VA-FVA-485B-2016 Combined Document

485BPOS 1 vafva485b2016filingbody.htm FLEX VARIABLE ANNUITY - PEA #34 VA-FVA-485B-2016 Combined Document

Registration No. 33-74232

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. 34

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 217

(Check appropriate box or boxes)

Principal Life Insurance Company Separate Account B

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(Exact Name of Registrant)

Principal Life Insurance Company

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(Name of Depositor)

The Principal Financial Group, Des Moines, Iowa 50392

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(Address of Depositor's Principal Executive Offices) (Zip Code)

(515) 362-2384

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Depositor's Telephone Number, including Area Code

Doug Hodgson

The Principal Financial Group, Des Moines, Iowa 50392

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(Name and Address of Agent for Service)

Title of Securities Being Registered: Flexible Variable Annuity Contract

It is proposed that this filing will become effective (check appropriate box)

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

__X__ on May 1, 2016 pursuant to paragraph (b) of Rule 485

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

_____ on (date) 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 Variable Annuity

(Flexible Variable Annuity)

Issued by Principal Life Insurance Company (the “Company”)

This prospectus is dated May 1, 2016.

The Company no longer offers this Contract. This Prospectus is only for the use of the current Contract owners.

The individual deferred annuity contract (“Contract”) described in this prospectus is funded with the Principal Life Insurance Company Separate Account B (“Separate Account”), dollar cost averaging fixed accounts (“DCA Plus Accounts”) and a Fixed Account. The DCA Plus Accounts and the Fixed Account are a part of the General Account of the Company. The assets of the Separate Account Divisions (“divisions”) are invested in the following underlying mutual funds:



AllianceBernstein Variable Products Series Fund — Class A	Guggenheim Investments Variable Insurance Funds
• AllianceBernstein Small/Mid Cap Value Portfolio	• Global Managed Futures Strategy Fund
American Century Variable Portfolios, Inc.	• Long Short Equity Fund
• Income & Growth Fund — Class I	• Multi-Hedge Strategies Fund
• Inflation Protection Fund — Class II	• Series F (Guggenheim Floating Rate Strategies Series)
• Mid Cap Value Fund — Class II	• Series M (Guggenheim Macro Opportunities Series)
• Ultra Fund — Class I	Invesco Variable Insurance Funds — Series I
• Value Fund — Class II	• American Franchise Fund
American Funds Insurance Series — Class 2	• Core Equity Fund
• Asset Allocation Fund⁽¹⁾	• Global Health Care Fund
• Blue Chip Income & Growth Fund⁽¹⁾	• Mid Cap Growth Fund
• Global Small Capitalization Fund	• Small Cap Equity Fund
• High-Income Bond Fund	• Technology Fund
• New World Fund	Janus Aspen Series — Service Shares
BlackRock Variable Insurance Funds — Class III	• Flexible Bond Portfolio⁽¹⁾
• Global Allocation V.I. Fund	• Enterprise Portfolio
• iShares Alternative Strategies V.I.	MFS — Service Class
• iShares Dynamic Allocation V.I.	• International Value
• iShares Dynamic Fixed Income V.I.	• New Discovery Series
• iShares Equity Appreciation V.I.	Oppenheimer Main Street — Service Shares
Columbia VP — Class 2	• Small Cap Fund/VA
• Limited Duration Credit Fund	PIMCO Variable Insurance Trust — Advisor Class
Delaware Variable Insurance Products — Service Class	• Low Duration Portfolio
• Limited Term Diversified Income Series	Principal Variable Contracts Funds, Inc. — Class 1
• Small Cap Value	• Balanced Account
Deutsche Variable Insurance Portfolio — Class B	• Core Plus Bond Account
• Small Mid Cap Value VIP	• Diversified International Account
Fidelity Variable Insurance Products	• Equity Income Account
• Contrafund^® Portfolio — Service Class	• Government & High Quality Bond Account
• Equity-Income Portfolio — Service Class 2	• Income Account
• Government Money Market Portfolio — Initial Class⁽²⁾	• International Emerging Markets Account
• Growth Portfolio — Service Class	• LargeCap Growth Account
• Overseas Portfolio — Service Class 2	• LargeCap Growth Account I
Franklin Templeton Variable Insurance Products Trust	• LargeCap S&P 500 Index Account
• Franklin Global Real Estate VIP Fund — Class 2	• LargeCap Value Account
• Small Cap Value VIP Fund — Class 2	• MidCap Account⁽³⁾
• Templeton Global Bond VIP Fund — Class 4	• Multi-Asset Income Account⁽¹⁾⁽⁴⁾
Goldman Sachs Variable Insurance Trust — Institutional Shares	• Principal LifeTime 2010 Account⁽⁴⁾
• MidCap Value Fund	• Principal LifeTime 2020 Account⁽⁴⁾
• Small Cap Equity Insights Fund	• Principal LifeTime 2030 Account⁽⁴⁾



Underlying mutual funds (cont.)

Principal Variable Contracts Funds, Inc. — Class 1 (cont.)	Principal Variable Contracts Funds, Inc. — Class 2
• Principal LifeTime 2040 Account⁽⁴⁾	• Diversified Balanced Managed Volatility Account
• Principal LifeTime 2050 Account⁽⁴⁾	• Diversified Growth Managed Volatility Account
• Principal LifeTime Strategic Income Account⁽⁴⁾	Rydex Variable Insurance
• Real Estate Securities Account	• Commodities Strategy Fund
• Short-Term Income Account	VanEck VIP Global Insurance Trust — S Class
• SmallCap Account	• Global Hard Assets Fund
• Strategic Asset Management Balanced⁽⁴⁾
• Strategic Asset Management Conservative Balanced⁽⁴⁾
• Strategic Asset Management Conservative Growth⁽⁴⁾
• Strategic Asset Management Flexible Income⁽⁴⁾
• Strategic Asset Management Strategic Growth⁽⁴⁾


⁽¹⁾	Investment option will be available May 21, 2016.


⁽²⁾	All references to the Money Market Division in this prospectus will mean the Fidelity VIP Government Money Market Division.


⁽³⁾	Effective August 16, 2013, the MidCap Account is no longer available to customers with an application signature date on or after August 16, 2013.


⁽⁴⁾	This underlying mutual fund is a fund of funds and expenses may be higher due to the tiered level of expenses.

This prospectus provides information about the Contract and the Separate Account that you, as owner, should know before investing. It should be read and retained for future reference. Additional information about the Contract is included in the Statement of Additional Information (“SAI”), dated May 1, 2016, which has been filed with the Securities and Exchange Commission (the “SEC”). The SAI is 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 by writing or calling:

Principal Flexible Variable Annuity

Principal Financial Group

P. O. Box 9382

Des Moines, Iowa 50306-9382

Telephone: 1-800-852-4450

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 offered by this prospectus may not be available in all states. 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.

The Contract is available with or without the Purchase Payment Credit Rider. This rider applies credits to the accumulated value for purchase 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 without this rider will cost less. 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 purchase payment credit if you return the Contract during the examination offer period. 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 credit option.

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.

This prospectus is valid only when accompanied by the current prospectuses for the underlying mutual funds. These prospectuses should be kept for future reference.

TABLE OF CONTENTS



GLOSSARY	5
SUMMARY OF EXPENSE INFORMATION	7
SUMMARY	9
Investment Limitations	9
Transfers	10
Surrenders	10
Charges and Deductions	10
Annuity Benefit Payments	11
Death Benefit	11
Examination Period (free look)	11
FLEXIBLE VARIABLE ANNUITY	11
THE COMPANY	11
THE SEPARATE ACCOUNT	11
THE UNDERLYING MUTUAL FUNDS	12
THE CONTRACT	13
To Buy a Contract	13
Purchase Payments	13
Right to Examine the Contract (free look)	13
Purchase Payment Credit Rider	14
The Accumulation Period	16
Automatic Portfolio Rebalancing (APR)	18
Telephone and Internet Services	19
Surrenders	20
Death Benefit	21
The Annuity Benefit Payment Period	24
CHARGES AND DEDUCTIONS	26
Annual Fee	26
Mortality and Expense Risks Charge	26
Charges for Optional Riders	26
Purchase Payment Credit Rider	26
Annual Enhanced Death Benefit Rider	27
Transaction Fee	27
Premium Taxes	27
Surrender Charge	27
Free Surrender Privilege	28
Special Provisions for Group or Sponsored Arrangements	29
FIXED ACCOUNT AND DCA PLUS ACCOUNTS	30
Fixed Account	30
Fixed Account Accumulated Value	30
Fixed Account Transfers, Total and Partial Surrenders	30
Dollar Cost Averaging Plus Program (DCA Plus Program)	31



GENERAL PROVISIONS	32
The Contract	32
Delay of Payments	32
Misstatement of Age or Gender	32
Assignment	32
Change of Owner or Annuitant	33
Beneficiary	33
Contract Termination	33
Reinstatement	33
Reports	33
RIGHTS RESERVED BY THE COMPANY	34
Frequent Trading and Market-Timing (Abusive Trading Practices)	34
DISTRIBUTION OF THE CONTRACT	35
PERFORMANCE CALCULATION	35
FEDERAL TAX MATTERS	35
Non-Qualified Contracts	36
Required Distributions for Non-Qualified Contracts	36
IRA, SEP, and SIMPLE-IRA	37
Rollover IRAs	38
Withholding	38
MUTUAL FUND DIVERSIFICATION	38
STATE REGULATION	39
GENERAL INFORMATION	39
FINANCIAL STATEMENTS	40
TABLE OF SEPARATE ACCOUNT DIVISIONS	41
TABLE OF CONTENTS OF THE STATEMENT OF ADDITIONAL INFORMATION	56
APPENDIX A - PRINCIPAL VARIABLE ANNUITY EXCHANGE OFFER	57
CONDENSED FINANCIAL INFORMATION	62

GLOSSARY

accumulated value – an amount equal to the DCA Plus Account(s) accumulated value plus the Fixed Account accumulated value plus the Separate Account accumulated value.

anniversary – 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 date – the date the owner’s accumulated value is applied, under an annuity benefit payment option, to make income payments. (Referred to in the Contract as “Retirement Date.”)

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, 2004, the first contract year ends on June 4, 2005, and the first contract anniversary falls on June 5, 2005).

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 earns guaranteed interest for a specific amount of time. (Referred to in the Contract as “Fixed DCA Account.”)

Dollar Cost Averaging Plus (DCA Plus) Accumulated value – the amount of your accumulated value which is in the DCA Plus Account(s).

Dollar Cost Averaging Plus (DCA Plus) Program – a program through which purchase payments are transferred from a DCA Plus Account to the divisions and/or the Fixed Account over a specified period of time. (Referred to in the Contract as “Fixed DCA Account.”)

Fixed Account – an account which earns guaranteed interest.

Fixed Account accumulated value – the amount of your accumulated value which is in the Fixed Account.

Investment Options – the DCA Plus Accounts, Fixed Account and Separate Account divisions.

joint annuitant – one of the annuitants on whose life the annuity benefit payment is based. Any reference to the death of the annuitant means the death of the first annuitant to die.

joint owner – an owner who has an undivided interest with 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 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.

purchase 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.

Separate Account division (division(s)) – a part of the Separate Account which invests in shares of a mutual fund. (Referred to in the marketing materials as “sub-accounts.”)

Separate Account division accumulated value – the amount of your accumulated value in all divisions.

surrender charge – the charge deducted upon certain partial surrenders or a total surrender(s) of the Contract before the annuitization date.

surrender value – accumulated value less any applicable surrender charge, annual fee, transaction fee and any premium or other taxes.

transfer – moving all or a portion of your accumulated value to or among one investment option or another. Simultaneous transfers are considered to be one transfer for purposes of calculating the transfer 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 calculate the value of a division prior to the annuitization date.

unit value – a measure used to determine the value of an investment in a division.

valuation date – each day the New York Stock Exchange (“NYSE”) is open.

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. E.T. (3:00 p.m. C.T.) 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.

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 that you will pay at the time that you buy the Contract, surrender the Contract or transfer cash value between investment options.



Contract owner transaction expenses
Sales charge imposed on purchase payments (as a percentage of purchase payments)	• none
Maximum surrender charge (as a percentage of amount surrendered)⁽¹⁾	• 6%
Maximum surrender charge for Contracts with the Purchase Payment Credit Rider (as a percentage of amount surrendered)⁽²⁾	• 8%
Transaction Fee for each unscheduled partial surrender • guaranteed maximum • current	• The lesser of $25 or 2% of each unscheduled partial surrender after the 12th in a contract year • zero
Transaction Fee⁽³⁾ for each unscheduled transfer • guaranteed maximum • current	• The lesser of $30 or 2% of each unscheduled transfer after the first in a contract year • zero
State Premium Taxes (vary by state) • guaranteed maximum • current	• 35% of premiums paid • zero

⁽¹⁾Surrender charge without the Purchase Payment Credit Rider (as a percentage of amounts surrendered):



Table of surrender charges without the Purchase Payment Credit Rider
Number of completed contract years since each purchase payment was made	Surrender charge applied to all purchase payments received in that contract year
0 (year of purchase payment)	6%
1	6%
2	6%
3	5%
4	4%
5	3%
6	2%
7 and later	0%

⁽²⁾ Surrender charge with the Purchase Payment Credit Rider (as a percentage of amounts surrendered):



Table of surrender charges with the Purchase Payment Credit Rider
Number of completed contract years since each purchase payment was made	Surrender charge applied to all purchase payments received in that contract year
0 (year of purchase payment)	8%
1	8%
2	8%
3	8%
4	7%
5	6%
6	5%
7	4%
8	3%
9 and later	0%


⁽³⁾	Please note that in addition to the fees shown, the Separate Account and or sponsors of the underlying mutual funds may adopt requirements pursuant to rules and or regulations adopted by federal and or state regulators which require us to collect additional transfer fees and or impose restrictions on transfers.

The following table describes the fees and expenses that you will pay periodically during the time that you own the Contract, not including underlying mutual fund fees and expenses.



Periodic Expenses
Annual Fee (waived for Contracts with accumulated value of $30,000 or more)	the lesser of $30 or 2% of the accumulated value
Separate Account Annual Expenses (as a percentage of average separate account accumulated value)
• guaranteed maximum Mortality and Expense Risks Charge Administration Charge Total Separate Account Annual Expense	1.25% 0.15% 1.40%
• current Mortality and Expense Risks Charge Administration Charge Total Separate Account Annual Expense	1.25% 0.05% 1.30%
Optional Riders
Annual Enhanced Death Benefit rider • guaranteed maximum • current	• 0.05% of average quarterly accumulated value • 0.05% of average quarterly accumulated value
Purchase Payment Credit rider • guaranteed maximum • current	• an annual charge of 0.60% of accumulated value in the divisions deducted daily • an annual charge of 0.60% of accumulated value in the divisions deducted daily

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, 2015
	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%	2.55%

The annual fees and expenses charged by each underlying mutual fund are shown in each fund’s current prospectus.

Example

The example is 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. Although your actual costs may be higher or lower, based on these assumptions, your costs would be as shown below.

Contract with Purchase Payment Credit Rider.

This example reflects the maximum charges imposed if you were to purchase the Contract with the Purchase Payment Credit Rider. This example reflects the maximum and minimum annual underlying mutual fund operating expenses as of December 31, 2015 (without voluntary waiver of fees by the underlying funds, if any). This example assumes:


•	a $10,000 investment in the Contract for the time periods indicated;


•	a 5% return each year;


•	an annual contract fee of $30 (expressed as a percentage of the average accumulated value); and


•	the Purchase Payment Credit Rider was added to the Contract at issue and the Premium Payment Credit Rider surrender charge schedule is applied. Because the purchase payment credit can not be added to the accumulated value in these examples, the Purchase Payment Credit Rider charges included below are not representative of the actual costs.



	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 (2.55%)	$1,172	$2,080	$2,904	$4,448	$448	$1,350	$2,259	$4,448	$448	$1,350	$2,259	$4,448
Minimum Total Underlying Mutual Fund Operating Expenses (0.25%)	$964	$1,472	$1,873	$2,368	$222	$685	$1,173	$2,368	$222	$685	$1,173	$2,368

SUMMARY

This prospectus describes an individual flexible premium variable annuity offered by the Company. The Contract is designed to provide individuals with retirement benefits, including:


•	Individual Retirement Annuities (“IRAs”), 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 FEDERAL TAX MATTERS — IRA, SEP and SIMPLE — IRA and Rollover IRAs); and


•	non-qualified retirement programs.

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.

This is a brief summary of the Contract’s features. More detailed information follows later in this prospectus.

Investment Limitations


•	The initial purchase payment must be $2,500 or more for non-qualified retirement programs.


•	The initial purchase payment must be $1,000 for all other contracts.


•	Each subsequent purchase payment must be at least $100.


•	If you are a member of a retirement plan covering three or more persons and purchase payments are made through an automatic investment program, then the initial and subsequent purchase payments for the Contract must average at least $100 and not be less than $50.

You may allocate your net purchase payments to the investment options.


•	A complete list of the divisions may be found in the 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.


•	The investment options also include the Fixed Account and the DCA Plus Accounts.

Transfers (See Division Transfers and Fixed Account Transfers, Total and Partial Surrenders for additional restrictions.)

This section does not apply to transfers under the DCA Plus Program (see Scheduled DCA Plus Transfers and Unscheduled DCA Plus 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 annuity benefit payment period, transfers are not permitted (no transfers once annuity payments have begun).

Surrenders (See Surrenders and Fixed Account Transfers, Total and Partial Surrenders and DCA Plus Surrenders)

During the accumulation period:


•	a dollar amount must be specified;


•	surrendered amounts may be subject to a surrender charge:


•	for Contracts without the Purchase Payment Credit Rider, the maximum surrender charge is 6% of the amount surrendered.


•	for Contracts with the Purchase Payment Credit Rider, the maximum surrender charge is 8% of the amount surrendered.


•	total surrenders may be subject to an annual Contract fee;


•	during a contract year, partial surrenders less than the Contract’s earnings or 10% of purchase payments are not subject to a surrender charge; and


•	withdrawals before age 59 ½ may involve an income tax penalty (see FEDERAL TAX MATTERS).

Principal Variable Annuity Exchange Offer (“exchange offer”)

This exchange offer is available on and after January 4, 2010. 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.

Charges and Deductions


•	There is no sales charge imposed on purchase payments.


•	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.


•	Optional riders are available at an additional charge (see CHARGES AND DEDUCTIONS).


•	The Daily Separate Account administration charge is currently 0.05%, but we reserve the right to assess a charge not to exceed 0.15% of Separate Account division value(s) annually.

•

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 may be 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. The Company reserves the right to deduct the amount of the tax from purchase payments or accumulated value.

Annuity Benefit Payments


•	You may choose from several fixed annuity benefit payment options which start on your selected annuitization date.


•	Annuity benefit 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 Annuity Benefit Payment Options and FEDERAL TAX MATTERS).


•	Your Contract refers to annuity benefit payments as “retirement benefit” payments.

Death Benefit


•	If the annuitant or owner dies before the annuitization date, then a death benefit is payable to the beneficiary of the Contract.


•	The death benefit may be paid as either a single payment or under an annuity benefit payment option (see Death Benefit).


•	If the annuitant dies on or after the annuitization date, then the beneficiary will receive only any continuing annuity benefit payments which may be provided by the annuity benefit payment option in effect.

Examination Period (free look)


•	You may return the Contract during the examination period which is generally 10 days from the date you receive the Contract. The examination period may be longer in certain states.


•	We return all purchase payments if required by state law. Otherwise, we return accumulated value


•	We retain the full amount of any purchase payment credit.

FLEXIBLE VARIABLE ANNUITY

The Flexible 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 divisions) rather than the insurance company. The Separate Account accumulated 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 purchase payments and accumulated values. There can be no assurance that your investment objectives will be achieved.

THE COMPANY

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. 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.

THE SEPARATE ACCOUNT

Principal Life Insurance Company Separate Account B 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. Obligations arising from the Contract, including the promise to make annuity benefit payments, are general corporate obligations of the Company. 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.

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 from the Separate Account following SEC approval.

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. Full descriptions 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 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 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 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.

We determine the number of fund shares that you may instruct us to vote by allocating one vote for each $100 of accumulated contract 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 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.


NOTE:	Because there is no required minimum number of votes, a small number of votes can have a disproportionate effect.

THE CONTRACT

The following descriptions are based on provisions of the Contract offered by this prospectus. You should refer to the actual Contract and the terms and limitations of any qualified plan which is to be funded by the Contract. Qualified plans are subject to several requirements and limitations which may affect the terms of any particular Contract or the advisability of taking certain action permitted by the Contract.

To Buy a Contract

If you want to buy a Contract, you must submit an application and make an initial purchase payment. If you are buying the Contract to fund a SIMPLE-IRA or SEP, an initial purchase 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 proper order, the initial purchase payment is credited within two valuation days after the later of receipt of the application or receipt of the initial purchase payment at our home office. If the initial purchase payment is not credited within five valuation days, it is refunded unless we have received your permission to retain the purchase 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.

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.

Purchase Payments


•	The initial purchase payment must be at least $2,500 for non-qualified retirement programs.


•	All other initial purchase payments must be at least $1,000.


•	If you are making purchase payments through a payroll deduction plan or through a bank account (or similar financial institution) under an automated investment program, then your initial and subsequent purchase payments must be at least $100.


•	All purchase payments are subject to a surrender charge period that begins in the contract year each purchase payment is received.


•	Payments may be made via personal or financial institution check (for example, a bank or cashier’s check). We reserve the right to refuse any payment that we feel presents a fraud or money laundering risk. Examples of the types of payments we will not accept are cash, money orders, starter checks, travelers checks, credit card checks, and foreign checks.


•	Subsequent purchase payments must be at least $100 and can be made until the annuitization date.


•	If you are a member of a retirement plan covering three or more persons, then the initial and subsequent purchase payments for the Contract must average at least $100 and cannot be less than $50.


•	The total of all purchase payments may not be greater than $2,000,000 without our prior approval.


•	In New Jersey after the first contract year, purchase payments cannot exceed $100,000 per contract year.

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 purchase payments to the investment options you have selected, we reserve the right to allocate initial purchase payments to the Money Market Division during the examination offer period. In addition, we are required to allocate initial purchase payments to the Money Market Division if the contract is issued in California and the owner is age 60 or older. After the examination offer period expires, your accumulated value will be converted into units of the divisions according to your allocation instructions. The units allocated will be based on the unit value next determined for each division.


NOTE:	All references to the Money Market Division in this prospectus will mean the Fidelity VIP Government Money Market Division.

If you properly exercise your free look, we will rescind the Contract and we will pay you a refund of your current accumulated value plus any premium tax charge deducted, less any applicable federal and state income tax withholding and depending on the state in which the Contract was issued, any applicable fees and charges. The amount returned to you may be higher or lower than the purchase payment(s) applied during the examination offer period. Some states require us to return to you the amount of your purchase payment(s); if so, we will return the greater of your purchase payments or your current 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.


NOTE:	Please note that we recapture the purchase payment credit if you decide to return the Contract during the examination offer period. We recover the full amount of the purchase payment credit and you could receive less than your initial purchase payment.

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 purchase 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.

Purchase Payment Credit Rider

The Purchase Payment Credit Rider applies credits to the accumulated value for purchase payments made in contract year one. This rider may not be available in all states and may be subject to additional restrictions. Some rider provisions may vary from state to state. We may withdraw or prospectively restrict the availability of this rider at any time. For information regarding availability of this rider, you may contact your registered representative or call us at 1-800-852-4450.

This rider can only be elected at the time the Contract is issued. Once this rider is elected, it cannot be terminated.

If you elect this rider, the following provisions apply to the Contract:


•	We will apply a credit of 5% of the purchase payment to your accumulated value for each purchase payment received during your first contract year on the date each purchase payment is applied to the Contract. For example, if you make a purchase 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 to your accumulated value for purchase payments made after the first contract year.


•	The credit is allocated among the investment options according to your then current purchase payment allocations.

•

If you decide to return your Contract during the examination offer period, we recapture the credit(s) from your investment options according to your surrender allocation percentages (if surrender allocation percentages are not specified, we use your purchase payment allocation percentages). The amount we recapture could be more than the current value of the credit(s). If the investment options have experienced negative investment performance you bear the loss for the difference between the original value of the credit(s) (the amount recaptured) and the current (lower) value of the credit(s).


•	Credits are considered earnings under the Contract, not purchase payments.


•	All purchase payments are subject to the 9-year surrender charge table (see CHARGES AND DEDUCTIONS — Surrender Charge).


•	The Purchase Payment Credit Rider can not be cancelled and the associated 9-year surrender charge period cannot be changed.


•	You can not participate in the DCA Plus Program.

If you elect the Purchase 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 Purchase Payment Credit Rider. In order to stop assessing the annual charge for the Purchase Payment Credit Rider, there will be a one time adjustment to the number of units in each division at the completion of the eighth contract year. The unit value used to calculate your accumulated value will increase at that time to reflect there is no longer an annual charge for the Purchase Payment Credit Rider. Therefore, to maintain your accumulated value, the number of units in each division will decrease. The following example is provided to assist you in understanding the one time adjustment at the completion of the eighth contract year.



	Sample Division Unit Value	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

You should carefully examine the Purchase Payment Credit Rider to decide if this rider is suitable for you as 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:


•	the length of time you plan to own your Contract (this rider increases the amount and duration of the surrender charges, see CHARGES AND DEDUCTIONS — Surrender Charge);


•	the amount and timing of your purchase payment(s). Any purchase payments made after the first contract year will be assessed higher Separate Account charges although no credit is applied to those purchase payments; and


•	the higher Separate Account charges have a negative impact on investment performance.

The charges used to recoup our cost for the purchase payment credit(s) include the surrender charge and the Purchase Payment Credit Rider charge. The current charge for the rider is 0.60% of the average daily net assets of the annuitization date.

The following tables demonstrate hypothetical surrender values for Contracts with and without this rider but do not show the impact of partial surrenders. The tables are based on:


•	a $25,000 initial purchase payment and no additional purchase payments;


•	the deduction of total Separate Account annual expenses:

•Contracts with the Purchase Payment Credit Rider:

•2.00% annually for the first eight contract years

•1.40% annually after the first eight contract years

•Contracts without the Purchase 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, 2015;


•	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 Purchase Payment Credit Rider	Surrender Value with Purchase Payment Credit Rider	Surrender Value without Purchase Payment Credit Rider	Surrender Value with Purchase Payment Credit Rider	Surrender Value without Purchase Payment Credit Rider	Surrender Value with Purchase Payment Credit Rider
1	$23,058.48	$23,598.60	$24,233.48	$24,806.10	$25,408.48	$26,058.26
2	$22,481.15	$22,869.73	$24,832.16	$25,271.34	$27,383.69	$28,023.16
3	$21,917.65	$22,162.69	$25,446.41	$25,767.28	$29,579.69	$30,125.65
4	$21,568.38	$21,476.85	$26,331.55	$26,293.43	$32,192.65	$32,375.39
5	$21,220.87	$21,010.61	$27,269.47	$27,080.13	$34,985.26	$35,032.66
6	$20,875.22	$20,550.27	$28,225.30	$27,877.57	$37,971.19	$37,858.52
7	$20,531.52	$20,095.87	$29,199.50	$28,685.98	$41,165.13	$40,864.76
8	$20,368.53	$19,647.45	$30,472.55	$29,535.57	$44,832.89	$44,064.02
9	$19,850.28	$19,323.52	$31,265.73	$30,580.38	$48,241.50	$47,740.20
10	$19,344.45	$19,338.16	$32,079.54	$32,145.88	$51,909.25	$52,176.87
15	$16,991.47	$16,985.90	$36,477.63	$36,553.06	$74,879.84	$75,265.88
20	$14,907.31	$14,902.38	$41,478.69	$41,564.47	$108,015.23	$108,572.10

The higher the rate of return, the more advantageous the Purchase Payment Credit Rider becomes. However, Contracts with the Purchase Payment Credit Rider are subject to both a greater surrender charge and a longer surrender charge period than Contracts issued without the Purchase Payment Credit Rider. If you surrender your Contract with the Purchase Payment Credit Rider while subject to a surrender charge, your surrender value may be less than the surrender value of a Contract without the Purchase Payment Credit Rider.

The Accumulation Period

The Value of Your Contract

The value of your Contract is the total of the Separate Account accumulated value plus the DCA Plus Account(s) accumulated value plus the Fixed Account accumulated value. The DCA Plus Accounts and Fixed Account are described in the section titled FIXED ACCOUNT AND DCA PLUS ACCOUNTS.

There is no guaranteed minimum Separate Account accumulated value. Its value reflects the investment experience of the divisions that you choose. It also reflects your purchase payments, partial surrenders, surrender charges and the Contract expenses deducted from the Separate Account.

The Separate Account accumulated value changes from day to day. To the extent the accumulated value is allocated to the Separate Account, 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 the total of units purchased by allocations to the division from:

•your initial purchase payment;

•subsequent purchase payments;

•purchase payment credits; and

•transfers from another division, a DCA Plus Account or the Fixed Account.

minus units sold:

•for partial surrenders from the division;

•as part of a transfer to another division or the Fixed Account; and

•to pay contract charges and fees.

Unit values are calculated each valuation date at the close of normal trading of the NYSE. 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 total Separate Account annual expenses.

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 Separate Account charges are calculated by dividing the annual amount of the charge by 365 and multiplying by the number of days in the valuation period.

Purchase Payments


•	On your application, you direct how your purchase payments will be allocated to the Investment Options.


•	Allocations may be in percentages.


•	Percentages must be in whole numbers and total 100%.


•	Subsequent purchase payments are allocated according to your future purchase payment 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.

•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 1-866-894-2087; or

•visiting www.principal.com.


•	Changes to purchase payment allocations do not automatically result in the transfer of any existing investment option accumulated values. You must provide specific instructions to transfer existing accumulated values.


•	Purchase payments are credited on the basis of unit value next determined after we receive a purchase payment.


•	If no purchase 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 GENERAL INFORMATION – Reservation of Rights).

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 1-866-894-2087; or

•visiting www.principal.com.

•You must specify the dollar amount or percentage to transfer from each division.

•The minimum 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 (without our prior approval).

Unscheduled Transfers


•	You may make unscheduled division transfers from one division to another division or to the Fixed Account by:

•mailing your instructions to us;

•calling us at 1-800-852-4450 (if telephone privileges apply);

•faxing your instructions to us at 1-866-894-2087; or

•visiting www.principal.com.


•	Transfers are not permitted into DCA Plus Accounts.


•	The transfer is made, and values determined, as of the end of the valuation period in which we receive your request.


•	We reserve the right to impose a fee of the lesser of $30 or 2% of each unscheduled transfer after the first unscheduled transfer in a contract year.

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 a transfer 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, then 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 them.


•	We reserve the right to limit the number of divisions from which simultaneous transfers are made. In no event will it ever be less than two.

Scheduled transfers are designed to reduce the risks that result from market fluctuations. They do this by spreading out the allocation of your purchase payments to investment options over a longer period of time. This allows you to reduce the risk of investing most of your purchase payments 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)).

Automatic Portfolio Rebalancing (APR)


•	APR allows you to maintain a specific percentage of your Separate Account accumulated value in specified divisions over time.


•	You may elect APR at any time.


•	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 will not begin until the examination period has expired.


•	There is no charge for APR transfers.


•	APR can be done on the frequency you specify:

•quarterly (on a calendar year or contract year basis); or

•semi-annually 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 1-866-894-2087; or

•visiting www.principal.com.

Divisions are rebalanced at the end of the valuation period during which we receive your request.

Example:

You elect APR to maintain your Separate Account accumulated 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 values 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 sold and applied to the Bond & Mortgage Securities Division so that 50% of the Separate Account accumulated value is once again in each Division.

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 purchase payment allocation changes;

•set up Dollar Cost Averaging (DCA) scheduled transfers;

•make transfers; and

•make changes to 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 (name, address, security phrase, password, daytime telephone number, social security number and/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 if we modify or terminate telephone service or internet services. 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 5 p.m. Eastern Time on any day that the NYSE is open).


•	are effective the day they are received if we receive the instructions in good order before the close of normal trading of the NYSE (generally 4:00 p.m. Eastern Time).


•	are effective the next valuation day if we receive the instructions when we are not open for business and/or after the NYSE closes its normal trading.

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


•	are effective the day they are received if we receive the instructions in good order before the close of normal trading of the NYSE (generally 4:00 p.m. Eastern Time).


•	are effective the next valuation day if we receive the instructions when we are not open for business and/or after the NYSE closes its normal trading.

Surrenders

You may surrender your Contract by providing us notice. Surrenders result in the redemption of units and your receipt of the value of the redeemed units minus any applicable fees and surrender charges. The values are determined as of the end of the valuation period in which 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 Delay of Payments). Surrenders before age 59 ½ may involve an income tax penalty (see FEDERAL TAX MATTERS).

You may specify surrender allocation percentages with each partial surrender request. If you don’t provide us with specific percentages, we will use your purchase payment allocation percentages for the partial surrender. Surrenders may be subject to a surrender charge (see Surrender Charge).

Surrender requests may be sent to us at:

Principal Life Insurance Company

P O Box 9382

Des Moines, Iowa 50306-9382

Total Surrender


•	You may surrender the Contract at any time before the annuitization date.


•	You receive the cash surrender value at the end of the valuation period during which we receive your surrender 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)).


•	The written consent of all collateral assignees and irrevocable beneficiaries must be obtained prior to surrender.


•	We reserve the right to require you to return the Contract.

Unscheduled Partial Surrender


•	Prior to the annuitization date and during the lifetime of the Annuitant, you may surrender a portion of your accumulated value by sending us a written request.


•	You must specify the dollar amount of the surrender (which must be at least $100).


•	The unscheduled partial surrender is effective at the end of the unscheduled partial valuation period during which we receive your written request for the unscheduled partial surrender.


•	The unscheduled partial surrender is deducted from your Investment Options according to the surrender allocation percentages you specify.


•	If surrender allocation percentages are not specified, we use your purchase payment allocation percentages.


•	We surrender units from your investment options to equal the dollar amount of the unscheduled partial surrender request plus any applicable surrender charge and fee.


•	The accumulated value after the unscheduled partial surrender must be equal to or greater than $5,000 (we reserve the right to change the minimum remaining accumulated value but it will not be greater than $10,000).

Scheduled Partial Surrender


•	You may elect scheduled partial surrenders from any of the investment options on a scheduled basis by sending us written notice.


•	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 scheduled 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 year.


•	We surrender units from your investment options to equal the dollar amount of the scheduled partial surrender request plus any applicable surrender charge.


•	The scheduled partial surrenders continue until your value in the division is zero or we receive written notice to stop the scheduled partial surrenders.

Death Benefit

The following table illustrates the various situations and the resulting death benefit payment if you die before the annuitization date.



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. If a beneficiary dies before you, on 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(ies’) right to the 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. elect to continue the Contract; or b. receive the death benefit under the Contract. All other beneficiaries receive the death benefit under the Contract. If a beneficiary dies before you, on 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(ies’) right to the 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. Upon your death, only the surviving owner’s right to the 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. elect to continue the Contract; or b. receive the death benefit under the Contract. Unless the surviving spouse owner elects to continue the Contract, upon your death, only your spouse’s right to the death benefit will continue; all other rights and benefits under the rider and the Contract will terminate.



If . . .	And . . .	Then . . .
The annuitant dies	The owner is not a natural person	The beneficiary(ies) receives 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) survives 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.

Before the annuitization date, you may give us written instructions for payment under a death benefit option. If we do not receive your instructions, the death benefit is paid according to instructions from the beneficiary(ies). The beneficiary(ies) may elect to apply the death benefit under an annuity benefit payment option or receive the death benefit as a single payment. Generally, unless the beneficiary(ies) elects otherwise, we pay the death benefit in a single payment, subject to proof of your death.

No surrender charge applies when a death benefit is paid.

Standard Death Benefit – for Contracts issued prior to November 23, 2003 (and all contracts issued in Louisiana, Oregon, and South Carolina)

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 purchase payments minus any partial surrenders (and any applicable fees and surrender charges) 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 purchase payments since that contract anniversary and minus any partial surrenders (and any applicable surrender charges and fees) made after that contract anniversary.

Standard Death Benefit - for Contracts issued on or after November 23, 2003 (except contracts issued in Louisiana, Oregon, and South Carolina)

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 = is the total of purchase payments minus an adjustment* for each partial surrender (and any applicable fees and surrender charges) made prior to the date we receive proof of death and all required documents; and

c = is 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 purchase payments since that contract anniversary and minus an adjustment* for each partial surrender (and any applicable fees and surrender charges) made after that contract anniversary.


*	The adjustment for each partial surrender is equal to ((i) divided by (ii)) multiplied by the amounts determined in (b) or (c) above immediately prior to the partial surrender, where:

•(i) is the amount of the partial surrender (and any applicable fees and surrender charges); and

•(ii) is the accumulated value immediately before the partial surrender.

Annual Enhanced Death Benefit Rider

This is an optional death benefit rider. The rider provides you with the greater of the annual enhanced death benefit or the standard death benefit. The rider can only be purchased at the time the Contract is issued. Once the rider is terminated, it cannot be reinstated (except in Florida). The rider charge is discussed in the section CHARGES AND DEDUCTIONS — Charges for Optional Riders.

For Contracts issued prior to November 23, 2003 and all contracts issued in New Jersey and Washington

Prior to the annuitization date and prior to the lock-in date (the later of five years after the rider effective date or the contract anniversary following the original owner’s or original annuitant’s 75th birthday), the annual enhanced death benefit is the greatest of (a) or (b) or (c) where:


•	(a) is the standard death benefit;


•	(b) is the annual increasing death benefit, based on purchase payments (accumulated at 5% annually) minus any partial surrender (and any applicable fees and charges) (accumulated at 5% annually) until the lock-in date; or


•	(c) is the highest accumulated value on any prior contract anniversary, plus purchase payments and minus the amount of each partial surrender (and any applicable fees and charges) made after that contract anniversary and prior to the lock-in date.


NOTE:	For Contracts issued in New York prior to November 23, 2003, the annual enhanced death benefit is the greater of (a) or (c).

Lock-in Feature - At the later of five years after the rider effective date or the contract anniversary following the original owner’s or original annuitant’s 75th birthday (the “lock-in date”), the death benefit amount is locked-in. After the lock-in date, the death benefit increases by purchase payments (subject to applicable restrictions) made after the lock-in date and decreases by the amount of each partial surrender (and any applicable fees and surrender charges) made after the lock-in date. After the lock-in date, once the standard death benefit equals the annual enhanced death benefit, the annual enhanced death benefit and any associated charges terminate. The standard death benefit then applies.

For Contracts issued on or after November 23, 2003 (except for contracts issued in New Jersey and Washington)


•	(a) is the standard death benefit;


•	(b) is the annual increasing death benefit, based on purchase payments (accumulated at 5% annually) minus the proportionate withdrawal amount* of each partial surrender (and any applicable fees and surrender charges) (accumulated at 5% annually) until the lock-in date; or


•	(c) is the highest accumulated value on any prior contract anniversary, plus purchase payments and minus the proportionate withdrawal amount* of each partial surrender (and any applicable fees and surrender charges) made after that contract anniversary and prior to the lock-in date.


NOTE:	For Contracts issued in New York on or after November 23, 2003, the annual enhanced death benefit is the greater of (a) or (c).


*	The proportionate withdrawal amount is equal to ((i) divided by (ii)) multiplied by the amounts determined in (b) or (c) above immediately prior to the partial surrender, where:

(i) is the amount of the partial surrender (and any applicable fees and surrender charges); and

(ii) is the accumulated value immediately before the partial surrender.

Lock-In Feature - At the later of five years after the rider effective date or the contract anniversary following the original owner’s or original annuitant’s 75th birthday (the “lock-in date”), the death benefit amount is locked-in. After the lock-in date, the death benefit increases by purchase payments (subject to applicable restrictions) made after the lock-in date and decreases by the adjusted proportionate withdrawal amount of each partial surrender (and any applicable fees and surrender charges). After the lock-in date, once the standard death benefit equals the annual enhanced death benefit, the annual enhanced death benefit and any associated charge terminate. The standard death benefit then applies.

Payment of Death Benefit

The death benefit is usually paid within five business days of our receiving all documents (including proof of death) that we require 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 Delay of Payments). We pay interest (as required by state law) on the death benefit from the date we receive all required documents until payment is made or until the death benefit is applied under an annuity benefit payment option.


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. After payment of all of the death benefit, the Contract is terminated.

The Annuity Benefit Payment 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 later than the maximum annuitization date 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.

You may annuitize your Contract at any time by electing to receive payments under an annuity benefit payment option. If the accumulated value on the annuitization date is less than $2,000.00 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 annuity benefit 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 annuity benefit payments begin under the annuity benefit payment option you choose, the option may not be changed. In addition, once annuity benefit payments begin, you may not surrender or otherwise liquidate or commute any of your accumulated value that has been annuitized.

Depending on the type of annuity benefit payment option selected, annuity benefit payments that are initiated either before or after the annuitization date may be subject to penalty taxes (see FEDERAL TAX MATTERS). You should consider this carefully when you select or change the annuity benefit payment commencement date.

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. Annuity benefit 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 annuity benefit payments is specified for the entire payment period according to the annuity benefit payment option selected. There is no right to take a total surrender after the annuitization date.

The amount of the fixed annuity benefit payment depends on:


•	the amount of accumulated value applied to the annuity benefit payment option;


•	the annuity benefit payment option selected; and


•	the age and gender of the annuitant and joint annuitant, if any (unless the Fixed Period Income benefit payment option is selected).

Annuity benefit payments are determined in accordance with annuity tables and other provisions contained in the Contract. The annuity benefit payments tables contained in this Contract are based on the 1983 Table A Mortality Table. These tables are guaranteed for the life of the Contract. The amount of the initial annuity benefit payment is determined by applying the accumulated value as of the date of the application to the annuity table for the annuitant’s annuity option, gender, and age.

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 fixing the annuity benefit 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.

You may select an annuity benefit payment option by written request only. Your selection of an annuity benefit payment option may not be changed after annuity benefit payments begin. You may change your selection of an annuity benefit payment option (for which no annuity benefit payments have been made) by sending us a written request prior to the annuitization date. We must receive your written request on or before the annuitization date. If you fail to elect an annuity benefit payment option, we will automatically apply:


•	for Contracts with one annuitant – Life Income with annuity benefit payments guaranteed for a period of 10 years.


•	for Contracts with joint annuitants – Joint and Full Survivor Life Income with annuity benefit payments guaranteed for a period of 10 years.

The available annuity benefit payment options include:


•	Fixed Period Income - Level payments are made 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 period. Payments stop after all guaranteed payments are made.


•	Life Income - Level payments are made during the annuitant’s lifetime only. NOTE: There is no death benefit value remaining or further payments when the annuitant dies. 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.


•	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 annuitants die before the first payment date. NOTE: There is no death benefit value remaining or future payments after both annuitants have died.

•

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.

•

Joint and Two-thirds Survivor Life Income - Payments continue as long as either the annuitant or the joint annuitant is alive. If either the annuitant or joint annuitant dies, payments continue to the survivor at two-thirds the original amount. Payments stop when both the annuitant and joint annuitant have died. It is possible that only one payment is made 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 annuitants die before the first payment date. NOTE: There is no death benefit value remaining or future payments after both annuitants have died.

Other annuity benefit payment options may be available.

Supplementary Contract

When you annuitize your Contract’s accumulated value, we issue a supplementary fixed annuity contract that provides an annuity benefit payment based on the amount you have annuitized and the annuity benefit payment option that you have selected. The date of the first annuity benefit payment under the supplementary contract is the effective date of that supplementary contract unless you select a date for the first annuity benefit payment that is later than the supplementary contract effective date. The first annuity benefit payment must be made within one year of the supplementary contract effective date.

