Blend Class 1 Division
19.05, 20.70, 20.73 and 27.02
–
SmallCap Growth II Class 1 Division
16.16, 16.32, 16.68, 17.56 and 17.59
–
SmallCap Value I Class 1 Division
34.27, 37.24 and 37.30
–
Van Eck Global Hard Assets Service Class Division
11.75, 12.14 and 12.16
(13.720)
 
 
 
 
Division
2013 Unit
Value ($)
2013 Total
Return (%)
Balanced Class 1 Division
2.92 and 26.55
–
Bond & Mortgage Securities Class 1 Division
2.59, 21.17, 22.89 and 22.90
–
Diversified International Class 1 Division
3.18, 26.28, 28.42 and 28.43
–
Equity Income Class 1 Division
13.44 and 13.45
–
Franklin Small Cap Value Securities Class 2 Division
–
17.18 and 34.47
Goldman Sachs VIT Mid Cap Value Service Class I Division
–
10.09 and 31.14
Goldman Sachs VIT Structured Small Cap Equity Service Class I Division
–
13.75 and 33.92
Government & High Quality Bond Class 1 Division
11.67, 11.86, 11.92 and 2.54
–
International Emerging Markets Class 1 Division
30.96, 33.48 and 33.50
–
LargeCap Growth Class 1 Division
2.87, 24.66, 26.67 and 26.68
–
LargeCap Growth I Class 1 Division
47.28, 51.13 and 51.15
–
LargeCap S&P 500 Index Class 1 Division
13.31, 14.39, 15.27 and 15.42
–
LargeCap Value Class 1 Division
4.56, 33.55, 36.29, 36.30 and 55.42
–
MidCap Class 1 Division
8.06, 67.65, 73.16 and 73.19
–

190



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
Division
2013 Unit
Value ($)
2013 Total
Return (%)
Money Market Class 1 Division
1.60, 1.68, 2.16, 12.59, 13.61 and 13.62
–
Principal LifeTime Strategic Income Class 1 Division
13.60
–
Principal LifeTime 2010 Class 1 Division
14.81 and 14.82
–
Principal LifeTime 2020 Class 1 Division
16.14
–
Principal LifeTime 2030 Class 1 Division
15.29, 16.16 and 16.17
–
Principal LifeTime 2040 Class 1 Division
15.89, 16.79 and 16.80
–
Principal LifeTime 2050 Class 1 Division
16.88
–
Real Estate Securities Class 1 Division
36.65, 39.63 and 39.65
–
SAM Balanced Portfolio Class 1 Division
13.31, 13.32 and 13.59
16.14, 16.23 and 16.65
SmallCap Blend Class 1 Division
18.51, 20.01, 20.02 and 25.98
–
SmallCap Growth II Class 1 Division
15.43, 15.78, 16.68 and 16.69
–
SmallCap Value I Class 1 Division
32.59, 35.24 and 35.26
–
 
 
 
 
Division
2012 Unit
Value ($)
2012 Total
Return (%)
Asset Allocation Class 1 Division
28.28
–
Balanced Class 1 Division
22.50
12.58
Bond & Mortgage Securities Class 1 Division
23.40
7.09
Diversified International Class 1 Division
24.24
17.94
Equity Income Class 1 Division
10.70
–
Government & High Quality Bond Class 1 Division
11.94, 12.09 and 12.14
3.48
International Emerging Markets Class 1 Division
35.58
–
LargeCap Growth Class 1 Division
20.18
16.36
LargeCap Growth I Class 1 Division
38.05
–
LargeCap S&P 500 Index Class 1 Division
11.04, 11.66 and 11.79
–
LargeCap Value Class 1 Division
28.10 and 42.56
18.01 and 18.08
MidCap Blend Class 1 Division
55.35
18.94
Money Market Class 1 Division
13.79
(1.22), (1.00), (0.94), (0.82), (0.64) and (0.42)
Principal LifeTime Strategic Income Class 1 Division
13.10
–
Principal LifeTime 2010 Class 1 Division
13.54
–
Principal LifeTime 2020 Class 1 Division
14.09
–

191



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
Division
2012 Unit
Value ($)
2012 Total
Return (%)
Principal LifeTime 2030 Class 1 Division
13.76
–
Principal LifeTime 2040 Class 1 Division
13.89
–
Principal LifeTime 2050 Class 1 Division
13.81
–
Real Estate Securities Class 1 Division
38.58
–
Short-Term Income Class 1 Division
–
4.08
SmallCap Blend Class 1 Division
13.72 and 17.72
–
SmallCap Growth II Class 1 Division
10.80 and 11.46
–
SmallCap Value I Class 1 Division
25.55
–
 
 
 
 
Division
2011 Unit
Value ($)
2011 Total
Return (%)
Asset Allocation Class 1 Division
25.22
–
Balanced Class 1 Division
2.19 and 20.16
–
Bond & Mortgage Securities Class 1 Division
2.46 and 22.03
–
Diversified Balanced Class 2 Division
–
2.39
Diversified Growth Class 2 Division
–
1.00
Diversified International Class 1 Division
2.30 and 20.73
–
Equity Income Class 1 Division
9.59
–
Government & High Quality Bond Class 1 Division
2.50, 11.64, 11.75 and 11.79
–
International Emerging Markets Class 1 Division
29.83
–
LargeCap Growth Class 1 Division
1.86 and 17.49
–
LargeCap Growth I Class 1 Division
33.11
–
LargeCap S&P 500 Index Class 1 Division
9.68, 10.18 and 10.30
–
LargeCap Value Class 1 Division
2.97, 3.10, 5.90, 6.97, 9.37 and 10.21
0.75
MidCap Blend Class 1 Division
5.11 and 46.92
–
Money Market Class 1 Division
1.62, 1.70, 2.23 and 13.96
(0.89), (0.78), (0.64) and (0.42)
Principal LifeTime Strategic Income Class 1 Division
12.10
–
Principal LifeTime 2010 Class 1 Division
12.27
–
Principal LifeTime 2020 Class 1 Division
12.43
–
Principal LifeTime 2030 Class 1 Division
12.06
–
Principal LifeTime 2040 Class 1 Division
12.05
–
Principal LifeTime 2050 Class 1 Division
11.95
–
Real Estate Securities Class 1 Division
33.34
–
SmallCap Blend Class 1 Division
12.11 and 15.58
–
SmallCap Growth II Class 1 Division
9.38 and 9.98
–
SmallCap Value I Class 1 Division
21.25
–
 
 
 
 

192



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

December 31, 2014
Division
2010 Unit
Value ($)
2010 Total
Return (%)
American Century VP Income & Growth Class I Division
9.55
13.15
Asset Allocation Division
25.00
–
Balanced Class Division
2.12 and 19.61
–
Bond & Mortgage Securities Division
2.31 and 20.83
–
Diversified International Division
2.58 and 23.55
–
Equity Income Division
9.21
–
Government & High Quality Bond Division
2.37, 11.10, 11.17 and 11.19
–
International Emerging Markets Division
36.60
–
LargeCap Growth Division
1.95 and 18.49
–
LargeCap Growth I Division
33.64
–
LargeCap S&P 500 Index Division
9.63, 10.09 and 10.22
–
LargeCap Value Division
2.96, 3.08, 5.92, 6.96, 9.35 and 10.17
13.60
MidCap Blend Division
4.74 and 43.87
–
Money Market Division
1.63 and 14.14
–
Principal LifeTime Strategic Income Division
11.84
–
Principal LifeTime 2010 Division
12.24
–
Principal LifeTime 2020 Division
12.73
–
Principal LifeTime 2030 Division
12.49
–
Principal LifeTime 2040 Division
12.61
–
Principal LifeTime 2050 Division
12.59
–
Real Estate Securities Division
30.99
–
SmallCap Blend Division
12.45 and 15.95
–
SmallCap Growth II Division
10.57
–
SmallCap Value I Division
22.34
–
Van Eck VIP Global Hard Assets Class Division
–
26.37 and 41.74

193





























(This page left intentionally blank)






194

 

Report of Independent Registered Public Accounting Firm
The Board of Directors and Stockholder
Principal Life Insurance Company
We have audited the accompanying consolidated statements of financial position of Principal Life Insurance Company (the Company) as of December 31, 2014 and 2013, and the related consolidated statements of operations, comprehensive income, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing 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 over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Principal Life Insurance Company at December 31, 2014 and 2013, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.

 
/s/ Ernst & Young LLP
Des Moines, Iowa
March 25, 2015
 



195

Principal Life Insurance Company
Consolidated Statements of Financial Position
 
 
 
 
 
 
 
December 31, 2014
 
December 31, 2013
 
 
 
 
 
 
 
 
 
(in millions)
Assets
 
Fixed maturities, available-for-sale (2014 and 2013 include $278.2 million and $272.0 million related to
 
 
 
 
 
 
consolidated variable interest entities)
$
46,549.4
 
$
45,524.1
Fixed maturities, trading (2014 and 2013 include $100.4 million and $110.4 million related to consolidated
 
 
 
 
 
 
variable interest entities)
 
400.3
 
 
358.5
Equity securities, available-for-sale
 
108.9
 
 
102.6
Equity securities, trading
 
191.6
 
 
169.7
Mortgage loans
 
11,164.4
 
 
10,819.2
Real estate (2014 and 2013 include $284.9 million and $266.3 million related to consolidated variable
 
 
 
 
 
 
interest entities)
 
1,340.4
 
 
1,266.4
Policy loans
 
799.0
 
 
830.1
Other investments (2014 and 2013 include $40.6 million and $68.1 million related to consolidated variable
 
 
 
 
 
 
interest entities and $127.2 million and $142.9 million measured at fair value under the fair value option)
 
1,428.4
 
 
1,354.1
 
Total investments
 
61,982.4
 
 
60,424.7
Cash and cash equivalents
 
1,274.0
 
 
2,071.6
Accrued investment income
 
497.3
 
 
523.2
Premiums due and other receivables
 
1,134.7
 
 
1,170.5
Deferred acquisition costs
 
2,754.6
 
 
2,848.8
Property and equipment
 
544.8
 
 
454.1
Goodwill
 
295.8
 
 
299.7
Other intangibles
 
144.3
 
 
151.9
Separate account assets
 
94,328.4
 
 
83,790.3
Other assets
 
958.5
 
 
1,045.7
 
Total assets
$
163,914.8
 
$
152,780.5
Liabilities
 
 
 
 
 
Contractholder funds
$
33,428.3
 
$
34,627.7
Future policy benefits and claims
 
19,691.6
 
 
18,245.0
Other policyholder funds
 
744.2
 
 
706.4
Short-term debt
 
154.5
 
 
292.4
Long-term debt (2014 and 2013 include $82.3 million and $47.7 million related to consolidated variable
 
 
 
 
 
 
interest entities)
 
82.3
 
 
152.4
Income taxes currently payable
 
5.3
 
 
5.2
Deferred income taxes
 
1,082.8
 
 
552.7
Separate account liabilities
 
94,328.4
 
 
83,790.3
Other liabilities (2014 and 2013 include $344.0 million and $362.4 million related to consolidated variable
 
 
 
 
 
 
interest entities, of which $71.0 million and $104.9 million are measured at fair value under the fair
 
 
 
 
 
 
value option)
 
6,151.7
 
 
6,420.2
Total liabilities
 
155,669.1
 
 
144,792.3
 
 
 
 
 
 
 
Redeemable noncontrolling interest
 
21.1
 
 
208.7
 
 
 
 
 
 
 
Stockholder's equity
 
 
 
 
 
Common stock, par value $1.00 per share - 5.0 million shares authorized, 2.5 million shares issued
 
 
 
 
 
 
and outstanding (wholly owned indirectly by Principal Financial Group, Inc.)
 
2.5
 
 
2.5
Additional paid-in capital
 
5,275.0
 
 
5,505.0
Retained earnings
 
1,817.2
 
 
1,738.1
Accumulated other comprehensive income
 
1,086.7
 
 
495.7
 
Total stockholder's equity attributable to Principal Life Insurance Company
 
8,181.4
 
 
7,741.3
Noncontrolling interest
 
43.2
 
 
38.2
 
Total stockholder's equity
 
8,224.6
 
 
7,779.5
 
Total liabilities and stockholder's equity
$
163,914.8
 
$
152,780.5
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 


196

Principal Life Insurance Company
Consolidated Statements of Operations
 
 
 
For the year ended December 31,
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Revenues
 
 
 
Premiums and other considerations
$
3,497.2
 
$
2,862.4
 
$
2,934.9
Fees and other revenues
 
2,392.7
 
 
2,234.6
 
 
1,934.8
Net investment income
 
2,663.5
 
 
2,681.5
 
 
2,811.8
Net realized capital gains (losses), excluding impairment losses on
 
 
 
 
 
 
 
 
 
available-for-sale securities
 
136.4
 
 
(99.5)
 
 
190.7
Net other-than-temporary impairment (losses) recoveries on available-
 
 
 
 
 
 
 
 
 
for-sale securities
 
28.5
 
 
(89.8)
 
 
(135.9)
Other-than-temporary impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale reclassified to (from) other comprehensive
 
 
 
 
 
 
 
 
 
income
 
(102.2)
 
 
(22.0)
 
 
17.3
Net impairment losses on available-for-sale securities
 
(73.7)
 
 
(111.8)
 
 
(118.6)
Net realized capital gains (losses)
 
62.7
 
 
(211.3)
 
 
72.1
 
Total revenues
 
8,616.1
 
 
7,567.2
 
 
7,753.6
Expenses
 
 
 
 
 
 
 
 
Benefits, claims and settlement expenses
 
4,610.0
 
 
4,114.5
 
 
4,556.6
Dividends to policyholders
 
177.4
 
 
189.0
 
 
197.7
Operating expenses
 
2,603.2
 
 
2,376.3
 
 
2,154.5
 
Total expenses
 
7,390.6
 
 
6,679.8
 
 
6,908.8
Income before income taxes
 
1,225.5
 
 
887.4
 
 
844.8
Income taxes
 
243.0
 
 
173.2
 
 
151.5
Net income
 
982.5
 
 
714.2
 
 
693.3
Net income attributable to noncontrolling interest
 
30.0
 
 
17.6
 
 
18.4
Net income attributable to Principal Life Insurance Company
$
952.5
 
$
696.6
 
$
674.9
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 



197

Principal Life Insurance Company
Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
 
For the year ended December 31,
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
Net income
$
982.5
 
$
714.2

 
$
693.3
Other comprehensive income (loss), net:
 
 
 
 
 
 
 
 
 
Net unrealized gains (losses) on available-for-sale securities
 
261.2
 
 
(477.7)

 
 
505.3
 
Noncredit component of impairment losses on fixed maturities, available-for-sale
 
61.9
 
 
5.1

 
 
(6.7)
 
Net unrealized gains (losses) on derivative instruments
 
56.6
 
 
(6.5)

 
 
(47.0)
 
Foreign currency translation adjustment
 
(3.7)
 
 
—

 
 
(9.0)
 
Net unrecognized postretirement benefit obligation
 
(8.0)
 
 
332.6

 
 
(127.4)
Other comprehensive income (loss)
 
368.0
 
 
(146.5)

 
 
315.2
Comprehensive income
 
1,350.5
 
 
567.7

 
 
1,008.5
Comprehensive income attributable to noncontrolling interest
 
28.7
 
 
18.0

 
 
19.6
Comprehensive income attributable to Principal Life Insurance Company
$
1,321.8
 
$
549.7

 
$
988.9
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 



198

Principal Life Insurance Company
Consolidated Statements of Stockholder's Equity
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
Additional
 
 
 
other
 
 
 
Total
 
 
 
Common
 
paid-in
 
Retained
 
comprehensive
 
Noncontrolling
 
stockholder's
 
 
 
stock
 
capital
 
earnings
 
income
 
interest
 
equity
 
 
 
(in millions)
Balances at January 1, 2012
$
2.5

 
$
5,718.1

 
$
1,195.0

 
$
328.6

 
$
350.8

 
$
7,595.0
Distribution to parent
 
—

 
 
(14.4)

 
 
—

 
 
—

 
 
—

 
 
(14.4)
Stock-based compensation and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
additional related tax benefits
 
—

 
 
43.9

 
 
(2.2)

 
 
—

 
 
—

 
 
41.7
Dividends to parent
 
—

 
 
—

 
 
(700.0)

 
 
—

 
 
—

 
 
(700.0)
Distributions to noncontrolling interest
 
—

 
 
—

 
 
—

 
 
—

 
 
(10.7)

 
 
(10.7)
Deconsolidation of certain variable interest entities
 
—

 
 
—

 
 
—

 
 
—

 
 
(353.2)

 
 
(353.2)
Contributions from noncontrolling
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
interest
 
—

 
 
—

 
 
—

 
 
—

 
 
12.6

 
 
12.6
Net income (excludes $1.0 million attributable to
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
redeemable noncontrolling interests)
 
—

 
 
—

 
 
674.9

 
 
—

 
 
17.4

 
 
692.3
Other comprehensive income (excludes $1.2 million
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
attributable to redeemable noncontrolling interest)
 
—

 
 
—

 
 
—

 
 
314.0

 
 
—

 
 
314.0
Balances at December 31, 2012
 
2.5

 
 
5,747.6

 
 
1,167.7

 
 
642.6

 
 
16.9

 
 
7,577.3
Distribution to parent
 
—

 
 
(163.8)

 
 
—

 
 
—

 
 
—

 
 
(163.8)
Stock-based compensation and additional related
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
tax benefits
 
—

 
 
47.4

 
 
(2.9)

 
 
—

 
 
—

 
 
44.5
Dividends to parent
 
—

 
 
—

 
 
(80.0)

 
 
—

 
 
—

 
 
(80.0)
Distributions to noncontrolling interest
 
—

 
 
—

 
 
—

 
 
—

 
 
(2.0)

 
 
(2.0)
Contributions from noncontrolling interest
 
—

 
 
—

 
 
—

 
 
—

 
 
2.5

 
 
2.5
Sale of subsidiary shares to noncontrolling interest
 
—

 
 
11.5

 
 
—

 
 
—

 
 
20.3

 
 
31.8
Adjustments to redemption amount of redeemable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
noncontrolling interest
 
—

 
 
(137.7)

 
 
(43.3)

 
 
—

 
 
(3.5)

 
 
(184.5)
Net income (excludes $13.6 million attributable to
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
redeemable noncontrolling interest)
 
—

 
 
—

 
 
696.6

 
 
—

 
 
4.0

 
 
700.6
Other comprehensive loss (excludes $0.4 million
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
attributable to redeemable noncontrolling interest)
 
—

 
 
—

 
 
—

 
 
(146.9)

 
 
—

 
 
(146.9)
Balances at December 31, 2013
 
2.5

 
 
5,505.0

 
 
1,738.1

 
 
495.7

 
 
38.2

 
 
7,779.5
Distribution to parent
 
—

 
 
(17.7)

 
 
—

 
 
—

 
 
—

 
 
(17.7)
Stock-based compensation and additional related
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
tax benefits
 
—

 
 
50.3

 
 
(3.7)

 
 
—

 
 
—

 
 
46.6
Dividends to parent
 
—

 
 
—

 
 
(850.0)

 
 
—

 
 
—

 
 
(850.0)
Distributions to noncontrolling interest
 
—

 
 
—

 
 
—

 
 
—

 
 
(22.7)

 
 
(22.7)
Contributions from noncontrolling interest
 
—

 
 
—

 
 
—

 
 
—

 
 
7.4

 
 
7.4
Adjustments to redemption amount of redeemable
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
noncontrolling interest
 
—

 
 
(14.9)

 
 
(19.7)

 
 
—

 
 
—

 
 
(34.6)
Pension plan transfer due to change in sponsorship
 
—

 
 
(247.7)

 
 
—

 
 
221.7

 
 
—

 
 
(26.0)
Net income (excludes $9.7 million attributable to
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
redeemable noncontrolling interest)
 
—

 
 
—

 
 
952.5

 
 
—

 
 
20.3

 
 
972.8
Other comprehensive income (excludes $(1.3) million
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
attributable to redeemable noncontrolling interest)
 
—

 
 
—

 
 
—

 
 
369.3

 
 
—

 
 
369.3
Balances at December 31, 2014
$
2.5

 
$
5,275.0

 
$
1,817.2

 
$
1,086.7

 
$
43.2

 
$
8,224.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



199

Principal Life Insurance Company
Consolidated Statements of Cash Flows
 
 
 
 
 
 
For the year ended December 31,
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Operating activities
 
 
 
 
 
 
 
 
Net income
$
982.5

 
$
714.2

 
$
693.3

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Amortization of deferred acquisition costs
 
348.5

 
 
170.6

 
 
82.3

 
Additions to deferred acquisition costs
 
(347.4)

 
 
(393.0)

 
 
(393.6)

 
Accrued investment income
 
25.9

 
 
52.8

 
 
28.4

 
Net cash flows for trading securities
 
14.4

 
 
18.5

 
 
88.9

 
Premiums due and other receivables
 
34.5

 
 
(152.7)

 
 
75.8

 
Contractholder and policyholder liabilities and dividends
 
1,488.2

 
 
1,296.8

 
 
1,814.5

 
Current and deferred income taxes
 
239.3

 
 
187.6

 
 
2.7

 
Net realized capital (gains) losses
 
(62.7)

 
 
211.3

 
 
(72.1)

 
Depreciation and amortization expense
 
107.1

 
 
96.8

 
 
103.1

 
Mortgage loans held for sale, sold or repaid, net of gain
 
43.3

 
 
0.2

 
 
74.9

 
Real estate acquired through operating activities
 
(49.4)

 
 
(107.2)

 
 
(46.4)

 
Real estate sold through operating activities
 
158.0

 
 
20.1

 
 
41.2

 
Stock-based compensation
 
47.5

 
 
45.1

 
 
41.9

 
Other
 
172.3

 
 
324.1

 
 
663.0

Net adjustments
 
2,219.5

 
 
1,771.0

 
 
2,504.6

Net cash provided by operating activities
 
3,202.0

 
 
2,485.2

 
 
3,197.9

Investing activities
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
Purchases
 
(8,598.2)

 
 
(8,554.0)

 
 
(7,986.7)

 
Sales
 
2,100.1

 
 
1,521.4

 
 
1,193.3

 
Maturities
 
6,047.1

 
 
7,142.4

 
 
6,383.8

Mortgage loans acquired or originated
 
(2,081.6)

 
 
(2,049.5)

 
 
(2,442.9)

Mortgage loans sold or repaid
 
1,671.6

 
 
1,989.0

 
 
1,545.4

Real estate acquired
 
(281.7)

 
 
(85.6)

 
 
(151.8)

Net purchases of property and equipment
 
(117.9)

 
 
(51.2)

 
 
(29.6)

Net change in other investments
 
266.2

 
 
213.0

 
 
(31.0)

Net cash provided by (used in) investing activities
 
(994.4)

 
 
125.5

 
 
(1,519.5)

Financing activities
 
 
 
 
 
 
 
 
Proceeds from financing element derivatives
 
15.1

 
 
47.0

 
 
51.8

Payments for financing element derivatives
 
(58.0)

 
 
(48.0)

 
 
(49.9)

Excess tax benefits from share-based payment arrangements
 
6.8

 
 
7.4

 
 
7.9

Purchase of subsidiary shares from noncontrolling interest
 
(179.9)

 
 
—

 
 
—

Sale of subsidiary shares to noncontrolling interest
 
—

 
 
31.8

 
 
—

Dividends paid to parent
 
(850.0)

 
 
(80.0)

 
 
(700.0)

Capital distributions to parent
 
(17.7)

 
 
(163.8)

 
 
(14.8)

Issuance of long-term debt
 
38.5

 
 
38.2

 
 
9.4

Principal repayments of long-term debt
 
(100.1)

 
 
(14.6)

 
 
(0.4)

Net proceeds from (repayments of) short-term borrowings
 
(137.9)

 
 
5.7

 
 
23.0

Investment contract deposits
 
5,349.1

 
 
6,355.1

 
 
6,401.2

Investment contract withdrawals
 
(7,088.8)

 
 
(8,846.6)

 
 
(7,519.8)

Net increase (decrease) in banking operation deposits
 
30.7

 
 
(225.7)

 
 
32.0

Other
 
(13.0)

 
 
(4.7)

 
 
(14.6)

Net cash used in financing activities
 
(3,005.2)

 
 
(2,898.2)

 
 
(1,774.2)

Net decrease in cash and cash equivalents
 
(797.6)

 
 
(287.5)

 
 
(95.8)

Cash and cash equivalents at beginning of period
 
2,071.6

 
 
2,359.1

 
 
2,454.9

Cash and cash equivalents at end of period
$
1,274.0

 
$
2,071.6

 
$
2,359.1

 
 
 
 
 
 
 
 
 
 
Supplemental Information:
 
 
 
 
 
 
 
 
Cash paid for interest
$
5.3

 
$
9.2

 
$
10.1

Cash paid for income taxes
$
9.0

 
$
19.6

 
$
117.5

 
 
 
 
 
 
 
 
 
 
Supplemental disclosure of non-cash investing and financing activities:
 
 
 
 
 
 
 
 
Assets transferred to parent due to change in pension plan sponsorship
$
308.2

 
$
—

 
$
—

Liabilities assumed by parent due to change in pension plan sponsorship
$
(282.2)

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 


200

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

1. Nature of Operations and Significant Accounting Policies

Description of Business

Principal Life Insurance Company (“Principal Life”) along with its consolidated subsidiaries is a diversified financial services organization offering retirement services, insurance solutions and asset management in the U.S. We are a direct wholly owned subsidiary of Principal Financial Services, Inc. (“PFSI”), which in turn is a direct wholly owned subsidiary of Principal Financial Group, Inc. (“PFG”).

Basis of Presentation

The accompanying consolidated financial statements include the accounts of Principal Life and all other entities in which we directly or indirectly have a controlling financial interest as well as those variable interest entities (“VIEs”) in which we are the primary beneficiary. Entities in which we have significant management influence over the operating and financing decisions but are not required to consolidate, other than investments accounted for at fair value under the fair value option, are reported using the equity method. The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). All significant intercompany accounts and transactions have been eliminated.

We have evaluated subsequent events through March 25, 2015, which was the date our consolidated financial statements were issued.
Recent Accounting Pronouncements
 
 
 
 
 
 
 
 
 
 
 
 
 
Effect on our consolidated
 
 
 
 
Date of
 
financial statements or
Description
 
adoption
 
other significant matters
 
 
 
 
 
 
 
Standards not yet adopted:
Revenue recognition
January 1,
We are currently evaluating
This authoritative guidance replaces all general and most industry specific
2017
the impact this guidance
revenue recognition guidance currently prescribed by U.S. GAAP. The core
 
 
will have on our
principle is that an entity recognizes revenue to reflect the transfer of a
 
 
consolidated financial
promised good or service to customers in an amount that reflects the
 
 
statements.
consideration to which the entity expects to be entitled to in exchange for
 
 
 
that good or service.
 
 
 
 
 
 
 
 
 
 
Discontinued operations
January 1,
This guidance will be
This authoritative guidance amends the definition of discontinued
2015
applied prospectively and
operations and requires entities to provide additional disclosures associated
 
 
is not expected to have a
with discontinued operations, as well as disposal transactions that do not
 
 
material impact on our
meet the discontinued operations criteria. The guidance requires discontinued
 
 
consolidated financial
operations treatment for disposals of a component or group of components
 
 
statements.
that represents a strategic shift that has or will have a major impact on an
 
 
 
entity’s operations or financial results. The guidance also expands the scope
 
 
 
to disposals of equity method investments and businesses that, upon initial
 
 
 
acquisition, qualify as held for sale.
 
 
 
 
 
 
 
 
 
 
Standards adopted:
 
 
 
 
 
 
Foreign currency cumulative translation adjustment
January 1,
The guidance was adopted
This authoritative guidance clarifies how the cumulative translation
2014
prospectively and did not
adjustment related to a parent’s investment in a foreign entity should be
 
 
have a material impact on
released when certain transactions related to the foreign entity occur.
 
 
our consolidated
 
 
 
 
 
 
financial statements.
 
 
 
 
 
 
 


201

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
 
 
 
 
 
 
Effect on our consolidated
 
 
 
 
Date of
 
financial statements or
Description
 
adoption
 
other significant matters
Accumulated other comprehensive income
January 1,
See Note 14, Stockholder's
This authoritative guidance requires entities to disclose additional
2013
Equity, for further details.
information about items reclassified out of accumulated other comprehensive
 
 
income (“AOCI”). Entities are required to disclose information regarding
 
The guidance did not have a
changes in AOCI balances by component and significant items reclassified
 
material impact on our
out of AOCI by component either on the face of the income statement or as
 
 
consolidated financial
a separate footnote to the financial statements.
 
 
statements.
 
 
 
 
 
 
 
Balance sheet offsetting
January 1,
See Note 5, Investments, for
This authoritative guidance requires disclosures about assets and liabilities
2013
further details.
that are offset or have the potential to be offset. These disclosures are
 
 
 
intended to address differences in the asset and liability offsetting
 
 
The guidance did not have a
requirements under U.S. GAAP and International Financial Reporting
 
 
material impact on our
Standards. The guidance further clarifies that the disclosure requirements
 
 
consolidated financial
apply to derivative instruments, including bifurcated embedded derivatives,
 
 
statements.
repurchase and reverse repurchase agreements and securities borrowing and
 
 
 
securities lending arrangements that are either offset on the balance sheet or
 
 
 
subject to an enforceable master netting arrangement or similar agreement.
 
 
 
Retrospective application was required.
 
 
 
 
 
 
 
 
 
 
Presentation of comprehensive income
January 1,
See Consolidated
This authoritative guidance changes the presentation of comprehensive
2012
Statements of
income in the financial statements. The guidance eliminates the presentation
 
 
Comprehensive Income and
options contained in previous guidance and instead requires entities to report
 
 
Note 14, Stockholder's
components of comprehensive income in either a continuous statement
 
 
Equity, for further details.
of comprehensive income or two separate but consecutive statements that
 
 
 
show the components of net income and other comprehensive income
 
 
The guidance did not have a
("OCI"), including adjustments for items that are reclassified from OCI to
 
 
material impact on our
net income. The guidance does not change the items that must be reported
 
 
consolidated financial
in OCI or when an item of OCI must be reclassified to net income.
 
 
statements.
 
 
 
 
Fair value measurement and disclosure requirements
January 1,
See Note 15, Fair Value
This authoritative guidance clarifies and changes fair value measurement
2012
Measurements, for further
and disclosure requirements. This guidance expands existing disclosure
 
 
details.
requirements for fair value measurements and makes other amendments but
 
 
 
does not require additional fair value measurements.
 
 
The guidance did not have a
 
 
 
material impact on our
 
 
 
consolidated financial
 
 
 
statements.
 
 
 
 
Capitalized costs incurred by insurance companies
January 1,
We adopted the guidance
This authoritative guidance modifies the definition of the types of costs
2012
retrospectively.
incurred by insurance entities that can be capitalized in the successful
 
 
 
acquisition of new or renewal insurance contracts. Capitalized costs should
 
 
 
include incremental direct costs of contract acquisition, as well as certain
 
 
 
costs related directly to acquisition activities such as underwriting, policy
 
 
 
issuance and processing, medical and inspection and sales force contract
 
 
 
selling.
 
 
 
 
 
 
 
 



202

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
Use of Estimates in the Preparation of Financial Statements
The preparation of our consolidated financial statements and accompanying notes requires management to make estimates and assumptions that affect the amounts reported and disclosed. These estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed in the consolidated financial statements and accompanying notes. The most critical estimates include those used in determining: 
•
the fair value of investments in the absence of quoted market values;
•
investment impairments and valuation allowances;
•
the fair value of and accounting for derivatives;
•
the deferred acquisition costs (“DAC”) and other actuarial balances where the amortization is based on estimated gross profits;
•
the measurement of goodwill, indefinite lived intangible assets, finite lived intangible assets and related impairments or amortization, if any;
•
the liability for future policy benefits and claims;
•
the value of our pension and other postretirement benefit obligations and
•
accounting for income taxes and the valuation of deferred tax assets.

A description of such critical estimates is incorporated within the discussion of the related accounting policies that follow. In applying these policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to our businesses and operations. Actual results could differ from these estimates.

Closed Block
We operate a closed block (“Closed Block”) for the benefit of individual participating dividend‑paying policies in force at the time of the 1998 mutual insurance holding company (“MIHC”) formation. See Note 7, Closed Block, for further details.
Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, money market instruments and other debt issues with a maturity date of three months or less when purchased.

Investments
Fixed maturities include bonds, asset-backed securities (“ABS”), redeemable preferred stock and certain nonredeemable preferred securities. Equity securities include mutual funds, common stock and nonredeemable preferred stock. We classify fixed maturities and equity securities as either available-for-sale or trading at the time of the purchase and, accordingly, carry them at fair value. See Note 15, Fair Value Measurements, for methodologies related to the determination of fair value. Unrealized gains and losses related to available-for-sale securities, excluding those in fair value hedging relationships, are reflected in stockholder’s equity, net of adjustments associated with DAC and related actuarial balances, derivatives in cash flow hedge relationships and applicable income taxes. Unrealized gains and losses related to hedged portions of available-for-sale securities in fair value hedging relationships and mark-to-market adjustments on certain trading securities are reflected in net realized capital gains (losses). Mark-to-market adjustments related to certain securities carried at fair value with an investment objective to realize economic value through mark-to-market changes are reflected in net investment income.
The cost of fixed maturities is adjusted for amortization of premiums and accrual of discounts, both computed using the interest method. The cost of fixed maturities and equity securities classified as available-for-sale is adjusted for declines in value that are other than temporary. Impairments in value deemed to be other than temporary are primarily reported in net income as a component of net realized capital gains (losses), with noncredit impairment losses for certain fixed maturities, available-for-sale reported in OCI. Interest income, as well as prepayment fees and the amortization of the related premium or discount, is reported in net investment income. For loan-backed and structured securities, we recognize income using a constant effective yield based on currently anticipated cash flows.
Real estate investments are reported at cost less accumulated depreciation. The initial cost basis of properties acquired through loan foreclosures are the lower of the fair market values of the properties at the time of foreclosure or the outstanding loan balance. Buildings and land improvements are generally depreciated on the straight-line method over the estimated useful life of


203

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

improvements and tenant improvement costs are depreciated on the straight-line method over the term of the related lease. We recognize impairment losses for properties when indicators of impairment are present and a property's expected undiscounted cash flows are not sufficient to recover the property's carrying value. In such cases, the cost basis of the properties are reduced to fair value. Real estate expected to be disposed is carried at the lower of cost or fair value, less cost to sell, with valuation allowances established accordingly and depreciation no longer recognized. The carrying amount of real estate held for sale was $171.8 million and $179.5 million as of December 31, 2014 and 2013, respectively. Any impairment losses and any changes in valuation allowances are reported in net income.
Commercial and residential mortgage loans are generally reported at cost adjusted for amortization of premiums and accrual of discounts, computed using the interest method, net of valuation allowances. Interest income is accrued on the principal amount of the loan based on the loan’s contractual interest rate. Interest income, as well as prepayment of fees and the amortization of the related premium or discount, is reported in net investment income. Any changes in the valuation allowances are reported in net income as net realized capital gains (losses). We measure impairment based upon the difference between carrying value and estimated value less cost to sell. Estimated value is based on either the present value of expected cash flows discounted at the loan's effective interest rate, the loan's observable market price or the fair value of the collateral. If foreclosure is probable, the measurement of any valuation allowance is based upon the fair value of the collateral.
Net realized capital gains and losses on sales of investments are determined on the basis of specific identification. In general, in addition to realized capital gains and losses on investment sales and periodic settlements on derivatives not designated as hedges, we report gains and losses related to the following in net realized capital gains (losses): other-than-temporary impairments of securities and subsequent realized recoveries, mark-to-market adjustments on certain trading securities, mark-to-market adjustments on certain seed money investments, fair value hedge and cash flow hedge ineffectiveness, mark-to-market adjustments on derivatives not designated as hedges, changes in the mortgage loan valuation allowance provision, impairments of real estate held for investment and impairments on equity method investments. Investment gains and losses on sales of certain real estate held for sale that do not meet the criteria for classification as a discontinued operation and mark-to-market adjustments on certain securities carried at fair value with an investment objective to realize economic value through mark-to-market changes are reported as net investment income and are excluded from net realized capital gains (losses).
Policy loans and other investments are primarily reported at cost, excluding seed money investments, other investment funds, derivative assets, commercial mortgage loans of consolidated VIEs for which the fair value option was elected and equity method real estate investments for which the fair value option was elected.
Derivatives
Overview. Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices or the values of securities. Derivatives generally used by us include interest rate swaps, interest rate options, swaptions, futures, currency swaps, equity options, credit default swaps and total return swaps. Derivatives may be exchange traded, cleared through centralized clearinghouses or contracted in the over-the-counter market without being cleared. Derivative positions are either assets or liabilities in the consolidated statements of financial position and are measured at fair value, generally by obtaining quoted market prices or through the use of pricing models. See Note 15, Fair Value Measurements, for policies related to the determination of fair value. Fair values can be affected by changes in interest rates, foreign exchange rates, financial indices, values of securities, credit spreads, and market volatility and liquidity.
Accounting and Financial Statement Presentation. We designate derivatives as either:
(a)
a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, including those denominated in a foreign currency (“fair value hedge”);
(b)
a hedge of a forecasted transaction or the exposure to variability of cash flows to be received or paid related to a recognized asset or liability, including those denominated in a foreign currency (“cash flow hedge”) or
(c)
a derivative not designated as a hedging instrument.
Our accounting for the ongoing changes in fair value of a derivative depends on the intended use of the derivative and the designation, as described above, and is determined when the derivative contract is entered into or at the time of redesignation. Hedge accounting is used for derivatives that are specifically designated in advance as hedges and that reduce our exposure to an indicated risk by having a high correlation between changes in the value of the derivatives and the items being hedged at both the inception of the hedge and throughout the hedge period.


204

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Fair Value Hedges. When a derivative is designated as a fair value hedge and is determined to be highly effective, changes in its fair value, along with changes in the fair value of the hedged asset, liability or firm commitment attributable to the hedged risk, are reported in net realized capital gains (losses). Any difference between the net change in fair value of the derivative and the hedged item represents hedge ineffectiveness.
Cash Flow Hedges. When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in its fair value are recorded as a component of OCI. Any hedge ineffectiveness is recorded immediately in net income. At the time the variability of cash flows being hedged impacts net income, the related portion of deferred gains or losses on the derivative instrument is reclassified and reported in net income.
Non-Hedge Derivatives. If a derivative does not qualify or is not designated for hedge accounting, all changes in fair value are reported in net income without considering the changes in the fair value of the economically associated assets or liabilities.
Hedge Documentation and Effectiveness Testing. At inception, we formally document all relationships between hedging instruments and hedged items, as well as our risk management objective and strategy for undertaking various hedge transactions. This process includes associating all derivatives designated as fair value or cash flow hedges with specific assets or liabilities on the statement of financial position or with specific firm commitments or forecasted transactions. Effectiveness of the hedge is formally assessed at inception and throughout the life of the hedging relationship. Even if a derivative is highly effective and qualifies for hedge accounting treatment, the hedge might have some ineffectiveness.
We use qualitative and quantitative methods to assess hedge effectiveness. Qualitative methods may include monitoring changes to terms and conditions and counterparty credit ratings. Quantitative methods may include statistical tests including regression analysis and minimum variance and dollar offset techniques.
Termination of Hedge Accounting. We prospectively discontinue hedge accounting when (1) the criteria to qualify for hedge accounting is no longer met, e.g., a derivative is determined to no longer be highly effective in offsetting the change in fair value or cash flows of a hedged item; (2) the derivative expires, is sold, terminated or exercised or (3) we remove the designation of the derivative being the hedging instrument for a fair value or cash flow hedge.
If it is determined that a derivative no longer qualifies as an effective hedge, the derivative will continue to be carried on the consolidated statements of financial position at its fair value, with changes in fair value recognized prospectively in net realized capital gains (losses). The asset or liability under a fair value hedge will no longer be adjusted for changes in fair value pursuant to hedging rules and the existing basis adjustment is amortized to the consolidated statements of operations line associated with the asset or liability. The component of OCI related to discontinued cash flow hedges that are no longer highly effective is amortized to the consolidated statements of operations consistent with the net income impacts of the original hedged cash flows. If a cash flow hedge is discontinued because it is probable the hedged forecasted transaction will not occur, the deferred gain or loss is immediately reclassified from OCI into net income.
Embedded Derivatives. We purchase and issue certain financial instruments and products that contain a derivative that is embedded in the financial instrument or product. We assess whether this embedded derivative is clearly and closely related to the asset or liability that serves as its host contract. If we deem that the embedded derivative's terms are not clearly and closely related to the host contract, and a separate instrument with the same terms would qualify as a derivative instrument, the derivative is bifurcated from that contract and held at fair value on the consolidated statements of financial position, with changes in fair value reported in net income.
Contractholder and Policyholder Liabilities
Contractholder and policyholder liabilities (contractholder funds, future policy benefits and claims and other policyholder funds) include reserves for investment contracts and reserves for universal life, term life insurance, participating traditional individual life insurance, group life insurance, health insurance and disability income policies, as well as a provision for dividends on participating policies.
Investment contracts are contractholders' funds on deposit with us and generally include reserves for pension and annuity contracts. Reserves on investment contracts are equal to the cumulative deposits less any applicable charges and withdrawals plus credited interest. Reserves for universal life insurance contracts are equal to cumulative deposits less charges plus credited interest, which represents the account balances that accrue to the benefit of the policyholders.


205

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
We hold additional reserves on certain long duration contracts where benefit features result in gains in early years followed by losses in later years, universal life/variable universal life contracts that contain no lapse guarantee features, or annuities with guaranteed minimum death benefits.
Reserves for nonparticipating term life insurance and disability income contracts are computed on a basis of assumed investment yield, mortality, morbidity and expenses, including a provision for adverse deviation, which generally varies by plan, year of issue and policy duration. Investment yield is based on our experience. Mortality, morbidity and withdrawal rate assumptions are based on our experience and are periodically reviewed against both industry standards and experience.
Reserves for participating life insurance contracts are based on the net level premium reserve for death and endowment policy benefits. This net level premium reserve is calculated based on dividend fund interest rates and mortality rates guaranteed in calculating the cash surrender values described in the contract.
Participating business represented approximately 11%, 12% and 13% of our life insurance in force and 40%, 43% and 47% of the number of life insurance policies in force at December 31, 2014, 2013 and 2012, respectively. Participating business represented approximately 53%, 58% and 61% of life insurance premiums for the years ended December 31, 2014, 2013 and 2012, respectively. The amount of dividends to policyholders is declared annually by our Board of Directors. The amount of dividends to be paid to policyholders is determined after consideration of several factors including interest, mortality, morbidity and other expense experience for the year and judgment as to the appropriate level of statutory surplus to be retained by us. At the end of the reporting period, we established a dividend liability for the pro rata portion of the dividends expected to be paid on or before the next policy anniversary date.
Some of our policies and contracts require payment of fees or other policyholder assessments in advance for services that will be rendered over the estimated lives of the policies and contracts. These payments are established as unearned revenue liabilities upon receipt and included in other policyholder funds in the consolidated statements of financial position. These unearned revenue reserves are amortized to operations over the estimated lives of these policies and contracts in relation to the emergence of estimated gross profits.
The liability for unpaid disability and health claims is an estimate of the ultimate net cost of reported and unreported losses not yet settled. This liability is estimated using actuarial analyses and case basis evaluations. Although considerable variability is inherent in such estimates, we believe that the liability for unpaid claims is adequate. These estimates are continually reviewed and, as adjustments to this liability become necessary, such adjustments are reflected in net income.
Recognition of Premiums and Other Considerations, Fees and Other Revenues and Benefits
Traditional individual life insurance products include those products with fixed and guaranteed premiums and benefits and consist principally of whole life and term life insurance policies. Premiums from these products are recognized as premium revenue when due. Related policy benefits and expenses for individual life products are associated with earned premiums and result in the recognition of profits over the expected term of the policies and contracts.
Immediate annuities with life contingencies include products with fixed and guaranteed annuity considerations and benefits and consist principally of group and individual single premium annuities with life contingencies. Annuity considerations from these products are recognized as premium revenue. However, the collection of these annuity considerations does not represent the completion of the earnings process, as we establish annuity reserves, using estimates for mortality and investment assumptions, which include provision for adverse deviation as required by U.S. GAAP. We anticipate profits to emerge over the life of the annuity products as we earn investment income, pay benefits and release reserves.
Group life and health insurance premiums are generally recorded as premium revenue over the term of the coverage. Certain group contracts contain experience premium refund provisions based on a pre-defined formula that reflects their claim experience. Experience premium refunds reduce revenue over the term of the coverage and are adjusted to reflect current experience. Related policy benefits and expenses for group life and health insurance products are associated with earned premiums and result in the recognition of profits over the term of the policies and contracts. Fees for contracts providing claim processing or other administrative services are recorded as revenue over the period the service is provided.
Universal life-type policies are insurance contracts with terms that are not fixed. Amounts received as payments for such contracts are not reported as premium revenues. Revenues for universal life-type insurance contracts consist of policy charges for the cost of insurance, policy initiation and administration, surrender charges and other fees that have been assessed against policy account values and investment income. Policy benefits and claims that are charged to expense include interest credited to contracts and benefit claims incurred in the period in excess of related policy account balances.


206

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Investment contracts do not subject us to significant risks arising from policyholder mortality or morbidity and consist primarily of guaranteed investment contracts (“GICs”), funding agreements and certain deferred annuities. Amounts received as payments for investment contracts are established as investment contract liability balances and are not reported as premium revenues. Revenues for investment contracts consist of investment income and policy administration charges. Investment contract benefits that are charged to expense include benefit claims incurred in the period in excess of related investment contract liability balances and interest credited to investment contract liability balances.
Fees and other revenues are earned for asset management services provided to retail and institutional clients based largely upon contractual rates applied to the market value of the client's portfolio. Additionally, fees and other revenues are earned for administrative services performed including recordkeeping and reporting services for retirement savings plans. Fees and other revenues received for performance of asset management and administrative services are recognized as revenue when earned, typically when the service is performed.
Deferred Acquisition Costs
Incremental direct costs of contract acquisition as well as certain costs directly related to acquisition activities (underwriting, policy issuance and processing, medical and inspection and sales force contract selling) for the successful acquisition of new and renewal insurance policies and investment contract business are capitalized to the extent recoverable. Commissions and other incremental direct costs of contract acquisition for the acquisition of long-term service contracts are also capitalized to the extent recoverable. Maintenance costs and acquisition costs that are not deferrable are charged to operations as incurred.
DAC for universal life-type insurance contracts, participating life insurance policies and certain investment contracts are being amortized over the lives of the policies and contracts in relation to the emergence of estimated gross profits (“EGPs”) or, in certain circumstances, estimated gross revenues. This amortization is adjusted in the current period when EGPs or estimated gross revenues are revised. For individual variable life insurance, individual variable annuities and group annuities that have separate account U.S. equity investment options, we utilize a mean reversion method (reversion to the mean assumption), a common industry practice, to determine the future domestic equity market growth assumption used for the amortization of DAC. The DAC of nonparticipating term life insurance and individual disability policies are being amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policyholder liabilities.
DAC on insurance policies and investment contracts are subject to recoverability testing at the time of policy issue and loss recognition testing on an annual basis, or when an event occurs that may warrant loss recognition. If loss recognition is necessary, DAC would be written off to the extent that it is determined that future policy premiums and investment income or gross profits are not adequate to cover related losses and expenses.
Deferred Acquisition Costs on Internal Replacements

All insurance and investment contract modifications and replacements are reviewed to determine if the internal replacement results in a substantially changed contract. If so, the acquisition costs, sales inducements and unearned revenue associated with the new contract are deferred and amortized over the lifetime of the new contract. In addition, the existing DAC, sales inducement costs and unearned revenue balances associated with the replaced contract are written off. If an internal replacement results in a substantially unchanged contract, the acquisition costs, sales inducements and unearned revenue associated with the new contract are immediately recognized in the period incurred. In addition, the existing DAC, sales inducement costs or unearned revenue balance associated with the replaced contract is not written off, but instead is carried over to the new contract.

Long-Term Debt

Long-term debt includes notes payable, nonrecourse mortgages and other debt with a maturity date greater than one year at the date of issuance. Current maturities of long-term debt are classified as long-term debt in our statement of financial position.

Reinsurance

We enter into reinsurance agreements with other companies in the normal course of business in order to limit losses and minimize exposure to significant risks. We may assume reinsurance from or cede reinsurance to other companies. Assets and liabilities related to reinsurance ceded are reported on a gross basis. Premiums and expenses are reported net of reinsurance ceded. The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions


207

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

consistent with those used to account for the underlying policies. We are contingently liable with respect to reinsurance ceded to other companies in the event the reinsurer is unable to meet the obligations it has assumed. At December 31, 2014 and 2013, we had $337.7 million and $282.0 million of net ceded reinsurance recoverables related to claims that have been received, respectively. At December 31, 2014 and 2013, our largest exposures to a single third party reinsurer was in our life insurance business, which totaled $38.9 billion and $35.9 billion of life insurance in force, representing 16% and 17% of total net life insurance in force, respectively. The reinsurance recoverable relating to claims received that are associated to this single third party reinsurer recorded in our consolidated statements of financial position was $48.1 million and $31.3 million at December 31, 2014 and 2013, respectively.

The effects of reinsurance on premiums and other considerations and policy and contract benefits were as follows:
 
 
 
For the year ended December 31,
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Premiums and other considerations:
 
 
 
 
 
 
 
 
 
Direct
$
3,755.4
 
$
3,132.8
 
$
3,212.1
 
Assumed
 
143.9
 
 
102.0
 
 
59.3
 
Ceded
 
(402.10)
 
 
(372.40)
 
 
(336.50)
Net premiums and other considerations
$
3,497.2
 
$
2,862.4
 
$
2,934.9
 
 
 
 
 
 
 
 
 
 
 
Benefits, claims and settlement expenses:
 
 
 
 
 
 
 
 
 
Direct
 
4,650.6
 
 
4,190.1
 
 
4,575.5
 
Assumed
 
289.6
 
 
204.5
 
 
157.9
 
Ceded
 
(330.20)
 
 
(280.10)
 
 
(176.80)
Net benefits, claims and settlement expenses
$
4,610.0
 
$
4,114.5
 
$
4,556.6
Separate Accounts
The separate accounts are legally segregated and are not subject to the claims that arise out of any of our other business. The client, rather than us, directs the investments and bears the investment risk of these funds. The separate account assets represent the fair value of funds that are separately administered by us for contracts with equity, real estate and fixed income investments and are presented as a summary total within the consolidated statements of financial position. An equivalent amount is reported as separate account liabilities, which represent the obligation to return the monies to the client. We receive fees for mortality, withdrawal and expense risks, as well as administrative, maintenance and investment advisory services that are included in the consolidated statements of operations. Net deposits, net investment income and realized and unrealized capital gains and losses of the separate accounts are not reflected in the consolidated statements of operations. 
At December 31, 2014 and 2013, the separate accounts include a separate account valued at $205.4 million and $223.1 million, respectively, which primarily includes shares of PFG stock that were allocated and issued to eligible participants of qualified employee benefit plans administered by us as part of the policy credits issued under Principal Mutual Holding Company’s 2001 demutualization. The separate account shares are recorded at fair value and are reported as separate account assets with a corresponding separate account liability to eligible participants of the qualified plan. Changes in fair value of the separate account shares are reflected in both the separate account assets and separate account liabilities and do not impact our results of operations.
Income Taxes
Our ultimate parent, PFG, files a U.S. consolidated income tax return that includes all of our qualifying subsidiaries. In addition, we file income tax returns in all states in which we conduct business. PFG allocates income tax expenses and benefits to companies in the group generally based upon pro rata contribution of taxable income or operating losses. We are taxed at corporate rates on taxable income based on existing tax laws. Current income taxes are charged or credited to net income based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. Deferred income taxes are provided for the tax effect of temporary differences in the financial reporting and income tax bases of assets and liabilities and net operating losses using enacted income tax rates and laws. The effect on deferred income tax assets and deferred income tax liabilities of a change in tax rates is recognized in operations in the period in which the change is enacted.


208

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Goodwill and Other Intangibles
Goodwill and other intangible assets include the cost of acquired subsidiaries in excess of the fair value of the net tangible assets recorded in connection with acquisitions. Goodwill and indefinite‑lived intangible assets are not amortized. Rather, they are tested for impairment during the third quarter each year, or more frequently if events or changes in circumstances indicate that the asset might be impaired. Goodwill is tested at the reporting unit level, which is a business one level below the operating segment, if financial information is prepared and regularly reviewed by management at that level. Once goodwill has been assigned to a reporting unit, it is no longer associated with a particular acquisition; therefore, all of the activities within a reporting unit, whether acquired or organically grown, are available to support the goodwill value. Impairment testing for indefinite‑lived intangible assets consists of a comparison of the fair value of the intangible asset with its carrying value.
Intangible assets with a finite useful life are amortized as related benefits emerge and are reviewed periodically for indicators of impairment in value. If facts and circumstances suggest possible impairment, the sum of the estimated undiscounted future cash flows expected to result from the use of the asset is compared to the current carrying value of the asset. If the undiscounted future cash flows are less than the carrying value, an impairment loss is recognized for the excess of the carrying amount of assets over their fair value.
2. Related Party Transactions
We have entered into various related party transactions with our ultimate parent and its other affiliates. During the years ended December 31, 2014, 2013 and 2012, we received $334.5 million, $327.1 million and $274.0 million, respectively, of expense reimbursements from affiliated entities.
We and our direct parent, PFSI, are parties to a cash advance agreement, which allows us, collectively, to pool our available cash in order to more efficiently and effectively invest our cash. The cash advance agreement allows (i) us to advance cash to PFSI in aggregate principal amounts not to exceed $1.0 billion, with such advanced amounts earning interest at the daily 30-day LIBOR rate (the “Internal Crediting Rate”); and (ii) PFSI to advance cash to us in aggregate principal amounts not to exceed $1.0 billion, with such advance amounts paying interest at the Internal Crediting Rate plus 10 basis points to reimburse PFSI for the costs incurred in maintaining short-term investing and borrowing programs. Under this cash advance agreement, we had a receivable from PFSI of $400.7 million and $359.1 million at December 31, 2014 and 2013, respectively, and earned interest of $0.3 million, $0.4 million and $1.0 million during 2014, 2013 and 2012, respectively.
We have short-term affiliated debt and long-term affiliated debt with our parent. See Note 10, Debt, for additional information.
We and an affiliated entity, Principal National Life Insurance Company, are parties to a reinsurance agreement to reinsure certain life insurance business. Under this agreement, we had an assumed reinsurance liability of $1,853.6 million and $1,481.4 million as of December 31, 2014 and 2013, respectively. In addition, we recognized premiums and other fees of $278.1 million, $223.6 million and $168.4 million for the years ended December 31, 2014, 2013 and 2012, respectively, associated with this agreement. Furthermore, we recognized expenses of $473.1 million, $428.6 million and $377.1 million for the years ended December 31, 2014, 2013 and 2012, respectively, associated with this agreement.
We receive commission fees, distribution and services fees from Principal Funds for distributing proprietary products on their behalf. Furthermore, we receive management and administrative fees from Principal Funds for investments our products hold in the Principal Mutual Funds and Principal Variable Contracts. Fees and other revenue was $377.4 million, $407.9 million and $342.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. In addition, we pay commission expense to affiliated registered representatives to sell proprietary products. Commission expense was $66.8 million, $87.8 million and $77.5 million for the years ended December 31, 2014, 2013 and 2012, respectively.
Pursuant to certain regulatory requirements or otherwise in the ordinary course of business, we guarantee certain payments of our affiliates and have agreements with affiliates to provide and/or receive management, administrative and other services, all of which, individually and in the aggregate, are immaterial to our business, financial condition and net income.
Effective November 2014, PFG became the sponsor of the defined benefit pension plans for both employees and individual field agents. Prior to November 2014, we were the sponsor of these plans. In connection with the change in sponsorship, we transferred $308.2 million of assets to PFG and PFG assumed $282.2 million of liabilities from us. In addition, we were allocated $9.6 million from PFG related to the defined benefit pension plans after the change in sponsorship was effective. See Note 12, Employee and Agent Benefits, for further details.


209

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

3. Goodwill and Other Intangible Assets
Goodwill
The changes in the carrying amount of goodwill reported in our segments were as follows:
 
 
Retirement
 
Principal
 
 
U.S.
 
 
 
 
 
and Investor
 
Global
 
 
Insurance
 
 
 
 
 
Services
 
Investors
 
 
Solutions
 
Consolidated
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Balance at January 1, 2013
$
18.7

 
$
223.4

 
 
$
53.9

 
$
296.0
 
Goodwill from acquisitions
 
—

 
 
—

 
 
 
2.5

 
 
2.5
 
Foreign currency
 
—

 
 
1.2

 
 
 
—

 
 
1.2
Balance at December 31, 2013
 
18.7

 
 
224.6

 
 
 
56.4

 
 
299.7
 
Foreign currency
 
—

 
 
(3.9)

 
 
 
—

 
 
(3.9)
Balance at December 31, 2014
$
18.7

 
$
220.7

 
 
$
56.4

 
$
295.8
Finite Lived Intangible Assets
Finite lived intangible assets that continue to be subject to amortization over a weighted average remaining expected life of 14 years were as follows:
 
 
December 31,
 
 
2014
 
2013
 
 
Gross
 
 
 
Net
 
Gross
 
 
 
 
Net
 
 
carrying
 
Accumulated
 
carrying
 
carrying
 
Accumulated
 
carrying
 
 
value
 
amortization
 
value
 
value
 
amortization
 
value
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Total finite lived intangible assets
$
77.4
 
$
27.6
 
$
49.8
 
$
94.5
 
$
37.1
 
$
57.4
During 2014, 2013 and 2012, we fully amortized finite lived intangible assets of $15.8 million, $5.2 million and $5.0 million, respectively.
The amortization expense for intangible assets with finite useful lives was $6.7 million, $6.5 million and $6.3 million for 2014, 2013 and 2012, respectively. At December 31, 2014, the estimated amortization expense for the next five years is as follows (in millions):
Year ending December 31:
 
 
 
2015
$
5.4
 
2016
 
5.4
 
2017
 
5.4
 
2018
 
5.2
 
2019
 
5.3
Indefinite Lived Intangible Assets
The net carrying amount of unamortized indefinite lived intangible assets was $94.5 million as of both December 31, 2014 and 2013. This represents our share of the purchase price from our parent’s 2006 acquisition of WM Advisors, Inc. related to investment management contracts that are not subject to amortization. We were allocated $99.9 million of the purchase price based on the fact that we will benefit from our parent’s acquisition, which also included $3.2 million related to goodwill and $2.2 million related to amortizable finite lived intangible assets that were subject to a three-year amortization period.



210

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

4. Variable Interest Entities

We have relationships with and may have a variable interest in various types of special purpose entities. Following is a discussion of our interest in entities that meet the definition of a VIE. When we are the primary beneficiary, we are required to consolidate the entity in our financial statements. The primary beneficiary of a VIE is defined as the enterprise with (1) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (2) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. For VIEs that are investment companies, the primary beneficiary is the enterprise who absorbs the majority of the entity’s expected losses, receives a majority of the expected residual returns or both. On an ongoing basis, we assess whether we are the primary beneficiary of VIEs in which we have a relationship.

Consolidated Variable Interest Entities

Grantor Trusts

We contributed undated subordinated floating rate notes to three grantor trusts. The trusts separated the cash flows by issuing an interest-only certificate and a residual certificate related to each note contributed. Each interest-only certificate entitles the holder to interest on the stated note for a specified term, while the residual certificate entitles the holder to interest payments subsequent to the term of the interest-only certificate and to all principal payments. We retained the interest-only certificates and the residual certificates were subsequently sold to third parties. We have determined these grantor trusts are VIEs due to insufficient equity to sustain them. We determined we are the primary beneficiary as a result of our contribution of securities into the trusts and our continuing interest in the trusts.

Collateralized Private Investment Vehicle

We invest in synthetic collateralized debt obligations, collateralized bond obligations, collateralized loan obligations and other collateralized structures, which are VIEs due to insufficient equity to sustain the entities (collectively known as “collateralized private investment vehicles”). The performance of the notes of these structures is primarily linked to a synthetic portfolio by derivatives; each note has a specific loss attachment and detachment point. The notes and related derivatives are collateralized by a pool of permitted investments. The investments are held by a trustee and can only be liquidated to settle obligations of the trusts. These obligations primarily include derivatives and the notes due at maturity or termination of the trusts. We determined we are the primary beneficiary for one of these entities because we act as the investment manager of the underlying portfolio and we have an ownership interest.

Commercial Mortgage-Backed Securities

We sold commercial mortgage loans to a real estate mortgage investment conduit trust. The trust issued various commercial mortgage-backed securities (“CMBS”) certificates using the cash flows of the underlying commercial mortgages it purchased. This is considered a VIE due to insufficient equity to sustain itself. We have determined we are the primary beneficiary as we retained the special servicing role for the assets within the trust as well as the ownership of the bond class that controls the unilateral kick out rights of the special servicer.

Real Estate

During the third quarter of 2014, we re-evaluated our consolidation conclusions for certain real estate limited partnerships and limited liability companies. We determined the entities were properly consolidated in the financial statements, but should have been consolidated under the VIE model as opposed to the voting interest model. As a result, we have included the consolidation impacts of these entities within the current and prior period VIE disclosures. 

We invest in several real estate limited partnerships and limited liability companies. The entities invest in real estate properties. These entities are VIEs based on the combination of our significant economic interest and related voting rights. We determined we are the primary beneficiary as a result of our power to control the entities through our significant ownership.



211

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The carrying amounts of our consolidated VIE assets, which can only be used to settle obligations of consolidated VIEs, and liabilities of consolidated VIEs for which creditors do not have recourse are as follows:
 
 
 
 
 
Collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
private investment
 
 
 
 
 
 
 
 
 
 
 
Grantor trusts
 
vehicle
 
CMBS
 
Real estate
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale
$
278.2

 
$
—

 
$
—

 
$
—

 
$
278.2
Fixed maturities, trading
 
—

 
 
100.4

 
 
—

 
 
—

 
 
100.4
Real estate
 
—

 
 
—

 
 
—

 
 
284.9

 
 
284.9
Other investments
 
—

 
 
—

 
 
35.0

 
 
5.6

 
 
40.6
Cash
 
—

 
 
—

 
 
—

 
 
4.7

 
 
4.7
Accrued investment income
 
0.4

 
 
—

 
 
0.2

 
 
1.4

 
 
2.0
Other assets
 
—

 
 
—

 
 
—

 
 
0.3

 
 
0.3
 
Total assets
$
278.6

 
 
100.4

 
 
35.2

 
$
296.9

 
$
711.1
Long-term debt
$
—

 
$
—

 
$
—

 
$
82.3

 
$
82.3
Income taxes currently payable
 
—

 
 
—

 
 
—

 
 
10.6

 
 
10.6
Deferred income taxes
 
1.5

 
 
—

 
 
—

 
 
(0.4)

 
 
1.1
Other liabilities (1)
 
239.1

 
 
85.6

 
 
4.8

 
 
14.5

 
 
344.0
 
Total liabilities
$
240.6

 
$
85.6

 
$
4.8

 
$
107.0

 
$
438.0
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale
$
272.0

 
$
—

 
$
—

 
$
—

 
$
272.0
Fixed maturities, trading
 
—

 
 
110.4

 
 
—

 
 
—

 
 
110.4
Real estate
 
—

 
 
—

 
 
—

 
 
266.3

 
 
266.3
Other investments
 
—

 
 
—

 
 
68.1

 
 
—

 
 
68.1
Cash
 
—

 
 
—

 
 
—

 
 
12.0

 
 
12.0
Accrued investment income
 
0.3

 
 
—

 
 
0.5

 
 
1.1

 
 
1.9
Other assets
 
—

 
 
—

 
 
—

 
 
0.1

 
 
0.1
 
Total assets
$
272.3

 
$
110.4

 
$
68.6

 
$
279.5

 
$
730.8
Long-term debt
$
—

 
$
—

 
$
—

 
$
47.7

 
 
47.7
Deferred income taxes
 
1.5

 
 
—

 
 
—

 
 
—

 
$
1.5
Other liabilities (1)
 
217.2

 
 
93.8

 
 
31.4

 
 
20.0

 
 
362.4
 
Total liabilities
$
218.7

 
$
93.8

 
$
31.4

 
$
67.7

 
$
411.6
(1)
Grantor trusts contain an embedded derivative of a forecasted transaction to deliver the underlying securities; the collateralized private investment vehicle includes derivative liabilities and an obligation to redeem notes at maturity or termination of the trust.
We did not provide financial or other support to investees designated as VIEs for the periods ended December 31, 2014 and 2013.
Unconsolidated Variable Interest Entities
Invested Securities
We hold a variable interest in a number of VIEs where we are not the primary beneficiary. Our investments in these VIEs are reported in fixed maturities, available-for-sale; fixed maturities, trading and other investments in the consolidated statements of financial position and are described below.
Unconsolidated VIEs include CMBS, residential mortgage-backed pass-through securities (“RMBS”) and other asset-backed securities (“ABS”). All of these entities were deemed VIEs because the equity within these entities is insufficient to sustain them. We determined we are not the primary beneficiary in the entities within these categories of investments. This determination was based primarily on the fact we do not own the class of security that controls the unilateral right to replace the special servicer or equivalent function. 


212

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

As previously discussed, we invest in several types of collateralized private investment vehicles, which are VIEs. These include cash and synthetic structures that we do not manage. We have determined we are not the primary beneficiary of these collateralized private investment vehicles primarily because we do not control the economic performance of the entities and were not involved with the design of the entities.
We have invested in various VIE trusts as a debt holder. All of these entities are classified as VIEs due to insufficient equity to sustain them. We have determined we are not the primary beneficiary primarily because we do not control the economic performance of the entities and were not involved with the design of the entities.
We have invested in partnerships and other funds, some of which are classified as VIEs. Some of these entities have returns in the form of income tax credits. These entities are classified as VIEs as the general partners do not have equity investments at risk in the entities. We have determined we are not the primary beneficiary because we are not the general partner, who makes all the significant decisions for the entities. Other limited partnerships and fund interests have returns from investment income. These entities are classified as VIEs as the decision makers do not have equity investments at risk in the entities. We have determined we are not the primary beneficiary because we do not make the significant decisions for the entities, or our variable interest does not absorb the majority of the variability of the entities’ net assets.
The carrying value and maximum loss exposure for our unconsolidated VIEs were as follows:
 
 
 
 
 
 
 
Maximum exposure to
 
 
 
 
Asset carrying value
 
loss (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
December 31, 2014
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
Corporate
$
456.7
 
$
353.3
 
Residential mortgage-backed pass-through securities
 
2,805.2
 
 
2,687.0
 
Commercial mortgage-backed securities
 
3,975.5
 
 
3,896.9
 
Collateralized debt obligations
 
504.1
 
 
521.2
 
Other debt obligations
 
4,616.4
 
 
4,583.4
Fixed maturities, trading:
 
 
 
 
 
 
Residential mortgage-backed pass-through securities
 
34.4
 
 
34.4
 
Commercial mortgage-backed securities
 
1.5
 
 
1.5
 
Collateralized debt obligations
 
39.4
 
 
39.4
 
Other debt obligations
 
0.2
 
 
0.2
Other investments:
 
 
 
 
 
 
Other limited partnership and fund interests
 
173.1
 
 
173.1
 
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
Corporate
$
523.4
 
$
448.2
 
Residential mortgage-backed pass-through securities
 
2,823.6
 
 
2,779.2
 
Commercial mortgage-backed securities
 
4,026.4
 
 
4,078.0
 
Collateralized debt obligations
 
363.4
 
 
391.9
 
Other debt obligations
 
4,167.8
 
 
4,157.5
Fixed maturities, trading:
 
 
 
 
 
 
Residential mortgage-backed pass-through securities
 
47.5
 
 
47.5
 
Commercial mortgage-backed securities
 
1.8
 
 
1.8
 
Collateralized debt obligations
 
59.6
 
 
59.6
 
Other debt obligations
 
1.2
 
 
1.2
Other investments:
 
 
 
 
 
 
Other limited partnership and fund interests
 
123.5
 
 
123.5
(1)
Our risk of loss is limited to our initial investment measured at amortized cost for fixed maturities, available-for-sale and other investments. Our risk of loss is limited to our investment measured at fair value for our fixed maturities, trading.


213

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Sponsored Investment Funds

We provide asset management and other services to certain investment structures that are considered VIEs as we generally earn performance-based management fees. We are not the primary beneficiary of these entities as we do not have the obligation to absorb losses of the entities that could be potentially significant to the VIE or the right to receive benefits from these entities that could be potentially significant.
5. Investments

Fixed Maturities and Equity Securities

The amortized cost, gross unrealized gains and losses, other-than-temporary impairments in AOCI and fair value of fixed maturities and equity securities available-for-sale are summarized as follows:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other-than-
 
 
 
 
 
 
 
Gross
 
Gross
 
 
 
 
temporary
 
 
 
 
Amortized
 
unrealized
 
unrealized
 
 
 
 
impairments in
 
 
 
 
cost
 
gains
 
losses
 
Fair value
 
AOCI (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
1,074.5
 
$
39.1
 
$
2.9
 
$
1,110.7
 
$
—

 
Non-U.S. governments
 
357.2
 
 
90.8
 
 
1.4
 
 
446.6
 
 
—

 
States and political subdivisions
 
3,891.0
 
 
289.3
 
 
4.1
 
 
4,176.2
 
 
—

 
Corporate
 
26,953.6
 
 
2,149.2
 
 
188.1
 
 
28,914.7
 
 
18.3

 
Residential mortgage-backed pass-through securities
 
2,687.0
 
 
124.5
 
 
6.3
 
 
2,805.2
 
 
—

 
Commercial mortgage-backed securities
 
3,896.9
 
 
141.5
 
 
62.9
 
 
3,975.5
 
 
88.9

 
Collateralized debt obligations
 
521.2
 
 
3.5
 
 
20.6
 
 
504.1
 
 
1.3

 
Other debt obligations
 
4,583.4
 
 
57.5
 
 
24.5
 
 
4,616.4
 
 
66.9

Total fixed maturities, available-for-sale
$
43,964.8
 
$
2,895.4
 
$
310.8
 
$
46,549.4
 
$
175.4

Total equity securities, available-for-sale
$
113.1
 
$
5.6
 
$
9.8
 
$
108.9
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
807.0
 
$
12.7
 
$
50.0
 
$
769.7
 
$
—

 
Non-U.S. governments
 
451.4
 
 
73.3
 
 
1.1
 
 
523.6
 
 
—

 
States and political subdivisions
 
3,597.0
 
 
120.8
 
 
85.4
 
 
3,632.4
 
 
—

 
Corporate
 
27,677.2
 
 
1,811.1
 
 
271.1
 
 
29,217.2
 
 
17.2

 
Residential mortgage-backed pass-through securities
 
2,779.2
 
 
91.1
 
 
46.7
 
 
2,823.6
 
 
—

 
Commercial mortgage-backed securities
 
4,078.0
 
 
170.6
 
 
222.2
 
 
4,026.4
 
 
183.4

 
Collateralized debt obligations
 
391.9
 
 
6.0
 
 
34.5
 
 
363.4
 
 
0.7

 
Other debt obligations
 
4,157.5
 
 
51.8
 
 
41.5
 
 
4,167.8
 
 
76.3

Total fixed maturities, available-for-sale
$
43,939.2
 
$
2,337.4
 
$
752.5
 
$
45,524.1
 
$
277.6

Total equity securities, available-for-sale
$
108.2
 
$
7.7
 
$
13.3
 
$
102.6
 
 
 
(1)
Excludes $167.5 million and $148.6 million as of December 31, 2014 and December 31, 2013, respectively, of net unrealized gains on impaired fixed maturities, available-for-sale related to changes in fair value subsequent to the impairment date, which are included in gross unrealized gains and gross unrealized losses.



214

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The amortized cost and fair value of fixed maturities available-for-sale at December 31, 2014, by expected maturity, were as follows:
 
 
Amortized cost
 
Fair value
 
 
 
 
 
 
 
 
 
(in millions)
Due in one year or less
$
2,597.2
 
$
2,626.7
Due after one year through five years
 
12,782.3
 
 
13,303.7
Due after five years through ten years
 
7,582.6
 
 
8,025.4
Due after ten years
 
9,314.2
 
 
10,692.4
Subtotal
 
32,276.3
 
 
34,648.2
Mortgage-backed and other asset-backed securities
 
11,688.5
 
 
11,901.2
Total
 
$
43,964.8
 
$
46,549.4
Actual maturities may differ because borrowers may have the right to call or prepay obligations. Our portfolio is diversified by industry, issuer and asset class. Credit concentrations are managed to established limits.

Net Investment Income

Major categories of net investment income are summarized as follows:
 
 
 
For the year ended December 31,
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Fixed maturities, available-for-sale
$
2,017.0
 
$
2,109.3
 
$
2,228.5
Fixed maturities, trading
 
12.2
 
 
11.2
 
 
15.1
Equity securities, available-for-sale
 
5.4
 
 
6.9
 
 
8.3
Equity securities, trading
 
6.5
 
 
2.8
 
 
2.9
Mortgage loans
 
563.4
 
 
565.2
 
 
588.9
Real estate
 
103.2
 
 
60.7
 
 
70.6
Policy loans
 
43.8
 
 
43.5
 
 
47.1
Cash and cash equivalents
 
3.7
 
 
4.4
 
 
4.9
Derivatives
 
(87.9)
 
 
(115.2)
 
 
(129.8)
Other
 
71.1
 
 
67.2
 
 
54.5
Total
 
2,738.4
 
 
2,756.0
 
 
2,891.0
Investment expenses
 
(74.9)
 
 
(74.5)
 
 
(79.2)
Net investment income
$
2,663.5
 
$
2,681.5
 
$
2,811.8



215

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Net Realized Capital Gains and Losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31,
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
Gross gains
$
85.0
 
$
37.9
 
$
26.4
 
Gross losses
 
(40.7)
 
 
(115.2)
 
 
(143.9)
 
Other-than-temporary impairment losses reclassified
 
 
 
 
 
 
 
 
 
 
to (from) OCI
 
(102.2)
 
 
(22.0)
 
 
17.3
 
Hedging, net
 
(21.4)
 
 
(115.5)
 
 
(27.5)
Fixed maturities, trading
 
8.9
 
 
(5.2)
 
 
4.9
Equity securities, available-for-sale:
 
 
 
 
 
 
 
 
 
Gross gains
 
10.2
 
 
0.8
 
 
0.5
 
Gross losses
 
(0.3)
 
 
(0.3)
 
 
(0.9)
Equity securities, trading
 
10.8
 
 
22.4
 
 
26.3
Mortgage loans
 
(9.4)
 
 
(16.0)
 
 
(51.0)
Derivatives
 
60.4
 
 
(22.9)
 
 
(21.7)
Other
 
61.4
 
 
24.7
 
 
241.7
Net realized capital gains (losses)
$
62.7
 
$
(211.3)
 
$
72.1
Proceeds from sales of investments (excluding call and maturity proceeds) in fixed maturities, available-for-sale were $2,068.9 million, $1,493.7 million and $1,119.3 million in 2014, 2013 and 2012, respectively.
Other-Than-Temporary Impairments
We have a process in place to identify fixed maturity and equity securities that could potentially have a credit impairment that is other than temporary. This process involves monitoring market events that could impact issuers’ credit ratings, business climate, management changes, litigation and government actions and other similar factors. This process also involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues.
Each reporting period, all securities are reviewed to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. We consider relevant facts and circumstances in evaluating whether a credit or interest-related impairment of a security is other than temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events; (4) for structured securities, the adequacy of the expected cash flows; (5) for fixed maturities, our intent to sell a security or whether it is more likely than not we will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and (6) for equity securities, our ability and intent to hold the security for a period of time that allows for the recovery in value. To the extent we determine that a security is deemed to be other than temporarily impaired, an impairment loss is recognized.
Impairment losses on equity securities are recognized in net income and are measured as the difference between amortized cost and fair value. The way in which impairment losses on fixed maturities are recognized in the financial statements is dependent on the facts and circumstances related to the specific security. If we intend to sell a security or it is more likely than not that we would be required to sell a security before the recovery of its amortized cost, we recognize an other-than-temporary impairment in net income for the difference between amortized cost and fair value. If we do not expect to recover the amortized cost basis, we do not plan to sell the security and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, the recognition of the other-than-temporary impairment is bifurcated. We recognize the credit loss portion in net income and the noncredit loss portion in OCI (“bifurcated OTTI”).


216

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Total other-than-temporary impairment losses, net of recoveries from the sale of previously impaired securities, were as follows:
 
 
 
 
For the year ended December 31,
 
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Fixed maturities, available-for-sale
$
18.5
 
$
(89.5)
 
$
(135.5)
Equity securities, available-for-sale
 
10.0
 
 
(0.3)
 
 
(0.4)
Total other-than-temporary impairment losses, net of recoveries from
 
 
 
 
 
 
 
 
 
the sale of previously impaired securities
 
28.5
 
 
(89.8)
 
 
(135.9)
Other-than-temporary impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale reclassified to (from) OCI (1)
 
(102.2)
 
 
(22.0)
 
 
17.3
Net impairment losses on available-for-sale securities
$
(73.7)
 
$
(111.8)
 
$
(118.6)
(1)
Represents the net impact of (a) gains resulting from reclassification of noncredit impairment losses for fixed maturities with bifurcated OTTI from net realized capital gains (losses) to OCI and (b) losses resulting from reclassification of previously recognized noncredit impairment losses from OCI to net realized capital gains (losses) for fixed maturities with bifurcated OTTI that had additional credit losses or fixed maturities that previously had bifurcated OTTI that have now been sold or are intended to be sold.
We estimate the amount of the credit loss component of a fixed maturity security impairment as the difference between amortized cost and the present value of the expected cash flows of the security. The present value is determined using the best estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. The ABS cash flow estimates are based on security specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds and structural support, including subordination and guarantees. The corporate security cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or liquidations using bond specific facts and circumstances including timing, security interests and loss severity.
The following table provides a rollforward of accumulated credit losses for fixed maturities with bifurcated credit losses. The purpose of the table is to provide detail of (1) additions to the bifurcated credit loss amounts recognized in net realized capital gains (losses) during the period and (2) decrements for previously recognized bifurcated credit losses where the loss is no longer bifurcated and/or there has been a positive change in expected cash flows or accretion of the bifurcated credit loss amount.
 
 
For the year ended December 31,
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Beginning balance
$
(235.4)
 
$
(329.0)
 
$
(428.0)
Credit losses for which an other-than-temporary impairment was
 
 
 
 
 
 
 
 
 
not previously recognized
 
(7.2)
 
 
(15.1)
 
 
(21.3)
Credit losses for which an other-than-temporary impairment was
 
 
 
 
 
 
 
 
 
previously recognized
 
(67.4)
 
 
(75.9)
 
 
(80.0)
Reduction for credit losses previously recognized on fixed maturities
 
 
 
 
 
 
 
 
 
now sold, paid down or intended to be sold
 
163.1
 
 
172.0
 
 
191.9
Net reduction for positive changes in cash flows expected
 
 
 
 
 
 
 
 
 
to be collected and amortization (1)
 
6.6
 
 
12.6
 
 
8.4
Ending balance
$
(140.3)
 
$
(235.4)
 
$
(329.0)
(1) Amounts are recognized in net investment income.



217

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Gross Unrealized Losses for Fixed Maturities and Equity Securities

For fixed maturities and equity securities available-for-sale with unrealized losses, including other-than-temporary impairment losses reported in OCI, the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position are summarized as follows:
 
 
 
December 31, 2014
 
 
 
Less than
 
Greater than or
 
 
 
 
 
twelve months
 
equal to twelve months
 
Total
 
 
 
 
 
Gross
 
 
 
Gross
 
 
 
Gross
 
 
 
Fair
 
unrealized
 
Fair
 
unrealized
 
Fair
 
unrealized
 
 
 
value
 
losses
 
value
 
losses
 
value
 
losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
200.3
 
$
0.7

 
$
95.0

 
$
2.2

 
$
295.3
 
$
2.9
 
Non-U.S. governments
 
13.5
 
 
1.4

 
 
—

 
 
—

 
 
13.5
 
 
1.4
 
States and political subdivisions
 
208.1
 
 
0.7

 
 
210.5

 
 
3.4

 
 
418.6
 
 
4.1
 
Corporate
 
3,005.9
 
 
75.1

 
 
1,091.1

 
 
113.0

 
 
4,097.0
 
 
188.1
 
Residential mortgage-backed pass-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
through securities
 
18.0
 
 
—

 
 
395.3

 
 
6.3

 
 
413.3
 
 
6.3
 
Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
375.3
 
 
3.0

 
 
395.0

 
 
59.9

 
 
770.3
 
 
62.9
 
Collateralized debt obligations
 
114.8
 
 
1.0

 
 
112.0

 
 
19.6

 
 
226.8
 
 
20.6
 
Other debt obligations
 
971.2
 
 
3.5

 
 
432.7

 
 
21.0

 
 
1,403.9
 
 
24.5
Total fixed maturities, available-for-sale
$
4,907.1
 
$
85.4

 
$
2,731.6

 
$
225.4

 
$
7,638.7
 
$
310.8
Total equity securities, available-for-sale
$
10.0
 
$
—

 
$
36.0

 
$
9.8

 
$
46.0
 
$
9.8
Our consolidated portfolio consists of fixed maturities where 80% were investment grade (rated AAA through BBB-) with an average price of 96 (carrying value/amortized cost) at December 31, 2014. Gross unrealized losses in our fixed maturities portfolio decreased during the year ended December 31, 2014, due primarily to a decrease in interest rates.
For those securities that had been in a continuous unrealized loss position for less than twelve months, our consolidated portfolio held 685 securities with a carrying value of $4,907.1 million and unrealized losses of $85.4 million reflecting an average price of 98 at December 31, 2014. Of this portfolio, 77% was investment grade (rated AAA through BBB-) at December 31, 2014, with associated unrealized losses of $44.4 million. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.
For those securities that had been in a continuous unrealized loss position greater than or equal to twelve months, our consolidated portfolio held 429 securities with a carrying value of $2,731.6 million and unrealized losses of $225.4 million. The average rating of this portfolio was A with an average price of 92 at December 31, 2014. Of the $225.4 million in unrealized losses, the commercial mortgage-backed securities sector accounts for $59.9 million in unrealized losses with an average price of 87 and an average credit rating of A-. The remaining unrealized losses consist primarily of $113.0 million within the corporate sector at December 31, 2014. The average price of the corporate sector was 91 and the average credit rating was BBB+. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.
Because we expected to recover our amortized cost, it was not our intent to sell the fixed maturity available-for-sale securities with unrealized losses and it was not more likely than not that we would be required to sell these securities before recovery of the amortized cost, which may be maturity, we did not consider these investments to be other-than-temporarily impaired at December 31, 2014.


218

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

 
 
 
December 31, 2013
 
 
 
Less than
 
Greater than or
 
 
 
 
 
twelve months
 
equal to twelve months
 
Total
 
 
 
 
 
Gross
 
 
 
Gross
 
 
 
Gross
 
 
 
Fair
 
unrealized
 
Fair
 
unrealized
 
Fair
 
unrealized
 
 
 
value
 
losses
 
value
 
losses
 
value
 
losses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
517.2
 
$
49.2
 
$
9.2

 
$
0.8

 
$
526.4
 
$
50.0
 
Non-U.S. governments
 
23.7
 
 
1.1
 
 
—

 
 
—

 
 
23.7
 
 
1.1
 
States and political subdivisions
 
1,319.0
 
 
75.0
 
 
46.1

 
 
10.4

 
 
1,365.1
 
 
85.4
 
Corporate
 
3,757.8
 
 
143.5
 
 
1,033.8

 
 
127.6

 
 
4,791.6
 
 
271.1
 
Residential mortgage-backed pass-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
through securities
 
1,150.3
 
 
38.2
 
 
85.9

 
 
8.5

 
 
1,236.2
 
 
46.7
 
Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
683.7
 
 
15.3
 
 
495.6

 
 
206.9

 
 
1,179.3
 
 
222.2
 
Collateralized debt obligations
 
88.8
 
 
1.4
 
 
47.4

 
 
33.1

 
 
136.2
 
 
34.5
 
Other debt obligations
 
1,359.0
 
 
16.1
 
 
287.9

 
 
25.4

 
 
1,646.9
 
 
41.5
Total fixed maturities, available-for-sale
$
8,899.5
 
$
339.8
 
$
2,005.9

 
$
412.7

 
$
10,905.4
 
$
752.5
Total equity securities, available-for-sale
$
16.7
 
$
0.3
 
$
48.3

 
$
13.0

 
$
65.0
 
$
13.3

Our consolidated portfolio consists of fixed maturities where 87% were investment grade (rated AAA through BBB-) with an average price of 94 (carrying value/amortized cost) at December 31, 2013. Gross unrealized losses in our fixed maturities portfolio decreased slightly during the year ended December 31, 2013, due to spread improvements.

For those securities that had been in a continuous unrealized loss position for less than twelve months, our consolidated portfolio held 1,154 securities with a carrying value of $8,899.5 million and unrealized losses of $339.8 million reflecting an average price of 96 at December 31, 2013. Of this portfolio, 94% was investment grade (rated AAA through BBB-) at December 31, 2013, with associated unrealized losses of $325.9 million. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.
    
For those securities that had been in a continuous unrealized loss position greater than or equal to twelve months, our consolidated portfolio held 359 securities with a carrying value of $2,005.9 million and unrealized losses of $412.7 million. The average rating of this portfolio was BBB- with an average price of 83 at December 31, 2013. Of the $412.7 million in unrealized losses, the commercial mortgage-backed securities sector accounts for $206.9 million in unrealized losses with an average price of 71 and an average credit rating of BB-. The remaining unrealized losses consist primarily of $127.6 million within the corporate sector at December 31, 2013. The average price of the corporate sector was 89 and the average credit rating was BBB+. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.

Because we expected to recover our amortized cost, it was not our intent to sell the fixed maturity available-for-sale securities with unrealized losses and it was not more likely than not that we would be required to sell these securities before recovery of the amortized cost, which may be maturity, we did not consider these investments to be other-than-temporarily impaired at December 31, 2013.



219

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Net Unrealized Gains and Losses on Available-for-Sale Securities and Derivative Instruments

The net unrealized gains and losses on investments in fixed maturities available-for-sale, equity securities available-for-sale and derivative instruments in cash flow hedge relationships are reported as a separate component of stockholder’s equity. The cumulative amount of net unrealized gains and losses on available-for-sale securities and derivative instruments in cash flow hedge relationships net of adjustments related to DAC and related actuarial balances and applicable income taxes was as follows:
 
 
December 31, 2014
 
December 31, 2013
 
 
 
 
 
 
 
 
 
(in millions)
Net unrealized gains on fixed maturities, available-for-sale (1)
$
2,712.3
 
$
1,893.0
Noncredit component of impairment losses on fixed maturities, available-for-sale
 
(175.4)
 
 
(277.6)
Net unrealized losses on equity securities, available-for-sale
 
(4.2)
 
 
(5.6)
Adjustments for assumed changes in amortization patterns
 
(346.8)
 
 
(265.9)
Adjustments for assumed changes in policyholder liabilities
 
(849.3)
 
 
(498.0)
Net unrealized gains on derivative instruments
 
203.8
 
 
107.1
Net unrealized gains on equity method subsidiaries and noncontrolling interest
 
 
 
 
 
 
adjustments
 
42.9
 
 
45.6
Provision for deferred income taxes
 
(553.5)
 
 
(348.5)
Net unrealized gains on available-for-sale securities and derivative instruments
$
1,029.8
 
$
650.1
(1)
Excludes net unrealized gains (losses) on fixed maturities, available-for-sale included in fair value hedging relationships.
Mortgage Loans

Mortgage loans consist of commercial and residential mortgage loans. We evaluate risks inherent in our commercial mortgage loans in two classes: (1) brick and mortar property loans, including mezzanine loans, where we analyze the property's rent payments as support for the loan, and (2) credit tenant loans (“CTL”), where we rely on the credit analysis of the tenant for the repayment of the loan. We evaluate risks inherent in our residential mortgage loan portfolio in two classes: (1) home equity mortgages and (2) first lien mortgages. The carrying amount of our mortgage loan portfolio was as follows:
 
 
December 31, 2014
 
December 31, 2013
 
 
 
 
 
 
 
 
 
(in millions)
Commercial mortgage loans
$
10,684.0
 
$
10,282.5
Residential mortgage loans
 
536.4
 
 
605.7
 
Total amortized cost
 
11,220.4
 
 
10,888.2
 
 
 
 
 
 
 
Valuation allowance
 
(56.0)
 
 
(69.0)
Total carrying value
$
11,164.4
 
$
10,819.2

We periodically purchase mortgage loans as well as sell mortgage loans we have originated. We purchased $99.0 million, $44.9 million and $62.3 million of residential mortgage loans in 2014, 2013 and 2012, respectively. We sold $34.6 million, $0.0 million and $0.0 million of residential mortgage loans in 2014, 2013 and 2012, respectively. We purchased $57.3 million, $166.1 million and $149.1 million of commercial mortgage loans in 2014, 2013 and 2012, respectively. We sold $0.2 million, $13.0 million and $31.1 million of commercial mortgage loans in 2014, 2013 and 2012, respectively.