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 70 ½. 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 Required Distributions for Non-Qualified Contracts).

Death of Annuitant (during the annuity benefit payment period)

If the annuitant dies during the annuity benefit payment period, remaining annuity benefit payments are made to the owner throughout the guarantee period, if any, or for the life of any joint annuitant, if any. If the owner is the annuitant, remaining annuity benefit 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.

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 benefit is more than our costs, the excess is profit to the Company. Other than the Annual Fee and Premium Taxes (which we do not expect to generate a profit), we expect a profit from the fees and charges listed below.

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.

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 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.

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. 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.

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. No surrender charge is imposed on a death benefit payment which gives us an additional mortality risk.

The expense risk that we assume is that the actual expenses incurred in issuing and administering the Contract exceed the Contract limits on administrative charges.

If the mortality and expense risks charge is not enough to cover the costs, we bear the loss. If the amount of mortality and expense risks charge deducted is more than our costs, the excess is profit to the Company.

Separate Administration Charge

We assess each division with a daily Separate Account administration charge. The annual rate of the charge is 0.05% of the average daily net assets of the Separate Account divisions. This charge only is assessed prior to the annuitization date. This charge is assessed daily, at the time the value of a unit is calculated. We reserve the right to increase this administration charge up to an annual rate of 0.15% of the average daily net assets of the Separate Account divisions.

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 above. 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 Optional Riders

Subject to certain conditions, you may add one or more of the following optional riders to your Contract. Detailed information concerning the optional riders may be obtained from your registered representative or by calling us at 1-800-852-4450.

Purchase Payment Credit Rider. The current annual charge for the rider is 0.60% of the average daily net assets of the Separate Account divisions. If you elect the Purchase 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. 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).

Annual Enhanced Death Benefit Rider

The annual charge for the rider is 0.20% of the accumulated value (0.15% in New York). The charge is equal to 0.05% (0.0375% in New York) of the average accumulated value during the calendar quarter. The charge is deducted through the redemption of units from the accumulated value in the same proportion as the surrender allocation percentages. If the rider is purchased after the beginning of a quarter, the charge is prorated according to the number of days it is in effect during the quarter. Upon termination of the rider or upon death, you will be charged based on the number of days the rider is in effect during the quarter.

The rider charge is intended to reimburse us for the cost of the potentially greater death benefit provided by this rider.

Transaction Fee

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.

We also reserve the right to charge a transaction fee of the lesser of $30 or 2% of each unscheduled transfer after the first unscheduled transfer in a contract year. The transfer fee would be deducted from the investment option(s) from which the amount is transferred, on a pro rata basis.

Premium Taxes

We reserve the right to deduct an amount to cover any premium taxes imposed by states or other jurisdictions. Any deduction is made from either a purchase payment when we receive it, or from the accumulated value when you request a surrender or you request application of the accumulated value under an annuity benefit payment option. Premium taxes range from 0% in most states to as high as 3.50%.

Surrender Charge

No sales charge is collected or deducted when purchase payments are applied under the Contract. A surrender charge is assessed on certain total or partial surrenders. The amounts we receive from the surrender charge are used to cover some of the expenses of the sale of the Contract (commissions and 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 includes profit, if any, from the mortality and expense risks charge.

The surrender charge for any total or partial surrender is a percentage of the purchase payments surrendered which were received by us during the contract years prior to the surrender. The applicable percentage which is applied to the sum of the purchase payments paid during each contract year is determined by the following tables. The amount of the purchase payment credit, if any, is not included in the sum of the purchase payments made.

Surrender Charge without the Purchase Payment Credit Rider (as a percentage of amounts surrendered)



Number of completed contract years since each purchase payment was made	Surrender charge applied to all purchase payments received in that contract year
0 (year of purchase payment)*	6%
1	6%
2	6%
3	5%
4	4%
5	3%
6	2%
7 and later	0%

Surrender Charge with the Purchase Payment Credit Rider (as a percentage of amounts surrendered)



Number of completed contract years since each purchase payment was made	Surrender charge applied to all purchase payments received in that contract year
0 (year of purchase payment)*	8%
1	8%
2	8%
3	8%
4	7%
5	6%
6	5%
7	4%
8	3%
9 and later	0%

Each purchase payment begins in year 0 for purposes of calculating the percentage applied to that purchase payment. However, purchase 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, then all purchase payments received during that period are considered to have been made in that contract year.

For purposes of calculating surrender charges, we assume that surrenders and transfers are made in the following order:


•	first from purchase payments no longer subject to a surrender charge;


•	then from the free surrender privilege (first from the earnings, then from the oldest purchase payments (first-in, first-out)) described below; and


•	then from purchase payments subject to a surrender charge on a first-in, first-out basis.

A surrender charge is not imposed in states where it is prohibited, including:


•	New Jersey – no surrender charge for total surrender on or after the later of the annuitant’s 64th birthday or 4 years after the contract date.


•	Washington – no surrender charge for total surrender on or after the later of the annuitant’s 70th birthday or 10 years after the contract date.


NOTE:	Partial surrenders may be subject to both the surrender charge and the transaction fee, if any.

Free Surrender Privilege

The free surrender privilege is an amount normally subject to a surrender charge that may be surrendered without a charge. The free surrender privilege is the greater of:


•	earnings in the Contract (earnings = accumulated value less unsurrendered purchase payments as of the surrender date); or


•	10% of the purchase payments, decreased by any partial surrenders since the last contract anniversary.

Any amount not taken under the free surrender privilege in a contract year is not added to the amount available under the free surrender privilege for any following contract year(s).

Unscheduled partial surrenders of the free surrender privilege may be subject to the transaction fee described above.

Waiver of Surrender Charge

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 purchase 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 Waiver of Surrender Charge Rider waives the surrender charge on surrenders made after the first contract anniversary if the original owner or original annuitant has a critical need. This rider is automatically made a part of the Contract at issue. There is no charge for this rider. This rider may not be available in all states or through all broker dealers and may be subject to additional restrictions. Some rider provisions may vary from state to state. We may withdraw or prospectively restrict the availability of this rider at any time. For more information regarding availability or features of this rider, you may contact your registered representative or call us at 1-800-852-4450.

Waiver of the surrender charge is available for critical need if the following conditions are met:


•	the original owner or original annuitant has a critical need (NOTE: A change of ownership will terminate this rider; once terminated the rider may not be reinstated); and


•	the critical need did not exist before the contract date.


•	For the purposes of this section, the following definitions apply:


•	critical need – owner’s or annuitant’s confinement to a health care facility, terminal illness diagnosis or total and permanent disability. 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.


•	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 primarily providing drug or alcohol treatment, or a facility owned or operated by the owner, annuitant or a member of their immediate families.


•	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. In Texas and New Jersey, terminal illness is not included in the criteria for critical need.


•	total and permanent disability – a disability that occurs after the contract date but before the original owner or annuitant reaches age 65 and qualifies to receive social security disability benefits. In New York, a different definition of total and permanent disability applies. In Oregon, total and permanent disability is not included in the criteria for critical need.


NOTE:	The Waiver of Surrender Charge Rider is not available in Massachusetts.

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 purchase payments, total assets under management for the Contract 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 administrative 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 Contract owners and other contract owners with contracts funded by the Separate Account.

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. It only contains selected information regarding the Fixed Account and DCA Plus Accounts. Assets in the Fixed Account and DCA Plus Accounts are held in the General Account of the Company.

The General Account is the assets of the Company other than those allocated to any of the Company’s Separate Accounts. Subject to applicable law, the Company has sole discretion over the assets in the General Account. Because of exemptive and exclusionary provisions, interests in the Fixed Account and DCA Plus Accounts are not registered under the Securities Act of 1933 and the General Account is not registered as an investment company under the Investment Company Act of 1940. The Fixed Account and DCA Plus Accounts are not subject to these Acts. The staff of the SEC does not review the prospectus disclosures relating to the Fixed Account or DCA Plus Accounts. However, these disclosures are subject to certain generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in the prospectus. Separate Account expenses are not assessed against any Fixed Account or DCA Plus Account values. More information concerning the Fixed Account and DCA Plus Accounts is available from your registered representative or by calling us at 1-800-852-4450.

Fixed Account

The Company guarantees that purchase payments allocated and amounts transferred to the Fixed Account earn interest at a guaranteed interest rate. In no event will the guaranteed interest rate be less than 3% compounded annually.

Each purchase payment allocated or amount transferred to the Fixed Account earns interest at the guaranteed rate in effect on the date it is received or transferred. This rate applies to each purchase payment or amount transferred through the end of the contract year.

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 accumulated value from which deductions for fees and charges may be made.

Fixed Account Accumulated Value

Your Fixed Account accumulated value on any valuation date is equal to:

•purchase payments allocated to the Fixed Account;

•plus any transfers to the Fixed Account from the Separate Account and DCA Plus Accounts;

•plus interest credited to the Fixed Account;

•minus any surrenders or applicable surrender charges from the Fixed Account;

•minus any transfers to the Separate Account.

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 charge (see Surrender Charge).

You may transfer amounts from the Fixed Account to the divisions before the annuitization date and as provided below. The transfer is effective on the valuation date following our receiving your instructions. You may transfer amounts on either a scheduled or unscheduled basis by:

•mailing your instructions to us;

•calling us at 1-800-852-4450 (if telephone privileges apply);

•faxing your instructions to us at 1-866-894-2087; or

•visiting www.principal.com

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 accumulated 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 accumulated value; or


•	transfer up to 100% of your Fixed Account accumulated value if:

•your Fixed Account accumulated value is less than $1,000; or

•(a) minus (b) is greater than 1% where:

•(a) is the weighted average of your Fixed Account interest rates for the preceding contract year; and

•(b) is the renewal interest rate for the Fixed Account.

We will inform you if the renewal interest rate falls to that level.

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:


•	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 accumulated 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 accumulated value is zero or until you notify us to discontinue the transfers. This specified dollar amount cannot exceed 2% of your Fixed Account accumulated value.


•	The minimum transfer amount is $100.


•	If the Fixed Account accumulated value is less than $100 at the time of transfer, then the entire Fixed Account accumulated value will be transferred.


•	If you stop the transfers, you may not start them again without our prior approval.

Dollar Cost Averaging Plus Program (DCA Plus Program)

Purchase payments allocated to the DCA Plus Accounts earn a guaranteed interest rate. A portion of your DCA Plus Account accumulated value is periodically transferred (on the 28th of each month) to divisions and/or to the Fixed Account. If the 28th is not a valuation date, then 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.

If you elect the Purchase Payment Credit rider, you may not participate in the DCA Plus Program.

DCA Plus Purchase Payments

You may enroll in the DCA Plus program by allocating a minimum purchase payment of $1,000 into a DCA Plus Account and selecting divisions and or the Fixed Account into which transfers will be made. Subsequent purchase 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 purchase payments receive the fixed rate of return in effect on the date each purchase payment is received by us. The rate of return remains in effect for the remainder of the 6-month or 12-month DCA Plus transfer 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 purchase payments and accrued interest must be transferred from the DCA Plus Account to the selected divisions and/or Fixed Account in no more than 6 months. Under the 12-month transfer program, all payments and accrued interest must be transferred to the selected divisions and or Fixed Account 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 accumulated value is $4,000, the transfer amount would be $1,000 ($4,000 / 4).

Scheduled DCA Plus Transfers

Transfers are made from DCA Plus Accounts to divisions and the Fixed Account according to your allocation instructions. The transfers begin after we receive your purchase payment and completed enrollment instructions. Transfers occur on the 28th of the month and continue until your entire DCA Plus Account accumulated value is transferred.

Unscheduled DCA Plus Transfers

You may make unscheduled transfers from DCA Plus Accounts to divisions and or the Fixed Account. 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 make scheduled or unscheduled surrenders from DCA Plus Accounts. Purchase payments earn interest according to the corresponding rate until the surrender date. Surrenders are subject to any applicable surrender charge.

GENERAL PROVISIONS

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 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 transaction 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.

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.

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 the 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.

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 your non-qualified Contract ownership and/or annuitant designation 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, then the waiver of the surrender charge for surrenders made because of critical need of the owner is not available. 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.

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.

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. 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 Contract 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 Purchase 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 you have any of the optional riders, rider fees will apply for the period between the date you requested termination and the date your contract was reinstated.

If you have any of the optional riders, rider benefits will be adjusted when the amount originally surrendered differs from the reinstatement amount.

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 surrenders 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 opens an account. When you open an account, 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 initial purchase payment, the account(s) will be closed and redeemed in accordance with normal redemption procedures.

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.

RIGHTS RESERVED BY THE COMPANY

We reserve the right to make certain changes if, in our judgment, they best serve the interests of you and the annuitant or are appropriate in carrying out the purpose of the Contract. Any changes will be made only to the extent and in the manner permitted by applicable laws. Also, when required by law, we will obtain your approval of the changes and approval from any appropriate regulatory authority. Approvals may not be required in all cases. Examples of the changes the Company may make include:


•	transfer assets in any division to another division or to the Fixed Account;


•	add, combine or eliminate a division(s);


•	substitute the units of a division for the units of another division:


•	if units of a division are no longer available for investment; or


•	if in our judgment, investment in a division becomes inappropriate considering the purposes of the Separate Account.

Frequent Trading and Market-Timing (Abusive Trading Practices)

This Contract is not designed for frequent trading or market timing activity of the divisions. 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;


•	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 recordkeeping 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.

If we, or an underlying mutual fund that is a division 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 will 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 Principal Securities, Inc. ("PSI") formerly Princor Financial Services Corporation (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. PSI is paid 6.5% of purchase payments by the Company for the distribution of the Contract. PSI also may receive 12b-1 fees in connection with purchases and sales of mutual funds underlying the Contracts. The 12b-1 fees for the underlying mutual funds are shown in this Contract prospectus in Summary of Expense, Annual Underlying Mutual Fund Expenses.

Applications for the Contracts are solicited by registered representatives of PSI or such other broker-dealers as have entered into selling agreements with PSI. 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.

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.

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.

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.

Non-Qualified Contracts

Section 72 of the Internal Revenue Code governs the income taxation of annuities in general.


•	Purchase 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 non-natural persons are immediately taxed on any increase in the accumulated value unless the non-natural person is acting as an agent for a natural person.

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 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.


•	The “investment in the contract” is generally the total of the purchase payments made less any tax-free return of premiums.


•	After the purchase 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.

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 premature distribution from the Contract, you may incur an income tax penalty, 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 your beneficiary;


•	made under an immediate annuity contract; or


•	allocable to contributions made prior to August 14, 1982.

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.

Tax-Free Exchanges

Under Section 1035 of the Code, the exchange of one annuity contract for another is not a taxable transaction if the same owner is on each contract in the exchange, but is reportable to the IRS.

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, purchase 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 purchase 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.

Net Investment Income Tax Change for 2013

The Net Investment Income tax is imposed at a rate of 3.8% on net investment 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.

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.

With respect to IRAs, IRA rollovers, SEP-IRAs and SIMPLE-IRAs there is a 10% excise tax under the Internal Revenue Code on the taxable portion of a “premature distribution.” 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;


•	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-B 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.

In addition, not more frequently than once every twelve months, an owner may execute one tax-free indirect rollover from one IRA to another, subject to the 60-day limitation. The once-per-year limitation on rollovers does not apply to direct transfers of funds between IRA providers or to Roth IRA conversions. For more information, please see 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.

The RMD rules apply to traditional IRAs, as well as SEP-IRA’s 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. Roth IRAs may not be aggregated with other IRAs, but may be aggregated with other Roth IRAs.

Failure to comply with the RMD rules can result in excise tax penalty of 50% on the amount by which the RMD in any year exceeds the amount actually distributed in that year.

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.

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 and in certain circumstances to payments made to non-natural persons. 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.

MUTUAL FUND DIVERSIFICATION

The United States Treasury Department has adopted regulations under Section 817(h) of the Internal Revenue Code which establish 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 Insurance Department of the State of Iowa. 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 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.

GENERAL INFORMATION

Reservation of Rights

The Company reserves the right to:


•	increase the minimum amount for each purchase payment to not more than $1,000; and

•

terminate a Contract and send you the accumulated value if no purchase payments are made during two consecutive calendar years and the accumulated value (or total purchase payments less partial surrenders and applicable surrender charges) is less than $2,000. 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.

Legal Matters

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 to which Separate Account B is a party or which would materially affect Separate Account B.

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 purchase payments made 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 options. 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 benefit and retirement plans. We and our affiliates may pay a bonus or other consideration or incentive to brokers or dealers:


•	if a participant in such a benefit or retirement plan purchases a 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 benefit or retirement plan utilizes; or


•	based on the broker’s or dealer’s relationship to the benefit or retirement plan.

The broker or dealer may pay to its financial professionals some or all of the amounts we pay to the broker or dealer.

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.

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.

TABLE OF SEPARATE ACCOUNT DIVISIONS

The following is a brief summary of the investment objectives of each division. There is no guarantee that the objectives will be met.



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 Income & Growth Division
Invests in:	American Century VP Income & Growth Fund – Class I
Investment Advisor:	American Century Investment Management, Inc.
Investment Objective:	seeks capital growth by investing in common stocks. Income is a secondary objective.



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 I
Investment Advisor:	American Century Investment Management, Inc.
Investment Objective:	seeks long-term capital growth.



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



American Funds Insurance Series Asset Allocation Fund Division (this fund is available beginning 05/21/2016)
Invests in:	American Funds Insurance Series Asset Allocation Fund – Class 2
Investment Advisor:	Capital Research and Management Company
Investment Objective:	seeks to provide you a high total return (including income and capital gains) consistent with preservation of capital over the long term.



American Funds Insurance Series Blue Chip Income & Growth Division (this fund is available beginning 05/21/2016)
Invests in:	American Funds Insurance Series Blue Chip Income & Growth Fund – Class 2
Investment Advisor:	Capital Research and Management Company
Investment Objective:	seeks to produce income exceeding the average yield on U.S. stocks generally and to provide an opportunity for growth of principal consistent with sound common stock investing.



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



American Funds Insurance Series High-Income Bond Division
Invests in:	American Funds Insurance Series High-Income Bond Fund – Class 2
Investment Advisor:	Capital Research and Management Company
Investment Objective:	seeks high level of current income. Its secondary investment objective is capital appreciation.



American Funds Insurance Series New World 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.



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.



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.



Fidelity VIP Contrafund^® Division
Invests in:	Fidelity VIP Contrafund^® Portfolio – Service Class
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^®).



Fidelity VIP Government Money Market Division
Invests in:	Fidelity VIP Government Money Market Portfolio – Initial Class
Investment Advisor:	Fidelity Management & Research Company
Investment Objective:	seeks as high a level of current income as is consistent with preservation of capital and liquidity.



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



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 Templeton VIP Trust – 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.



Goldman Sachs VIT Small Cap Equity Insights Division
Invests in:	Goldman Sachs VIT – Goldman Sachs Small Cap Equity Insights 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.



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 American Franchise Division
Invests in:	Invesco V.I. American Franchise Fund – Series I Shares
Investment Advisor:	Invesco Advisors, Inc.
Investment Objective:	seeks capital growth.



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



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



Invesco Mid Cap Growth Division
Invests in:	Invesco V.I. Mid Cap Growth Fund – Series I Shares
Investment Advisor:	Invesco Advisors, Inc.
Investment Objective:	seeks capital growth.



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



Janus Aspen Enterprise Division
Invests in:	Janus Aspen Enterprise Portfolio – Service Shares
Investment Advisor:	Janus Capital Management LLC
Investment Objective:	seeks long-term growth of capital.



Janus Aspen Flexible Bond Division (this fund is available beginning 05/21/2016)
Invests in:	Janus Aspen Flexible Bond Portfolio – Service Shares
Investment Advisor:	Janus Capital Management LLC
Investment Objective:	seeks to obtain maximum total return, consistent with preservation of capital.



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



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



Oppenheimer Main Street Small Cap Division
Invests in:	Oppenheimer Main Street Small Cap Fund^®/VA – Service Shares
Investment Advisor:	Oppenheimer Funds, Inc.
Investment Objective:	seeks capital appreciation.



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.



Balanced Division
Invests in:	Principal Variable Contracts Funds Balanced Account – Class 1
Investment Advisor:	Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:	seeks to generate a total return consisting of current income and capital appreciation.



Core Plus Bond Division
Invests in:	Principal Variable Contracts Funds Core Plus Bond 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 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.



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 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.



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 to provide 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, Inc. and Brown Advisory LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:	seeks long-term growth of capital.



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.



Multi-Asset Income Division (This underlying mutual fund is a fund of funds.) (this fund is available beginning 05/21/2016)
Invests in:	Principal Variable Contracts Funds Multi-Asset Income Account – Class 1
Investment Advisor:	Principal Global Investors, LLC through a sub-advisory agreement with Principal Management Corporation
Investment Objective:	seeks current income.



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.



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.



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 Division
Invests in:	Principal Variable Contracts Funds SmallCap 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.



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, LLC 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.



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.



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.



VanEck VIP Global Hard Assets Division
Invests in:	VanEck 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.

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 number for the Flexible Variable Annuity Contract is 33-74232.

The registration number for the Flexible Variable Annuity Contract with the Purchase Payment Credit Rider is 333-40254.

Customer Inquiries

Your questions should be directed to: Principal Flexible Variable Annuity, Principal Financial Group, P.O. Box 9382, Des Moines, Iowa 50306-9382, 1-800-852-4450.

TABLE OF CONTENTS OF THE SAI

The table of contents for the Statement of Additional Information is provided below.



TABLE OF CONTENTS
	Page
GENERAL INFORMATION AND HISTORY	3
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	3
PRINCIPAL UNDERWRITER	3
CALCULATION OF PERFORMANCE DATA	3
TAXATION UNDER CERTAIN RETIREMENT PLANS	11

Principal Life Insurance Company Separate Account B
Report of Independent Registered Public Accounting Firm	15
Financial Statements	16

Principal Life Insurance Company
Report of Independent Registered Public Accounting Firm	239
Consolidated Financial Statements	240

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

Principal Securities, Inc.

a company of

the Principal Financial Group

Des Moines, IA 50392-2080

Telephone: 1-800-852-4450

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

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.

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



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: 2.55% Minimum Annual: 0.25%	Maximum Annual: 0.65% Minimum Annual: 0.55%
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 and in states where rider changes are not yet approved, 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.

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.

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 also the FEDERAL TAX MATTERS section of this prospectus.

CONDENSED FINANCIAL INFORMATION

Financial statements are included in the Statement of Additional Information. Following are unit values for the Contract for the periods ended December 31.



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/Mid Cap Value
2015	$12.258	$11.436	-6.71%	23
2014	11.372	12.258	7.79	22
2013⁽¹⁾	10.000	11.372	13.72	17
American Century VP Income & Growth
2015	17.513	16.315	-6.84	537
2014	15.770	17.513	11.05	633
2013	11.759	15.770	34.11	736
2012	10.378	11.759	13.31	784
2011	10.191	10.378	1.83	873
2010	9.040	10.191	12.73	1,000
2009	7.751	9.040	16.63	1,054
2008	11.999	7.751	-35.40	1,160
2007	12.159	11.999	-1.32	1,465
2006	10.515	12.159	15.63	1,686
American Century VP Inflation Protection
2015⁽²⁾	10.000	9.637	-3.63	7
American Century VP Mid Cap Value
2015	19.152	18.606	-2.85	59
2014	16.692	19.152	14.74	76
2013	13.014	16.692	28.26	73
2012	11.339	13.014	14.77	66
2011	11.579	11.339	-2.07	75
2010⁽³⁾	10.000	11.579	15.29	29
American Century VP Ultra
2015	15.693	16.462	4.90	220
2014	14.454	15.693	8.57	234
2013	10.679	14.454	35.35	278
2012	9.493	10.679	12.49	325
2011	9.510	9.493	-0.18	345
2010	8.295	9.510	14.65	397
2009	6.246	8.295	32.80	407
2008	10.809	6.246	-42.21	449
2007	9.044	10.809	19.55	561
2006	9.468	9.044	-4.48	672
American Century VP Value
2015	21.256	20.137	-5.26	752
2014	19.074	21.256	11.44	853
2013	14.693	19.074	29.82	1,007
2012	12.985	14.693	13.15	1,142
2011	13.036	12.985	-0.39	1,236
2010	11.677	13.036	11.64	1,373
2009	9.876	11.677	18.24	1,520
2008	13.663	9.876	-27.72	1,738
2007	14.612	13.663	-6.49	2,157
2006	12.489	14.612	17.00	2,266



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)
American Global Small Capitalization Fund
2015	$10.235	$10.129	-1.04%	36
2014⁽⁴⁾	10.000	10.235	2.35	9
American High Income Bond
2015	9.691	8.867	-8.50	41
2014⁽⁴⁾	10.000	9.691	-3.09	22
American New World Fund
2015	9.094	8.694	-4.40	27
2014⁽⁴⁾	10.000	9.094	-9.06	17
BlackRock Global Allocation VI
2015⁽²⁾	10.000	9.294	-7.06	6
BlackRock iShares Alternative Strategies VI
2015⁽²⁾	10.000	9.286	-7.14	4
BlackRock iShares Dynamic Allocation VI
2015⁽²⁾	10.000	9.140	-8.60	‑
BlackRock iShares Dynamic Fixed Income VI
2015⁽²⁾	10.000	9.695	-3.05	2
BlackRock iShares Equity Appreciation VI
2015⁽²⁾	10.000	8.660	-13.40	‑
Columbia Limited Duration Credit
2015⁽²⁾	10.000	9.567	-4.33	5
Delaware VIP Limited Term Diversified Income
2015⁽²⁾	10.000	9.868	-1.32	7
Delaware VIP Small Cap Value
2015	11.883	10.971	-7.67	2
2014	11.398	11.883	4.26	3
2013⁽¹⁾	10.000	11.398	13.98	1
Deutsche Small Mid Cap Value
2015	11.813	11.403	-3.47	4
2014	11.388	11.813	3.73	3
2013⁽¹⁾	10.000	11.388	13.88	1
Fidelity VIP Contrafund®
2015	23.790	23.614	-0.74	1,786
2014	21.554	23.790	10.37	2,015
2013	16.645	21.554	29.49	2,343
2012	14.492	16.645	14.86	2,723
2011	15.072	14.492	-3.85	3,212
2010	13.032	15.072	15.65	3,661
2009	9.727	13.032	33.98	4,098
2008	17.164	9.727	-43.33	4,545
2007	14.791	17.164	16.04	5,653
2006	13.421	14.791	10.21	6,230



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 Equity-Income
2015	$17.813	$16.838	-5.47%	1,248
2014	16.636	17.813	7.08	1,442
2013	13.181	16.636	26.21	1,669
2012	11.403	13.181	15.59	1,934
2011	11.471	11.403	-0.59	2,039
2010	10.107	11.471	13.49	2,197
2009	7.879	10.107	28.28	2,487
2008	13.952	7.879	-43.53	2,705
2007	13.951	13.952	0.01	3,196
2006	11.779	13.951	18.44	3,299
Fidelity VIP Growth
2015	14.645	15.475	5.67	917
2014	13.344	14.645	9.75	1,035
2013	9.922	13.344	34.49	1,239
2012	8.772	9.922	13.11	1,430
2011	8.869	8.772	-1.09	1,562
2010	7.239	8.869	22.52	1,810
2009	5.720	7.239	26.56	1,965
2008	10.978	5.720	-47.90	2,188
2007	8.762	10.978	25.29	2,680
2006	8.312	8.762	5.41	2,981
Fidelity VIP Overseas
2015⁽²⁾	10.000	9.067	-9.33	9
Franklin Global Real Estate VIP
2015⁽²⁾	10.000	9.579	-4.21	4
Franklin Small Cap Value VIP
2015	18.790	17.178	-8.58	12
2014	18.928	18.790	-0.73	10
2013⁽¹⁾	16.049	18.928	17.94	8
Franklin Templeton Global Bond VIP
2015⁽²⁾	10.000	9.381	-6.19	3
Goldman Sachs VIT Mid Cap Value
2015	24.323	21.790	-10.41	9
2014	21.697	24.323	12.10	7
2013⁽¹⁾	19.636	21.697	10.50	3
Goldman Sachs VIT Small Cap Equity Insights
2015	18.379	17.755	-3.40	5
2014	17.413	18.379	5.55	5
2013⁽¹⁾	15.223	17.413	14.39	5
Guggenheim Floating Rate Strategies
2015⁽²⁾	10.000	9.720	-2.80	18
Guggenheim Global Managed Futures Strategy
2015⁽²⁾	10.000	9.658	-3.42	-
Guggenheim Long Short Equity Fund
2015⁽²⁾	10.000	9.886	-1.14	6
Guggenheim Macro Opportunities
2015⁽²⁾	10.000	9.706	-2.94	8
Guggenheim Multi-Hedge Strategies
2015⁽²⁾	10.000	10.001	0.01	1



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 V.I. American Franchise
2015	$14.333	$14.857	3.66%	294
2014	13.391	14.333	7.03	320
2013	9.678	13.391	38.37	383
2012	7.695	9.678	25.77	453
2011	8.461	7.695	-9.05	584
2010	7.419	8.461	14.05	667
2009	6.204	7.419	19.58	763
2008	10.925	6.204	-43.21	836
2007	9.876	10.925	10.62	1,097
2006⁽⁵⁾	10.000	9.876	-1.24	1,339
Invesco V.I. Core Equity
2015	15.699	14.602	-6.99	1,220
2014	14.707	15.699	6.75	1,369
2013	11.524	14.707	27.62	1,605
2012	10.247	11.524	12.46	1,909
2011	10.382	10.247	-1.30	2,198
2010	9.596	10.382	8.19	2,408
2009	7.573	9.596	26.71	2,721
2008	10.978	7.573	-31.02	3,063
2007	10.282	10.978	6.77	3,892
2006	8.921	10.282	15.26	4,649
Invesco V.I. Global Health Care
2015	22.511	22.923	1.83	461
2014	19.057	22.511	18.12	482
2013	13.733	19.057	38.77	540
2012	11.503	13.733	19.38	522
2011	11.204	11.503	2.67	506
2010	10.775	11.204	3.99	486
2009	8.546	10.775	26.08	531
2008	12.123	8.546	-29.51	595
2007	10.975	12.123	10.46	686
2006	10.560	10.975	3.93	770
Invesco V.I. Mid Cap Growth
2015	14.129	14.114	-0.11	113
2014	13.249	14.129	6.64	107
2013	9.793	13.249	35.29	117
2012	8.192	9.793	19.55	142
2011	10.027	8.192	-18.30	199
2010	8.199	10.027	22.29	166
2009	5.829	8.199	40.66	154
2008	11.367	5.829	-48.72	156
2007	10.261	11.367	10.78	223
2006	8.948	10.261	14.67	170



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 V.I. Small Cap Equity
2015	$23.026	$21.474	-6.74%	105
2014	22.789	23.026	1.04	122
2013	16.790	22.789	35.73	173
2012	14.928	16.790	12.47	185
2011	15.226	14.928	-1.96	212
2010	11.994	15.226	26.95	169
2009	10.014	11.994	19.77	165
2008	14.762	10.014	-32.16	181
2007⁽⁶⁾	14.972	14.762	-1.40	202
Invesco V.I. Technology
2015	9.178	9.677	5.44	357
2014	8.373	9.178	9.61	409
2013	6.776	8.373	23.57	398
2012	6.166	6.776	9.90	440
2011	6.576	6.166	-6.23	456
2010	5.489	6.576	19.81	515
2009	3.531	5.489	55.45	628
2008	6.444	3.531	-45.20	480
2007	6.059	6.444	6.35	625
2006	5.553	6.059	9.11	625
Janus Aspen Enterprise
2015	14.795	15.154	2.43	580
2014	13.354	14.795	10.79	638
2013	10.243	13.354	30.37	737
2012	8.866	10.243	15.53	864
2011	9.128	8.866	-2.87	994
2010	7.364	9.128	23.96	1,216
2009	5.162	7.364	42.66	1,321
2008	9.311	5.162	-44.56	1,271
2007	7.745	9.311	20.22	1,608
2006	6.921	7.745	11.91	1,559
MFS International Value
2015⁽²⁾	10.000	9.488	-5.12	42
MFS New Discovery
2015	10.811	10.442	-3.41	42
2014	11.840	10.811	-8.69	20
2013⁽¹⁾	10.000	11.840	18.40	19
Oppenheimer Main Street Small Cap
2015	12.712	11.784	-7.30	48
2014	11.534	12.712	10.21	52
2013⁽¹⁾	10.000	11.534	15.34	32
PIMCO VIT Low Duration
2015⁽²⁾	10.000	9.881	-1.19	‑
Rydex Commodities Strategy
2015⁽²⁾	10.000	6.431	-35.69	3



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)
Van Eck Global Hard Assets
2015	$12.159	$7.966	-34.48%	119
2014	15.273	12.159	-20.39	124
2013	14.024	15.273	8.91	151
2012	13.773	14.024	1.83	183
2011	16.741	13.773	-17.73	165
2010⁽³⁾	12.108	16.741	38.26	77
Balanced
2015	28.512	28.261	-0.88	961
2014	26.546	28.512	7.41	1,102
2013	22.501	26.546	17.98	1,238
2012	20.155	22.501	11.64	1,420
2011	19.613	20.155	2.76	1,554
2010	17.479	19.613	12.21	1,778
2009	14.608	17.479	19.65	1,955
2008	21.413	14.608	-31.78	2,343
2007	20.578	21.413	4.06	3,104
2006	18.697	20.578	10.06	3,526
Core Plus Bond (f.k.a. Bond & Mortgage Securities)
2015	23.790	23.369	-1.77	2,728
2014	22.902	23.790	3.88	3,140
2013	23.396	22.902	-2.11	3,498
2012	22.029	23.396	6.20	4,120
2011	20.832	22.029	5.75	4,357
2010	18.892	20.832	10.27	4,781
2009	15.821	18.892	19.41	5,197
2008	19.317	15.821	-18.10	6,144
2007	18.916	19.317	2.12	8,281
2006	18.303	18.916	3.35	8,677
Diversified Balanced Managed Volatility
2015⁽²⁾	10.000	9.662	-3.38	1
Diversified Growth Managed Volatility
2015⁽²⁾	10.000	9.601	-3.99	‑
Diversified International
2015	27.164	26.718	-1.64	3,195
2014	28.433	27.164	-4.46	3,556
2013	24.244	28.433	17.28	4,067
2012	20.727	24.244	16.97	4,646
2011	23.552	20.727	-11.99	5,150
2010	20.974	23.552	12.29	5,833
2009	16.480	20.974	27.27	4,828
2008	31.029	16.480	-46.89	5,386
2007	27.066	31.029	14.64	6,553
2006	21.417	27.066	26.38	7,234



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)
Equity Income
2015	$14.973	$14.199	-5.17%	3,385
2014	13.447	14.973	11.35	3,867
2013	10.699	13.447	25.68	4,527
2012	9.586	10.699	11.61	5,129
2011	9.206	9.586	4.13	5,703
2010	8.024	9.206	14.73	2,766
2009	6.770	8.024	18.52	2,922
2008	10.378	6.770	-34.77	3,187
2007⁽⁷⁾	10.000	10.378	3.78	4,174
Government & High Quality Bond
2015	12.107	12.046	-0.50	5,493
2014	11.673	12.107	3.72	6,248
2013	11.945	11.673	-2.28	7,261
2012	11.640	11.945	2.62	8,955
2011	11.095	11.640	4.91	9,556
2010	10.614	11.095	4.53	10,696
2009	10.094	10.614	5.15	289
2008⁽⁸⁾	10.000	10.094	0.94	13
Income
2015⁽²⁾	10.000	9.713	-2.87	7
International Emerging Markets
2015	31.824	27.075	-14.92	757
2014	33.496	31.824	-4.99	841
2013	35.580	33.496	-5.86	976
2012	29.825	35.580	19.29	1,105
2011	36.604	29.825	-18.52	1,201
2010	31.077	36.604	17.78	1,395
2009	18.554	31.077	67.49	1,531
2008	41.619	18.554	-55.42	1,526
2007	29.657	41.619	40.33	2,056
2006	21.709	29.657	36.61	2,015
LargeCap Growth
2015	29.261	30.322	3.63	1,068
2014	26.678	29.261	9.68	1,181
2013	20.177	26.678	32.22	1,343
2012	17.486	20.177	15.39	1,568
2011	18.488	17.486	-5.42	1,799
2010	15.814	18.488	16.91	2,158
2009	12.607	15.814	25.44	2,523
2008	22.461	12.607	-43.87	2,822
2007	18.462	22.461	21.66	3,514
2006	17.007	18.462	8.56	4,179



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 Growth I
2015	$54.841	$58.340	6.38%	1,441
2014	51.153	54.841	7.21	1,616
2013	38.054	51.153	34.42	1,848
2012	33.112	38.054	14.93	2,118
2011	33.638	33.112	-1.56	2,390
2010	28.478	33.638	18.12	2,786
2009	18.883	28.478	50.81	3,220
2008	32.193	18.883	-41.34	3,647
2007	30.042	32.193	7.16	4,508
2006	28.640	30.042	4.90	5,029
LargeCap S&P 500 Index
2015	16.096	16.069	-0.17	2,656
2014	14.394	16.096	11.82	3,064
2013	11.040	14.394	30.38	3,579
2012	9.679	11.040	14.06	3,996
2011	9.634	9.679	0.47	4,390
2010	8.507	9.634	13.25	4,805
2009	6.820	8.507	24.74	5,248
2008	10.978	6.820	-37.88	5,778
2007	10.573	10.978	3.83	7,250
2006	9.263	10.573	14.14	8,048
LargeCap Value
2015	39.834	38.889	-2.37	1,317
2014	36.300	39.834	9.74	1,490
2013	28.101	36.300	29.18	1,726
2012	23.997	28.101	17.10	1,988
2011	24.017	23.997	-0.08	2,235
2010	21.317	24.017	12.67	2,641
2009	18.560	21.317	14.85	2,964
2008	28.988	18.560	-35.97	3,358
2007	29.384	28.988	-1.35	4,376
2006	24.803	29.384	18.47	5,087
MidCap
2015	81.624	81.895	0.33	2,478
2014	73.189	81.624	11.52	2,777
2013	55.347	73.189	32.24	3,211
2012	46.923	55.347	17.95	3,658
2011	43.875	46.923	6.95	4,084
2010	35.797	43.875	22.57	4,652
2009	27.098	35.797	32.10	4,035
2008	41.530	27.098	-34.75	4,614
2007	38.425	41.530	8.08	5,827
2006	34.060	38.425	12.82	6,621



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)
Money Market
2015	$13.441	$13.267	-1.29%	1,479
2014	13.616	13.441	-1.29	1,807
2013	13.791	13.616	-1.27	2,148
2012	13.965	13.791	-1.25	2,929
2011	14.140	13.965	-1.24	3,554
2010	14.318	14.140	-1.24	3,899
2009	14.466	14.318	-1.02	5,866
2008	14.280	14.466	1.30	8,822
2007	13.786	14.280	3.58	5,015
2006	13.342	13.786	3.33	4,090
Principal Capital Appreciation
2015⁽²⁾	10.000	9.773	-2.27	3,666
Principal LifeTime 2010
2015	15.331	14.956	-2.45	108
2014	14.820	15.331	3.45	127
2013	13.542	14.820	9.44	130
2012	12.266	13.542	10.40	106
2011	12.243	12.266	0.19	120
2010	10.881	12.243	12.52	118
2009	8.809	10.881	23.52	113
2008	12.910	8.809	-31.77	113
2007⁽⁹⁾	12.950	12.910	-0.31	23
Principal LifeTime 2020
2015	16.849	16.443	-2.41	278
2014	16.142	16.849	4.38	310
2013	14.091	16.142	14.56	393
2012	12.434	14.091	13.32	341
2011	12.726	12.434	-2.29	321
2010	11.200	12.726	13.63	269
2009	8.896	11.200	25.90	181
2008	13.682	8.896	-34.98	70
2007⁽⁹⁾	13.683	13.682	-0.01	14
Principal LifeTime 2030
2015	16.930	16.535	-2.33	119
2014	16.172	16.930	4.69	123
2013	13.761	16.172	17.52	135
2012	12.057	13.761	14.13	110
2011	12.485	12.057	-3.43	129
2010	10.955	12.485	13.97	94
2009	8.652	10.955	26.62	81
2008	13.780	8.652	-37.21	50
2007⁽⁹⁾	13.762	13.780	0.13	7



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 2040
2015	$17.614	$17.239	-2.13%	47
2014	16.802	17.614	4.83	32
2013	13.892	16.802	20.95	26
2012	12.053	13.892	15.26	23
2011	12.606	12.053	-4.39	15
2010	11.022	12.606	14.37	7
2009	8.615	11.022	27.94	2
2008	14.107	8.615	-38.93	6
2007⁽⁹⁾	14.079	14.107	0.20	2
Principal LifeTime 2050
2015	17.699	17.349	-1.98	14
2014	16.883	17.699	4.83	20
2013	13.811	16.883	22.24	37
2012	11.946	13.811	15.61	18
2011	12.593	11.946	-5.14	19
2010	10.973	12.593	14.76	19
2009	8.544	10.973	28.43	9
2008	14.195	8.544	-39.81	11
2007⁽⁹⁾	14.158	14.195	0.26	2
Principal LifeTime Strategic Income
2015	14.040	13.727	-2.23	183
2014	13.603	14.040	3.21	250
2013	13.105	13.603	3.80	266
2012	12.102	13.105	8.28	249
2011	11.837	12.102	2.24	243
2010	10.775	11.837	9.86	189
2009	9.173	10.775	17.46	98
2008	12.204	9.173	-24.84	123
2007⁽⁹⁾	12.263	12.204	-0.48	63
Real Estate Securities
2015	51.985	53.471	2.86	789
2014	39.650	51.985	31.11	935
2013	38.577	39.650	2.78	1,058
2012	33.340	38.577	15.71	1,223
2011	30.990	33.340	7.58	1,303
2010	24.962	30.990	24.15	1,406
2009	19.606	24.962	27.32	1,560
2008	29.571	19.606	-33.70	1,776
2007	36.380	29.571	-18.72	2,254
2006	26.965	36.380	34.92	3,138
Short-Term Income
2015	11.614	11.545	-0.59	1,521
2014	11.566	11.614	0.42	1,737
2013	11.582	11.566	-0.14	2,018
2012	11.170	11.582	3.69	2,436
2011	11.158	11.170	0.11	2,521
2010	10.843	11.158	2.90	2,543
2009	9.986	10.843	8.58	509
2008⁽⁸⁾	10.000	9.986	-0.14	6



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 (f.k.a. SmallCap Blend)
2015	$20.728	$20.440	-1.39%	3,071
2014	20.020	20.728	3.54	1,252
2013	13.717	20.020	45.95	1,469
2012	12.110	13.717	13.27	1,663
2011	12.445	12.110	-2.69	1,824
2010	10.142	12.445	22.71	2,114
2009	8.405	10.142	20.67	2,359
2008	13.453	8.405	-37.52	2,587
2007	13.402	13.453	0.38	3,269
2006	12.041	13.402	11.30	3,601
SAM Balanced Portfolio
2015	14.041	13.747	-2.09	4,258
2014	13.316	14.041	5.44	4,680
2013	11.457	13.316	16.23	5,097
2012	10.289	11.457	11.35	3,123
2011	10.317	10.289	-0.27	3,107
2010	9.195	10.317	12.20	3,002
2009	7.519	9.195	22.29	2,995
2008	10.314	7.519	-27.10	1,672
2007⁽⁸⁾	10.222	10.314	0.90	101
SAM Conservative Balanced Portfolio
2015	13.891	13.604	-2.07	1,248
2014	13.249	13.891	4.85	1,288
2013	12.029	13.249	10.14	1,376
2012	10.955	12.029	9.81	1,446
2011	10.844	10.955	1.02	1,594
2010	9.818	10.844	10.45	1,759
2009	8.206	9.818	19.64	1,567
2008	10.286	8.206	-20.22	789
2007⁽⁸⁾	10.207	10.286	0.77	26
SAM Conservative Growth Portfolio
2015	13.752	13.426	-2.37	1,061
2014	12.968	13.752	6.05	1,099
2013	10.668	12.968	21.56	1,196
2012	9.461	10.668	12.75	1,143
2011	9.623	9.461	-1.68	1,115
2010	8.457	9.623	13.79	1,163
2009	6.813	8.457	24.13	1,096
2008	10.314	6.813	-33.94	616
2007⁽⁸⁾	10.218	10.314	0.94	55
SAM Flexible Income Portfolio
2015	13.983	13.621	-2.59	2,208
2014	13.360	13.983	4.66	2,463
2013	12.556	13.360	6.40	2,494
2012	11.493	12.556	9.25	2,558
2011	11.256	11.493	2.11	2,281
2010	10.313	11.256	9.14	2,260
2009	8.706	10.313	18.46	1,844
2008	10.222	8.706	-14.83	1,619
2007⁽⁸⁾	10.145	10.222	0.76	5



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 Strategic Growth Portfolio
2015	$13.754	$13.356	-2.89%	633
2014	12.822	13.754	7.27	705
2013	10.188	12.822	25.85	839
2012	8.930	10.188	14.09	809
2011	9.217	8.930	-3.11	1,121
2010	8.018	9.217	14.96	973
2009	6.370	8.018	25.87	840
2008	10.308	6.370	-38.20	571
2007⁽⁸⁾	10.212	10.308	0.94	45

⁽¹⁾ Commenced operations on May 18, 2013.