220

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Our commercial mortgage loan portfolio consists primarily of non-recourse, fixed rate mortgages on stabilized properties. Our commercial mortgage loan portfolio is diversified by geographic region and specific collateral property type as follows:
 
December 31, 2014
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amortized
 
Percent
 
Amortized
 
Percent
 
cost
 
of total
 
cost
 
of total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
Geographic distribution
 
 
 
 
 
 
 
 
 
 
 
 
 
New England
$
528.0
 
 
4.9
%
 
$
528.5
 
 
5.1
%
Middle Atlantic
 
2,951.0
 
 
27.7
 
 
 
2,489.0
 
 
24.1
 
East North Central
 
442.1
 
 
4.1
 
 
 
519.9
 
 
5.1
 
West North Central
 
233.3
 
 
2.2
 
 
 
302.9
 
 
2.9
 
South Atlantic
 
1,970.9
 
 
18.5
 
 
 
1,949.5
 
 
19.0
 
East South Central
 
197.4
 
 
1.8
 
 
 
192.8
 
 
1.9
 
West South Central
 
1,023.9
 
 
9.6
 
 
 
830.3
 
 
8.1
 
Mountain
 
772.0
 
 
7.2
 
 
 
747.1
 
 
7.3
 
Pacific
 
2,565.4
 
 
24.0
 
 
 
2,722.5
 
 
26.5
 
Total
$
10,684.0
 
 
100.0
%
 
$
10,282.5
 
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property type distribution
 
 
 
 
 
 
 
 
 
 
 
 
 
Office
$
3,646.1
 
 
34.1
%
 
$
3,360.5
 
 
32.6
%
Retail
 
2,512.1
 
 
23.5
 
 
 
2,668.5
 
 
26.0
 
Industrial
 
1,916.1
 
 
18.0
 
 
 
1,766.2
 
 
17.2
 
Apartments
 
2,200.5
 
 
20.6
 
 
 
1,911.2
 
 
18.6
 
Hotel
 
331.5
 
 
3.1
 
 
 
333.1
 
 
3.2
 
Mixed use/other
 
77.7
 
 
0.7
 
 
 
243.0
 
 
2.4
 
Total
$
10,684.0
 
 
100.0
%
 
$
10,282.5
 
 
100.0
%
Our residential mortgage loan portfolio is composed of home equity mortgages with an amortized cost of $283.5 million and $394.9 million and first lien mortgages with an amortized cost of $252.9 million and $210.8 million as of December 31, 2014 and December 31, 2013, respectively. Our residential home equity mortgages are generally second lien mortgages comprised of closed-end loans and lines of credit.

Mortgage Loan Credit Monitoring

Commercial Credit Risk Profile Based on Internal Rating

We actively monitor and manage our commercial mortgage loan portfolio. All commercial mortgage loans are analyzed regularly and substantially all are internally rated, based on a proprietary risk rating cash flow model, in order to monitor the financial quality of these assets. The model stresses expected cash flows at various levels and at different points in time depending on the durability of the income stream, which includes our assessment of factors such as location (macro and micro markets), tenant quality and lease expirations. Our internal rating analysis presents expected losses in terms of a Standard & Poor’s (“S&P”) bond equivalent rating. As the credit risk for commercial mortgage loans increases, we adjust our internal ratings downward with loans in the category “B+ and below” having the highest risk for credit loss. Internal ratings on commercial mortgage loans are updated at least annually and potentially more often for certain loans with material changes in collateral value or occupancy and for loans on an internal “watch list”.

Commercial mortgage loans that require more frequent and detailed attention than other loans in our portfolio are identified and placed on an internal “watch list”. Among the criteria that would indicate a potential problem are significant negative changes in ratios of loan to value or contract rents to debt service, major tenant vacancies or bankruptcies, borrower sponsorship problems, late payments, delinquent taxes and loan relief/restructuring requests.



221

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The amortized cost of our commercial mortgage loan portfolio by credit risk, as determined by our internal rating system expressed in terms of an S&P bond equivalent rating, was as follows:
 
 
December 31, 2014
 
 
Brick and mortar
 
CTL
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
A- and above
$
9,098.6
 
$
168.8

 
$
9,267.4
BBB+ thru BBB-
 
1,019.4
 
 
178.5

 
 
1,197.9
BB+ thru BB-
 
148.3
 
 
—

 
 
148.3
B+ and below
 
68.8
 
 
1.6

 
 
70.4
Total
$
10,335.1
 
$
348.9

 
$
10,684.0
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2013
 
 
Brick and mortar
 
CTL
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
A- and above
$
8,067.1
 
$
194.5

 
$
8,261.6
BBB+ thru BBB-
 
1,444.3
 
 
250.0

 
 
1,694.3
BB+ thru BB-
 
155.4
 
 
0.1

 
 
155.5
B+ and below
 
169.1
 
 
2.0

 
 
171.1
Total
$
9,835.9
 
$
446.6

 
$
10,282.5

Residential Credit Risk Profile Based on Performance Status

Our residential mortgage loan portfolio is monitored based on performance of the loans. Monitoring on a residential mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment. We define non-performing residential mortgage loans as loans 90 days or greater delinquent or on non-accrual status.

The amortized cost of our performing and non-performing residential mortgage loans was as follows:
 
 
December 31, 2014
 
 
Home equity
 
First liens
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Performing
$
268.4
 
$
247.6
 
$
516.0
Nonperforming
 
15.0
 
 
5.4
 
 
20.4
Total
$
283.4
 
$
253.0
 
$
536.4
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2013
 
 
Home equity
 
First liens
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Performing
$
378.3
 
$
203.6
 
$
581.9
Nonperforming
 
16.6
 
 
7.2
 
 
23.8
Total
$
394.9
 
$
210.8
 
$
605.7
Non-Accrual Mortgage Loans
Commercial and residential mortgage loans are placed on non-accrual status if we have concern regarding the collectability of future payments or if a loan has matured without being paid off or extended. Factors considered may include conversations with the borrower, loss of major tenant, bankruptcy of borrower or major tenant, decreased property cash flow for commercial mortgage loans or number of days past due and other circumstances for residential mortgage loans. Based on an assessment as to the collectability of the principal, a determination is made to apply any payments received either against the principal or according to the contractual terms of the loan. When a loan is placed on nonaccrual status, the accrued unpaid interest receivable is reversed against interest income. Accrual of interest resumes after factors resulting in doubts about collectability have improved.


222

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The amortized cost of mortgage loans on non-accrual status was as follows:
 
 
 
December 31, 2014
 
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Commercial:
 
 
 
 
 
 
Brick and mortar
$
9.6
 
$
33.2
Residential:
 
 
 
 
 
 
Home equity
 
15.0
 
 
16.6
 
First liens
 
5.4
 
 
7.2
Total
$
30.0
 
$
57.0

The aging of our mortgage loans, based on amortized cost, was as follows:
 
 
December 31, 2014
 
 
 
 
 
 
 
90 days or
 
 
 
 
 
 
 
 
 
 
 
30-59 days
 
60-89 days
 
more past
 
Total past
 
 
 
 
 
 
 
 
past due
 
past due
 
due
 
due
 
Current
 
Total loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Commercial-brick and mortar
$
—

 
$
4.5

 
$
0.7

 
$
5.2

 
$
10,329.9
 
$
10,335.1
Commercial-CTL
 
—

 
 
—

 
 
—

 
 
—

 
 
348.9
 
 
348.9
Residential-home equity
 
2.3

 
 
1.2

 
 
3.4

 
 
6.9

 
 
276.5
 
 
283.4
Residential-first liens
 
0.3

 
 
1.1

 
 
4.3

 
 
5.7

 
 
247.3
 
 
253.0
Total
$
2.6

 
$
6.8

 
$
8.4

 
$
17.8

 
$
11,202.6
 
$
11,220.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
90 days or
 
 
 
 
 
 
 
 
 
 
 
30-59 days
 
60-89 days
 
more past
 
Total past
 
 
 
 
 
 
 
 
past due
 
past due
 
due
 
due
 
Current
 
Total loans
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Commercial-brick and mortar
$
—

 
$
—

 
$
16.7

 
$
16.7

 
$
9,819.2
 
$
9,835.9
Commercial-CTL
 
—

 
 
—

 
 
—

 
 
—

 
 
446.6
 
 
446.6
Residential-home equity
 
4.4

 
 
1.0

 
 
3.0

 
 
8.4

 
 
386.5
 
 
394.9
Residential-first liens
 
1.2

 
 
0.3

 
 
5.6

 
 
7.1

 
 
203.7
 
 
210.8
Total
$
5.6

 
$
1.3

 
$
25.3

 
$
32.2

 
$
10,856.0
 
$
10,888.2
We did not have any mortgage loans that were 90 days or more past due and still accruing interest as of either December 31, 2014 or December 31, 2013.
Mortgage Loan Valuation Allowance
We establish a valuation allowance to provide for the risk of credit losses inherent in our portfolio. The valuation allowance includes loan specific reserves for loans that are deemed to be impaired as well as reserves for pools of loans with similar risk characteristics where a property risk or market specific risk has not been identified but for which we anticipate a loss may occur. Mortgage loans on real estate are considered impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to contractual terms of the loan agreement. When we determine that a loan is impaired, a valuation allowance is established equal to the difference between the carrying amount of the mortgage loan and the estimated value reduced by the cost to sell. Estimated value is based on either the present value of the expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price or fair value of the collateral. Subsequent changes in the estimated value are reflected in the valuation allowance. Amounts on loans deemed to be uncollectible are charged off and removed from the valuation allowance. The change in the valuation allowance provision is included in net realized capital gains (losses) on our consolidated statements of operations.


223

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The valuation allowance is maintained at a level believed adequate by management to absorb estimated probable credit losses. Management's periodic evaluation and assessment of the valuation allowance adequacy is based on known and inherent risks in the portfolio, adverse situations that may affect a borrower's ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, portfolio delinquency information, underwriting standards, peer group information, current economic conditions, loss experience and other relevant factors. The evaluation of our impaired loan component is subjective, as it requires the estimation of timing and amount of future cash flows expected to be received on impaired loans.

We review our commercial mortgage loan portfolio and analyze the need for a valuation allowance for any loan that is delinquent for 60 days or more, in process of foreclosure, restructured, on the internal “watch list” or that currently has a valuation allowance. In addition to establishing allowance levels for specifically identified impaired commercial mortgage loans, management determines an allowance for all other loans in the portfolio for which historical experience and current economic conditions indicate certain losses exist. These loans are segregated by risk rating level with an estimated loss ratio applied against each risk rating level. The loss ratio is generally based upon historic loss experience for each risk rating level as adjusted for certain current environmental factors management believes to be relevant.

For our residential mortgage loan portfolio, we separate the loans into several homogeneous pools, each of which consist of loans of a similar nature including but not limited to loans similar in collateral, term and structure and loan purpose or type. We evaluate loan pools based on aggregated risk ratings, estimated specific loss potential in the different classes of credits, and historical loss experience by pool type. We adjust these quantitative factors for qualitative factors of present conditions. Qualitative factors include items such as economic and business conditions, changes in the portfolio, value of underlying collateral and concentrations. Residential mortgage loan pools exclude loans that have been restructured or impaired, as those loans are evaluated individually.



224

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
A rollforward of our valuation allowance and ending balances of the allowance and loan balance by basis of impairment method was as follows:
 
 
 
Commercial
 
Residential
 
Total
 
 
 
(in millions)
For the year ended December 31, 2014
 
 
 
 
 
 
 
 
Beginning balance
$
28.7

 
$
40.3
 
$
69.0
 
Provision
 
(0.9)

 
 
7.9
 
 
7.0
 
Charge-offs
 
(0.9)

 
 
(22.7)
 
 
(23.6)
 
Recoveries
 
—

 
 
3.6
 
 
3.6
Ending balance
$
26.9

 
$
29.1
 
$
56.0
Allowance ending balance by basis of impairment method:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
2.4

 
$
8.8
 
$
11.2
 
Collectively evaluated for impairment
 
24.5

 
 
20.3
 
 
44.8
Allowance ending balance
$
26.9

 
$
29.1
 
$
56.0
Loan balance by basis of impairment method:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
4.4

 
$
26.4
 
$
30.8
 
Collectively evaluated for impairment
 
10,679.6

 
 
510.0
 
 
11,189.6
Loan ending balance
$
10,684.0

 
$
536.4
 
$
11,220.4
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2013
 
 
 
 
 
 
 
 
Beginning balance
$
51.8

 
$
44.4
 
$
96.2
 
Provision
 
4.1

 
 
11.1
 
 
15.2
 
Charge-offs
 
(28.0)

 
 
(18.3)
 
 
(46.3)
 
Recoveries
 
0.8

 
 
3.1
 
 
3.9
Ending balance
$
28.7

 
$
40.3
 
$
69.0
Allowance ending balance by basis of impairment method:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
2.4

 
$
9.8
 
$
12.2
 
Collectively evaluated for impairment
 
26.3

 
 
30.5
 
 
56.8
Allowance ending balance
$
28.7

 
$
40.3
 
$
69.0
Loan balance by basis of impairment method:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
4.4

 
$
31.4
 
$
35.8
 
Collectively evaluated for impairment
 
10,278.1

 
 
574.3
 
 
10,852.4
Loan ending balance
$
10,282.5

 
$
605.7
 
$
10,888.2
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2012
 
 
 
 
 
 
 
 
Beginning balance
$
64.8

 
$
36.0
 
$
100.8
 
Provision
 
13.5

 
 
39.9
 
 
53.4
 
Charge-offs
 
(26.7)

 
 
(35.1)
 
 
(61.8)
 
Recoveries
 
0.2

 
 
3.6
 
 
3.8
Ending balance
$
51.8

 
$
44.4
 
$
96.2
Allowance ending balance by basis of impairment method:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
2.4

 
$
9.8
 
$
12.2
 
Collectively evaluated for impairment
 
49.4

 
 
34.6
 
 
84.0
Allowance ending balance
$
51.8

 
$
44.4
 
$
96.2
Loan balance by basis of impairment method:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
13.6

 
$
37.5
 
$
51.1
 
Collectively evaluated for impairment
 
10,205.9

 
 
664.6
 
 
10,870.5
Loan ending balance
$
10,219.5

 
$
702.1
 
$
10,921.6
Impaired Mortgage Loans
Impaired mortgage loans are loans with a related specific valuation allowance, loans whose carrying amount has been reduced to the expected collectible amount because the impairment has been considered other than temporary or a loan modification has been classified as a troubled debt restructuring (“TDR”). Based on an assessment as to the collectability of the principal, a


225

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

determination is made to apply any payments received either against the principal or according to the contractual terms of the loan. Our recorded investment in and unpaid principal balance of impaired loans along with the related loan specific allowance for losses, if any, and the average recorded investment and interest income recognized during the time the loans were impaired were as follows:
 
 
December 31, 2014
 
 
 
 
Unpaid
 
 
 
 
Recorded
 
principal
 
Related
 
 
investment
 
balance
 
allowance
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
Commercial-brick and mortar
$
5.2
 
$
6.7
 
$
—

 
Residential-first liens
 
3.4
 
 
3.4
 
 
—

With an allowance recorded:
 
 
 
 
 
 
 
 
 
Commercial-brick and mortar
 
4.4
 
 
4.4
 
 
2.4

 
Residential-home equity
 
16.5
 
 
17.1
 
 
8.2

 
Residential-first liens
 
6.4
 
 
6.4
 
 
0.6

Total:
 
 
 
 
 
 
 
 
 
Commercial
$
9.6
 
$
11.1
 
$
2.4

 
Residential
$
26.3
 
$
26.9
 
$
8.8

 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
Unpaid
 
 
 
 
Recorded
 
principal
 
Related
 
 
investment
 
balance
 
allowance
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
Commercial-brick and mortar
$
21.5
 
$
32.7
 
$
—

 
Residential-first liens
 
4.6
 
 
4.6
 
 
—

With an allowance recorded:
 
 
 
 
 
 
 
 
 
Commercial-brick and mortar
 
4.4
 
 
4.4
 
 
2.4

 
Residential-home equity
 
19.5
 
 
19.7
 
 
9.2

 
Residential-first liens
 
7.3
 
 
6.2
 
 
0.6

Total:
 
 
 
 
 
 
 
 
 
Commercial
$
25.9
 
$
37.1
 
$
2.4

 
Residential
$
31.4
 
$
30.5
 
$
9.8




226

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
 
 
Average
 
 
 
 
recorded
 
Interest income
 
 
investment
 
recognized
 
 
 
 
 
 
 
 
 
(in millions)
For the year ended December 31, 2014
 
 
 
 
 
With no related allowance recorded:
 
 
 
 
 
 
Commercial-brick and mortar
$
13.4
 
$
—

 
Residential-first liens
 
4.0
 
 
—

With an allowance recorded:
 
 
 
 
 
 
Commercial-brick and mortar
 
4.4
 
 
0.2

 
Residential-home equity
 
18.0
 
 
0.6

 
Residential-first liens
 
6.9
 
 
0.2

Total:
 
 
 
 
 
 
Commercial
$
17.8
 
$
0.2

 
Residential
$
28.9
 
$
0.8

 
 
 
 
 
 
 
For the year ended December 31, 2013
 
 
 
 
 
With no related allowance recorded:
 
 
 
 
 
 
Commercial-brick and mortar
$
22.2
 
$
0.2

 
Residential-first liens
 
7.2
 
 
—

With an allowance recorded:
 
 
 
 
 
 
Commercial-brick and mortar
 
4.4
 
 
0.3

 
Residential-home equity
 
20.2
 
 
1.1

 
Residential-first liens
 
7.1
 
 
0.2

Total:
 
 
 
 
 
 
Commercial
$
26.6
 
$
0.5

 
Residential
$
34.5
 
$
1.3

 
 
 
 
 
 
 
For the year ended December 31, 2012
 
 
 
 
 
With no related allowance recorded:
 
 
 
 
 
 
Commercial-brick and mortar
$
11.4
 
$
2.6

 
Residential-first liens
 
7.0
 
 
—

With an allowance recorded:
 
 
 
 
 
 
Commercial-brick and mortar
 
59.2
 
 
0.2

 
Residential-home equity
 
17.7
 
 
0.9

 
Residential-first liens
 
6.2
 
 
0.1

Total:
 
 
 
 
 
 
Commercial
$
70.6
 
$
2.8

 
Residential
$
30.9
 
$
1.0

Mortgage Loan Modifications
Our commercial and residential mortgage loan portfolios include loans that have been modified. We assess loan modifications on a case-by-case basis to evaluate whether a TDR has occurred. The commercial mortgage loan TDRs were modified to delay or reduce principal payments and to increase, reduce or delay interest payments. For these TDR assessments, we have determined the loan rates are now considered below market based on current circumstances. The commercial mortgage loan modifications resulted in delayed cash receipts and a decrease in interest income. The residential mortgage loan TDRs include modifications of interest-only payment periods, delays in principal balloon payments, and interest rate reductions. Residential mortgage loan modifications resulted in delayed or decreased cash receipts and a decrease in interest income.
The following table includes information about outstanding loans that were modified and met the criteria of a TDR during the periods indicated. In addition, the table includes information for loans that were modified and met the criteria of a TDR within the past twelve months that were in payment default during the periods indicated:


227

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
 
 
For the year ended December 31, 2014
 
 
TDRs
 
TDRs in payment default
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of
 
Recorded
 
Number of
 
Recorded
 
 
contracts
 
investment
 
contracts
 
investment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
(in millions)
Commercial-brick and mortar
2
 
$
5.1
 
1

 
$
0.7

Residential-home equity
75
 
 
3.0
 
3

 
 
—

Residential-first liens
1
 
 
0.1
 
—

 
 
—

Total
78
 
$
8.2
 
4

 
$
0.7

 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2013
 
 
TDRs
 
TDRs in payment default
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of
 
Recorded
 
Number of
 
Recorded
 
 
contracts
 
investment
 
contracts
 
investment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
(in millions)
Commercial-brick and mortar
2
 
$
0.9
 
—

 
$
—

Residential-home equity
69
 
 
3.8
 
19

 
 
—

Residential-first liens
3
 
 
0.6
 
1

 
 
0.3

Total
74
 
$
5.3
 
20

 
$
0.3

 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2012
 
 
TDRs
 
TDRs in payment default
 
 
 
 
 
 
 
 
 
 
 
 
 
Number of
 
Recorded
 
Number of
 
Recorded
 
 
contracts
 
investment
 
contracts
 
investment
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
(in millions)
Commercial-brick and mortar
2
 
$
18.0
 
1

 
$
13.7

Residential-home equity
324
 
 
15.0
 
12

 
 
—

Residential-first liens
12
 
 
2.1
 
—

 
 
—

Total
338
 
$
35.1
 
13

 
$
13.7


Commercial mortgage loans that have been designated as a TDR have been previously reserved in the mortgage loan valuation allowance to the estimated fair value of the underlying collateral reduced by the cost to sell.

Residential mortgage loans that have been designated as a TDR are specifically reserved for in the mortgage loan valuation allowance if losses result from the modification. Residential mortgage loans that have defaulted or have been discharged through bankruptcy are reduced to the expected collectible amount.

Real Estate

Depreciation expense on invested real estate was $46.4 million, $44.4 million and $45.1 million in 2014, 2013 and 2012, respectively. Accumulated depreciation was $387.8 million and $364.8 million as of December 31, 2014 and 2013, respectively.

Other Investments

Other investments include interests in unconsolidated entities, joint ventures and partnerships and properties owned jointly with venture partners and operated by the partners. Such investments are generally accounted for using the equity method. In applying the equity method, we record our share of income or loss reported by the equity investees in net investment income. Summarized financial information for these unconsolidated entities was as follows:



228

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
 
 
 
 
 
December 31,
 
 
 
 
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
Total assets
 
 
 
$
14,066.7
 
$
7,985.3
Total liabilities
 
 
 
 
3,773.7
 
 
2,781.1
Total equity
 
 
 
$
10,293.0
 
$
5,204.2
Net investment in unconsolidated entities
 
 
 
$
521.6
 
$
384.3
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31,
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Total revenues
$
1,485.2
 
$
773.7
 
$
794.5
Net income
 
747.3
 
 
368.3
 
 
380.5
Our share of net income of unconsolidated entities
 
52.9
 
 
43.9
 
 
31.5
Derivative assets are carried at fair value and reported as a component of other investments. Certain seed money investments are also carried at fair value and reported as a component of other investments, with changes in fair value included in net realized capital gains (losses) on our consolidated statements of operations.
Securities Posted as Collateral
We posted $1,439.9 million in fixed maturities, available-for-sale securities at December 31, 2014, to satisfy collateral requirements primarily associated with a reinsurance arrangement, our derivative credit support annex (collateral) agreements, Futures Commission Merchant (“FCM”) agreements, a lending arrangement and our obligation under funding agreements with the Federal Home Loan Bank of Des Moines (“FHLB Des Moines”). In addition, we posted $2,408.2 million in commercial mortgage loans and home equity mortgages as of December 31, 2014, to satisfy collateral requirements associated with our obligation under funding agreements with the FHLB Des Moines. Since we did not relinquish ownership rights on these instruments, they are reported as fixed maturities, available-for-sale and mortgage loans, respectively, on our consolidated statements of financial position. Of the securities posted as collateral, $139.7 million can be sold or repledged by the secured party.
Balance Sheet Offsetting
Financial assets subject to master netting agreements or similar agreements were as follows:
 
 
 
 
 
 
Gross amounts not offset in the
 
 
 
 
 
 
 
 
 
consolidated statements
 
 
 
 
 
 
 
 
 
of financial position
 
 
 
 
 
 
Gross amount
 
 
 
 
 
 
 
 
 
 
of recognized
 
Financial
 
Collateral
 
 
 
 
 
 
assets (1)
 
instruments (2)
 
received
 
Net amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
Derivative assets
$
650.8
 
$
(478.9)
 
$
(159.4)
 
$
12.5
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
Derivative assets
$
651.1
 
$
(576.9)
 
$
(70.6)
 
$
3.6
(1)
The gross amount of recognized derivative assets is reported with other investments on the consolidated statements of financial position. The gross amount of derivative assets is not netted against offsetting liabilities for presentation on the consolidated statements of financial position.
(2)
Represents amount of offsetting derivative liabilities that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative assets for presentation on the consolidated statements of financial position.



229

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Financial liabilities subject to master netting agreements or similar agreements were as follows:
 
 
 
 
 
 
Gross amounts not offset in the
 
 
 
 
 
 
 
 
 
consolidated statements
 
 
 
 
 
 
 
 
 
of financial position
 
 
 
 
 
 
Gross amount
 
 
 
 
 
 
 
 
 
 
of recognized
 
Financial
 
Collateral
 
 
 
 
 
 
liabilities (1)
 
instruments (2)
 
pledged
 
Net amount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
Derivative liabilities
$
763.8
 
$
(478.9)
 
$
(220.6)
 
$
64.3
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
Derivative liabilities
$
1,017.3
 
$
(576.9)
 
$
(362.1)
 
$
78.3
(1)
The gross amount of recognized derivative liabilities are reported with other liabilities on the consolidated statements of financial position. The above excludes $395.0 million and $207.7 million of derivative liabilities as of December 31, 2014 and December 31, 2013, respectively, which are primarily embedded derivatives that are not subject to master netting agreements or similar agreements. The gross amounts of derivative liabilities are not netted against offsetting assets for presentation on the consolidated statements of financial position.
(2)
Represents amount of offsetting derivative assets that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative liabilities for presentation on the consolidated statements of financial position.

The financial instruments that are subject to master netting agreements or similar agreements include right of setoff provisions. Derivative instruments include provisions to setoff positions covered under the agreements with the same counterparties and provisions to setoff positions outside of the agreements with the same counterparties in the event of default by one of the parties. Derivative instruments also include collateral provisions. Collateral received and pledged is generally settled daily with each counterparty. See Note 6, Derivative Financial Instruments, for further details.

Repurchase and reverse repurchase agreements include provisions to setoff other repurchase and reverse repurchase balances with the same counterparty. Repurchase and reverse repurchase agreements also include collateral provisions with the counterparties. For reverse repurchase agreements we require the counterparties to pledge collateral with a value greater than the amount of cash transferred. We have the right but do not sell or repledge collateral received in reverse repurchase agreements. Repurchase agreements are structured as secured borrowings for all counterparties. We pledge fixed maturities available-for-sale, which the counterparties have the right to sell or repledge. Interest incurred on repurchase agreements is reported as part of operating expense on the consolidated statements of operations. Net proceeds related to repurchase agreements are reported as a component of financing activities on the consolidated statements of cash flows. We did not have any outstanding repurchase or reverse repurchase agreements as of December 31, 2014 and December 31, 2013.
6. Derivative Financial Instruments
Derivatives are generally used to hedge or reduce exposure to market risks associated with assets held or expected to be purchased or sold and liabilities incurred or expected to be incurred. Derivatives are used to change the characteristics of our asset/liability mix consistent with our risk management activities. Derivatives are also used in asset replication strategies.
Types of Derivative Instruments
Interest Rate Contracts
Interest rate risk is the risk we will incur economic losses due to adverse changes in interest rates. Sources of interest rate risk include the difference between the maturity and interest rate changes of assets with the liabilities they support, timing differences between the pricing of liabilities and the purchase or procurement of assets and changing cash flow profiles from original projections due to prepayment options embedded within asset and liability contracts. We use various derivatives to manage our exposure to fluctuations in interest rates.
Interest rate swaps are contracts in which we agree with other parties to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts based upon designated market rates or rate indices and an agreed upon notional principal amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by any party. Cash


230

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

is paid or received based on the terms of the swap. We use interest rate swaps primarily to more closely match the interest rate characteristics of assets and liabilities and to mitigate the risks arising from timing mismatches between assets and liabilities (including duration mismatches). We also use interest rate swaps to hedge against changes in the value of assets we anticipate acquiring and other anticipated transactions and commitments. Interest rate swaps are used to hedge against changes in the value of the guaranteed minimum withdrawal benefit (“GMWB”) liability. The GMWB rider on our variable annuity products provides for guaranteed minimum withdrawal benefits regardless of the actual performance of various equity and/or fixed income funds available with the product.

Interest rate options, including interest rate caps and interest rate floors, which can be combined to form interest rate collars, are contracts that entitle the purchaser to pay or receive the amounts, if any, by which a specified market rate exceeds a cap strike interest rate, or falls below a floor strike interest rate, respectively, at specified dates. We use interest rate collars to manage interest rate risk related to guaranteed minimum interest rate liabilities in our individual annuities contracts and lapse risk associated with higher interest rates.

A swaption is an option to enter into an interest rate swap at a future date. We purchase swaptions to offset or modify existing exposures. Swaptions provide us the benefit of the agreed-upon strike rate if the market rates for liabilities are higher, with the flexibility to enter into the current market rate swap if the market rates for liabilities are lower. Swaptions not only hedge against the downside risk, but also allow us to take advantage of any upside benefits.

In exchange‑traded futures transactions, we agree to purchase or sell a specified number of contracts, the values of which are determined by the values of designated classes of securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. We enter into exchange‑traded futures with regulated futures commissions merchants who are members of a trading exchange. We have used exchange‑traded futures to reduce market risks from changes in interest rates and to alter mismatches between the assets in a portfolio and the liabilities supported by those assets.

Foreign Exchange Contracts

Foreign currency risk is the risk we will incur economic losses due to adverse fluctuations in foreign currency exchange rates. This risk arises from foreign currency-denominated funding agreements we issue and foreign currency-denominated fixed maturities we invest in. We use currency swaps to manage our exposure to foreign currency exchange rates.

Currency swaps are contracts in which we agree with other parties to exchange, at specified intervals, a series of principal and interest payments in one currency for that of another currency. Generally, the principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party. The interest payments are primarily fixed-to-fixed rate; however, they may also be fixed-to-floating rate or floating-to-fixed rate. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty for payments made in the same currency at each due date. We use currency swaps to reduce market risks from changes in currency exchange rates with respect to investments or liabilities denominated in foreign currencies that we either hold or intend to acquire or sell.

Equity Contracts

Equity risk is the risk that we will incur economic losses due to adverse fluctuations in common stock. We use various derivatives to manage our exposure to equity risk, which arises from products in which the interest we credit is tied to an external equity index as well as products subject to minimum contractual guarantees.

We purchase equity call spreads to hedge the equity participation rates promised to contractholders in conjunction with our fixed deferred annuity and universal life products that credit interest based on changes in an external equity index. We use exchange-traded futures and equity put options to hedge against changes in the value of the GMWB liability related to the GMWB rider on our variable annuity product, as previously explained. The premium associated with certain options is paid quarterly over the life of the option contract.



231

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Credit Contracts
Credit risk relates to the uncertainty associated with the continued ability of a given obligor to make timely payments of principal and interest. We use credit default swaps to enhance the return on our investment portfolio by providing comparable exposure to fixed income securities that might not be available in the primary market. They are also used to hedge credit exposures in our investment portfolio. Credit derivatives are used to sell or buy credit protection on an identified name or names on an unfunded or synthetic basis in return for receiving or paying a quarterly premium. The premium generally corresponds to a referenced name's credit spread at the time the agreement is executed. In cases where we sell protection, we also buy a quality cash bond to match against the credit default swap, thereby entering into a synthetic transaction replicating a cash security. When selling protection, if there is an event of default by the referenced name, as defined by the agreement, we are obligated to pay the counterparty the referenced amount of the contract and receive in return the referenced security in a principal amount equal to the notional value of the credit default swap.
Total return swaps are contracts in which we agree with other parties to exchange, at specified intervals, an amount determined by the difference between the previous price and the current price of a reference asset based upon an agreed upon notional principal amount plus an additional amount determined by the financing spread.  We currently use futures traded on an exchange (“exchange traded”) and total return swaps referencing equity indices to hedge our portfolio from potential credit losses related to systemic events.
Other Contracts
Embedded Derivatives. We purchase or issue certain financial instruments or products that contain a derivative instrument that is embedded in the financial instrument or product. When it is determined that the embedded derivative possesses economic characteristics that are not clearly or closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host instrument for measurement purposes. The embedded derivative, which is reported with the host instrument in the consolidated statements of financial position, is carried at fair value.
We have investment-type insurance contracts in which the return is tied to a leveraged inflation index. In addition, we had an investment-type insurance contract in which the return was tied to an external equity index. We economically hedge the risk associated with these investment-type insurance contracts.
We offer group annuity contracts that have guaranteed separate accounts as an investment option.
We have structured investment relationships with trusts we have determined to be VIEs, which are consolidated in our financial statements. The notes issued by these trusts include obligations to deliver an underlying security to residual interest holders and the obligations contain an embedded derivative of the forecasted transaction to deliver the underlying security.
We have fixed deferred annuities and universal life contracts that credit interest based on changes in an external equity index. We also have certain variable annuity products with a GMWB rider, which allows the customer to make withdrawals of a specified annual amount, either for a fixed number of years or for the lifetime of the customer, even if the account value is fully exhausted. Declines in the equity markets may increase our exposure to benefits under contracts with the GMWB. We economically hedge the exposure in these contracts, as previously explained.
Exposure
Our risk of loss is typically limited to the fair value of our derivative instruments and not to the notional or contractual amounts of these derivatives. We are also exposed to credit losses in the event of nonperformance of the counterparties. Our current credit exposure is limited to the value of derivatives that have become favorable to us. This credit risk is minimized by purchasing such agreements from financial institutions with high credit ratings and by establishing and monitoring exposure limits. We also utilize various credit enhancements, including collateral and credit triggers to reduce the credit exposure to our derivative instruments.
Derivatives may be exchange-traded or they may be privately negotiated contracts, which are usually referred to as over-the-counter (“OTC”) derivatives. Certain of our OTC derivatives are cleared and settled through central clearing counterparties (“OTC cleared”), while others are bilateral contracts between two counterparties (“bilateral OTC”). Our derivative transactions are generally documented under International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements. Management believes that such agreements provide for legally enforceable set-off and close-out netting of exposures to specific counterparties. Under such agreements, in connection with an early termination of a transaction, we are permitted to set off our receivable from a counterparty


232

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

against our payables to the same counterparty arising out of all included transactions. For reporting purposes, we do not offset fair value amounts recognized for the right to reclaim cash collateral or the obligation to return cash collateral against fair value amounts recognized for derivative instruments executed with the same counterparties under master netting agreements.

We posted $271.6 million and $393.1 million in cash and securities under collateral arrangements as of December 31, 2014 and December 31, 2013, respectively, to satisfy collateral requirements associated with our derivative credit support agreements and FCM agreements. These amounts include initial margin requirements.

Certain of our derivative instruments contain provisions that require us to maintain an investment grade rating from each of the major credit rating agencies on our debt. If the ratings on our debt were to fall below investment grade, it would be in violation of these provisions and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair value, inclusive of accrued interest, of all derivative instruments with credit-risk-related contingent features that were in a liability position without regard to netting under derivative credit support annex agreements as of December 31, 2014 and December 31, 2013, was $656.2 million and $1,042.9 million, respectively. Cleared derivatives have contingent features that require us to post excess margin as required by the FCM. The terms surrounding excess margin vary by FCM agreement. With respect to derivatives containing collateral triggers, we posted collateral and initial margin of $271.6 million and $393.1 million as of December 31, 2014 and December 31, 2013, respectively, in the normal course of business, which reflects netting under derivative agreements. If the credit-risk-related contingent features underlying these agreements were triggered on December 31, 2014, we would be required to post an additional $67.7 million of collateral to our counterparties.

As of December 31, 2014 and December 31, 2013, we had received $138.7 million and $21.0 million, respectively, of cash collateral associated with our derivative credit support annex agreements and FCM agreements, for which we recorded a corresponding liability reflecting our obligation to return the collateral.

Notional amounts are used to express the extent of our involvement in derivative transactions and represent a standard measurement of the volume of our derivative activity. Notional amounts represent those amounts used to calculate contractual flows to be exchanged and are not paid or received, except for contracts such as currency swaps. Credit exposure represents the gross amount owed to us under derivative contracts as of the valuation date. The notional amounts and credit exposure of our derivative financial instruments by type were as follows:



233

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
 
 
December 31, 2014
 
December 31, 2013
 
 
 
 
 
 
 
 
 
(in millions)
Notional amounts of derivative instruments
 
 
 
 
 
Interest rate contracts:
 
 
 
 
 
 
Interest rate swaps
$
19,182.6

 
$
20,570.8
 
Interest rate options
 
4,900.0

 
 
4,100.0
 
Swaptions
 
260.0

 
 
325.0
 
Interest rate futures
 
147.5

 
 
92.5
Foreign exchange contracts:
 
 
 
 
 
 
Currency swaps
 
1,835.1

 
 
2,247.1
Equity contracts:
 
 
 
 
 
 
Equity options
 
3,293.4

 
 
2,010.4
 
Equity futures
 
498.1

 
 
273.3
Credit contracts:
 
 
 
 
 
 
Credit default swaps
 
1,234.5

 
 
1,153.2
 
Total return swaps
 
90.0

 
 
90.0
 
Futures
 
10.4

 
 
9.1
Other contracts:
 
 
 
 
 
 
Embedded derivatives
 
8,646.8

 
 
7,036.0
Total notional amounts at end of period
$
40,098.4

 
$
37,907.4
 
 
 
 
 
 
 
Credit exposure of derivative instruments
 
 
 
 
 
Interest rate contracts:
 
 
 
 
 
 
Interest rate swaps
$
510.8

 
$
435.5
 
Interest rate options
 
41.0

 
 
42.5
 
Swaptions
 
—

 
 
1.0
Foreign exchange contracts:
 
 
 
 
 
 
Currency swaps
 
87.6

 
 
187.5
Equity contracts:
 
 
 
 
 
 
Equity options
 
30.2

 
 
30.0
Credit contracts:
 
 
 
 
 
 
Credit default swaps
 
13.3

 
 
9.5
 
Total return swaps
 
—

 
 
0.1
Total gross credit exposure
 
682.9

 
 
706.1
Less: collateral received
 
173.9

 
 
104.5
Net credit exposure
$
509.0

 
$
601.6



234

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The fair value of our derivative instruments classified as assets and liabilities was as follows:
 
 
 
Derivative assets (1)
 
Derivative liabilities (2)
 
 
 
December 31, 2014
 
December 31, 2013
 
December 31, 2014
 
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Derivatives designated as hedging
 
 
 
 
 
 
 
 
 
 
 
 
instruments
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
$
8.8

 
$
0.1

 
$
193.9
 
$
285.4
Foreign exchange contracts
 
80.0

 
 
121.6

 
 
69.1
 
 
51.2
Total derivatives designated as hedging
 
 
 
 
 
 
 
 
 
 
 
 
instruments
$
88.8

 
$
121.7

 
$
263.0
 
$
336.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives not designated as hedging
 
 
 
 
 
 
 
 
 
 
 
 
instruments
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
$
508.6

 
$
452.2

 
$
321.5
 
$
489.6
Foreign exchange contracts
 
9.9

 
 
37.6

 
 
12.0
 
 
10.6
Equity contracts
 
30.2

 
 
30.0

 
 
131.7
 
 
145.0
Credit contracts
 
13.3

 
 
9.6

 
 
35.6
 
 
35.5
Other contracts
 
—

 
 
—

 
 
395.0
 
 
207.7
Total derivatives not designated as hedging
 
 
 
 
 
 
 
 
 
 
 
 
instruments
 
562.0

 
 
529.4

 
 
895.8
 
 
888.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total derivative instruments
$
650.8

 
$
651.1

 
$
1,158.8
 
$
1,225.0
(1) The fair value of derivative assets is reported with other investments on the consolidated statements of financial position.
(2) The fair value of derivative liabilities is reported with other liabilities on the consolidated statements of financial position, with the exception of certain embedded derivative liabilities. Embedded derivative (assets) liabilities with a fair value of $155.9 million and $(9.5) million as of December 31, 2014 and December 31, 2013, respectively, are reported with contractholder funds on the consolidated statements of financial position.
Credit Derivatives Sold
When we sell credit protection, we are exposed to the underlying credit risk similar to purchasing a fixed maturity security instrument. The majority of our credit derivative contracts sold reference a single name or reference security (referred to as “single name credit default swaps”). The remainder of our credit derivatives reference either a basket or index of securities. These instruments are either referenced in an over-the-counter credit derivative transaction, or embedded within an investment structure that has been fully consolidated into our financial statements.
These credit derivative transactions are subject to events of default defined within the terms of the contract, which normally consist of bankruptcy, failure to pay, or modified restructuring of the reference entity and/or issue. If a default event occurs for a reference name or security, we are obligated to pay the counterparty an amount equal to the notional amount of the credit derivative transaction. As a result, our maximum future payment is equal to the notional amount of the credit derivative. In certain cases, we also have purchased credit protection with identical underlyings to certain of our sold protection transactions. The effect of this purchased protection would reduce our total maximum future payments by $10.0 million as of December 31, 2014 and $44.9 million as of December 31, 2013. These purchased credit derivative transactions had a net asset (liability) fair value of $(0.1) million as of December 31, 2014 and $(0.5) million as of December 31, 2013. In certain circumstances, our potential loss could also be reduced by any amount recovered in the default proceedings of the underlying credit name.
We purchased an investment structure with embedded credit features that is fully consolidated into our financial statements. This consolidation results in recognition of the underlying credit derivatives and collateral within the structure, typically high quality fixed maturities that are owned by a special purpose vehicle. These credit derivatives reference several names in a basket structure. In the event of default, the collateral within the structure would typically be liquidated to pay the claims of the credit derivative counterparty.
The following tables show our credit default swap protection sold by types of contract, types of referenced/underlying asset class and external agency rating for the underlying reference security. The maximum future payments are undiscounted and have not been reduced by the effect of any offsetting transactions, collateral or recourse features described above.



235

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
 
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Maximum
 
average
 
 
 
Notional
 
Fair
 
future
 
expected life
 
 
 
amount
 
value
 
payments
 
(in years)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
Single name credit default swaps
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt
 
 
 
 
 
 
 
 
 
 
 
 
 
AAA
$
30.0
 
$
1.0
 
$
30.0
 
 
4.2
 
 
AA
 
79.0
 
 
1.6
 
 
79.0
 
 
3.3
 
 
A
 
254.5
 
 
3.3
 
 
254.5
 
 
2.8
 
 
BBB
 
345.0
 
 
1.2
 
 
345.0
 
 
3.6
 
 
BB
 
10.0
 
 
0.9
 
 
10.0
 
 
5.0
 
Government/municipalities
 
 
 
 
 
 
 
 
 
 
 
 
 
AA
 
30.0
 
 
0.6
 
 
30.0
 
 
4.3
 
Sovereign
 
 
 
 
 
 
 
 
 
 
 
 
 
AA
 
10.0
 
 
0.1
 
 
10.0
 
 
4.7
 
 
BBB
 
40.0
 
 
(0.1)
 
 
40.0
 
 
4.7
Total single name credit default swaps
 
798.5
 
 
8.6
 
 
798.5
 
 
3.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basket and index credit default swaps
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt
 
 
 
 
 
 
 
 
 
 
 
 
 
Near default (1)
 
100.4
 
 
(19.1)
 
 
100.4
 
 
2.2
 
Government/municipalities
 
 
 
 
 
 
 
 
 
 
 
 
 
AA
 
30.0
 
 
(1.8)
 
 
30.0
 
 
2.7
 
Structured finance
 
 
 
 
 
 
 
 
 
 
 
 
 
BBB
 
16.9
 
 
0.1
 
 
16.9
 
 
3.5
Total basket and index credit default swaps
 
147.3
 
 
(20.8)
 
 
147.3
 
 
2.5
Total credit default swap protection sold
$
945.8
 
$
(12.2)
 
$
945.8
 
 
3.3
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Maximum
 
average
 
 
 
Notional
 
Fair
 
future
 
expected life
 
 
 
amount
 
value
 
payments
 
(in years)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
Single name credit default swaps
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt
 
 
 
 
 
 
 
 
 
 
 
 
 
AAA
$
10.0
 
$
0.3
 
$
10.0
 
 
4.7
 
 
AA
 
84.0
 
 
1.8
 
 
84.0
 
 
4.0
 
 
A
 
294.5
 
 
4.2
 
 
294.5
 
 
4.0
 
 
BBB
 
265.0
 
 
(1.2)
 
 
265.0
 
 
3.9
Total single name credit default swaps
 
653.5
 
 
5.1
 
 
653.5
 
 
4.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basket and index credit default swaps
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt
 
 
 
 
 
 
 
 
 
 
 
 
 
Near default (1)
 
110.4
 
 
(19.9)
 
 
110.4
 
 
3.2
 
Government/municipalities
 
 
 
 
 
 
 
 
 
 
 
 
 
AA
 
30.0
 
 
(3.5)
 
 
30.0
 
 
3.7
 
Structured finance
 
 
 
 
 
 
 
 
 
 
 
 
 
BBB
 
25.0
 
 
(0.9)
 
 
25.0
 
 
3.5
Total basket and index credit default swaps
 
165.4
 
 
(24.3)
 
 
165.4
 
 
3.4
Total credit default swap protection sold
$
818.9
 
$
(19.2)
 
$
818.9
 
 
3.9


236

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

(1)
Includes $78.0 million and $88.0 million as of December 31, 2014 and December 31, 2013, respectively, notional of derivatives in consolidated collateralized private investment vehicle VIEs where the credit risk is borne by third party investors.

We also have invested in fixed maturities classified as available-for-sale that contain credit default swaps that do not require bifurcation and fixed maturities classified as trading that contain credit default swaps. These securities are subject to the credit risk of the issuer, normally a special purpose vehicle, which consists of the underlying credit default swaps and high quality fixed maturities that serve as collateral. A default event occurs if the cumulative losses exceed a specified attachment point, which is typically not the first loss of the portfolio. If a default event occurs that exceeds the specified attachment point, our investment may not be fully returned. We would have no future potential payments under these investments. The following tables show, by the types of referenced/underlying asset class and external rating, our fixed maturities with embedded credit derivatives.
 
 
December 31, 2014
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
average
 
 
Amortized
 
Carrying
 
 
expected life
 
 
cost
 
value
 
 
(in years)
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
Corporate debt
 
 
 
 
 
 
 
 
 
 
A
$
24.1
 
$
24.1
 
 
 
2.0
Total corporate debt
 
24.1
 
 
24.1
 
 
 
2.0
 
 
 
 
 
 
 
 
 
 
 
Structured finance
 
 
 
 
 
 
 
 
 
 
A
 
56.1
 
 
56.1
 
 
 
1.5
 
BB
 
5.8
 
 
5.8
 
 
 
2.7
 
CCC
 
9.5
 
 
9.5
 
 
 
4.7
Total structured finance
 
71.4
 
 
71.4
 
 
 
2.1
Total fixed maturities with credit derivatives
$
95.5
 
$
95.5
 
 
 
2.0
 
 
December 31, 2013
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
average
 
 
Amortized
 
Carrying
 
 
expected life
 
 
cost
 
value
 
 
(in years)
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
Corporate debt
 
 
 
 
 
 
 
 
 
 
BBB
$
23.4
 
$
23.4
 
 
 
3.0
Total corporate debt
 
23.4
 
 
23.4
 
 
 
3.0
 
 
 
 
 
 
 
 
 
 
 
Structured finance
 
 
 
 
 
 
 
 
 
 
A
 
18.1
 
 
16.7
 
 
 
4.8
 
BB
 
5.5
 
 
5.5
 
 
 
3.3
 
B
 
4.1
 
 
4.1
 
 
 
3.1
 
CCC
 
23.5
 
 
23.5
 
 
 
4.8
Total structured finance
 
51.2
 
 
49.8
 
 
 
4.5
Total fixed maturities with credit derivatives
$
74.6
 
$
73.2
 
 
 
4.0
Fair Value Hedges
We use fixed-to-floating rate interest rate swaps to more closely align the interest rate characteristics of certain assets and liabilities. In general, these swaps are used in asset and liability management to modify duration, which is a measure of sensitivity to interest rate changes.
We enter into currency exchange swap agreements to convert certain foreign denominated assets and liabilities into U.S. dollar floating-rate denominated instruments to eliminate the exposure to future currency volatility on those items.



237

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The net interest effect of interest rate swap and currency swap transactions for derivatives in fair value hedges is recorded as an adjustment to income or expense of the underlying hedged item in our consolidated statements of operations.

Hedge effectiveness testing for fair value relationships is performed utilizing a regression analysis approach for both prospective and retrospective evaluations. This regression analysis will consider multiple data points for the assessment that the hedge continues to be highly effective in achieving offsetting changes in fair value. In certain periods, the comparison of the change in value of the derivative and the change in the value of the hedged item may not be offsetting at a specific period in time due to small movements in value. However, any amounts recorded as fair value hedges have shown to be highly effective in achieving offsetting changes in fair value both for present and future periods.

The following table shows the effect of derivatives in fair value hedging relationships and the related hedged items on the consolidated statements of operations. All gains or losses on derivatives were included in the assessment of hedge effectiveness.
 
 
 
Amount of gain (loss)
 
 
 
 
Amount of gain (loss)
 
 
 
recognized in net income on
 
 
 
 
recognized in net income on
 
 
 
derivatives for the year
 
Hedged items in fair
 
related hedged item for the year ended
Derivatives in fair value
 
ended December 31, (1)
 
fair value hedging
 
December 31, (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
hedging relationships
 
2014
 
2013
 
2012
 
relationships
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
Interest rate contracts
 
$
25.4
 
$
139.5
 
$
38.6

 
 
available-for-sale
 
$
(27.7)
 
$
(133.3)
 
$
(34.1)

 
 
 
 
 
 
 
 
 
 
 
 
Investment-type
 
 
 
 
 
 
 
 
 
Interest rate contracts
 
 
2.0
 
 
(0.7)
 
 
—

 
 
insurance contracts
 
 
(1.9)
 
 
0.2
 
 
—

Foreign exchange
 
 
 
 
 
 
 
 
 
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
 
contracts
 
 
5.5
 
 
(0.2)
 
 
0.7

 
 
available-for-sale
 
 
(5.4)
 
 
0.4
 
 
0.4

Foreign exchange
 
 
 
 
 
 
 
 
 
 
Investment-type
 
 
 
 
 
 
 
 
 
 
contracts
 
 
0.2
 
 
(36.7)
 
 
9.3

 
 
insurance contracts
 
 
(0.2)
 
 
36.5
 
 
(12.6)

Total
 
$
33.1
 
$
101.9
 
$
48.6

 
Total
 
$
(35.2)
 
$
(96.2)
 
$
(46.3)

(1)
The gain (loss) on both derivatives and hedged items in fair value relationships is reported in net realized capital gains (losses) on the consolidated statements of operations. The net amount represents the ineffective portion of our fair value hedges.
The following table shows the periodic settlements on interest rate contracts and foreign exchange contracts in fair value hedging relationships.
 
 
 
Amount of gain (loss) for the year
 
 
 
ended December 31,
 
 
 
 
 
 
 
 
 
 
 
Hedged Item
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Fixed maturities, available-for-sale (1)
 
$
(93.0)
 
$
(120.7)
 
$
(134.3)
Investment-type insurance contracts (2)
 
 
4.3
 
 
33.2
 
 
37.1
(1) Reported in net investment income on the consolidated statements of operations.
(2) Reported in benefits, claims and settlement expenses on the consolidated statements of operations.
Cash Flow Hedges
We utilize floating-to-fixed rate interest rate swaps to eliminate the variability in cash flows of recognized financial assets and liabilities and forecasted transactions.
We enter into currency exchange swap agreements to convert both principal and interest payments of certain foreign denominated assets and liabilities into U.S. dollar denominated fixed-rate instruments to eliminate the exposure to future currency volatility on those items.
The net interest effect of interest rate swap and currency swap transactions for derivatives in cash flow hedges is recorded as an adjustment to income or expense of the underlying hedged item in our consolidated statements of operations.


238

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The maximum length of time we are hedging our exposure to the variability in future cash flows for forecasted transactions, excluding those related to the payments of variable interest on existing financial assets and liabilities, is 5.5 years. At December 31, 2014, we had $67.1 million of net gains reported in AOCI on the consolidated statements of financial position related to active hedges of forecasted transactions. If a hedged forecasted transaction is no longer probable of occurring, cash flow hedge accounting is discontinued. If it is probable that the hedged forecasted transaction will not occur, the deferred gain or loss is immediately reclassified from AOCI into net income. We reclassified $0.0 million and $0.2 million from AOCI into net realized capital gains (losses) as a result of the determination that hedged cash flows were probable of not occurring during the years ended December 31, 2014 and 2013, respectively.
The following table shows the effect of derivatives in cash flow hedging relationships on the consolidated statements of operations and consolidated statements of financial position. All gains or losses on derivatives were included in the assessment of hedge effectiveness.
 
 
 
 
 
 
 
Amount of gain (loss)
 
 
 
 
Amount of gain (loss)
 
 
 
 
 
 
 
recognized in AOCI on
 
 
 
 
reclassified from AOCI on
Derivatives in
 
 
 
 
derivatives (effective portion)
 
Location of gain (loss)
 
derivatives (effective portion)
cash flow
 
 
 
 
for the year ended
 
reclassified from
 
for the year ended
hedging
 
Related
 
December 31,
 
AOCI into net income
 
December 31,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
relationships
 
hedged item
 
2014
 
2013
 
2012
 
(effective portion)
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
(in millions)
Interest rate
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
 
Net investment
 
 
 
 
 
 
 
 
 
 
contracts
 
 
available-for-sale
 
$
29.0
 
$
(80.5)
 
$
16.2
 
 
income
 
$
13.8

 
$
11.7

 
$
8.9

Interest rate
 
Investment-type
 
 
 
 
 
 
 
 
 
 
Benefits, claims and
 
 
 
 
 
 
 
 
 
 
contracts
 
 
insurance contracts
 
 
2.0
 
 
2.5
 
 
2.5
 
 
settlement expenses
 
 
—

 
 
—

 
 
—

Foreign exchange
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
 
Net realized capital
 
 
 
 
 
 
 
 
 
 
contracts
 
 
available-for-sale
 
 
68.7
 
 
(0.9)
 
 
(27.9)
 
 
losses
 
 
(10.2)

 
 
(16.7)

 
 
(6.4)

Foreign exchange
 
Investment-type
 
 
 
 
 
 
 
 
 
 
Benefits, claims and
 
 
 
 
 
 
 
 
 
 
contracts
 
 
insurance contracts
 
 
7.2
 
 
5.0
 
 
7.6
 
 
settlement expenses
 
 
—

 
 
—

 
 
—

Total
 
 
 
 
$
106.9
 
$
(73.9)
 
$
(1.6)
 
Total
 
$
3.6

 
$
(5.0)

 
$
2.5

The following table shows the periodic settlements on interest rate contracts and foreign exchange contracts in cash flow hedging relationships.
 
 
 
Amount of gain (loss) for the year
 
 
 
ended December 31,
 
 
 
 
 
 
 
 
 
 
 
Hedged item
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Fixed maturities, available-for-sale (1)
 
$
5.1
 
$
7.7
 
$
8.0
Investment-type insurance contracts (2)
 
 
(11.1)
 
 
(11.0)
 
 
(13.4)
(1) Reported in net investment income on the consolidated statements of operations.
(2) Reported in benefits, claims and settlement expenses on the consolidated statements of operations.
The ineffective portion of our cash flow hedges is reported in net realized capital gains (losses) on the consolidated statements of operations. The net gain resulting from the ineffective portion of foreign currency contracts in cash flow hedging relationships was $0.0 million, $0.8 million and $0.5 million for the years ended December 31, 2014, 2013 and 2012, respectively.
We expect to reclassify net gains of $10.1 million from AOCI into net income in the next 12 months, which includes both net deferred gains on discontinued hedges and net losses on periodic settlements of active hedges. Actual amounts may vary from this amount as a result of market conditions.
Derivatives Not Designated as Hedging Instruments
Our use of futures, certain swaptions and swaps, collars and options are effective from an economic standpoint, but they have not been designated as hedges for financial reporting purposes. As such, periodic changes in the market value of these instruments, which includes mark-to-market gains and losses as well as periodic and final settlements, primarily flow directly into net realized capital gains (losses) on the consolidated statements of operations.


239

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The following table shows the effect of derivatives not designated as hedging instruments, including fair value changes of embedded derivatives that have been bifurcated from the host contract, on the consolidated statements of operations.
 
 
 
Amount of gain (loss) recognized in
 
 
 
net income on derivatives for the
 
 
 
year ended December 31,
 
 
 
 
 
 
 
 
 
 
 
Derivatives not designated as hedging instruments
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Interest rate contracts
 
$
246.1
 
$
(137.6)
 
$
(7.7)
Foreign exchange contracts
 
 
(31.4)
 
 
6.1
 
 
40.0
Equity contracts
 
 
21.9
 
 
(159.4)
 
 
(100.5)
Credit contracts
 
 
(34.7)
 
 
40.6
 
 
12.0
Other contracts
 
 
(190.2)
 
 
148.3
 
 
35.7
Total
 
$
11.7
 
$
(102.0)
 
$
(20.5)
7. Closed Block

In connection with the 1998 MIHC formation, we formed a Closed Block to provide reasonable assurance to policyholders included therein that, after the formation of the MIHC, assets would be available to maintain dividends in aggregate in accordance with the 1997 policy dividend scales, if the experience underlying such scales continued. Certain of our assets were allocated to the Closed Block in an amount that produces cash flows which, together with anticipated revenue from policies and contracts included in the Closed Block, were expected to be sufficient to support the Closed Block policies, including, but not limited to, provisions for payment of claims, certain expenses, charges and taxes, and to provide for continuation of policy and contract dividends in aggregate in accordance with the 1997 dividend scales, if the experience underlying such scales continues, and to allow for appropriate adjustments in such scales, if such experience changes. Due to adjustable life policies being included in the Closed Block, the Closed Block is charged with amounts necessary to properly fund for certain adjustments, such as face amount and premium increases, that are made to these policies after the Closed Block inception date. These amounts are referred to as Funding Adjustment Charges and are treated as capital transfers from the Closed Block.

Assets allocated to the Closed Block inure solely to the benefit of the holders of policies included in the Closed Block. Closed Block assets and liabilities are carried on the same basis as other similar assets and liabilities. We will continue to pay guaranteed benefits under all policies, including the policies within the Closed Block, in accordance with their terms. If the assets allocated to the Closed Block, the investment cash flows from those assets and the revenues from the policies included in the Closed Block, including investment income thereon, prove to be insufficient to pay the benefits guaranteed under the policies included in the Closed Block, we will be required to make such payments from our general funds. No additional policies were added to the Closed Block, nor was the Closed Block affected in any other way, as a result of the demutualization.

A policyholder dividend obligation (“PDO”) is required to be established for earnings in the Closed Block that are not available to PFG stockholders. A model of the Closed Block was established to produce the pattern of expected earnings in the Closed Block, adjusted to eliminate the impact of related amounts in AOCI.

If actual cumulative earnings of the Closed Block are greater than the expected cumulative earnings of the Closed Block, only the expected cumulative earnings will be recognized in income with the excess recorded as a PDO. This PDO represents undistributed accumulated earnings that will be paid to Closed Block policyholders as additional policyholder dividends unless offset by future performance of the Closed Block that is less favorable than originally expected. If actual cumulative performance is less favorable than expected, only actual earnings will be recognized in income. At December 31, 2014 and 2013, cumulative actual earnings have been less than cumulative expected earnings. However, cumulative net unrealized gains were greater than expected, resulting in the recognition of a PDO of $165.2 million and $111.6 million as of December 31, 2014 and 2013, respectively.




240

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Closed Block liabilities and assets designated to the Closed Block were as follows:
 
 
December 31, 2014
 
December 31, 2013
 
 
 
 
 
 
 
 
 
(in millions)
Closed Block liabilities
 
 
 
 
 
Future policy benefits and claims
$
4,366.5

 
$
4,532.0
Other policyholder funds
 
9.6

 
 
10.5
Policyholder dividends payable
 
259.2

 
 
270.5
Policyholder dividends obligation
 
165.2

 
 
111.6
Deferred income taxes
 
—

 
 
2.2
Other liabilities
 
17.6

 
 
24.7
 
Total Closed Block liabilities
 
4,818.1

 
 
4,951.5
 
 
 
 
 
 
 
Assets designated to the Closed Block
 
 
 
 
 
Fixed maturities, available-for-sale
 
2,399.5

 
 
2,470.9
Fixed maturities, trading
 
11.9

 
 
13.4
Equity securities, available-for-sale
 
3.8

 
 
3.6
Mortgage loans
 
912.1

 
 
828.6
Policy loans
 
610.0

 
 
644.2
Other investments
 
101.1

 
 
118.5
 
Total investments
 
4,038.4

 
 
4,079.2
Cash and cash equivalents
 
29.2

 
 
70.3
Accrued investment income
 
48.8

 
 
49.5
Premiums due and other receivables
 
13.6

 
 
11.7
Deferred tax asset
 
58.1

 
 
66.2
Other assets
 
—

 
 
2.2
 
Total assets designated to the Closed Block
 
4,188.1

 
 
4,279.1
Excess of Closed Block liabilities over assets designated to the Closed Block
 
630.0

 
 
672.4
Amounts included in accumulated other comprehensive income
 
18.9

 
 
12.9
Maximum future earnings to be recognized from Closed Block assets and
 
 
 
 
 
 
liabilities
$
648.9

 
$
685.3
Closed Block revenues and expenses were as follows:
 
 
For the year ended December 31,
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Revenues
 
 
 
 
 
 
 
 
Premiums and other considerations
$
351.9
 
$
379.9
 
$
397.4
Net investment income
 
201.9
 
 
207.7
 
 
222.8
Net realized capital gains (losses)
 
(2.3)
 
 
(12.3)
 
 
3.6
 
Total revenues
 
551.5
 
 
575.3
 
 
623.8
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
Benefits, claims and settlement expenses
 
313.3
 
 
320.1
 
 
325.7
Dividends to policyholders
 
173.2
 
 
184.4
 
 
192.6
Operating expenses
 
4.3
 
 
4.7
 
 
4.9
 
Total expenses
 
490.8
 
 
509.2
 
 
523.2
Closed Block revenues, net of Closed Block expenses, before income taxes
 
60.7
 
 
66.1
 
 
100.6
Income taxes
 
19.5
 
 
21.1
 
 
32.6
Closed Block revenues, net of Closed Block expenses and income taxes
 
41.2
 
 
45.0
 
 
68.0
Funding adjustment charges
 
(4.8)
 
 
(6.5)
 
 
(4.8)
Closed Block revenues, net of Closed Block expenses, income taxes and
 
 
 
 
 
 
 
 
 
funding adjustment charges
$
36.4
 
$
38.5
 
$
63.2



241

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The change in maximum future earnings of the Closed Block was as follows:
 
 
For the year ended December 31,
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Beginning of year
$
685.3
 
$
723.8
 
$
787.0
End of year
 
648.9
 
 
685.3
 
 
723.8
Change in maximum future earnings
$
(36.4)
 
$
(38.5)
 
$
(63.2)

We charge the Closed Block with federal income taxes, payroll taxes, state and local premium taxes and other state or local taxes, licenses and fees as provided in the plan of reorganization.
8. Deferred Acquisition Costs

Acquisition costs deferred and amortized were as follows:
 
 
For the year ended December 31,
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Balance at beginning of year
$
2,848.8
 
$
2,394.7
 
$
2,197.3
Cost deferred during the year
 
347.4
 
 
393.0
 
 
393.6
Amortized to expense during the year (1)
 
(348.5)
 
 
(170.6)
 
 
(82.3)
Adjustment related to unrealized gains on available-for-sale securities and
 
 
 
 
 
 
 
 
 
derivative instruments
 
(93.1)
 
 
231.7
 
 
(113.9)
Balance at end of year
$
2,754.6
 
$
2,848.8
 
$
2,394.7
(1) Includes adjustments for revisions to estimated gross profits.

9. Insurance Liabilities

Contractholder Funds

Major components of contractholder funds in the consolidated statements of financial position are summarized as follows:
 
 
December 31,
 
 
2014
 
2013
 
 
 
 
 
 
 
 
 
(in millions)
Liabilities for investment-type insurance contracts:
 
 
 
 
 
 
Liabilities for individual annuities
$
10,077.7
 
$
10,582.7
 
GICs
 
10,115.3
 
 
10,858.3
 
Funding agreements
 
7,338.1
 
 
7,642.9
 
Other investment-type insurance contracts
 
1,008.5
 
 
731.8
Total liabilities for investment-type insurance contracts
 
28,539.6
 
 
29,815.7
Universal life and other reserves
 
4,888.7
 
 
4,812.0
Total contractholder funds
$
33,428.3
 
$
34,627.7
Our GICs and funding agreements contain provisions limiting or prohibiting early surrenders, which typically include penalties for early surrenders, minimum notice requirements or, in the case of funding agreements with survivor options, minimum pre-death holding periods and specific maximum amounts.
Funding agreements include those issued directly to nonqualified institutional investors, as well as under five separate programs where the funding agreements have been issued directly or indirectly to unconsolidated special purpose entities. Claims for principal and interest under funding agreements are afforded equal priority to claims of life insurance and annuity policyholders under insolvency provisions of Iowa Insurance Laws.


242

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

We were authorized to issue up to $4.0 billion of funding agreements under a program established in 1998 to support the prospective issuance of medium term notes by an unaffiliated entity in non-U.S. markets. As of December 31, 2014 and 2013, $111.2 million and $370.9 million, respectively, of liabilities are outstanding with respect to the issuance outstanding under this program. We were also authorized to issue up to Euro 4.0 billion (approximately USD$5.3 billion) of funding agreements under a program established in 2006 to support the prospective issuance of medium term notes by an unaffiliated entity in non-U.S. markets. The unaffiliated entity is an unconsolidated special purpose vehicle. As of December 31, 2014 and 2013, $1,137.1 million and $1,278.7 million, respectively, of liabilities are outstanding with respect to issuances outstanding under this program. We do not anticipate any new issuance activity under either of these programs due to the existence of the program established in 2011 described below.

In addition, we were authorized to issue up to $7.0 billion of funding agreements under a program established in 2001 to support the prospective issuance of medium term notes by an unaffiliated entity in both domestic and international markets. The unaffiliated entity is an unconsolidated special purpose entity. As of December 31, 2014 and 2013, $505.8 million and $637.6 million, respectively, of liabilities are being held with respect to issuances outstanding under this program. We do not anticipate any new issuance activity under this program, given our December 2005 termination of the dealership agreement for this program and the availability of the program established in 2011 described below.

Additionally, we were authorized to issue up to $4.0 billion of funding agreements under a program established in March 2004 to support the prospective issuance of medium term notes by unaffiliated entities in both domestic and international markets. In February 2006, this program was amended to authorize issuance of up to an additional $5.0 billion in recognition of the use of nearly all $4.0 billion of initial issuance authorization. In recognition of the use of nearly all $9.0 billion, this program was amended in November 2007 to authorize issuance of up to an additional $5.0 billion. Under this program, both the notes and the supporting funding agreements were registered with the United States Securities and Exchange Commission (“SEC”). As of December 31, 2014 and 2013, $549.2 million and $975.0 million, respectively, of liabilities are being held with respect to issuances outstanding under this program. In contrast with direct funding agreements, GIC issuances and the other three funding agreement‑backed medium term note programs described above, our payment obligations on each funding agreement issued under this SEC-registered program are guaranteed by PFG. We do not anticipate any new issuance activity under this program due to the existence of the program established in 2011 described below.

We were authorized to issue up to $5.0 billion of funding agreements under a program established in 2011 to support the prospective issuance of medium term notes by an unaffiliated entity in both domestic and international markets. The unaffiliated entity is an unconsolidated special purpose entity. As of December 31, 2014 and 2013, $3,284.7 million and $2,630.5 million of liabilities are being held with respect to any issuances outstanding under this program. Similar to the SEC-registered program, our payment obligations on each funding agreement issued under this program are guaranteed by PFG. The program established in 2011 is not registered with the SEC.



243

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Future Policy Benefits and Claims

Activity associated with unpaid disability and health claims is summarized as follows:

 
 
December 31,
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Balance at beginning of year
$
1,144.7
 
$
1,066.0
 
$
1,006.9
Incurred:
 
 
 
 
 
 
 
 
 
Current year
 
760.5
 
 
712.0
 
 
711.8
 
Prior years
 
1.2
 
 
1.0
 
 
9.7
Total incurred
 
761.7
 
 
713.0
 
 
721.5
Payments:
 
 
 
 
 
 
 
 
 
Current year
 
445.5
 
 
432.1
 
 
446.3
 
Prior years
 
220.8
 
 
202.2
 
 
216.1
Total payments
 
666.3
 
 
634.3
 
 
662.4
Balance at end of year:
 
 
 
 
 
 
 
 
 
Current year
 
315.0
 
 
279.9
 
 
265.5
 
Prior years
 
925.1
 
 
864.8
 
 
800.5
Total balance at end of year
$
1,240.1
 
$
1,144.7
 
$
1,066.0
 
 
 
 
 
 
 
 
 
 
Amounts not included in the rollforward above:
 
 
 
 
 
 
 
 
 
Claim adjustment expense liabilities
$
47.5
 
$
43.4
 
$
46.6
 
Reinsurance recoverables for unpaid claims
$
300.0
 
$
260.1
 
$
239.1

Incurred liability adjustments relating to prior years, which affected current operations during 2014, 2013 and 2012, resulted in part from developed claims for prior years being different than were anticipated when the liabilities for unpaid disability and health claims were originally estimated. These trends have been considered in establishing the current year liability for unpaid disability and health claims.

10. Debt
Short-Term Debt
As of December 31, 2014 and 2013, we had short-term credit facilities with various financial institutions in an aggregate amount of $945.0 million and $1,045.0 million, respectively. As of December 31, 2014 and 2013, we had $154.5 million and $292.4 million, respectively, of outstanding borrowings related to our credit facilities, which consisted of a payable to PFSI, with no assets pledged as support. Interest paid on intercompany debt was $0.5 million, $0.8 million and $1.0 million during 2014, 2013 and 2012, respectively. Our credit facilities include a $400.0 million 5-year facility that matures in March 2019, with PFG, PFSI and us as co-borrowers, a $300.0 million 364-day facility with us as borrower that matures in March 2015, and a $200.0 million 3-year facility with PFG, PFSI, Principal Financial Services V (UK) LTD and us as the co-borrowers that matures in March 2017. These facilities may be used for general corporate purposes, including commercial paper back-stop. Our commercial paper programs require 100% back-stop support, of which there were no outstanding balances as of December 31, 2014 and 2013.
The weighted‑average interest rate on short-term borrowings as of December 31, 2014 and 2013, was 0.1% and 0.2%, respectively.


244

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Long-Term Debt

The components of long-term debt were as follows:
 
December 31,
 
2014
 
2013
 
 
 
 
 
 
 
(in millions)
8.0% surplus notes payable, due 2044
$
—

 
$
99.3
Non-recourse mortgages and notes payable
 
82.3

 
 
53.1
Total long-term debt
$
82.3

 
$
152.4

The amounts included above are net of the discount and premium associated with issuing these notes, which are being amortized to expense over their respective terms using the interest method.

On March 10, 1994, we issued $100.0 million of surplus notes due March 1, 2044, at an 8% annual interest rate. None of our affiliates held any portion of the notes. Each payment of interest and principal on the notes, however, could be made only with the prior approval of the Commissioner of Insurance of the State of Iowa (the “Commissioner”) and only to the extent that we had sufficient surplus earnings to make such payments. On March 1, 2014, we redeemed the surplus notes in whole at a redemption price equal to 102.3% of par, which was approved by the Commissioner.

The non-recourse mortgages, other mortgages and notes payable are primarily financings for real estate developments. Outstanding principal balances as of December 31, 2014, ranged from $1.7 million to $32.6 million per development with interest rates being variable. Outstanding principal balances as of December 31, 2013, ranged from $1.6 million to $20.1 million per development with interest rates being 5.5% or variable. Outstanding debt is secured by the underlying real estate properties, which were reported as real estate on our consolidated statements of financial position with a carrying value of $155.6 million and $101.4 million as of December 31, 2014 and 2013, respectively.

At December 31, 2014, future annual maturities of the long-term debt were as follows (in millions):
Year ending December 31:
 
 
 
2015
$
—

 
2016
 
—

 
2017
 
—

 
2018
 
—

 
2019
 
—

 
Thereafter
 
82.3

 
Total future maturities of the long-term debt
$
82.3




245

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

11. Income Taxes
Income Tax Expense
Our income tax expense was as follows:
 
 
 
For the year ended December 31,
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Current income taxes (benefits):
 
 
 
 
 
 
 
 
 
U.S. federal
$
218.8
 
$
98.2
 
$
(8.1)
 
State
 
6.0
 
 
4.9
 
 
7.6
 
Foreign
 
4.9
 
 
17.9
 
 
19.5
 
Tax benefit of operating loss carryforward
 
(161.4)
 
 
(130.4)
 
 
(70.7)
Total current income taxes (benefits)
 
68.3
 
 
(9.4)
 
 
(51.7)
Deferred income taxes (benefits):
 
 
 
 
 
 
 
 
 
U.S. federal
 
172.7
 
 
181.4
 
 
206.1
 
State
 
2.0
 
 
1.4
 
 
(3.1)
Total deferred income taxes
 
174.7
 
 
182.6
 
 
203.2
Total income taxes
$
243.0
 
$
173.2
 
$
151.5
Effective Income Tax Rate
Our provision for income taxes may not have the customary relationship of taxes to income. A reconciliation between the U.S. corporate income tax rate and the effective income tax rate was as follows:
 
 
 
For the year ended December 31,
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
U.S. corporate income tax rate
35
%
 
35

%
 
35

%
Dividends received deduction
(12)
 
 
(13)

 
 
(12)

 
Interest exclusion from taxable income
(2)
 
 
(2)

 
 
(3)

 
Tax credits
(2)
 
 
—

 
 
—

 
Other
1
 
 
—

 
 
(2)

 
Effective income tax rate
20
%
 
20

%
 
18

%
Unrecognized Tax Benefits
A summary of the changes in unrecognized tax benefits follows.
 
 
For the year ended December 31,
 
 
2014
 
2013
 
 
 
 
 
 
 
 
 
(in millions)
Balance at beginning of period
$
106.0

 
$
129.1

 
Additions based on tax positions related to the current year
 
12.1

 
 
8.8

 
Additions for tax positions of prior years
 
58.8

 
 
—

 
Reductions for tax positions related to the current year
 
(8.4)

 
 
(3.3)

 
Reductions for tax positions of prior years
 
—

 
 
(28.6)

Balance at end of period (1)
$
168.5

 
$
106.0

(1)
Of this amount, $52.5 million, if recognized, would reduce the 2014 effective income tax rate. We recognize interest and penalties related to uncertain tax positions in operating expenses.
As of December 31, 2014 and 2013, we had recognized $100.4 million and $37.0 million of accumulated pre-tax interest and penalties related to unrecognized tax benefits, respectively.



246

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Net Deferred Income Taxes
    
Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of our net deferred income taxes were as follows:
 
 
 
December 31,
 
 
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Deferred income tax assets:
 
 
 
 
 
 
Insurance liabilities
$
390.8
 
$
281.6

 
Investments, including derivatives
 
380.6
 
 
455.0

 
Net operating and capital loss carryforwards
 
114.4
 
 
241.9

 
Employee benefits
 
147.3
 
 
307.3

 
Other deferred income tax assets
 
50.6
 
 
21.5

 
 
Total deferred income tax assets
 
1,083.7
 
 
1,307.3

Deferred income tax liabilities:
 
 
 
 
 
 
Deferred acquisition costs
 
(728.3)
 
 
(761.5)

 
Investments, including derivatives
 
(374.2)
 
 
(375.6)

 
Net unrealized gains on available-for-sale securities
 
(901.0)
 
 
(578.4)

 
Real estate
 
(132.7)
 
 
(117.2)

 
Intangible assets
 
(22.9)
 
 
(27.3)

 
Other deferred income tax liabilities
 
(7.4)
 
 
—

 
 
Total deferred income tax liabilities
 
(2,166.5)
 
 
(1,860.0)

 
 
Total net deferred income tax liabilities
$
(1,082.8)
 
$
(552.7)


Net deferred income taxes by jurisdiction were as follows:
 
 
 
December 31,
 
 
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Deferred income tax liabilities:
 
 
 
 
 
 
U.S. federal
$
(1,078.8)
 
$
(550.7)
 
State
 
(4.0)
 
 
(2.0)
Total net deferred income tax liabilities
$
(1,082.8)
 
$
(552.7)

In management’s judgment, total deferred income tax assets are more likely than not to be realized. Included in the deferred income tax asset are net operating loss and tax credit carryforwards for tax purposes available to offset future taxable income. We had net operating loss and tax credit carryforwards for U.S. federal income tax purposes of $191.4 million and $670.8 million at December 31, 2014 and 2013, respectively, primarily attributable to our captive reinsurance companies that joined our consolidated U.S. federal income tax return in 2012 and 2013. These U.S. federal net operating loss and tax credit carryforwards will expire between 2022 and 2033. All accumulated U.S. federal net operating loss and tax credit carryforwards are anticipated to be utilized before expiration; therefore, no valuation allowance has been provided for the related deferred income tax assets.

Domestic state net operating loss carryforwards were $17.7 million and $10.0 million as of December 31, 2014 and 2013, respectively, and will expire between 2015 and 2034. We maintain valuation allowances by jurisdiction against the deferred income tax assets related to certain of these carryforwards, as utilization of these income tax benefits fail the more likely than not criteria in certain jurisdictions. Adjustments to the valuation allowance will be made if there is a change in management’s assessment of the amount of the deferred income tax assets that are more likely than not to be realized.



247

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Other Tax Information
The Internal Revenue Service (“IRS”) has completed examination of the consolidated U.S. federal income tax returns for years prior to 2009. We are contesting certain issues and have filed suit in the Court of Federal Claims, requesting refunds for the years 1995-2003. We do not expect the litigation to be resolved within the next twelve months. We had $300.7 million and $331.4 million of current income tax receivables associated with outstanding audit issues reported as other assets in our consolidated statements of financial position as of December 31, 2014 and 2013, respectively.
We filed claims for refund for tax years 2004 – 2005 during 2012 and will file claims for refund relating to disputed adjustments for tax years 2006 – 2008 in 2015. The IRS commenced audit of our U.S. federal income tax return for 2009 during the fourth quarter of 2011, for 2010 during the first quarter of 2012 and for 2011 during the first quarter of 2013. We do not expect the results of these audits or developments in other tax areas for all open tax years to significantly change the possible increase in the amount of unrecognized tax benefits, but the outcome of tax reviews is uncertain and unforeseen results can occur.
The U.S. Court of Federal Claims issued a summary judgment determination in the case of Principal Life Insurance Company and Subsidiaries v. the United States on May 9, 2014. The court ruled against our timing of recognition of gains and losses associated with the purchase and sale of principal-only certificates. The ruling caused a re-evaluation of our uncertain tax positions, which resulted in a $47.5 million reduction in net income in the second quarter of 2014. We believe that we have adequate defenses against, or sufficient provisions for, the contested issues, but final resolution of the contested issues could take several years while legal remedies are pursued. Consequently, we do not expect the ultimate resolution of issues from tax years 1995-2003 or those that might arise in tax years subsequent to 2003 to have a material impact on our net income. We do not believe there is a reasonable possibility the total amount of unrecognized tax benefits will significantly increase or decrease in the next twelve months.
12. Employee and Agent Benefits
We participate in postretirement benefit plans covering substantially all of our employees and certain agents, including employees of other companies affiliated with our ultimate parent, PFG ("affiliated companies"). Actuarial information regarding the status of the post-retirement benefit plans is calculated for the total plan only. The affiliated company portion of the actuarial present value of the accumulated or projected benefit obligations, or net assets available for benefits, is not separately determined. However, we are reimbursed for employee benefits related to the affiliated companies for plans we sponsor and we reimburse PFG for plans it sponsors. The reimbursement is not reflected in our employee and agent benefits disclosures.
Prior to November 2014, we sponsored defined benefit pension plans covering substantially all of our U.S. employees and certain agents. Some of these plans provide supplemental pension benefits to employees and agents with salaries and/or pension benefits in excess of the qualified plan limits imposed by federal tax law. The employees and agents are generally first eligible for the pension plans when they reach age 21. For plan participants employed prior to January 1, 2002, the pension benefits are based on the greater of a final average pay benefit or a cash balance benefit. The final average pay benefit is based on the years of service and generally the employee's or agent's average annual compensation during the last five years of employment. Partial benefit accrual of final average pay benefits is recognized from first eligibility until retirement based on attained service divided by potential service to age 65 with a minimum of 35 years of potential service. The cash balance portion of the plan started on January 1, 2002. An employee's account is credited with an amount based on the employee's salary, age and service. These credits accrue with interest. For plan participants hired on and after January 1, 2002, only the cash balance plan applies. The policy is to fund the cost of providing pension benefits in the years that the employees and agents are providing service to us. The funding policy for the qualified defined benefit plan is to contribute an amount annually at least equal to the minimum annual contribution required under the Employee Retirement Income Security Act (“ERISA”), and, generally, not greater than the maximum amount that can be deducted for federal income tax purposes. The funding policy for the nonqualified benefit plan is to fund the plan in the years that the employees are providing service, taking into account the funded status of the trust. While assets are designated to cover the computed liability of the nonqualified plan, the assets are not included as part of the asset balances presented in this footnote as they do not qualify as plan assets in accordance with U.S. GAAP. Effective November 2014, PFG became the sponsor of these plans. We continue to reflect pension expense through our expense allocation agreement with PFG. In connection with the change in sponsorship, PFG assumed the pension plan liability from us.
We provide certain health care, life insurance and long-term care benefits for retired employees. Subsidized retiree health benefits are provided for employees hired prior to January 1, 2002. Employees hired after December 31, 2001, have access to retiree health benefits but it is intended that they pay for the full cost of the coverage. The health care plans are contributory with participants' contributions adjusted annually. The contributions are based on the number of years of service and age at retirement for those hired prior to January 1, 2002, who retired prior to January 1, 2011. For employees hired prior to January 1, 2002, who retired on or after January 1, 2011, the contributions are 60% of the expected cost. As part of the substantive plan, the retiree health contributions are


248

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

assumed to be adjusted in the future as claim levels change. The life insurance plans are contributory for a small group of previously grandfathered participants that have elected supplemental coverage and dependent coverage.
Covered employees are first eligible for the health and life postretirement benefits when they reach age 57 and have completed ten years of service with us. Retiree long-term care benefits are provided for employees whose retirement was effective prior to July 1, 2000. Our policy is to fund the cost of providing retiree benefits in the years that the employees are providing service, taking into account the funded status of the trust.
Obligations and Funded Status
The plans' combined funded status, reconciled to amounts recognized in the consolidated statements of financial position, was as follows:
 
 
 
 
 
Other postretirement
 
 
 
Pension benefits
 
benefits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
 
December 31,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Change in benefit obligation
 
 
 
 
 
 
 
 
 
 
 
 
Benefit obligation at beginning of year
 
$
(2,440.2)

 
$
(2,638.0)

 
$
(140.6)

 
$
(147.8)

Service cost
 
 
(45.0)

 
 
(57.1)

 
 
(1.4)

 
 
(1.0)

Interest cost
 
 
(97.6)

 
 
(103.8)

 
 
(6.6)

 
 
(5.7)

Actuarial gain (loss)
 
 
—

 
 
279.2

 
 
(26.0)

 
 
7.9

Participant contribution
 
 
—

 
 
—

 
 
(6.6)

 
 
(6.8)

Benefits paid
 
 
69.5

 
 
79.5

 
 
12.2

 
 
13.6

Plan transfer due to change in sponsorship
 
 
2,513.3

 
 
—

 
 
—

 
 
—

Other
 
 
—

 
 
—

 
 
(0.7)

 
 
(0.8)

Benefit obligation at end of year
 
$
—

 
$
(2,440.2)

 
$
(169.7)

 
$
(140.6)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in plan assets
 
 
 
 
 
 
 
 
 
 
 
 
Fair value of plan assets at beginning of year
 
$
1,925.6

 
$
1,682.1

 
$
613.0

 
$
519.7

Actual return on plan assets
 
 
110.0

 
 
199.8

 
 
31.9

 
 
95.9

Employer contribution
 
 
116.4

 
 
123.2

 
 
0.4

 
 
4.2

Participant contributions
 
 
—

 
 
—

 
 
6.6

 
 
6.8

Benefits paid
 
 
(69.5)

 
 
(79.5)

 
 
(12.2)

 
 
(13.6)

Plan transfer due to change in sponsorship
 
 
(2,082.5)

 
 
—

 
 
—

 
 
—

Fair value of plan assets at end of year
 
$
—

 
$
1,925.6

 
$
639.7

 
$
613.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount recognized in statement of financial position
 
 
 
 
 
 
 
 
 
 
 
 
Other assets
 
$
—

 
$
—

 
$
470.7

 
$
473.0

Other liabilities
 
 
—

 
 
(514.6)

 
 
(0.7)

 
 
(0.6)

Total
 
$
—

 
$
(514.6)

 
$
470.0

 
$
472.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount recognized in accumulated other comprehensive
 
 
 
 
 
 
 
 
 
 
 
 
(income) loss
 
 
 
 
 
 
 
 
 
 
 
 
Total net actuarial (gain) loss
 
$
—

 
$
391.1

 
$
(53.0)

 
$
(83.1)

Prior service benefit
 
 
—

 
 
(11.8)

 
 
(35.9)

 
 
(56.2)

Pre-tax accumulated other comprehensive (income) loss
 
$
—

 
$
379.3

 
$
(88.9)

 
$
(139.3)

The accumulated benefit obligation for all defined benefit pension plans was $2,287.4 million at December 31, 2013.
Employer contributions to the pension plans include contributions made directly to the qualified pension plan assets and contributions from corporate assets to pay nonqualified pension benefits. Benefits paid from the pension plans include both qualified and nonqualified plan benefits. Nonqualified pension plan assets are not included as part of the asset balances presented in this footnote. The nonqualified pension plan assets are held in Rabbi trusts for the benefit of all nonqualified plan participants. The assets held in a Rabbi trust are available to satisfy the claims of general creditors only in the event of bankruptcy. Therefore, these assets are fully consolidated in our consolidated statements of financial position and are not reflected in our funded status as they do not qualify


249

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

as plan assets under U.S. GAAP. Effective November 2014, the assets held in Rabbi trusts were transferred to PFG due the change in sponsorship and are no longer fully consolidated in our consolidated statements of financial position. The market value of assets held in these trusts was $304.3 million as of December 31, 2013.

Pension Plan Changes and Plan Gains/Losses
On January 1, 2010, benefits under the Principal Pension Plan were frozen for certain participants.
For the year ended December 31, 2013, the pension plans had a gain primarily due to an increase in the discount rate.
Other Postretirement Plan Changes and Plan Gains/Losses
On December 8, 2003, the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Medicare Modernization Act”) was signed into law. The Medicare Modernization Act introduced a prescription drug benefit under Medicare (“Medicare Part D”) as well as a federal subsidy to sponsors of retiree medical benefit plans. During each of the years ended December 31, 2014, 2013 and 2012, the Medicare subsidies we received and accrued for were $0.7 million, $0.8 million and $0.8 million, respectively.

An actuarial loss occurred during 2014 for the other postretirement benefit plans. This was due to a decrease in the discount rate, a change in the mortality assumption, a lower than expected increase in the medical premium equivalents for participants over age 65 and a greater than expected increase in the claim costs for participants under age 65. An actuarial gain occurred during 2013 for the other postretirement benefit plans. This was due to an increase in the discount rate and trend assumption for participants over age 65 and a change in assumption for retirees who voluntarily drop medical coverage at age 65 or older.

Impact from Exit of Group Medical Insurance Business

On September 30, 2010, we announced our decision to exit the group medical insurance business and entered into an agreement with United Healthcare Services, Inc. to renew medical insurance coverage for our customers as the business transitions. Our exit from the group medical insurance business resulted in a curtailment gain associated with the pension and other postretirement benefits of the impacted employees, which was recognized in our consolidated financial statements as impacted employees were terminated. We recognized a final curtailment in 2012, which resulted in a curtailment gain of $0.7 million for the pension plan and $3.5 million for the other postretirement benefits.

Information for Pension Plans With an Accumulated Benefit Obligation in Excess of Plan Assets

For 2013, both the qualified and nonqualified plans had accumulated benefit obligations in excess of plan assets. As noted previously, the nonqualified plans had assets deposited in trusts that fail to meet the U.S. GAAP requirements to be included in plan assets; however, these assets were included in our consolidated statements of financial position.
 
 
December 31,
 
 
 
 
 
 
 
 
 
2014
 
2013
 
 
 
 
 
 
 
 
 
(in millions)
Projected benefit obligation
 
$
—

 
$
2,440.2
Accumulated benefit obligation
 
 
—

 
 
2,287.4
Fair value of plan assets
 
 
—

 
 
1,925.6
Information for Other Postretirement Benefit Plans With an Accumulated Postretirement Benefit Obligation
in Excess of Plan Assets
 
 
 
 
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
 
2014
 
2013
 
 
 
 
 
 
 
 
 
(in millions)
Accumulated postretirement benefit obligation
 
$
1.5
 
$
1.5
Fair value of plan assets
 
 
0.8
 
 
0.9



250

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Components of Net Periodic Benefit Cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pension benefits
 
Other postretirement benefits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Service cost
 
$
45.0

 
$
57.1

 
$
47.0
 
$
1.4

 
$
1.0

 
$
1.3
Interest cost
 
 
97.6

 
 
103.8

 
 
109.1
 
 
6.6

 
 
5.7

 
 
8.2
Expected return on plan assets
 
 
(110.0)

 
 
(127.4)

 
 
(114.6)
 
 
(32.6)

 
 
(28.8)

 
 
(33.5)
Amortization of prior service benefit
 
 
(3.9)

 
 
(8.7)

 
 
(9.4)
 
 
(20.3)

 
 
(25.9)

 
 
(28.6)
Recognized net actuarial (gain) loss
 
 
42.1

 
 
118.5

 
 
90.9
 
 
(3.4)

 
 
1.0

 
 
0.9
Amounts recognized due to special events
 
 
—

 
 
—

 
 
(0.7)
 
 
—

 
 
—

 
 
(3.5)
Net periodic benefit cost (income)
 
$
70.8

 
$
143.3

 
$
122.3
 
$
(48.3)

 
$
(47.0)

 
$
(55.2)

The pension plans' actuarial gains and losses were amortized using a straight-line amortization method over the average remaining service period of plan participants. For the qualified pension plan, gains and losses were amortized without use of the 10% allowable corridor. For the nonqualified pension plans the corridors allowed were used. For the other postretirement benefit plans, the corridors allowed are used.
 