⁽²⁾ Commenced operations on May 16, 2015.

⁽³⁾ Commenced operations on May 22, 2010.

⁽⁴⁾ Commenced operations on May 17, 2014.

⁽⁵⁾ Commenced operations on April 28, 2006.

⁽⁶⁾ Commenced operations on May 1, 2007.

⁽⁷⁾ Commenced operations on January 5, 2007.

⁽⁸⁾ Commenced operations on November 24, 2008

⁽⁹⁾ Commenced operations on November 19, 2007.



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/Mid Cap Value
2015	$12.139	$11.257	-7.27%	‑
2014	11.330	12.139	7.14	‑
2013⁽¹⁾	10.000	11.330	13.30	‑
American Century VP Income & Growth
2015	16.137	14.944	(7.39)	‑
2014	14.619	16.137	10.38	‑
2013	10.967	14.619	33.30	7
2012	9.737	10.967	12.63	63
2011	9.619	9.737	1.23	171
2010	8.584	9.619	12.06	345
2009	7.404	8.584	15.94	552
2008	11.532	7.404	-35.80	758
2007	11.756	11.532	-1.91	873
2006	10.227	11.756	14.95	908
American Century VP Inflation Protection
2015⁽²⁾	10.000	9.601	-3.99	‑
American Century VP Mid Cap Value
2015	18.629	17.989	-3.44	‑
2014	16.334	18.629	14.05	‑
2013	12.811	16.334	27.50	4
2012	11.230	12.811	14.08	4
2011	11.536	11.230	-2.65	9
2010⁽³⁾	10.000	11.536	15.36	4
American Century VP Ultra
2015	14.461	15.078	4.27	‑
2014	13.399	14.461	7.93	2
2013	9.959	13.399	34.54	6
2012	8.906	9.959	11.83	25
2011	8.976	8.906	-0.78	80
2010	7.877	8.976	13.95	130
2009	5.967	7.877	32.01	222
2008	10.387	5.967	-42.55	266
2007	8.745	10.387	18.78	345
2006	9.209	8.745	-5.04	385
American Century VP Value
2015	19.704	18.555	-5.83	‑
2014	17.788	19.704	10.77	3
2013	13.784	17.788	29.05	28
2012	12.256	13.784	12.47	152
2011	12.378	12.256	-0.99	398
2010	11.155	12.378	10.96	588
2009	9.491	11.155	17.53	732
2008	13.210	9.491	-28.15	927
2007	14.212	13.210	-7.05	1,129
2006	12.221	14.212	16.29	1,228
American Global Small Capitalization Fund
2015	10.196	10.031	-1.62	‑
2014⁽⁴⁾	10.000	10.196	1.96	‑



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)
American High Income Bond
2015	$9.654	$8.781	-9.04%	‑
2014⁽⁴⁾	10.000	9.654	-3.46	‑
American New World Fund
2015	9.060	8.610	-4.97	‑
2014⁽⁴⁾	10.000	9.060	-9.40	‑
BlackRock Global Allocation VI
2015⁽²⁾	10.000	9.259	-7.41	‑
BlackRock iShares Alternative Strategies VI
2015⁽²⁾	10.000	9.250	-7.50	‑
BlackRock iShares Dynamic Allocation VI
2015⁽²⁾	10.000	9.105	-8.95	‑
BlackRock iShares Dynamic Fixed Income VI
2015⁽²⁾	10.000	9.658	-3.42	‑
BlackRock iShares Equity Appreciation VI
2015⁽²⁾	10.000	8.627	-13.73	‑
Columbia Limited Duration Credit
2015⁽²⁾	10.000	9.531	-4.69	‑
Delaware VIP Limited Term Diversified Income
2015⁽²⁾	10.000	9.831	-1.69	‑
Delaware VIP Small Cap Value
2015	11.767	10.800	-8.22	‑
2014	11.355	11.767	3.63	‑
2013⁽¹⁾	10.000	11.355	13.55	‑
Deutsche Small Mid Cap Value
2015	11.699	11.225	-4.05
2014	11.345	11.699	3.12	‑
2013⁽¹⁾	10.000	11.345	13.45	‑
Fidelity VIP Contrafund^®
2015	21.859	21.567	-1.34	‑
2014	19.924	21.859	9.71	9
2013	15.479	19.924	28.72	28
2012	13.558	15.479	14.17	120
2011	14.185	13.558	-4.42	315
2010	12.339	14.185	14.96	576
2009	9.265	12.339	33.18	1,023
2008	16.447	9.265	-43.67	1,453
2007	14.260	16.447	15.34	1,782
2006	13.017	14.260	9.55	1,847
Fidelity VIP Equity-Income
2015	16.513	15.515	-6.04	‑
2014	15.514	16.513	6.44	9
2013	12.366	15.514	25.46	31
2012	10.762	12.366	14.90	166
2011	10.892	10.762	-1.19	576
2010	9.655	10.892	12.81	1,006
2009	7.572	9.655	27.51	1,278
2008	13.489	7.572	-43.87	1,482
2007	13.570	13.489	-0.60	1,734
2006	11.526	13.570	17.73	1,794



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 Growth
2015	$13.456	$14.134	5.04%	‑
2014	12.334	13.456	9.10	2
2013	9.226	12.334	33.69	9
2012	8.206	9.226	12.44	39
2011	8.347	8.206	-1.69	148
2010	6.854	8.347	21.78	307
2009	5.448	6.854	25.81	512
2008	10.519	5.448	-48.21	757
2007	8.447	10.519	24.53	844
2006	8.062	8.447	4.78	908
Fidelity VIP Overseas
2015⁽²⁾	10.000	9.033	-9.67	‑
Franklin Global Real Estate VIP
2015⁽²⁾	10.000	9.543	-4.57	‑
Franklin Small Cap Value VIP
2015	18.235	16.570	-9.13	‑
2014	18.479	18.235	-1.32	‑
2013⁽¹⁾	15.727	18.479	17.50	‑
Franklin Templeton Global Bond VIP
2015⁽²⁾	10.000	9.345	-6.55	‑
Goldman Sachs VIT Mid Cap Value
2015	22.856	20.353	-10.95	‑
2014	20.511	22.856	11.43	‑
2013⁽¹⁾	18.632	20.511	10.08	‑
Goldman Sachs VIT Small Cap Equity Insights
2015	17.270	16.584	-3.97
2014	16.461	17.270	4.91	‑
2013⁽¹⁾	14.445	16.461	13.96	‑
Guggenheim Floating Rate Strategies
2015⁽²⁾	10.000	9.683	-3.17	‑
Guggenheim Global Managed Futures Strategy
2015⁽²⁾	10.000	9.622	-3.78	‑
Guggenheim Long Short Equity Fund
2015⁽²⁾	10.000	9.849	-1.51	‑
Guggenheim Macro Opportunities
2015⁽²⁾	10.000	9.669	-3.31	‑
Guggenheim Multi-Hedge Strategies
2015⁽²⁾	10.000	9.963	-0.37	‑
Invesco V.I. American Franchise
2015	14.105	14.532	3.03	‑
2014	13.256	14.105	6.40	1
2013	9.638	13.256	37.54	2
2012	7.437	9.638	29.60	5
2011	8.227	7.437	-9.60	21
2010	7.256	8.227	13.38	46
2009	6.105	7.256	18.85	73
2008	10.815	6.105	-43.55	156
2007	9.837	10.815	9.94	198
2006⁽⁵⁾	10.000	9.837	-1.63	240



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. Core Equity
2015	$14.425	$13.336	-7.55%	‑
2014	13.594	14.425	6.11	1
2013	10.716	13.594	26.86	1
2012	9.586	10.716	11.79	25
2011	9.771	9.586	-1.89	98
2010	9.085	9.771	7.55	278
2009	7.214	9.085	25.94	595
2008	10.520	7.214	-31.43	954
2007	9.913	10.520	6.12	1,294
2006	8.652	9.913	14.57	1,415
Invesco V.I. Global Health Care
2015	20.743	20.996	1.22	‑
2014	17.666	20.743	17.42	3
2013	12.807	17.666	37.94	10
2012	10.792	12.807	18.67	29
2011	10.575	10.792	2.05	86
2010	10.231	10.575	3.36	177
2009	8.163	10.231	25.33	287
2008	11.651	8.163	-29.94	407
2007	10.611	11.651	9.80	484
2006	10.271	10.611	3.31	510
Invesco V.I. Mid Cap Growth
2015	13.903	13.806	-0.70	‑
2014	13.116	13.903	6.00	4
2013	9.753	13.116	34.48	9
2012	8.159	9.753	19.54	21
2011	9.463	8.159	-13.78	52
2010	7.785	9.463	21.55	114
2009	5.568	7.785	39.82	155
2008	10.924	5.568	-49.03	160
2007	9.920	10.924	10.12	172
2006	8.703	9.920	13.98	133
Invesco V.I. Small Cap Equity
2015	21.637	20.058	-7.30	‑
2014	21.543	21.637	0.44	1
2013	15.968	21.543	34.91	3
2012	14.283	15.968	11.79	20
2011	14.655	14.283	-2.54	50
2010	11.614	14.655	26.18	62
2009	9.755	11.614	19.06	73
2008	14.467	9.755	-32.57	97
2007⁽⁶⁾	14.732	14.467	-1.80	110



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. Technology
2015	$8.457	$8.864	4.81%	‑
2014	7.762	8.457	8.95	3
2013	6.319	7.762	22.84	12
2012	5.785	6.319	9.24	58
2011	6.207	5.785	-6.80	135
2010	5.212	6.207	19.09	257
2009	3.373	5.212	54.52	372
2008	6.192	3.373	-45.53	327
2007	5.858	6.192	5.70	410
2006	5.401	5.858	8.46	403
Janus Aspen Enterprise
2015	13.594	13.840	1.81	‑
2014	12.343	13.594	10.14	5
2013	9.525	12.343	29.59	7
2012	8.294	9.525	14.84	25
2011	8.591	8.294	-3.46	91
2010	6.972	8.591	23.22	179
2009	4.917	6.972	41.79	391
2008	8.922	4.917	-44.89	696
2007	7.466	8.922	19.50	846
2006	6.712	7.466	11.23	971
MFS International Value
2015⁽²⁾	10.000	9.452	-5.48	‑
MFS New Discovery
2015	10.706	10.279	-3.99
2014	11.796	10.706	-9.24	1
2013⁽¹⁾	10.000	11.796	17.96	‑
Oppenheimer Main Street Small Cap
2015	12.589	11.599	(7.86)	‑
2014	11.491	12.589	9.56	‑
2013⁽¹⁾	10.000	11.491	14.91	‑
PIMCO VIT Low Duration
2015⁽²⁾	10.000	9.844	-1.56	‑
Rydex Commodities Strategy
2015⁽²⁾	10.000	6.407	-35.93	‑
Van Eck Global Hard Assets
2015	11.755	7.655	-34.88	‑
2014	14.854	11.755	-20.86	‑
2013	13.722	14.854	8.25	1
2012	13.558	13.722	1.21	6
2011	16.579	13.558	-18.22	14
2010⁽³⁾	12.035	16.579	37.76	6



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)
Balanced
2015	$26.197	$25.812	-1.47%	‑
2014	24.538	26.197	6.76	2
2013	20.924	24.538	17.27	10
2012	18.856	20.924	10.97	45
2011	18.459	18.856	2.15	147
2010	16.549	18.459	11.54	272
2009	13.914	16.549	18.94	422
2008	20.520	13.914	-32.19	584
2007	19.839	20.520	3.43	711
2006	18.133	19.839	9.41	757
Core Plus Bond (f.k.a. Bond & Mortgage Securities)
2015	21.859	21.344	-2.36	‑
2014	21.170	21.859	3.25	10
2013	21.756	21.170	-2.69	77
2012	20.610	21.756	5.56	288
2011	19.606	20.610	5.12	733
2010	17.888	19.606	9.60	1,286
2009	15.070	17.888	18.70	1,892
2008	18.511	15.070	-18.59	2,506
2007	18.237	18.511	1.50	3,297
2006	17.751	18.237	2.74	3,432
Diversified Balanced Managed Volatility
2015⁽²⁾	10.000	9.626	-3.74	‑
Diversified Growth Managed Volatility
2015⁽²⁾	10.000	9.565	-4.35	‑
Diversified International
2015	24.959	24.402	-2.23	‑
2014	26.282	24.959	-5.03	12
2013	22.544	26.282	16.58	68
2012	19.391	22.544	16.26	285
2011	22.166	19.391	-12.52	793
2010	19.858	22.166	11.62	1,278
2009	15.697	19.858	26.51	1,319
2008	29.734	15.697	-47.21	1,743
2007	26.094	29.734	13.95	1,979
2006	20.771	26.094	25.63	2,114
Equity Income
2015	14.271	13.453	-5.73	‑
2014	12.895	14.271	10.67	11
2013	10.321	12.895	24.94	68
2012	9.303	10.321	10.94	364
2011	8.988	9.303	3.50	1,004
2010	7.881	8.988	14.05	491
2009	6.690	7.881	17.81	697
2008	10.317	6.690	-35.16	1,064
2007⁽⁷⁾	10.000	10.317	3.17	1,401



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)
Government & High Quality Bond
2015	$11.671	$11.542	-1.11%	‑
2014	11.320	11.671	3.10	15
2013	11.654	11.320	-2.87	118
2012	11.425	11.654	2.00	408
2011	10.956	11.425	4.28	1,043
2010	10.544	10.956	3.91	1,991
2009	10.088	10.544	4.52	86
2008⁽⁸⁾	10.000	10.088	0.88	‑
Income
2015⁽²⁾	10.000	9.676	-3.24	‑
International Emerging Markets
2015	29.241	24.728	-15.43	‑
2014	30.962	29.241	-5.56	8
2013	33.086	30.962	-6.42	35
2012	27.903	33.086	18.58	109
2011	34.450	27.903	-19.00	268
2010	29.424	34.450	17.08	391
2009	17.672	29.424	66.50	606
2008	39.883	17.672	-55.69	759
2007	28.591	39.883	39.49	937
2006	21.055	28.591	35.79	955
LargeCap Growth
2015	26.885	27.694	3.01	‑
2014	24.659	26.885	9.03	3
2013	18.762	24.659	31.43	8
2012	16.359	18.762	14.69	17
2011	17.400	16.359	-5.98	64
2010	14.972	17.400	16.22	114
2009	12.008	14.972	24.68	213
2008	21.523	12.008	-44.21	336
2007	17.798	21.523	20.93	410
2006	16.494	17.798	7.91	452
LargeCap Growth I
2015	50.388	53.283	5.75	‑
2014	47.282	50.388	6.57	2
2013	35.386	47.282	33.62	11
2012	30.977	35.386	14.23	65
2011	31.658	30.977	-2.15	183
2010	26.962	31.658	17.42	317
2009	17.986	26.962	49.91	539
2008	30.849	17.986	-41.70	760
2007	28.962	30.849	6.52	909
2006	27.776	28.962	4.27	791



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 S&P 500 Index
2015	$14.790	$14.677	-0.76%	‑
2014	13.305	14.790	11.16	11
2013	10.266	13.305	29.60	37
2012	9.055	10.266	13.38	213
2011	9.067	9.055	-0.13	668
2010	8.055	9.067	12.56	1,212
2009	6.496	8.055	24.00	1,878
2008	10.520	6.496	-38.25	2,462
2007	10.193	10.520	3.21	3,092
2006	8.984	10.193	13.46	3,200
LargeCap Value
2015	36.601	35.518	-2.96	‑
2014	33.554	36.601	9.08	1
2013	26.132	33.554	28.40	10
2012	22.450	26.132	16.40	39
2011	22.604	22.450	-0.68	158
2010	20.183	22.604	12.00	268
2009	17.679	20.183	14.16	466
2008	27.779	17.679	-36.36	636
2007	28.328	27.779	-1.94	822
2006	24.056	28.328	17.76	884
MidCap
2015	74.999	74.797	-0.27	‑
2014	67.653	74.999	10.86	8
2013	51.468	67.653	31.45	36
2012	43.898	51.468	17.24	164
2011	41.293	43.898	6.31	441
2010	33.894	41.293	21.83	813
2009	25.811	33.894	31.32	749
2008	39.797	25.811	-35.14	1,063
2007	37.044	39.797	7.43	1,322
2006	33.034	37.044	12.14	1,414
Money Market
2015	12.350	12.117	-1.89	‑
2014	12.586	12.350	-1.88	2
2013	12.824	12.586	-1.86	54
2012	13.065	12.824	-1.84	232
2011	13.308	13.065	-1.83	525
2010	13.557	13.308	-1.84	938
2009	13.779	13.557	-1.61	1,555
2008	13.684	13.779	0.69	3,120
2007	13.291	13.684	2.96	1,955
2006	12.940	13.291	2.71	1,261
Principal Capital Appreciation
2015⁽²⁾	10.000	9.732	-2.68	‑



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 2010
2015	$14.409	$13.972	-3.03%	‑
2014	14.012	14.409	2.83	‑
2013	12.881	14.012	8.78	‑
2012	11.738	12.881	9.73	‑
2011	11.786	11.738	-0.41	9
2010	10.538	11.786	11.84	15
2009	8.582	10.538	22.79	18
2008	12.664	8.582	-32.23	27
2007⁽⁹⁾	12.703	12.664	-0.31	6
Principal LifeTime 2020
2015	15.835	15.361	-2.99	‑
2014	15.262	15.835	3.75	‑
2013	13.403	15.262	13.87	‑
2012	11.898	13.403	12.65	19
2011	12.251	11.898	-2.88	34
2010	10.847	12.251	12.94	60
2009	8.667	10.847	25.15	69
2008	13.421	8.667	-35.42	34
2007⁽⁹⁾	13.422	13.421	-0.01	8
Principal LifeTime 2030
2015	15.911	15.447	-2.92	‑
2014	15.290	15.911	4.06	‑
2013	13.089	15.290	16.82	‑
2012	11.537	13.089	13.45	1
2011	12.019	11.537	-4.01	1
2010	10.610	12.019	13.28	4
2009	8.429	10.610	25.87	8
2008	13.517	8.429	-37.64	5
2007⁽⁹⁾	13.500	13.517	0.13	1
Principal LifeTime 2040
2015	16.554	16.105	-2.71	‑
2014	15.886	16.554	4.20	‑
2013	13.214	15.886	20.22	‑
2012	11.534	13.214	14.56	‑
2011	12.135	11.534	-4.95	4
2010	10.674	12.135	13.69	5
2009	8.393	10.674	27.18	2
2008	13.838	8.393	-39.35	3
2007⁽⁹⁾	13.811	13.838	0.20	‑
Principal LifeTime 2050
2015	16.634	16.208	-2.56	‑
2014	15.963	16.634	4.20	‑
2013	13.136	15.963	21.52	‑
2012	11.432	13.136	14.91	2
2011	12.123	11.432	-5.70	5
2010	10.627	12.123	14.08	4
2009	8.324	10.627	27.67	9
2008	13.924	8.324	-40.22	‑
2007⁽⁹⁾	13.888	13.924	0.26	‑



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 Strategic Income
2015	$13.196	$12.824	-2.82%	‑
2014	12.861	13.196	2.60	4
2013	12.465	12.861	3.18	‑
2012	11.581	12.465	7.63	14
2011	11.396	11.581	1.62	35
2010	10.436	11.396	9.20	44
2009	8.937	10.436	16.77	42
2008	11.971	8.937	-25.34	9
2007⁽⁹⁾	12.029	11.971	-0.48	‑
Real Estate Securities
2015	47.765	48.837	2.24	‑
2014	36.651	47.765	30.32	5
2013	35.874	36.651	2.17	25
2012	31.190	35.874	15.02	95
2011	29.166	31.190	6.94	289
2010	23.634	29.166	23.41	481
2009	18.675	23.634	26.55	752
2008	28.337	18.675	-34.10	940
2007	35.074	28.337	-19.21	1,162
2006	26.153	35.074	34.11	1,474
Short-Term Income
2015	11.196	11.063	-1.19	‑
2014	11.217	11.196	-0.19	3
2013	11.300	11.217	-0.73	48
2012	10.964	11.300	3.06	149
2011	11.017	10.964	-0.48	438
2010	10.771	11.017	2.28	788
2009	9.980	10.771	7.93	165
2008⁽⁸⁾	10.000	9.980	-0.20	‑
SmallCap (f.k.a SmallCap Blend)
2015	19.045	18.668	-1.98	‑
2014	18.505	19.045	2.92	2
2013	12.756	18.505	45.07	16
2012	11.329	12.756	12.59	83
2011	11.713	11.329	-3.28	252
2010	9.602	11.713	21.99	488
2009	8.006	9.602	19.94	701
2008	12.891	8.006	-37.89	980
2007	12.920	12.891	-0.22	1,181
2006	11.677	12.920	10.64	1,288



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 Portfolio
2015	$13.409	$13.050	-2.68%	‑
2014	12.793	13.409	4.82	29
2013	11.073	12.793	15.53	122
2012	10.005	11.073	10.67	233
2011	10.092	10.005	-0.86	634
2010	9.049	10.092	11.53	840
2009	7.443	9.049	21.58	1,067
2008	10.280	7.443	-27.60	927
2007⁽⁸⁾	10.189	10.280	0.89	26
SAM Conservative Balanced Portfolio
2015	13.266	12.914	-2.65	‑
2014	12.729	13.266	4.22	‑
2013	11.626	12.729	9.49	28
2012	10.652	11.626	9.15	131
2011	10.608	10.652	0.41	269
2010	9.662	10.608	9.79	274
2009	8.124	9.662	18.93	351
2008	10.252	8.124	-20.76	370
2007⁽⁸⁾	10.174	10.252	0.77	33
SAM Conservative Growth Portfolio
2015	13.133	12.745	-2.95	‑
2014	12.459	13.133	5.41	8
2013	10.310	12.459	20.84	34
2012	9.199	10.310	12.08	108
2011	9.413	9.199	-2.27	297
2010	8.323	9.413	13.10	397
2009	6.745	8.323	31.96	451
2008	10.281	6.745	-34.39	390
2007⁽⁸⁾	10.185	10.281	0.94	24
SAM Flexible Income Portfolio
2015	13.353	12.931	-3.16	‑
2014	12.836	13.353	4.03	5
2013	12.136	12.836	5.77	57
2012	11.175	12.136	8.60	371
2011	11.011	11.175	1.49	586
2010	10.149	11.011	8.49	578
2009	8.619	10.149	17.75	738
2008	10.189	8.619	-15.41	764
2007⁽⁸⁾	10.112	10.189	0.76	20



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 Strategic Growth Portfolio
2015	$13.135	$12.679	-3.47%	‑
2014	12.318	13.135	6.63	1
2013	9.846	12.318	25.11	3
2012	8.683	9.846	13.40	28
2011	9.016	8.683	-3.69	116
2010	7.891	9.016	14.26	121
2009	6.307	7.891	25.11	242
2008	10.275	6.307	-38.62	129
2007⁽⁸⁾	10.179	10.275	0.94	6

⁽¹⁾ Commenced operations on May 18, 2013.

⁽²⁾ Commenced operations on May 16, 2015.

⁽³⁾Commenced operations on May 22, 2010.

⁽⁴⁾ Commenced operations on May 17, 2014.

⁽⁵⁾Commenced operations on April 28, 2006.

⁽⁶⁾ Commenced operations on May 1, 2007.

⁽⁷⁾Commenced operations on January 5, 2007.

⁽⁸⁾Commenced operations on November 24, 2008

⁽⁹⁾Commenced operations on November 19, 2007.

PART B

PRINCIPAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT B

FLEXIBLE VARIABLE ANNUITY (“FVA”) CONTRACT

Statement of Additional Information

dated May 1, 2016

This Statement of Additional Information provides information about Principal Life Insurance Company Separate Account B Flexible Variable Annuity (the “Contract”) in addition to the information that is contained in the Contract’s Prospectus, dated May 1, 2016.

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 telephoning:

Principal Flexible Variable Annuity

Principal Financial Group

P.O. Box 9382

Des Moines Iowa 50306-9382

Telephone: 1-800-852-4450



TABLE OF CONTENTS
	Page
GENERAL INFORMATION AND HISTORY	3
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	3
PRINCIPAL UNDERWRITER	3
CALCULATION OF PERFORMANCE DATA	3
TAXATION UNDER CERTAIN RETIREMENT PLANS	11

Principal Life Insurance Company Separate Account B
Report of Independent Registered Public Accounting Firm	15
Financial Statements	16

Principal Life Insurance Company
Report of Independent Registered Public Accounting Firm	239
Consolidated Financial Statements	240

GENERAL INFORMATION AND HISTORY

Principal Life Insurance Company (the “Company”) is the issuer of the Principal Flexible 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 Principal Securities, Inc. ("PSI") formerly Princor Financial Services Corporation which is a wholly owned subsidiary of Principal Financial Services, Inc. and an affiliate of the Company. The address of PSI is the Principal Financial Group, 655 9th Street, Des Moines, Iowa 50392. PSI 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 PSI 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 non-continuous. As the principal underwriter, PSI is paid for the distribution of the Contract. For the last three fiscal years PSI has received and retained the following commissions:



2015 received/retained	2014 received/retained	2013 received/retained
$8,637,125/$0	$9,649,424/$0	$9,755,742/$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.

The Contract was not offered prior to June 16, 1994. Certain of the underlying funds 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.

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 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 under the Contract in the division over a seven-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, 2015
For Contracts	7-day annualized yield	7-day effective yield
without a surrender charge or a Purchase Payment Credit Rider	-1.30%	-1.29%
with a surrender charge but without a Purchase Payment Credit Rider	-7.30%	-7.29%
without a surrender charge but with a Purchase Payment Credit Rider	-1.90%	-1.89%

* Effective April 8, 2016, the Money Market Division was replaced by the Fidelity VIP Government Money Market Division.

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, 2015 assuming the Contract had been offered as of the effective dates of the underlying mutual funds in which the divisions invest:



	For Contracts without Purchase Payment Credit Rider and with Surrender Charge
Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
Alliance Bernstein Small/Mid Cap Value	05/02/2001	-12.75%	7.28%	6.34%
American Century VP Income & Growth	10/31/1997	-12.89%	9.41%	4.44%
American Century VP Inflation Protection	12/31/2002	-9.78%	0.08%	2.06%
American Century VP Mid Cap Value	10/29/2004	-8.90%	9.49%	7.47%
American Century VP Ultra	05/01/2001	-1.15%	11.16%	5.63%
American Century VP Value	05/01/1996	-11.31%	8.61%	4.84%
American Funds Global Small Capitalization	04/30/1998	-7.08%	2.71%	4.25%
American High Income Bond	02/08/1984	-14.54%	0.93%	3.23%
American New World	06/17/1999	-10.44%	-1.83%	4.62%
Balanced	12/18/1987	-6.93%	7.08%	4.17%
BlackRock Global Allocation VI	02/28/1992	-8.30%	2.18%	4.48%



	For Contracts without Purchase Payment Credit Rider and with Surrender Charge
Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
BlackRock iShares Alternative Strategies VI	04/30/2014	-8.58%			-3.85%
BlackRock iShares Dynamic Allocation VI	04/30/2014	-11.27%			-6.82%
BlackRock iShares Dynamic Fixed Income VI	04/30/2014	-8.81%			-5.28%
BlackRock iShares Equity Appreciation VI	04/30/2014	-14.01%			-9.05%
Columbia Limited Duration Credit	05/07/2010	-9.80%	-0.58%		-0.05%
Core Plus Bond (formerly Bond & Mortgage Securities)	12/18/1987	-7.82%	1.72%	2.42%
Delaware VIP Limited Term Diversified Income	05/01/2000	-6.77%	-0.82%	1.62%
Delaware VIP Small Cap Value	05/01/2000	-13.72%	6.14%	5.40%
Deutsche Small Mid Cap Value	05/01/1996	-9.52%	6.13%	5.67%
Diversified Balanced Managed Volatility	10/31/2013	-7.33%			0.31%
Diversified Growth Managed Volatility	10/31/2013	-7.28%			0.83%
Diversified International	05/02/1994	-7.69%	1.95%	2.19%
Equity Income	04/28/1998	-11.22%	8.58%	5.08%
Fidelity VIP Contrafund	01/03/1995	-6.79%	8.93%	5.76%
Fidelity VIP Equity-Income	11/03/1986	-11.52%	7.49%	3.58%
Fidelity VIP Growth	10/31/1986	-0.38%	11.34%	6.36%
Fidelity VIP Overseas	01/28/1987	-4.09%	2.23%	1.66%
Franklin Global Real Estate VIP	01/24/1989	-6.78%	5.39%	-0.19%
Franklin Small Cap Value VIP	04/30/1998	-14.63%	5.77%	4.86%
Goldman Sachs VIT Mid Cap Value	05/01/1998	-16.46%	6.84%	5.29%
Goldman Sachs VIT Small Cap Equity Insights	02/13/1998	-9.44%	8.15%	3.80%
Government & High Quality Bond	05/06/1993	-6.56%	1.04%	2.92%
Guggenheim Floating Rate Strategies	04/22/2013	-6.62%			-1.16%
Guggenheim Global Managed Futures Strategy	11/07/2008	-8.87%	-3.71%		-4.04%
Guggenheim Long Short Equity Fund	05/01/2002	-6.10%	1.64%	1.80%
Guggenheim Macro Opportunities	04/22/2013	-7.64%			-1.03%
Guggenheim Multi-Hedge Strategies	11/29/2005	-5.51%	0.79%	-0.79%
Guggenheim Rydex Commodities Strategy	09/30/2005	-40.70%	-19.73%	-13.92%
Income	05/07/1993	-8.04%	2.20%	3.98%
International Emerging Markets	10/24/2000	-20.97%	-6.69%	2.19%
Invesco VI American Franchise	07/03/1995	-2.40%	9.38%	6.21%
Invesco VI Core Equity	05/02/1994	-13.03%	6.55%	5.00%
Invesco VI Global Health Care	05/22/1997	-4.22%	15.01%	8.01%
Invesco VI Mid Cap Growth	09/25/2000	-6.15%	5.85%	5.19%
Invesco VI Small Cap Equity	08/29/2003	-12.79%	6.61%	5.72%
Invesco VI Technology	05/21/1997	-0.61%	7.54%	5.66%
Janus Aspen Enterprise	09/13/1993	-3.62%	10.22%	8.11%
LargeCap Growth	05/02/1994	-2.42%	9.95%	5.90%
LargeCap Growth I	06/01/1994	0.33%	11.21%	7.32%
LargeCap S&P 500 Index	05/03/1999	-6.21%	10.33%	5.61%
LargeCap Value	05/13/1970	-8.42%	9.66%	4.55%
MFS VIT International Value	08/23/2001	-1.10%	7.43%	5.79%
MFS VIT New Discovery	05/01/1998	-9.46%	4.81%	6.50%
Money Market*	03/18/1983	-7.34%	-1.96%	-0.11%
MidCap	12/18/1987	-5.72%	12.89%	9.13%
Oppenheimer Main Street Small Cap	07/16/2001	-13.35%	9.24%	5.78%
PIMCO VIT Low Duration	03/31/2006	-7.18%	-0.50%		2.26%
Principal Capital Appreciation	04/28/1998	-5.19%	9.78%	6.32%



	For Contracts without Purchase Payment Credit Rider and with Surrender Charge
Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
Principal LifeTime 2010	08/30/2004	-8.50%	3.52%	2.73%
Principal LifeTime 2020	08/30/2004	-8.46%	4.72%	3.49%
Principal LifeTime 2030	08/30/2004	-8.38%	5.25%	3.55%
Principal LifeTime 2040	08/30/2004	-8.18%	5.94%	3.82%
Principal LifeTime 2050	08/30/2004	-8.02%	6.10%	3.86%
Principal LifeTime Strategic Income	08/30/2004	-8.28%	2.42%	2.08%
Real Estate Securities	05/01/1998	-3.19%	11.09%	7.04%
SAM Balanced	06/03/1997	-8.14%	5.38%	4.52%
SAM Conservative Balanced	04/23/1998	-8.11%	4.08%	4.16%
SAM Conservative Growth	06/03/1997	-8.42%	6.38%	4.48%
SAM Flexible Income	09/09/1997	-8.63%	3.32%	3.91%
SAM Strategic Growth	06/03/1997	-8.94%	7.20%	4.54%
Short-Term Income	01/12/1994	-6.64%	0.04%	1.87%
SmallCap (formerly SmallCap Blend)	05/01/1998	-7.44%	9.98%	5.38%
Templeton Global Bond VIP	01/24/1989	-11.67%	0.41%	5.94%
Van Eck VIP Global Hard Assets	05/01/2006	-40.53%	-14.99%		-3.56%
* Effective April 8, 2016, the Money Market Division was replaced by the Fidelity VIP Government Money Market Division.



	For Contracts without Purchase Payment Credit Rider and without Surrender Charge
Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
Alliance Bernstein Small/Mid Cap Value	05/02/2001	-6.75%	7.73%	6.34%
American Century VP Income & Growth	10/31/1997	-6.89%	9.82%	4.44%
American Century VP Inflation Protection	12/31/2002	-3.78%	0.68%	2.06%
American Century VP Mid Cap Value	10/29/2004	-2.90%	9.90%	7.47%
American Century VP Ultra	05/01/2001	4.85%	11.55%	5.63%
American Century VP Value	05/01/1996	-5.31%	9.04%	4.84%
American Funds Global Small Capitalization	04/30/1998	-1.08%	3.24%	4.25%
American High Income Bond	02/08/1984	-8.54%	1.50%	3.23%
American New World	06/17/1999	-4.44%	-1.20%	4.62%
Balanced	12/18/1987	-0.93%	7.53%	4.17%
BlackRock Global Allocation VI	02/28/1992	-2.30%	2.73%	4.48%
BlackRock iShares Alternative Strategies VI	04/30/2014	-2.58%			-0.21%
BlackRock iShares Dynamic Allocation VI	04/30/2014	-5.27%			-3.10%
BlackRock iShares Dynamic Fixed Income VI	04/30/2014	-2.81%			-1.61%
BlackRock iShares Equity Appreciation VI	04/30/2014	-8.01%			-5.28%
Columbia Limited Duration Credit	05/07/2010	-3.80%	0.03%		0.31%
Core Plus Bond (formerly Bond & Mortgage Securities)	12/18/1987	-1.82%	2.28%	2.42%
Delaware VIP Limited Term Diversified Income	05/01/2000	-0.77%	-0.21%	1.62%
Delaware VIP Small Cap Value	05/01/2000	-7.72%	6.61%	5.40%
Deutsche Small Mid Cap Value	05/01/1996	-3.52%	6.59%	5.67%
Diversified Balanced Managed Volatility	10/31/2013	-1.33%			2.58%
Diversified Growth Managed Volatility	10/31/2013	-1.28%			3.09%
Diversified International	05/02/1994	-1.69%	2.50%	2.19%
Equity Income	04/28/1998	-5.22%	9.01%	5.08%
Fidelity VIP Contrafund	01/03/1995	-0.79%	9.35%	5.76%
Fidelity VIP Equity-Income	11/03/1986	-5.52%	7.93%	3.58%
Fidelity VIP Growth	10/31/1986	5.62%	11.73%	6.36%
Fidelity VIP Overseas	01/28/1987	1.91%	2.77%	1.66%



	For Contracts without Purchase Payment Credit Rider and without Surrender Charge
Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
Franklin Global Real Estate VIP	01/24/1989	-0.78%	5.87%	-0.19%
Franklin Small Cap Value VIP	04/30/1998	-8.63%	6.24%	4.86%
Goldman Sachs VIT Mid Cap Value	05/01/1998	-10.46%	7.30%	5.29%
Goldman Sachs VIT Small Cap Equity Insights	02/13/1998	-3.44%	8.58%	3.80%
Government & High Quality Bond	05/06/1993	-0.56%	1.61%	2.92%
Guggenheim Floating Rate Strategies	04/22/2013	-0.62%			0.70%
Guggenheim Global Managed Futures Strategy	11/07/2008	-2.87%	-3.02%		-4.04%
Guggenheim Long Short Equity Fund	05/01/2002	-0.10%	2.20%	1.80%
Guggenheim Macro Opportunities	04/22/2013	-1.64%			0.83%
Guggenheim Multi-Hedge Strategies	11/29/2005	0.49%	1.37%	-0.79%
Guggenheim Rydex Commodities Strategy	09/30/2005	-34.70%	-18.34%	-13.92%
Income	05/07/1993	-2.04%	2.75%	3.98%
International Emerging Markets	10/24/2000	-14.97%	-5.91%	2.19%
Invesco VI American Franchise	07/03/1995	3.60%	9.80%	6.21%
Invesco VI Core Equity	05/02/1994	-7.03%	7.01%	5.00%
Invesco VI Global Health Care	05/22/1997	1.78%	15.35%	8.01%
Invesco VI Mid Cap Growth	09/25/2000	-0.15%	6.33%	5.19%
Invesco VI Small Cap Equity	08/29/2003	-6.79%	7.07%	5.72%
Invesco VI Technology	05/21/1997	5.39%	7.98%	5.66%
Janus Aspen Enterprise	09/13/1993	2.38%	10.62%	8.11%
LargeCap Growth	05/02/1994	3.58%	10.35%	5.90%
LargeCap Growth I	06/01/1994	6.33%	11.60%	7.32%
LargeCap S&P 500 Index	05/03/1999	-0.21%	10.73%	5.61%
LargeCap Value	05/13/1970	-2.42%	10.07%	4.55%
MFS VIT International Value	08/23/2001	4.90%	7.88%	5.79%
MFS VIT New Discovery	05/01/1998	-3.46%	5.30%	6.50%
MidCap	12/18/1987	0.28%	13.25%	9.13%
Money Market*	03/18/1983	-1.34%	-1.32%	-0.11%
Oppenheimer Main Street Small Cap	07/16/2001	-7.35%	9.66%	5.78%
PIMCO VIT Low Duration	03/31/2006	-1.18%	0.10%		2.26%
Principal Capital Appreciation	04/28/1998	0.81%	10.19%	6.32%
Principal LifeTime 2010	08/30/2004	-2.50%	4.03%	2.73%
Principal LifeTime 2020	08/30/2004	-2.46%	5.21%	3.49%
Principal LifeTime 2030	08/30/2004	-2.38%	5.73%	3.55%
Principal LifeTime 2040	08/30/2004	-2.18%	6.41%	3.82%
Principal LifeTime 2050	08/30/2004	-2.02%	6.57%	3.86%
Principal LifeTime Strategic Income	08/30/2004	-2.28%	2.96%	2.08%
Real Estate Securities	05/01/1998	2.81%	11.48%	7.04%
SAM Balanced	06/03/1997	-2.14%	5.86%	4.52%
SAM Conservative Balanced	04/23/1998	-2.11%	4.59%	4.16%
SAM Conservative Growth	06/03/1997	-2.42%	6.84%	4.48%
SAM Flexible Income	09/09/1997	-2.63%	3.84%	3.91%
SAM Strategic Growth	06/03/1997	-2.94%	7.65%	4.54%
Short-Term Income	01/12/1994	-0.64%	0.63%	1.87%
SmallCap (formerly SmallCap Blend)	05/01/1998	-1.44%	10.39%	5.38%
Templeton Global Bond VIP	01/24/1989	-5.67%	0.99%	5.94%
Van Eck VIP Global Hard Assets	05/01/2006	-34.53%	-13.87%		-3.56%
* Effective April 8, 2016, the Money Market Division was replaced by the Fidelity VIP Government Money Market Division.