 
 
 
 
Other postretirement
 
 
 
Pension benefits
 
benefits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Other changes recognized in accumulated other comprehensive
 
 
 
 
 
 
 
 
 
 
 
 
 
(income) loss
 
 
 
 
 
 
 
 
 
 
 
 
Net actuarial (gain) loss
 
$
—

 
$
(351.7)
 
$
26.7
 
$
(75.0)
Amortization of gain (loss)
 
 
(42.1)

 
 
(118.5)
 
 
3.4
 
 
(1.0)
Amortization of prior service benefit
 
 
3.9

 
 
8.7
 
 
20.3
 
 
25.9
Total recognized in pre-tax accumulated other comprehensive (income) loss
 
$
(38.2)

 
$
(461.5)
 
$
50.4
 
$
(50.1)
Total recognized in net periodic benefit cost and pre-tax accumulated
 
 
 
 
 
 
 
 
 
 
 
 
 
other comprehensive (income) loss
 
$
32.6

 
$
(318.2)
 
$
2.1
 
$
(97.1)
In connection with the pension plan sponsorship change, we transferred $341.1 of pre-tax accumulated other comprehensive loss to PFG.
Net actuarial (gain) loss and net prior service cost benefit have been recognized in AOCI.
The estimated net actuarial (gain) loss and prior service cost (benefit) for the postretirement benefits that will be amortized from AOCI into net periodic benefit cost during the 2015 fiscal year are $(0.8) million and $(18.4) million, respectively.
Assumptions
Weighted‑average assumptions used to determine benefit obligations as disclosed under the Obligations and Funded Status section
 
 
 
 
 
Other postretirement
 
 
Pension benefits
 
benefits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
 
2013
 
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate
N/A
%
 
4.90
%
 
4.00
%
 
4.90
%
Rate of compensation increase
N/A
%
 
4.80
%
 
4.82
%
 
4.83
%


251

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
Weighted average assumptions used to determine net periodic benefit cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Pension benefits
 
Other postretirement benefits
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
2012
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Discount rate
4.90
%
 
4.00
%
 
5.15
%
 
4.90
%
 
4.00
%
 
5.15
%
Expected long-term return on plan assets
6.75
%
 
7.50
%
 
8.00
%
 
5.36
%
 
5.62
%
 
7.30
%
Rate of compensation increase
4.80
%
 
4.80
%
 
5.00
%
 
4.83
%
 
4.83
%
 
5.00
%

For the pension benefits, the discount rate was determined by projecting future benefit payments inherent in the projected benefit obligation and discounting those cash flows using a spot yield curve for high quality corporate bonds. The plans’ expected benefit payments were discounted to determine a present value using the yield curve and the discount rate was the level rate that produces the same present value. The expected return on plan assets was the long-term rate we expected to be earned based on the plans’ investment strategy. Historical and expected future returns of multiple asset classes were analyzed to develop a risk free rate of return and risk premiums for each asset class. The overall rate for each asset class was developed by combining a long-term inflation component, the risk free real rate of return and the associated risk premium. A weighted average rate was developed based on those overall rates and the target asset allocation of the plans.

For other postretirement benefits, the 5.36% expected long-term return on plan assets for 2014 is based on the weighted average expected long-term asset returns for the medical, life and long-term care plans. The expected long-term rates for the medical, life and long-term care plans are 5.4%, 5.0% and 5.85%, respectively.

Assumed Health Care Cost Trend Rates
 
 
December 31,
 
 
 
 
 
 
 
 
2014
 
2013
 
 
 
 
 
 
 
Health care cost trend rate assumed for next year under age 65
7.0
%
 
8.0
%
Health care cost trend rate assumed for next year age 65 and over
6.0
%
 
6.0
%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)
4.5
%
 
4.5
%
Year that the rate reaches the ultimate trend rate (under age 65)
2019
 
 
2020
 
Year that the rate reaches the ultimate trend rate (65 and older)
2020
 
 
2019
 
Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:
 
 
1-percentage
 
1-percentage
 
point increase
 
point decrease
 
 
 
 
 
 
 
 
 
 
(in millions)
Effect on total of service cost and interest cost components
$
0.4
 
$
(0.4)
Effect on accumulated postretirement benefit obligation
 
(8.5)
 
 
7.5
Pension Plan and Other Postretirement Benefit Plan Assets
Fair value is defined as the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date (an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels.
•
Level 1 – Fair values are based on unadjusted quoted prices in active markets for identical assets. Our Level 1 assets include cash, fixed income investment funds and exchange traded equity securities.
•
Level 2 – Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset, either directly or indirectly. Our Level 2 assets primarily include fixed income and equity investment funds and real estate investments.
•
Level 3 – Fair values are based on significant unobservable inputs for the asset. Our Level 3 assets include a Principal Life general account investment.
Prior to November 2014, our pension plan assets consisted of investments in separate accounts. Net asset value (“NAV”) of the separate accounts was calculated in a manner consistent with U.S. GAAP for investment companies and was determinative of their


252

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

fair value. Several of the separate accounts invested in publicly quoted mutual funds or actively managed stocks. The fair value of the underlying mutual funds or stock was used to determine the NAV of the separate account, which was not publicly quoted. Some of the separate accounts also invested in fixed income securities. The fair value of the underlying securities was based on quoted prices of similar assets and used to determine the NAV of the separate account.

Our other postretirement benefit plan assets consist of cash, investments in fixed income security portfolios and investments in equity security portfolios. Because of the nature of cash, its carrying amount approximates fair value. The fair value of fixed income investment funds, U.S. equity portfolios and international equity portfolios is based on quoted prices in active markets for identical assets. The fair value of the Principal Life general account investment is the amount the plan would receive if withdrawing funds from this participating contract. The amount that would be received is calculated using a cash-out factor based on an associated pool of general account fixed income securities. The cash-out factor is a ratio of the asset investment value of these securities to asset book value. As the investment values change, the cash-out factor is adjusted, impacting the amount the plan receives at measurement date. To determine investment value for each category of assets, we project cash flows. This is done using contractual provisions for the assets, with adjustment for expected prepayments and call provisions. Projected cash flows are discounted to present value for each asset category. Interest rates for discounting are based on current rates on similar new assets in the general account based on asset strategy.
Pension Plan Assets
The fair value of the qualified pension plan’s assets by asset category was as follows:
 
 
 
 
December 31, 2013
 
 
 
 
Assets
 
Fair value hierarchy level
 
 
 
 
measured at
 
 
 
 
 
 
 
 
 
 
 
fair value
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Asset category
 
 
 
 
 
 
 
 
 
 
 
 
U.S. large cap equity portfolios (1)
 
$
414.0
 
$
—

 
$
414.0
 
$
—

U.S. small/mid cap equity portfolios (2)
 
 
102.9
 
 
—

 
 
102.9
 
 
—

Balanced asset portfolios (3)
 
 
96.9
 
 
—

 
 
96.9
 
 
—

International equity portfolios (4)
 
 
171.0
 
 
—

 
 
171.0
 
 
—

Fixed income security portfolios (5)
 
 
1,048.5
 
 
—

 
 
1,048.5
 
 
—

Real estate investment portfolios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Direct real estate investments (6)
 
 
92.3
 
 
—

 
 
92.3
 
 
—

Total
 
$
1,925.6
 
$
—

 
$
1,925.6
 
$
—

(1)
The portfolios invested primarily in publicly traded equity securities of large U.S. companies.
(2)
The portfolios invested primarily in publicly traded equity securities of mid-sized and small U.S. companies.
(3)
The portfolios were a combination of underlying fixed income and equity investment options. These investment options may have included balanced, asset allocation, target-date and target-risk investment options. Although typically lower risk than investment options that invested solely in equities, all investment options in this category had the potential to lose value.
(4)
The portfolios invested primarily in publicly traded equity securities of non-U.S. companies.
(5)
The portfolios invested in various fixed income securities, primarily of U.S. origin. These included, but were not limited to, corporate bonds, mortgage-backed securities, commercial mortgage-backed securities, U.S. Treasury securities, agency securities, asset-backed securities and collateralized mortgage obligations.
(6)
The portfolio invested primarily in U.S. commercial real estate properties.
We had no Level 3 assets in 2013 or 2012.
We had established an investment policy that provided the investment objectives and guidelines for the pension plan. Our investment strategy was to achieve the following:
•
Obtain a reasonable long-term return consistent with the level of risk assumed and at a cost of operation within prudent levels. Performance benchmarks were monitored.
•
Ensure sufficient liquidity to meet the emerging benefit liabilities for the plan.
•
Provide for diversification of assets in an effort to avoid the risk of large losses and maximize the investment return to the pension plan consistent with market and economic risk.


253

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

In administering the qualified pension plan’s asset allocation strategy, we considered the projected liability stream of benefit payments, the relationship between current and projected assets of the plan and the projected actuarial liabilities streams, the historical performance of capital markets adjusted for the perception of future short‑ and long-term capital market performance and the perception of future economic conditions.

Other Postretirement Benefit Plan Assets

The fair value of the other postretirement benefit plans’ assets by asset category as of the most recent measurement date is as follows:

 
 
 
 
December 31, 2014
 
 
 
 
Assets
 
Fair value hierarchy level
 
 
 
 
measured at
 
 
 
 
 
 
 
 
 
 
 
fair value
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Asset category
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
5.5
 
$
5.5

 
$
—

 
$
—

Fixed income security portfolios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed income investment funds (1)
 
 
164.4
 
 
161.1

 
 
3.3

 
 
—

 
Principal Life general account investment (2)
 
 
36.3
 
 
—

 
 
—

 
 
36.3

U.S. equity portfolios (3)
 
 
375.6
 
 
311.0

 
 
64.6

 
 
—

International equity portfolios (4)
 
 
57.9
 
 
44.5

 
 
13.4

 
 
—

Total
 
$
639.7
 
$
522.1

 
$
81.3

 
$
36.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
Fair value hierarchy level
 
 
 
 
measured at
 
 
 
 
 
 
 
 
 
 
 
fair value
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Asset category
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
4.7
 
$
4.7

 
$
—

 
$
—

Fixed income security portfolios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed income investment funds (1)
 
 
157.9
 
 
157.9

 
 
—

 
 
—

 
Principal Life general account investment (2)
 
 
38.8
 
 
—

 
 
—

 
 
38.8

U.S. equity portfolios (3)
 
 
351.6
 
 
288.0

 
 
63.6

 
 
—

International equity portfolios (4)
 
 
60.0
 
 
45.9

 
 
14.1

 
 
—

Total
 
$
613.0
 
$
496.5

 
$
77.7

 
$
38.8


(1)
The portfolios invest in various fixed income securities, primarily of U.S. origin. These include, but are not limited to, corporate bonds, mortgage-backed securities, commercial mortgage-backed securities, U.S. Treasury securities, agency securities, asset-backed securities and collateralized mortgage obligations.
(2)
The general account is invested in various fixed income securities.
(3)
The portfolios invest primarily in publicly traded equity securities of large U.S. companies.
(4)
The portfolios invest primarily in publicly traded equity securities of non-U.S. companies.

As of December 31, 2014 and 2013, respectively, $81.3 million and $77.7 million of assets in the U.S. equity and international equity portfolios were included in a trust owned life insurance contract.



254

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The reconciliation for all assets measured at fair value using significant unobservable inputs (Level 3) is as follows:
 
 
For the year ended December 31, 2014
 
 
 
 
Actual return gains (losses)
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning
 
on plan assets
 
 
 
 
 
 
 
 
 
Ending
 
 
asset
 
Relating to
 
 
 
 
Net
 
 
 
 
 
 
 
asset
 
 
balance
 
assets still
 
Relating to
 
purchases,
 
 
 
 
 
 
 
balance
 
 
as of
 
held at the
 
assets sold
 
sales,
 
Transfers
 
Transfers
 
as of
 
 
December 31,
 
reporting
 
during the
 
and
 
into
 
out of
 
December 31,
 
 
2013
 
date
 
period
 
settlements
 
Level 3
 
Level 3
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Asset category
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal Life general account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
investment
$
38.8
 
$
0.8
 
$
—

 
$
(3.3)
 
$
—

 
$
—

 
$
36.3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2013
 
 
 
 
Actual return gains (losses)
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning
 
on plan assets
 
 
 
 
 
 
 
 
 
Ending
 
 
assets
 
Relating to
 
 
 
 
Net
 
 
 
 
 
 
 
assets
 
 
balance
 
assets still
 
Relating to
 
purchases,
 
 
 
 
 
 
 
balance
 
 
as of
 
held at the
 
assets sold
 
sales,
 
Transfers
 
Transfers
 
as of
 
 
December 31,
 
reporting
 
during the
 
and
 
into
 
out of
 
December 31,
 
 
2012
 
date
 
period
 
settlements
 
Level 3
 
Level 3
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Asset category
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal Life general account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
investment
$
42.1
 
$
1.1
 
$
—

 
$
(4.4)
 
$
—

 
$
—

 
$
38.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2012
 
 
 
 
Actual return gains (losses)
 
 
 
 
 
 
 
 
 
 
 
 
 
Beginning
 
on plan assets
 
 
 
 
 
 
 
 
 
Ending
 
 
assets
 
Relating to
 
 
 
 
Net
 
 
 
 
 
 
 
assets
 
 
balance
 
assets still
 
Relating to
 
purchases,
 
 
 
 
 
 
 
balance
 
 
as of
 
held at the
 
assets sold
 
sales,
 
Transfers
 
Transfers
 
as of
 
 
December 31,
 
reporting
 
during the
 
and
 
into
 
out of
 
December 31,
 
 
2011
 
date
 
period
 
settlements
 
Level 3
 
Level 3
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Asset category
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal Life general account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
investment
$
42.5
 
$
3.1
 
$
—

 
$
(3.5)
 
$
—

 
$
—

 
$
42.1
According to our investment policy, the target asset allocation for the other postretirement benefit plans is:
Asset Category
 
Target allocation
 
 
 
U.S. equity portfolios
45% - 65%
International equity portfolios
5% - 15%
Fixed income security portfolios
30% - 50%
The investment strategies and policies for the other postretirement benefit plans are similar to those employed by the qualified pension plan.
Contributions
Prior to November 2014, our funding policy for the qualified pension plan was to fund the plan annually in an amount at least equal to the minimum annual contribution required under ERISA and, generally, not greater than the maximum amount that can be deducted for federal income tax purposes. We may contribute to our other postretirement benefit plans in 2015 pending future analysis.



255

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Estimated Future Benefit Payments

The estimated future benefit payments, which reflect expected future service, and the expected amount of subsidy receipts under Medicare Part D are:

 
 
 
Other postretirement
 
 
 
 
 
 
benefits (gross benefit
 
 
 
 
 
 
payments, including
 
 
Amount of Medicare
 
 
prescription drug benefits)
 
 
Part D subsidy receipts
 
 
 
 
 
 
 
 
 
(in millions)
Year ending December 31:
 
 
 
 
 
2015
$
18.2
 
$
0.9
2016
 
18.9
 
 
1.0
2017
 
19.4
 
 
1.0
2018
 
19.6
 
 
1.0
2019
 
20.1
 
 
1.0
2020-2024
 
104.5
 
 
4.8

The above table reflects the total estimated future benefits to be paid from the plan, including both our share of the benefit cost and the participants' share of the cost, which is funded by their contributions to the plan.

The assumptions used in calculating the estimated future benefit payments are the same as those used to measure the benefit obligation for the year ended December 31, 2014.

    


256

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
The information that follows shows supplemental information for our defined benefit pension plans. Certain key summary data is shown separately for qualified and nonqualified plans.
 
 
 
For the year ended December 31,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Qualified
Nonqualified
 
 
 
 
Qualified
Nonqualified
 
 
 
 
 
 
Plan
 
Plan
 
Total
 
Plan
 
Plan
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Amount recognized in statement of financial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other assets
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

Other liabilities
 
 
—

 
 
—

 
 
—

 
 
(138.6)

 
 
(376.0)

 
 
(514.6)

Total
 
$
—

 
$
—

 
$
—

 
$
(138.6)

 
$
(376.0)

 
$
(514.6)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Amount recognized in accumulated other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total net actuarial loss
 
$
—

 
$
—

 
$
—

 
$
298.3

 
$
92.8

 
$
391.1

Prior service benefit
 
 
—

 
 
—

 
 
—

 
 
(6.5)

 
 
(5.3)

 
 
(11.8)

Pre-tax accumulated other comprehensive loss
 
$
—

 
$
—

 
$
—

 
$
291.8

 
$
87.5

 
$
379.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Components of net periodic benefit cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Service cost
 
$
39.0

 
$
6.0

 
$
45.0

 
$
50.4

 
$
6.7

 
$
57.1

Interest cost
 
 
82.6

 
 
15.0

 
 
97.6

 
 
88.2

 
 
15.6

 
 
103.8

Expected return on plan assets
 
(110.0)
 
 
 
—

 
 
(110.0)

 
 
(127.4)

 
 
—

 
 
(127.4)

Amortization of prior service benefit
 
 
(2.6)

 
 
(1.3)

 
 
(3.9)

 
 
(6.1)

 
 
(2.6)

 
 
(8.7)

Recognized net actuarial loss
 
 
35.8

 
 
6.3

 
 
42.1

 
 
104.4

 
 
14.1

 
 
118.5

Net periodic benefit cost
 
$
44.8

 
$
26.0

 
$
70.8

 
$
109.5

 
$
33.8

 
$
143.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other changes recognized in accumulated other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
comprehensive (income) loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net actuarial gain
 
$
—

 
$
—

 
$
—

 
$
(322.4)

 
$
(29.3)

 
$
(351.7)

Amortization of net loss
 
 
(35.8)

 
 
(6.3)

 
 
(42.1)

 
 
(104.4)

 
 
(14.1)

 
 
(118.5)

Amortization of prior service benefit
 
 
2.6

 
 
1.3

 
 
3.9

 
 
6.1

 
 
2.6

 
 
8.7

Total recognized in pre-tax accumulated other
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
comprehensive income
$
(33.2)

 
$
(5.0)

 
$
(38.2)

 
$
(420.7)

 
$
(40.8)

 
$
(461.5)

Total recognized in net periodic benefit cost
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
and pre-tax accumulated other comprehensive
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(income) loss
$
11.6

 
$
21.0

 
$
32.6

 
$
(311.2)

 
$
(7.0)

 
$
(318.2)

We have defined contribution plans that are generally available to all U.S. employees and agents. Eligible participants could not contribute more than $17,500 of their compensation to the plans in 2014. Effective January 1, 2006, we made several changes to the retirement programs. In general, the pension and supplemental executive retirement plan benefit formulas were reduced, and the 401(k) matching contribution was increased. Employees who were ages 47 or older with at least ten years of service on December 31, 2005, could elect to retain the prior benefit provisions and forgo receipt of the additional matching contributions. The employees who elected to retain the prior benefit provisions are referred to as “Grandfathered Choice Participants.” We match the Grandfathered Choice Participant's contribution at a 50% contribution rate up to a maximum contribution of 3% of the participant's compensation. For all other participants, we match the participant's contributions at a 75% contribution rate up to a maximum of 6% of the participant's compensation. The defined contribution plans allow employees to choose among various investment options, including PFG’s common stock. We contributed $41.7 million, $39.8 million and $37.3 million in 2014, 2013 and 2012, respectively, to our qualified defined contribution plans.
We also have nonqualified deferred compensation plans available to select employees and agents that allow them to defer compensation amounts in excess of limits imposed by federal tax law with respect to the qualified plans. In 2014, we matched the Grandfathered Choice Participant's deferral at a 50% match deferral rate up to a maximum matching deferral of 3% of the participant's compensation. For all other participants, we matched the participant's deferral at a 75% match deferral rate up to a maximum matching deferral of 6% of the participant's compensation. We contributed $4.1 million, $5.0 million and $4.6 million in 2014, 2013 and 2012, respectively, to our nonqualified deferred compensation plans.


257

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

13. Contingencies, Guarantees and Indemnifications
Litigation and Regulatory Contingencies
We are regularly involved in litigation, both as a defendant and as a plaintiff, but primarily as a defendant. Litigation naming us as a defendant ordinarily arises out of our business operations as a provider of asset management and accumulation products and services; individual life insurance, specialty benefits insurance and our investment activities. Some of the lawsuits may be class actions, or purport to be, and some may include claims for unspecified or substantial punitive and treble damages.
We may discuss such litigation in one of three ways. We accrue a charge to income and disclose legal matters for which the chance of loss is probable and for which the amount of loss can be reasonably estimated. We may disclose contingencies for which the chance of loss is reasonably possible and provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. Finally, we may voluntarily disclose loss contingencies for which the chance of loss is remote in order to provide information concerning matters that potentially expose us to possible losses.
In addition, regulatory bodies such as state insurance departments, the SEC, the Financial Industry Regulatory Authority, the Department of Labor and other regulatory agencies regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, ERISA and laws governing the activities of broker-dealers. We receive requests from regulators and other governmental authorities relating to industry issues and may receive additional requests, including subpoenas and interrogatories, in the future.
On March 18, 2014, McCaffree Financial Corp. Employee Retirement Program (“McCaffree”) filed a putative class action lawsuit in the United States District Court for the Southern District of Iowa against us. The complaint alleged, among other things, breach of duty of loyalty, breach of duty of prudence and prohibited transactions under ERISA. McCaffree seeks a nationwide class action on behalf of all participants and beneficiaries of defined contribution retirement plans that invested in any Principal Separate Account in the last six years. McCaffree seeks disgorgement of all fees it alleges we improperly retained in addition to other general claims for relief. We have filed a motion to dismiss the case and on December 11, 2014, the court granted the motion. McCaffree filed a notice of appeal on December 22, 2014. We will continue to aggressively defend the case.
On August 29, 2013, American Chemicals & Equipment, Inc. 401(k) Retirement Plan (“ACE”) filed a lawsuit in the United States District Court for the Northern District of Alabama against Principal Management Corporation and Principal Global Investors, LLC (the “ACE Defendants”). The lawsuit alleges the ACE Defendants breached their fiduciary duty under Section 36(b) of the Investment Company Act by charging excessive fees on certain of the LifeTime series target date funds. On January 24, 2014, the court granted the motion filed by the ACE Defendants to transfer the case to the Southern District of Iowa. The ACE Defendants continue to aggressively defend the lawsuit.
On December 2, 2009 and December 4, 2009, two plaintiffs, Cruise and Mullaney, each filed putative class action lawsuits in the United States District Court for the Southern District of New York against us; PFG; Principal Global Investors, LLC; Principal Management Corporation; and Principal Real Estate Investors, LLC (the “Cruise/Mullaney Defendants”). The lawsuits alleged the Cruise/Mullaney Defendants failed to manage the Principal U.S. Property Separate Account (“PUSPSA”) in the best interests of investors, improperly imposed a “withdrawal freeze” on September 26, 2008, and instituted a “withdrawal queue” to honor withdrawal requests as sufficient liquidity became available. The two lawsuits, as well as two subsequently filed complaints asserting similar claims, have been consolidated and are now known as In re Principal U.S. Property Account Litigation. Plaintiffs’ request for permission to appeal the denial of class certification was denied by the U.S. Eighth Circuit Court of Appeals on December 31, 2013. The case was dismissed on December 15, 2014.
In 2008, we received approximately $440.0 million in connection with the termination of certain structured transactions and the resulting prepayment of our investment in those transactions. The transactions involved Lehman Brothers Special Financing Inc. and Lehman Brothers Holdings Inc. (collectively, “Lehman”) in various capacities. Subsequent to Lehman’s 2008 bankruptcy filing, its bankruptcy estate initiated several lawsuits seeking to recover from numerous sources significant amounts to which it claims entitlement under various theories. We are one of a large group of defendants to this action, and believe that we have meritorious defenses to Lehman’s claims and intend to aggressively defend against them. The estate’s claim against us, including interest (which we also dispute), was approximately $541.0 million.
While the outcome of any pending or future litigation or regulatory matter cannot be predicted, management does not believe that any such matter will have a material adverse effect on our business or financial position. As of December 31, 2014, there were no


258

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

estimated losses accrued related to the legal matters discussed above because we believe the loss from these matters is not probable and cannot be reasonably estimated.

We believe all of the litigation contingencies discussed above involve a chance of loss that is either remote or reasonably possible. Unless otherwise noted, all of these matters involve unspecified claim amounts, in which the respective plaintiffs seek an indeterminate amount of damages. To the extent such matters present a reasonably possible chance of loss, we are generally not able to estimate the possible loss or range of loss associated therewith.

The outcome of such matters is always uncertain, and unforeseen results can occur. It is possible that such outcomes could require us to pay damages or make other expenditures or establish accruals in amounts that we could not estimate at December 31, 2014.

Guarantees and Indemnifications

In the normal course of business, we have provided guarantees to our ultimate parent, PFG, related to benefit payments of the nonqualified pension plan and to third parties primarily related to a former subsidiary. These agreements generally expire through 2019. The maximum exposure under these agreements as of December 31, 2014, was approximately $345.0 million. At inception, the fair value of such guarantees was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. Should we be required to perform under these guarantees, we generally could recover a portion of the loss from third parties through recourse provisions included in agreements with such parties, the sale of assets held as collateral that can be liquidated in the event that performance is required under the guarantees or other recourse generally available to us; therefore, such guarantees would not result in a material adverse effect on our business or financial position. While the likelihood is remote, such outcomes could materially affect net income in a particular quarter or annual period.

We are also subject to various other indemnification obligations issued in conjunction with divestitures, acquisitions and financing transactions whose terms range in duration and often are not explicitly defined. Certain portions of these indemnifications may be capped, while other portions are not subject to such limitations; therefore, the overall maximum amount of the obligation under the indemnifications cannot be reasonably estimated. At inception, the fair value of such indemnifications was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. While we are unable to estimate with certainty the ultimate legal and financial liability with respect to these indemnifications, we believe that performance under these indemnifications would not result in a material adverse effect on our business or financial position. While the likelihood is remote, performance under these indemnifications could materially affect net income in a particular quarter or annual period.

Guaranty Funds

Under state insurance guaranty fund laws, insurers doing business in a state can be assessed, up to prescribed limits, for certain obligations of insolvent insurance companies to policyholders and claimants. A state’s fund assesses its members based on their pro rata market share of written premiums in the state for the classes of insurance for which the insolvent insurer was engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets. We accrue liabilities for guaranty fund assessments when an assessment is probable, can be reasonably estimated and when the event obligating us to pay has occurred. While we cannot predict the amount and timing of any future assessments, we have established reserves we believe are adequate for assessments relating to insurance companies that are currently subject to insolvency proceedings. As of December 31, 2014 and 2013, the liability balance for guaranty fund assessments, which is not discounted, was $16.8 million and $22.5 million, respectively, and was reported within other liabilities in the consolidated statements of financial position. As of December 31, 2014 and 2013, $7.1 million and $11.5 million, respectively, related to premium tax offsets were included in premiums due and other receivables in the consolidated statements of financial position.

Operating Leases

As a lessee, we lease office space, data processing equipment, office furniture and office equipment under various operating leases. Rental expense for the years ended December 31, 2014, 2013 and 2012 was $29.5 million, $26.4 million and $33.2 million, respectively.


259

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The following represents payments due by period for operating lease obligations (in millions):
Year ending December 31:
 
 
 
2015
$
35.1
 
2016
 
31.3
 
2017
 
27.1
 
2018
 
19.4
 
2019
 
11.3
 
2020 and thereafter
 
50.8
 
 
Total operating lease obligations
 
175.0
 
 
Less: Future sublease rental income on noncancelable leases
 
5.8
 
 
Total future minimum lease payments
$
169.2

Capital Leases

We lease buildings and hardware storage equipment under capital leases. As of December 31, 2014 and 2013, these leases had a gross asset balance of $54.5 million and $42.3 million and accumulated depreciation of $17.0 million and $16.1 million, respectively. Depreciation expense for the years ended December 31, 2014, 2013 and 2012 was $11.8 million, $9.3 million and $7.0 million, respectively.

The following represents future minimum lease payments due by period for capital lease obligations (in millions).

Year ending December 31:
 
 
 
2015
$
6.2

 
2016
 
5.3

 
2017
 
2.4

 
2018
 
0.6

 
2019
 
—

 
 
Total
 
14.5

 
 
Less: Amounts representing interest
 
0.3

 
 
Net present value of minimum lease payments
$
14.2




260

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

14. Stockholder's Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Comprehensive Income (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Pre-Tax
 
Tax
 
After-Tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Net unrealized gains on available-for-sale securities during the period
$
884.2
 
$
(309.9)
 
$
574.3
Reclassification adjustment for gains included in net income (1)
 
(66.2)
 
 
23.1
 
 
(43.1)
Adjustments for assumed changes in amortization patterns
 
(63.4)
 
 
22.2
 
 
(41.2)
Adjustments for assumed changes in policyholder liabilities
 
(352.3)
 
 
123.5
 
 
(228.8)
Net unrealized gains on available-for-sale securities
 
402.3
 
 
(141.1)
 
 
261.2
 
 
 
 
 
 
 
 
 
 
 
Noncredit component of impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale during the period
 
102.2
 
 
(35.8)
 
 
66.4
Adjustments for assumed changes in amortization patterns
 
(4.7)
 
 
1.7
 
 
(3.0)
Adjustments for assumed changes in policyholder liabilities
 
(2.2)
 
 
0.7
 
 
(1.5)
Noncredit component of impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale (2)
 
95.3
 
 
(33.4)
 
 
61.9
 
 
 
 
 
 
 
 
 
 
 
Net unrealized gains on derivative instruments during the period
 
100.3
 
 
(35.1)
 
 
65.2
Reclassification adjustment for gains included in net income (3)
 
(3.6)
 
 
1.2
 
 
(2.4)
Adjustments for assumed changes in amortization patterns
 
(12.8)
 
 
4.5
 
 
(8.3)
Adjustments for assumed changes in policyholder liabilities
 
3.2
 
 
(1.1)
 
 
2.1
Net unrealized gains on derivative instruments
 
87.1
 
 
(30.5)
 
 
56.6
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
 
(5.3)
 
 
1.6
 
 
(3.7)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Unrecognized postretirement benefit obligation during the period
 
(26.7)
 
 
9.3
 
 
(17.4)
Amortization of prior service cost and actuarial loss included in
 
 
 
 
 
 
 
 
 
net periodic benefit cost (4)
 
14.5
 
 
(5.1)
 
 
9.4
Net unrecognized postretirement benefit obligation
 
(12.2)
 
 
4.2
 
 
(8.0)
 
 
 
 
 
 
 
 
 
Other comprehensive income
$
567.2
 
$
(199.2)
 
$
368.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


261

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

 
 
 
For the year ended December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
Pre-Tax
 
Tax
 
After-Tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Net unrealized losses on available-for-sale securities during the period
$
(1,520.2)
 
$
533.0
 
$
(987.2)

Reclassification adjustment for losses included in net income (1)
 
59.6
 
 
(20.8)
 
 
38.8

Adjustments for assumed changes in amortization patterns
 
252.8
 
 
(88.5)
 
 
164.3

Adjustments for assumed changes in policyholder liabilities
 
471.8
 
 
(165.4)
 
 
306.4

Net unrealized losses on available-for-sale securities
 
(736.0)
 
 
258.3
 
 
(477.7)

 
 
 
 
 
 
 
 
 
 
 
Noncredit component of impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale during the period
 
22.0
 
 
(7.6)
 
 
14.4

Adjustments for assumed changes in amortization patterns
 
(14.4)
 
 
5.1
 
 
(9.3)

Noncredit component of impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale (2)
 
7.6
 
 
(2.5)
 
 
5.1

 
 
 
 
 
 
 
 
 
 
 
Net unrealized losses on derivative instruments during the period
 
(46.3)
 
 
16.2
 
 
(30.1)

Reclassification adjustment for losses included in net income (3)
 
5.0
 
 
(1.8)
 
 
3.2

Adjustments for assumed changes in amortization patterns
 
10.9
 
 
(3.8)
 
 
7.1

Adjustments for assumed changes in policyholder liabilities
 
20.5
 
 
(7.2)
 
 
13.3

Net unrealized losses on derivative instruments
 
(9.9)
 
 
3.4
 
 
(6.5)

 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
 
1.6
 
 
(1.6)
 
 
—

 
 
 
 
 
 
 
 
 
 
 
Unrecognized postretirement benefit obligation during the period
 
426.7
 
 
(149.3)
 
 
277.4

Amortization of prior service cost and actuarial loss included in
 
 
 
 
 
 
 
 
 
net periodic benefit cost (4)
 
84.9
 
 
(29.7)
 
 
55.2

Net unrecognized postretirement benefit obligation
 
511.6
 
 
(179.0)
 
 
332.6

 
 
 
 
 
 
 
 
 
Other comprehensive loss
$
(225.1)
 
$
78.6
 
$
(146.5)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


262

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

 
 
 
For the year ended December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
Pre-Tax
 
Tax
 
After-Tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Net unrealized gains on available-for-sale securities during the period
$
1,475.4
 
$
(513.3)
 
$
962.1
Reclassification adjustment for losses included in net income (1)
 
111.6
 
 
(39.1)
 
 
72.5
Adjustments for assumed changes in amortization patterns
 
(169.0)
 
 
59.1
 
 
(109.9)
Adjustments for assumed changes in policyholder liabilities
 
(645.5)
 
 
226.1
 
 
(419.4)
Net unrealized gains on available-for-sale securities
 
772.5
 
 
(267.2)
 
 
505.3
 
 
 
 
 
 
 
 
 
 
 
Noncredit component of impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale during the period
 
(17.3)
 
 
6.1
 
 
(11.2)
Adjustments for assumed changes in amortization patterns
 
4.0
 
 
(1.6)
 
 
2.4
Adjustments for assumed changes in policyholder liabilities
 
3.2
 
 
(1.1)
 
 
2.1
Noncredit component of impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale (2)
 
(10.1)
 
 
3.4
 
 
(6.7)
 
 
 
 
 
 
 
 
 
 
 
Net unrealized losses on derivative instruments during the period
 
(25.9)
 
 
9.2
 
 
(16.7)
Reclassification adjustment for gains included in net income (3)
 
(2.5)
 
 
0.9
 
 
(1.6)
Adjustments for assumed changes in amortization patterns
 
25.9
 
 
(9.1)
 
 
16.8
Adjustments for assumed changes in policyholder liabilities
 
(70.0)
 
 
24.5
 
 
(45.5)
Net unrealized losses on derivative instruments
 
(72.5)
 
 
25.5
 
 
(47.0)
 
 
 
 
 
 
 
 
 
 
 
Foreign currency translation adjustment
 
(14.7)
 
 
5.7
 
 
(9.0)
 
 
 
 
 
 
 
 
 
 
 
Unrecognized postretirement benefit obligation during the period
 
(245.7)
 
 
86.0
 
 
(159.7)
Amortization of prior service cost and actuarial loss included in
 
 
 
 
 
 
 
 
 
net periodic benefit cost (4)
 
49.6
 
 
(17.3)
 
 
32.3
Net unrecognized postretirement benefit obligation
 
(196.1)
 
 
68.7
 
 
(127.4)
 
 
 
 
 
 
 
 
 
Other comprehensive income
$
479.1
 
$
(163.9)
 
$
315.2

(1)
Pre-tax reclassification adjustments relating to available-for-sale securities are reported in net realized capital gains (losses) on the consolidated statements of operations.
(2)
Represents the net impact of (1) unrealized gains resulting from reclassification of previously recognized noncredit impairment losses from OCI to net realized capital gains (losses) for fixed maturities with bifurcated OTTI that had additional credit losses or fixed maturities that previously had bifurcated OTTI that have now been sold or are intended to be sold and (2) unrealized losses resulting from reclassification of noncredit impairment losses for fixed maturities with bifurcated OTTI from net realized capital gains (losses) to OCI.
(3)
See Note 6, Derivative Financial Instruments – Cash Flow Hedges, for further details.
(4)
Pre-tax amortization of prior service cost and actuarial loss included in net periodic benefit cost, which is comprised of amortization of prior service cost (benefit) and recognized net actuarial (gain) loss, is reported in operating expenses on the consolidated statements of operations. See Note 12, Employee and Agent Benefits – Components of Net Periodic Benefit Cost, for further details.



263

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Accumulated Other Comprehensive Income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Noncredit
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net unrealized
 
component of
 
Net unrealized
 
Foreign
 
Unrecognized
 
Accumulated
 
 
 
gains on
 
impairment losses
 
gains on
 
currency
 
postretirement
 
other
 
 
 
available-for-sale
 
on fixed maturities
 
derivative
 
translation
 
benefit
 
comprehensive
 
 
 
securities
 
available-for-sale
 
instruments
 
adjustment
 
obligation
 
income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Balances at January 1, 2012
$
768.7

 
$
(165.2)

 
$
74.1

 
$
12.1

 
$
(361.1)
 
$
328.6
Other comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
during the period, net of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
adjustments
 
432.8

 
 
(6.7)

 
 
(45.4)

 
 
(10.2)

 
 
(159.7)
 
 
210.8
Amounts reclassified to AOCI
 
72.5

 
 
—

 
 
(1.6)

 
 
—

 
 
32.3
 
 
103.2
Other comprehensive income
 
505.3

 
 
(6.7)

 
 
(47.0)

 
 
(10.2)

 
 
(127.4)
 
 
314.0
Balances at December 31, 2012
 
1,274.0

 
 
(171.9)

 
 
27.1

 
 
1.9

 
 
(488.5)
 
 
642.6
Other comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
during the period, net of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
adjustments
 
(516.5)

 
 
—

 
 
(9.7)

 
 
(0.4)

 
 
277.4
 
 
(249.2)
Amounts reclassified to AOCI
 
38.8

 
 
5.1

 
 
3.2

 
 
—

 
 
55.2
 
 
102.3
Other comprehensive loss
 
(477.7)

 
 
5.1

 
 
(6.5)

 
 
(0.4)

 
 
332.6
 
 
(146.9)
Balances at December 31, 2013
 
796.3

 
 
(166.8)

 
 
20.6

 
 
1.5

 
 
(155.9)
 
 
495.7
Pension plan transfer due to
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
change in sponsorship
 
—

 
 
—

 
 
—

 
 
—

 
 
221.7
 
 
221.7
Other comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
during the period, net of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
adjustments
 
304.3

 
 
—

 
 
59.0

 
 
(2.4)

 
 
(17.4)
 
 
343.5
Amounts reclassified to AOCI
 
(43.1)

 
 
61.9

 
 
(2.4)

 
 
—

 
 
9.4
 
 
25.8
Other comprehensive income
 
261.2

 
 
61.9

 
 
56.6

 
 
(2.4)

 
 
(8.0)
 
 
369.3
Balances at December 31, 2014
$
1,057.5

 
$
(104.9)

 
$
77.2

 
$
(0.9)

 
$
57.8
 
$
1,086.7

Noncontrolling Interest

Interests held by unaffiliated parties in consolidated entities are reflected in noncontrolling interest, which represents the noncontrolling partners’ share of the underlying net assets of our consolidated subsidiaries. Noncontrolling interest that is not redeemable is reported in the equity section of the consolidated statements of financial position.

The noncontrolling interest holders in certain of our consolidated entities maintain an equity interest that is redeemable at the option of the holder, which may be exercised on varying dates. Since redemption of the noncontrolling interest is outside of our control, this interest is presented on the consolidated statements of financial position line item titled “Redeemable noncontrolling interest.” If the interest were to be redeemed, we would be required to purchase such interest at a redemption value based on fair value or a formula that management intended to reasonably approximate fair value based on a fixed multiple of earnings over a measurement period. As such, the carrying value of the redeemable noncontrolling interest is compared to the redemption value at each reporting period. Any adjustments to the carrying amount of the redeemable noncontrolling interest for changes in redemption value prior to exercise of the redemption option are determined after the attribution of net income or loss of the subsidiary and are recognized in the redemption value as they occur. Adjustments to the carrying value of redeemable noncontrolling interest result in adjustments to additional paid-in capital and/or retained earnings. Adjustments are recorded in retained earnings to the extent the redemption value of the redeemable noncontrolling interest exceeds its fair value. All other adjustments to the redeemable noncontrolling interest are recorded in additional paid-in capital.



264

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Following is a reconciliation of the changes in the redeemable noncontrolling interest (in millions):
Balance at January 1, 2012
$
22.2
Net income attributable to redeemable noncontrolling interest
 
1.0
Distributions to redeemable noncontrolling interest
 
(1.2)
Foreign currency translation adjustment
 
1.2
Balance at December 31, 2012
 
23.2
Net income attributable to redeemable noncontrolling interest
 
13.6
Reclassification from stockholder's equity (1)
 
166.7
Distributions to redeemable noncontrolling interest
 
(13.0)
Change in redemption value of redeemable noncontrolling interest
 
17.8
Foreign currency translation adjustment
 
0.4
Balance at December 31, 2013
 
208.7
Net income attributable to redeemable noncontrolling interest
 
9.7
Distributions to redeemable noncontrolling interest
 
(14.9)
Purchase of subsidiary shares from redeemable noncontrolling interest (2)
 
(215.7)
Change in redemption value of redeemable noncontrolling interest
 
34.6
Foreign currency translation adjustment
 
(1.3)
Balance at December 31, 2014
$
21.1
(1)
During the third quarter of 2013, we identified a classification error of certain of our noncontrolling interests. The classification error had no impact on net income. We evaluated the classification error based on qualitative and quantitative factors in accordance with SEC Staff Accounting Bulletins 99 and 108 and concluded the impact was not material in the current or any prior quarterly or annual periods presented. During the third quarter of 2013, we recorded a $166.7 million increase to redeemable noncontrolling interest and a corresponding decrease to stockholder’s equity.
(2)
During the third quarter of 2014 we increased our ownership stake in Columbus Circle Investors.
Dividend Limitations
Under Iowa law, we may pay stockholder dividends only from the earned surplus arising from our business and must receive the prior approval of the Commissioner to pay a stockholder dividend if such a stockholder dividend would exceed certain statutory limitations. In general, the current statutory limitation is the greater of 10% of our policyholder surplus as of the preceding year-end or the net gain from operations from the previous calendar year. Based on this limitation and 2014 statutory results, we could pay approximately $615.2 million in stockholder dividends in 2015 without exceeding the statutory limitation.
15. Fair Value Measurements
We use fair value measurements to record fair value of certain assets and liabilities and to estimate fair value of financial instruments not recorded at fair value but required to be disclosed at fair value. Certain financial instruments, particularly policyholder liabilities other than investment-type insurance contracts, are excluded from these fair value disclosure requirements.
Valuation Hierarchy
Fair value is defined as 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 (an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety considering factors specific to the asset or liability.
•
Level 1 – Fair values are based on unadjusted quoted prices in active markets for identical assets or liabilities. Our Level 1 assets and liabilities primarily include exchange traded equity securities, mutual funds and U.S. Treasury bonds.
•
Level 2 – Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. Our Level 2 assets and liabilities primarily include fixed maturities (including public and private bonds), equity securities, derivatives and other investments for which public quotations are not available but that are priced by third-party pricing services or internal models using substantially all observable inputs.



265

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

•
Level 3 – Fair values are based on at least one significant unobservable input for the asset or liability. Our Level 3 assets and liabilities include certain assets and liabilities priced using broker quotes or other valuation methods that utilize at least one significant unobservable input. These include fixed maturities, private equity securities, real estate and commercial mortgage loan investments of our separate accounts, commercial mortgage loan investments and obligations of consolidated VIEs for which the fair value option was elected, complex derivatives, embedded derivatives and equity method real estate investments for which the fair value option was elected.