	For Contracts with Purchase Payment Credit Rider and with Surrender Charge
Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
Alliance Bernstein Small/Mid Cap Value	05/02/2001	-15.31%	6.16%	5.70%
American Century VP Income & Growth	10/31/1997	-15.44%	8.31%	3.81%
American Century VP Inflation Protection	12/31/2002	-12.35%	-1.15%	1.45%
American Century VP Mid Cap Value	10/29/2004	-11.48%	8.39%	6.83%
American Century VP Ultra	05/01/2001	-3.78%	10.08%	5.00%
American Century VP Value	05/01/1996	-13.88%	7.50%	4.21%
American Funds Global Small Capitalization	04/30/1998	-9.67%	1.52%	3.63%
American High Income Bond	02/08/1984	-17.09%	-0.29%	2.61%
American New World	06/17/1999	-13.02%	-3.11%	3.99%
Balanced	12/18/1987	-9.52%	5.95%	3.54%
BlackRock Global Allocation VI	02/28/1992	-10.88%	0.98%	3.86%
BlackRock iShares Alternative Strategies VI	04/30/2014	-11.17%			-5.70%
BlackRock iShares Dynamic Allocation VI	04/30/2014	-13.84%			-8.68%
BlackRock iShares Dynamic Fixed Income VI	04/30/2014	-11.40%			-7.14%
BlackRock iShares Equity Appreciation VI	04/30/2014	-16.56%			-10.92%
Columbia Limited Duration Credit	05/07/2010	-12.37%	-1.83%		-1.21%
Core Plus Bond (formerly Bond & Mortgage Securities)	12/18/1987	-10.41%	0.51%	1.81%
Delaware VIP Limited Term Diversified Income	05/01/2000	-9.36%	-2.08%	1.01%
Delaware VIP Small Cap Value	05/01/2000	-16.27%	5.00%	4.76%
Deutsche Small Mid Cap Value	05/01/1996	-12.10%	4.99%	5.03%
Diversified Balanced Managed Volatility	10/31/2013	-9.92%			-1.73%
Diversified Growth Managed Volatility	10/31/2013	-9.87%			-1.19%
Diversified International	05/02/1994	-10.28%	0.75%	1.57%
Equity Income	04/28/1998	-13.79%	7.47%	4.45%
Fidelity VIP Contrafund	01/31/1995	-9.38%	7.82%	5.13%
Fidelity VIP Equity-Income	11/03/1986	-14.09%	6.37%	2.96%
Fidelity VIP Growth	10/31/1986	-3.01%	10.26%	5.72%
Fidelity VIP Overseas	01/28/1987	-6.70%	1.03%	1.05%
Franklin Global Real Estate VIP	01/24/1989	-9.37%	4.24%	-0.79%
Franklin Small Cap Value VIP	04/30/1998	-17.18%	4.62%	4.23%
Goldman Sachs VIT Mid Cap Value	05/01/1998	-19.00%	5.71%	4.66%
Goldman Sachs VIT Small Cap Equity Insights	02/13/1998	-12.02%	7.03%	3.18%
Government & High Quality Bond	05/06/1993	-9.15%	-0.18%	2.30%
Guggenheim Floating Rate Strategies	04/22/2013	-9.22%			-2.94%
Guggenheim Global Managed Futures Strategy	11/07/2008	-11.45%	-5.03%		-5.19%
Guggenheim Long Short Equity Fund	05/01/2002	-8.69%	0.44%	1.19%
Guggenheim Macro Opportunities	04/22/2013	-10.23%			-2.81%
Guggenheim Multi-Hedge Strategies	11/29/2005	-8.12%	-0.43%	-1.39%
Guggenheim Rydex Commodities Strategy	09/30/2005	-43.10%	-21.80%	-14.44%
Income	05/07/1993	-10.63%	1.00%	3.35%
International Emerging Markets	10/24/2000	-23.48%	-8.10%	1.58%
Invesco VI American Franchise	07/03/1995	-5.02%	8.29%	5.57%
Invesco VI Core Equity	05/02/1994	-15.59%	5.42%	4.37%
Invesco VI Global Health Care	05/22/1997	-6.83%	13.96%	7.36%
Invesco VI Mid Cap Growth	09/25/2000	-8.75%	4.72%	4.56%
Invesco VI Small Cap Equity	08/29/2003	-15.35%	5.48%	5.09%
Invesco VI Technology	05/21/1997	-3.24%	6.42%	5.03%
Janus Aspen Enterprise	09/13/1993	-6.23%	9.13%	7.46%



	For Contracts with Purchase Payment Credit Rider and with Surrender Charge
Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
LargeCap Growth I	06/01/1994	-2.30%	10.12%	6.68%
LargeCap Growth	05/02/1994	-5.04%	8.85%	5.27%
LargeCap S&P 500 Index	05/03/1999	-8.81%	9.24%	4.98%
LargeCap Value	05/13/1970	-11.00%	8.56%	3.92%
MFS VIT International Value	08/23/2001	-3.73%	6.31%	5.16%
MFS VIT New Discovery	05/01/1998	-12.04%	3.65%	5.86%
MidCap	12/18/1987	-8.32%	11.82%	8.47%
Money Market*	03/18/1983	-9.93%	-3.25%	-0.71%
Oppenheimer Main Street Small Cap	07/16/2001	-15.91%	8.14%	5.14%
PIMCO VIT Low Duration	03/31/2006	-9.77%	-1.76%		1.65%
Principal Capital Appreciation	04/28/1998	-7.79%	8.68%	5.69%
Principal LifeTime 2010	08/30/2004	-11.08%	2.34%	2.12%
Principal LifeTime 2020	08/30/2004	-11.04%	3.56%	2.86%
Principal LifeTime 2030	08/30/2004	-10.96%	4.10%	2.93%
Principal LifeTime 2040	08/30/2004	-10.76%	4.80%	3.20%
Principal LifeTime 2050	08/30/2004	-10.61%	4.96%	3.24%
Principal LifeTime Strategic Income	08/30/2004	-10.86%	1.22%	1.47%
Real Estate Securities	05/01/1998	-5.80%	10.01%	6.39%
SAM Balanced	06/03/1997	-10.73%	4.23%	3.89%
SAM Conservative Balanced	04/23/1998	-10.70%	2.92%	3.54%
SAM Conservative Growth	06/03/1997	-11.00%	5.24%	3.85%
SAM Flexible Income	09/09/1997	-11.21%	2.14%	3.28%
SAM Strategic Growth	06/03/1997	-11.52%	6.08%	3.91%
Short-Term Income	01/12/1994	-9.23%	-1.20%	1.26%
SmallCap (formerly SmallCap Blend)	05/01/1998	-10.03%	8.88%	4.75%
Templeton Global Bond VIP	01/24/1989	-14.24%	-0.82%	5.31%
Van Eck VIP Global Hard Assets	05/01/2006	-42.93%	-16.74%		-4.14%
* Effective April 8, 2016, the Money Market Division was replaced by the Fidelity VIP Government Money Market Division.



	For Contracts with Purchase Payment Credit Rider and without Surrender Charge
Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
Alliance Bernstein Small/Mid Cap Value	05/02/2001	-7.31%	7.08%	5.70%
American Century VP Income & Growth	10/31/1997	-7.44%	9.17%	3.81%
American Century VP Inflation Protection	12/31/2002	-4.35%	0.07%	1.45%
American Century VP Mid Cap Value	10/29/2004	-3.48%	9.25%	6.83%
American Century VP Ultra	05/01/2001	4.22%	10.88%	5.00%
American Century VP Value	05/01/1996	-5.88%	8.39%	4.21%
American Funds Global Small Capitalization	04/30/1998	-1.67%	2.62%	3.63%
American High Income Bond	02/08/1984	-9.09%	0.89%	2.61%
American New World	06/17/1999	-5.02%	-1.79%	3.99%
Balanced	12/18/1987	-1.52%	6.89%	3.54%
BlackRock Global Allocation VI	02/28/1992	-2.88%	2.11%	3.86%
BlackRock iShares Alternative Strategies VI	04/30/2014	-3.17%			-0.81%
BlackRock iShares Dynamic Allocation VI	04/30/2014	-5.84%			-3.68%
BlackRock iShares Dynamic Fixed Income VI	04/30/2014	-3.40%			-2.20%
BlackRock iShares Equity Appreciation VI	04/30/2014	-8.56%			-5.85%
Columbia Limited Duration Credit	05/07/2010	-4.37%	-0.57%		-0.30%
Core Plus Bond (formerly Bond & Mortgage Securities)	12/18/1987	-2.41%	1.66%	1.81%



	For Contracts with Purchase Payment Credit Rider and without Surrender Charge
Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
Delaware VIP Limited Term Diversified Income	05/01/2000	-1.36%	-0.81%	1.01%
Delaware VIP Small Cap Value	05/01/2000	-8.27%	5.97%	4.76%
Deutsche Small Mid Cap Value	05/01/1996	-4.10%	5.96%	5.03%
Diversified Balanced Managed Volatility	10/31/2013	-1.92%			1.96%
Diversified Growth Managed Volatility	10/31/2013	-1.87%			2.47%
Diversified International	05/02/1994	-2.28%	1.89%	1.57%
Equity Income	04/28/1998	-5.79%	8.35%	4.45%
Fidelity VIP Contrafund	01/31/1995	-1.38%	8.69%	5.13%
Fidelity VIP Equity-Income	11/03/1986	-6.09%	7.29%	2.96%
Fidelity VIP Growth	10/31/1986	4.99%	11.06%	5.72%
Fidelity VIP Overseas	01/28/1987	1.30%	2.16%	1.05%
Franklin Global Real Estate VIP	01/24/1989	-1.37%	5.24%	-0.79%
Franklin Small Cap Value VIP	04/30/1998	-9.18%	5.60%	4.23%
Goldman Sachs VIT Mid Cap Value	05/01/1998	-11.00%	6.66%	4.66%
Goldman Sachs VIT Small Cap Equity Insights	02/13/1998	-4.02%	7.93%	3.18%
Government & High Quality Bond	05/06/1993	-1.15%	1.00%	2.30%
Guggenheim Floating Rate Strategies	04/22/2013	-1.22%			0.10%
Guggenheim Global Managed Futures Strategy	11/07/2008	-3.45%	-3.60%		-4.62%
Guggenheim Long Short Equity Fund	05/01/2002	-0.69%	1.59%	1.19%
Guggenheim Macro Opportunities	04/22/2013	-2.23%			0.22%
Guggenheim Multi-Hedge Strategies	11/29/2005	-0.12%	0.76%	-1.39%
Guggenheim Rydex Commodities Strategy	09/30/2005	-35.10%	-18.83%	-14.44%
Income	05/07/1993	-2.63%	2.13%	3.35%
International Emerging Markets	10/24/2000	-15.48%	-6.48%	1.58%
Invesco VI American Franchise	07/03/1995	2.98%	9.15%	5.57%
Invesco VI Core Equity	05/02/1994	-7.59%	6.37%	4.37%
Invesco VI Global Health Care	05/22/1997	1.17%	14.66%	7.36%
Invesco VI Mid Cap Growth	09/25/2000	-0.75%	5.70%	4.56%
Invesco VI Small Cap Equity	08/29/2003	-7.35%	6.43%	5.09%
Invesco VI Technology	05/21/1997	4.76%	7.34%	5.03%
Janus Aspen Enterprise	09/13/1993	1.77%	9.96%	7.46%
LargeCap Growth I	06/01/1994	5.70%	10.93%	6.68%
LargeCap Growth	05/02/1994	2.96%	9.69%	5.27%
LargeCap S&P 500 Index	05/03/1999	-0.81%	10.07%	4.98%
LargeCap Value	05/13/1970	-3.00%	9.41%	3.92%
MFS VIT International Value	08/23/2001	4.27%	7.23%	5.16%
MFS VIT New Discovery	05/01/1998	-4.04%	4.67%	5.86%
MidCap	12/18/1987	-0.32%	12.57%	8.47%
Money Market*	03/18/1983	-1.93%	-1.91%	-0.71%
Oppenheimer Main Street Small Cap	07/16/2001	-7.91%	9.00%	5.14%
PIMCO VIT Low Duration	03/31/2006	-1.77%	-0.50%		1.65%
Principal Capital Appreciation	04/28/1998	0.21%	9.53%	5.69%
Principal LifeTime 2010	08/30/2004	-3.08%	3.41%	2.12%
Principal LifeTime 2020	08/30/2004	-3.04%	4.58%	2.86%
Principal LifeTime 2030	08/30/2004	-2.96%	5.10%	2.93%
Principal LifeTime 2040	08/30/2004	-2.76%	5.78%	3.20%
Principal LifeTime 2050	08/30/2004	-2.61%	5.93%	3.24%
Principal LifeTime Strategic Income	08/30/2004	-2.86%	2.34%	1.47%



	For Contracts with Purchase Payment Credit Rider and without Surrender Charge
Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
Real Estate Securities	05/01/1998	2.20%	10.81%	6.39%
SAM Balanced	06/03/1997	-2.73%	5.23%	3.89%
SAM Conservative Balanced	04/23/1998	-2.70%	3.96%	3.54%
SAM Conservative Growth	06/03/1997	-3.00%	6.20%	3.85%
SAM Flexible Income	09/09/1997	-3.21%	3.22%	3.28%
SAM Strategic Growth	06/03/1997	-3.52%	7.01%	3.91%
Short-Term Income	01/12/1994	-1.23%	0.03%	1.26%
SmallCap (formerly SmallCap Blend)	05/01/1998	-2.03%	9.73%	4.75%
Templeton Global Bond VIP	01/24/1989	-6.24%	0.39%	5.31%
Van Eck VIP Global Hard Assets	05/01/2006	-34.93%	-14.38%		-4.14%
* Effective April 8, 2016, the Money Market Division was replaced by the Fidelity VIP Government Money Market Division.

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 2015 and 2016.

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
2015	$5,500	$11,000
2016	$5,500	$11,000

For succeeding years, limits are indexed for cost of living.

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 and tax filing status.

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 $184,000 and $194,000 in 2016.



Deductibility of Traditional IRA Contributions for Active Participants
Married Individuals (Filing Jointly)			Single Individual
Year	Limited Deduction	No Deduction	Year	Limited Deduction	No Deduction
2015	$98,000	$118,000	2015	$61,000	$71,000
2016	$98,000	$118,000	2016	$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 deductible 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 Traditional IRA for the year in which he/she reaches age 70½ 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 59½ 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 unemployed medical insurance premiums; distributions for first-time home purchases (up to $10,000), distributions for higher education expenses; made on account of certain levies on income and payments; qualified reservist distributions; 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 70½, and such distributions must be made over a period that does not exceed the uniform life distribution period or in certain instances under the joint life and last survivor period established by the IRS. In addition, upon the death of the owner prior to the commencement of annuity payments, the amount accumulated under the contract must be distributed by December 31 of the calendar year that contains fifth anniversary of the owner’s death or, if distributions to a beneficiary designated under the contract commence by December 31 of the calendar year following the Plan Participant’s death, distributions are permitted over the life of the beneficiary or over a period not extending beyond the beneficiary’s life expectancy. In certain instances the distributions may be payable over the remaining life expectancy of the deceased owner. If the surviving spouse is the beneficiary of the IRA Contract, the surviving spouse may have additional distribution options. If the Plan Participant has commenced receiving annuity distributions prior to the Plan Participant’s death, distributions must continue at least as rapidly as under the method in effect at the date of death. 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.

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 indirect 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 in 2016.

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
2015	$18,000	$6,000
2016	$18,000	$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 2016.

Elective contribution amounts made under the salary reduction portions (i.e., those subject to the $12,500 limit in 2016) 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 (subject to certain exceptions) or fixed nonelective contributions of 2% of compensation of all eligible employees.



Savings Incentive Match Plan for Employees (SIMPLE IRA)
Year	Elective Deferral	Catch-up Contribution	401(k) Elective Deferral
2015	$12,500	$3,000	$18,000
2016	$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 permitted after two years of participation in the SIMPLE plan, however, such rollovers are currently not permitted into our SIMPLE IRA contract.

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 2015 and 2016.



Roth IRA - Maximum Annual Contribution
Year	Individual ROTH IRA	Catch-up Contribution
2015	$5,500	$1,000
2016	$5,500	$1,000

For successive years, individual Roth IRA limits are indexed for cost-of-living.

For 2016, the maximum contribution is phased out for single taxpayers with adjusted gross income between $117,000 and $132,000 and for joint filers with adjusted gross income between $184,000 and $194,000 (see chart below).



Modified Adjusted Gross Income Limits – 2016
Single	Married Filing Joint	ROTH IRA Contribution
$117,000 or less	$184,000 or less	Full Contribution
$117,000 – $132,000	$184,000 – $194,000	Partial Contribution*
$132,000 & over	$194,000 & 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 59 ½, dies, becomes disabled, or uses the funds for first-time home buyer expenses at the time of distribution. The five-year period for owner contributions begins January 1 of the year the first contribution is made to any Roth IRA. The five-year period for converted amounts begins from January 1 of the year of the conversion.

Required Distributions . Roth IRAs are not subject to lifetime minimum required distributions. Roth IRAs are subject to the same post-death minimum required distribution rules described above for IRAs.

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, 2015, 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, 2015 and 2014. 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, 2015, 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, 2015, 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, 2015 and 2014, in conformity with U.S. generally accepted accounting principles.

/s/Ernst & Young LLP

Des Moines, Iowa

April 29, 2016



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015
		AllianceBernstein Small Cap Growth Class A Division		AllianceBernstein Small/Mid Cap Value Class A Division		Alps/Red Rocks Listed Private Equity Class III Division




Assets
Investments in shares of mutual funds, at market		$	4,350,241	$	2,766,015	$	23,675
Liabilities			—		—		—
Net assets		$	4,350,241	$	2,766,015	$	23,675

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		—		258,992		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		3,838,950		2,085,701		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		511,291		421,322		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		23,675
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	4,350,241	$	2,766,015	$	23,675

Investments in shares of mutual funds, at cost		$	4,973,781	$	3,391,466	$	24,667
Shares of mutual funds owned			251,314		159,978		2,294
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		—		22,648		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		152,946		182,833		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		21,809		37,519		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		2,640
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		—		11.44		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		11.26		—
	Principal Investment Plus Variable Annuity		25.10		11.41		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		23.45		11.23		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		8.98
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		8.97
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
American Century VP Capital Appreciation Class I Division		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





$	2,496,198	$	11,548,437	$	51,379,647	$	6,444,459	$	3,618,032	$	36,158,449	$	15,477,692
	—		—		—		—		—		—		—
$	2,496,198	$	11,548,437	$	51,379,647	$	6,444,459	$	3,618,032	$	36,158,449	$	15,477,692



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		2,693,079		—		—		—		—		—
	—		91,348		—		—		—		—		—
	—		8,764,010		64,802		1,091,980		3,618,032		—		15,144,771
	—		—		—		—		—		—		—
	2,295,230		—		49,011,821		4,512,198		—		34,060,533		—
	200,968		—		2,247,410		840,281		—		2,097,916		—
	—		—		—		—		—		—		—
	—		—		16,808		—		—		—		114,296
	—		—		38,806		—		—		—		218,625

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	2,496,198	$	11,548,437	$	51,379,647	$	6,444,459	$	3,618,032	$	36,158,449	$	15,477,692

$	2,415,931	$	8,996,822	$	57,254,100	$	6,340,662	$	2,466,965	$	21,887,786	$	11,405,990
	166,192		1,347,542		5,168,979		350,242		233,874		2,374,160		1,746,918

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		156,193		—		—		—		—		—
	—		5,881		—		—		—		—		—
	—		537,127		6,724		58,694		219,740		—		752,055
	—		—		—		—		—		—		—
	211,490		—		3,887,158		243,115		—		1,765,323		—
	18,706		—		190,826		46,825		—		116,409		—
	—		—		—		—		—		—		—
	—		—		1,754		—		—		—		11,875
	—		—		4,062		—		—		—		22,786

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		17.24		—		—		—		—		—
	—		15.53		—		—		—		—		—
	—		16.31		9.64		18.61		16.46		—		20.14
	—		14.94		9.60		17.99		15.08		—		18.56
	10.85		—		12.61		18.56		—		19.29		—
	10.74		—		11.78		17.95		—		18.02		—
	—		—		—		—		—		—		—
	—		—		9.58		—		—		—		9.63
	—		—		9.55		—		—		—		9.59

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015
		American Funds Insurance Series Asset Allocation Fund Class 4 Division		American Funds Insurance Series Blue Chip Income & Growth Fund Class 4 Division		American Funds Insurance Series Global Small Capitalization Fund Class 2 Division




Assets
Investments in shares of mutual funds, at market		$	806,434	$	900,392	$	843,960
Liabilities			—		—		—
Net assets		$	806,434	$	900,392	$	843,960

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		—		—		367,945
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		—		476,015
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		259,947		404,354		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		546,487		496,038		—
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	806,434	$	900,392	$	843,960

Investments in shares of mutual funds, at cost		$	808,051	$	1,025,956	$	928,166
Shares of mutual funds owned			39,531		71,859		35,312
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		—		—		36,347
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		—		54,474
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		26,779		41,324		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		56,386		50,856		—
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		—		—		10.13
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		10.03
	Principal Investment Plus Variable Annuity		—		—		8.74
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		8.71
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		9.71		9.79		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		9.69		9.75		—
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
	American Funds Insurance Series Global Small Capitalization Fund Class 4 Division	American Funds Insurance Series High-Income Bond Class 2 Division		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





$	132,990	$	364,164	$	62,127	$	148,405	$	37,589	$	440,766	$	393,506
	—		—		—		—		—		—		—
$	132,990	$	364,164	$	62,127	$	148,405	$	37,589	$	440,766	$	393,506



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		364,164		—		—		—		234,974		—
	—		—		—		—		—		—		—
	—		—		—		—		—		205,792		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	57,468		—		18,474		74,779		27,079		—		236,141
	75,522		—		43,653		73,626		10,510		—		157,365

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	132,990	$	364,164	$	62,127	$	148,405	$	37,589	$	440,766	$	393,506

$	143,998	$	410,754	$	64,703	$	150,982	$	40,514	$	481,418	$	428,498
	5,516		40,195		5,306		12,984		3,986		23,558		21,054

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		41,088		—		—		—		27,031		—
	—		—		—		—		—		—		—
	—		—		—		—		—		23,054		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	5,897		—		1,907		7,678		3,106		—		27,458
	7,774		—		4,520		7,584		1,210		—		18,357

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		8.87		—		—		—		8.69		—
	—		8.78		—		—		—		8.61		—
	—		—		—		—		—		8.93		—
	—		—		—		—		—		8.89		—
	—		—		—		—		—		—		—
	9.75		—		9.69		9.74		8.72		—		8.60
	9.71		—		9.66		9.71		8.69		—		8.57

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015

		Balanced Class 1 Division		BlackRock Global Allocation Class III Division		BlackRock iShares Alternative Strategies Class III Division



Assets
Investments in shares of mutual funds, at market		$	29,965,069	$	522,246	$	129,148
Liabilities			—		—		—
Net assets		$	29,965,069	$	522,246	$	129,148

Net assets
Applicable to accumulation units:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		569,330		—		—
	Premier Variable		2,243,418		—		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		27,152,321		58,010		35,052
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		396,521		77,887
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		8,494		11,130
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		4,030		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		55,191		5,079
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	29,965,069	$	522,246	$	129,148

Investments in shares of mutual funds, at cost		$	24,509,319	$	562,375	$	134,212
Shares of mutual funds owned			1,692,942		40,050		13,205
Accumulation units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		180,760		—		—
	Premier Variable		679,819		—		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		960,761		6,242		3,775
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		42,691		8,394
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		918		1,204
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		433		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		5,942		547
Accumulation unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		3.15		—		—
	Premier Variable		3.30		—		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		28.26		9.29		9.29
	The Principal Variable Annuity with Purchase Payment Credit Rider		25.81		9.26		9.25
	Principal Investment Plus Variable Annuity		—		9.29		9.28
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		9.25		9.24
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		9.30		9.29
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		9.29		9.28
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
BlackRock iShares Dynamic Allocation Class III Division		BlackRock iShares Dynamic Fixed Income Class III Division		BlackRock iShares Equity Appreciation Class III Division		BlackRock Value Opportunities Class III Division		Bond & Mortgage Securities Class 1 Division		Bond & Mortgage Securities Class 2 Division		Calvert EAFE International Index Class F Division





$	60,297	$	110,754	$	110,952	$	826	$	151,327,795	$	18,626	$	14,972
	—		—		—		—		—		—		—
$	60,297	$	110,754	$	110,952	$	826	$	151,327,795	$	18,626	$	14,972



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		195,449		—		—
	—		—		—		—		1,870,370		—		—
	—		—		—		—		5,352,712		—		—
	—		—		—		—		326,829		—		—
	—		21,115		2,948		—		63,750,763		—		—
	—		—		—		—		—		—		—
	27,776		89,047		64,855		—		73,295,134		—		—
	32,521		—		37,834		—		6,536,538		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		3,637
	—		592		5,315		826		—		18,626		11,335

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	60,297	$	110,754	$	110,952	$	826	$	151,327,795	$	18,626	$	14,972

$	62,447	$	113,935	$	118,143	$	901	$	149,982,947	$	18,853	$	15,932
	6,388		11,418		12,193		45		13,694,823		1,689		193

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		72,961		—		—
	—		—		—		—		666,285		—		—
	—		—		—		—		303,236		—		—
	—		—		—		—		24,838		—		—
	—		2,178		340		—		2,728,039		—		—
	—		—		—		—		—		—		—
	3,041		9,191		7,494		—		3,144,063		—		—
	3,574		—		4,388		—		306,993		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		405
	—		61		614		92		—		1,916		1,267

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		2.68		—		—
	—		—		—		—		2.81		—		—
	—		—		—		—		17.65		—		—
	—		—		—		—		13.16		—		—
	9.14		9.69		8.66		—		23.37		—		—
	9.11		9.66		8.63		—		21.34		—		—
	9.13		9.69		8.65		—		23.31		—		—
	9.10		9.65		8.62		—		21.29		—		—
	—		—		—		—		—		—		—
	9.15		9.70		8.67		9.00		—		9.73		8.98
	9.13		9.69		8.65		8.99		—		9.72		8.95

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015
		Calvert Russell 2000 Small Cap Index Class F Division		Calvert S&P MidCap 400 Index Class F Division		ClearBridge Small Cap Growth Series II Division




Assets
Investments in shares of mutual funds, at market		$	103,122	$	480,283	$	8,536
Liabilities			—		—		—
Net assets		$	103,122	$	480,283	$	8,536

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		76,272		270,504		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		26,850		209,779		8,536
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	103,122	$	480,283	$	8,536

Investments in shares of mutual funds, at cost		$	115,602	$	522,298	$	9,049
Shares of mutual funds owned			1,470		5,174		420
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		7,782		27,556		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		2,748		21,438		902
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		9.80		9.82		9.48
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		9.77		9.79		9.47
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
Columbia Limited Duration Credit Class 2 Division		Columbia Small Cap Value Class 2 Division		Delaware Limited Term Diversified Income Service Class Division		Delaware Small Cap Value Service Class Division		Deutsche Alternative Asset Allocation Class B Division		Deutsche Equity 500 Index Class B2 Division		Deutsche Small Mid Cap Value Class B Division





$	140,265	$	75,095	$	226,690	$	1,008,617	$	40,290	$	678,440	$	952,631
	—		—		—		—		—		—		—
$	140,265	$	75,095	$	226,690	$	1,008,617	$	40,290	$	678,440	$	952,631



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	51,997		—		68,626		20,189		—		—		40,634
	—		—		—		—		—		—		—
	69,738		—		133,320		742,801		—		—		682,290
	7,887		—		13,193		245,627		—		—		124,076
	—		—		—		—		—		—		—
	—		959		—		—		—		293,054		16,779
	10,643		74,136		11,551		—		40,290		385,386		88,852

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	140,265	$	75,095	$	226,690	$	1,008,617	$	40,290	$	678,440	$	952,631

$	143,034	$	84,525	$	227,972	$	1,158,768	$	42,037	$	709,241	$	1,024,922
	15,082		4,711		23,322		30,036		3,200		34,989		59,726

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	5,435		—		6,957		1,840		—		—		3,564
	—		—		—		—		—		—		—
	7,294		—		13,525		67,872		—		—		59,983
	828		—		1,343		22,800		—		—		11,081
	—		—		—		—		—		—		—
	—		105		—		—		—		28,707		1,721
	1,113		8,158		1,172		—		4,453		37,873		9,142

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	9.57		—		9.87		10.97		—		—		11.40
	9.53		—		9.83		10.80		—		—		11.22
	9.56		—		9.86		10.94		—		—		11.38
	9.52		—		9.82		10.77		—		—		11.20
	—		—		—		—		—		—		—
	9.58		9.10		9.88		—		9.08		10.21		9.75
	9.56		9.09		9.86		—		9.05		10.18		9.72

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015

		Diversified Balanced Class 2 Division		Diversified Balanced Managed Volatility Class 2 Division		Diversified Growth Class 2 Division



Assets
Investments in shares of mutual funds, at market		$	1,030,996,862	$	138,377,896	$	3,202,277,009
Liabilities			—		—		—
Net assets		$	1,030,996,862	$	138,377,896	$	3,202,277,009

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		—		7,058		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		919,718,416		107,545,897		2,960,163,557
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		80,515,136		6,547,087		206,154,057
	Principal Lifetime Income Solutions		30,763,310		23,865,901		35,959,395
	Principal Pivot Series Variable Annuity		—		173,355		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		238,598		—
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	1,030,996,862	$	138,377,896	$	3,202,277,009

Investments in shares of mutual funds, at cost		$	902,278,266	$	138,382,674	$	2,788,993,675
Shares of mutual funds owned			73,068,523		12,908,386		212,352,587
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		—		731		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		65,359,101		10,271,906		197,094,058
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		5,931,532		633,352		14,229,420
	Principal Lifetime Income Solutions		2,186,172		2,279,565		2,394,254
	Principal Pivot Series Variable Annuity		—		17,252		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		23,821		—
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		—		9.66		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		9.63		—
	Principal Investment Plus Variable Annuity		14.07		10.47		15.02
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		13.57		10.34		14.49
	Principal Lifetime Income Solutions		14.07		10.47		15.02
	Principal Pivot Series Variable Annuity		—		10.05		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		10.02		—
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
Diversified Growth Managed Volatility Class 2 Division		Diversified Income Class 2 Division		Diversified International Class 1 Division		Diversified International Class 2 Division		Dreyfus IP MidCap Stock Service Shares Division		Dreyfus Investment Portfolio Technology Growth Service Shares Division		Equity Income Class 1 Division





$	252,642,046	$	198,790,685	$	136,018,971	$	210,196	$	43,675	$	6,205,084	$	207,673,737
	—		—		—		—		—		—		—
$	252,642,046	$	198,790,685	$	136,018,971	$	210,196	$	43,675	$	6,205,084	$	207,673,737



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		243,856		—		—		—		—
	—		—		2,497,610		—		—		—		63,783
	—		—		2,231,773		—		—		—		—
	—		—		362,702		—		—		—		—
	—		—		85,356,225		—		—		—		48,067,615
	—		—		—		—		—		—		—
	205,755,834		183,425,912		42,063,588		—		—		5,261,110		151,301,136
	19,054,283		8,494,133		3,263,217		—		—		943,974		8,241,203
	27,503,019		6,870,640		—		—		—		—		—
	299,767		—		—		127,166		19,695		—		—
	29,143		—		—		83,030		23,980		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	252,642,046	$	198,790,685	$	136,018,971	$	210,196	$	43,675	$	6,205,084	$	207,673,737

$	252,793,498	$	192,836,820	$	111,389,468	$	228,298	$	43,776	$	5,934,546	$	160,847,828
	23,414,462		16,747,320		9,942,908		15,254		2,313		363,721		9,583,467

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		80,483		—		—		—		—
	—		—		786,785		—		—		—		33,904
	—		—		133,897		—		—		—		—
	—		—		29,674		—		—		—		—
	—		—		3,194,681		—		—		—		3,385,374
	—		—		—		—		—		—		—
	19,518,214		15,736,842		1,578,156		—		—		223,435		10,681,866
	1,830,714		744,752		134,051		—		—		42,920		614,097
	2,608,964		589,483		—		—		—		—		—
	29,880		—		—		13,806		2,124		—		—
	2,914		—		—		9,043		2,590		—		—

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		3.03		—		—		—		—
	—		—		3.17		—		—		—		1.88
	—		—		16.67		—		—		—		—
	—		—		12.22		—		—		—		—
	9.60		—		26.72		—		—		—		14.20
	9.56		—		24.40		—		—		—		13.45
	10.54		11.66		26.65		—		—		23.55		14.16
	10.41		11.41		24.34		—		—		21.99		13.42
	10.54		11.66		—		—		—		—		—
	10.03		—		—		9.21		9.27		—		—
	10.00		—		—		9.18		9.26		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015
		Equity Income Class 2 Division		Fidelity VIP Contrafund Service Class Division		Fidelity VIP Contrafund Service Class 2 Division




Assets
Investments in shares of mutual funds, at market		$	1,006,029	$	42,170,547	$	50,809,499
Liabilities			—		—		—
Net assets		$	1,006,029	$	42,170,547	$	50,809,499

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		—		42,170,547		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		—		45,809,235
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		3,731,266
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		440,071		—		629,305
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		565,958		—		639,693
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	1,006,029	$	42,170,547	$	50,809,499

Investments in shares of mutual funds, at cost		$	1,077,827	$	32,905,384	$	36,373,596
Shares of mutual funds owned			46,748		1,248,019		1,527,646
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		—		1,785,852		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		—		2,022,275
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		176,348
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		45,400		—		62,363
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		58,575		—		63,595
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		—		23.61		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		21.57		—
	Principal Investment Plus Variable Annuity		—		—		22.65
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		21.16
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		9.69		—		10.09
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		9.66		—		10.06
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
Fidelity VIP Equity-Income Service Class 2 Division		Fidelity VIP Growth Service Class Division		Fidelity VIP Growth Service Class 2 Division		Fidelity VIP Mid Cap Service Class Division		Fidelity VIP Mid Cap Service Class 2 Division		Fidelity VIP Overseas Service Class 2 Division		Franklin Global Real Estate VIP Class 2 Division





$	31,471,745	$	14,192,952	$	9,985,318	$	69,447	$	19,266,260	$	31,476,924	$	496,713
	—		—		—		—		—		—		—
$	31,471,745	$	14,192,952	$	9,985,318	$	69,447	$	19,266,260	$	31,476,924	$	496,713



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		69,447		—		—		—
	21,014,371		14,192,952		—		—		—		85,052		33,895
	—		—		—		—		—		—		—
	9,187,080		—		8,897,470		—		16,461,187		29,167,336		58,784
	1,270,294		—		1,087,848		—		1,877,308		2,104,523		5,125
	—		—		—		—		—		—		—
	—		—		—		—		579,628		59,794		210,367
	—		—		—		—		348,137		60,219		188,542

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	31,471,745	$	14,192,952	$	9,985,318	$	69,447	$	19,266,260	$	31,476,924	$	496,713

$	32,306,526	$	9,059,520	$	7,257,801	$	78,357	$	19,892,394	$	25,566,736	$	512,876
	1,570,446		216,455		153,597		2,143		605,286		1,664,565		32,005

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		6,676		—		—		—
	1,248,031		917,134		—		—		—		9,381		3,539
	—		—		—		—		—		—		—
	546,954		—		424,858		—		654,316		1,780,301		6,141
	82,074		—		55,613		—		79,889		137,525		537
	—		—		—		—		—		—		—
	—		—		—		—		59,265		6,207		20,044
	—		—		—		—		35,710		6,272		18,022

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		10.40		—		—		—
	16.84		15.48		—		—		—		9.07		9.58
	15.52		14.13		—		—		—		9.03		9.54
	16.80		—		20.94		—		25.16		16.38		9.57
	15.48		—		19.56		—		23.50		15.30		9.54
	—		—		—		—		—		—		—
	—		—		—		—		9.78		9.63		10.50
	—		—		—		—		9.75		9.60		10.46

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015

		Franklin Rising Dividends VIP Class 4 Division		Franklin Small Cap Value VIP Class 2 Division		Goldman Sachs VIT Mid Cap Value Institutional Shares Division



Assets
Investments in shares of mutual funds, at market		$	469,916	$	3,252,241	$	14,901,640
Liabilities			—		—		—
Net assets		$	469,916	$	3,252,241	$	14,901,640

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		—		208,408		194,168
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		2,585,817		13,772,424
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		458,016		935,048
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		165,118		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		304,798		—		—
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	469,916	$	3,252,241	$	14,901,640

Investments in shares of mutual funds, at cost		$	523,276	$	3,892,446	$	15,769,289
Shares of mutual funds owned			18,941		183,950		1,028,409
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		—		12,133		8,911
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		150,907		633,584
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		27,710		46,053
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		16,779		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		31,072		—		—
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		—		17.18		21.79
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		16.57		20.35
	Principal Investment Plus Variable Annuity		—		17.14		21.74
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		16.53		20.30
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		9.84		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		9.81		—		—
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
Goldman Sachs VIT Mid Cap Value Service Shares Division		Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division		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		Government & High Quality Bond Class 2 Division		Guggenheim Floating Rate Strategies Series F Division





$	468,946	$	12,179	$	6,193,049	$	107,122	$	121,664,052	$	1,002,555	$	787,211
	—		—		—		—		—		—		—
$	468,946	$	12,179	$	6,193,049	$	107,122	$	121,664,052	$	1,002,555	$	787,211



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		58,173		—		—
	—		—		—		—		32,161		—		—
	—		—		—		—		122,529		—		—
	—		—		—		—		2,387,194		—		—
	—		—		—		—		2,602,044		—		—
	—		—		—		—		235,767		—		—
	—		—		88,157		—		66,162,480		—		177,720
	—		—		—		—		—		—		—
	—		—		5,755,293		—		44,939,853		—		498,817
	—		—		349,599		—		5,123,851		—		19,334
	—		—		—		—		—		—		—
	132,872		—		—		48,944		—		809,920		29,498
	336,074		12,179		—		58,178		—		192,635		61,842

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	468,946	$	12,179	$	6,193,049	$	107,122	$	121,664,052	$	1,002,555	$	787,211

$	554,624	$	12,714	$	6,864,240	$	128,426	$	126,416,058	$	1,037,517	$	807,948
	32,319		1,332		533,884		9,299		11,974,808		98,580		30,607

	—		—		—		—		—		—		—
	—		—		—		—		17,733		—		—
	—		—		—		—		8,510		—		—
	—		—		—		—		46,132		—		—
	—		—		—		—		853,570		—		—
	—		—		—		—		209,701		—		—
	—		—		—		—		19,138		—		—
	—		—		4,965		—		5,492,668		—		18,284
	—		—		—		—		—		—		—
	—		—		324,925		—		3,739,785		—		51,352
	—		—		21,131		—		444,980		—		1,998
	—		—		—		—		—		—		—
	14,496		—		—		4,781		—		80,402		2,981
	36,783		1,306		—		5,702		—		19,184		6,270

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		3.28		—		—
	—		—		—		—		3.78		—		—
	—		—		—		—		2.66		—		—
	—		—		—		—		2.80		—		—
	—		—		—		—		12.41		—		—
	—		—		—		—		12.32		—		—
	—		—		17.76		—		12.05		—		9.72
	—		—		16.58		—		11.54		—		9.68
	—		—		17.71		—		12.02		—		9.71
	—		—		16.54		—		11.51		—		9.68
	—		—		—		—		—		—		—
	9.17		9.34		—		10.24		—		10.07		9.90
	9.14		9.33		—		10.20		—		10.04		9.86

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015

		Guggenheim Investments Global Managed Futures Strategy Division		Guggenheim Investments Long Short Equity Division		Guggenheim Investments Multi-Hedge Strategies Division



Assets
Investments in shares of mutual funds, at market		$	114,058	$	177,354	$	87,800
Liabilities			—		—		—
Net assets		$	114,058	$	177,354	$	87,800

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		—		58,773		5,317
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		4,642		23,078		20,153
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		3,257		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		86,326		37,456		6,943
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		23,090		54,790		55,387
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	114,058	$	177,354	$	87,800

Investments in shares of mutual funds, at cost		$	123,690	$	177,807	$	87,827
Shares of mutual funds owned			5,873		11,614		3,645
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		—		5,945		531
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		481		2,336		2,017
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		331		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		8,251		3,582		672
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		2,214		5,257		5,379
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		9.66		9.89		10.00
	The Principal Variable Annuity with Purchase Payment Credit Rider		9.62		9.85		9.96
	Principal Investment Plus Variable Annuity		9.65		9.88		9.99
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		9.62		9.84		9.96
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		10.46		10.46		10.33
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		10.43		10.42		10.30
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
Guggenheim Macro Opportunities Series M Division		Income Class 1 Division		Income Class 2 Division		International Emerging Markets Class 1 Division		International Emerging Markets Class 2 Division		Invesco American Franchise Series I Division		Invesco Balanced-Risk Allocation Series II Division





$	219,308	$	582,115	$	17,265	$	50,664,749	$	33,123	$	4,368,724	$	191,276
	—		—		—		—		—		—		—
$	219,308	$	582,115	$	17,265	$	50,664,749	$	33,123	$	4,368,724	$	191,276



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		387,308		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	79,568		71,968		—		20,505,629		—		4,368,724		—
	—		—		—		—		—		—		—
	28,721		494,531		—		27,606,238		—		—		—
	5,222		15,616		—		2,165,574		—		—		—
	—		—		—		—		—		—		—
	52,855		—		—		—		—		—		23,722
	52,942		—		17,265		—		33,123		—		167,554

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	219,308	$	582,115	$	17,265	$	50,664,749	$	33,123	$	4,368,724	$	191,276

$	225,613	$	596,738	$	17,402	$	59,694,396	$	35,852	$	2,968,737	$	228,556
	8,507		56,847		1,693		3,933,598		2,576		76,243		18,976

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		124,776		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	8,198		7,410		—		757,361		—		294,117		—
	—		—		—		—		—		—		—
	2,961		50,950		—		1,022,073		—		—		—
	540		1,615		—		87,786		—		—		—
	—		—		—		—		—		—		—
	5,332		—		—		—		—		—		2,490
	5,358		—		1,783		—		4,256		—		17,642

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		3.10		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	9.71		9.71		—		27.08		—		14.86		—
	9.67		9.68		—		24.73		—		14.53		—
	9.70		9.71		—		27.01		—		—		—
	9.66		9.67		—		24.67		—		—		—
	—		—		—		—		—		—		—
	9.91		—		9.70		—		7.80		—		9.53
	9.88		—		9.69		—		7.78		—		9.50

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015

		Invesco Core Equity Series I Division		Invesco Global Health Care Series I Division		Invesco Global Health Care Series II Division



Assets
Investments in shares of mutual funds, at market		$	17,819,731	$	10,562,192	$	814,219
Liabilities			—		—		—
Net assets		$	17,819,731	$	10,562,192	$	814,219

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		17,819,731		10,562,192		—
	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		—		—		311,665
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		502,554
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	17,819,731	$	10,562,192	$	814,219

Investments in shares of mutual funds, at cost		$	14,298,472	$	8,288,830	$	925,421
Shares of mutual funds owned			526,588		332,667		26,565
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		1,220,317		460,748		—
	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		—		—		29,638
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		47,944
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		14.60		22.92		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		13.34		21.00		—
	Principal Investment Plus Variable Annuity		—		—		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		10.52
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		10.48
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
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		Invesco Value Opportunities Series I Division		Janus Aspen Enterprise Service Shares Division





$	10,160,725	$	428,869	$	1,594,437	$	7,927,985	$	3,452,392	$	4,445,303	$	8,794,398
	—		—		—		—		—		—		—
$	10,160,725	$	428,869	$	1,594,437	$	7,927,985	$	3,452,392	$	4,445,303	$	8,794,398



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		1,594,437		2,257,885		3,452,392		—		8,794,398
	—		—		—		—		—		—		—
	9,299,077		—		—		5,043,124		—		3,967,940		—
	861,648		—		—		626,976		—		477,363		—
	—		—		—		—		—		—		—
	—		225,950		—		—		—		—		—
	—		202,919		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	10,160,725	$	428,869	$	1,594,437	$	7,927,985	$	3,452,392	$	4,445,303	$	8,794,398

$	9,654,943	$	461,139	$	889,328	$	8,668,134	$	3,252,164	$	4,108,119	$	5,697,629
	303,396		12,980		296,364		449,432		183,345		568,453		160,863

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		112,954		105,137		356,718		—		580,326
	—		—		—		—		—		—		—
	869,910		—		—		235,428		—		299,505		—
	84,382		—		—		31,336		—		38,577		—
	—		—		—		—		—		—		—
	—		24,423		—		—		—		—		—
	—		22,004		—		—		—		—		—

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		14.11		21.47		9.68		—		15.15
	—		—		13.81		20.06		8.86		—		13.84
	10.69		—		—		21.42		—		13.25		—
	10.21		—		—		20.01		—		12.38		—
	—		—		—		—		—		—		—
	—		9.25		—		—		—		—		—
	—		9.22		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015

		Janus Aspen Flexible Bond Service Shares Division		LargeCap Growth Class 1 Division		LargeCap Growth Class 2 Division



Assets
Investments in shares of mutual funds, at market		$	796,255	$	49,543,081	$	442,067
Liabilities			—		—		—
Net assets		$	796,255	$	49,543,081	$	442,067

Net assets
Applicable to accumulation units:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		800,284		—
	Premier Variable		—		3,882,026		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		—		32,399,770		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		10,623,351		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		1,837,650		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		281,901		—		230,848
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		514,354		—		211,219
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	796,255	$	49,543,081	$	442,067

Investments in shares of mutual funds, at cost		$	818,582	$	31,758,657	$	441,385
Shares of mutual funds owned			62,895		1,921,019		17,208
Accumulation units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		242,091		—
	Premier Variable		—		1,120,783		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		—		1,068,477		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		351,211		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		66,520		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		28,391		—		22,042
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		51,967		—		20,233
Accumulation unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		3.31		—
	Premier Variable		—		3.46		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		—		30.32		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		27.69		—
	Principal Investment Plus Variable Annuity		—		30.25		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		27.63		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		9.93		—		10.47
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		9.90		—		10.44
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
LargeCap Growth I Class 1 Division		LargeCap Growth I Class 2 Division		LargeCap S&P 500 Index Class 1 Division		LargeCap S&P 500 Index Class 2 Division		LargeCap Value Class 1 Division		LargeCap Value Class 2 Division		MFS VIT International Value Service Class Division





$	105,641,855	$	490,954	$	92,317,286	$	150,988	$	79,222,760	$	10,361	$	1,563,353
	—		—		—		—		—		—		—
$	105,641,855	$	490,954	$	92,317,286	$	150,988	$	79,222,760	$	10,361	$	1,563,353



$	—	$	—	$	—	$	—	$	875,218	$	—	$	—
	—		—		—		—		1,992,345		—		—
	—		—		—		—		100,401		—		—
	—		—		—		—		354,908		—		—
	626,046		—		478,182		—		4,991,756		—		—
	1,889,137		—		7,923,486		—		2,728,337		—		—
	175,176		—		489,973		—		393,436		—		—
	84,063,887		—		42,681,921		—		51,219,772		—		398,762
	—		—		—		—		—		—		—
	17,519,788		—		37,465,583		—		14,455,424		—		564,993
	1,367,821		—		3,278,141		—		2,016,398		—		39,867
	—		—		—		—		—		—		—
	—		379,409		—		31,784		—		—		310,472
	—		111,545		—		119,204		—		10,361		249,259

	—		—		—		—		—		—		—
	—		—		—		—		94,765		—		—
$	105,641,855	$	490,954	$	92,317,286	$	150,988	$	79,222,760	$	10,361	$	1,563,353

$	88,867,164	$	559,966	$	61,453,425	$	153,316	$	78,321,514	$	10,713	$	1,580,719
	4,012,224		18,675		6,406,474		10,493		2,714,038		356		70,644

	—		—		—		—		14,438		—		—
	—		—		—		—		210,207		—		—
	—		—		—		—		8,051		—		—
	—		—		—		—		71,750		—		—
	282,105		—		238,462		—		958,512		—		—
	99,331		—		460,696		—		162,148		—		—
	9,291		—		28,270		—		25,579		—		—
	1,440,917		—		2,656,070		—		1,317,058		—		42,032
	—		—		—		—		—		—		—
	301,032		—		2,337,130		—		372,609		—		59,591
	25,733		—		223,900		—		56,908		—		4,221
	—		—		—		—		—		—		—
	—		37,961		—		3,291		—		—		30,037
	—		11,178		—		12,363		—		1,083		24,192

$	—	$	—	$	—	$	—	$	60.35	$	—	$	—
	—		—		—		—		9.48		—		—
	—		—		—		—		11.42		—		—
	—		—		—		—		4.95		—		—
	2.22		—		2.01		—		5.21		—		—
	19.02		—		17.20		—		16.83		—		—
	18.85		—		17.33		—		15.38		—		—
	58.34		—		16.07		—		38.89		—		9.49
	53.28		—		14.68		—		35.52		—		9.45
	58.20		—		16.03		—		38.80		—		9.48
	53.15		—		14.64		—		35.43		—		9.45
	—		—		—		—		—		—		—
	—		9.99		—		9.66		—		9.58		10.34
	—		9.98		—		9.64		—		9.56		10.30

	—		—		—		—		—		—		—
	—		—		—		—		8,295		—		—

	—		—		—		—		60.35		—		—
	—		—		—		—		11.42		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015

		MFS VIT New Discovery Service Class Division		MFS VIT Utilities Service Class Division		MFS VIT Value Service Class Division



Assets
Investments in shares of mutual funds, at market		$	1,253,361	$	10,898,121	$	5,167,926
Liabilities			—		—		—
Net assets		$	1,253,361	$	10,898,121	$	5,167,926

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		442,890		—		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		681,803		9,174,769		4,452,531
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		107,676		992,616		715,395
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		227,245		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		20,992		503,491		—
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	1,253,361	$	10,898,121	$	5,167,926

Investments in shares of mutual funds, at cost		$	1,418,304	$	13,658,107	$	4,917,034
Shares of mutual funds owned			86,738		433,325		285,206
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		42,414		—		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		65,452		483,022		208,828
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		10,501		54,379		34,914
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		27,508		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		2,299		61,144		—
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		10.44		—		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		10.28		—		—
	Principal Investment Plus Variable Annuity		10.42		19.00		21.32
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		10.25		18.25		20.49
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		9.15		8.26		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		9.13		8.23		—
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
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 Mid-Cap Growth Portfolio S Class Division		Neuberger Berman AMT Socially Responsive I Class Division		Oppenheimer Main Street Small Cap Service Shares Division





$	339,892,141	$	49,380,027	$	1,381,070	$	4,047,878	$	2,745,675	$	5,077,342	$	561,373
	—		—		—		—		—		—		—
$	339,892,141	$	49,380,027	$	1,381,070	$	4,047,878	$	2,745,675	$	5,077,342	$	561,373



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		78,187		—		—		—		—		—
	—		1		—		—		—		—		—
	1,060,805		503,449		—		—		—		—		—
	5,878,744		3,800,180		—		—		—		—		—
	9,135,671		1,380,058		—		—		—		—		—
	720,565		233,023		—		—		—		—		—
	202,959,336		19,630,354		—		—		—		—		561,373
	—		—		—		—		—		—		—
	111,393,797		21,357,035		—		3,830,950		2,494,015		4,586,329		—
	8,743,223		2,397,740		—		216,928		208,102		491,013		—
	—		—		—		—		—		—		—
	—		—		397,139		—		17,172		—		—
	—		—		983,931		—		26,386		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	339,892,141	$	49,380,027	$	1,381,070	$	4,047,878	$	2,745,675	$	5,077,342	$	561,373

$	249,287,542	$	49,380,025	$	1,381,070	$	3,711,522	$	2,866,328	$	4,026,139	$	663,072
	6,153,007		49,380,027		1,381,069		306,890		128,603		236,596		26,669

	—		—		—		—		—		—		—
	—		37,271		—		—		—		—		—
	—		—		—		—		—		—		—
	116,047		318,285		—		—		—		—		—
	613,690		2,279,776		—		—		—		—		—
	203,886		117,008		—		—		—		—		—
	29,693		22,850		—		—		—		—		—
	2,478,296		1,479,391		—		—		—		—		47,642
	—		—		—		—		—		—		—
	1,363,494		1,613,619		—		230,223		260,006		221,115		—
	117,175		198,350		—		13,957		21,715		25,344		—
	—		—		—		—		—		—		—
	—		—		40,305		—		1,869		—		—
	—		—		100,179		—		2,876		—		—

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		2.10		—		—		—		—		—
	—		—		—		—		—		—		—
	9.14		1.58		—		—		—		—		—
	9.58		1.67		—		—		—		—		—
	44.81		11.79		—		—		—		—		—
	24.27		10.22		—		—		—		—		—
	81.89		13.27		—		—		—		—		11.78
	74.80		12.12		—		—		—		—		11.60
	81.70		13.23		—		16.64		9.59		20.74		—
	74.62		12.09		—		15.54		9.58		19.37		—
	—		13.23		—		—		—		—		—
	—		—		9.85		—		9.19		—		—
	—		—		9.82		—		9.18		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015

		PIMCO All Asset Administrative Class Division		PIMCO All Asset Advisor Class Division		PIMCO Commodity Real Return Strategy M Class Division



Assets
Investments in shares of mutual funds, at market		$	4,147,238	$	—	$	12,559
Liabilities			—		—		—
Net assets		$	4,147,238	$	—	$	12,559

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		3,839,071		—		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		308,167		—		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		2,610
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		9,949
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	4,147,238	$	—	$	12,559

Investments in shares of mutual funds, at cost		$	5,064,118	$	—	$	14,240
Shares of mutual funds owned			455,740		—		1,823
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		297,474		—		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		24,848		—		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		361
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		1,377
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		12.91		—		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		12.40		—		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		8.77		7.24
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		8.75		7.22
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
PIMCO High Yield Administrative Class Division		PIMCO Low Duration Advisor Class Division		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





$	15,655,710	$	360,732	$	27,066,926	$	116,745,107	$	632,233	$	17,075,093	$	28,520,977
	—		—		—		—		—		—		—
$	15,655,710	$	360,732	$	27,066,926	$	116,745,107	$	632,233	$	17,075,093	$	28,520,977



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		43,149		—		164,925		1,118,419
	—		1,649		—		35,824,794		—		2,514,753		1,609,149
	—		—		—		—		—		—		—
	14,027,464		334,637		25,149,392		74,356,109		—		13,070,595		24,867,569
	873,889		—		1,387,010		6,521,055		—		1,324,820		925,840
	—		—		—		—		—		—		—
	327,005		11,353		258,770		—		304,204		—		—
	427,352		13,093		271,754		—		328,029		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	15,655,710	$	360,732	$	27,066,926	$	116,745,107	$	632,233	$	17,075,093	$	28,520,977

$	17,309,287	$	368,234	$	29,371,227	$	119,131,396	$	643,002	$	16,069,538	$	24,217,211
	2,156,434		35,193		2,558,311		5,223,495		28,556		1,531,398		2,341,624

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		2,586		—		13,195		84,413
	—		167		—		3,665,507		—		183,199		107,566
	—		—		—		—		—		—		—
	1,044,282		33,889		2,023,396		4,591,100		—		954,474		1,666,748
	67,443		—		116,122		424,160		—		103,557		66,424
	—		—		—		—		—		—		—
	34,028		1,148		25,778		—		29,260		—		—
	44,613		1,326		27,158		—		31,653		—		—

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		16.68		—		12.50		13.25
	—		9.88		—		9.77		—		13.73		14.96
	—		9.84		—		9.73		—		12.82		13.97
	13.44		9.87		12.43		16.20		—		13.69		14.92
	12.97		9.84		11.94		15.37		—		12.79		13.94
	—		—		—		—		—		—		—
	9.61		9.89		10.04		—		10.40		—		—
	9.58		9.87		10.00		—		10.36		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015

		Principal LifeTime 2020 Class 1 Division		Principal LifeTime 2020 Class 2 Division		Principal LifeTime 2030 Class 1 Division



Assets
Investments in shares of mutual funds, at market		$	117,717,726	$	15,521	$	68,801,944
Liabilities			—		—		—
Net assets		$	117,717,726	$	15,521	$	68,801,944

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		4,325,988		—		2,493,883
	The Principal Variable Annuity		4,572,793		—		1,963,519
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		101,559,303		—		54,887,357
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		7,259,642		—		9,457,185
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		15,521		—
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	117,717,726	$	15,521	$	68,801,944

Investments in shares of mutual funds, at cost		$	103,034,284	$	17,285	$	64,875,235
Shares of mutual funds owned			9,313,111		1,231		6,008,904
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		306,025		—		175,417
	The Principal Variable Annuity		278,108		—		118,754
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		6,191,329		—		3,327,477
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		473,735		—		613,707
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		1,654		—
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		14.14		—		14.22
	The Principal Variable Annuity		16.44		—		16.54
	The Principal Variable Annuity with Purchase Payment Credit Rider		15.36		—		15.45
	Principal Investment Plus Variable Annuity		16.40		—		16.50
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		15.32		—		15.41
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		9.40		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		9.38		—
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
Principal LifeTime 2030 Class 2 Division		Principal LifeTime 2040 Class 1 Division		Principal LifeTime 2040 Class 2 Division		Principal LifeTime 2050 Class 1 Division		Principal LifeTime 2050 Class 2 Division		Real Estate Securities Class 1 Division		Real Estate Securities Class 2 Division





$	16,387	$	13,718,518	$	494	$	8,936,895	$	25,451	$	81,336,745	$	1,732,909
	—		—		—		—		—		—		—
$	16,387	$	13,718,518	$	494	$	8,936,895	$	25,451	$	81,336,745	$	1,732,909



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		279,811		—
	—		—		—		—		—		—		—
	—		289,883		—		166,083		—		205,480		—
	—		809,906		—		238,841		—		42,199,772		—
	—		—		—		—		—		—		—
	—		11,796,367		—		7,988,092		—		33,529,848		—
	—		822,362		—		543,879		—		5,121,834		—
	—		—		—		—		—		—		—
	494		—		494		—		25,451		—		880,884
	15,893		—		—		—		—		—		852,025

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	16,387	$	13,718,518	$	494	$	8,936,895	$	25,451	$	81,336,745	$	1,732,909

$	17,105	$	12,506,324	$	499	$	8,456,711	$	28,517	$	56,218,746	$	1,740,485
	1,434		1,013,933		37		683,772		1,950		3,663,817		77,744

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		55,487		—
	—		—		—		—		—		—		—
	—		19,907		—		11,383		—		10,940		—
	—		46,983		—		13,767		—		789,204		—
	—		—		—		—		—		—		—
	—		685,948		—		461,545		—		628,581		—
	—		51,188		—		33,638		—		105,130		—
	—		—		—		—		—		—		—
	53		—		53		—		2,735		—		75,237
	1,704		—		—		—		—		—		73,006

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		5.04		—
	—		—		—		—		—		—		—
	—		14.56		—		14.59		—		18.78		—
	—		17.24		—		17.35		—		53.47		—
	—		16.10		—		16.21		—		48.84		—
	—		17.20		—		17.31		—		53.34		—
	—		16.07		—		16.17		—		48.72		—
	—		—		—		—		—		—		—
	9.34		—		9.32		—		9.31		—		11.71
	9.33		—		9.31		—		9.29		—		11.67

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015

		Rydex Basic Materials Division		Rydex Commodities Strategy Division		Rydex NASDAQ 100 Division



Assets
Investments in shares of mutual funds, at market		$	—	$	76,970	$	646,151
Liabilities			—		—		—
Net assets		$	—	$	76,970	$	646,151

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		—		22,159		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		41,611		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		6,956		273,874
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		6,244		372,277
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	—	$	76,970	$	646,151

Investments in shares of mutual funds, at cost		$	—	$	99,233	$	656,774
Shares of mutual funds owned			—		16,238		18,915
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		—		3,445		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		6,475		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		1,501		24,889
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		1,352		33,939
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		—		6.43		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		6.41		—
	Principal Investment Plus Variable Annuity		—		6.43		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		6.40		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		7.71		4.63		11.00
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		7.70		4.62		10.97
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
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		SAM Conservative Growth Portfolio Class 1 Division		SAM Conservative Growth Portfolio Class 2 Division		SAM Flexible Income Portfolio Class 1 Division





$	598,643,366	$	3,759,160	$	150,875,233	$	3,002,012	$	100,958,357	$	5,521,966	$	170,645,344
	—		—		—		—		—		—		—
$	598,643,366	$	3,759,160	$	150,875,233	$	3,002,012	$	100,958,357	$	5,521,966	$	170,645,344



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	416,925		—		—		—		—		—		—
	—		—		—		—		—		—		—
	1,932,648		—		1,192,188		—		1,567,589		—		1,766,638
	58,536,316		—		16,976,209		—		14,241,962		—		30,080,877
	—		—		—		—		—		—		—
	484,878,461		—		116,116,527		—		70,813,862		—		120,161,456
	52,879,016		—		16,590,309		—		14,334,944		—		18,636,373
	—		—		—		—		—		—		—
	—		2,048,821		—		1,577,660		—		4,535,561		—
	—		1,710,339		—		1,424,352		—		986,405		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	598,643,366	$	3,759,160	$	150,875,233	$	3,002,012	$	100,958,357	$	5,521,966	$	170,645,344

$	599,406,714	$	4,126,690	$	155,706,422	$	3,237,563	$	100,280,719	$	6,095,563	$	178,318,438
	40,751,760		258,362		13,096,808		263,104		5,862,855		324,440		13,907,526

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	208,794		—		—		—		—		—		—
	—		—		—		—		—		—		—
	136,816		—		85,284		—		113,626		—		126,214
	4,258,176		—		1,247,874		—		1,060,832		—		2,208,368
	—		—		—		—		—		—		—
	35,357,350		—		8,556,153		—		5,287,231		—		8,842,865
	4,061,997		—		1,287,800		—		1,127,507		—		1,444,763
	—		—		—		—		—		—		—
	—		208,668		—		160,459		—		462,615		—
	—		174,754		—		145,331		—		100,934		—

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	2.00		—		—		—		—		—		—
	—		—		—		—		—		—		—
	14.13		—		13.98		—		13.80		—		14.00
	13.75		—		13.60		—		13.43		—		13.62
	13.05		—		12.91		—		12.74		—		12.93
	13.71		—		13.57		—		13.39		—		13.59
	13.02		—		12.88		—		12.71		—		12.90
	—		—		—		—		—		—		—
	—		9.82		—		9.83		—		9.80		—
	—		9.79		—		9.80		—		9.77		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015

		SAM Flexible Income Portfolio Class 2 Division		SAM Strategic Growth Portfolio Class 1 Division		SAM Strategic Growth Portfolio Class 2 Division



Assets
Investments in shares of mutual funds, at market		$	4,421,092	$	66,772,764	$	1,650,363
Liabilities			—		—		—
Net assets		$	4,421,092	$	66,772,764	$	1,650,363

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		—		910,088		—
	The Principal Variable Annuity		—		8,451,846		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		43,391,402		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		14,019,428		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		1,318,346		—		1,321,784
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		3,102,746		—		328,579
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	4,421,092	$	66,772,764	$	1,650,363

Investments in shares of mutual funds, at cost		$	4,751,648	$	66,759,153	$	1,835,163
Shares of mutual funds owned			363,278		3,570,736		89,209
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		—		66,311		—
	The Principal Variable Annuity		—		632,828		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		3,256,648		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		1,108,442		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		135,070		—		135,062
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		318,909		—		33,683
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		—		13.73		—
	The Principal Variable Annuity		—		13.36		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		12.68		—
	Principal Investment Plus Variable Annuity		—		13.32		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		12.65		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		9.76		—		9.79
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		9.73		—		9.76
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.



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities (continued)
December 31, 2015
Short-Term Income Class 1 Division		Short-Term Income Class 2 Division		SmallCap Blend Class 1 Division		SmallCap Blend Class 2 Division		T. Rowe Price Blue Chip Growth Portfolio II Division		T. Rowe Price Health Sciences Portfolio II Division		Templeton Global Bond VIP Class 4 Division





$	108,511,943	$	774,746	$	116,458,571	$	785,090	$	16,983,602	$	35,402,743	$	1,072,128
	—		—		—		—		—		—		—
$	108,511,943	$	774,746	$	116,458,571	$	785,090	$	16,983,602	$	35,402,743	$	1,072,128



$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		546,419		—		—		—		—
	1,468,954		—		3,903,302		—		—		—		—
	68,328		—		298,197		—		—		—		—
	17,559,325		—		62,765,888		—		—		—		31,673
	—		—		—		—		—		—		—
	84,894,341		—		45,054,118		—		14,963,431		31,457,011		233,963
	4,520,995		—		3,890,647		—		2,020,171		3,945,732		9,459
	—		—		—		—		—		—		—
	—		327,906		—		602,345		—		—		330,362
	—		446,840		—		182,745		—		—		466,671

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	108,511,943	$	774,746	$	116,458,571	$	785,090	$	16,983,602	$	35,402,743	$	1,072,128

$	110,086,761	$	790,937	$	118,856,907	$	865,129	$	12,413,747	$	28,355,171	$	1,155,151
	42,721,237		306,223		8,594,728		58,069		759,213		939,813		66,263

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		252,913		—		—		—		—
	123,512		—		145,841		—		—		—		—
	5,788		—		18,166		—		—		—		—
	1,520,887		—		3,070,696		—		—		—		3,377
	—		—		—		—		—		—		—
	7,370,859		—		2,209,523		—		624,575		639,456		24,957
	409,642		—		208,915		—		90,276		85,870		1,013
	—		—		—		—		—		—		—
	—		32,956		—		65,937		—		—		35,850
	—		45,053		—		20,040		—		—		50,805

$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		2.16		—		—		—		—
	11.89		—		26.76		—		—		—		—
	11.81		—		16.41		—		—		—		—
	11.55		—		20.44		—		—		—		9.38
	11.06		—		18.67		—		—		—		9.35
	11.52		—		20.39		—		23.96		49.19		9.37
	11.04		—		18.62		—		22.38		45.95		9.34
	—		—		—		—		—		—		—
	—		9.95		—		9.14		—		—		9.22
	—		9.92		—		9.12		—		—		9.19

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

	—		—		—		—		—		—		—
	—		—		—		—		—		—		—



Principal Life Insurance Company - Separate Account B

Statements of Assets and Liabilities
December 31, 2015

		Templeton Growth VIP Class 2 Division		The Merger Fund Division		Van Eck Global Hard Assets Class S Division



Assets
Investments in shares of mutual funds, at market		$	869,180	$	—	$	5,127,012
Liabilities			—		—		—
Net assets		$	869,180	$	—	$	5,127,012

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		869,180		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		—		—		944,103
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		—		3,345,051
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		611,017
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		203,980
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		22,861
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	869,180	$	—	$	5,127,012

Investments in shares of mutual funds, at cost		$	774,578	$	—	$	8,420,615
Shares of mutual funds owned			65,254		—		313,579
Accumulation units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		—		—
	Principal Freedom Variable Annuity		44,339		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		—		—		118,518
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		—		420,943
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		80,015
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		40,836
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		4,591
Accumulation unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		—		—
	Principal Freedom Variable Annuity		19.60		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		—		—		7.97
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		7.65
	Principal Investment Plus Variable Annuity		—		—		7.95
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		7.64
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		9.65		5.00
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		9.64		4.98
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.

(This page left intentionally blank)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		AllianceBernstein Small Cap Growth Class A Division		AllianceBernstein Small/Mid Cap Value Class A Division		Alps/Red Rocks Listed Private Equity Class III Division (1)






Investment income (loss)
Income
	Dividends	$	—	$	21,556	$	16

Expenses
	Mortality and expense risks		59,684		32,849		81
	Administrative charges		7,163		3,662		10
	Separate account rider charges		4,294		2,978		—
Net investment income (loss)			(71,141)		(17,933)		(75)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			159,590		(34,413)		(6)
Capital gains distributions			793,370		438,156		11
Total realized gains (losses) on investments			952,960		403,743		5

Change in net unrealized appreciation or depreciation of investments			(980,379)		(586,927)		(992)

Net gains (losses) on investments			(98,560)		(201,117)		(1,062)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(98,560)	$	(201,117)	$	(1,062)


(1) Commenced operations May 18, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


American Century VP Capital Appreciation Class I Division		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








$	—	$	269,283	$	1,180,345	$	89,041	$	16,224	$	127,469	$	330,686


	33,123		150,225		727,438		74,354		45,641		513,271		209,906
	3,975		4,966		87,290		7,641		1,826		61,600		8,658
	2,248		5		24,857		4,541		26		20,987		27
	(39,346)		114,087		340,760		2,505		(31,269)		(468,389)		112,095


	48,492		693,175		(1,104,330)		230,184		363,626		5,374,138		499,170
	170,538		1,141,341		—		245,794		349,388		4,209,146		—
	219,030		1,834,516		(1,104,330)		475,978		713,014		9,583,284		499,170

	(169,766)		(2,846,462)		(1,423,679)		(680,016)		(500,969)		(7,134,566)		(1,501,643)

	9,918		(897,859)		(2,187,249)		(201,533)		180,776		1,980,329		(890,378)

	—		—		—		—		—		—		—

$	9,918	$	(897,859)	$	(2,187,249)	$	(201,533)	$	180,776	$	1,980,329	$	(890,378)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


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






Investment income (loss)
Income
	Dividends	$	9,848	$	17,120	$	—

Expenses
	Mortality and expense risks		1,040		7,428		5,318
	Administrative charges		146		990		375
	Separate account rider charges		—		—		3
Net investment income (loss)			8,662		8,702		(5,696)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			8		(12,710)		(8,748)
Capital gains distributions			26		77,418		21,077
Total realized gains (losses) on investments			34		64,708		12,329

Change in net unrealized appreciation or depreciation of investments			(1,616)		(124,673)		(83,834)

Net gains (losses) on investments			7,080		(51,263)		(77,201)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	7,080	$	(51,263)	$	(77,201)


(1) Commenced operations May 18, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


American Funds Insurance Series Global Small Capitalization Fund Class 4 Division		American Funds Insurance Series High-Income Bond Class 2 Division		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








$	—	$	21,884	$	553	$	—	$	7	$	1,893	$	1,581


	766		3,932		383		1,273		354		3,476		2,562
	106		158		50		170		51		206		355
	—		—		—		—		—		2		—
	(872)		17,794		120		(1,443)		(398)		(1,791)		(1,336)


	24		(23,602)		236		379		1		(14,668)		(1,659)
	4,940		—		560		—		—		13,029		12,371
	4,964		(23,602)		796		379		1		(1,639)		10,712

	(11,033)		(31,252)		(2,576)		(2,464)		(2,825)		(18,268)		(34,555)

	(6,941)		(37,060)		(1,660)		(3,528)		(3,222)		(21,698)		(25,179)

	—		—		—		—		—		—		—

$	(6,941)	$	(37,060)	$	(1,660)	$	(3,528)	$	(3,222)	$	(21,698)	$	(25,179)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		Balanced Class 1 Division		BlackRock Global Allocation Class III Division (1)		BlackRock iShares Alternative Strategies Class III Division (1)






Investment income (loss)
Income
	Dividends	$	575,379	$	3,762	$	3,786

Expenses
	Mortality and expense risks		384,098		2,228		544
	Administrative charges		14,749		243		61
	Separate account rider charges		75		9		18
Net investment income (loss)			176,457		1,282		3,163

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			1,391,909		(133)		(17)
Capital gains distributions			2,208,798		27,557		—
Total realized gains (losses) on investments			3,600,707		27,424		(17)

Change in net unrealized appreciation or depreciation of investments			(3,988,979)		(40,129)		(5,064)

Net gains (losses) on investments			(211,815)		(11,423)		(1,918)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(211,815)	$	(11,423)	$	(1,918)


(1) Commenced operations May 18, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


BlackRock iShares Dynamic Allocation Class III Division (1)		BlackRock iShares Dynamic Fixed Income Class III Division (1)		BlackRock iShares Equity Appreciation Class III Division (1)		BlackRock Value Opportunities Class III Division (1)		Bond & Mortgage Securities Class 1 Division		Bond & Mortgage Securities Class 2 Division (1)		Calvert EAFE International Index Class F Division








$	1,082	$	2,038	$	1,864	$	1	$	5,123,271	$	338	$	5


	145		389		302		1		2,042,897		50		132
	17		39		33		—		167,515		7		16
	22		—		29		—		52,179		—		—
	898		1,610		1,500		—		2,860,680		281		(143)


	(6)		30		(200)		—		2,799,443		(382)		(26)
	—		—		—		60		—		—		—
	(6)		30		(200)		60		2,799,443		(382)		(26)

	(2,151)		(3,180)		(7,191)		(75)		(8,435,344)		(227)		(677)

	(1,259)		(1,540)		(5,891)		(15)		(2,775,221)		(328)		(846)

	—		—		—		—		—		—		—

$	(1,259)	$	(1,540)	$	(5,891)	$	(15)	$	(2,775,221)	$	(328)	$	(846)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		Calvert Russell 2000 Small Cap Index Class F Division		Calvert S&P MidCap 400 Index Class F Division		ClearBridge Small Cap Growth Series II Division (1)






Investment income (loss)
Income
	Dividends	$	—	$	—	$	—

Expenses
	Mortality and expense risks		831		3,750		43
	Administrative charges		118		516		5
	Separate account rider charges		—		—		—
Net investment income (loss)			(949)		(4,266)		(48)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(488)		(3,915)		(4)
Capital gains distributions			3,004		8,056		130
Total realized gains (losses) on investments			2,516		4,141		126

Change in net unrealized appreciation or depreciation of investments			(10,338)		(39,192)		(514)

Net gains (losses) on investments			(8,771)		(39,317)		(436)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(8,771)	$	(39,317)	$	(436)


(1) Commenced operations May 18, 2015. (2) Represented the operations of DWS Alternative Asset Allocation Class B Division until May 18, 2015. (3) Represented the operations of DWS Equity 500 Index Class B2 Division until May 18, 2015. (4) Represented the operations of DWS Small Mid Cap Value Class B Division until May 18, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


Columbia Limited Duration Credit Class 2 Division (1)		Columbia Small Cap Value Class 2 Division (1)		Delaware Limited Term Diversified Income Service Class Division (1)		Delaware Small Cap Value Service Class Division		Deutsche Alternative Asset Allocation Class B Division (2)		Deutsche Equity 500 Index Class B2 Division (3)		Deutsche Small Mid Cap Value Class B Division (4)








$	—	$	290	$	903	$	3,975	$	—	$	6,590	$	—


	542		452		887		11,723		228		5,791		9,917
	46		54		84		1,380		27		767		1,163
	12		—		21		1,167		—		—		758
	(600)		(216)		(89)		(10,295)		(255)		32		(11,838)


	(17)		(181)		(1)		(28,898)		(43)		(573)		9,635
	—		3,349		—		89,194		—		23,615		58,836
	(17)		3,168		(1)		60,296		(43)		23,042		68,471

	(2,769)		(9,429)		(1,282)		(143,899)		(1,747)		(31,577)		(104,085)

	(3,386)		(6,477)		(1,372)		(93,898)		(2,045)		(8,503)		(47,452)

	—		—		—		—		—		—		—

$	(3,386)	$	(6,477)	$	(1,372)	$	(93,898)	$	(2,045)	$	(8,503)	$	(47,452)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		Diversified Balanced Class 2 Division		Diversified Balanced Managed Volatility Class 2 Division		Diversified Growth Class 2 Division






Investment income (loss)
Income
	Dividends	$	10,359,498	$	1,010,519	$	31,926,815

Expenses
	Mortality and expense risks		12,964,661		1,480,644		38,606,793
	Administrative charges		1,555,941		177,738		4,633,356
	Separate account rider charges		483,161		31,967		1,238,415
Net investment income (loss)			(4,644,265)		(679,830)		(12,551,749)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			13,350,970		374,672		12,287,419
Capital gains distributions			11,596,346		888,700		39,243,376
Total realized gains (losses) on investments			24,947,316		1,263,372		51,530,795

Change in net unrealized appreciation or depreciation of investments			(33,963,056)		(2,817,972)		(82,522,145)

Net gains (losses) on investments			(13,660,005)		(2,234,430)		(43,543,099)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(13,660,005)	$	(2,234,430)	$	(43,543,099)


(1) Commenced operations May 18, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


Diversified Growth Managed Volatility Class 2 Division		Diversified Income Class 2 Division		Diversified International Class 1 Division		Diversified International Class 2 Division		Dreyfus IP MidCap Stock Service Shares Division (1)		Dreyfus Investment Portfolio Technology Growth Service Shares Division		Equity Income Class 1 Division








$	2,224,735	$	1,446,911	$	3,741,029	$	4,610	$	—	$	—	$	5,642,279


	2,622,693		2,300,635		1,843,411		1,497		126		70,633		2,929,315
	314,833		276,108		122,361		210		16		8,477		298,120
	88,217		55,498		32,017		—		—		6,118		87,762
	(801,008)		(1,185,330)		1,743,240		2,903		(142)		(85,228)		2,327,082


	338,877		2,739,573		2,833,709		197		(4)		198,732		18,361,241
	2,049,847		1,285,472		—		—		—		553,356		—
	2,388,724		4,025,045		2,833,709		197		(4)		752,088		18,361,241

	(5,771,107)		(5,329,705)		(6,432,512)		(17,869)		(101)		(450,567)		(32,719,713)

	(4,183,391)		(2,489,990)		(1,855,563)		(14,769)		(247)		216,293		(12,031,390)

	—		—		—		—		—		—		—

$	(4,183,391)	$	(2,489,990)	$	(1,855,563)	$	(14,769)	$	(247)	$	216,293	$	(12,031,390)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		Equity Income Class 2 Division		Fidelity VIP Contrafund Service Class Division		Fidelity VIP Contrafund Service Class 2 Division






Investment income (loss)
Income
	Dividends	$	23,115	$	409,566	$	426,206

Expenses
	Mortality and expense risks		7,909		573,291		671,763
	Administrative charges		1,055		22,934		80,737
	Separate account rider charges		—		170		31,077
Net investment income (loss)			14,151		(186,829)		(357,371)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(706)		1,754,019		1,415,179
Capital gains distributions			—		4,198,838		4,916,370
Total realized gains (losses) on investments			(706)		5,952,857		6,331,549

Change in net unrealized appreciation or depreciation of investments			(73,132)		(6,027,355)		(6,432,389)

Net gains (losses) on investments			(59,687)		(261,327)		(458,211)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(59,687)	$	(261,327)	$	(458,211)


See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


Fidelity VIP Equity-Income Service Class 2 Division		Fidelity VIP Growth Service Class Division		Fidelity VIP Growth Service Class 2 Division		Fidelity VIP Mid Cap Service Class Division		Fidelity VIP Mid Cap Service Class 2 Division		Fidelity VIP Overseas Service Class 2 Division		Franklin Global Real Estate VIP Class 2 Division








$	991,709	$	23,046	$	3,244	$	294	$	51,141	$	379,014	$	12,948


	437,643		184,710		123,905		690		239,690		443,553		3,665
	28,849		7,389		14,870		—		28,902		53,200		469
	10,031		21		8,746		—		12,750		22,427		1
	515,186		(169,074)		(144,277)		(396)		(230,201)		(140,166)		8,813


	408,345		879,451		888,596		(55)		343,214		3,602,584		(3,729)
	3,419,201		466,626		295,090		8,433		2,178,831		33,541		—
	3,827,546		1,346,077		1,183,686		8,378		2,522,045		3,636,125		(3,729)

	(6,251,868)		(336,213)		(541,150)		(9,712)		(2,950,636)		(2,528,939)		(16,233)

	(1,909,136)		840,790		498,259		(1,730)		(658,792)		967,020		(11,149)

	—		—		—		—		—		—		—

$	(1,909,136)	$	840,790	$	498,259	$	(1,730)	$	(658,792)	$	967,020	$	(11,149)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		Franklin Rising Dividends VIP Class 4 Division		Franklin Small Cap Value VIP Class 2 Division		Goldman Sachs VIT Mid Cap Value Institutional Shares Division






Investment income (loss)
Income
	Dividends	$	5,291	$	21,099	$	65,159

Expenses
	Mortality and expense risks		3,990		42,363		214,359
	Administrative charges		518		4,888		25,534
	Separate account rider charges		—		2,423		10,338
Net investment income (loss)			783		(28,575)		(185,072)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(3,279)		106,243		257,354
Capital gains distributions			38,445		485,251		1,173,232
Total realized gains (losses) on investments			35,166		591,494		1,430,586

Change in net unrealized appreciation or depreciation of investments			(53,955)		(872,202)		(3,039,327)

Net gains (losses) on investments			(18,006)		(309,283)		(1,793,813)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(18,006)	$	(309,283)	$	(1,793,813)


(1) Commenced operations May 18, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


Goldman Sachs VIT Mid Cap Value Service Shares Division		Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division (1)		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		Government & High Quality Bond Class 2 Division		Guggenheim Floating Rate Strategies Series F Division








$	583	$	247	$	19,045	$	32	$	4,292,504	$	30,280	$	9,797


	3,768		46		85,709		716		1,618,908		8,028		4,207
	476		5		10,151		97		118,417		1,159		457
	—		—		3,142		—		38,460		—		274
	(3,661)		196		(79,957)		(781)		2,516,719		21,093		4,859


	(1,061)		(1)		324,327		(642)		(425,501)		(540)		(4,998)
	37,194		19		805,505		14,011		173,721		1,273		644
	36,133		18		1,129,832		13,369		(251,780)		733		(4,354)

	(85,686)		(535)		(1,288,027)		(20,751)		(2,913,168)		(34,980)		(20,662)

	(53,214)		(321)		(238,152)		(8,163)		(648,229)		(13,154)		(20,157)

	—		—		—		—		—		—		—

$	(53,214)	$	(321)	$	(238,152)	$	(8,163)	$	(648,229)	$	(13,154)	$	(20,157)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		Guggenheim Investments Global Managed Futures Strategy Division		Guggenheim Investments Long Short Equity Division		Guggenheim Investments Multi-Hedge Strategies Division






Investment income (loss)
Income
	Dividends	$	2,621	$	—	$	369

Expenses
	Mortality and expense risks		892		1,182		662
	Administrative charges		123		136		77
	Separate account rider charges		—		5		—
Net investment income (loss)			1,606		(1,323)		(370)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(1,027)		348		(84)
Capital gains distributions			3,595		—		—
Total realized gains (losses) on investments			2,568		348		(84)

Change in net unrealized appreciation or depreciation of investments			(9,969)		(453)		(142)

Net gains (losses) on investments			(5,795)		(1,428)		(596)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(5,795)	$	(1,428)	$	(596)


(1) Commenced operations May 18, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


Guggenheim Macro Opportunities Series M Division		Income Class 1 Division (1)		Income Class 2 Division (1)		International Emerging Markets Class 1 Division		International Emerging Markets Class 2 Division (1)		Invesco American Franchise Series I Division		Invesco Balanced-Risk Allocation Series II Division








$	2,514	$	9,922	$	691	$	990,913	$	148	$	—	$	7,315


	1,217		2,353		65		747,232		110		56,118		1,723
	141		249		9		64,679		13		2,245		212
	7		13		—		22,795		—		9		—
	1,149		7,307		617		156,207		25		(58,372)		5,380


	(20)		(1,904)		(825)		(1,561,454)		(23)		231,069		(225)
	210		—		—		—		—		23,592		16,491
	190		(1,904)		(825)		(1,561,454)		(23)		254,661		16,266

	(6,305)		(14,624)		(137)		(7,499,679)		(2,729)		(24,532)		(37,280)

	(4,966)		(9,221)		(345)		(8,904,926)		(2,727)		171,757		(15,634)

	—		—		—		—		—		—		—

$	(4,966)	$	(9,221)	$	(345)	$	(8,904,926)	$	(2,727)	$	171,757	$	(15,634)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		Invesco Core Equity Series I Division		Invesco Global Health Care Series I Division		Invesco Global Health Care Series II Division






Investment income (loss)
Income
	Dividends	$	217,919	$	—	$	—

Expenses
	Mortality and expense risks		246,721		144,805		5,790
	Administrative charges		9,870		5,793		759
	Separate account rider charges		7		56		—
Net investment income (loss)			(38,679)		(150,654)		(6,549)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			973,879		1,219,747		(2,149)
Capital gains distributions			1,992,878		980,548		68,540
Total realized gains (losses) on investments			2,966,757		2,200,295		66,391

Change in net unrealized appreciation or depreciation of investments			(4,292,405)		(1,850,670)		(110,805)

Net gains (losses) on investments			(1,364,327)		198,971		(50,963)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(1,364,327)	$	198,971	$	(50,963)


See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


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		Invesco Value Opportunities Series I Division		Janus Aspen Enterprise Service Shares Division








$	156,573	$	5,394	$	—	$	—	$	—	$	128,300	$	70,439


	131,037		3,080		19,838		111,875		44,588		61,485		116,751
	15,726		423		793		10,757		1,784		7,379		4,671
	5,306		—		35		4,655		14		3,467		88
	4,504		1,891		(20,666)		(127,287)		(46,386)		55,969		(51,071)


	281,670		467		367,924		284,127		296,517		358,495		690,764
	—		—		114,435		1,731,921		344,168		360,136		1,008,793
	281,670		467		482,359		2,016,048		640,685		718,631		1,699,557

	(689,168)		(32,194)		(459,061)		(2,480,337)		(412,929)		(1,361,289)		(1,403,548)

	(402,994)		(29,836)		2,632		(591,576)		181,370		(586,689)		244,938

	—		—		—		—		—		—		—

$	(402,994)	$	(29,836)	$	2,632	$	(591,576)	$	181,370	$	(586,689)	$	244,938



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		Janus Aspen Flexible Bond Service Shares Division		LargeCap Growth Class 1 Division		LargeCap Growth Class 2 Division






Investment income (loss)
Income
	Dividends	$	13,164	$	73,405	$	—

Expenses
	Mortality and expense risks		6,256		612,114		2,940
	Administrative charges		819		36,907		398
	Separate account rider charges		—		13,706		—
Net investment income (loss)			6,089		(589,322)		(3,338)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(126)		3,556,456		1,311
Capital gains distributions			2,456		—		—
Total realized gains (losses) on investments			2,330		3,556,456		1,311

Change in net unrealized appreciation or depreciation of investments			(22,250)		(1,049,459)		755

Net gains (losses) on investments			(13,831)		1,917,675		(1,272)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(13,831)	$	1,917,675	$	(1,272)


(1) Commenced operations May 18, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


LargeCap Growth I Class 1 Division		LargeCap Growth I Class 2 Division (1)		LargeCap S&P 500 Index Class 1 Division		LargeCap S&P 500 Index Class 2 Division (1)		LargeCap Value Class 1 Division		LargeCap Value Class 2 Division (1)		MFS VIT International Value Service Class Division








$	245,069	$	921	$	1,397,559	$	927	$	1,420,877	$	68	$	13,630


	1,341,982		1,853		1,182,639		464		995,302		51		6,924
	71,505		268		86,626		58		53,792		6		792
	10,303		—		26,866		—		15,840		—		25
	(1,178,721)		(1,200)		101,428		405		355,943		11		5,889


	5,444,977		(1,856)		7,729,723		(50)		2,079,395		(10)		(360)
	16,168,894		60,741		1,146,931		760		9,347,592		496		7,799
	21,613,871		58,885		8,876,654		710		11,426,987		486		7,439

	(13,707,976)		(69,012)		(9,066,908)		(2,328)		(13,740,865)		(352)		(16,783)

	6,727,174		(11,327)		(88,826)		(1,213)		(1,957,935)		145		(3,455)

	—		—		—		—		—		—		—

$	6,727,174	$	(11,327)	$	(88,826)	$	(1,213)	$	(1,957,935)	$	145	$	(3,455)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		MFS VIT New Discovery Service Class Division		MFS VIT Utilities Service Class Division		MFS VIT Value Service Class Division






Investment income (loss)
Income
	Dividends	$	—	$	502,675	$	107,652

Expenses
	Mortality and expense risks		13,969		154,255		63,712
	Administrative charges		1,373		18,573		7,646
	Separate account rider charges		683		8,978		4,228
Net investment income (loss)			(16,025)		320,869		32,066

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(77,588)		182,192		170,905
Capital gains distributions			38,400		882,250		303,478
Total realized gains (losses) on investments			(39,188)		1,064,442		474,383

Change in net unrealized appreciation or depreciation of investments			4,980		(3,494,394)		(632,553)

Net gains (losses) on investments			(50,233)		(2,109,083)		(126,104)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(50,233)	$	(2,109,083)	$	(126,104)


(1) Commenced operations May 18, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


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 Mid-Cap Growth Portfolio S Class Division (1)		Neuberger Berman AMT Socially Responsive I Class Division		Oppenheimer Main Street Small Cap Service Shares Division








$	1,883,573	$	15	$	—	$	35,109	$	—	$	30,164	$	4,335


	4,573,762		584,853		14,495		58,623		5,422		69,212		7,881
	312,389		43,992		1,868		7,036		652		8,306		315
	78,563		13,844		—		2,245		214		4,060		1
	(3,081,141)		(642,674)		(16,363)		(32,795)		(6,288)		(51,414)		(3,862)


	27,129,590		—		—		292,546		(3,443)		569,566		(43,722)
	38,553,134		—		—		354,802		2,506		476,898		100,410
	65,682,724		—		—		647,348		(937)		1,046,464		56,688

	(59,850,213)		—		—		(1,246,521)		(120,653)		(1,096,068)		(97,581)

	2,751,370		(642,674)		(16,363)		(631,968)		(127,878)		(101,018)		(44,755)

	—		—		—		—		—		—		—

$	2,751,370	$	(642,674)	$	(16,363)	$	(631,968)	$	(127,878)	$	(101,018)	$	(44,755)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		PIMCO All Asset Administrative Class Division		PIMCO All Asset Advisor Class Division (1)		PIMCO Commodity Real Return Strategy M Class Division (1)