Determination of Fair Value
The following discussion describes the valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis or disclosed at fair value. The techniques utilized in estimating the fair values of financial instruments are reliant on the assumptions used. Care should be exercised in deriving conclusions about our business, its value or financial position based on the fair value information of financial instruments presented below.
Fair value estimates are made based on available market information and judgments about the financial instrument at a specific point in time. Such estimates do not consider the tax impact of the realization of unrealized gains or losses. In addition, the disclosed fair value may not be realized in the immediate settlement of the financial instrument. We validate prices through an investment analyst review process, which includes validation through direct interaction with external sources, review of recent trade activity or use of internal models. In circumstances where broker quotes are used to value an instrument, we generally receive one non-binding quote. Broker quotes are validated through an investment analyst review process, which includes validation through direct interaction with external sources and use of internal models or other relevant information. We did not make any significant changes to our valuation processes during 2014.
Fixed Maturities
Fixed maturities include bonds, redeemable preferred stock, ABS and certain nonredeemable preferred securities. When available, the fair value of fixed maturities is based on quoted prices of identical assets in active markets. These are reflected in Level 1 and primarily include U.S. Treasury bonds and actively traded redeemable corporate preferred securities.
When quoted prices of identical assets in active markets are not available, our first priority is to obtain prices from third party pricing vendors. We have regular interaction with these vendors to ensure we understand their pricing methodologies and to confirm they are utilizing observable market information. Their methodologies vary by asset class and include inputs such as estimated cash flows, benchmark yields, reported trades, broker quotes, credit quality, industry events and economic events. Fixed maturities with validated prices from pricing services, which includes the majority of our public fixed maturities in all asset classes, are generally reflected in Level 2. Also included in Level 2 are corporate bonds where quoted market prices are not available, for which an internal model using substantially all observable inputs or a matrix pricing valuation approach is used. In the matrix approach, securities are grouped into pricing categories that vary by sector, rating and average life. Each pricing category is assigned a risk spread based on studies of observable public market data from the investment professionals assigned to specific security classes. The expected cash flows of the security are then discounted back at the current Treasury curve plus the appropriate risk spread. Although the matrix valuation approach provides a fair valuation of each pricing category, the valuation of an individual security within each pricing category may actually be impacted by company specific factors.
If we are unable to price a fixed maturity security using prices from third party pricing vendors or other sources specific to the asset class, we may obtain a broker quote or utilize an internal pricing model specific to the asset utilizing relevant market information, to the extent available and where at least one significant unobservable input is utilized, which are reflected in Level 3 and can include fixed maturities across all asset classes. As of December 31, 2014, less than 1% of our fixed maturities were valued using internal pricing models, which were classified as Level 3 assets accordingly.
The primary inputs, by asset class, for valuations of the majority of our Level 2 investments from third party pricing vendors or our internal pricing valuation approach are described below.
U.S. Government and Agencies/Non-U.S. Governments. Inputs include recently executed market transactions, interest rate yield curves, maturity dates, market price quotations and credit spreads relating to similar instruments.
States and Political Subdivisions. Inputs include Municipal Securities Rulemaking Board reported trades, U.S. Treasury and other benchmark curves, material event notices, new issue data and obligor credit ratings.


266

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Corporate. Inputs include recently executed transactions, market price quotations, benchmark yields, issuer spreads and observations of equity and credit default swap curves related to the issuer. For private placement corporate securities valued through the matrix valuation approach inputs include the current Treasury curve and risk spreads based on sector, rating and average life of the issuance.
RMBS, CMBS, Collateralized Debt Obligations and Other Debt Obligations. Inputs include cash flows, priority of the tranche in the capital structure, expected time to maturity for the specific tranche, reinvestment period remaining and performance of the underlying collateral including prepayments, defaults, deferrals, loss severity of defaulted collateral and, for RMBS, prepayment speed assumptions. Other inputs include market indices and recently executed market transactions.
Equity Securities
Equity securities include mutual funds, common stock and nonredeemable preferred stock. Fair values of equity securities are determined using quoted prices in active markets for identical assets when available, which are reflected in Level 1. When quoted prices are not available, we may utilize internal valuation methodologies appropriate for the specific asset that use observable inputs such as underlying share prices or the net asset value (“NAV”), which are reflected in Level 2. Fair values might also be determined using broker quotes or through the use of internal models or analysis that incorporate significant assumptions deemed appropriate given the circumstances and consistent with what other market participants would use when pricing such securities, which are reflected in Level 3. 
Derivatives
The fair values of exchange-traded derivatives are determined through quoted market prices, which are reflected in Level 1. Exchange-traded derivatives include futures that are settled daily such that their fair value is not reflected in the consolidated statements of financial position. The fair values of derivative instruments cleared through centralized clearinghouses are determined through market prices published by the clearinghouses, which are reflected in Level 2. The clearinghouses may utilize the overnight indexed swap curve in their valuation. The fair values of bilateral OTC derivative instruments are determined using either pricing valuation models that utilize market observable inputs or broker quotes. The majority of our bilateral OTC derivatives are valued with models that use market observable inputs, which are reflected in Level 2. Significant inputs include contractual terms, interest rates, currency exchange rates, credit spread curves, equity prices, and volatilities. These valuation models consider projected discounted cash flows, relevant swap curves, and appropriate implied volatilities. Certain bilateral OTC derivatives utilize unobservable market data, primarily independent broker quotes that are nonbinding quotes based on models that do not reflect the result of market transactions, which are reflected in Level 3.
Our non-cleared derivative contracts are generally documented under ISDA Master Agreements, which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties. Collateral arrangements are bilateral and based on current ratings of each entity. We utilize the LIBOR interest rate curve to value our positions, which includes a credit spread. This credit spread incorporates an appropriate level of nonperformance risk into our valuations given the current ratings of our counterparties, as well as the collateral agreements in place. Counterparty credit risk is routinely monitored to ensure our adjustment for non-performance risk is appropriate. Our centrally cleared derivative contracts are conducted with regulated centralized clearinghouses, which provide for daily exchange of cash collateral equal to the difference in the daily market values of those contracts that eliminates the non-performance risk on these trades.
Interest Rate Contracts. For non-cleared contracts we use discounted cash flow valuation techniques to determine the fair value of interest rate swaps using observable swap curves as the inputs. These are reflected in Level 2. For centrally cleared contracts we use published prices from clearinghouses. These are reflected in Level 2. In addition, we have a limited number of complex inflation-linked interest rate swaps, interest rate collars and swaptions that are valued using broker quotes. These are reflected in Level 3.
Foreign Exchange Contracts. We use discounted cash flow valuation techniques that utilize observable swap curves and exchange rates as the inputs to determine the fair value of foreign currency swaps. These are reflected in Level 2. In addition, we have a limited number of non-standard currency swaps that are valued using broker quotes. These are reflected within Level 3.
Equity Contracts. We use an option pricing model using observable implied volatilities, dividend yields, index prices and swap curves as the inputs to determine the fair value of equity options. These are reflected in Level 2.
Credit Contracts. We use either the ISDA Credit Default Swap Standard discounted cash flow model that utilizes observable default probabilities and recovery rates as inputs or broker prices to determine the fair value of credit default swaps. These are reflected in Level 3. In addition, we have a limited number of total return swaps that are valued based on the observable quoted price of underlying equity indices. These are reflected in Level 2.


267

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Other Investments
Other investments reported at fair value include seed money investments, other investment funds, commercial mortgage loans of consolidated VIEs and equity method real estate investments for which the fair value option was elected.
The fair value of seed money and other investment funds is determined using the NAV of the fund. The NAV of the funds represents the price at which we feel we would be able to initiate a transaction. Seed money investments in mutual funds for which the NAV is published are reflected in Level 1. Seed money investments in mutual funds in markets that do not have a published NAV and other investment funds, which are relatively illiquid due to restrictions on sale, are reflected in Level 2.
Commercial mortgage loans of consolidated VIEs and equity method real estate investments for which the fair value option was elected are reflected in Level 3. Fair value of the commercial mortgage loans is computed utilizing a discount rate based on the current market. The market discount rate is then adjusted based on various factors that differentiate it from our pool of loans. The equity method real estate investments consist of underlying real estate and debt. The real estate fair value is estimated using a discounted cash flow valuation model that utilizes various public real estate market data inputs. The debt fair value is estimated using a discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements.
Cash and Cash Equivalents
Certain cash equivalents are reported at fair value on a recurring basis and include money market instruments and other short-term investments with maturities of less than three months. Fair values of these cash equivalents may be determined using public quotations, when available, which are reflected in Level 1. When public quotations are not available, because of the highly liquid nature of these assets, carrying amounts may be used to approximate fair values, which are reflected in Level 2.
Separate Account Assets
Separate account assets include equity securities, debt securities and derivative instruments, for which fair values are determined as previously described, and are reflected in Level 1, Level 2 and Level 3. Separate account assets also include commercial mortgage loans, for which the fair value is estimated by discounting the expected total cash flows using market rates that are applicable to the yield, credit quality and maturity of the loans. The market clearing spreads vary based on mortgage type, weighted average life, rating and liquidity. These are reflected in Level 3. Finally, separate account assets include real estate, for which the fair value is estimated using discounted cash flow valuation models that utilize various public real estate market data inputs. In addition, each property is appraised annually by an independent appraiser. The real estate included in separate account assets is recorded net of related mortgage encumbrances for which the fair value is estimated using discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. The real estate within the separate accounts is reflected in Level 3.
Investment-Type Insurance Contracts
Certain annuity contracts and other investment-type insurance contracts include embedded derivatives that have been bifurcated from the host contract and that are measured at fair value on a recurring basis, which are reflected in Level 3. The key assumptions for calculating the fair value of the embedded derivative liabilities are market assumptions (such as equity market returns, interest rate levels, market volatility and correlations) and policyholder behavior assumptions (such as lapse, mortality, utilization and withdrawal patterns). Risk margins are included in the policyholder behavior assumptions. The assumptions are based on a combination of historical data and actuarial judgment. The embedded derivative liabilities are valued using stochastic models that incorporate a spread reflecting our own creditworthiness. 
The assumption for our own non-performance risk for investment-type insurance contracts and any embedded derivatives bifurcated from certain annuity and investment-type insurance contracts is based on the current market credit spreads for debt-like instruments that we have issued and are available in the market.
Other Liabilities
Certain obligations reported in other liabilities include embedded derivatives to deliver underlying securities of structured investments to third parties. The fair value of the embedded derivatives is calculated based on the value of the underlying securities that are valued based on prices obtained from third party pricing vendors as utilized and described in our discussion of how fair value is determined for fixed maturities, which are reflected in Level 2.


268

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Additionally, obligations of consolidated VIEs for which the fair value option was elected are included in other liabilities. These obligations are valued either based on prices obtained from third party pricing vendors as utilized and described in our discussion of how fair value is determined for fixed maturities, which are reflected in Level 2, or broker quotes, which are reflected in Level 3.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below.
 
 
 
December 31, 2014
 
 
 
Assets/
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
Fair value hierarchy level
 
 
 
measured at
 
 
 
 
 
 
 
 
 
 
 
fair value
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
 
$
1,110.7
 
$
709.4

 
$
401.3

 
$
—

Non-U.S. governments
 
 
446.6
 
 
—

 
 
436.3

 
 
10.3

States and political subdivisions
 
 
4,176.2
 
 
—

 
 
4,176.2

 
 
—

Corporate
 
 
28,914.7
 
 
40.2

 
 
28,685.9

 
 
188.6

Residential mortgage-backed securities
 
 
2,805.2
 
 
—

 
 
2,805.2

 
 
—

Commercial mortgage-backed securities
 
 
3,975.5
 
 
—

 
 
3,975.5

 
 
—

Collateralized debt obligations
 
 
504.1
 
 
—

 
 
439.9

 
 
64.2

Other debt obligations
 
 
4,616.4
 
 
—

 
 
4,552.7

 
 
63.7

Total fixed maturities, available-for-sale
 
 
46,549.4
 
 
749.6

 
 
45,473.0

 
 
326.8

Fixed maturities, trading
 
 
400.3
 
 
—

 
 
260.6

 
 
139.7

Equity securities, available-for-sale
 
 
108.9
 
 
53.4

 
 
51.4

 
 
4.1

Equity securities, trading
 
 
191.6
 
 
2.0

 
 
189.6

 
 
—

Derivative assets (1)
 
 
650.8
 
 
—

 
 
597.1

 
 
53.7

Other investments (2)
 
 
239.6
 
 
—

 
 
112.4

 
 
127.2

Cash equivalents (3)
 
 
284.5
 
 
—

 
 
284.5

 
 
—

Sub-total excluding separate account assets
 
 
48,425.1
 
 
805.0

 
 
46,968.6

 
 
651.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Separate account assets
 
 
94,328.4
 
 
73,181.4

 
 
15,289.5

 
 
5,857.5

Total assets
 
$
142,753.5
 
$
73,986.4

 
$
62,258.1

 
$
6,509.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Investment-type insurance contracts (4)
 
$
(155.9)
 
$
—

 
$
—

 
$
(155.9)

Derivative liabilities (1)
 
 
(763.8)
 
 
—

 
 
(728.3)

 
 
(35.5)

Other liabilities (4)
 
 
(310.1)
 
 
—

 
 
(243.8)

 
 
(66.3)

Total liabilities
 
$
(1,229.8)
 
$
—

 
$
(972.1)

 
$
(257.7)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
$
141,523.7
 
$
73,986.4

 
$
61,286.0

 
$
6,251.3




269

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
 
 
 
December 31, 2013
 
 
 
Assets/
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
Fair value hierarchy level
 
 
 
measured at
 
 
 
 
 
 
 
 
 
 
 
fair value
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
 
$
769.7
 
$
398.6

 
$
371.1

 
$
—

Non-U.S. governments
 
 
523.6
 
 
—

 
 
511.9

 
 
11.7

States and political subdivisions
 
 
3,632.4
 
 
—

 
 
3,630.6

 
 
1.8

Corporate
 
 
29,217.2
 
 
40.3

 
 
29,062.1

 
 
114.8

Residential mortgage-backed securities
 
 
2,823.6
 
 
—

 
 
2,823.6

 
 
—

Commercial mortgage-backed securities
 
 
4,026.4
 
 
—

 
 
4,024.8

 
 
1.6

Collateralized debt obligations
 
 
363.4
 
 
—

 
 
325.6

 
 
37.8

Other debt obligations
 
 
4,167.8
 
 
—

 
 
4,083.7

 
 
84.1

Total fixed maturities, available-for-sale
 
 
45,524.1
 
 
438.9

 
 
44,833.4

 
 
251.8

Fixed maturities, trading
 
 
358.5
 
 
—

 
 
188.6

 
 
169.9

Equity securities, available-for-sale
 
 
102.6
 
 
34.6

 
 
51.1

 
 
16.9

Equity securities, trading
 
 
169.7
 
 
8.7

 
 
161.0

 
 
—

Derivative assets (1)
 
 
651.1
 
 
—

 
 
576.9

 
 
74.2

Other investments (2)
 
 
279.3
 
 
—

 
 
136.4

 
 
142.9

Cash equivalents (3)
 
 
1,160.5
 
 
—

 
 
1,160.5

 
 
—

Sub-total excluding separate account assets
 
 
48,245.8
 
 
482.2

 
 
47,107.9

 
 
655.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Separate account assets
 
 
83,790.3
 
 
65,599.5

 
 
13,092.9

 
 
5,097.9

Total assets
 
$
132,036.1
 
$
66,081.7

 
$
60,200.8

 
$
5,753.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
Investment-type insurance contracts (4)
 
$
9.5
 
$
—

 
$
—

 
$
9.5

Derivative liabilities (1)
 
 
(1,017.3)
 
 
—

 
 
(977.7)

 
 
(39.6)

Other liabilities (4)
 
 
(322.1)
 
 
—

 
 
(248.2)

 
 
(73.9)

Total liabilities
 
$
(1,329.9)
 
$
—

 
$
(1,225.9)

 
$
(104.0)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
$
130,706.2
 
$
66,081.7

 
$
58,974.9

 
$
5,649.6


(1)
Within the consolidated statements of financial position, derivative assets are reported with other investments and derivative liabilities are reported with other liabilities. Refer to Note 6, Derivative Financial Instruments, for further information on fair value by class of derivative instruments. Our derivatives are primarily Level 2, with the exception of certain credit default swaps and other swaps that are Level 3.
(2)
Primarily includes seed money investments, other investment funds, commercial mortgage loans of consolidated VIEs and equity method investments reported at fair value.
(3)
Includes money market instruments and short-term investments with a maturity date of three months or less when purchased.
(4)
Includes bifurcated embedded derivatives that are reported at fair value within the same line item in the consolidated statements of financial position in which the host contract is reported. Other liabilities also include obligations of consolidated VIEs reported at fair value.



270

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Changes in Level 3 Fair Value Measurements

The reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) are summarized as follows:

 
 
 
 
 
For the year ended December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
Total realized/unrealized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
gains (losses)
 
 
 
 
 
 
 
 
 
 
 
 
Changes in
 
 
 
 
 
Beginning
 
 
 
 
 
 
 
Net
 
 
 
 
 
 
 
Ending
 
unrealized
 
 
 
 
 
asset/
 
 
 
 
 
 
 
purchases,
 
 
 
 
 
 
 
asset/
 
gains (losses)
 
 
 
 
 
(liability)
 
 
 
 
 
 
sales,
 
 
 
 
 
 
 
(liability)
 
included in
 
 
 
 
 
balance
 
Included
 
Included in
 
issuances
 
 
 
 
 
 
 
balance
 
net income
 
 
 
 
 
as of
 
in net
 
other
 
and
 
Transfers
 
Transfers
 
as of
 
relating to
 
 
 
 
 
December 31,
 
income
 
comprehensive
 
settlements
 
into
 
out of
 
December 31,
 
positions still
 
 
 
 
 
2013
 
(1)
 
income
 
(4)
 
Level 3
 
Level 3
 
2014
 
held (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
governments
$
11.7
 
$
—

 
$
(0.2)

 
$
(1.2)
 
$
—

 
$
—

 
$
10.3

 
$
—

 
States and political
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
subdivisions
 
1.8
 
 
—

 
 
—

 
 
(0.1)
 
 
—

 
 
(1.7)

 
 
—

 
 
—

 
Corporate
 
114.8
 
 
(1.4)

 
 
(1.5)

 
 
48.0
 
 
46.6

 
 
(17.9)

 
 
188.6

 
 
(1.3)

 
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
1.6
 
 
(1.2)

 
 
1.3

 
 
(6.0)
 
 
6.8

 
 
(2.5)

 
 
—

 
 
—

 
Collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
debt obligations
 
37.8
 
 
—

 
 
0.4

 
 
46.1
 
 
3.9

 
 
(24.0)

 
 
64.2

 
 
—

 
Other debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
obligations
 
84.1
 
 
—

 
 
1.4

 
 
7.9
 
 
—

 
 
(29.7)

 
 
63.7

 
 
—

Total fixed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
251.8
 
 
(2.6)

 
 
1.4

 
 
94.7
 
 
57.3

 
 
(75.8)

 
 
326.8

 
 
(1.3)

Fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
trading
 
169.9
 
 
9.9

 
 
—

 
 
(40.1)
 
 
—

 
 
—

 
 
139.7

 
 
1.2

Equity securities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
16.9
 
 
4.2

 
 
2.8

 
 
(20.0)
 
 
0.2

 
 
—

 
 
4.1

 
 
(0.3)

Derivative assets
 
74.2
 
 
(32.0)

 
 
—

 
 
11.5
 
 
—

 
 
—

 
 
53.7

 
 
(32.0)

Other investments
 
142.9
 
 
15.7

 
 
—

 
 
(31.4)
 
 
—

 
 
—

 
 
127.2

 
 
15.7

Separate account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
assets (2)
 
5,097.9
 
 
653.5

 
 
—

 
 
115.6
 
 
4.4

 
 
(13.9)

 
 
5,857.5

 
 
608.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments-type
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
insurance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
contracts
 
9.5
 
(190.2)
 
 
 
—

 
 
24.8
 
 
—

 
 
—

 
 
(155.9)

 
 
(190.6)

Derivative liabilities
 
(39.6)
 
 
3.9

 
 
(0.4)

 
 
0.6
 
 
—

 
 
—

 
 
(35.5)

 
 
(0.9)

Other liabilities (3)
 
(73.9)
 
 
(1.4)

 
 
—

 
 
9.0
 
 
—

 
 
—

 
 
(66.3)

 
 
(0.8)




271

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

 
 
 
 
 
For the year ended December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
Total realized/unrealized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
gains (losses)
 
 
 
 
 
 
 
 
 
 
 
 
Changes in
 
 
 
 
 
Beginning
 
 
 
 
 
 
 
Net
 
 
 
 
 
 
 
Ending
 
unrealized
 
 
 
 
 
asset/
 
 
 
 
 
 
 
purchases,
 
 
 
 
 
 
 
asset/
 
gains (losses)
 
 
 
 
 
(liability)
 
 
 
 
 
 
sales,
 
 
 
 
 
 
 
(liability)
 
included in
 
 
 
 
 
balance
 
Included
 
Included in
 
issuances
 
 
 
 
 
 
 
balance
 
net income
 
 
 
 
 
as of
 
in net
 
other
 
and
 
Transfers
 
Transfers
 
as of
 
relating to
 
 
 
 
 
December 31,
 
income
 
comprehensive
 
settlements
 
into
 
out of
 
December 31,
 
positions still
 
 
 
 
 
2012
 
(1)
 
income
 
(4)
 
Level 3
 
Level 3
 
2013
 
held (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
governments
$
12.9

 
$
—

 
$
—

 
$
(1.2)

 
$
—

 
$
—

 
$
11.7
 
$
—

 
States and political
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
subdivisions
 
1.9

 
 
—

 
 
—

 
 
(0.1)

 
 
—

 
 
—

 
 
1.8
 
 
—

 
Corporate
 
117.8

 
 
(11.4)

 
 
2.2

 
 
(15.2)

 
 
105.3

 
 
(83.9)

 
 
114.8
 
 
(8.6)

 
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
—

 
 
—

 
 
(0.1)

 
 
(0.7)

 
 
2.4

 
 
—

 
 
1.6
 
 
—

 
Collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
debt obligations
 
77.6

 
 
2.1

 
 
7.2

 
 
(56.0)

 
 
31.7

 
 
(24.8)

 
 
37.8
 
 
—

 
Other debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
obligations
 
14.7

 
 
(0.3)

 
 
2.8

 
 
34.9

 
 
32.0

 
 
—

 
 
84.1
 
 
(0.3)

Total fixed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
224.9

 
 
(9.6)

 
 
12.1

 
 
(38.3)

 
 
171.4

 
 
(108.7)

 
 
251.8
 
 
(8.9)

Fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
trading
 
166.8

 
 
3.0

 
 
—

 
 
0.1

 
 
—

 
 
—

 
 
169.9
 
 
3.1

Equity securities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
15.3

 
 
(0.2)

 
 
1.8

 
 
—

 
 
—

 
 
—

 
 
16.9
 
 
(0.2)

Derivative assets
 
73.3

 
 
(20.7)

 
 
—

 
 
21.6

 
 
—

 
 
—

 
 
74.2
 
 
(19.8)

Other investments
 
113.9

 
 
11.2

 
 
—

 
 
17.8

 
 
—

 
 
—

 
 
142.9
 
 
11.2

Separate account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
assets (2)
 
4,450.7

 
 
585.2

 
 
—

 
 
55.8

 
 
12.7

 
 
(6.5)

 
 
5,097.9
 
 
556.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments-type
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
insurance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
contracts
 
(148.1)

 
 
143.4

 
 
—

 
 
14.2

 
 
—

 
 
—

 
 
9.5
 
 
141.1

Derivative liabilities
 
(101.7)

 
 
54.4

 
 
(0.1)

 
 
7.8

 
 
—

 
 
—

 
 
(39.6)
 
 
53.9

Other liabilities (3)
 
(39.6)

 
 
(34.3)

 
 
—

 
 
—

 
 
—

 
 
—

 
 
(73.9)
 
 
(34.3)




272

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

 
 
 
 
 
For the year ended December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
Total realized/unrealized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
gains (losses)
 
 
 
 
 
 
 
 
 
 
 
 
Changes in
 
 
 
 
 
Beginning
 
 
 
 
 
 
 
Net
 
 
 
 
 
 
 
Ending
 
unrealized
 
 
 
 
 
asset/
 
 
 
 
 
 
 
purchases,
 
 
 
 
 
 
 
asset/
 
gains (losses)
 
 
 
 
 
(liability)
 
 
 
 
 
 
sales,
 
 
 
 
 
 
 
(liability)
 
included in
 
 
 
 
 
balance
 
Included
 
Included in
 
issuances
 
 
 
 
 
 
 
balance
 
net income
 
 
 
 
 
as of
 
in net
 
other
 
and
 
Transfers
 
Transfers
 
as of
 
relating to
 
 
 
 
 
December 31,
 
income
 
comprehensive
 
settlements
 
into
 
out of
 
December 31,
 
positions still
 
 
 
 
 
2011
 
(1)
 
income
 
(4)
 
Level 3
 
Level 3
 
2012
 
held (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
governments
$
—

 
$
—

 
$
(0.5)

 
$
(1.1)

 
$
14.5

 
$
—

 
$
12.9
 
$
—

 
States and political
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
subdivisions
 
—

 
 
—

 
 
0.2

 
 
(0.1)

 
 
1.8

 
 
—

 
 
1.9
 
 
—

 
Corporate
 
239.2

 
 
(8.8)

 
 
22.7

 
 
(77.6)

 
 
79.7

 
 
(137.4)

 
 
117.8
 
 
(2.2)

 
Collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
debt obligations
 
102.5

 
 
(3.3)

 
 
5.1

 
 
4.5

 
 
—

 
 
(31.2)

 
 
77.6
 
 
—

 
Other debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
obligations
 
27.3

 
 
(2.2)

 
 
0.5

 
 
(26.2)

 
 
15.3

 
 
—

 
 
14.7
 
 
(2.2)

Total fixed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
369.0

 
 
(14.3)

 
 
28.0

 
 
(100.5)

 
 
111.3

 
 
(168.6)

 
 
224.9
 
 
(4.4)

Fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
trading
 
220.8

 
 
3.2

 
 
—

 
 
(66.7)

 
 
9.5

 
 
—

 
 
166.8
 
 
(4.4)

Equity securities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
18.0

 
 
(0.3)

 
 
(2.4)

 
 
—

 
 
—

 
 
—

 
 
15.3
 
 
—

Derivative assets
 
59.0

 
 
10.8

 
 
—

 
 
3.5

 
 
—

 
 
—

 
 
73.3
 
 
12.0

Other investments
 
97.5

 
 
2.1

 
 
—

 
 
14.3

 
 
—

 
 
—

 
 
113.9
 
 
2.2

Separate account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
assets (2)
 
4,049.0

 
 
423.2

 
 
—

 
 
(21.2)

 
 
1.6

 
 
(1.9)

 
 
4,450.7
 
 
414.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments-type
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
insurance
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
contracts
 
(171.8)

 
 
37.4

 
 
—

 
 
(13.7)

 
 
—

 
 
—

 
 
(148.1)
 
 
34.5

Derivative liabilities
 
(177.1)

 
 
36.0

 
 
1.3

 
 
38.1

 
 
—

 
 
—

 
 
(101.7)
 
 
34.4

Other liabilities (3)
 
(24.2)

 
 
(23.5)

 
 
—

 
 
8.1

 
 
—

 
 
—

 
 
(39.6)
 
 
(20.2)

(1)
Both realized gains (losses) and mark-to-market unrealized gains (losses) are generally reported in net realized capital gains (losses) within the consolidated statements of operations. Realized and unrealized gains (losses) on certain fixed maturities, trading and certain derivatives used in relation to certain trading portfolios are reported in net investment income within the consolidated statements of operations.
(2)
Gains and losses for separate account assets do not impact net income as the change in value of separate account assets is offset by a change in value of separate account liabilities.
(3)
Certain embedded derivatives reported in other liabilities are part of a cash flow hedge, with the effective portion of the unrealized gains (losses) recorded in AOCI.
(4)
Gross purchases, sales, issuances and settlements were:



273

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
 
 
 
 
 
For the year ended December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
Net purchases,
 
 
 
 
 
 
 
 
 
 
 
 
 
sales, issuances
 
 
 
 
 
Purchases
 
Sales
 
Issuances
 
Settlements
 
and settlements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S. governments
$
—

 
$
—

 
$
—

 
$
(1.2)

 
$
(1.2)
 
States and political subdivisions
 
—

 
 
—

 
 
—

 
 
(0.1)

 
 
(0.1)
 
Corporate
 
79.3

 
 
(23.6)

 
 
—

 
 
(7.7)

 
 
48.0
 
Commercial mortgage-backed securities
 
—

 
 
(5.8)

 
 
—

 
 
(0.2)

 
 
(6.0)
 
Collateralized debt obligations
 
61.3

 
 
—

 
 
—

 
 
(15.2)

 
 
46.1
 
Other debt obligations
 
19.2

 
 
—

 
 
—

 
 
(11.3)

 
 
7.9
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total fixed maturities, available-for-sale
 
159.8

 
 
(29.4)

 
 
—

 
 
(35.7)

 
 
94.7
Fixed maturities, trading
 
—

 
 
(10.0)

 
 
—

 
 
(30.1)

 
 
(40.1)
Equity securities, available-for-sale
 
—

 
 
(20.0)

 
 
—

 
 
—

 
 
(20.0)
Derivative assets
 
11.8

 
 
(0.3)

 
 
—

 
 
—

 
 
11.5
Other investments
 
0.2

 
 
—

 
 
—

 
 
(31.6)

 
 
(31.4)
Separate account assets (5)
 
537.6

 
 
(330.5)

 
 
(331.8)

 
 
240.3

 
 
115.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment-type insurance contracts
 
—

 
 
—

 
 
20.7

 
 
4.1

 
 
24.8
Derivative liabilities
 
(1.5)

 
 
2.1

 
 
—

 
 
—

 
 
0.6
Other liabilities
 
—

 
 
9.0

 
 
—

 
 
—

 
 
9.0

 
 
 
 
 
For the year ended December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
Net purchases,
 
 
 
 
 
 
 
 
 
 
 
 
 
sales, issuances
 
 
 
 
 
Purchases
 
Sales
 
Issuances
 
Settlements
 
and settlements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S. governments
$
—

 
$
—

 
$
—

 
$
(1.2)

 
$
(1.2)
 
States and political subdivisions
 
—

 
 
—

 
 
—

 
 
(0.1)

 
 
(0.1)
 
Corporate
 
18.0

 
 
(17.0)

 
 
—

 
 
(16.2)

 
 
(15.2)
 
Commercial mortgage-backed securities
 
—

 
 
—

 
 
—

 
 
(0.7)

 
 
(0.7)
 
Collateralized debt obligations
 
17.0

 
 
(47.4)

 
 
—

 
 
(25.6)

 
 
(56.0)
 
Other debt obligations
 
37.8

 
 
—

 
 
—

 
 
(2.9)

 
 
34.9
Total fixed maturities, available-for-sale
 
72.8

 
 
(64.4)

 
 
—

 
 
(46.7)

 
 
(38.3)
Fixed maturities, trading
 
—

 
 
—

 
 
—

 
 
0.1

 
 
0.1
Derivative assets
 
22.1

 
 
(0.5)

 
 
—

 
 
—

 
 
21.6
Other investments
 
30.2

 
 
—

 
 
—

 
 
(12.4)

 
 
17.8
Separate account assets (5)
 
276.0

 
 
(170.8)

 
 
(21.8)

 
 
(27.6)

 
 
55.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment-type insurance contracts
 
—

 
 
—

 
 
10.9

 
 
3.3

 
 
14.2
Derivative liabilities
 
(3.4)

 
 
11.2

 
 
—

 
 
—

 
 
7.8



274

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
 
 
 
 
 
For the year ended December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
 
 
Net purchases,
 
 
 
 
 
 
 
 
 
 
 
 
 
sales, issuances
 
 
 
 
 
Purchases
 
Sales
 
Issuances
 
Settlements
 
and settlements
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S. governments
$
—

 
$
—

 
$
—

 
$
(1.1)

 
$
(1.1)
 
States and political subdivisions
 
—

 
 
—

 
 
—

 
 
(0.1)

 
 
(0.1)
 
Corporate
 
0.3

 
 
(65.2)

 
 
—

 
 
(12.7)

 
 
(77.6)
 
Collateralized debt obligations
 
5.1

 
 
(1.1)

 
 
—

 
 
0.5

 
 
4.5
 
Other debt obligations
 
—

 
 
—

 
 
—

 
 
(26.2)

 
 
(26.2)
Total fixed maturities, available-for-sale
 
5.4

 
 
(66.3)

 
 
—

 
 
(39.6)

 
 
(100.5)
Fixed maturities, trading
 
—

 
 
(24.6)

 
 
—

 
 
(42.1)

 
 
(66.7)
Derivative assets
 
3.7

 
 
(0.2)

 
 
—

 
 
—

 
 
3.5
Other investments
 
34.0

 
 
—

 
 
—

 
 
(19.7)

 
 
14.3
Separate account assets (5)
 
134.8

 
 
(120.8)

 
 
(208.4)

 
 
173.2

 
 
(21.2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment-type insurance contracts
 
—

 
 
—

 
 
(16.6)

 
 
2.9

 
 
(13.7)
Derivative liabilities
 
(3.9)

 
 
42.0

 
 
—

 
 
—

 
 
38.1
Other liabilities
 
—

 
 
8.1

 
 
—

 
 
—

 
 
8.1
(5)
Issuances and settlements include amounts related to mortgage encumbrances associated with real estate in our separate accounts.
Transfers
Transfers of assets and liabilities measured at fair value on a recurring basis between fair value hierarchy levels are summarized below.
 
 
 
 
 
For the year ended December 31, 2014
 
 
 
 
 
Transfers out
 
Transfers out
 
Transfers out
 
Transfers out
 
Transfers out
 
Transfers out
 
 
 
 
 
of Level 1 into
 
of Level 1 into
 
of Level 2 into
 
of Level 2 into
 
of Level 3 into
 
of Level 3 into
 
 
 
 
 
Level 2
 
Level 3
 
Level 1
 
Level 3
 
Level 1
 
Level 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
States and political subdivisions
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
1.7

 
Corporate
 
—

 
 
—

 
 
—

 
 
46.6

 
 
—

 
 
17.9

 
Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
—

 
 
—

 
 
—

 
 
6.8

 
 
—

 
 
2.5

 
Collateralized debt obligations
 
—

 
 
—

 
 
—

 
 
3.9

 
 
—

 
 
24.0

 
Other debt obligations
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
29.7

Total fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
—

 
 
—

 
 
—

 
 
57.3

 
 
—

 
 
75.8

Equity securities, available-for-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
sale
 
—

 
 
—

 
 
—

 
 
0.2

 
 
—

 
 
—

Separate account assets
 
33.0

 
 
—

 
 
71.3

 
 
4.4

 
 
—

 
 
13.9




275

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

 
 
 
 
 
For the year ended December 31, 2013
 
 
 
 
 
Transfers out
 
Transfers out
 
Transfers out
 
Transfers out
 
Transfers out
 
Transfers out
 
 
 
 
 
of Level 1 into
 
of Level 1 into
 
of Level 2 into
 
of Level 2 into
 
of Level 3 into
 
of Level 3 into
 
 
 
 
 
Level 2
 
Level 3
 
Level 1
 
Level 3
 
Level 1
 
Level 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate
$
—

 
$
—

 
$
—

 
$
105.3
 
$
—

 
$
83.9

 
Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
—

 
 
—

 
 
—

 
 
2.4
 
 
—

 
 
—

 
Collateralized debt obligations
 
—

 
 
—

 
 
—

 
 
31.7
 
 
—

 
 
24.8

 
Other debt obligations
 
—

 
 
—

 
 
—

 
 
32.0
 
 
—

 
 
—

Total fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
—

 
 
—

 
 
—

 
 
171.4
 
 
—

 
 
108.7

Separate account assets
 
253.9

 
 
0.1

 
 
15.5

 
 
12.6
 
 
—

 
 
6.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2012
 
 
 
 
 
Transfers out
 
Transfers out
 
Transfers out
 
Transfers out
 
Transfers out
 
Transfers out
 
 
 
 
 
of Level 1 into
 
of Level 1 into
 
of Level 2 into
 
of Level 2 into
 
of Level 3 into
 
of Level 3 into
 
 
 
 
 
Level 2
 
Level 3
 
Level 1
 
Level 3
 
Level 1
 
Level 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S. governments
$
—

 
$
—

 
$
—

 
$
14.5

 
$
—

 
$
—

 
States and political subdivisions
 
—

 
 
—

 
 
—

 
 
1.8

 
 
—

 
 
—

 
Corporate
 
—

 
 
—

 
 
—

 
 
79.7

 
 
—

 
 
137.4

 
Collateralized debt obligations
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
31.2

 
Other debt obligations
 
—

 
 
—

 
 
—

 
 
15.3

 
 
—

 
 
—

Total fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
—

 
 
—

 
 
—

 
 
111.3

 
 
—

 
 
168.6

Fixed maturities, trading
 
—

 
 
—

 
 
—

 
 
9.5

 
 
—

 
 
—

Separate account assets
 
3,255.7

 
 
0.3

 
 
205.5

 
 
1.3

 
 
—

 
 
1.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Transfers between fair value hierarchy levels are recognized at the beginning of the reporting period.
We had significant transfers of separate account assets between Level 1 and Level 2, primarily related to foreign equity securities. When these securities are valued at the local close price of the exchange where the assets traded, they are reflected in Level 1. When events materially affecting the value occur between the close of the local exchange and the New York Stock Exchange, we use adjusted prices determined by a third party pricing vendor to update the foreign market closing prices and the fair value is reflected in Level 2.
Assets transferred into Level 3 during 2014, 2013 and 2012, primarily included those assets for which we are now unable to obtain pricing from a recognized third party pricing vendor as well as assets that were previously priced using a matrix valuation approach that may no longer be relevant when applied to asset-specific situations.
Assets transferred out of Level 3 during 2014, 2013 and 2012, included those for which we are now able to obtain pricing from a recognized third party pricing vendor or from internal models using substantially all market observable information.



276

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Quantitative Information about Level 3 Fair Value Measurements

The following table provides quantitative information about the significant unobservable inputs used for recurring fair value measurements categorized within Level 3, excluding assets and liabilities for which significant quantitative unobservable inputs are not developed internally, which primarily consists of those valued using broker quotes. Refer to “Assets and liabilities measured at fair value on a recurring basis” for a complete valuation hierarchy summary.
 
 
 
 
 
December 31, 2014
 
 
 
 
 
Assets /
 
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
 
 
 
 
 
 
 
 
 
 
 
 
measured at
 
Valuation
 
Unobservable
 
Input/range
 
Weighted
 
 
 
 
 
fair value
 
technique(s)
 
input description
 
of inputs
 
average
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
Non-U.S. governments
$
10.3
 
Discounted cash
  flow
 
Discount rate (1)
 
2.2
%
 
2.2
%
 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
50 basis points ("bps")

 
50bps

 
Corporate
 
83.0
 
Discounted cash
  flow
 
Discount rate (1)
 
1.8%-6.7%

 
4.0
%
 
 
 
 
 
 
 
 
 
 
Comparability
  adjustment
 
0bps-1bps

 
0bps

 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
0bps-25bps

 
13bps

 
Collateralized debt obligations
 
12.7
 
Discounted cash
  flow
 
Discount rate (1)
 
2.7%-17.1%

 
6.1
%
 
 
 
 
 
 
 
 
 
 
Probability of default
 
0%-100%

 
23.5
%
 
 
 
 
 
 
 
Potential loss
  severity
 
0%-70%

 
16.4
%
 
Other debt obligations
 
49.3
 
Discounted cash
  flow
 
Discount rate (1)
 
1.4%-5.0%

 
2.3
%
 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
0bps-1,000bps

 
175bps

Fixed maturities, trading
 
15.2
 
Discounted cash
  flow
 
Discount rate (1)
 
1.8%-126.9%

 
3.5
%
 
 
 
 
 
 
 
Illiquidity premium
 
200bps-
1,400bps

 
460bps

 
 
 
100.4
 
See note (2)
 
 
 
 
 
 


277

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

 
 
 
 
 
December 31, 2014
 
 
 
 
 
Assets /
 
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
 
 
 
 
 
 
 
 
 
 
 
 
measured at
 
Valuation
 
Unobservable
 
Input/range
 
Weighted
 
 
 
 
 
fair value
 
technique(s)
 
input description
 
of inputs
 
average
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
Other investments
 
35.0
 
Discounted cash
  flow - commercial
  mortgage loans of
  consolidated VIEs
 
Discount rate (1)
 
4.2
%
 
4.2
%
 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
76bps

 
76bps

 
 
 
 
 
 
92.2
 
Discounted cash
  flow - equity
  method real estate
  investments
 
Discount rate (1)
 
7.3%-8.0%

 
7.6
%
 
 
 
 
 
 
 
 
 
 
Terminal
  capitalization rate
 
5.5%-6.8%

 
6.1
%
 
 
 
 
 
 
 
Average market rent
  growth rate
 
3.3%-3.7%

 
3.5
%
 
 
 
 
 
 
 
 
Discounted cash
  flow - equity
  method real estate
  investments -
  debt
 
Loan to value
 
34.2%-58.9%

 
46.5
%
 
 
 
 
 
 
 
 
 
 
Credit spread rate
 
1.8%-2.0%

 
1.9
%
Separate account assets
 
5,857.4
 
Discounted cash
  flow - mortgage
  loans
 
Discount rate (1)
 
1.1%-6.9%

 
3.2
%
 
 
 
 
 
 
 
Illiquidity premium
 
0bps-60bps

 
7bps

 
 
 
 
 
 
 
Credit spread rate
 
70bps-632bps

 
221bps

 
 
 
 
 
Discounted cash
  flow - real estate
 
Discount rate (1)
 
6.0%-24.6%

 
7.4
%
 
 
 
 
 
 
 
Terminal
  capitalization rate
 
4.5%-9.5%

 
6.4
%
 
 
 
 
 
 
 
Average market rent
  growth rate
 
1.3%-4.4%

 
3.0
%
 
 
 
 
 
 
 
 
Discounted cash
  flow - real estate
  debt
 
Loan to value
 
6.8%-64.1%

 
46.5
%
 
 
 
 
 
 
 
 
 
 
Credit spread rate
 
2.1%-4.8%

 
3.4
%
 
 
 
 
 
 
 
 
 
 
 


278

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

 
 
 
 
 
December 31, 2014
 
 
 
 
 
Assets /
 
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
 
 
 
 
 
 
 
 
 
 
 
 
measured at
 
Valuation
 
Unobservable
 
Input/range
 
Weighted
 
 
 
 
 
fair value
 
technique(s)
 
input description
 
of inputs
 
average
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
Investment-type insurance
  contracts
 
(155.9)
 
Discounted cash
  flow
 
Long duration
  interest rate
 
2.6%-2.7%
(3)
 
 
 
 
 
 
 
 
 
Long-term equity
  market volatility
 
18.4%-39.5%
 
 
 
 
 
 
 
 
 
Non-performance risk
 
0.1%-1.4%
 
 
 
 
 
 
 
 
 
Utilization rate
 
See note (4)
 
 
 
 
 
 
 
 
 
Lapse rate
 
0.5%-11.8%
 
 
 
 
 
 
 
 
 
Mortality rate
 
See note (5)
 
 
Derivative liabilities
 
(19.3)
 
See note (2)
 
 
 
 
 
 
Other liabilities
 
(66.3)
 
See note (2)
 
 
 
 
 
 

 
 
 
 
 
December 31, 2013
 
 
 
 
 
Assets /
 
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
 
 
 
 
 
 
 
 
 
 
 
 
measured at
 
Valuation
 
Unobservable
 
Input/range
 
Weighted
 
 
 
 
 
fair value
 
technique(s)
 
input description
 
of inputs
 
average
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
Non-U.S. governments
$
11.7
 
Discounted cash
  flow
 
Discount rate (1)
 
2.0
%
 
2.0
%
 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
50 bps

 
50bps

 
Corporate
 
70.1
 
Discounted cash
  flow
 
Discount rate (1)
 
1.9%-7.7%

 
4.4
%
 
 
 
 
 
 
 
Earnings before
  interest, taxes,
  depreciation and
  amortization multiple
 
0x-4.5x

 
0.2x

 
 
 
 
 
 
 
 
 
 
Comparability
  adjustment
 
0bps-125bps

 
43bps

 
 
 
 
 
 
 
 
 
 
Probability of default
 
0%-100%

 
5.4
%
 
 
 
 
 
 
 
 
 
 
Potential loss
  severity
 
0%-16%

 
0.9
%
 
 
 
 
 
 
 
Illiquidity premium
 
0bps-25bps

 
15bps

 
Commercial mortgage-backed
 
1.6
 
Discounted cash
 
Discount rate (1)
 
1.5%-4.5%

 
1.5
%
 
 
securities
 
 
 
flow
 
 
 
 
 
 
 
Collateralized debt obligations
 
13.6
 
Discounted cash
  flow
 
Discount rate (1)
 
1.5
%
 
1.5
%
 
 
 
 
 
 
 
Illiquidity premium
 
400bps

 
400bps



279

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

 
 
 
 
 
December 31, 2013
 
 
 
 
 
Assets /
 
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
 
 
 
 
 
 
 
 
 
 
 
 
measured at
 
Valuation
 
Unobservable
 
Input/range
 
Weighted
 
 
 
 
 
fair value
 
technique(s)
 
input description
 
of inputs
 
average
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
Other debt obligations
 
33.6
 
Discounted cash
  flow
 
Discount rate (1)
 
2.0%-15.0%

 
6.7
%
 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
0bps-50bps

 
11bps

Fixed maturities, trading
 
36.3
 
Discounted cash
  flow
 
Discount rate (1)
 
1.6%-83.0%

 
3.4
%
 
 
 
 
 
 
 
Illiquidity premium
 
0bps-1,400bps

 
370bps

 
 
 
110.4
 
See note (2)
 
 
 
 
 
 
Other investments
 
68.1
 
Discounted cash
  flow - commercial
  mortgage loans of
  consolidated VIEs
 
Discount rate (1)
 
4.8
%
 
4.8
%
 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
94bps

 
94bps

 
 
 
 
 
 
74.8
 
Discounted cash
  flow - equity
  method real estate
  investments
 
Discount rate (1)
 
7.8%-8.1%

 
7.9
%
 
 
 
 
 
 
 
 
 
 
Terminal
  capitalization rate
 
5.5%-6.8%

 
6.1
%
 
 
 
 
 
 
 
Average market rent
  growth rate
 
3.5%-3.6%

 
3.6
%
 
 
 
 
 
 
 
 
Discounted cash
  flow - equity
  method real estate
  investments -
  debt
 
Loan to value
 
40.5%-61.0%

 
50.7
%
 
 
 
 
 
 
 
 
 
 
Credit spread rate
 
1.5%-2.0%

 
1.8
%


280

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

 
 
 
 
 
December 31, 2013
 
 
 
 
 
Assets /
 
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
 
 
 
 
 
 
 
 
 
 
 
 
measured at
 
Valuation
 
Unobservable
 
Input/range
 
Weighted
 
 
 
 
 
fair value
 
technique(s)
 
input description
 
of inputs
 
average
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
Separate account assets
 
5,090.4
 
Discounted cash
  flow - mortgage
  loans
 
Discount rate (1)
 
0.6%-5.6%
 
3.3
%
 
 
 
 
 
 
 
Illiquidity premium
 
0bps-60bps
 
12bps

 
 
 
 
 
 
 
Credit spread rate
 
32bps-440bps
 
214bps

 
 
 
 
 
Discounted cash
  flow - real estate
 
Discount rate (1)
 
6.0%-16.0%
 
7.6
%
 
 
 
 
 
 
 
Terminal
  capitalization rate
 
4.5%-9.0%
 
6.6
%
 
 
 
 
 
 
 
Average market rent
  growth rate
 
2.4%-4.7%
 
3.0
%
 
 
 
 
 
 
 
 
Discounted cash
  flow - real estate
  debt
 
Loan to value
 
11.0%-55.9%
 
50.3
%
 
 
 
 
 
 
 
 
 
 
Credit spread rate
 
1.5%-5.2%
 
3.3
%
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
Investment-type insurance
  contracts
 
9.5
 
Discounted cash
  flow
 
Long duration
  interest rate
 
3.8%-3.9%
(3)
 
 
 
 
 
 
 
 
 
Long-term equity
  market volatility
 
18.4%-40.1%
 
 
 
 
 
 
 
 
 
Non-performance risk
 
0.2%-1.2%
 
 
 
 
 
 
 
 
 
Utilization rate
 
See note (4)
 
 
 
 
 
 
 
 
 
Lapse rate
 
0.5%-11.8%
 
 
 
 
 
 
 
 
 
Mortality rate
 
See note (5)
 
 
Derivative liabilities
 
(19.9)
 
See note (2)
 
 
 
 
 
 
Other liabilities
 
(73.9)
 
See note (2)
 
 
 
 
 
 

(1)
Represents market comparable interest rate or an index adjusted rate used as the base rate in the discounted cash flow analysis prior to any credit spread, illiquidity or other adjustments, where applicable.
(2)
Relates to a consolidated collateralized private investment vehicle that is a VIE. Fixed maturities, trading represents the underlying collateral of the investment structure and consists of high-grade fixed maturity investments, which are over-collateralized based on outstanding notes priced at par. The derivative liability represents credit default swaps that are valued using a correlation model to the credit default swap (“CDS”) Index (“CDX”) and inputs to the valuation are based on observable market data such as the end of period swap curve, CDS constituents of the index and spread levels of the index, as well as CDX tranche spreads. The value of the obligations, which are due at maturity or termination of the trust, reflect the third parties’ interest in the investment structure.
(3)
Represents the range of rate curves used in the valuation analysis that we have determined market participants would use when pricing the instrument. Derived from interpolation between observable 20 and 30-year swap rates.
(4)
This input factor is the number of contractholders taking withdrawals as well as the amount and timing of the withdrawals and a range does not provide a meaningful presentation.
(5)
This input is based on an appropriate industry mortality table and a range does not provide a meaningful presentation.