Investment income (loss)
Income
	Dividends	$	160,970	$	—	$	—

Expenses
	Mortality and expense risks		61,996		2		50
	Administrative charges		7,440		—		6
	Separate account rider charges		2,803		—		—
Net investment income (loss)			88,731		(2)		(56)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(177,260)		(70)		(4)
Capital gains distributions			—		—		—
Total realized gains (losses) on investments			(177,260)		(70)		(4)

Change in net unrealized appreciation or depreciation of investments			(434,074)		(1)		(1,681)

Net gains (losses) on investments			(522,603)		(73)		(1,741)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(522,603)	$	(73)	$	(1,741)


(1) Commenced operations May 18, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


PIMCO High Yield Administrative Class Division		PIMCO Low Duration Advisor Class Division (1)		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








$	861,318	$	6,868	$	1,400,879	$	307,376	$	227	$	417,000	$	676,407


	204,425		587		356,933		1,172,314		5,041		245,152		386,704
	24,602		71		42,871		113,920		688		25,472		42,945
	7,729		—		9,757		43,218		—		9,990		7,982
	624,562		6,210		991,318		(1,022,076)		(5,502)		136,386		238,776


	(62,199)		(20)		(33,826)		142,624		320		970,488		481,787
	252,088		—		295,050		2,165,827		10,872		—		—
	189,889		(20)		261,224		2,308,451		11,192		970,488		481,787

	(1,327,188)		(7,503)		(1,527,726)		(2,510,117)		(12,067)		(1,507,441)		(1,445,646)

	(512,737)		(1,313)		(275,184)		(1,223,742)		(6,377)		(400,567)		(725,083)

	—		—		—		—		—		—		—

$	(512,737)	$	(1,313)	$	(275,184)	$	(1,223,742)	$	(6,377)	$	(400,567)	$	(725,083)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		Principal LifeTime 2020 Class 1 Division		Principal LifeTime 2020 Class 2 Division (1)		Principal LifeTime 2030 Class 1 Division






Investment income (loss)
Income
	Dividends	$	3,298,424	$	419	$	1,826,930

Expenses
	Mortality and expense risks		1,621,896		81		887,613
	Administrative charges		184,486		9		101,210
	Separate account rider charges		69,387		—		62,699
Net investment income (loss)			1,422,655		329		775,408

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			2,363,142		(12)		2,821,494
Capital gains distributions			5,826,128		740		2,667,500
Total realized gains (losses) on investments			8,189,270		728		5,488,994

Change in net unrealized appreciation or depreciation of investments			(12,413,841)		(1,763)		(7,969,079)

Net gains (losses) on investments			(2,801,916)		(706)		(1,704,677)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(2,801,916)	$	(706)	$	(1,704,677)


(1) Commenced operations May 18, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


Principal LifeTime 2030 Class 2 Division (1)		Principal LifeTime 2040 Class 1 Division		Principal LifeTime 2040 Class 2 Division (1)		Principal LifeTime 2050 Class 1 Division		Principal LifeTime 2050 Class 2 Division (1)		Real Estate Securities Class 1 Division		Real Estate Securities Class 2 Division








$	141	$	342,759	$	—	$	219,996	$	573	$	1,262,897	$	22,565


	48		178,696		1		108,771		144		1,050,737		12,685
	6		20,459		—		12,569		22		80,634		1,720
	—		6,197		—		3,951		—		34,232		—
	87		137,407		(1)		94,705		407		97,294		8,160


	(8)		171,678		—		139,445		(17)		5,714,965		(5,427)
	205		495,796		—		390,499		1,017		2,573,521		47,288
	197		667,474		—		529,944		1,000		8,288,486		41,861

	(718)		(1,119,014)		(5)		(762,417)		(3,066)		(6,248,173)		(9,501)

	(434)		(314,133)		(6)		(137,768)		(1,659)		2,137,607		40,520

	—		—		—		—		—		—		—

$	(434)	$	(314,133)	$	(6)	$	(137,768)	$	(1,659)	$	2,137,607	$	40,520



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		Rydex Basic Materials Division (1)		Rydex Commodities Strategy Division		Rydex NASDAQ 100 Division






Investment income (loss)
Income
	Dividends	$	—	$	—	$	—

Expenses
	Mortality and expense risks		—		428		4,787
	Administrative charges		—		49		640
	Separate account rider charges		—		—		—
Net investment income (loss)			—		(477)		(5,427)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			—		(1,126)		(2,492)
Capital gains distributions			—		—		35,828
Total realized gains (losses) on investments			—		(1,126)		33,336

Change in net unrealized appreciation or depreciation of investments			—		(20,055)		(10,106)

Net gains (losses) on investments			—		(21,658)		17,803

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	—	$	(21,658)	$	17,803


(1) Commenced operations May 18, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


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		SAM Conservative Growth Portfolio Class 1 Division		SAM Conservative Growth Portfolio Class 2 Division		SAM Flexible Income Portfolio Class 1 Division








$	18,822,013	$	78,508	$	5,131,092	$	69,422	$	2,340,794	$	100,839	$	6,471,813


	8,153,569		25,320		2,014,448		20,305		1,291,114		37,487		2,266,119
	912,520		3,494		222,487		2,779		138,098		5,474		237,002
	381,391		—		115,378		—		96,455		—		125,907
	9,374,533		49,694		2,778,779		46,338		815,127		57,878		3,842,785


	22,194,594		(12,231)		4,204,578		(4,732)		3,205,219		(14,891)		1,892,628
	48,266,925		220,282		7,483,261		108,720		6,634,063		319,158		4,382,541
	70,461,519		208,051		11,687,839		103,988		9,839,282		304,267		6,275,169

	(93,512,609)		(366,087)		(17,902,602)		(233,687)		(13,344,263)		(572,909)		(15,012,560)

	(13,676,557)		(108,342)		(3,435,984)		(83,361)		(2,689,854)		(210,764)		(4,894,606)

	—		—		—		—		—		—		—

$	(13,676,557)	$	(108,342)	$	(3,435,984)	$	(83,361)	$	(2,689,854)	$	(210,764)	$	(4,894,606)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		SAM Flexible Income Portfolio Class 2 Division		SAM Strategic Growth Portfolio Class 1 Division		SAM Strategic Growth Portfolio Class 2 Division






Investment income (loss)
Income
	Dividends	$	123,861	$	1,515,673	$	31,517

Expenses
	Mortality and expense risks		34,950		837,592		13,559
	Administrative charges		4,529		90,378		1,990
	Separate account rider charges		—		87,294		—
Net investment income (loss)			84,382		500,409		15,968

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			10,280		2,247,548		(21,539)
Capital gains distributions			89,479		4,977,875		115,330
Total realized gains (losses) on investments			99,759		7,225,423		93,791

Change in net unrealized appreciation or depreciation of investments			(331,837)		(9,852,418)		(183,660)

Net gains (losses) on investments			(147,696)		(2,126,586)		(73,901)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(147,696)	$	(2,126,586)	$	(73,901)


(1) Commenced operations April 17, 2015. See accompanying notes.



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


Short-Term Income Class 1 Division		Short-Term Income Class 2 Division		SmallCap Blend Class 1 Division		SmallCap Blend Class 2 Division (1)		T. Rowe Price Blue Chip Growth Portfolio II Division		T. Rowe Price Health Sciences Portfolio II Division		Templeton Global Bond VIP Class 4 Division








$	3,098,236	$	20,654	$	79,677	$	460	$	—	$	—	$	44,813


	1,488,883		6,411		1,233,807		5,073		179,858		443,917		7,114
	158,116		879		86,838		729		21,586		53,276		913
	43,820		—		22,994		—		11,075		27,869		22
	1,407,417		13,364		(1,263,962)		(5,342)		(212,519)		(525,062)		36,764


	534,051		(4,694)		3,935,734		(1,707)		934,600		3,150,864		(9,111)
	—		—		3,923,209		22,673		—		2,663,598		2,959
	534,051		(4,694)		7,858,943		20,966		934,600		5,814,462		(6,152)

	(2,714,781)		(16,114)		(13,749,436)		(80,039)		456,116		(2,151,210)		(82,235)

	(773,313)		(7,444)		(7,154,455)		(64,415)		1,178,197		3,138,190		(51,623)

	—		—		—		—		—		—		—

$	(773,313)	$	(7,444)	$	(7,154,455)	$	(64,415)	$	1,178,197	$	3,138,190	$	(51,623)



Principal Life Insurance Company
Separate Account B

Statements of Operations

December 31, 2015


		Templeton Growth VIP Class 2 Division		The Merger Fund Division (1)		Van Eck Global Hard Assets Class S Division






Investment income (loss)
Income
	Dividends	$	25,191	$	—	$	2,034

Expenses
	Mortality and expense risks		8,123		—		82,091
	Administrative charges		—		—		8,585
	Separate account rider charges		—		—		4,893
Net investment income (loss)			17,068		—		(93,535)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			6,034		—		(526,299)
Capital gains distributions			—		—		—
Total realized gains (losses) on investments			6,034		—		(526,299)

Change in net unrealized appreciation or depreciation of investments			(95,558)		—		(1,919,469)

Net gains (losses) on investments			(72,456)		—		(2,539,303)

Payment from affiliate			—		—		—

Net increase (decrease) in net assets resulting from operations		$	(72,456)	$	—	$	(2,539,303)


(1) Commenced operations May 18, 2015. See accompanying notes.

(This page left intentionally blank)



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		AllianceBernstein Small Cap Growth Class A Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(71,141)	$	(82,853)
	Total realized gains (losses) on investments		952,960		711,933
	Change in net unrealized appreciation or depreciation of investments		(980,379)		(834,462)
	Net gains (losses) from investments		(98,560)		(205,382)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(98,560)		(205,382)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		692,012		883,376
	Administration charges		(407)		(575)
	Contingent sales charges		(4,994)		(5,340)
	Contract terminations		(563,413)		(515,559)
	Death benefit payments		(25,911)		(32,960)
	Flexible withdrawal option payments		(22,903)		(16,721)
	Transfers to other contracts		(570,163)		(1,345,012)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(495,779)		(1,032,791)
Total increase (decrease)			(594,339)		(1,238,173)

Net assets at beginning of period			4,944,580		6,182,753
Net assets at end of period		$	4,350,241	$	4,944,580


(1) Commenced operations May 18, 2015. See accompanying notes.












AllianceBernstein Small/Mid Cap Value Class A Division				Alps/Red Rocks Listed Private Equity Class III Division (1)		American Century VP Capital Appreciation Class I Division




2015		2014		2015		2015		2014


$	(17,933)	$	(12,463)	$	(75)	$	(39,346)	$	(27,698)
	403,743		255,333		5		219,030		21,929
	(586,927)		(103,979)		(992)		(169,766)		250,033
	(201,117)		138,891		(1,062)		9,918		244,264

	—		—		—		—		—

	(201,117)		138,891		(1,062)		9,918		244,264


	1,332,689		1,756,451		24,745		645,130		3,015,252
	—		(60)		(8)		(1,550)		(1,154)
	(1,040)		(375)		—		(2,290)		(2,204)
	(118,349)		(76,395)		—		(258,314)		(212,790)
	(23,425)		(10,551)		—		(27,500)		(18,522)
	(19,743)		(13,164)		—		(24,857)		(13,909)
	(523,465)		(549,664)		—		(447,846)		(407,430)
	—		—		—		—		—
	646,667		1,106,242		24,737		(117,227)		2,359,243
	445,550		1,245,133		23,675		(107,309)		2,603,507

	2,320,465		1,075,332		—		2,603,507		—
$	2,766,015	$	2,320,465	$	23,675	$	2,496,198	$	2,603,507



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		American Century VP Income & Growth Class I Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	114,087	$	119,178
	Total realized gains (losses) on investments		1,834,516		811,414
	Change in net unrealized appreciation or depreciation of investments		(2,846,462)		588,288
	Net gains (losses) from investments		(897,859)		1,518,880

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(897,859)		1,518,880

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		429,765		624,667
	Administration charges		(1,061)		(1,891)
	Contingent sales charges		(1,747)		(2,062)
	Contract terminations		(1,560,280)		(1,528,791)
	Death benefit payments		(116,724)		(111,850)
	Flexible withdrawal option payments		(152,106)		(164,308)
	Transfers to other contracts		(587,166)		(884,451)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(1,989,319)		(2,068,686)
Total increase (decrease)			(2,887,178)		(549,806)

Net assets at beginning of period			14,435,615		14,985,421
Net assets at end of period		$	11,548,437	$	14,435,615


See accompanying notes.












American Century VP Inflation Protection Class II Division				American Century VP MidCap Value Class II Division				American Century VP Ultra Class I Division




2015		2014		2015		2014		2015		2014


$	340,760	$	(161,357)	$	2,505	$	(18,591)	$	(31,269)	$	(34,855)
	(1,104,330)		2,311,462		475,978		502,545		713,014		330,844
	(1,423,679)		(569,158)		(680,016)		122,659		(500,969)		5,663
	(2,187,249)		1,580,947		(201,533)		606,613		180,776		301,652

	—		—		—		—		—		—

	(2,187,249)		1,580,947		(201,533)		606,613		180,776		301,652


	8,848,538		13,312,143		2,523,086		2,495,268		566,985		213,536
	(299,369)		(368,840)		(391)		(517)		(722)		(846)
	(53,212)		(83,724)		(1,614)		(3,227)		(394)		(700)
	(6,003,190)		(8,083,732)		(333,932)		(446,735)		(350,601)		(567,666)
	(597,826)		(456,869)		(91,015)		(92,761)		(10,583)		(18,560)
	(1,871,537)		(2,013,619)		(45,033)		(27,075)		(47,184)		(54,106)
	(11,648,589)		(17,534,228)		(734,456)		(1,016,734)		(416,178)		(276,896)
	—		—		—		—		—		—
	(11,625,185)		(15,228,869)		1,316,645		908,219		(258,677)		(705,238)
	(13,812,434)		(13,647,922)		1,115,112		1,514,832		(77,901)		(403,586)

	65,192,081		78,840,003		5,329,347		3,814,515		3,695,933		4,099,519
$	51,379,647	$	65,192,081	$	6,444,459	$	5,329,347	$	3,618,032	$	3,695,933



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		American Century VP Ultra Class II Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(468,389)	$	(620,307)
	Total realized gains (losses) on investments		9,583,284		5,452,590
	Change in net unrealized appreciation or depreciation of investments		(7,134,566)		(1,063,112)
	Net gains (losses) from investments		1,980,329		3,769,171

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			1,980,329		3,769,171

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		4,602,185		6,983,627
	Administration charges		(226,359)		(283,549)
	Contingent sales charges		(39,443)		(65,566)
	Contract terminations		(4,449,811)		(6,330,547)
	Death benefit payments		(406,576)		(281,760)
	Flexible withdrawal option payments		(1,393,167)		(1,480,963)
	Transfers to other contracts		(8,773,849)		(11,843,761)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(10,687,020)		(13,302,519)
Total increase (decrease)			(8,706,691)		(9,533,348)

Net assets at beginning of period			44,865,140		54,398,488
Net assets at end of period		$	36,158,449	$	44,865,140


(1) Commenced operations May 18, 2015. See accompanying notes.












American Century VP Value Class II Division				American Funds Insurance Series Asset Allocation Fund Class 4 Division (1)		American Funds Insurance Series Blue Chip Income & Growth Fund Class 4 Division




2015		2014		2015		2015		2014


$	112,095	$	16,472	$	8,662	$	8,702	$	522
	499,170		703,639		34		64,708		(235)
	(1,501,643)		1,330,760		(1,616)		(124,673)		(891)
	(890,378)		2,050,871		7,080		(51,263)		(604)

	—		—		—		—		—

	(890,378)		2,050,871		7,080		(51,263)		(604)


	1,050,927		1,607,095		799,566		916,573		104,128
	(2,991)		(3,393)		(175)		(616)		(3)
	(2,043)		(3,965)		—		(33)		—
	(1,809,594)		(3,215,888)		(37)		(3,014)		—
	(71,351)		(93,993)		—		(591)		—
	(207,941)		(216,110)		—		(3,300)		—
	(799,496)		(1,627,230)		—		(60,885)		—
	—		—		—		—		—
	(1,842,489)		(3,553,484)		799,354		848,134		104,125
	(2,732,867)		(1,502,613)		806,434		796,871		103,521

	18,210,559		19,713,172		—		103,521		—
$	15,477,692	$	18,210,559	$	806,434	$	900,392	$	103,521



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		American Funds Insurance Series Global Small Capitalization Fund Class 2 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(5,696)	$	(410)
	Total realized gains (losses) on investments		12,329		416
	Change in net unrealized appreciation or depreciation of investments		(83,834)		(372)
	Net gains (losses) from investments		(77,201)		(366)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(77,201)		(366)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		1,081,691		113,699
	Administration charges		—		—
	Contingent sales charges		(75)		(5)
	Contract terminations		(43,326)		(3,834)
	Death benefit payments		—		—
	Flexible withdrawal option payments		(2,772)		—
	Transfers to other contracts		(210,335)		(13,516)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			825,183		96,344
Total increase (decrease)			747,982		95,978

Net assets at beginning of period			95,978		—
Net assets at end of period		$	843,960	$	95,978


See accompanying notes.












American Funds Insurance Series Global Small Capitalization Fund Class 4 Division				American Funds Insurance Series High-Income Bond Class 2 Division				American Funds Insurance Series Managed Risk Asset Allocation Fund Class P2 Division




2015		2014		2015		2014		2015		2014


$	(872)	$	(1)	$	17,794	$	10,057	$	120	$	—
	4,964		—		(23,602)		(2,174)		796		—
	(11,033)		25		(31,252)		(15,338)		(2,576)		—
	(6,941)		24		(37,060)		(7,455)		(1,660)		—

	—		—		—		—		—		—

	(6,941)		24		(37,060)		(7,455)		(1,660)		—


	144,281		7,841		514,915		318,020		94,893		—
	(106)		—		(6)		(1)		(34)		—
	(2)		—		(33)		(74)		—		—
	(199)		—		(29,259)		(60,154)		—		—
	—		—		—		—		—		—
	—		—		(5,380)		(1,200)		—		—
	(11,908)		—		(290,011)		(38,138)		(31,072)		—
	—		—		—		—		—		—
	132,066		7,841		190,226		218,453		63,787		—
	125,125		7,865		153,166		210,998		62,127		—

	7,865		—		210,998		—		—		—
$	132,990	$	7,865	$	364,164	$	210,998	$	62,127	$	—



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		American Funds Insurance Series Managed Risk Growth Fund Class P2 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(1,443)	$	(7)
	Total realized gains (losses) on investments		379		—
	Change in net unrealized appreciation or depreciation of investments		(2,464)		(113)
	Net gains (losses) from investments		(3,528)		(120)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(3,528)		(120)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		124,649		30,019
	Administration charges		(179)		—
	Contingent sales charges		(2)		—
	Contract terminations		(198)		—
	Death benefit payments		—		—
	Flexible withdrawal option payments		—		—
	Transfers to other contracts		(2,236)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			122,034		30,019
Total increase (decrease)			118,506		29,899

Net assets at beginning of period			29,899		—
Net assets at end of period		$	148,405	$	29,899


See accompanying notes.












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




2015		2014		2015		2014		2015		2014


$	(398)	$	(4)	$	(1,791)	$	607	$	(1,336)	$	346
	1		—		(1,639)		3,731		10,712		(632)
	(2,825)		(100)		(18,268)		(22,384)		(34,555)		(437)
	(3,222)		(104)		(21,698)		(18,046)		(25,179)		(723)

	—		—		—		—		—		—

	(3,222)		(104)		(21,698)		(18,046)		(25,179)		(723)


	23,207		18,000		392,640		176,734		383,239		52,693
	(8)		—		(2)		—		(378)		(4)
	(1)		—		(139)		(4)		—		—
	(99)		—		(15,920)		(3,547)		—		—
	—		—		—		—		—		—
	—		—		(631)		—		(191)		—
	(184)		—		(65,841)		(2,780)		(15,951)		—
	—		—		—		—		—		—
	22,915		18,000		310,107		170,403		366,719		52,689
	19,693		17,896		288,409		152,357		341,540		51,966

	17,896		—		152,357		—		51,966		—
$	37,589	$	17,896	$	440,766	$	152,357	$	393,506	$	51,966



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Balanced Class 1 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	176,457	$	178,893
	Total realized gains (losses) on investments		3,600,707		1,285,488
	Change in net unrealized appreciation or depreciation of investments		(3,988,979)		1,105,685
	Net gains (losses) from investments		(211,815)		2,570,066

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(211,815)		2,570,066

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		1,182,321		1,615,675
	Administration charges		(10,601)		(13,308)
	Contingent sales charges		(3,246)		(3,904)
	Contract terminations		(4,255,018)		(3,825,292)
	Death benefit payments		(319,838)		(328,687)
	Flexible withdrawal option payments		(632,582)		(621,682)
	Transfers to other contracts		(738,415)		(945,275)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(4,777,379)		(4,122,473)
Total increase (decrease)			(4,989,194)		(1,552,407)

Net assets at beginning of period			34,954,263		36,506,670
Net assets at end of period		$	29,965,069	$	34,954,263


(1) Commenced operations May 18, 2015. See accompanying notes.












BlackRock Global Allocation Class III Division (1)		BlackRock iShares Alternative Strategies Class III Division (1)		BlackRock iShares Dynamic Allocation Class III Division (1)




2015		2015		2015


$	1,282	$	3,163	$	898
	27,424		(17)		(6)
	(40,129)		(5,064)		(2,151)
	(11,423)		(1,918)		(1,259)

	—		—		—

	(11,423)		(1,918)		(1,259)


	538,180		217,766		61,556
	(6)		—		—
	(40)		(19)		—
	(4,460)		(2,163)		—
	—		—		—
	—		(314)		—
	(5)		(84,204)		—
	—		—		—
	533,669		131,066		61,556
	522,246		129,148		60,297

	—		—		—
$	522,246	$	129,148	$	60,297



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		BlackRock iShares Dynamic Fixed Income Class III Division (1)




		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	1,610
	Total realized gains (losses) on investments		30
	Change in net unrealized appreciation or depreciation of investments		(3,180)
	Net gains (losses) from investments		(1,540)

Payment from affiliate			—

Net increase (decrease) in net assets resulting from operations			(1,540)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		127,778
	Administration charges		(39)
	Contingent sales charges		—
	Contract terminations		—
	Death benefit payments		—
	Flexible withdrawal option payments		(1,080)
	Transfers to other contracts		(14,365)
	Annuity payments		—
Increase (decrease) in net assets from policy related transactions			112,294
Total increase (decrease)			110,754

Net assets at beginning of period			—
Net assets at end of period		$	110,754


(1) Commenced operations May 18, 2015. See accompanying notes.












BlackRock iShares Equity Appreciation Class III Division (1)		BlackRock Value Opportunities Class III Division (1)		Bond & Mortgage Securities Class 1 Division




2015		2015		2015		2014


$	1,500	$	—	$	2,860,680	$	3,310,500
	(200)		60		2,799,443		(697,163)
	(7,191)		(75)		(8,435,344)		4,749,114
	(5,891)		(15)		(2,775,221)		7,362,451

	—		—		—		—

	(5,891)		(15)		(2,775,221)		7,362,451


	116,848		841		17,875,923		27,844,763
	(5)		—		(363,601)		(453,229)
	—		—		(96,660)		(135,527)
	—		—		(19,282,067)		(23,038,674)
	—		—		(1,508,435)		(975,504)
	—		—		(3,963,183)		(4,266,564)
	—		—		(19,499,104)		(27,083,716)
	—		—		—		—
	116,843		841		(26,837,127)		(28,108,451)
	110,952		826		(29,612,348)		(20,746,000)

	—		—		180,940,143		201,686,143
$	110,952	$	826	$	151,327,795	$	180,940,143



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Bond & Mortgage Securities Class 2 Division (1)




		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	281
	Total realized gains (losses) on investments		(382)
	Change in net unrealized appreciation or depreciation of investments		(227)
	Net gains (losses) from investments		(328)

Payment from affiliate			—

Net increase (decrease) in net assets resulting from operations			(328)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		39,327
	Administration charges		(9)
	Contingent sales charges		(3)
	Contract terminations		(301)
	Death benefit payments		—
	Flexible withdrawal option payments		—
	Transfers to other contracts		(20,060)
	Annuity payments		—
Increase (decrease) in net assets from policy related transactions			18,954
Total increase (decrease)			18,626

Net assets at beginning of period			—
Net assets at end of period		$	18,626


(1) Commenced operations May 18, 2015. See accompanying notes.












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




2015		2014		2015		2014		2015		2014


$	(143)	$	116	$	(949)	$	51	$	(4,266)	$	178
	(26)		(1)		2,516		2,374		4,141		2,812
	(677)		(284)		(10,338)		(2,142)		(39,192)		(2,823)
	(846)		(169)		(8,771)		283		(39,317)		167

	—		—		—		—		—		—

	(846)		(169)		(8,771)		283		(39,317)		167


	10,391		5,650		94,943		21,184		541,126		35,556
	(19)		(1)		(106)		(1)		(322)		(3)
	—		—		—		—		(24)		—
	(18)		—		—		—		(2,184)		—
	—		—		—		—		(586)		—
	—		—		—		—		—		—
	(16)		—		(4,410)		—		(54,130)		—
	—		—		—		—		—		—
	10,338		5,649		90,427		21,183		483,880		35,553
	9,492		5,480		81,656		21,466		444,563		35,720

	5,480		—		21,466		—		35,720		—
$	14,972	$	5,480	$	103,122	$	21,466	$	480,283	$	35,720



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		ClearBridge Small Cap Growth Series II Division (1)




		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(48)
	Total realized gains (losses) on investments		126
	Change in net unrealized appreciation or depreciation of investments		(514)
	Net gains (losses) from investments		(436)

Payment from affiliate			—

Net increase (decrease) in net assets resulting from operations			(436)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		8,977
	Administration charges		(5)
	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			8,972
Total increase (decrease)			8,536

Net assets at beginning of period			—
Net assets at end of period		$	8,536


(1) Commenced operations May 18, 2015. See accompanying notes.












Columbia Limited Duration Credit Class 2 Division (1)		Columbia Small Cap Value Class 2 Division (1)		Delaware Limited Term Diversified Income Service Class Division (1)




2015		2015		2015


$	(600)	$	(216)	$	(89)
	(17)		3,168		(1)
	(2,769)		(9,429)		(1,282)
	(3,386)		(6,477)		(1,372)

	—		—		—

	(3,386)		(6,477)		(1,372)


	146,269		82,607		230,703
	(7)		(38)		(1)
	(3)		—		—
	(301)		—		—
	—		—		—
	(1,320)		—		(2,640)
	(987)		(997)		—
	—		—		—
	143,651		81,572		228,062
	140,265		75,095		226,690

	—		—		—
$	140,265	$	75,095	$	226,690



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Delaware Small Cap Value Service Class Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(10,295)	$	(6,946)
	Total realized gains (losses) on investments		60,296		50,553
	Change in net unrealized appreciation or depreciation of investments		(143,899)		(24,718)
	Net gains (losses) from investments		(93,898)		18,889

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(93,898)		18,889

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		613,946		805,377
	Administration charges		(5)		(7)
	Contingent sales charges		(695)		(415)
	Contract terminations		(88,431)		(44,694)
	Death benefit payments		(727)		(686)
	Flexible withdrawal option payments		(2,452)		(2,147)
	Transfers to other contracts		(164,705)		(292,798)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			356,931		464,630
Total increase (decrease)			263,033		483,519

Net assets at beginning of period			745,584		262,065
Net assets at end of period		$	1,008,617	$	745,584


(1) Represented the operations of DWS Alternative Asset Allocation Class B Division until May 18, 2015. (2) Represented the operations of DWS Equity 500 Index Class B2 Division until May 18, 2015. (3) Represented the operations of DWS Small Mid Cap Value Class B Division until May 18, 2015. See accompanying notes.












Deutsche Alternative Asset Allocation Class B Division (1)				Deutsche Equity 500 Index Class B2 Division (2)				Deutsche Small Mid Cap Value Class B Division (3)




2015		2014		2015		2014		2015		2014


$	(255)	$	—	$	32	$	(38)	$	(11,838)	$	(4,637)
	(43)		—		23,042		—		68,471		6,238
	(1,747)		—		(31,577)		776		(104,085)		18,717
	(2,045)		—		(8,503)		738		(47,452)		20,318

	—		—		—		—		—		—

	(2,045)		—		(8,503)		738		(47,452)		20,318


	43,087		—		664,544		58,505		512,154		469,603
	(32)		—		(646)		(4)		(131)		—
	—		—		(126)		—		(194)		(145)
	—		—		(11,546)		—		(22,290)		(13,984)
	—		—		—		—		—		—
	(720)		—		(2,259)		—		(5,528)		(535)
	—		—		(22,263)		—		(98,976)		(6,630)
	—		—		—		—		—		—
	42,335		—		627,704		58,501		385,035		448,309
	40,290		—		619,201		59,239		337,583		468,627

	—		—		59,239		—		615,048		146,421
$	40,290	$	—	$	678,440	$	59,239	$	952,631	$	615,048



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Diversified Balanced Class 2 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(4,644,265)	$	(5,103,248)
	Total realized gains (losses) on investments		24,947,316		17,226,049
	Change in net unrealized appreciation or depreciation of investments		(33,963,056)		41,256,299
	Net gains (losses) from investments		(13,660,005)		53,379,100

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(13,660,005)		53,379,100

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		148,297,223		204,475,928
	Administration charges		(10,208,600)		(8,816,823)
	Contingent sales charges		(307,866)		(321,133)
	Contract terminations		(33,834,764)		(29,923,921)
	Death benefit payments		(4,339,389)		(4,446,014)
	Flexible withdrawal option payments		(15,733,181)		(11,235,966)
	Transfers to other contracts		(50,351,557)		(48,479,767)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			33,521,866		101,252,304
Total increase (decrease)			19,861,861		154,631,404

Net assets at beginning of period			1,011,135,001		856,503,597
Net assets at end of period		$	1,030,996,862	$	1,011,135,001


See accompanying notes.

100












Diversified Balanced Managed Volatility Class 2 Division				Diversified Growth Class 2 Division				Diversified Growth Managed Volatility Class 2 Division




2015		2014		2015		2014		2015		2014


$	(679,830)	$	(571,146)	$	(12,551,749)	$	(11,978,249)	$	(801,008)	$	(1,091,587)
	1,263,372		69,141		51,530,795		40,149,285		2,388,724		166,250
	(2,817,972)		2,805,987		(82,522,145)		129,051,299		(5,771,107)		5,573,416
	(2,234,430)		2,303,982		(43,543,099)		157,222,335		(4,183,391)		4,648,079

	—		—		—		—		—		—

	(2,234,430)		2,303,982		(43,543,099)		157,222,335		(4,183,391)		4,648,079


	81,082,062		85,991,855		607,720,734		707,153,835		130,875,606		151,901,026
	(1,345,576)		(432,397)		(31,268,064)		(24,520,132)		(2,220,053)		(842,149)
	(26,521)		(3,771)		(737,875)		(663,488)		(35,183)		(11,131)
	(2,855,738)		(364,095)		(82,565,699)		(61,042,314)		(3,695,433)		(1,020,805)
	(159,363)		(83,506)		(5,252,123)		(7,369,365)		(713,173)		—
	(1,724,784)		(426,709)		(34,611,268)		(23,673,228)		(1,886,963)		(597,960)
	(18,902,170)		(3,317,816)		(89,103,085)		(67,768,174)		(17,124,645)		(6,430,729)
	—		—		—		—		—		—
	56,067,910		81,363,561		364,182,620		522,117,134		105,200,156		142,998,252
	53,833,480		83,667,543		320,639,521		679,339,469		101,016,765		147,646,331

	84,544,416		876,873		2,881,637,488		2,202,298,019		151,625,281		3,978,950
$	138,377,896	$	84,544,416	$	3,202,277,009	$	2,881,637,488	$	252,642,046	$	151,625,281

101



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Diversified Income Class 2 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(1,185,330)	$	(1,183,394)
	Total realized gains (losses) on investments		4,025,045		2,826,894
	Change in net unrealized appreciation or depreciation of investments		(5,329,705)		5,516,168
	Net gains (losses) from investments		(2,489,990)		7,159,668

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(2,489,990)		7,159,668

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		83,072,684		88,489,565
	Administration charges		(1,863,532)		(1,327,401)
	Contingent sales charges		(106,534)		(66,865)
	Contract terminations		(11,739,459)		(5,030,610)
	Death benefit payments		(771,288)		(307,790)
	Flexible withdrawal option payments		(2,907,293)		(1,893,484)
	Transfers to other contracts		(32,923,101)		(30,584,567)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			32,761,477		49,278,848
Total increase (decrease)			30,271,487		56,438,516

Net assets at beginning of period			168,519,198		112,080,682
Net assets at end of period		$	198,790,685	$	168,519,198


(1) Commenced operations May 18, 2015. See accompanying notes.

102












Diversified International Class 1 Division				Diversified International Class 2 Division				Dreyfus IP MidCap Stock Service Shares Division (1)




2015		2014		2015		2014		2015


$	1,743,240	$	1,403,412	$	2,903	$	(10)	$	(142)
	2,833,709		2,123,040		197		—		(4)
	(6,432,512)		(10,768,603)		(17,869)		(233)		(101)
	(1,855,563)		(7,242,151)		(14,769)		(243)		(247)

	—		—		—		—		—

	(1,855,563)		(7,242,151)		(14,769)		(243)		(247)


	14,634,219		18,781,531		222,972		26,250		44,969
	(111,940)		(131,204)		(208)		(1)		(19)
	(62,004)		(78,131)		(95)		—		—
	(16,496,579)		(21,015,046)		(8,764)		—		—
	(831,074)		(934,159)		—		—		—
	(1,662,894)		(1,745,516)		—		—		—
	(11,604,130)		(16,641,375)		(14,946)		—		(1,028)
	—		—		—		—		—
	(16,134,402)		(21,763,900)		198,959		26,249		43,922
	(17,989,965)		(29,006,051)		184,190		26,006		43,675

	154,008,936		183,014,987		26,006		—		—
$	136,018,971	$	154,008,936	$	210,196	$	26,006	$	43,675

103



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Dreyfus Investment Portfolio Technology Growth Service Shares Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(85,228)	$	(74,402)
	Total realized gains (losses) on investments		752,088		601,919
	Change in net unrealized appreciation or depreciation of investments		(450,567)		(337,264)
	Net gains (losses) from investments		216,293		190,253

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			216,293		190,253

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		2,001,336		2,026,813
	Administration charges		(576)		(458)
	Contingent sales charges		(2,512)		(3,956)
	Contract terminations		(283,401)		(381,970)
	Death benefit payments		(56,253)		(35,378)
	Flexible withdrawal option payments		(49,500)		(33,686)
	Transfers to other contracts		(660,895)		(1,326,074)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			948,199		245,291
Total increase (decrease)			1,164,492		435,544

Net assets at beginning of period			5,040,592		4,605,048
Net assets at end of period		$	6,205,084	$	5,040,592


See accompanying notes.

104












Equity Income Class 1 Division				Equity Income Class 2 Division				Fidelity VIP Contrafund Service Class Division




2015		2014		2015		2014		2015		2014


$	2,327,082	$	2,471,246	$	14,151	$	(56)	$	(186,829)	$	(236,480)
	18,361,241		21,436,943		(706)		—		5,952,857		3,370,695
	(32,719,713)		5,170,721		(73,132)		1,334		(6,027,355)		1,670,519
	(12,031,390)		29,078,910		(59,687)		1,278		(261,327)		4,804,734

	—		—		—		—		—		—

	(12,031,390)		29,078,910		(59,687)		1,278		(261,327)		4,804,734


	26,323,857		31,779,340		1,035,730		79,875		1,597,789		2,487,812
	(795,423)		(998,503)		(867)		(8)		(8,542)		(10,159)
	(180,753)		(262,012)		(274)		—		(4,817)		(7,420)
	(24,867,854)		(32,445,348)		(25,196)		—		(4,291,254)		(6,018,328)
	(2,019,345)		(1,887,061)		(599)		—		(157,093)		(210,974)
	(5,951,129)		(6,229,853)		(9,470)		—		(554,040)		(537,444)
	(31,771,106)		(53,668,427)		(14,753)		—		(2,289,887)		(3,444,101)
	—		—		—		—		—		—
	(39,261,753)		(63,711,864)		984,571		79,867		(5,707,844)		(7,740,614)
	(51,293,143)		(34,632,954)		924,884		81,145		(5,969,171)		(2,935,880)

	258,966,880		293,599,834		81,145		—		48,139,718		51,075,598
$	207,673,737	$	258,966,880	$	1,006,029	$	81,145	$	42,170,547	$	48,139,718

105



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Fidelity VIP Contrafund Service Class 2 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(357,371)	$	(417,871)
	Total realized gains (losses) on investments		6,331,549		2,687,837
	Change in net unrealized appreciation or depreciation of investments		(6,432,389)		2,939,300
	Net gains (losses) from investments		(458,211)		5,209,266

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(458,211)		5,209,266

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		10,439,325		9,210,767
	Administration charges		(109,943)		(128,019)
	Contingent sales charges		(45,617)		(48,448)
	Contract terminations		(5,136,128)		(4,677,758)
	Death benefit payments		(397,888)		(554,403)
	Flexible withdrawal option payments		(844,779)		(768,536)
	Transfers to other contracts		(7,778,786)		(8,941,072)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(3,873,816)		(5,907,469)
Total increase (decrease)			(4,332,027)		(698,203)

Net assets at beginning of period			55,141,526		55,839,729
Net assets at end of period		$	50,809,499	$	55,141,526


See accompanying notes.

106












Fidelity VIP Equity-Income Service Class 2 Division				Fidelity VIP Growth Service Class Division				Fidelity VIP Growth Service Class 2 Division




2015		2014		2015		2014		2015		2014


$	515,186	$	457,675	$	(169,074)	$	(194,960)	$	(144,277)	$	(136,449)
	3,827,546		872,820		1,346,077		1,066,857		1,183,686		653,557
	(6,251,868)		1,250,674		(336,213)		627,231		(541,150)		258,174
	(1,909,136)		2,581,169		840,790		1,499,128		498,259		775,282

	—		—		—		—		—		—

	(1,909,136)		2,581,169		840,790		1,499,128		498,259		775,282


	2,997,713		3,512,477		786,926		754,685		2,931,834		3,479,922
	(5,586)		(6,690)		(3,401)		(4,015)		(1,271)		(1,314)
	(16,443)		(17,558)		(1,636)		(2,434)		(8,880)		(11,418)
	(4,446,515)		(4,752,614)		(1,457,604)		(1,973,920)		(1,001,787)		(1,102,425)
	(353,785)		(210,028)		(93,984)		(269,572)		(34,768)		(3,814)
	(434,131)		(397,723)		(142,151)		(152,175)		(51,248)		(36,420)
	(1,903,882)		(2,873,880)		(920,669)		(1,304,407)		(1,788,406)		(2,004,111)
	—		—		—		—		—		—
	(4,162,629)		(4,746,016)		(1,832,519)		(2,951,838)		45,474		320,420
	(6,071,765)		(2,164,847)		(991,729)		(1,452,710)		543,733		1,095,702

	37,543,510		39,708,357		15,184,681		16,637,391		9,441,585		8,345,883
$	31,471,745	$	37,543,510	$	14,192,952	$	15,184,681	$	9,985,318	$	9,441,585

107



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Fidelity VIP Mid Cap Service Class Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(396)	$	(167)
	Total realized gains (losses) on investments		8,378		541
	Change in net unrealized appreciation or depreciation of investments		(9,712)		803
	Net gains (losses) from investments		(1,730)		1,177

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(1,730)		1,177

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		—		70,000
	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			—		70,000
Total increase (decrease)			(1,730)		71,177

Net assets at beginning of period			71,177		—
Net assets at end of period		$	69,447	$	71,177


See accompanying notes.

108












Fidelity VIP Mid Cap Service Class 2 Division				Fidelity VIP Overseas Service Class 2 Division				Franklin Global Real Estate VIP Class 2 Division




2015		2014		2015		2014		2015		2014


$	(230,201)	$	(242,325)	$	(140,166)	$	(191,950)	$	8,813	$	(23)
	2,522,045		921,737		3,636,125		(196,348)		(3,729)		—
	(2,950,636)		71,824		(2,528,939)		(3,762,189)		(16,233)		69
	(658,792)		751,236		967,020		(4,150,487)		(11,149)		46

	—		—		—		—		—		—

	(658,792)		751,236		967,020		(4,150,487)		(11,149)		46


	5,265,430		5,110,604		6,100,177		10,194,179		522,134		41,465
	(2,071)		(1,449)		(131,466)		(160,352)		(365)		(1)
	(13,152)		(16,516)		(35,886)		(49,635)		(87)		—
	(1,481,963)		(1,594,709)		(4,051,999)		(4,792,388)		(8,410)		—
	(109,265)		(20,631)		(287,764)		(181,974)		—		—
	(129,565)		(102,057)		(807,640)		(845,535)		—		—
	(1,559,897)		(1,494,401)		(8,016,886)		(8,034,475)		(46,920)		—
	—		—		—		—		—		—
	1,969,517		1,880,841		(7,231,464)		(3,870,180)		466,352		41,464
	1,310,725		2,632,077		(6,264,444)		(8,020,667)		455,203		41,510

	17,955,535		15,323,458		37,741,368		45,762,035		41,510		—
$	19,266,260	$	17,955,535	$	31,476,924	$	37,741,368	$	496,713	$	41,510

109



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Franklin Rising Dividends VIP Class 4 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	783	$	(46)
	Total realized gains (losses) on investments		35,166		502
	Change in net unrealized appreciation or depreciation of investments		(53,955)		595
	Net gains (losses) from investments		(18,006)		1,051

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(18,006)		1,051

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		443,109		70,331
	Administration charges		(481)		(2)
	Contingent sales charges		(14)		—
	Contract terminations		(1,254)		—
	Death benefit payments		(299)		—
	Flexible withdrawal option payments		(4,518)		—
	Transfers to other contracts		(20,001)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			416,542		70,329
Total increase (decrease)			398,536		71,380

Net assets at beginning of period			71,380		—
Net assets at end of period		$	469,916	$	71,380


See accompanying notes.

110












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




2015		2014		2015		2014		2015		2014


$	(28,575)	$	(29,743)	$	(185,072)	$	(94,635)	$	(3,661)	$	64
	591,494		529,980		1,430,586		3,778,415		36,133		363
	(872,202)		(547,683)		(3,039,327)		(1,635,687)		(85,686)		7
	(309,283)		(47,446)		(1,793,813)		2,048,093		(53,214)		434

	—		—		—		—		—		—

	(309,283)		(47,446)		(1,793,813)		2,048,093		(53,214)		434


	783,593		1,346,893		3,023,991		5,232,222		526,409		17,029
	(5)		(183)		(1,187)		(1,732)		(245)		(1)
	(2,189)		(2,891)		(19,913)		(22,162)		(193)		—
	(285,364)		(328,142)		(2,259,462)		(2,147,707)		(17,719)		—
	(29,378)		(23,159)		(60,543)		(60,524)		(292)		—
	(13,711)		(8,950)		(144,313)		(122,263)		—		—
	(468,763)		(853,228)		(2,385,747)		(4,398,344)		(3,262)		—
	—		—		—		—		—		—
	(15,817)		130,340		(1,847,174)		(1,520,510)		504,698		17,028
	(325,100)		82,894		(3,640,987)		527,583		451,484		17,462

	3,577,341		3,494,447		18,542,627		18,015,044		17,462		—
$	3,252,241	$	3,577,341	$	14,901,640	$	18,542,627	$	468,946	$	17,462

111



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division (1)




		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	196
	Total realized gains (losses) on investments		18
	Change in net unrealized appreciation or depreciation of investments		(535)
	Net gains (losses) from investments		(321)

Payment from affiliate			—

Net increase (decrease) in net assets resulting from operations			(321)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		12,500
	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			12,500
Total increase (decrease)			12,179

Net assets at beginning of period			—
Net assets at end of period		$	12,179


(1) Commenced operations May 18, 2015. See accompanying notes.

112












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




2015		2014		2015		2014		2015		2014


$	(79,957)	$	(49,658)	$	(781)	$	21	$	2,516,719	$	3,598,886
	1,129,832		1,388,802		13,369		733		(251,780)		(203,842)
	(1,288,027)		(984,276)		(20,751)		(554)		(2,913,168)		2,078,450
	(238,152)		354,868		(8,163)		200		(648,229)		5,473,494

	—		—		—		—		—		—

	(238,152)		354,868		(8,163)		200		(648,229)		5,473,494


	1,050,298		1,391,718		113,930		4,978		12,419,375		18,915,882
	(238)		(220)		(74)		—		(191,449)		(222,428)
	(6,889)		(5,518)		—		—		(62,235)		(72,910)
	(778,536)		(532,771)		—		—		(14,653,632)		(18,735,952)
	(94,178)		(132,235)		—		—		(1,800,129)		(1,334,777)
	(47,557)		(46,428)		—		—		(3,114,987)		(3,288,604)
	(669,514)		(1,215,324)		(3,749)		—		(11,643,312)		(19,320,034)
	—		—		—		—		—		—
	(546,614)		(540,778)		110,107		4,978		(19,046,369)		(24,058,823)
	(784,766)		(185,910)		101,944		5,178		(19,694,598)		(18,585,329)

	6,977,815		7,163,725		5,178		—		141,358,650		159,943,979
$	6,193,049	$	6,977,815	$	107,122	$	5,178	$	121,664,052	$	141,358,650

113



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Government & High Quality Bond Class 2 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	21,093	$	(14)
	Total realized gains (losses) on investments		733		(12)
	Change in net unrealized appreciation or depreciation of investments		(34,980)		18
	Net gains (losses) from investments		(13,154)		(8)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(13,154)		(8)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		1,056,425		19,934
	Administration charges		(964)		(2)
	Contingent sales charges		(160)		—
	Contract terminations		(14,662)		—
	Death benefit payments		—		—
	Flexible withdrawal option payments		(3,616)		—
	Transfers to other contracts		(41,238)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			995,785		19,932
Total increase (decrease)			982,631		19,924

Net assets at beginning of period			19,924		—
Net assets at end of period		$	1,002,555	$	19,924


See accompanying notes.

114












Guggenheim Floating Rate Strategies Series F Division				Guggenheim Investments Global Managed Futures Strategy Division				Guggenheim Investments Long Short Equity Division




2015		2014		2015		2014		2015		2014


$	4,859	$	(14)	$	1,606	$	(6)	$	(1,323)	$	(15)
	(4,354)		—		2,568		—		348		—
	(20,662)		(75)		(9,969)		337		(453)		—
	(20,157)		(89)		(5,795)		331		(1,428)		(15)

	—		—		—		—		—		—

	(20,157)		(89)		(5,795)		331		(1,428)		(15)


	1,035,121		12,997		110,546		21,000		148,724		42,874
	(73)		—		(129)		—		(38)		—
	(649)		—		—		—		(1)		—
	(73,160)		—		—		—		(99)		—
	—		—		—		—		—		—
	(1,804)		—		(317)		—		—		—
	(164,975)		—		(11,578)		—		(12,663)		—
	—		—		—		—		—		—
	794,460		12,997		98,522		21,000		135,923		42,874
	774,303		12,908		92,727		21,331		134,495		42,859

	12,908		—		21,331		—		42,859		—
$	787,211	$	12,908	$	114,058	$	21,331	$	177,354	$	42,859

115



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Guggenheim Investments Multi-Hedge Strategies Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(370)	$	(6)
	Total realized gains (losses) on investments		(84)		—
	Change in net unrealized appreciation or depreciation of investments		(142)		115
	Net gains (losses) from investments		(596)		109

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(596)		109

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		95,362		7,761
	Administration charges		(39)		(1)
	Contingent sales charges		(1)		—
	Contract terminations		(99)		—
	Death benefit payments		—		—
	Flexible withdrawal option payments		—		—
	Transfers to other contracts		(14,696)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			80,527		7,760
Total increase (decrease)			79,931		7,869

Net assets at beginning of period			7,869		—
Net assets at end of period		$	87,800	$	7,869


(1) Commenced operations May 18, 2015. See accompanying notes.

116












Guggenheim Macro Opportunities Series M Division				Income Class 1 Division (1)		Income Class 2 Division (1)




2015		2014		2015		2015


$	1,149	$	(1)	$	7,307	$	617
	190		(6)		(1,904)		(825)
	(6,305)		—		(14,624)		(137)
	(4,966)		(7)		(9,221)		(345)

	—		—		—		—

	(4,966)		(7)		(9,221)		(345)


	225,034		7		605,521		28,432
	(43)		—		—		—
	—		—		(2)		—
	—		—		(241)		—
	—		—		—		—
	—		—		(4,267)		—
	(717)		—		(9,675)		(10,822)
	—		—		—		—
	224,274		7		591,336		17,610
	219,308		—		582,115		17,265

	—		—		—		—
$	219,308	$	—	$	582,115	$	17,265

117



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		International Emerging Markets Class 1 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	156,207	$	(353,629)
	Total realized gains (losses) on investments		(1,561,454)		(1,258,213)
	Change in net unrealized appreciation or depreciation of investments		(7,499,679)		(1,840,421)
	Net gains (losses) from investments		(8,904,926)		(3,452,263)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(8,904,926)		(3,452,263)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		9,844,478		12,499,886
	Administration charges		(7,754)		(9,693)
	Contingent sales charges		(35,354)		(45,835)
	Contract terminations		(6,671,281)		(8,523,548)
	Death benefit payments		(244,634)		(344,250)
	Flexible withdrawal option payments		(478,002)		(478,249)
	Transfers to other contracts		(7,092,429)		(10,379,824)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(4,684,976)		(7,281,513)
Total increase (decrease)			(13,589,902)		(10,733,776)

Net assets at beginning of period			64,254,651		74,988,427
Net assets at end of period		$	50,664,749	$	64,254,651


(1) Commenced operations May 18, 2015. See accompanying notes.

118












International Emerging Markets Class 2 Division (1)		Invesco American Franchise Series I Division				Invesco Balanced-Risk Allocation Series II Division




2015		2015		2014		2015		2014


$	25	$	(58,372)	$	(59,847)	$	5,380	$	—
	(23)		254,661		290,027		16,266		—
	(2,729)		(24,532)		76,495		(37,280)		—
	(2,727)		171,757		306,675		(15,634)		—

	—		—		—		—		—

	(2,727)		171,757		306,675		(15,634)		—


	35,857		292,097		221,988		207,357		—
	(7)		(908)		(1,074)		(124)		—
	—		(544)		(627)		—		—
	—		(484,740)		(508,232)		—		—
	—		(29,979)		(42,280)		—		—
	—		(49,918)		(51,427)		—		—
	—		(136,045)		(478,140)		(323)		—
	—		—		—		—		—
	35,850		(410,037)		(859,792)		206,910		—
	33,123		(238,280)		(553,117)		191,276		—

	—		4,607,004		5,160,121		—		—
$	33,123	$	4,368,724	$	4,607,004	$	191,276	$	—

119



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Invesco Core Equity Series I Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(38,679)	$	(105,817)
	Total realized gains (losses) on investments		2,966,757		1,614,298
	Change in net unrealized appreciation or depreciation of investments		(4,292,405)		(7,629)
	Net gains (losses) from investments		(1,364,327)		1,500,852

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(1,364,327)		1,500,852

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		759,713		1,230,692
	Administration charges		(3,355)		(4,519)
	Contingent sales charges		(1,906)		(3,310)
	Contract terminations		(1,697,944)		(2,685,101)
	Death benefit payments		(139,339)		(245,338)
	Flexible withdrawal option payments		(294,518)		(313,019)
	Transfers to other contracts		(935,226)		(1,606,399)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(2,312,575)		(3,626,994)
Total increase (decrease)			(3,676,902)		(2,126,142)

Net assets at beginning of period			21,496,633		23,622,775
Net assets at end of period		$	17,819,731	$	21,496,633


See accompanying notes.

120












Invesco Global Health Care Series I Division				Invesco Global Health Care Series II Division				Invesco International Growth Series I Division




2015		2014		2015		2014		2015		2014


$	(150,654)	$	(135,465)	$	(6,549)	$	(46)	$	4,504	$	23,783
	2,200,295		1,529,755		66,391		237		281,670		337,819
	(1,850,670)		294,532		(110,805)		(397)		(689,168)		(512,905)
	198,971		1,688,822		(50,963)		(206)		(402,994)		(151,303)

	—		—		—		—		—		—

	198,971		1,688,822		(50,963)		(206)		(402,994)		(151,303)


	2,342,510		1,709,369		922,960		71,609		2,317,822		3,896,646
	(2,472)		(2,385)		(477)		(3)		(20,401)		(23,486)
	(1,367)		(1,358)		(244)		—		(5,114)		(7,339)
	(1,218,076)		(1,101,342)		(22,419)		—		(576,983)		(708,622)
	(116,359)		(48,851)		—		—		(68,389)		(48,573)
	(165,323)		(149,142)		(1,607)		—		(86,275)		(60,613)
	(1,392,953)		(1,656,924)		(104,431)		—		(1,422,431)		(1,324,604)
	—		—		—		—		—		—
	(554,040)		(1,250,633)		793,782		71,606		138,229		1,723,409
	(355,069)		438,189		742,819		71,400		(264,765)		1,572,106

	10,917,261		10,479,072		71,400		—		10,425,490		8,853,384
$	10,562,192	$	10,917,261	$	814,219	$	71,400	$	10,160,725	$	10,425,490

121



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Invesco International Growth Series II Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	1,891	$	(24)
	Total realized gains (losses) on investments		467		(220)
	Change in net unrealized appreciation or depreciation of investments		(32,194)		(76)
	Net gains (losses) from investments		(29,836)		(320)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(29,836)		(320)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		439,861		32,552
	Administration charges		(285)		(2)
	Contingent sales charges		(10)		—
	Contract terminations		(882)		—
	Death benefit payments		—		—
	Flexible withdrawal option payments		(191)		—
	Transfers to other contracts		(12,018)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			426,475		32,550
Total increase (decrease)			396,639		32,230

Net assets at beginning of period			32,230		—
Net assets at end of period		$	428,869	$	32,230


See accompanying notes.

122












Invesco Mid Cap Growth Series I Division				Invesco Small Cap Equity Series I Division				Invesco Technology Series I Division




2015		2014		2015		2014		2015		2014


$	(20,666)	$	(21,473)	$	(127,287)	$	(137,584)	$	(46,386)	$	(47,568)
	482,359		375,481		2,016,048		1,642,728		640,685		540,002
	(459,061)		(250,833)		(2,480,337)		(1,438,151)		(412,929)		(177,191)
	2,632		103,175		(591,576)		66,993		181,370		315,243

	—		—		—		—		—		—

	2,632		103,175		(591,576)		66,993		181,370		315,243


	459,853		235,114		1,413,906		1,691,034		372,266		816,865
	(289)		(252)		(10,113)		(10,869)		(244)		(352)
	(222)		(239)		(4,703)		(5,584)		(441)		(318)
	(197,600)		(193,773)		(840,380)		(925,774)		(393,113)		(258,213)
	(7,745)		(12,755)		(39,310)		(60,353)		(129,071)		(3,379)
	(20,226)		(17,669)		(98,534)		(91,960)		(36,384)		(41,124)
	(195,687)		(231,937)		(1,228,625)		(1,958,863)		(314,437)		(481,811)
	—		—		—		—		—		—
	38,084		(221,511)		(807,759)		(1,362,369)		(501,424)		31,668
	40,716		(118,336)		(1,399,335)		(1,295,376)		(320,054)		346,911

	1,553,721		1,672,057		9,327,320		10,622,696		3,772,446		3,425,535
$	1,594,437	$	1,553,721	$	7,927,985	$	9,327,320	$	3,452,392	$	3,772,446

123



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Invesco Value Opportunities Series I Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	55,969	$	(7,116)
	Total realized gains (losses) on investments		718,631		357,914
	Change in net unrealized appreciation or depreciation of investments		(1,361,289)		(76,879)
	Net gains (losses) from investments		(586,689)		273,919

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(586,689)		273,919

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		920,508		636,415
	Administration charges		(16,359)		(19,404)
	Contingent sales charges		(2,599)		(2,892)
	Contract terminations		(293,189)		(279,217)
	Death benefit payments		(86,354)		(20,338)
	Flexible withdrawal option payments		(64,689)		(63,939)
	Transfers to other contracts		(772,885)		(842,922)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(315,567)		(592,297)
Total increase (decrease)			(902,256)		(318,378)

Net assets at beginning of period			5,347,559		5,665,937
Net assets at end of period		$	4,445,303	$	5,347,559


See accompanying notes.

124












Janus Aspen Enterprise Service Shares Division				Janus Aspen Flexible Bond Service Shares Division				LargeCap Growth Class 1 Division




2015		2014		2015		2014		2015		2014


$	(51,071)	$	(118,714)	$	6,089	$	316	$	(589,322)	$	(398,873)
	1,699,557		1,502,811		2,330		(260)		3,556,456		4,042,057
	(1,403,548)		(428,379)		(22,250)		(77)		(1,049,459)		1,327,791
	244,938		955,718		(13,831)		(21)		1,917,675		4,970,975

	—		—		—		—		—		—

	244,938		955,718		(13,831)		(21)		1,917,675		4,970,975


	463,698		312,129		754,108		72,683		5,779,961		6,099,882
	(2,764)		(2,494)		(599)		(4)		(37,237)		(40,340)
	(959)		(1,169)		(54)		—		(19,082)		(20,968)
	(854,388)		(948,308)		(4,931)		—		(7,704,396)		(8,451,196)
	(61,729)		(21,439)		(292)		—		(455,041)		(526,612)
	(60,274)		(54,608)		(1,151)		—		(665,528)		(666,129)
	(437,253)		(667,269)		(9,653)		—		(2,742,766)		(3,418,017)
	—		—		—		—		—		—
	(953,669)		(1,383,158)		737,428		72,679		(5,844,089)		(7,023,380)
	(708,731)		(427,440)		723,597		72,658		(3,926,414)		(2,052,405)

	9,503,129		9,930,569		72,658		—		53,469,495		55,521,900
$	8,794,398	$	9,503,129	$	796,255	$	72,658	$	49,543,081	$	53,469,495

125



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		LargeCap Growth Class 2 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(3,338)	$	(8)
	Total realized gains (losses) on investments		1,311		(46)
	Change in net unrealized appreciation or depreciation of investments		755		(73)
	Net gains (losses) from investments		(1,272)		(127)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(1,272)		(127)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		488,375		6,102
	Administration charges		(277)		(1)
	Contingent sales charges		(17)		—
	Contract terminations		(1,595)		—
	Death benefit payments		—		—
	Flexible withdrawal option payments		(633)		—
	Transfers to other contracts		(48,488)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			437,365		6,101
Total increase (decrease)			436,093		5,974

Net assets at beginning of period			5,974		—
Net assets at end of period		$	442,067	$	5,974


(1) Commenced operations May 18, 2015. See accompanying notes.

126













LargeCap Growth I Class 1 Division				LargeCap Growth I Class 2 Division (1)		LargeCap S&P 500 Index Class 1 Division




2015		2014		2015		2015		2014


$	(1,178,721)	$	(1,315,545)	$	(1,200)	$	101,428	$	(87,857)
	21,613,871		27,667,480		58,885		8,876,654		8,026,434
	(13,707,976)		(18,840,451)		(69,012)		(9,066,908)		3,249,988
	6,727,174		7,511,484		(11,327)		(88,826)		11,188,565

	—		—		—		—		—

	6,727,174		7,511,484		(11,327)		(88,826)		11,188,565


	5,819,047		7,206,865		502,321		12,367,727		12,948,268
	(32,264)		(34,261)		(40)		(67,555)		(78,673)
	(22,483)		(25,671)		—		(45,950)		(41,253)
	(8,729,110)		(10,905,256)		—		(10,132,170)		(11,230,074)
	(1,095,484)		(584,928)		—		(511,844)		(309,060)
	(1,046,816)		(1,036,617)		—		(1,340,338)		(1,338,106)
	(5,203,875)		(7,423,740)		—		(10,227,245)		(9,965,557)
	—		—		—		—		—
	(10,310,985)		(12,803,608)		502,281		(9,957,375)		(10,014,455)
	(3,583,811)		(5,292,124)		490,954		(10,046,201)		1,174,110

	109,225,666		114,517,790		—		102,363,487		101,189,377
$	105,641,855	$	109,225,666	$	490,954	$	92,317,286	$	102,363,487

127



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		LargeCap S&P 500 Index Class 2 Division (1)




		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	405
	Total realized gains (losses) on investments		710
	Change in net unrealized appreciation or depreciation of investments		(2,328)
	Net gains (losses) from investments		(1,213)

Payment from affiliate			—

Net increase (decrease) in net assets resulting from operations			(1,213)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		154,007
	Administration charges		(43)
	Contingent sales charges		—
	Contract terminations		—
	Death benefit payments		—
	Flexible withdrawal option payments		—
	Transfers to other contracts		(1,763)
	Annuity payments		—
Increase (decrease) in net assets from policy related transactions			152,201
Total increase (decrease)			150,988

Net assets at beginning of period			—
Net assets at end of period		$	150,988


(1) Commenced operations May 18, 2015. See accompanying notes.

128












LargeCap Value Class 1 Division				LargeCap Value Class 2 Division (1)		MFS VIT International Value Service Class Division




2015		2014		2015		2015		2014


$	355,943	$	881,390	$	11	$	5,889	$	(53)
	11,426,987		16,211,853		486		7,439		(233)
	(13,740,865)		(8,506,475)		(352)		(16,783)		(582)
	(1,957,935)		8,586,768		145		(3,455)		(868)

	—		—		—		—		—

	(1,957,935)		8,586,768		145		(3,455)		(868)


	5,630,214		7,323,348		10,225		1,634,129		61,956
	(67,653)		(80,393)		(9)		(391)		(4)
	(21,751)		(24,385)		—		(251)		—
	(8,906,081)		(10,408,631)		—		(27,121)		—
	(1,048,917)		(985,462)		—		—		—
	(1,260,641)		(1,314,265)		—		(5,694)		—
	(4,629,833)		(7,136,991)		—		(94,948)		—
	—		—		—		—		—
	(10,304,662)		(12,626,779)		10,216		1,505,724		61,952
	(12,262,597)		(4,040,011)		10,361		1,502,269		61,084

	91,485,357		95,525,368		—		61,084		—
$	79,222,760	$	91,485,357	$	10,361	$	1,563,353	$	61,084

129



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		MFS VIT New Discovery Service Class Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(16,025)	$	(12,342)
	Total realized gains (losses) on investments		(39,188)		153,886
	Change in net unrealized appreciation or depreciation of investments		4,980		(212,134)
	Net gains (losses) from investments		(50,233)		(70,590)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(50,233)		(70,590)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		703,477		743,637
	Administration charges		(41)		(17)
	Contingent sales charges		(203)		(516)
	Contract terminations		(38,286)		(97,304)
	Death benefit payments		—		(306)
	Flexible withdrawal option payments		(10,169)		(5,371)
	Transfers to other contracts		(294,991)		(223,902)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			359,787		416,221
Total increase (decrease)			309,554		345,631

Net assets at beginning of period			943,807		598,176
Net assets at end of period		$	1,253,361	$	943,807


See accompanying notes.

130












MFS VIT Utilities Service Class Division				MFS VIT Value Service Class Division				MidCap Class 1 Division




2015		2014		2015		2014		2015		2014


$	320,869	$	62,535	$	32,066	$	(7,029)	$	(3,081,141)	$	(3,295,573)
	1,064,442		980,596		474,383		425,175		65,682,724		68,652,401
	(3,494,394)		(93,732)		(632,553)		(7,797)		(59,850,213)		(22,942,508)
	(2,109,083)		949,399		(126,104)		410,349		2,751,370		42,414,320

	—		—		—		—		—		—

	(2,109,083)		949,399		(126,104)		410,349		2,751,370		42,414,320


	3,716,029		6,322,669		1,057,713		1,423,174		22,672,291		25,177,450
	(940)		(665)		(104)		(60)		(391,774)		(472,341)
	(5,514)		(5,339)		(2,037)		(4,289)		(149,784)		(182,089)
	(616,234)		(515,510)		(229,800)		(414,160)		(36,441,353)		(42,965,965)
	(60,712)		(96,829)		(15,830)		(29,188)		(2,288,766)		(2,723,449)
	(84,001)		(73,552)		(63,981)		(33,796)		(5,056,785)		(5,144,788)
	(2,122,826)		(3,029,538)		(626,978)		(619,446)		(30,494,178)		(39,131,074)
	—		—		—		—		—		—
	825,802		2,601,236		118,983		322,235		(52,150,349)		(65,442,256)
	(1,283,281)		3,550,635		(7,121)		732,584		(49,398,979)		(23,027,936)

	12,181,402		8,630,767		5,175,047		4,442,463		389,291,120		412,319,056
$	10,898,121	$	12,181,402	$	5,167,926	$	5,175,047	$	339,892,141	$	389,291,120

131



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Money Market Class 1 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(642,674)	$	(755,402)
	Total realized gains (losses) on investments		—		—
	Change in net unrealized appreciation or depreciation of investments		—		—
	Net gains (losses) from investments		(642,674)		(755,402)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(642,674)		(755,402)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		59,310,934		57,849,237
	Administration charges		(56,669)		(57,648)
	Contingent sales charges		(62,585)		(78,725)
	Contract terminations		(16,881,165)		(19,811,398)
	Death benefit payments		(763,265)		(1,073,801)
	Flexible withdrawal option payments		(950,260)		(1,140,987)
	Transfers to other contracts		(45,804,649)		(45,340,272)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(5,207,659)		(9,653,594)
Total increase (decrease)			(5,850,333)		(10,408,996)

Net assets at beginning of period			55,230,360		65,639,356
Net assets at end of period		$	49,380,027	$	55,230,360


(1) Commenced operations May 18, 2015. See accompanying notes.

132












Money Market Class 2 Division				Neuberger Berman AMT Large Cap Value I Class Division				Neuberger Berman AMT Mid-Cap Growth Portfolio S Class Division (1)




2015		2014		2015		2014		2015


$	(16,363)	$	(268)	$	(32,795)	$	(40,048)	$	(6,288)
	—		—		647,348		396,207		(937)
	—		—		(1,246,521)		65,815		(120,653)
	(16,363)		(268)		(631,968)		421,974		(127,878)

	—		—		—		—		—

	(16,363)		(268)		(631,968)		421,974		(127,878)


	7,489,988		294,359		571,136		1,006,877		3,003,327
	(2,411)		(42)		(823)		(1,049)		(1,035)
	(443)		—		(6,051)		(6,694)		(478)
	(40,733)		—		(682,648)		(646,360)		(53,887)
	—		—		(57,257)		(104,705)		—
	(11,529)		—		(37,075)		(42,014)		(5,347)
	(6,254,749)		(76,739)		(348,631)		(830,038)		(69,027)
	—		—		—		—		—
	1,180,123		217,578		(561,349)		(623,983)		2,873,553
	1,163,760		217,310		(1,193,317)		(202,009)		2,745,675

	217,310		—		5,241,195		5,443,204		—
$	1,381,070	$	217,310	$	4,047,878	$	5,241,195	$	2,745,675

133



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Neuberger Berman AMT Socially Responsive I Class Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(51,414)	$	(74,782)
	Total realized gains (losses) on investments		1,046,464		1,076,131
	Change in net unrealized appreciation or depreciation of investments		(1,096,068)		(496,844)
	Net gains (losses) from investments		(101,018)		504,505

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(101,018)		504,505

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		779,432		1,111,514
	Administration charges		(22,503)		(26,153)
	Contingent sales charges		(3,946)		(7,665)
	Contract terminations		(445,154)		(740,098)
	Death benefit payments		(23,757)		(11,223)
	Flexible withdrawal option payments		(130,187)		(119,842)
	Transfers to other contracts		(1,052,798)		(2,072,490)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(898,913)		(1,865,957)
Total increase (decrease)			(999,931)		(1,361,452)

Net assets at beginning of period			6,077,273		7,438,725
Net assets at end of period		$	5,077,342	$	6,077,273


(1) Commenced operations May 18, 2015. See accompanying notes.

134












Oppenheimer Main Street Small Cap Service Shares Division				PIMCO All Asset Administrative Class Division				PIMCO All Asset Advisor Class Division (1)




2015		2014		2015		2014		2015


$	(3,862)	$	(3,783)	$	88,731	$	201,425	$	(2)
	56,688		93,385		(177,260)		(10,798)		(70)
	(97,581)		(27,039)		(434,074)		(271,826)		(1)
	(44,755)		62,563		(522,603)		(81,199)		(73)

	—		—		—		—		—

	(44,755)		62,563		(522,603)		(81,199)		(73)


	207,404		426,860		579,848		1,666,391		5,676
	(207)		(237)		(114)		(117)		—
	(103)		(14)		(2,504)		(5,294)		—
	(91,394)		(11,585)		(282,541)		(511,190)		—
	—		—		—		(33,270)		—
	(4,652)		(6,693)		(55,604)		(50,959)		—
	(163,133)		(190,287)		(815,831)		(731,550)		(5,603)
	—		—		—		—		—
	(52,085)		218,044		(576,746)		334,011		73
	(96,840)		280,607		(1,099,349)		252,812		—

	658,213		377,606		5,246,587		4,993,775		—
$	561,373	$	658,213	$	4,147,238	$	5,246,587	$	—

135



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		PIMCO Commodity Real Return Strategy M Class Division (1)




		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(56)
	Total realized gains (losses) on investments		(4)
	Change in net unrealized appreciation or depreciation of investments		(1,681)
	Net gains (losses) from investments		(1,741)

Payment from affiliate			—

Net increase (decrease) in net assets resulting from operations			(1,741)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		14,300
	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			14,300
Total increase (decrease)			12,559

Net assets at beginning of period			—
Net assets at end of period		$	12,559


(1) Commenced operations May 18, 2015. See accompanying notes.

136












PIMCO High Yield Administrative Class Division				PIMCO Low Duration Advisor Class Division (1)		PIMCO Total Return Administrative Class Division




2015		2014		2015		2015		2014


$	624,562	$	604,355	$	6,210	$	991,318	$	224,780
	189,889		79,195		(20)		261,224		(18,070)
	(1,327,188)		(431,109)		(7,503)		(1,527,726)		629,305
	(512,737)		252,441		(1,313)		(275,184)		836,015

	—		—		—		—		—

	(512,737)		252,441		(1,313)		(275,184)		836,015


	4,340,966		4,945,263		368,267		4,119,218		6,646,375
	(1,456)		(1,212)		(11)		(3,232)		(3,119)
	(11,674)		(11,530)		(4)		(19,235)		(27,784)
	(1,316,009)		(1,113,259)		(454)		(2,168,399)		(2,682,587)
	(11,238)		(195,708)		—		(84,142)		(474,172)
	(197,776)		(176,766)		—		(318,089)		(286,408)
	(2,649,159)		(1,888,293)		(5,753)		(3,343,233)		(5,965,401)
	—		—		—		—		—
	153,654		1,558,495		362,045		(1,817,112)		(2,793,096)
	(359,083)		1,810,936		360,732		(2,092,296)		(1,957,081)

	16,014,793		14,203,857		—		29,159,222		31,116,303
$	15,655,710	$	16,014,793	$	360,732	$	27,066,926	$	29,159,222

137



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Principal Capital Appreciation Class 1 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(1,022,076)	$	285,693
	Total realized gains (losses) on investments		2,308,451		3,166,147
	Change in net unrealized appreciation or depreciation of investments		(2,510,117)		(1,656,566)
	Net gains (losses) from investments		(1,223,742)		1,795,274

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(1,223,742)		1,795,274

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		123,197,595		3,393,463
	Administration charges		(213,072)		(1,388)
	Contingent sales charges		(58,257)		(12,775)
	Contract terminations		(8,995,555)		(1,236,387)
	Death benefit payments		(770,561)		(226,076)
	Flexible withdrawal option payments		(1,763,649)		(90,028)
	Transfers to other contracts		(11,933,116)		(1,933,969)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			99,463,385		(107,160)
Total increase (decrease)			98,239,643		1,688,114

Net assets at beginning of period			18,505,464		16,817,350
Net assets at end of period		$	116,745,107	$	18,505,464


See accompanying notes.

138












Principal Capital Appreciation Class 2 Division				Principal LifeTime Strategic Income Class 1 Division				Principal LifeTime 2010 Class 1 Division




2015		2014		2015		2014		2015		2014


$	(5,502)	$	(192)	$	136,386	$	244,144	$	238,776	$	266,924
	11,192		1		970,488		593,959		481,787		310,635
	(12,067)		1,298		(1,507,441)		(133,715)		(1,445,646)		607,302
	(6,377)		1,107		(400,567)		704,388		(725,083)		1,184,861

	—		—		—		—		—		—

	(6,377)		1,107		(400,567)		704,388		(725,083)		1,184,861


	484,532		191,275		1,497,294		2,410,807		2,358,317		3,316,071
	(591)		(10)		(54,103)		(64,619)		(113,584)		(133,752)
	(162)		—		(13,564)		(10,780)		(26,688)		(20,977)
	(14,898)		—		(2,314,975)		(1,451,603)		(3,394,795)		(2,927,568)
	—		—		(112,974)		(389,106)		(128,430)		(286,246)
	(1,099)		—		(789,084)		(913,567)		(1,182,374)		(1,205,714)
	(21,544)		—		(2,475,326)		(2,952,774)		(2,009,050)		(3,177,576)
	—		—		—		—		—		—
	446,238		191,265		(4,262,732)		(3,371,642)		(4,496,604)		(4,435,762)
	439,861		192,372		(4,663,299)		(2,667,254)		(5,221,687)		(3,250,901)

	192,372		—		21,738,392		24,405,646		33,742,664		36,993,565
$	632,233	$	192,372	$	17,075,093	$	21,738,392	$	28,520,977	$	33,742,664

139



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Principal LifeTime 2020 Class 1 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	1,422,655	$	1,323,135
	Total realized gains (losses) on investments		8,189,270		7,170,238
	Change in net unrealized appreciation or depreciation of investments		(12,413,841)		(1,951,174)
	Net gains (losses) from investments		(2,801,916)		6,542,199

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(2,801,916)		6,542,199

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		14,036,904		16,927,771
	Administration charges		(651,509)		(802,934)
	Contingent sales charges		(98,472)		(163,496)
	Contract terminations		(11,711,518)		(17,496,600)
	Death benefit payments		(317,278)		(776,485)
	Flexible withdrawal option payments		(3,718,001)		(3,685,547)
	Transfers to other contracts		(20,715,435)		(32,943,639)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(23,175,309)		(38,940,930)
Total increase (decrease)			(25,977,225)		(32,398,731)

Net assets at beginning of period			143,694,951		176,093,682
Net assets at end of period		$	117,717,726	$	143,694,951


(1) Commenced operations May 18, 2015. See accompanying notes.

140












Principal LifeTime 2020 Class 2 Division (1)		Principal LifeTime 2030 Class 1 Division				Principal LifeTime 2030 Class 2 Division (1)




2015		2015		2014		2015


$	329	$	775,408	$	502,417	$	87
	728		5,488,994		13,481,878		197
	(1,763)		(7,969,079)		(10,747,978)		(718)
	(706)		(1,704,677)		3,236,317		(434)

	—		—		—		—

	(706)		(1,704,677)		3,236,317		(434)


	16,250		7,389,783		4,769,941		17,838
	—		(380,121)		(383,742)		(7)
	—		(42,146)		(37,413)		—
	—		(5,148,538)		(4,312,357)		—
	—		(10,512)		(22,361)		—
	—		(849,852)		(661,839)		(945)
	(23)		(3,685,067)		(1,588,524)		(65)
	—		—		—		—
	16,227		(2,726,453)		(2,236,295)		16,821
	15,521		(4,431,130)		1,000,022		16,387

	—		73,233,074		72,233,052		—
$	15,521	$	68,801,944	$	73,233,074	$	16,387

141



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Principal LifeTime 2040 Class 1 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	137,407	$	79,815
	Total realized gains (losses) on investments		667,474		1,145,128
	Change in net unrealized appreciation or depreciation of investments		(1,119,014)		(574,127)
	Net gains (losses) from investments		(314,133)		650,816

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(314,133)		650,816

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		1,529,020		3,041,037
	Administration charges		(5,328)		(5,266)
	Contingent sales charges		(9,437)		(12,946)
	Contract terminations		(1,147,112)		(1,310,814)
	Death benefit payments		(4,435)		(77,304)
	Flexible withdrawal option payments		(36,766)		(42,760)
	Transfers to other contracts		(797,183)		(791,531)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(471,241)		800,416
Total increase (decrease)			(785,374)		1,451,232

Net assets at beginning of period			14,503,892		13,052,660
Net assets at end of period		$	13,718,518	$	14,503,892


(1) Commenced operations May 18, 2015. See accompanying notes.

142












Principal LifeTime 2040 Class 2 Division (1)		Principal LifeTime 2050 Class 1 Division				Principal LifeTime 2050 Class 2 Division (1)




2015		2015		2014		2015


$	(1)	$	94,705	$	63,295	$	407
	—		529,944		921,620		1,000
	(5)		(762,417)		(587,998)		(3,066)
	(6)		(137,768)		396,917		(1,659)

	—		—		—		—

	(6)		(137,768)		396,917		(1,659)


	500		2,294,787		1,389,803		27,110
	—		(4,528)		(4,424)		—
	—		(9,805)		(7,056)		—
	—		(1,144,908)		(790,793)		—
	—		—		(26,773)		—
	—		(22,419)		(15,293)		—
	—		(656,354)		(678,352)		—
	—		—		—		—
	500		456,773		(132,888)		27,110
	494		319,005		264,029		25,451

	—		8,617,890		8,353,861		—
$	494	$	8,936,895	$	8,617,890	$	25,451

143



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Real Estate Securities Class 1 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	97,294	$	172,806
	Total realized gains (losses) on investments		8,288,486		2,192,506
	Change in net unrealized appreciation or depreciation of investments		(6,248,173)		19,163,492
	Net gains (losses) from investments		2,137,607		21,528,804

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			2,137,607		21,528,804

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		13,293,791		15,004,806
	Administration charges		(22,851)		(22,235)
	Contingent sales charges		(34,200)		(36,790)
	Contract terminations		(8,361,629)		(9,031,964)
	Death benefit payments		(426,032)		(679,382)
	Flexible withdrawal option payments		(856,904)		(798,019)
	Transfers to other contracts		(12,325,219)		(10,430,931)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(8,733,044)		(5,994,515)
Total increase (decrease)			(6,595,437)		15,534,289

Net assets at beginning of period			87,932,182		72,397,893
Net assets at end of period		$	81,336,745	$	87,932,182


(1) Commenced operations May 18, 2015. See accompanying notes.

144












Real Estate Securities Class 2 Division				Rydex Basic Materials Division (1)		Rydex Commodities Strategy Division




2015		2014		2015		2015		2014


$	8,160	$	(150)	$	—	$	(477)	$	(15)
	41,861		585		—		(1,126)		(1)
	(9,501)		1,926		—		(20,055)		(2,208)
	40,520		2,361		—		(21,658)		(2,224)

	—		—		—		—		—

	40,520		2,361		—		(21,658)		(2,224)


	1,727,261		178,553		—		88,462		13,597
	(1,203)		(9)		—		(3)		—
	(231)		—		—		—		—
	(21,258)		—		—		—		—
	—		—		—		—		—
	(8,160)		—		—		—		—
	(184,925)		—		—		(1,204)		—
	—		—		—		—		—
	1,511,484		178,544		—		87,255		13,597
	1,552,004		180,905		—		65,597		11,373

	180,905		—		—		11,373		—
$	1,732,909	$	180,905	$	—	$	76,970	$	11,373

145



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Rydex NASDAQ 100 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(5,427)	$	(101)
	Total realized gains (losses) on investments		33,336		—
	Change in net unrealized appreciation or depreciation of investments		(10,106)		(517)
	Net gains (losses) from investments		17,803		(618)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			17,803		(618)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		575,850		97,933
	Administration charges		(449)		—
	Contingent sales charges		—		—
	Contract terminations		—		—
	Death benefit payments		—		—
	Flexible withdrawal option payments		—		—
	Transfers to other contracts		(44,368)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			531,033		97,933
Total increase (decrease)			548,836		97,315

Net assets at beginning of period			97,315		—
Net assets at end of period		$	646,151	$	97,315


See accompanying notes.

146












SAM Balanced Portfolio Class 1 Division				SAM Balanced Portfolio Class 2 Division				SAM Conservative Balanced Portfolio Class 1 Division




2015		2014		2015		2014		2015		2014


$	9,374,533	$	8,811,345	$	49,694	$	(368)	$	2,778,779	$	2,634,239
	70,461,519		137,083,803		208,051		1		11,687,839		22,680,728
	(93,512,609)		(108,056,045)		(366,087)		(1,444)		(17,902,602)		(17,320,821)
	(13,676,557)		37,839,103		(108,342)		(1,811)		(3,435,984)		7,994,146

	—		—		—		—		—		—

	(13,676,557)		37,839,103		(108,342)		(1,811)		(3,435,984)		7,994,146


	42,878,760		41,302,687		4,642,656		636,008		16,191,319		22,652,606
	(3,776,977)		(4,206,262)		(3,447)		(24)		(571,557)		(641,303)
	(380,646)		(345,560)		(859)		—		(94,116)		(90,288)
	(48,656,930)		(41,025,690)		(78,883)		—		(12,416,351)		(11,942,225)
	(3,440,873)		(4,186,225)		—		—		(1,295,958)		(567,833)
	(14,292,327)		(13,722,382)		(6,835)		—		(3,720,077)		(3,692,453)
	(47,758,625)		(103,810,768)		(1,319,303)		—		(12,363,565)		(23,007,231)
	—		—		—		—		—		—
	(75,427,618)		(125,994,200)		3,233,329		635,984		(14,270,305)		(17,288,727)
	(89,104,175)		(88,155,097)		3,124,987		634,173		(17,706,289)		(9,294,581)

	687,747,541		775,902,638		634,173		—		168,581,522		177,876,103
$	598,643,366	$	687,747,541	$	3,759,160	$	634,173	$	150,875,233	$	168,581,522

147



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		SAM Conservative Balanced Portfolio Class 2 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	46,338	$	(139)
	Total realized gains (losses) on investments		103,988		(1)
	Change in net unrealized appreciation or depreciation of investments		(233,687)		(1,863)
	Net gains (losses) from investments		(83,361)		(2,003)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(83,361)		(2,003)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		2,760,536		555,186
	Administration charges		(2,797)		(24)
	Contingent sales charges		(455)		—
	Contract terminations		(41,814)		—
	Death benefit payments		(585)		—
	Flexible withdrawal option payments		—		—
	Transfers to other contracts		(182,671)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			2,532,214		555,162
Total increase (decrease)			2,448,853		553,159

Net assets at beginning of period			553,159		—
Net assets at end of period		$	3,002,012	$	553,159


See accompanying notes.

148












SAM Conservative Growth Portfolio Class 1 Division				SAM Conservative Growth Portfolio Class 2 Division				SAM Flexible Income Portfolio Class 1 Division




2015		2014		2015		2014		2015		2014


$	815,127	$	334,889	$	57,878	$	(280)	$	3,842,785	$	3,993,760
	9,839,282		14,937,808		304,267		—		6,275,169		15,166,292
	(13,344,263)		(9,886,503)		(572,909)		(687)		(15,012,560)		(11,000,369)
	(2,689,854)		5,386,194		(210,764)		(967)		(4,894,606)		8,159,683

	—		—		—		—		—		—

	(2,689,854)		5,386,194		(210,764)		(967)		(4,894,606)		8,159,683


	18,126,551		19,065,877		5,570,624		459,694		24,992,192		30,551,547
	(14,810)		(15,131)		(7,919)		(46)		(372,349)		(443,286)
	(53,596)		(50,966)		(254)		—		(106,058)		(97,156)
	(7,747,125)		(6,746,140)		(23,362)		—		(15,162,620)		(14,457,804)
	(601,397)		(241,358)		(39,701)		—		(2,005,147)		(2,027,725)
	(829,477)		(668,476)		(12,763)		—		(4,139,297)		(3,936,033)
	(6,989,428)		(4,614,487)		(184,260)		(28,316)		(12,902,231)		(18,150,196)
	—		—		—		—		—		—
	1,890,718		6,729,319		5,302,365		431,332		(9,695,510)		(8,560,653)
	(799,136)		12,115,513		5,091,601		430,365		(14,590,116)		(400,970)

	101,757,493		89,641,980		430,365		—		185,235,460		185,636,430
$	100,958,357	$	101,757,493	$	5,521,966	$	430,365	$	170,645,344	$	185,235,460

149



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		SAM Flexible Income Portfolio Class 2 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	84,382	$	(318)
	Total realized gains (losses) on investments		99,759		(1)
	Change in net unrealized appreciation or depreciation of investments		(331,837)		1,281
	Net gains (losses) from investments		(147,696)		962

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(147,696)		962

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		6,447,810		417,182
	Administration charges		(3,593)		(15)
	Contingent sales charges		(1,665)		—
	Contract terminations		(153,011)		—
	Death benefit payments		(1,173)		—
	Flexible withdrawal option payments		(93,579)		—
	Transfers to other contracts		(2,044,130)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			4,150,659		417,167
Total increase (decrease)			4,002,963		418,129

Net assets at beginning of period			418,129		—
Net assets at end of period		$	4,421,092	$	418,129


See accompanying notes.

150












SAM Strategic Growth Portfolio Class 1 Division				SAM Strategic Growth Portfolio Class 2 Division				Short-Term Income Class 1 Division




2015		2014		2015		2014		2015		2014


$	500,409	$	13,463	$	15,968	$	(473)	$	1,407,417	$	327,505
	7,225,423		12,334,413		93,791		(3)		534,051		997,364
	(9,852,418)		(8,132,619)		(183,660)		(1,140)		(2,714,781)		(890,451)
	(2,126,586)		4,215,257		(73,901)		(1,616)		(773,313)		434,418

	—		—		—		—		—		—

	(2,126,586)		4,215,257		(73,901)		(1,616)		(773,313)		434,418


	13,546,079		12,760,354		1,830,809		654,126		18,193,280		31,531,632
	(12,400)		(11,823)		(954)		(31)		(451,497)		(550,115)
	(39,721)		(33,416)		(640)		—		(95,995)		(135,202)
	(5,255,487)		(4,951,685)		(58,837)		—		(12,627,559)		(16,659,536)
	(154,270)		(133,544)		—		—		(1,214,866)		(957,367)
	(362,685)		(298,078)		(14,625)		—		(3,796,702)		(4,059,124)
	(4,794,550)		(3,229,092)		(655,616)		(28,352)		(22,332,953)		(31,209,003)
	—		—		—		—		—		—
	2,926,966		4,102,716		1,100,137		625,743		(22,326,292)		(22,038,715)
	800,380		8,317,973		1,026,236		624,127		(23,099,605)		(21,604,297)

	65,972,384		57,654,411		624,127		—		131,611,548		153,215,845
$	66,772,764	$	65,972,384	$	1,650,363	$	624,127	$	108,511,943	$	131,611,548

151



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Short-Term Income Class 2 Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	13,364	$	(51)
	Total realized gains (losses) on investments		(4,694)		—
	Change in net unrealized appreciation or depreciation of investments		(16,114)		(77)
	Net gains (losses) from investments		(7,444)		(128)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(7,444)		(128)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		1,175,305		93,765
	Administration charges		(791)		(8)
	Contingent sales charges		(64)		—
	Contract terminations		(5,926)		—
	Death benefit payments		—		—
	Flexible withdrawal option payments		(2,223)		—
	Transfers to other contracts		(477,740)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			688,561		93,757
Total increase (decrease)			681,117		93,629

Net assets at beginning of period			93,629		—
Net assets at end of period		$	774,746	$	93,629


(1) Commenced operations April 17, 2015. See accompanying notes.