281

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Market comparable discount rates are used as the base rate in the discounted cash flows used to determine the fair value of certain assets. Increases or decreases in the credit spreads on the comparable assets could cause the fair value of the assets to significantly decrease or increase, respectively. Additionally, we may adjust the base discount rate or the modeled price by applying an illiquidity premium given the highly structured nature of certain assets. Increases or decreases in this illiquidity premium could cause significant decreases or increases, respectively, in the fair value of the asset.
Embedded derivatives can be either assets or liabilities within the investment-type insurance contracts line item, depending on certain inputs at the reporting date. Increases to an asset or decreases to a liability are described as increases to fair value. Increases or decreases in market volatilities could cause significant decreases or increases, respectively, in the fair value of embedded derivatives in investment-type insurance contracts. Long duration interest rates are used as the mean return when projecting the growth in the value of associated account value and impact the discount rate used in the discounted future cash flows valuation. The amount of claims will increase if account value is not sufficient to cover guaranteed withdrawals. Increases or decreases in risk free rates could cause the fair value of the embedded derivative to significantly increase or decrease, respectively. Increases or decreases in our own credit risks, which impact the rates used to discount future cash flows, could significantly increase or decrease, respectively, the fair value of the embedded derivative. All of these changes in fair value would impact net income.
Decreases or increases in the mortality rate assumption could cause the fair value of the embedded derivative to decrease or increase, respectively. Decreases or increases in the overall lapse rate assumption could cause the fair value of the embedded derivative to decrease or increase, respectively. The lapse rate assumption varies dynamically based on the relationship of the guarantee and associated account value. A stronger or weaker dynamic lapse rate assumption could cause the fair value of the embedded derivative to decrease or increase, respectively. The utilization rate assumption includes how many contractholders will take withdrawals, when they will take them and how much of their benefit they will take. Increases or decreases in the assumption of the number of contractholders taking withdrawals could cause the fair value of the embedded derivative to decrease or increase, respectively. Assuming contractholders take withdrawals earlier or later could cause the fair value of the embedded derivative to decrease or increase, respectively. Assuming contractholders take more or less of their benefit could cause the fair value of the embedded derivative to decrease or increase, respectively.
Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis
Certain assets are measured at fair value on a nonrecurring basis. During 2014, certain mortgage loans had been marked to fair value of $68.1 million. The net impact of impairments and improvements in estimated fair value of previously impaired loans resulted in a net loss of $10.0 million that was recorded in net realized capital gains (losses) as part of the mortgage loan valuation allowance. This includes the impact of certain loans no longer on our books. These collateral-dependent mortgage loans are a Level 3 fair value measurement, as fair value is based on the fair value of the underlying real estate collateral, which is estimated using appraised values that involve significant unobservable inputs. The fair value of the underlying collateral is determined based on a discounted cash flow valuation either from an external broker opinion of value or an internal model. Significant inputs used in the discounted cash flow calculation include: a discount rate, terminal capitalization rate and average market rent growth. The ranges of inputs used in the fair value measurements for the mortgage loans marked to fair value during 2014 were:
Discount rate = 8.8% - 11.0%
Terminal capitalization rate = 7.3% - 9.0%
Average market rent growth = 2.0% - 10.9%
During 2014, certain real estate had been written down to fair value of $22.3 million. This write down resulted in a loss of $6.2 million that was recorded in net realized capital gains (losses). This is a Level 3 fair value measurement, as the fair value of real estate is estimated based on a discounted cash flow valuation from an internal model. Significant inputs used in the discounted cash flow calculation include a discount rate, terminal capitalization rate and average market rent growth. The ranges of inputs used in the fair value measurements for the real estate marked to fair value during 2014 were:
Discount rate = 9.6% - 11.8%
Terminal capitalization rate = 8.3% - 8.5%
Average market rent growth = 3.0% - 3.6%
During 2013, certain mortgage loans had been marked to fair value of $151.5 million. The net impact of impairments and improvements in estimated fair value of previously impaired loans resulted in a net loss of $28.5 million that was recorded in net realized capital gains (losses) as part of the mortgage loan valuation allowance. This includes the impact of certain loans no longer on our books. These collateral-dependent mortgage loans are a Level 3 fair value measurement, as fair value is based on the fair value of the underlying real estate collateral, which is estimated using appraised values that involve significant unobservable inputs. The fair value of the underlying collateral is determined based on a discounted cash flow valuation either from an external broker opinion of


282

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

value or an internal model. Significant inputs used in the discounted cash flow calculation include: a discount rate, terminal capitalization rate and average market rent growth. The ranges of inputs used in the fair value measurements for the mortgage loans marked to fair value during 2013 were:

Discount rate = 8.0% - 20.0%
Terminal capitalization rate = 7.3% - 10.5%
Average market rent growth = 1.0% - 10.9%

During 2013, certain mortgage servicing rights had been marked to fair value of $7.3 million. The net impact of impairments and subsequent improvements in estimated fair value of previously impaired mortgage servicing rights resulted in a net gain of $1.3 million that was recorded in operating expenses. These mortgage servicing rights are a Level 3 fair value measurement, as fair value is determined by calculating the present value of the future servicing cash flows from the underlying mortgage loans. The discount rate used in calculating the present value of the future servicing cash flows was 4.3% for the year ended December 31, 2013.

During 2012, certain mortgage loans had been marked to fair value of $171.2 million. The net impact of impairments and improvements in estimated fair value of previously impaired loans resulted in a net loss of $13.1 million that was recorded in net realized capital gains (losses) as part of the mortgage loan valuation allowance. This includes the impact of certain loans no longer on our books. These collateral-dependent mortgage loans are a Level 3 fair value measurement, as fair value is based on the fair value of the underlying real estate collateral, which is estimated using appraised values that involve significant unobservable inputs. The fair value of the underlying collateral is determined based on a discounted cash flow valuation either from an external broker opinion of value or an internal model. Significant inputs used in the discounted cash flow calculation include: a discount rate, terminal capitalization rate and average market rent growth. The ranges of inputs used in the fair value measurements for the mortgage loans marked to fair value during 2012 were:

Discount rate = 8.0% - 20.0%
Terminal capitalization rate = 6.3% - 10.5%
Average market rent growth = 3.0% - 8.0%

During 2012, certain mortgage servicing rights had been marked to fair value of $7.0 million. The net impact of impairments and subsequent improvements in estimated fair value of previously impaired mortgage servicing rights resulted in a net gain of $0.4 million that was recorded in operating expenses. These mortgage servicing rights are a Level 3 fair value measurement, as fair value is determined by calculating the present value of the future servicing cash flows from the underlying mortgage loans. The discount rate used in calculating the present value of the future servicing cash flows was 3.1% for the year ended December 31, 2012.

During 2012, certain real estate had been written down to fair value of $5.0 million. This write down resulted in a loss of $0.1 million that was recorded in net realized capital gains (losses). This is a Level 3 fair value measurement, as the fair value of real estate is estimated using appraised values that involve significant unobservable inputs that are not developed internally.

Fair Value Option

We elected fair value accounting for certain assets and liabilities of consolidated VIEs for which it was not practicable for us to determine the carrying value. The fair value option was elected for commercial mortgage loans reported with other investments and obligations reported with other liabilities in the consolidated statements of financial position. The changes in fair value of these items are reported in net realized capital gains (losses) on the consolidated statements of operations.

The fair value and aggregate contractual principal amounts of commercial mortgage loans for which the fair value option has been elected were $35.0 million and $32.4 million as of December 31, 2014, and $68.1 million and $64.0 million as of December 31, 2013, respectively. The change in fair value of the loans resulted in a $(1.5) million, $0.2 million and $2.6 million pre-tax gain (loss) for the years ended December 31, 2014, 2013 and 2012, respectively, none of which related to instrument-specific credit risk. None of these loans were more than 90 days past due or in nonaccrual status. Interest income on these commercial mortgage loans is included in net investment income on the consolidated statements of operations and is recorded based on the effective interest rates as determined at the closing of the loan. Interest income recorded on these commercial mortgage loans was $6.2 million, $5.7 million and $6.9 million for the years ended December 31, 2014, 2013 and 2012, respectively.



283

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The fair value and aggregate unpaid principal amounts of obligations for which the fair value option has been elected were $71.0 million and $132.8 million as of December 31, 2014, and $104.9 million and $174.4 million as of December 31, 2013, respectively. For the years ended December 31, 2014, 2013 and 2012, the change in fair value of the obligations resulted in a pre-tax loss of $0.7 million, $32.8 million and $37.7 million, which includes a pre-tax loss of $2.4 million, $34.3 million and $37.4 million related to instrument-specific credit risk that is estimated based on credit spreads and quality ratings, respectively. Interest expense recorded on these obligations is included in operating expenses on the consolidated statements of operations and was $3.0 million, $3.6 million and $5.3 million for the years ended December 31, 2014, 2013 and 2012, respectively.
We invest in real estate ventures for the purpose of earning investment returns and for capital appreciation. We elected the fair value option for certain ventures that are subject to the equity method of accounting because the nature of the investments are to add value to the properties and generate income from the operations of the properties. Other equity method real estate investments are not fair valued because the investments mainly generate income from the operations of the underlying properties. These investments are reported with other investments in the consolidated statements of financial position. The changes in fair value are reported in net investment income on the consolidated statements of operations. The fair value of the equity method investments for which the fair value option has been elected was $92.2 million and $74.8 million as of December 31, 2014 and 2013, respectively. The change in fair value of the investments resulted in a $17.3 million, $11.0 million and $(0.4) million pre-tax gain (loss) for the years ended December 31, 2014, 2013 and 2012, respectively.
Financial Instruments Not Reported at Fair Value
The carrying value and estimated fair value of financial instruments not recorded at fair value on a recurring basis but required to be disclosed at fair value were as follows:
 
 
December 31, 2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value hierarchy level
 
 
Carrying amount
 
Fair value
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets (liabilities)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage loans
 
$
11,164.4
 
$
11,703.0
 
$
—

 
$
—

 
$
11,703.0

Policy loans
 
 
799.0
 
 
1,051.4
 
 
—

 
 
—

 
 
1,051.4

Other investments
 
 
108.5
 
 
108.9
 
 
—

 
 
81.0

 
 
27.9

Cash and cash equivalents
 
 
989.5
 
 
989.5
 
 
989.5

 
 
—

 
 
—

Investment-type insurance contracts
 
 
(28,383.7)
 
 
(28,430.7)
 
 
—

 
 
(5,455.4)

 
 
(22,975.3)

Short-term debt
 
 
(154.5)
 
 
(154.5)
 
 
—

 
 
(154.5)

 
 
—

Long-term debt
 
 
(82.3)
 
 
(82.3)
 
 
—

 
 
—

 
 
(82.3)

Separate account liabilities
 
 
(82,986.8)
 
 
(82,265.5)
 
 
—

 
 
—

 
 
(82,265.5)

Bank deposits
 
 
(1,979.7)
 
 
(1,985.5)
 
 
(1,343.8)

 
 
(641.7)

 
 
—

Cash collateral payable
 
 
(138.7)
 
 
(138.7)
 
 
(138.7)

 
 
—

 
 
—

 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fair value hierarchy level
 
 
Carrying amount
 
Fair value
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Assets (liabilities)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage loans
 
$
10,819.2
 
$
11,048.6
 
$
—

 
$
—

 
$
11,048.6

Policy loans
 
 
830.1
 
 
933.1
 
 
—

 
 
—

 
 
933.1

Other investments
 
 
114.2
 
 
114.9
 
 
—

 
 
81.1

 
 
33.8

Cash and cash equivalents
 
 
911.1
 
 
911.1
 
 
911.1

 
 
—

 
 
—

Investment-type insurance contracts
 
 
(29,825.2)
 
 
(30,008.7)
 
 
—

 
 
(5,902.2)

 
 
(24,106.5)

Short-term debt
 
 
(292.4)
 
 
(292.4)
 
 
—

 
 
(292.4)

 
 
—

Long-term debt
 
 
(152.4)
 
 
(156.4)
 
 
—

 
 
(103.3)

 
 
(53.1)

Separate account liabilities
 
 
(73,492.5)
 
 
(72,780.1)
 
 
—

 
 
—

 
 
(72,780.1)

Bank deposits
 
 
(1,949.0)
 
 
(1,951.1)
 
 
(1,252.2)

 
 
(698.9)

 
 
—

Cash collateral payable
 
 
(21.0)
 
 
(21.0)
 
 
(21.0)

 
 
—

 
 
—




284

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Mortgage Loans
Fair values of commercial and residential mortgage loans are primarily determined by discounting the expected cash flows at current treasury rates plus an applicable risk spread, which reflects credit quality and maturity of the loans. The risk spread is based on market clearing levels for loans with comparable credit quality, maturities and risk. The fair value of mortgage loans may also be based on the fair value of the underlying real estate collateral less cost to sell, which is estimated using appraised values. These are reflected in Level 3.
Policy Loans
Fair values of policy loans are estimated by discounting expected cash flows using a risk-free rate based on the Treasury curve. The expected cash flows reflect an estimate of timing of the repayment of the loans. These are reflected in Level 3.
Other Investments
The fair value of commercial loans and certain consumer loans included in other investments is calculated by discounting expected cash flows through the estimated maturity date using market interest rates that reflect the credit and interest rate risk inherent in the loans. The estimate of term to maturity is based on historical experience, adjusted as required, for current economic and lending conditions. The effect of nonperforming loans is considered in assessing the credit risk inherent in the fair value estimate. These are reflected in Level 3. The carrying value of the remaining investments reported in this line item approximate their fair value and are of a short-term nature. These are reflected in Level 2.
Cash and Cash Equivalents
Certain cash equivalents not reported at fair value include short-term investments with maturities of less than three months for which public quotations are not available to use in determining fair value. Because of the highly liquid nature of these assets, carrying amounts are used to approximate fair value, which are reflected in Level 2. The carrying amounts of the remaining cash and cash equivalents that are not reported at fair value on a recurring basis approximate their fair value, which are reflected in Level 1 given the nature of cash.
Investment-Type Insurance Contracts
The fair values of our reserves and liabilities for investment-type insurance contracts are determined via a third party pricing vendor or using discounted cash flow analyses when we are unable to find a price from third party pricing vendors. Third party pricing on various outstanding medium-term notes and funding agreements is based on observable inputs such as benchmark yields and spreads based on reported trades for our medium-term notes and funding agreement issuances. These are reflected in Level 2. The discounted cash flow analyses for the remaining contracts is based on current interest rates, including non-performance risk, being offered for similar contracts with maturities consistent with those remaining for the investment-type contracts being valued. These are reflected in Level 3. Investment-type insurance contracts include insurance, annuity and other policy contracts that do not involve significant mortality or morbidity risk and are only a portion of the policyholder liabilities appearing in the consolidated statements of financial position. Insurance contracts include insurance, annuity and other policy contracts that do involve significant mortality or morbidity risk. The fair values for our insurance contracts, other than investment-type contracts, are not required to be disclosed.
Short-Term Debt
The carrying amount of short-term debt approximates its fair value because of the relatively short time between origination of the debt instrument and its maturity, which is reflected in Level 2.
Long-Term Debt
Long-term debt primarily includes senior note issuances for which the fair values are determined using inputs that are observable in the market or that can be derived from or corroborated with observable market data. These are reflected in Level 2. Additionally, our long-term debt includes non-recourse mortgages and notes payable that are primarily financings for real estate developments for which the fair values are estimated using discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. These are reflected in Level 3.


285

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Separate Account Liabilities
Fair values of separate account liabilities, excluding insurance-related elements, are estimated based on market assumptions around what a potential acquirer would pay for the associated block of business, including both the separate account assets and liabilities. As the applicable separate account assets are already reflected at fair value, any adjustment to the fair value of the block is an assumed adjustment to the separate account liabilities. To compute fair value, the separate account liabilities are originally set to equal separate account assets because these are pass-through contracts. The separate account liabilities are reduced by the amount of future fees expected to be collected that are intended to offset upfront acquisition costs already incurred that a potential acquirer would not have to pay. The estimated future fees are adjusted by an adverse deviation discount and the amount is then discounted at a risk-free rate as measured by the yield on Treasury securities at maturities aligned with the estimated timing of fee collection. These are reflected in Level 3.
Bank Deposits
The fair value of deposits of our Principal Bank subsidiary with no stated maturity is equal to the amount payable on demand (i.e., their carrying amounts). These are reflected in Level 1. The fair value of certificates of deposit is based on the discounted value of contractual cash flows. The discount is estimated using the rates currently offered for deposits of similar remaining maturities. These are reflected in Level 2.
Cash Collateral Payable
The carrying amount of the payable associated with our obligation to return the cash collateral received under derivative credit support annex (collateral) agreements approximates its fair value, which is reflected in Level 1.
16. Statutory Insurance Financial Information
We, the largest indirect subsidiary of PFG, prepare statutory financial statements in accordance with the accounting practices prescribed or permitted by the Insurance Division of the Department of Commerce of the State of Iowa (the “State of Iowa”). The State of Iowa recognizes only statutory accounting practices prescribed or permitted by the State of Iowa for determining and reporting the financial condition and results of operations of an insurance company to determine its solvency under the Iowa Insurance Law. The National Association of Insurance Commissioners' (“NAIC”) Accounting Practices and Procedures Manual has been adopted as a component of prescribed practices by the State of Iowa. The Commissioner has the right to permit other specific practices that deviate from prescribed practices. As of December 31, 2014, our use of prescribed statutory accounting practices has resulted in higher statutory net income of $6.4 million relative to the accounting practices and procedures of the NAIC due to our accounting for derivatives that hedge some of our equity indexed products. In addition, as of December 31, 2014, our permitted statutory accounting practice relating to variable annuities with a guaranteed living benefit rider resulted in lower statutory surplus of $150.2 million relative to carrying certain interest rate swaps at book value rather than fair value, as if they received hedge accounting treatment for statutory. Statutory accounting practices differ from U.S. GAAP primarily due to charging policy acquisition costs to expense as incurred, establishing reserves using different actuarial assumptions, valuing investments on a different basis and not admitting certain assets, including certain net deferred income tax assets.
We cede certain term and universal life insurance statutory reserves to affiliated reinsurance entities on a funds withheld coinsurance basis. The reserves are secured by cash, invested assets and financing provided by highly rated third parties. As of December 31, 2014, affiliated reinsurance entities assumed statutory reserves of $3,272.4 million from us. In the states of Vermont and Delaware, the affiliated reinsurers had permitted and prescribed practices allowing for the admissibility of certain assets backing these reserves. As of December 31, 2014, assets admitted under these practices totaled $1,129.0 million.   
Life and health insurance companies are subject to certain risk-based capital (“RBC”) requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life and health insurance company is to be determined based on the various risk factors related to it. At December 31, 2014, we meet the minimum RBC requirements.
Our statutory net income and statutory capital and surplus were as follows:
 
As of or for the year ended December 31,
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
(in millions)
Statutory net income
$
535.5
 
$
607.9
 
$
576.1
Statutory capital and surplus
 
4,202.1
 
 
4,142.2
 
 
3,944.3


286

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

17. Segment Information
We provide financial products and services through the following segments: Retirement and Investor Services, Principal Global Investors and U.S. Insurance Solutions. In addition, we have a Corporate segment. The segments are managed and reported separately because they provide different products and services, have different strategies or have different markets and distribution channels.
The Retirement and Investor Services segment provides retirement and related financial products and services primarily to businesses, their employees and other individuals.
The Principal Global Investors segment provides asset management services to our asset accumulation business, our insurance operations, the Corporate segment and third‑party clients.
The U.S. Insurance Solutions segment provides individual life insurance and specialty benefits, which consists of group dental and vision insurance, individual and group disability insurance, group life insurance and non-medical fee-for-service claims administration, throughout the United States.
The Corporate segment manages the assets representing capital that has not been allocated to any other segment. Financial results of the Corporate segment primarily reflect our financing activities (including interest expense), income on capital not allocated to other segments, inter‑segment eliminations, income tax risks and certain income, expenses and other after-tax adjustments not allocated to the segments based on the nature of such items. Results of our exited group medical insurance business are reported in this segment.
Management uses segment operating earnings in goal setting, as a basis for determining employee compensation and in evaluating performance on a basis comparable to that used by securities analysts. We determine segment operating earnings by adjusting U.S. GAAP net income for net realized capital gains (losses), as adjusted, and other after-tax adjustments which management believes are not indicative of overall operating trends. Net realized capital gains (losses), as adjusted, are net of income taxes, related changes in the amortization pattern of DAC and related actuarial balances, recognition of deferred front-end fee revenues for sales charges on retirement and life insurance products and services, amortization of hedge accounting book value adjustments for certain discontinued hedges, net realized capital gains and losses distributed, noncontrolling interest capital gains and losses and certain market value adjustments to fee revenues. Net realized capital gains (losses), as adjusted, exclude periodic settlements and accruals on derivative instruments not designated as hedging instruments and exclude certain market value adjustments of embedded derivatives and realized capital gains (losses) associated with our exited group medical insurance business. Segment operating revenues exclude net realized capital gains (losses) (except periodic settlements and accruals on derivatives not designated as hedging instruments), including their impact on recognition of front-end fee revenues, certain market value adjustments to fee revenues and amortization of hedge accounting book value adjustments for certain discontinued hedges, and revenue from our exited group medical insurance business. Segment operating revenues include operating revenues from real estate properties that qualify for discontinued operations. While these items may be significant components in understanding and assessing the consolidated financial performance, management believes the presentation of segment operating earnings enhances the understanding of our results of operations by highlighting earnings attributable to the normal, ongoing operations of the business.
The accounting policies of the segments are consistent with the accounting policies for the consolidated financial statements, with the exception of income tax allocation. The Corporate segment functions to absorb the risk inherent in interpreting and applying tax law. The segments are allocated tax adjustments consistent with the positions we took on tax returns. The Corporate segment results reflect any differences between the tax returns and the estimated resolution of any disputes.
The following tables summarize select financial information by segment and reconcile segment totals to those reported in the consolidated financial statements:
 
 
December 31, 2014
 
December 31, 2013
 
 
 
 
 
 
 
 
 
(in millions)
Assets:
 
 
 
 
 
Retirement and Investor Services
$
137,822.0
 
$
128,021.9
Principal Global Investors
 
928.8
 
 
1,025.0
U.S. Insurance Solutions
 
21,382.2
 
 
19,895.6
Corporate
 
3,781.8
 
 
3,838.0
 
Total consolidated assets
$
163,914.8
 
$
152,780.5


287

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014
 
 
 
 
 
 
 
 
 
For the twelve months ended December 31,
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Operating revenues by segment:
 
 
 
 
 
 
 
 
Retirement and Investor Services
$
4,799.7
 
$
4,212.5
 
$
4,321.0
Principal Global Investors
 
668.2
 
 
664.1
 
 
537.1
U.S. Insurance Solutions
 
3,257.5
 
 
3,097.7
 
 
2,983.1
Corporate
 
(99.9)
 
 
(109.9)
 
 
(91.7)
 
Total segment operating revenues
 
8,625.5
 
 
7,864.4
 
 
7,749.5
Net realized capital losses, net of related revenue adjustments
 
(9.6)
 
 
(299.2)
 
 
(21.2)
Exited group medical insurance business
 
0.2
 
 
2.0
 
 
25.3
 
Total revenues per consolidated statements of operations
$
8,616.1
 
$
7,567.2
 
$
7,753.6
Operating earnings (loss) by segment, net of
 
 
 
 
 
 
 
 
 
related income taxes:
 
 
 
 
 
 
 
 
Retirement and Investor Services
$
722.7
 
$
613.3
 
$
523.4
Principal Global Investors
 
103.4
 
 
87.0
 
 
66.9
U.S. Insurance Solutions
 
230.8
 
 
199.9
 
 
143.3
Corporate
 
(12.7)
 
 
(35.3)
 
 
(24.1)
 
Total segment operating earnings, net of related
 
 
 
 
 
 
 
 
 
 
income taxes
 
1,044.2
 
 
864.9
 
 
709.5
Net realized capital gains (losses), as adjusted (1)
 
(43.5)
 
 
(167.2)
 
 
14.8
Other after-tax adjustments (2)
 
(48.2)
 
 
(1.1)
 
 
(49.4)
 
Net income attributable to PLIC per consolidated statements
 
 
 
 
 
 
 
 
 
 
of operations
$
952.5
 
$
696.6
 
$
674.9
(1) Net realized capital gains (losses), as adjusted, is derived as follows:
 
 
 
 
 
For the year ended December 31,
 
 
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Net realized capital gains (losses):
 
 
 
 
 
 
 
 
Net realized capital gains (losses)
$
62.7

 
$
(211.3)

 
$
72.1
Certain derivative and hedging-related adjustments
 
(73.0)

 
 
(87.0)

 
 
(92.8)
Certain market value adjustments to fee revenues
 
—

 
 
—

 
 
(0.3)
Recognition of front-end fee revenue
 
0.7

 
 
(0.9)

 
 
(0.2)
 
Net realized capital losses, net of related revenue adjustments
 
(9.6)

 
 
(299.2)

 
 
(21.2)
Amortization of deferred acquisition costs and other actuarial balances
 
(49.6)

 
 
47.8

 
 
36.8
Capital gains distributed
 
(10.9)

 
 
(24.3)

 
 
(11.8)
Certain market value adjustments of embedded derivatives
 
4.8

 
 
18.4

 
 
(0.6)
Net realized capital losses associated with exited group
 
 
 
 
 
 
 
 
 
medical insurance business
 
—

 
 
—

 
 
0.2
Noncontrolling interest capital gains
 
(0.1)

 
 
0.1

 
 
(8.1)
Income tax effect
 
21.9

 
 
90.0

 
 
19.5
 
Net realized capital gains (losses), as adjusted
$
(43.5)

 
$
(167.2)

 
$
14.8
(2)
For the year ended December 31, 2014, other after-tax adjustments included the negative effect resulting from (a) the impact of a court ruling on some uncertain tax positions ($47.5 million) and (b) losses associated with our exited group medical insurance business that does not qualify for discontinued operations accounting treatment under U.S. GAAP ($0.7 million).
For the year ended December 31, 2013, other after-tax adjustments included the negative effect resulting from losses associated with our exited group medical insurance business that does not qualify for discontinued operations accounting treatment under U.S. GAAP.


288

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

For the year ended December 31, 2012, other after-tax adjustments included the negative effect resulting from (a) a contribution made to The Principal Financial Group Foundation, Inc. ($39.8 million) and (b) losses associated with our exited group medical insurance business that does not qualify for discontinued operations accounting treatment under U.S. GAAP ($9.6 million).

The following is a summary of income tax expense (benefit) allocated to our segments for purposes of determining operating earnings. Segment income taxes are reconciled to income taxes reported on our consolidated statements of operations.

 
 
 
 
For the year ended December 31,
 
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Income tax expense by segment:
 
 
 
 
 
 
 
 
Retirement and Investor Services
$
128.5
 
$
139.2
 
$
113.5
Principal Global Investors
 
56.3
 
 
48.3
 
 
37.0
U.S. Insurance Solutions
 
112.5
 
 
95.9
 
 
64.4
Corporate
 
(17.5)
 
 
(19.6)
 
 
(17.3)
Total segment income taxes from operating earnings
 
279.8
 
 
263.8
 
 
197.6
 
Tax benefit related to net realized capital losses, as adjusted
 
(21.9)
 
 
(90.0)
 
 
(19.5)
 
Tax expense benefit related to other after-tax adjustments
 
(14.9)
 
 
(0.6)
 
 
(26.6)
Total income taxes expense per consolidated statements of
 
 
 
 
 
 
 
 
 
operations
$
243.0
 
$
173.2
 
$
151.5

The following is a summary of depreciation and amortization expense allocated to our segments for purposes of determining operating earnings. Segment depreciation and amortization equates to depreciation and amortization included in our consolidated statements of operations.
 
 
 
 
For the year ended December 31,
 
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Depreciation and amortization expense by segment:
 
 
 
 
 
 
 
 
Retirement and Investor Services
$
27.5

 
$
23.1
 
$
21.2
Principal Global Investors
 
12.9

 
 
10.2
 
 
11.6
U.S. Insurance Solutions
 
16.7

 
 
13.7
 
 
14.1
Corporate
 
3.3

 
 
3.9
 
 
5.1
Total segment depreciation and amortization expense included in
 
 
 
 
 
 
 
 
 
operating earnings
 
60.4

 
 
50.9
 
 
52.0
 
Depreciation and amortization expense related to other
 
 
 
 
 
 
 
 
 
 
after-tax adjustments
 
—

 
 
1.4
 
 
6.1
Total depreciation and amortization expense included in our
 
 
 
 
 
 
 
 
 
consolidated statements of operations
$
60.4

 
$
52.3
 
$
58.1



289

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

The following table summarizes operating revenues for our products and services:
 
 
 
 
For the years ended December 31,
 
 
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Retirement and Investor Services:
 
 
 
 
 
 
 
 
 
Full-service accumulation
$
1,559.5
 
$
1,467.2
 
$
1,353.7
 
Individual annuities
 
1,488.9
 
 
1,366.5
 
 
1,162.4
 
Bank and trust services
 
84.2
 
 
95.2
 
 
101.6
 
Eliminations
 
(13.4)
 
 
(12.6)
 
 
(11.3)
 
Total Accumulation
 
3,119.2
 
 
2,916.3
 
 
2,606.4
 
Investment only
 
308.1
 
 
341.0
 
 
431.6
 
Full-service payout
 
 
1,372.4
 
 
955.2
 
 
1,283.0
 
Total Guaranteed
 
1,680.5
 
 
1,296.2
 
 
1,714.6
 
Total Retirement and Investor Services
 
4,799.7
 
 
4,212.5
 
 
4,321.0
Principal Global Investors (1)
 
668.2
 
 
664.1
 
 
537.1
U.S. Insurance Solutions:
 
 
 
 
 
 
 
 
 
Individual life insurance
 
1,532.8
 
 
1,480.9
 
 
1,421.9
 
Specialty benefits insurance
 
1,724.7
 
 
1,616.8
 
 
1,561.2
 
Total U.S. Insurance Solutions
 
3,257.5
 
 
3,097.7
 
 
2,983.1
Corporate
 
(99.9)
 
 
(109.9)
 
 
(91.7)
Total operating revenues
$
8,625.5
 
$
7,864.4
 
$
7,749.5
Total operating revenues
$
8,625.5
 
$
7,864.4
 
$
7,749.5
 
Net realized capital losses, net of related revenue adjustments
 
(9.6)
 
 
(299.2)
 
 
(21.2)
 
Exited group medical insurance business
 
0.2
 
 
2.0
 
 
25.3
Total revenues per consolidated statements of
 
 
 
 
 
 
 
 
 
operations
$
8,616.1
 
$
7,567.2
 
$
7,753.6
(1) Reflects inter-segment revenues of $276.5 million, $250.1 million and $214.3 million for the years ended December 31, 2014, December 31, 2013 and December 31, 2012, respectively.

18. Stock‑Based Compensation Plans
As of December 31, 2014, our ultimate parent, PFG, sponsored the 2014 Stock Incentive Plan (approved by PFG shareholders at the May 20, 2014, annual shareholder meeting), the Employee Stock Purchase Plan, the Long-Term Performance Plan, the Amended and Restated 2010 Stock Incentive Plan and the Stock Incentive Plan ("Stock Based Compensation Plans"). As of May 20, 2014, no new grants will be made under the Amended and Restated 2010 Stock Incentive Plan. No grants have been made under the Stock Incentive Plan or the Long-Term Performance Plan since at least 2005. Under the terms of the 2014 Stock Incentive Plan, grants may be nonqualified stock options, incentive stock options qualifying under Section 422 of the Internal Revenue Code, restricted stock, restricted stock units, stock appreciation rights, performance shares, performance units or other stock-based awards. To date, PFG has not granted any incentive stock options, restricted stock or performance units. The following Stock-Based Compensation Plans information represents all share based compensation data related to us and our subsidiaries’ employees.
For awards with graded vesting, we use an accelerated expense attribution method. The compensation cost that was charged against income for stock-based awards granted under the Stock-Based Compensation Plans was as follows:
 
 
For the year ended December 31,
 
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Compensation cost
$
41.2
 
$
42.9
 
$
34.8
Related income tax benefit
 
14.0
 
 
12.8
 
 
11.4
Capitalized as part of an asset
 
2.5
 
 
2.6
 
 
2.3


290

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Nonqualified Stock Options
Nonqualified stock options were granted to certain employees under the 2014 Stock Incentive Plan, the Amended and Restated 2010 Stock Incentive Plan and the Stock Incentive Plan. Options outstanding were granted at an exercise price equal to the fair market value of PFG common stock on the date of grant, and expire ten years after the grant date. These options have graded vesting over a three-year period, except in the case of approved retirement.

The fair value of stock options is estimated using the Black‑Scholes option pricing model. The following is a summary of the assumptions used in this model for the stock options granted during the period:
 
 
 
For the year ended December 31,
Options
 
2014
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expected volatility
 
 
53.2
%
 
 
53.3
%
 
 
70.0
%
Expected term (in years)
 
 
6.5
 
 
 
6.5
 
 
 
6.0
 
Risk-free interest rate
 
 
2.0
%
 
 
1.1
%
 
 
1.1
%
Expected dividend yield
 
 
2.50
%
 
 
3.00
%
 
 
2.55
%
Weighted average estimated fair value
 
$
18.89
 
 
$
11.95
 
 
$
13.95
 

We previously determined expected volatility based on, among other factors, historical volatility using daily price observations. Beginning with nonqualified stock options granted in 2013, we determine expected volatility based on a combination of historical volatility using daily price observations and implied volatility from traded options on PFG common stock. We believe that incorporating both historical and implied volatility into the expected volatility assumption calculation better reflects market expectations. The expected term represents the period of time that options granted are expected to be outstanding. We determine expected term using historical exercise and employee termination data. The risk-free rate for periods within the expected term of the option is based on the U.S. Treasury risk-free interest rate in effect at the time of grant. The dividend yield is based on historical dividend distributions compared to the closing price of PFG common shares on the grant date.

As of December 31, 2014, there was $1.6 million of total unrecognized compensation costs related to nonvested stock options. The cost is expected to be recognized over a weighted‑average service period of approximately 1.9 years.

Performance Share Awards

Performance share awards were granted to certain employees under the 2014 Stock Incentive Plan and the Amended and Restated 2010 Stock Incentive Plan. The performance share awards are treated as an equity award and are paid in shares. Whether the performance shares are earned depends upon the participant's continued employment through the performance period (except in the case of an approved retirement) and PFG’s performance against three-year goals set at the beginning of the performance period. Performance goals based on various PFG factors, including return on common equity, operating income and book value per common share, must be achieved for any of the performance shares to be earned. If the performance requirements are not met, the performance shares will be forfeited, no compensation cost is recognized and any previously recognized compensation cost is reversed. There is no maximum contractual term on these awards. Dividend equivalents are credited on performance shares outstanding as of the record date. These dividend equivalents are only paid on the shares released.

The fair value of performance share awards is determined based on the closing stock price of PFG common shares on the grant date. The weighted‑average grant-date fair value of performance share awards granted during 2014, 2013 and 2012 were $44.88, $30.70 and $27.46, respectively.

As of December 31, 2014, there was $3.2 million of total unrecognized compensation cost related to nonvested performance share awards granted. The cost is expected to be recognized over a weighted‑average service period of approximately 1.7 years.



291

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2014

Restricted Stock Units
Restricted stock units were granted to certain employees and agents under the 2014 Stock Incentive Plan, the Amended and Restated 2010 Stock Incentive Plan and Stock Incentive Plan. Restricted stock units are treated as equity awards and are paid in shares. Under these plans, awards have graded or cliff vesting over a three-year service period. When service for PFG ceases (except in the case of an approved retirement), all vesting stops and unvested units are forfeited. There is no maximum contractual term on these awards. Dividend equivalents are credited on restricted stock units outstanding as of the record date. These dividend equivalents are only paid on the shares released.

The fair value of restricted stock units is determined based on the closing stock price of PFG common shares on the grant date. The weighted‑average grant-date fair value of restricted stock units granted during 2014, 2013 and 2012 was $45.00, $30.80 and $27.45, respectively.

As of December 31, 2014, there was $31.5 million of total unrecognized compensation cost related to nonvested restricted stock unit awards granted under these plans. The cost is expected to be recognized over a weighted‑average period of approximately 1.7 years.

Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, participating employees have the opportunity to purchase shares of PFG common stock on a semi-annual basis. Employees may purchase up to $25,000 worth of PFG common stock each year. Employees may purchase shares of PFG common stock at a price equal to 85% of the shares' fair market value as of the beginning or end of the purchase period, whichever is lower.

We recognize compensation expense for the fair value of the discount granted to employees participating in the employee stock purchase plan in the period of grant. Shares of the Employee Stock Purchase Plan are treated as an equity award. The weighted‑average fair value of the discount on the stock purchased was $8.94, $14.16 and $5.32 during 2014, 2013 and 2012, respectively.
19. Quarterly Results of Operations (Unaudited)

The following is a summary of unaudited quarterly results of operations.

 
 
 
For the three months ended
 
 
 
December 31
 
September 30
 
June 30
 
March 31
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
2014
 
 
 
 
 
 
 
 
 
 
 
Total revenues
$
2,472.5
 
$
2,042.3
 
$
2,074.1
 
$
2,027.2
Total expenses
 
2,169.7
 
 
1,725.3
 
 
1,766.7
 
 
1,728.9
Net income
 
240.3
 
 
253.2
 
 
233.5
 
 
255.5
Net income attributable to PLIC
 
239.7
 
 
248.6
 
 
229.6
 
 
234.6
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2013
 
 
 
 
 
 
 
 
 
 
 
Total revenues
$
2,197.7
 
$
1,779.0
 
$
1,814.3
 
$
1,776.2
Total expenses
 
1,971.5
 
 
1,531.3
 
 
1,587.0
 
 
1,590.0
Net income
 
182.3
 
 
195.8
 
 
182.4
 
 
153.7
Net income attributable to PLIC
 
175.2
 
 
191.5
 
 
178.9
 
 
151.0



292
 


PART C
OTHER INFORMATION
Item 24.    Financial Statements and Exhibits
(a)
Financial Statements included in the Registration Statement
(1)
Part A:
Condensed Financial Information for the 9 years ended December 31, 2014 and the period ended December 31, 2005*
(2)
Part B:
Principal Life Insurance Company Separate Account B:
Report of Independent Registered Public Accounting Firm*
Statements of Assets and Liabilities, December 31, 2014*
Statements of Operations for the year ended December 31, 2014*
Statements of Changes in Net Assets for the years ended December 31, 2014 and 2013*
Notes to Financial Statements*
Principal Life Insurance Company:
Report of Independent Registered Public Accounting Firm*
Consolidated Statements of Financial Position at December 31, 2014, and 2013*
Consolidated Statements of Operations for the years ended December 31, 2014, 2013 and 2012*
Consolidated Statements of Stockholder's Equity for the years ended December 31, 2014, 2013 and 2012*
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2013 and 2012*
Notes to Consolidated Financial Statements*
(3)
Part C
Principal Life Insurance Company
Report of Independent Registered Public Accounting Firm on Schedules*
Schedule I - Summary of Investments - Other Than Investments in Related Parties As of December 31, 2014*
Schedule III - Supplementary Insurance Information as of December 31, 2014, 2013 and 2012 and for each of the years then ended*
Schedule IV - Reinsurance as of December 31, 2014, 2013 and 2012 and for each of the years then ended*
(b)
Exhibits
 
 
 
 
(1)
Resolution of Board of Directors of the Depositor (filed with the Commission for 333-116220 on 06/07/2004 Accession No. 0000870786-04-000093)
 
(3a)
Distribution Agreement dated 08/04/2015 (filed with the commission on 08/06/2015 Accession No. 0000009713-15-000107 )
 
(3b)
Selling Agreement (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4a)
Form of Variable Annuity Contract (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4b)
Premium Payment Credit Rider (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4c)
Fixed Account Endorsement (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4d)
Fixed DCA Account Endorsement (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4e)
GMWB Rider (PIB3) (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4f)
GMWB Rider (PIB10) (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4g)
IRA Rider (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4h)
Roth IRA Rider (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4i)
Simple IRA Rider (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4j)
Pension Trust Rider (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4k)
Waiver of Surrender Charge Rider (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4l)
Contract Data Page (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4m)
Partial Annuitization Endorsement (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(5)
Form of Variable Annuity Application (filed with the Commission for 333-116220 on 05/02/2013 Accession No. 0000812797-13-000071)




 
(6a)
Articles of Incorporation of the Depositor (filed with the Commission for 333-116220 on 06/07/2004 Accession No. 0000870786-04-000093)
 
(6b)
Bylaws of Depositor (filed with the Commission for 333-116220 on 06/07/2004 Accession No. 0000870786-04-000093)
 
(8a1)
Participation Agreement with AIM Variable Insurance Funds, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8a2)
AIM Variable Insurance Funds Amendment to Participation Agreement dated 04/30/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8a3)
AIM Variable Insurance Funds Tenth Amendment to Participation Agreement dated 04/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8a4)
AIM Variable Insurance Funds Eleventh Amendment & Joinder to Participation Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8a5)
AIM Advisors, Inc. First Amendment to the Administrative Services Agreement dated 04/30/2004 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8a6)
AIM Advisors, Inc. Second Amendment & Joinder to the Administrative Services Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8a7)
Distribution Agreement with AIM Variable Insurance Funds, (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8a8)
Rule 22c-2 Agreement with AIM Variable Insurance Funds, (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8a9)
AIM Investment Services, Inc. First Amendment & Joinder to the Rule 22c-2 Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8a10)
AIM Advisors, Inc. Administrative Services Agreement Second Amendment & Joinder dated 11/01/2011 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(8b1)
Participation Agreement with AllianceBernstein Variable Products Series Fund, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8b2)
AllianceBernstein Investment, Inc. Participation Agreement Amendment No. 1 dated 01/01/2008 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8b3)
AllianceBernstein Investment, Inc. Participation Agreement Amendment No. 2 dated 05/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8b4)
AllianceBernstein Investment Research and Management, Inc. Master Administrative Services Agreement Letter dated 12/15/2004 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8b5)
Rule 22c-2 Agreement with AllianceBernstein Variable Products Series Fund, (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8c1)
Shareholder Services Agreement with American Century Investment Management Inc., as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8c2)
American Century Investment Services, Inc. Amendment No. 5 to Shareholder Services Agreement dated 06/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8c3)
American Century Investment Services, Inc. Amendment No. 6 and Joinder to Shareholder Service Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8c4)
American Century Investment Services, Inc. Amendment No. 7 to Shareholder Services Agreement dated 03/20/2014 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8c5)
Rule 22c-2 Agreement with American Century Investment Management Inc., (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8c6)
American Century Investment Services, Inc. Amendment No. 1 to Rule 22c-2 Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8d1)
American Funds Distributors, Inc. Participation and Service Agreement dated 05/01/2014 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(8d2)
American Funds Distributors, Inc. Business Agreement dated 05/01/2014 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(8d3)
American Funds Service Company Rule 22c-2 Agreement dated 05/19/2014 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(8d4)
American Funds Form of First Amendment To Fund Participation and Service Agreement (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000045)




 
(8e1)
BlackRock Variable Series Funds, Inc. Participation Agreement dated 05/19/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8e2)
BlackRock Advisors, LLC Administrative Services Agreement dated 05/19/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8e3)
BlackRock Variable Series Funds, Inc. Distribution Sub-Agreement dated 05/19/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8f1)
Columbia Management Investment Distributors, Inc. Participation Agreement dated 04/28/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8f2)
Columbia Management Investment Distributors, Inc. Services Agreement dated 05/01/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8g1)
Delaware VIP Trust & Delaware Distribution, L. P. Participation Agreement dated 04/26/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8g2)
Delaware VIP Trust & Delaware Distribution, L. P. Participation Agreement Amendment No. 1 dated 12/30/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8g3)
Delaware VIP Trust & Delaware Distribution, L. P. Participation Agreement Amendment No. 2 dated 04/04/2014 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8g4)
Delaware VIP Trust & Delaware Distribution, L. P. Participation Agreement Amendment No. 3 dated 07/01/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8g5)
Delaware Distributions, L.P. Administrative Services Agreement dated 04/26/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8h1)
Participation Agreement with Dreyfus Investment Portfolios, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8h2)
Dreyfus Services Corporation Participation Agreement Amendment No. 2 dated 04/15/11 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8h3)
Dreyfus Services Corporation Participation Agreement Amendment No. 3 dated 04/25/12 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8h4)
Administrative Services Agreement with Dreyfus Investment Portfolios, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8h5)
Dreyfus Services Corporation Administrative Services Agreement Amendment No. 2 and Joinder dated 04/25/12 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8h6)
Rule 12b-1 Agreement with Dreyfus Investment Portfolios, as amended (filed with the Commission on May 1, 2008)
 
(8h7)
Dreyfus Service Corporation 12b-1 Letter Agreement for Service Class Shares dated 03/26/2002 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8h8)
Dreyfus Service Corporation 12b-1 Letter Agreement Amendment No. 2 and Joinder dated 04/25/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8h9)
Dreyfus Service Corporation 22c-2 Supplement Agreement dated 04/16/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8i1)
DWS Scudder Distributors, Inc. Participation Agreement dated 12/01/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8i2)
DWS Investments Distributors, Inc. Amendment No. 1 to Participation Agreement dated 01/05/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8i3)
DWS Investments Distributors, Inc. Amendment No. 2 to Participation Agreement dated 05/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8i4)
DWS Investments Distributors, Inc. Amendment No. 3 and Joinder to Participation Agreement dated 12/18/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8i5)
DWS Investments Distributors, Inc. Amendment No. 4 to Participation Agreement dated 04/10/2013 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8j1)
Amended & Restated Participation Agreement with Fidelity Insurance Products Fund (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8j2)
Distribution Agreement with Fidelity Variable Insurance Products Fund (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8j3)
Service Agreement dated 3/26/2002 with Fidelity Variable Insurance Products Fund (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8j4)
Rule 22c-2 Agreement with Fidelity Insurance Products Fund (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)




 
(8k1)
Franklin Templeton Distributors, Inc. Amended and Restated Participation Agreement dated 11/01/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k2)
Franklin Templeton Distributors, Inc. Amendment No. 1 to Amended and Restated Participation Agreement dated 09/10/2009 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k3)
Franklin Templeton Distributors, Inc. Amendment No. 2 to Amended and Restated Participation Agreement dated 08/16/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k4)
Franklin Templeton Distributors, Inc. Amended and Restated Participation Agreement Addendum dated 05/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k5)
Franklin Templeton Distributors, Inc. Amendment No. 3 to Amended and Restated Participation Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k6)
Franklin Templeton Distributors, Inc. Amendment No. 4 to Amended and Restated Participation Agreement dated 09/16/2013 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k7)
Franklin Templeton Distributors, Inc. Amendment No. 5 to Amended and Restated Participation Agreement dated 05/01/2014 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(8k8)
Franklin Templeton Services, LLC Administrative Services Agreement dated 12/14/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k9)
Franklin Templeton Services, LLC Amendment No. 1 to Administrative Services Agreement dated 09/10/2009 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k10)
Franklin Templeton Services, LLC Amendment No. 2 to Administrative Services Agreement dated 04/20/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k11)
Franklin Templeton Services, LLC Amendment No. 3 to Administrative Services Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k12)
Franklin Templeton Services, LLC Amendment No. 4 to Administrative Services Agreement dated 05/24/2013 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(8k13)
Franklin Templeton Distributors, Inc. Rule 22c-2 Agreement dated 04/16/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k14)
Franklin Templeton Amendment to Shareholder Information Agreement (22c-2) dated April 2015 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000045)
 
(8k15)
Franklin Templeton Amendment to Participation Agreement Addendum dated March 31, 2015 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000045)
 
(8l1)
Participation Agreement with Goldman Sachs Variable Insurance Trust, (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8l2)
Goldman Sachs Variable Insurance Trust Participation Agreement Amendment No. 1 dated 06/20/2008 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8l3)
Goldman Sachs Variable Insurance Trust Participation Agreement Amendment No. 2 dated 04/07/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8l4)
Goldman Sachs Variable Insurance Trust Participation Agreement Amendment No. 3 dated 10/26/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8l5)
Administrative Services Agreement with Goldman Sachs Variable Insurance Trust (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8l6)
Goldman Sachs & Co. Administrative Services Agreement Amendment No. 1 dated 06/20/2008 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8l7)
Goldman Sachs & Co. Administrative Services Agreement Amendment No. 2 dated 10/26/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8l8)
Rule 22c-2 Agreement with Goldman Sachs Variable Insurance Trust (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8l9)
Goldman Sachs & Co. Rule 22c-2 Agreement Amendment No. 1 dated 10/26/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8m1)
Guggenheim Variable Funds Trust and Rydex Variable Trust Participation Agreement dated 05/01/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8m2)
Guggenheim Funds Distributors, LLC Variable Product Services Agreement for the Rydex Variable Trust dated 05/01/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8m3)
Guggenheim Funds Distributors, LLC Services Agreement dated 05/01/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8m4)
Guggenheim Distributors, LLC FUND/SERV and Networking Agreement dated 10/28/2014 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)




 
(8n1)
MFS Fund Distributors, Inc. Amended and Restated Participation Agreement dated 05/01/2013 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8n2)
MFS Fund Distributors, Inc. Fund/Serv and Networking Agreement to Amended and Restated Participation Agreement dated 05/01/2013 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8n3)
MFS Fund Distributors, Inc. Administrative Services Letter Agreement dated 05/01/2013 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8n4)
Website Regulatory Document Agreement with MFS Variable Insurance Trust dtd 03/06/08– (filed with the Commission for 333-116220 on 3/01/10 Accession No. 0000898745-10-000129)
 
(8n5)
Rule 22c-2 Shareholder Information Agreement with MFS Variable Insurance Trust dtd 03/06/07– (filed with the Commission for 333-116220 on 3/01/10 Accession No. 0000898745-10-000129)
 
(8n6)
MFS Fund Distributors, Inc. Amendment No. 1 to Rule 22c-2 Shareholder Information Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8o1)
Participation Agreement with Neuberger Berman Advisers Management Trust, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8o2)
Neuberger Berman Advisers Management Trust Fund Participation Agreement Amendment No. 4 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8o3)
Distribution & Administrative Services Agreement with Neuberger Berman Advisers Management Trust (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8o4)
Neuberger Berman Management LLC Distribution and Administrative Services Agreement Amendment No. 1 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8o5)
Rule 22c-2 Agreement with Neuberger Berman Advisers Management Trust (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8o6)
Neuberger Berman Advisers Management Trust Rule 22c-2 Agreement Amendment No. 1 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8p1)
Participation Agreement with PIMCO Variable Insurance Trust dtd 03/09/09– (filed with the Commission for 333-116220 as Ex-99.B (8k1) on 3/01/10 Accession No. 0000898745-10-000129)
 
(8p2)
PIMCO Participation Agreement Amendment and Novation dated 10/22/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8p3)
PIMCO Novation 1 dated 10/22/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8p4)
PIMCO Novation 2 dated 10/22/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8p5)
Administrative Services Agreement for Administrative Class Shares of PIMCO Variable Insurance Trust dtd 03/09/09 (filed with the Commission for 333-116220 as Ex-99.B (8k2) on 3/01/10 Accession No. 0000898745-10-000129)
 
(8p6)
Administrative Services Agreement for Administrative Class Shares of PIMCO Variable Insurance Trust amendment 1 dtd 04/22/09 (filed with the Commission for 333-116220 as Ex-99.B (8k3) on 3/01/10 Accession No. 0000898745-10-000129)
 
(8p7)
PIMCO Assignment and Amendment to Services Agreement dated 03/29/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8p8)
PIMCO Instrument of Accession and Amendment dated 08/29/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q1)
Principal Variable Contracts Funds, Inc. Participation Agreement dated 01/05/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q2)
Principal Variable Contracts Funds, Inc. Participation Agreement Amendment No. 1 dated 06/01/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q3)
Principal Variable Contracts Funds, Inc. Participation Agreement Amendment No. 2 dated 01/01/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q4)
Principal Variable Contracts Funds, Inc. Participation Agreement Amendment Letter dated 06/17/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q5)
Principal Variable Contracts Funds, Inc. Participation Agreement Amendment No. 3 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q6)
Principal Variable Contracts Funds, Inc. 12b-1 Letter dated 12/30/2009 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)




 
(8q7)
Principal Variable Contracts Funds, Inc. 12b-1 Letter Amendment No. 1 dated 11/09/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q8)
Principal Variable Contracts Funds, Inc. Rule 22c-2 dated 04/16/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q9)
Principal Variable Contracts Funds, Inc. Rule 22c-2 Agreement Amendment No. 1 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q10)
Principal Variable Contracts Fund, Inc. Participation Agreement Amendment dated 02/09/2015 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000045)
 
(8r1)
Rydex Participation Agreement (see 8m1 through 8m4 above)
 
(8s1)
Participation Agreement with T Rowe Equity Series Inc, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8s2)
Administrative Services Agreement with T. Rowe Equity Series Inc, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-06515)
 
(8s3)
T. Rowe Price Administrative Services Agreement Letter Amendment No. 2 dated 03/16/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8s4)
Rule 12b-1 Agreement with T Rowe Equity Series Inc (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8s5)
Rule 22c-2 Agreement with T Rowe Equity Series Inc (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8t1)
Participation Agreement with Van Eck Worldwide Insurance Trust dtd 11/28/07 (filed with the Commission for 333-116220 on 3/01/10 Accession No. 0000898745-10-000129)
 
(8t2)
Van Eck Worldwide Insurance Trust Participation Agreement Amendment No. 1 dated 04/24/2009 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t3)
Van Eck VIP Trust Participation Agreement Amendment No. 2 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t4)
Service Agreement with Van Eck Worldwide Insurance Trust dtd 11/28/07 (filed with the Commission for 333-116220 on 3/01/10 Accession No. 0000898745-10-000129)
 
(8t5)
Van Eck Securities Corporation Service Agreement Amendment No. 1 dated 04/24/2009 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t6)
Van Eck Securities Corporation Service Agreement Amendment No. 2 dated 05/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t7)
Van Eck Securities Corporation Service Agreement Amendment No. 2 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t8)
Van Eck Securities Corporation Service Agreement Amendment No.4 dated 05/01/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t9)
Rule 22c-2 Agreement with Van Eck Worldwide Insurance Trust dtd 11/28/07 (filed with the Commission for 333-116220 on 3/01/10 Accession No. 0000898745-10-000129)
 
(8t10)
Van Eck Securities Corporation Shareholder Information Agreement (Rule 22c-2) Amendment No. 1 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(9)
Opinion of Counsel (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(10a)
Consent of Ernst & Young LLP *
 
 
 
(10b)
Powers of Attorney (filed with the commission on 05/02/2013 Accession No. 0000812797-13-000071, 02/23/2015 Accession No. 0000009713-15-000007, 04/29/2015 Accession No. 0000009713-15-000045, and 10/22/2015 Accession No. 0000009713-15-000115)
 
(10c)
Consent of Counsel -- N/A
 
 
 
(11)
Financial Statement Schedules *
 
 
* Filed Herein
 
 
 
 
** To be filed by amendment
 
 
 
 




Item 25. Officers and Directors of the Depositor
Principal Life Insurance Company is managed by a Board of Directors which is elected by its policyowners. The directors and executive officers of the Company, their positions with the Company, including Board Committee memberships, and their principal business address, are as follows:
DIRECTORS:
Name and Principal Business Address
Positions and Offices
BETSY J. BERNARD
40 Shalebrook Drive
Morristown, NJ 07960
Director
Chair, Nominating and Governance Committee
Member, Executive Committee
JOCELYN CARTER-MILLER
8701 Banyan Court
Tamarac, FL 33321
Director
Member, Nominating and Governance Committee
GARY E. COSTLEY
520 Sandhill Ct.
Marco Island, FL 34145
Director
Member, Audit and Human Resources Committees
MICHAEL T. DAN
495 Rudder Road
Naples, FL 34102
Director
Chair, Human Resources Committee
Member, Nominating and Governance Committee
DENNIS H. FERRO
21 Sago Palm Road
Vero Beach, FL 32963
Director
Member, Audit Committee
C. DANIEL GELATT, JR.
NMT Corporation
2004 Kramer Street
La Crosse, WI 54603
Director
Member, Audit and Human Resources Committees
SANDRA L. HELTON
1040 North Lake Shore Drive #26A
Chicago, IL 60611
Director
Chair, Audit Committee
Member, Executive Committee
ROGER C. HOCHSCHILD
Discover Financial Services
2500 Lake Cook Road
Riverwoods, IL 60015
Director
Member, Audit and Human Resources Committees
DANIEL J. HOUSTON
The Principal Financial Group
Des Moines, IA 50392
Director
Principal Life: President and Chief Executive Officer
BLAIR C. PICKERELL
Lower House 1
29 Mt. Kellett Road
The Peak
Hong Kong
Director
Member, Nominating and Governance Committee
ELIZABETH E. TALLETT
12 Windswept Circle
Thornton, NH 03285-6883
Director
Member, Executive, Human Resources and Nominating and Governance Committees
LARRY D. ZIMPLEMAN
The Principal Financial Group
Des Moines, IA 50392
Chairman of the Board and Chair, Executive Committee
Principal Life: Chairman





EXECUTIVE OFFICERS (OTHER THAN DIRECTORS)
Name and Principal Business Address
Positions and Offices
REX AUYEUNG(1)
Chairman - Principal Financial Group - Asia
DAVID M. BLAKE(2)
Senior Executive Director and Head Global Fixed Income
ELIZABETH S. BRADY(2)
Senior Vice President and Chief Marketing Officer
NED A. BURMEISTER(2)
Senior Vice President and Chief Operating Officer, Principal International
GREGORY J. BURROWS(2)
Senior Vice President Retirement and Investor Services
TERESA M. BUTTON(2)
Vice President and Treasurer
TIMOTHY M. DUNBAR(2)
Executive Vice President and Chief Investment Officer
GREGORY B. ELMING(2)
Senior Vice President and Chief Risk Officer
NORA M. EVERETT(2)
President Retirement and Investor Services
AMY C. FRIEDRICH(2)
Senior Vice President, Specialty Benefits Division
PATRICK G. HALTER(2)
Senior Executive Director Principal Real Estate Investors
JULIA M. LAWLER(2)
Senior Executive Director - Multi-Asset Allocation
TERRANCE J. LILLIS(2)
Executive Vice President and Chief Financial Officer
GREGORY A. LINDE(2)
Senior Vice President Individual Life
JAMES P. MCCAUGHAN(2)
President - Global Asset Management
BARBARA A. MCKENZIE(2)
Senior Executive Director and Chief Operating Officer - Boutique Operations (PGI)
DENNIS J. MENKEN(2)
Senior Vice President and Chief Investment Officer - Principal Life Insurance Company
GERALD W. PATTERSON(2)
Senior Vice President Retirement and Investor Services
ELIZABETH L. RAYMOND(2)
Senior Vice President and Chief Human Resources Officer
ANGELA R. SANDERS(2)
Senior Vice President and Controller
GARY P. SCHOLTEN(2)
Executive Vice President and Chief Information Officer
KAREN E. SHAFF(2)
Executive Vice President, General Counsel and Secretary
ELLEN W. SHUMWAY(2)
Senior Executive Director - Strategy and Boutique Operations (PGI)
DEANNA D. STRABLE(2)
President - U.S. Insurance Solutions
LUIS E. VALDES(2)
President - International Asset Management and Accumulation
ROBERTO WALKER(3)
Senior Vice President and President, Principal Financial Group - Latin America
 
 
(1) 
Unit 1001-3, Central Plaza
 
18 Harbour Road
 
Wanchai
 
Hong Kong, China
 
 
(2) 
711 High Street
 
Des Moines, IA 50392
 
 
(3) 
Principal Vida Chile
 
Av Apoquindo 3600
 
Las Condes
 
Santiago, Chile

Item 26. Persons Controlled by or Under Common Control with the Depositor or the Registrant
The Registrant is a separate account of Principal Life Insurance Company (the "Depositor") and is operated as a unit investment trust. Registrant supports benefits payable under Depositor's variable life contracts by investing assets allocated to various investment options in shares of Principal Variable Contracts Funds, Inc. and other mutual funds registered under the Investment Company Act of 1940 as open-end management investment companies of the "series" type. No person is directly or indirectly controlled by the Registrant.
The Depositor is wholly-owned by Principal Financial Services, Inc. Principal Financial Services, Inc. (an Iowa corporation) an intermediate holding company organized pursuant to Section 512A.14 of the Iowa Code. In turn, Principal Financial Services, Inc. is a wholly-owned subsidiary of Principal Financial Group, Inc., a publicly traded company that filed consolidated financial statements with the SEC. A list of persons directly or indirectly controlled by or under common control with Depositor as of January 1, 2015 appears below:
None of the companies listed in such organization chart is a subsidiary of the Registrant; therefore, only the separate financial statements of Registrant and the consolidated financial statements of Depositor are being filed with this Registration Statement.




Principal Life Insurance Company - Organizational Structure
(January 1, 2015)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PRINCIPAL FINANCIAL GROUP, INC.
 
 
 
Delaware
 
Publicly Held
 
-->Principal Financial Services, Inc.*#
 
 
Iowa
 
100

 
 
-->Princor Financial Services Corporation*#
 
 
Iowa
 
100

 
 
-->PFG DO Brasil LTDA*#
 
 
Brazil
 
100

 
 
 
-->Brasilprev Seguros E Previdencia S.A.*
 
 
 
Brazil
 
50

 
 
 
-->Principal Global Investors Participacoes, LTDA*#
 
Brazil
 
100

 
 
 
-->Claritas Investments Ltd.*#
Cayman Islands
 
66

 
 
 
-->Claritas Participacoes S.A.*#
Brazil
 
81

 
 
 
 
-->Claritas Administracao de Recursos LTDA *#
Brazil
 
77

 
 
-->Principal International, Inc.*#
 
 
Iowa
 
100

 
 
 
-->Principal International (Asia) Limited*#
 
Hong Kong
 
100

 
 
 
 
-->Principal International (South Asia) SDN, BHD*#
 
 
Malaysia
 
100

 
 
 
 
-->Principal Global Investors (Asia) Limited*#
 
 
Hong Kong
 
100

 
 
 
 
-->Principal Nominee Company (Hong Kong) Limited*#
 
 
Hong Kong
 
100

 
 
 
 
-->Principal Asset Management Company (Asia) Limited*#
 
Hong Kong
 
100

 
 
 
 
-->Principal Insurance Company (Hong Kong) Limited*#
 
Hong Kong
 
100

 
 
 
 
-->CIMB - Principal Asset Management Berhad*
 
Malaysia
 
40

 
 
 
 
 
-->CIMB Wealth Advisors Berhad*
 
Malaysia
 
100

 
 
 
 
 
-->CIMB - Principal Asset Management (S) PTE LTD*#
 
Singapore
 
100

 
 
 
 
 
-->CIMB - Principal Asset Management Company Limited*
 
Thailand
 
99.99

 
 
 
 
 
-->PT CIMB Principal Asset Management*
 
Indonesia
 
99

 
 
 
 
-->Principal Trust Company (Asia) Limited*#
 
Hong Kong
 
100

 
 
 
 
-->Principal Investment & Retirement Services Limited*#
 
Hong Kong
 
100

 
 
 
-->Principal Mexico Servicios, S.A. de C.V.*#
 
Mexico
 
100

 
 
 
-->Distribuidora Principal Mexico, S.A. de C.V.*#
 
Mexico
 
100

 
 
 
-->Principal International Mexico, LLC *#
 
 
 
Delaware
 
100

 
 
 
-->Principal Consulting (India) Private Limited*#
 
 
 
India
 
100

 
 
 
-->Principal Financial Group, S.A. de C. V. Grupo Financiero.*#
 
Mexico
 
100

 
 
 
 
-->Principal Afore, S. A. de C.V., Principal Grupo Financiero*#
 
Mexico
 
100

 
 
 
 
-->Principal Fondos de Inversion S.A. de C.V., Operadora de Fondos de Inversion, Principal Grupo Financiero *#
Mexico
 
100

 
 
 
 
-->Principal Seguros, S.A. de C.V., Principal Grupo Financiero*#
 
 
Mexico
 
100

 
 
 
 
-->Principal Pensiones, S.A. de C.V., Principal Grupo Financiero*#
 
 
Mexico
 
100

 
 
-->Principal Global Investors Holding Company, Inc.*#
 
 
Delaware
 
100

 
 
 
-->Principal Global Investors (Ireland) Limited*#
 
 
 
Ireland
 
100

 
 
 
-->Principal Global Investors (Europe) Limited*#
 
 
 
United Kingdom
100

 
 
 
-->Principal Global Investors (Singapore) Limited*#
 
 
 
Singapore
 
100

 
 
 
-->Principal Global Investors (Japan) Limited*#
 
 
 
Japan
 
100

 
 
 
-->Principal Global Investors (Hong Kong) Limited*#
 
 
 
Hong Kong
 
100

 
 
 
-->CIMB Principal Islamic Asset Management SDN. BHD*#
 
 
 
Malaysia
 
50

 
 
-->Principal Financial Group (Mauritius) Ltd.*#
 
 
Mauritius
 
100

 
 
 
-->Principal PNB Asset Management Company Private Limited*#
 
 
India
 
78.6

 
 
 
-->Principal Trustee Company Private Limited*#
 
 
India
 
70

 
 
 
-->Principal Retirement Advisors Private Limited*#
 
 
India
 
100

 
 
-->Principal Life Insurance Company +#
 
 
Iowa
 
100

 
 
 
-->Principal Real Estate Fund Investors, LLC*#<
 
 
Delaware
 
100

 
 
 
-->Principal Development Investors, LLC*#<
 
 
Delaware
 
100

 
 
 
-->Principal Real Estate Holding Company, LLC*#<
 
 
Delaware
 
100

 
 
 
 
-->GAVI PREHC HC, LLC*#<
 
 
Delaware
 
100

 
 
 
-->Principal Global Investors, LLC*#<
 
 
Delaware
 
100

 
 
 
 
-->Principal Real Estate Investors, LLC*#
 
 
Delaware
 
100

 
 
 
 
-->Principal Enterprise Capital, LLC*#
 
 
Delaware
 
100

 
 
 
 
-->PGI Origin Holding Company Ltd.*#<
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
-->Origin Asset Management LLP*#<
 
 
Wales/United Kingdom
 
74

 
 
 
 
-->PGI Finisterre Holding Company Ltd.
 
 
 
Wales/United Kingdom
 
100





 
 
 
 
-->Finisterre Holdings Limited *
 
 
Malta
 
54

 
 
 
 
 
-->Finisterre Capital UK Limited *
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
 
-->Finisterre Capital LLP *
 
Wales/United Kingdom
 
72

 
 
 
 
 
-->Finisterre Hong Kong Limited *
 
 
Hong Kong
 
100

 
 
 
 
 
-->Finisterre Malta Limited *
 
 
 
 
Malta
 
100

 
 
 
 
 
-->Finisterre USA, Inc. *
 
 
 
 
Delaware
 
100

 
 
 
 
-->Principal Commercial Funding, LLC*#<
 
 
Delaware
 
100

 
 
 
 
-->Principal Global Columbus Circle, LLC*#<
 
Delaware
 
100

 
 
 
 
 
-->CCI Capital Partners, LLC *#<
 
 
 
Delaware
 
100

 
 
 
 
-->Post Advisory Group, LLC*#<
 
 
Delaware
 
80

 
 
 
 
 
-->Post Advisory Europe Limited *#<
 
Wales/United Kingdom
 
100

 
 
 
 
-->Principal Global Investors Trust*#<
 
 
Delaware
 
100

 
 
 
 
-->Spectrum Asset Management, Inc.*#<
 
 
Connecticut
 
100

 
 
 
 
-->CCIP, LLC*#<
 
 
Delaware
 
95

 
 
 
 
 
-->Columbus Circle Investors*#<
 
 
Delaware
 
100

 
 
 
-->Principal Holding Company, LLC*#<
 
 
Iowa
 
100

 
 
 
 
-->Petula Associates, LLC*<
 
 
Iowa
 
100

 
 
 
 
 
-->Principal Real Estate Portfolio, Inc.*#<
 
Delaware
 
100

 
 
 
 
 
 
-->GAVI PREPI HC, LLC *#<
 
Delaware
 
100

 
 
 
 
 
-->Petula Prolix Development Company*#<
 
 
Iowa
 
100

 
 
 
 
 
-->Principal Commercial Acceptance, LLC*#<
 
 
Delaware
 
100

 
 
 
 
-->Principal Generation Plant, LLC*#<
 
Delaware
 
100

 
 
 
 
-->Principal Bank*#<
 
Iowa
 
100

 
 
 
 
-->Equity FC, Ltd.*#<
 
 
 
 
Iowa
 
100

 
 
 
 
-->Principal Dental Services, Inc.*#<
 
 
Arizona
 
100

 
 
 
 
 
-->Employers Dental Services, Inc.*#<
 
 
Arizona
 
100

 
 
 
 
-->First Dental Health *#<
 
 
California
 
100

 
 
 
 
-->Delaware Charter Guarantee & Trust Company*#<
 
Delaware
 
100

 
 
 
 
-->Preferred Product Network, Inc.*#<
 
Delaware
 
100

 
 
 
-->Principal Reinsurance Company of Vermont*#
 
Vermont
 
100

 
 
 
-->Principal Life Insurance Company of Iowa*#<
 
Iowa
 
100

 
 
 
 
-->Principal Reinsurance Company of Delaware*#<
 
Delaware
 
100

 
 
-->Principal Financial Services (Australia), Inc.*#
 
 
Iowa
 
100

 
 
 
-->Principal Global Investors (Australia) Service Company Pty Limited*#
 
Australia
 
100

 
 
 
 
-->Principal Global Investors (Australia) Limited*#
 
Australia
 
100

 
 
-->Principal International Holding Company, LLC*#
 
 
Delaware
 
100

 
 
-->Principal Management Corporation*#
 
 
Iowa
 
100

 
 
 
-->Principal Financial Advisors, Inc.*#
 
 
Iowa
 
100

 
 
 
-->Principal Shareholder Services, Inc.*#
 
 
Washington
 
100

 
 
 
-->Edge Asset Management, Inc.*#
 
 
Washington
 
100

 
 
 
-->Principal Funds Distributor, Inc.*#
 
 
 
Washington
 
100

 
 
-->Principal Global Services Private Limited*#
 
 
India
 
100

 
 
-->CCB Principal Asset Management Company, Ltd.*
 
 
China
 
25

 
 
-->Principal Financial Services I (US), LLC *#
 
 
Delaware
 
100

 
 
 
-->Principal Financial Services II (US), LLC *#
 
 
Delaware
 
100

 
 
 
-->Principal Financial Services I (UK) LLP *#
 
 
Wales/United Kingdom
 
100

 
 
 
 
-->Principal Financial Services IV (UK) LLP *#
 
United Kingdom
 
100

 
 
 
 
 
-->Principal Financial Services V (UK) LTD.*#
 
 
United Kingdom
 
100

 
 
 
 
-->Principal Financial Services II (UK) LTD. *#
 
Wales/United Kingdom
 
100

 
 
 
 
 
-->Principal Financial Services III (UK) LTD. *#
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
 
-->Principal Financial Services VI (UK) LTD *#
 
 
United Kingdom
 
100

 
 
 
 
 
 
 
-->Principal Global Financial Services (Europe) LTD *#
 
 
United Kingdom
 
100

 
 
 
 
 
 
 
 
-->Liongate Capital Management LLP *
 
 
Wales/United Kingdom
 
59

 
 
 
 
 
 
 
 
-->Liongate Limited *
 
 
Malta
 
55

 
 
 
 
 
 
 
 
 
-->Liongate Capital Management (Cayman) Limited *
 
 
Cayman Islands
 
100

 
 
 
 
 
 
 
 
 
 
-->Liongate Capital Management (UK) Limited *
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
 
 
 
 
 
-->Liongate Multi-Strategy GP Limited *
 
 
Cayman Islands
 
100

 
 
 
 
 
 
 
 
 
-->Liongate Capital Management Limited *
 
 
Malta
 
100





 
 
 
 
 
 
 
 
 
 
-->Liongate Capital Management (India) Private Limited *
 
 
India
 
100

 
 
 
 
 
 
 
 
 
-->Liongate Capital Management Inc.
 
Delaware
 
100

 
 
 
 
 
 
 
 
 
 
-->Liongate Capital Management (US) LP *
 
 
 
 
Delaware
 
100

 
 
 
 
 
 
-->Principal Financial Services Latin America LTD. *#
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
 
 
-->Principal International Latin America LTD.*#
 
United Kingdom
 
100

 
 
 
 
 
 
 
 
-->Principal International South America I LTD.*#
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
 
 
 
 
-->Principal International South America II LTD.*#
 
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
 
 
 
 
 
-->Principal International South America II LTD., Agencia En Chile *#
 
Chile/United Kingdom
 
100

 
 
 
 
 
 
 
 
 
 
 
-->Principal International de Chile, S.A.*#
 
 
 
Chile
 
100

 
 
 
 
 
 
 
 
 
 
 
 
-->Principal Compania de Seguros de Vida Chile S.A.*#
Chile
 
100

 
 
 
 
 
 
 
 
 
 
 
 
 
-->Principal Administradora General de Fondos S.A.*#
Chile
 
100

 
 
 
 
 
 
 
 
 
 
 
 
-->Principal Asset Management Chile S.A.*#
 
 
Chile
 
100

 
 
 
 
 
 
 
 
 
 
 
 
-->Principal Servicios Corporativos Chile LTDA*#
 
Chile
 
100

 
 
 
 
 
 
 
 
 
 
 
 
-->Principal Servicios de Administracion S.A.
 
 
Chile
 
100

 
 
 
 
 
 
 
 
 
 
 
 
 
-->Hipotecaria Cruz Del Sur Principal, S.A *
 
Chile
 
49

 
 
 
 
 
 
 
 
 
 
 
-->Principal Holding Company Chile S.A.*#
 
 
 
Chile
 
100

 
 
 
 
 
 
 
 
 
 
 
 
-->Principal Chile Limitada*#
 
 
 
 
Chile
 
100

 
 
 
 
 
 
 
 
 
 
 
 
 
-->Administradora de Fondos de Pensiones Cuprum S.A. *#
 
Chile
 
100

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
-->Inversiones Cuprum Internacional S.A.*#
Chile
 
100

 
 
-->Principal Edge Network Holdings, Inc.*#
 
 
Delaware
 
100

 
 
 
-->Principal Edge Network - Georgia, LLC*#
 
Delaware
 
100

 
 
 
-->Principal Edge Network - Dallas Ft. Worth, Inc.*#
 
 
Delaware
 
100

 
 
-->Principal National Life Insurance Company+#
 
Iowa
 
100

 
 
-->Diversified Dental Services, Inc.*#
 
 
Nevada
 
100

 
 
-->Morley Financial Services, Inc. *#
 
Oregon
 
100

 
 
 
-->Morley Capital Management, Inc.*#
 
Oregon
 
100

 
 
 
-->Union Bond and Trust Company*#
 
Oregon
 
100

 
 
-->Principal Investors Corporation*#
 
 
New Jersey
 
100

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
+ Consolidated financial statements are filed with the SEC.
 
 
 
 
 
 
* Not required to file financial statements with the SEC.
 
 
 
 
# Included in the consolidated financial statements of Principal Financial Group, Inc. filed with the SEC.
 
 
 
 
= Separate Financial statements are filed with SEC.
 
 
 
 
< Included in the financial statements of Principal Life Insurance Company filed with the SEC.
 
 
 
 

Item 27. Number of Contractowners - As of September 30, 2015
(1)
(2)
 
Number of
Title of Class
Contractowners
BFA Variable Annuity Contracts
6
Pension Builder Contracts
72
Personal Variable Contracts
13
Premier Variable Contracts
22
Flexible Variable Annuity Contract
22,273
Freedom Variable Annuity Contract
874
Freedom 2 Variable Annuity Contract
266
Investment Plus Variable Annuity Contract
65,855
Principal Lifetime Income Solutions
1,039
Principal Pivot Series Variable Annuity
486







Item 28. Indemnification

Sections 490.851 through 490.859 of the Iowa Business Corporation Act permit corporations to indemnify directors and officers where (A) all of the following apply: the director or officer (i) acted in good faith; (ii) reasonably believed that (a) in the case of conduct in the individual's official capacity, that the individual's conduct was in the best interests of the corporation or (b) in all other cases, that the individual's conduct was at least not opposed to the best interests of the corporation; and (iii) in the case of any criminal proceeding, the individual had no reasonable cause to believe the individual's conduct was unlawful; and (B) the individual engaged in conduct for which broader indemnification has been made permissible or obligatory under a provision of the corporation's articles of incorporation.

Unless ordered by a court pursuant to the Iowa Business Corporation Act, a corporation shall not indemnify a director or officer in either of the following circumstances: (A) in connection with a proceeding by or in the right of the corporation, except for reasonable expenses incurred in connection with the proceeding if it is determined that the director has met the relevant standard of conduct (above) or (B) in connection with any proceeding with respect to conduct for which the director was adjudged liable on the basis that the director receive a financial benefit to which he or she was not entitled, whether or not involving action in the director's official capacity.

Registrant's By-Laws provide that it shall indemnify directors and officers against damages, awards, settlements and costs reasonably incurred or imposed in connection with any suit or proceeding to which such person is or may be made a party by reason of being a director or officer of the Registrant. Such rights of indemnification are in addition to any rights to indemnity to which the person may be entitled under Iowa law and are subject to any limitations imposed by the Board of Directors. The Board has provided that certain procedures must be followed for indemnification of officers, and that there is no indemnity of officers when there is a final adjudication of liability based upon acts which constitute gross negligence or willful misconduct.

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 29. Principal Underwriters
(a)    Other Activity
Princor Financial Services Corporation acts as principal underwriter for variable annuity contracts issued by Principal Life Insurance Company Separate Account B, a registered unit investment trust and for variable life insurance contracts issued by Principal Life Insurance Company Variable Life Separate Account, a registered unit investment trust.
(b)    Management
(b1)
(b2)
Name and principal
Positions and offices
business address
with principal underwriter
 
 
Deborah J. Barnhart
Director/Distribution (PPN)
The Principal Financial Group(1)
 
 
 
Patricia A. Barry
Assistant Corporate Secretary
The Principal Financial Group(1)
 
 
 
David J. Brown
Senior Vice President
The Principal Financial Group(1)
 
 
 
Teresa M. Button
Vice President and Treasurer
The Principal Financial Group(1)
 
 
 
Nicholas M. Cecere
Senior Vice President and Director
The Principal Financial Group(1)
 




(b1)
(b2)
Name and principal
Positions and offices
business address
with principal underwriter
 
 
Scott A. Christensen
Chief Financial Officer
The Principal Financial Group(1)
 
 
 
Gregory B. Elming
Director
The Principal Financial Group(1)
 
 
 
Nora M. Everett
Director
The Principal Financial Group(1)
 
 
 
Stephen G. Gallaher
Assistant General Counsel/Assistant Corporate Secretary
The Principal Financial Group(1)
 
 
 
Curtis Hollebrands
AML Officer
The Principal Financial Group(1)
 
 
 
Kara Hoogensen
Chairman, President and Chief Executive Officer
The Principal Financial Group(1)
 
 
 
Julie LeClere
Senior Vice President/Managing Director
The Principal Financial Group(1)
 
 
 
Martin R. Richardson
Vice President - Broker Dealer Operations
The Principal Financial Group(1)
 
 
 
Karen E. Shaff
Executive Vice President/General Counsel/Corporate Secretary
The Principal Financial Group(1)
 
 
 
Deanna D. Strable-Soethout
Director
The Principal Financial Group(1)
 
 
 
Jeffrey A. Van Baale
Chief Information Officer
The Principal Financial Group(1)
 
 
 
Traci L. Weldon
Vice President/Chief Compliance Officer
The Principal Financial Group(1)
 
 
 
Dan L. Westholm
Assistant Vice President - Treasury
The Principal Financial Group(1)
 
 
 
John Wetherell
Private Funds Chief Compliance Officer
The Principal Financial Group(1)
 
 
 
(1)   655 9th Street
      Des Moines, IA 50392




(c)    Compensation from the Registrant
(1)
Name of Principal Underwriter
(2)
Net Underwriting Discounts & Commissions
(3)
Compensation on Events Occasioning the Deduction of a Deferred Sales Load
(4)
Brokerage Commissions
(5)
Compensation
Princor Financial Services Corporation
$45,854,616.07
0
0
0

Item 30. Location of Accounts and Records

All accounts, books or other documents of the Registrant are located at the offices of the Depositor, The Principal Financial Group, Des Moines, Iowa 50392.

Item 31. Management Services

N/A

Item 32. Undertakings

The Registrant undertakes that in restricting cash withdrawals from Tax Sheltered Annuities to prohibit cash withdrawals before the Participant attains age 59 1/2, separates from service, dies, or becomes disabled or in the case of hardship, Registrant acts in reliance on SEC No Action Letter addressed to American Counsel of Life Insurance (available November 28, 1988). Registrant further undertakes that:

1.
Registrant has included appropriate disclosure regarding the redemption restrictions imposed by Section 403(b)(11) in its registration statement, including the prospectus, used in connection with the offer of the contract;

2.
Registrant will include appropriate disclosure regarding the redemption restrictions imposed by Section 403(b)(11) in any sales literature used in connection with the offer of the contract;

3.
Registrant will instruct sales representatives who solicit Plan Participants to purchase the contract specifically to bring the redemption restrictions imposed by Section 403(b)(11) to the attention of the potential Plan Participants; and

4.
Registrant will obtain from each Plan Participant who purchases a Section 403(b) annuity contract, prior to or at the time of such purchase, a signed statement acknowledging the Plan Participant's understanding of (a) the restrictions on redemption imposed by Section 403(b)(11), and (b) the investment alternatives available under the employer's Section 403(b) arrangement, to which the Plan Participant may elect to transfer his contract value.

Fee Representation

Principal Life Insurance Company represents 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 Company.








SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Principal Life Insurance Company Variable Life Separate Account, has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned thereto duly authorized, and its seal to be hereunto affixed and attested, in the City of Des Moines and State of Iowa, on the 30th day of October, 2015.
 
PRINCIPAL LIFE INSURANCE COMPANY
 
    SEPARATE ACCOUNT B
 
(Registrant)
 
 
 
 
 
 
 
 
 
By :
/s/ L. D. Zimpleman
 
 
L. D. Zimpleman
 
 
Chairman
 
 
 
 
 
 
 
 
 
PRINCIPAL LIFE INSURANCE COMPANY
 
(Depositor)
 
 
 
 
 
 
 
 
 
By :
/s/ L. D. Zimpleman
 
 
L. D. Zimpleman
 
 
Chairman of the Board
 
 
Chairman
 
 
 
 
Attest:
 
 
 
 
 
 
 
 
 
 
 
/s/ Clint Woods
 
 
 
Clint Woods
 
 
 
Vice President, Associate General Counsel, Governance Officer and Assistant Corporate Secretary
 
 
 





Pursuant to the requirements of the Securities Act, this amendment to the registration statement has been signed by the following persons in the capacities and on the date indicated.
Signature
Title
Date
 
 
 
/s/ L. D. Zimpleman
Chairman of the Board
October 30, 2015
L. D. Zimpleman
Chairman
 
 
 
 
/s/ A. R. Sanders
Senior Vice President and Controller
October 30, 2015
A. R. Sanders
(Principal Accounting Officer)
 
 
 
 
/s/ T. J. Lillis
Executive Vice President
October 30, 2015
T. J. Lillis
and Chief Financial Officer
 
 
(Principal Financial Officer)
 
 
 
 
  (B. J. Bernard)*
Director
October 30, 2015
B. J. Bernard
 
 
 
 
 
  (J. Carter-Miller)*
Director
October 30, 2015
J. Carter-Miller
 
 
 
 
 
  (G. E. Costley)*
Director
October 30, 2015
G. E. Costley
 
 
 
 
 
  (M.T. Dan)*
Director
October 30, 2015
M. T. Dan
 
 
 
 
 
  (D. H. Ferro)*
Director
October 30, 2015
D. H. Ferro
 
 
 
 
 
  (C. D. Gelatt, Jr.)*
Director
October 30, 2015
C. D. Gelatt, Jr.
 
 
 
 
 
  (S. L. Helton)*
Director
October 30, 2015
S. L. Helton
 
 
 
 
 
  (R. C. Hochschild)*
Director
October 30, 2015
R. C. Hochschild
 
 
 
 
 
  (D. J. Houston)*
Director
October 30, 2015
D. J. Houston
President and Chief Executive Officer
 
 
 
 
  (B. C. Pickerell)*
Director
October 30, 2015
B. C. Pickerell
 
 
 
 
 
  (E. E. Tallett)*
Director
October 30, 2015
E. E. Tallett
 
 
 
 
*By
/s/ L. D. Zimpleman
 
L. D. Zimpleman
 
Chairman of the Board
 
Chairman
 
 
*
Pursuant to Powers of Attorney (Previously filed and Incorporated by Reference from Exhibit b(8b) to Registrant's Filing on Form N-4 on 05/02/2013 (Accession No. 0000812797-13-000071); on 02/23/2015 (Accession No. 0000009713-15-000007); on 04/29/2015 (Accession No. 0000009713-15-000045); and 10/22/2015 Accession No. 0000009713-15-000115)