152












SmallCap Blend Class 1 Division				SmallCap Blend Class 2 Division (1)		T. Rowe Price Blue Chip Growth Portfolio II Division




2015		2014		2015		2015		2014


$	(1,263,962)	$	(313,244)	$	(5,342)	$	(212,519)	$	(180,328)
	7,858,943		3,178,158		20,966		934,600		994,904
	(13,749,436)		(1,699,886)		(80,039)		456,116		49,729
	(7,154,455)		1,165,028		(64,415)		1,178,197		864,305

	—		—		—		—		—

	(7,154,455)		1,165,028		(64,415)		1,178,197		864,305


	110,159,536		4,816,866		900,333		6,962,887		3,421,556
	(107,433)		(5,073)		(714)		(23,065)		(26,832)
	(42,982)		(4,823)		(50)		(8,657)		(6,035)
	(9,480,406)		(3,694,446)		(4,580)		(976,660)		(582,701)
	(539,136)		(191,768)		—		(63,287)		(60,017)
	(1,340,187)		(374,693)		(15,360)		(150,007)		(129,539)
	(8,564,730)		(2,827,031)		(30,124)		(2,548,485)		(2,324,302)
	—		—		—		—		—
	90,084,662		(2,280,968)		849,505		3,192,726		292,130
	82,930,207		(1,115,940)		785,090		4,370,923		1,156,435

	33,528,364		34,644,304		—		12,612,679		11,456,244
$	116,458,571	$	33,528,364	$	785,090	$	16,983,602	$	12,612,679

153



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		T. Rowe Price Health Sciences Portfolio II Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(525,062)	$	(379,627)
	Total realized gains (losses) on investments		5,814,462		4,632,533
	Change in net unrealized appreciation or depreciation of investments		(2,151,210)		2,222,956
	Net gains (losses) from investments		3,138,190		6,475,862

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			3,138,190		6,475,862

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		13,496,896		11,371,091
	Administration charges		(15,884)		(16,773)
	Contingent sales charges		(29,482)		(14,216)
	Contract terminations		(3,326,062)		(1,372,608)
	Death benefit payments		(272,554)		(134,766)
	Flexible withdrawal option payments		(261,586)		(193,971)
	Transfers to other contracts		(7,433,937)		(7,400,018)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			2,157,391		2,238,739
Total increase (decrease)			5,295,581		8,714,601

Net assets at beginning of period			30,107,162		21,392,561
Net assets at end of period		$	35,402,743	$	30,107,162


(1) Commenced operations May 18, 2015. See accompanying notes.

154












Templeton Global Bond VIP Class 4 Division				Templeton Growth VIP Class 2 Division				The Merger Fund Division (1)




2015		2014		2015		2014		2015


$	36,764	$	(70)	$	17,068	$	5,052	$	—
	(6,152)		(1)		6,034		21,912		—
	(82,235)		(788)		(95,558)		(61,483)		—
	(51,623)		(859)		(72,456)		(34,519)		—

	—		—		—		—		—

	(51,623)		(859)		(72,456)		(34,519)		—


	1,158,444		68,416		51,714		52,531		—
	(501)		(3)		—		—		—
	(769)		—		(54)		(142)		—
	(86,222)		—		(47,158)		(76,572)		—
	—		—		—		(31,267)		—
	—		—		(10,344)		(12,689)		—
	(14,755)		—		(12,545)		(8,405)		—
	—		—		—		—		—
	1,056,197		68,413		(18,387)		(76,544)		—
	1,004,574		67,554		(90,843)		(111,063)		—

	67,554		—		960,023		1,071,086		—
$	1,072,128	$	67,554	$	869,180	$	960,023	$	—

155



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2015 and 2014, except as noted



		Van Eck Global Hard Assets Class S Division




		2015		2014
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(93,535)	$	(126,962)
	Total realized gains (losses) on investments		(526,299)		(449,127)
	Change in net unrealized appreciation or depreciation of investments		(1,919,469)		(1,185,645)
	Net gains (losses) from investments		(2,539,303)		(1,761,734)

Payment from affiliate			—		—

Net increase (decrease) in net assets resulting from operations			(2,539,303)		(1,761,734)

Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		2,415,914		3,163,554
	Administration charges		(480)		(574)
	Contingent sales charges		(2,588)		(4,814)
	Contract terminations		(325,524)		(612,679)
	Death benefit payments		(23,712)		(39,541)
	Flexible withdrawal option payments		(46,402)		(79,453)
	Transfers to other contracts		(1,437,952)		(2,462,866)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			579,256		(36,373)
Total increase (decrease)			(1,960,047)		(1,798,107)

Net assets at beginning of period			7,087,059		8,885,166
Net assets at end of period		$	5,127,012	$	7,087,059


See accompanying notes.

156

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015

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, 2015, 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

Income Account (10)

International Emerging Markets Account

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

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

157

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015

Principal Variable Contracts Funds, Inc. – Class 2 (1):

Bond & Mortgage Securities Account (10)

Diversified Balanced Account

Diversified Balanced Managed Volatility Account (5)

Diversified Growth Account

Diversified Growth Managed Volatility Account (5)

Diversified Income Account (3)

Diversified International Account (8)

Equity Income Account (8)

Government & High Quality Bond Account (8)

Income Account (10)

International Emerging Markets Account (10)

LargeCap Growth Account (8)

LargeCap Growth I Account (10)

LargeCap S&P 500 Index Account (10)

LargeCap Value Account (10)

Money Market Account (8)

Principal Capital Appreciation Account (8)

Principal LifeTime 2020 Account (10)

Principal LifeTime 2030 Account (10)

Principal LifeTime 2040 Account (10)

Principal LifeTime 2050 Account (10)

Real Estate Securities Account (8)

SmallCap Blend Account (9)

Short-Term Income Account (8)

Strategic Asset Management (“SAM”) Balanced Portfolio (8)

Strategic Asset Management (“SAM”) Conservative Balanced Portfolio (8)

Strategic Asset Management (“SAM”) Conservative Growth Portfolio (8)

Strategic Asset Management (“SAM”) Flexible Income Portfolio (8)

Strategic Asset Management (“SAM”) Strategic Growth Portfolio (8)

AllianceBernstein Variable Product Series Fund, Inc.:

Small Cap Growth Portfolio – Class A

Small/Mid Cap Value Portfolio – Class A (4)

Alps/Red Rocks Listed Private Equity – Class III (10)

American Century Investments®:

VP Capital Appreciation – Class I (6)

VP Income & Growth Fund – Class I

VP Inflation Protection Fund – Class II

VP MidCap Value Fund – Class II

VP Ultra® Fund – Class I

VP Ultra® Fund – Class II

VP Value Fund – Class II

158

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015

American Funds Insurance Series:

Asset Allocation Fund – Class 4 (10)

Blue Chip Income and Growth Fund – Class 4 (8)

Global Small Capitalization Fund – Class 2 (7)

Global Small Capitalization Fund – Class 4 (8)

High-Income Bond – Class 2 (7)

Managed Risk Asset Allocation Fund – Class P2 (8)

Managed Risk Growth Fund – Class P2 (8)

Managed Risk International Fund – Class P2 (8)

New World Fund – Class 2 (7)

New World Fund – Class 4 (8)

BlackRock:

Global Allocation – Class III (10)

iShares Alternative Strategies – Class III (10)

iShares Dynamic Allocation – Class III (10)

iShares Dynamic Fixed Income – Class III (10)

iShares Equity Appreciation – Class III (10)

Value Opportunities – Class III (10)

Calvert Investment:

VP EAFE International Index – Class F (8)

VP Russell 2000 Small Cap Index Portfolio – Class F (8)

VP S&P MidCap 400 Index Portfolio – Class F (8)

ClearBridge Variable Small Cap Growth Portfolio Class II (10)

Columbia Variable Portfolio:

Limited Duration Credit – Class 2 (10)

Small Cap Value – Class 2 (10)

Delaware Limited Term Diversified Income Series – Service Class (10)

Delaware Small Cap Value Series – Service Class (4)

Deutsche Funds:

Alternative Asset Allocation VIP – Class B (8) (11)

Equity 500 Index VIP – Class B2 (8) (12)

Small Mid Cap Value VIP – Class B (4) (13)

Dreyfus Investment Portfolios:

MidCap Stock – Service Shares (10)

Technology Growth Portfolio – Service Shares

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 (7)

Mid Cap Portfolio – Service Class 2

Overseas Portfolio – Service Class 2

Franklin Templeton Variable Insurance Products Trust:

Global Real Estate VIP Fund – Class 2 (8)

Rising Dividends VIP Fund – Class 4 (8)

Small Cap Value VIP Fund – Class 2

Templeton Global Bond VIP Fund – Class 4 (8)

Templeton Growth VIP Fund – Class 2

159

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015

Goldman Sachs Variable Insurance Trust:

Mid Cap Value Fund – Institutional Shares

Mid Cap Value Fund – Service Shares (8)

Multi-Strategy Alternatives Portfolio – Service Shares (10)

Small Cap Equity Insights Fund – Institutional Shares

Small Cap Equity Insights Fund – Service Shares (8)

Guggenheim Investments:

Floating Rate Strategies – Series F (8)

Global Managed Futures Strategy (8)

Long Short Equity Fund (8)

Macro Opportunities – Series M (8)

Multi-Hedge Strategies (8)

Invesco Variable Insurance Fund:

American Franchise – Series I Shares (2)

Balanced-Risk Allocation – Series II Shares (8)

Core Equity Fund – Series I Shares

Global Health Care Fund – Series I Shares

Global Health Care Fund – Series II Shares (8)

International Growth Fund – Series I Shares

International Growth Fund – Series II Shares (8)

MidCap Growth – Series I Shares (2)

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 (8)

MFS® Variable Insurance Trust:

International Value – Service Class (8)

New Discovery – Service Class (4)

Utilities Series – Service Class

Value Series – Service Class

Neuberger Berman Advisors Management Trust:

Large Cap Value Portfolio – Class I Shares

Mid-Cap Growth Portfolio – Class S Shares (10)

Socially Responsive Portfolio – Class I Shares

Oppenheimer Main Street Small Cap Fund®/VA - Service Shares (4)

PIMCO Variable Insurance Trust:

All Asset Portfolio Administrative Class

All Asset Portfolio Advisor Class (10)

Commodity Real Return Strategy M Class Division (10)

High Yield Portfolio Administrative Class

Low Duration Advisor Class Division (10)

Total Return Portfolio Administrative Class

Rydex Funds:

Basic Materials (10)

Commodities Strategy (8)

NASDAQ 100 (8)

160

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015

T. Rowe Price Equity Series, Inc.:

Blue Chip Growth Portfolio – II

Health Sciences Portfolio – II

The Merger Fund (10)

Van Eck VIP Trust:

Global Hard Assets Fund –Class S Shares

(1) Organized by Principal Life Insurance Company.


(2)	Commencement of operations, April 27, 2012.


(3)	Commencement of operations, May 21, 2012.


(4)	Commencement of operations, May 20, 2013.


(5)	Commencement of operations, December 2, 2013


(6)	Commencement of operations, April 24, 2014.


(7)	Commencement of operations, May 17, 2014.


(8)	Commencement of operations, November 10, 2014.


(9)	Commencement of operations, April 17, 2015.


(10)	Commencement of operations, May 18, 2015.

(11) Represented the operations of DWS Alternative Asset Allocation Class B Division until May 18, 2015.

(12) Represented the operations of DWS Equity 500 Index Class B2 Division until May 18, 2015.

(13) Represented the operations of DWS Small Mid Cap Value Class B Division until May 18, 2015.

Commencement of operations date is the date that the division became available to contractholders.

161

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015

During 2015, the following subaccounts were liquidated and subsequently reinvested:



Date	Liquidation Subaccount	Reinvested Subaccount	Transferred Assets
April 17, 2015	LargeCap Blend II Class 1 Division	Principal Capital Appreciation Class 1 Division	$	118,690,704
November 6, 2015	Neuberger Berman AMT Small-Cap Growth S Class Division	Neuberger Berman AMT Mid Cap Growth Portfolio S Class Division		3,087,692
April 17, 2015	SmallCap Growth II Class 1 Division	SmallCap Blend Class 1 Division		30,427,185
April 17, 2015	SmallCap Growth II Class 2 Division	SmallCap Blend Class 2 Division		6,829
April 17, 2015	SmallCap Value I Class 1 Division	SmallCap Blend Class 1 Division		72,971,660
April 17, 2015	SmallCap Value I Class 2 Division	SmallCap Blend Class 2 Division		30,106

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.

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, 2015. 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.

162

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015

Fair Value Measurements


•	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.

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.

163

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015

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.

Principal Lifetime Income Solutions^SM 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.

164

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015

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, 2015, 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 Fund, 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

165

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



		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 Value Account		0.60		0.55		0.50		0.45		0.40

Net Assets of Accounts

(in millions)

First $500

Next $500

Next $1 billion

Over $3 billion

First $500

Over $500

Principal Capital

LargeCap Growth

Appreciation

Account

0.68%

0.63%

0.61%

0.56%

0.51%

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%
Income Account	0.50%	0.45%



	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, 2016. The expense limit will reduce the Separate Account’s management and investment advisory fees by the following amounts:



LargeCap Growth Account I	0.016%

166

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 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, 2015 through December 31, 2015
	Class 1	Class 2	Expiration
Diversified Balanced Managed Volatility Account	N/A	0.31%	April 30, 2016
Diversified Growth Managed Volatility Account	N/A	0.31	April 30, 2016

The Manager has contractually agreed to limit Short-Term Income Account’s expenses by 0.01% through the period ended April 30, 2016.

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.

167

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015

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, 2015:



	2015
Division:	Purchases		Sales

AllianceBernstein Small Cap Growth Class A Division:
Principal Investment Plus Variable Annuity	$	1,443,718	$	853,858
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		41,664		405,074

AllianceBernstein Small/Mid Cap Value Class A Division:
The Principal Variable Annuity	$	144,263	$	86,270
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,363,109		417,779
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		285,030		221,463

Alps/Red Rocks Listed Private Equity Class III Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		24,773		99

American Century VP Capital Appreciation Class I Division:
Principal Investment Plus Variable Annuity	$	755,910	$	471,878
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		59,759		329,826

American Century VP Income & Growth Class I Division:
Principal Freedom Variable Annuity	$	402,781	$	429,193
Principal Freedom Variable Annuity 2		10,289		31,458
The Principal Variable Annuity		1,427,319		2,110,021
The Principal Variable Annuity with Purchase Payment Credit Rider		—		3,609

American Century VP Inflation Protection Class II Division:
Principal Investment Plus Variable Annuity	$	9,594,649	$	16,933,083
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		309,291		4,363,422
Principal Pivot Series Variable Annuity		28,610		11,068
Principal Pivot Series Variable Annuity with Liquidity Max Rider		29,364		4,492
The Principal Variable Annuity		66,970		1,243
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—

American Century VP MidCap Value Class II Division:
The Principal Variable Annuity	$	403,181	$	669,379
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		2,077,900		482,458
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		376,840		141,140

American Century VP Ultra Class I Division:
The Principal Variable Annuity	$	932,598	$	840,963
The Principal Variable Annuity with Purchase Payment Credit Rider		—		32,193

American Century VP Ultra Class II Division:
Principal Investment Plus Variable Annuity	$	8,536,645	$	12,259,318
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		402,155		3,625,746

168

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015
Division:	Purchases		Sales
American Century VP Value Class II Division:
The Principal Variable Annuity	$	1,054,770	$	3,040,205
The Principal Variable Annuity with Purchase Payment Credit Rider		181		61,551
Principal Pivot Series Variable Annuity		100,865		921
Principal Pivot Series Variable Annuity with Liquidity Max Rider		225,796		9,329

American Funds Insurance Series Asset Allocation Fund Class 4 Division:
Principal Pivot Series Variable Annuity	$	260,744	$	1,144
Principal Pivot Series Variable Annuity with Liquidity Max Rider		548,696		254

American Funds Insurance Series Blue Chip Income & Growth Fund Class 4 Division:
Principal Pivot Series Variable Annuity	$	387,682	$	2,334
Principal Pivot Series Variable Annuity with Liquidity Max Rider		623,429		74,523

American Funds Insurance Series Global Small Capitalization Fund Class 2 Division:
The Principal Variable Annuity	$	580,722	$	251,271
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		518,770		7,031
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		3,276		3,902

American Funds Insurance Series Global Small Capitalization Fund Class 4 Division:
Principal Pivot Series Variable Annuity	$	62,875	$	9,227
Principal Pivot Series Variable Annuity with Liquidity Max Rider		86,346		3,860

American Funds Insurance Series High-Income Bond Class 2 Division:
The Principal Variable Annuity	$	536,799	$	328,779
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	$	50,459	$	31,309
Principal Pivot Series Variable Annuity with Liquidity Max Rider		45,547		230

American Funds Insurance Series Managed Risk Growth Fund Class P2 Division:
Principal Pivot Series Variable Annuity	$	47,766	$	2,404
Principal Pivot Series Variable Annuity with Liquidity Max Rider		76,883		1,654

American Funds Insurance Series Managed Risk International Fund Class P2 Division:
Principal Pivot Series Variable Annuity	$	11,626	$	405
Principal Pivot Series Variable Annuity with Liquidity Max Rider		11,588		292

American Funds Insurance Series New World Fund Class 2 Division:
The Principal Variable Annuity	$	171,019	$	61,100
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		234,316		22,910
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		2,226		2,206

American Funds Insurance Series New World Fund Class 4 Division:
Principal Pivot Series Variable Annuity	$	216,438	$	11,984
Principal Pivot Series Variable Annuity with Liquidity Max Rider		180,754		7,454

169

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015
Division:	Purchases		Sales
Balanced Class 1 Division:
Personal Variable	$	93,216	$	25,792
Premier Variable		904,905		1,355,525
The Principal Variable Annuity		2,968,374		4,921,527
The Principal Variable Annuity with Purchase Payment Credit Rider		—		55,776

BlackRock Global Allocation Class III Division:
The Principal Variable Annuity	$	64,304	$	332
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		432,335		6,469
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		9,197		—
Principal Pivot Series Variable Annuity		4,324		190
Principal Pivot Series Variable Annuity with Liquidity Max Rider		59,338		—

BlackRock iShares Alternative Strategies Class III Division:
The Principal Variable Annuity	$	36,731	$	59
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		168,022		87,243
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		11,600		—
Principal Pivot Series Variable Annuity		—		22
Principal Pivot Series Variable Annuity with Liquidity Max Rider		5,199		—

BlackRock iShares Dynamic Allocation Class III Division:
The Principal Variable Annuity	$	—	$	—
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		28,795		184
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		33,843		—
Principal Pivot Series Variable Annuity		—		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—

BlackRock iShares Dynamic Fixed Income Class III Division:
The Principal Variable Annuity	$	36,292	$	14,497
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		92,908		1,404
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—
Principal Pivot Series Variable Annuity		—		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		617		11

BlackRock iShares Equity Appreciation Class III Division:
The Principal Variable Annuity	$	3,301	$	19
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		69,136		315
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		40,481		—
Principal Pivot Series Variable Annuity		—		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		5,794		34

BlackRock Value Opportunities Class III Division:
Principal Pivot Series Variable Annuity	$	—	$	2
Principal Pivot Series Variable Annuity with Liquidity Max Rider		903		—

170

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015
Division:	Purchases		Sales
Bond & Mortgage Securities Class 1 Division:
Personal Variable	$	27,141	$	38,236
Premier Variable		704,216		1,418,559
Principal Freedom Variable Annuity		342,237		827,939
Principal Freedom Variable Annuity 2		19,471		43,469
The Principal Variable Annuity		4,712,325		13,261,544
The Principal Variable Annuity with Purchase Payment Credit Rider		4,755		249,487
Principal Investment Plus Variable Annuity		13,967,036		23,587,422
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		3,222,013		7,548,985

Bond & Mortgage Securities Class 2 Division:
Principal Pivot Series Variable Annuity	$	20,256	$	20,114
Principal Pivot Series Variable Annuity with Liquidity Max Rider		19,409		316

Calvert EAFE International Index Class F Division:
Principal Pivot Series Variable Annuity	$	3,900	$	66
Principal Pivot Series Variable Annuity with Liquidity Max Rider		6,496		135

Calvert Russell 2000 Small Cap Index Class F Division:
Principal Pivot Series Variable Annuity	$	75,584	$	3,843
Principal Pivot Series Variable Annuity with Liquidity Max Rider		22,362		1,622

Calvert S&P MidCap 400 Index Class F Division:
Principal Pivot Series Variable Annuity	$	278,298	$	9,860
Principal Pivot Series Variable Annuity with Liquidity Max Rider		270,883		51,651

ClearBridge Small Cap Growth Series II Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		9,106		54

Columbia Limited Duration Credit Class 2 Division:
The Principal Variable Annuity	$	54,350	$	1,231
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		72,589		1,647
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		8,090		—
Principal Pivot Series Variable Annuity		—		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		11,239		340

Columbia Small Cap Value Class 2 Division:
Principal Pivot Series Variable Annuity	$	1,083	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		85,164		1,541

Delaware Limited Term Diversified Income Service Class Division:
The Principal Variable Annuity	$	69,319	$	294
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		137,257		3,284
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		13,365		—
Principal Pivot Series Variable Annuity		—		55
Principal Pivot Series Variable Annuity with Liquidity Max Rider		11,665		—

171



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015
Division:	Purchases		Sales
Delaware Small Cap Value Service Class Division:
The Principal Variable Annuity	$	24,615	$	34,367
The Principal Variable Annuity with Purchase Payment Credit Rider		—		1,722
Principal Investment Plus Variable Annuity		523,659		225,556
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		158,841		9,639

Deutsche Alternative Asset Allocation Class B Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		43,087		1,007

Deutsche Equity 500 Index Class B2 Division:
Principal Pivot Series Variable Annuity	$	298,800	$	8,254
Principal Pivot Series Variable Annuity with Liquidity Max Rider		395,949		35,144

Deutsche Small Mid Cap Value Class B Division:
The Principal Variable Annuity	$	29,707	$	24,888
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		401,477		107,138
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		21,446		3,137
Principal Pivot Series Variable Annuity		18,526		325
Principal Pivot Series Variable Annuity with Liquidity Max Rider		99,834		3,468

Diversified Balanced Class 2 Division:
Principal Investment Plus Variable Annuity	$	154,479,687	$	118,225,094
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		14,841,087		8,632,702
Principal Lifetime Income Solutions		932,294		2,921,324
Principal Pivot Series Variable Annuity		—		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—

Diversified Balanced Managed Volatility Class 2 Division:
The Principal Variable Annuity	$	6,998	$	23
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		66,974,309		22,741,506
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		3,846,881		1,262,585
Principal Lifetime Income Solutions		11,672,407		2,633,244
Principal Pivot Series Variable Annuity		170,843		568
Principal Pivot Series Variable Annuity with Liquidity Max Rider		309,842		66,575

Diversified Growth Class 2 Division:
Principal Investment Plus Variable Annuity	$	642,720,696	$	261,773,720
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		34,583,216		23,449,077
Principal Lifetime Income Solutions		1,587,013		2,793,880
Principal Pivot Series Variable Annuity		—		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—

Diversified Growth Managed Volatility Class 2 Division:
The Principal Variable Annuity	$	—	$	—
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		114,703,352		25,632,071
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		10,385,434		1,334,786
Principal Lifetime Income Solutions		9,744,388		1,728,367
Principal Pivot Series Variable Annuity		285,633		3,946
Principal Pivot Series Variable Annuity with Liquidity Max Rider		31,381		2,023

172



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015
Division:	Purchases		Sales
Diversified Income Class 2 Division:
Principal Investment Plus Variable Annuity	$	81,226,231	$	48,288,717
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		3,608,167		3,658,809
Principal Lifetime Income Solutions		970,669		995,922

Diversified International Class 1 Division:
Personal Variable	$	41,505	$	70,248
Premier Variable		975,630		1,409,834
Principal Freedom Variable Annuity		289,516		331,162
Principal Freedom Variable Annuity 2		28,728		113,323
The Principal Variable Annuity		6,693,146		15,668,016
The Principal Variable Annuity with Purchase Payment Credit Rider		2,439		360,225
Principal Investment Plus Variable Annuity		9,644,893		10,464,192
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		699,392		4,349,411

Diversified International Class 2 Division:
Principal Pivot Series Variable Annuity	$	126,252	$	15,336
Principal Pivot Series Variable Annuity with Liquidity Max Rider		101,331		10,384

Dreyfus IP MidCap Stock Service Shares Division:
Principal Pivot Series Variable Annuity	$	19,788	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		25,181		1,189

Dreyfus Investment Portfolio Technology Growth Service Shares Division:
Principal Investment Plus Variable Annuity	$	2,322,853	$	811,999
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		231,839		326,366

Equity Income Class 1 Division:
Premier Variable	$	95,159	$	83,112
The Principal Variable Annuity		3,496,140		9,962,393
The Principal Variable Annuity with Purchase Payment Credit Rider		188		177,145
Principal Investment Plus Variable Annuity		26,899,596		44,197,750
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,475,052		14,480,407

Equity Income Class 2 Division:
Principal Pivot Series Variable Annuity	$	435,135	$	23,708
Principal Pivot Series Variable Annuity with Liquidity Max Rider		623,710		36,414

Fidelity VIP Contrafund Service Class Division:
The Principal Variable Annuity	$	6,206,194	$	7,663,453
The Principal Variable Annuity with Purchase Payment Credit Rider		—		238,576

Fidelity VIP Contrafund Service Class 2 Division:
Principal Investment Plus Variable Annuity	$	13,231,559	$	11,539,853
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,226,560		3,438,570
Principal Pivot Series Variable Annuity		594,844		37,393
Principal Pivot Series Variable Annuity with Liquidity Max Rider		728,937		80,901

Fidelity VIP Equity-Income Service Class 2 Division:
The Principal Variable Annuity	$	3,965,592	$	4,671,925
The Principal Variable Annuity with Purchase Payment Credit Rider		572		167,008
Principal Investment Plus Variable Annuity		3,120,918		2,020,860
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		321,541		777,072

173



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015
Division:	Purchases		Sales
Fidelity VIP Growth Service Class Division:
The Principal Variable Annuity	$	1,276,597	$	2,779,543
The Principal Variable Annuity with Purchase Payment Credit Rider		—		32,021

Fidelity VIP Growth Service Class 2 Division:
Principal Investment Plus Variable Annuity	$	2,777,563	$	1,744,932
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		452,605		1,288,949

Fidelity VIP Mid Cap Service Class Division:
Principal Freedom Variable Annuity 2	$	8,727	$	690

Fidelity VIP Mid Cap Service Class 2 Division:
Principal Investment Plus Variable Annuity	$	5,739,364	$	2,674,302
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		785,393		786,373
Principal Pivot Series Variable Annuity		544,697		60,047
Principal Pivot Series Variable Annuity with Liquidity Max Rider		425,948		56,533

Fidelity VIP Overseas Service Class 2 Division:
The Principal Variable Annuity	$	184,966	$	93,622
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		5,941,679		9,889,554
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		258,858		3,858,737
Principal Pivot Series Variable Annuity		63,115		3,501
Principal Pivot Series Variable Annuity with Liquidity Max Rider		64,115		5,408

Franklin Global Real Estate VIP Class 2 Division:
The Principal Variable Annuity	$	64,165	$	27,441
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		60,073		2,384
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		5,063		—
Principal Pivot Series Variable Annuity		211,453		6,834
Principal Pivot Series Variable Annuity with Liquidity Max Rider		194,327		23,258

Franklin Rising Dividends VIP Class 4 Division:
Principal Pivot Series Variable Annuity	$	182,161	$	6,133
Principal Pivot Series Variable Annuity with Liquidity Max Rider		304,684		24,942

Franklin Small Cap Value VIP Class 2 Division:
The Principal Variable Annuity	$	139,396	$	79,540
The Principal Variable Annuity with Purchase Payment Credit Rider		—		6,013
Principal Investment Plus Variable Annuity		796,855		676,898
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		353,691		86,633

Goldman Sachs VIT Mid Cap Value Institutional Shares Division:
The Principal Variable Annuity	$	136,744	$	76,254
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		3,809,574		3,402,446
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		316,063		1,642,696

Goldman Sachs VIT Mid Cap Value Service Shares Division:
Principal Pivot Series Variable Annuity	$	160,803	$	14,324
Principal Pivot Series Variable Annuity with Liquidity Max Rider		403,383		11,631

174



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015
Division:	Purchases		Sales
Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division:
Principal Pivot Series Variable Annuity	$	—	$	51
Principal Pivot Series Variable Annuity with Liquidity Max Rider		12,766		—

Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division:
The Principal Variable Annuity	$	138,688	$	123,939
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,683,045		1,273,625
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		53,115		298,350

Goldman Sachs VIT Small Cap Equity Insights Service Shares Division:
Principal Pivot Series Variable Annuity	$	57,479	$	4,549
Principal Pivot Series Variable Annuity with Liquidity Max Rider		70,494		88

Government & High Quality Bond Class 1 Division:
Pension Builder Plus	$	2,001	$	18,011
Pension Builder Plus – Rollover IRA		1,112		468
Personal Variable		23,742		53,838
Premier Variable		1,449,220		1,717,304
Principal Freedom Variable Annuity		287,466		351,164
Principal Freedom Variable Annuity 2		13,539		43,680
The Principal Variable Annuity		5,725,497		13,385,859
The Principal Variable Annuity with Purchase Payment Credit Rider		629		195,690
Principal Investment Plus Variable Annuity		8,805,731		14,457,009
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		576,663		3,018,505

Government & High Quality Bond Class 2 Division:
Principal Pivot Series Variable Annuity	$	876,913	$	49,877
Principal Pivot Series Variable Annuity with Liquidity Max Rider		211,066		19,951

Guggenheim Floating Rate Strategies Series F Division:
The Principal Variable Annuity	$	201,074	$	19,154
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		596,375		80,386
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		123,893		102,988
Principal Pivot Series Variable Annuity		67,161		39,180
Principal Pivot Series Variable Annuity with Liquidity Max Rider		57,058		3,891

Guggenheim Investments Global Managed Futures Strategy Division:
The Principal Variable Annuity	$	9,211	$	8,059
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		4,670		80
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—
Principal Pivot Series Variable Annuity		75,332		2,816
Principal Pivot Series Variable Annuity with Liquidity Max Rider		27,549		2,084

Guggenheim Investments Long Short Equity Division:
The Principal Variable Annuity	$	59,426	$	227
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		23,098		56
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		3,273		—
Principal Pivot Series Variable Annuity		6,680		7,201
Principal Pivot Series Variable Annuity with Liquidity Max Rider		56,247		6,640

175



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015
Division:	Purchases		Sales
Guggenheim Investments Multi-Hedge Strategies Division:
The Principal Variable Annuity	$	16,275	$	10,824
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		20,721		636
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—
Principal Pivot Series Variable Annuity		5,989		3,709
Principal Pivot Series Variable Annuity with Liquidity Max Rider		52,746		405

Guggenheim Macro Opportunities Series M Division:
The Principal Variable Annuity	$	80,955	$	214
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		29,562		171
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		5,391		—
Principal Pivot Series Variable Annuity		56,086		1,531
Principal Pivot Series Variable Annuity with Liquidity Max Rider		55,764		209

Income Class 1 Division:
The Principal Variable Annuity	$	77,310	$	1,472
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		522,010		15,329
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		16,123		—

Income Class 2 Division:
Principal Pivot Series Variable Annuity	$	11,106	$	10,896
Principal Pivot Series Variable Annuity with Liquidity Max Rider		18,017		1

International Emerging Markets Class 1 Division:
Premier Variable	$	71,699	$	45,147
The Principal Variable Annuity		2,737,690		5,292,467
The Principal Variable Annuity with Purchase Payment Credit Rider		905		265,895
Principal Investment Plus Variable Annuity		7,468,363		6,699,279
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		556,734		3,061,371

International Emerging Markets Class 2 Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		36,005		130

Invesco American Franchise Series I Division:
The Principal Variable Annuity	$	315,689	$	740,821
The Principal Variable Annuity with Purchase Payment Credit Rider		—		19,686

Invesco Balanced-Risk Allocation Series II Division:
Principal Pivot Series Variable Annuity	$	28,755	$	1,036
Principal Pivot Series Variable Annuity with Liquidity Max Rider		202,408		1,346

Invesco Core Equity Series I Division:
The Principal Variable Annuity	$	2,970,509	$	3,317,686
The Principal Variable Annuity with Purchase Payment Credit Rider		—		11,199

Invesco Global Health Care Series I Division:
The Principal Variable Annuity	$	3,323,058	$	2,971,760
The Principal Variable Annuity with Purchase Payment Credit Rider		—		75,444

176



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015
Division:	Purchases		Sales
Invesco Global Health Care Series II Division:
Principal Pivot Series Variable Annuity	$	298,520	$	20,117
Principal Pivot Series Variable Annuity with Liquidity Max Rider		692,980		115,610

Invesco International Growth Series I Division:
Principal Investment Plus Variable Annuity	$	2,234,869	$	2,028,899
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		239,526		302,763

Invesco International Growth Series II Division:
Principal Pivot Series Variable Annuity	$	226,620	$	11,731
Principal Pivot Series Variable Annuity with Liquidity Max Rider		218,635		5,158

Invesco Mid Cap Growth Series I Division:
The Principal Variable Annuity	$	574,287	$	388,574
The Principal Variable Annuity with Purchase Payment Credit Rider		—		53,862

Invesco Small Cap Equity Series I Division:
The Principal Variable Annuity	$	901,375	$	805,709
The Principal Variable Annuity with Purchase Payment Credit Rider		—		23,896
Principal Investment Plus Variable Annuity		1,857,531		1,104,969
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		386,920		414,378

Invesco Technology Series I Division:
The Principal Variable Annuity	$	716,433	$	895,042
The Principal Variable Annuity with Purchase Payment Credit Rider		—		25,034

Invesco Value Opportunities Series I Division:
Principal Investment Plus Variable Annuity	$	1,192,704	$	912,874
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		216,242		395,533

Janus Aspen Enterprise Service Shares Division:
The Principal Variable Annuity	$	1,542,931	$	1,462,176
The Principal Variable Annuity with Purchase Payment Credit Rider		—		76,700

Janus Aspen Flexible Bond Service Shares Division:
Principal Pivot Series Variable Annuity	$	274,127	$	9,309
Principal Pivot Series Variable Annuity with Liquidity Max Rider		495,602		14,447

LargeCap Growth Class 1 Division:
Personal Variable	$	64,436	$	73,923
Premier Variable		2,786,259		3,347,155
The Principal Variable Annuity		925,245		4,705,452
The Principal Variable Annuity with Purchase Payment Credit Rider		—		86,383
Principal Investment Plus Variable Annuity		1,860,211		3,010,171
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		217,213		1,063,692

LargeCap Growth Class 2 Division:
Principal Pivot Series Variable Annuity	$	281,350	$	52,933
Principal Pivot Series Variable Annuity with Liquidity Max Rider		207,026		1,415

177

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015
Division:	Purchases		Sales
LargeCap Growth I Class 1 Division:
Premier Variable	$	189,802	$	3,589
Principal Freedom Variable Annuity		421,374		127,553
Principal Freedom Variable Annuity 2		26,501		24,744
The Principal Variable Annuity		15,321,680		13,320,573
The Principal Variable Annuity with Purchase Payment Credit Rider		16,115		126,097
Principal Investment Plus Variable Annuity		5,865,719		2,970,562
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		391,819		980,704

LargeCap Growth I Class 2 Division:
Principal Pivot Series Variable Annuity	$	435,654	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		128,329		2,161

LargeCap S&P 500 Index Class 1 Division:
Premier Variable	$	210,579	$	53,447
Principal Freedom Variable Annuity		295,154		1,037,646
Principal Freedom Variable Annuity 2		17,407		56,914
The Principal Variable Annuity		3,357,432		9,399,820
The Principal Variable Annuity with Purchase Payment Credit Rider		3,245		188,978
Principal Investment Plus Variable Annuity		10,087,877		10,070,242
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		940,522		2,814,185

LargeCap S&P 500 Index Class 2 Division:
Principal Pivot Series Variable Annuity	$	32,347	$	12
Principal Pivot Series Variable Annuity with Liquidity Max Rider		123,347		2,316

LargeCap Value Class 1 Division:
Bankers Flexible Annuity	$	114,408	$	17,823
Pension Builder Plus		269,393		158,384
Pension Builder Plus – Rollover IRA		26,100		29,166
Personal Variable		75,088		22,532
Premier Variable		1,642,413		2,192,694
Principal Freedom Variable Annuity		437,581		253,959
Principal Freedom Variable Annuity 2		101,795		24,870
The Principal Variable Annuity		8,165,167		8,781,520
The Principal Variable Annuity with Purchase Payment Credit Rider		—		33,944
Principal Investment Plus Variable Annuity		5,012,773		3,819,636
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		553,965		1,665,282

LargeCap Value Class 2 Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		10,789		66

MFS VIT International Value Service Class Division:
The Principal Variable Annuity	$	408,520	$	8,326
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		627,011		62,802
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		43,512		3,534
Principal Pivot Series Variable Annuity		274,542		15,167
Principal Pivot Series Variable Annuity with Liquidity Max Rider		301,974		46,317

178

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015
Division:	Purchases		Sales
MFS VIT New Discovery Service Class Division:
The Principal Variable Annuity	$	362,206	$	117,942
The Principal Variable Annuity with Purchase Payment Credit Rider		—		6,277
Principal Investment Plus Variable Annuity		351,885		230,020
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		5,179		4,362
Principal Pivot Series Variable Annuity		—		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		22,607		1,114

MFS VIT Utilities Service Class Division:
Principal Investment Plus Variable Annuity	$	3,818,871	$	2,136,439
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		363,833		816,000
Principal Pivot Series Variable Annuity		208,569		32,016
Principal Pivot Series Variable Annuity with Liquidity Max Rider		709,679		87,576

MFS VIT Value Service Class Division:
Principal Investment Plus Variable Annuity	$	1,252,598	$	770,297
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		216,245		244,019

MidCap Class 1 Division:
Personal Variable	$	187,020	$	119,187
Premier Variable		2,370,107		2,798,642
Principal Freedom Variable Annuity		1,198,894		921,381
Principal Freedom Variable Annuity 2		135,039		43,863
The Principal Variable Annuity		30,036,828		34,039,306
The Principal Variable Annuity with Purchase Payment Credit Rider		—		772,236
Principal Investment Plus Variable Annuity		27,630,282		31,366,561
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,550,827		9,726,178

Money Market Class 1 Division:
Pension Builder Plus	$	1	$	17,578
Pension Builder Plus – Rollover IRA		—		—
Personal Variable		96,230		68,309
Premier Variable		4,521,294		5,020,760
Principal Freedom Variable Annuity		49,015		364,099
Principal Freedom Variable Annuity 2		24,816		14,528
The Principal Variable Annuity		7,550,794		12,199,662
The Principal Variable Annuity with Purchase Payment Credit Rider		211,042		249,900
Principal Investment Plus Variable Annuity		39,681,647		39,683,023
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		7,176,111		7,418,680
Principal Lifetime Income Solutions		—		124,743

Money Market Class 2 Division:
Principal Pivot Series Variable Annuity	$	1,681,947	$	1,501,488
Principal Pivot Series Variable Annuity with Liquidity Max Rider		5,808,041		4,824,740

Neuberger Berman AMT Large Cap Value I Class Division:
Principal Investment Plus Variable Annuity	$	943,608	$	901,970
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		17,440		298,420

Neuberger Berman AMT Mid-Cap Growth Portfolio S Class Division:
Principal Investment Plus Variable Annuity	$	2,674,076	$	68,967
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		272,017		55,555
Principal Pivot Series Variable Annuity		30,777		11,530
Principal Pivot Series Variable Annuity with Liquidity Max Rider		28,963		10

179



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015

	2015
Division:	Purchases		Sales
Neuberger Berman AMT Socially Responsive I Class Division:
Principal Investment Plus Variable Annuity	$	1,239,817	$	1,317,921
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		46,678		442,003

Oppenheimer Main Street Small Cap Service Shares Division:
The Principal Variable Annuity	$	312,150	$	265,886
The Principal Variable Annuity with Purchase Payment Credit Rider		—		1,800

PIMCO All Asset Administrative Class Division:
Principal Investment Plus Variable Annuity	$	677,391	$	992,269
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		63,428		236,564

PIMCO All Asset Advisor Class Division:
Principal Pivot Series Variable Annuity	$	5,675	$	5,605
Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—

PIMCO Commodity Real Return Strategy M Class Division:
Principal Pivot Series Variable Annuity	$	2,970	$	56
Principal Pivot Series Variable Annuity with Liquidity Max Rider		11,330		—

PIMCO High Yield Administrative Class Division:
Principal Investment Plus Variable Annuity	$	4,330,413	$	3,555,296
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		263,892		811,093
Principal Pivot Series Variable Annuity		361,510		6,272
Principal Pivot Series Variable Annuity with Liquidity Max Rider		498,556		51,407

PIMCO Low Duration Advisor Class Division:
The Principal Variable Annuity	$	2,691	$	1,002
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		342,542		509
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		4,724		5,183
Principal Pivot Series Variable Annuity		11,641		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		13,537		186

PIMCO Total Return Administrative Class Division:
Principal Investment Plus Variable Annuity	$	4,937,453	$	5,389,995
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		328,393		933,749
Principal Pivot Series Variable Annuity		279,751		3,797
Principal Pivot Series Variable Annuity with Liquidity Max Rider		269,550		18,350

Principal Capital Appreciation Class 1 Division:
Principal Freedom Variable Annuity 2	$	860	$	4,224
The Principal Variable Annuity		41,631,362		4,952,512
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		75,753,433		15,088,491
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		8,285,142		5,018,434

Principal Capital Appreciation Class 2 Division:
Principal Pivot Series Variable Annuity	$	135,860	$	23,466
Principal Pivot Series Variable Annuity with Liquidity Max Rider		359,772		20,558

180

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015
Division:	Purchases		Sales
Principal LifeTime Strategic Income Class 1 Division:
Principal Freedom Variable Annuity 2	$	3,197	$	619,044
The Principal Variable Annuity		345,304		1,231,203
The Principal Variable Annuity with Purchase Payment Credit Rider		—		52,863
Principal Investment Plus Variable Annuity		1,535,075		3,427,954
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		30,718		709,576

Principal LifeTime 2010 Class 1 Division:
Principal Freedom Variable Annuity 2	$	34,866	$	404,164
The Principal Variable Annuity		131,712		406,439
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		2,639,209		5,681,149
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		228,938		800,799

Principal LifeTime 2020 Class 1 Division:
Principal Freedom Variable Annuity 2	$	410,482	$	438,112
The Principal Variable Annuity		542,828		797,217
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		21,297,060		27,222,311
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		911,085		10,630,341

Principal LifeTime 2020 Class 2 Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		17,409		113

Principal LifeTime 2030 Class 1 Division:
Principal Freedom Variable Annuity 2	$	181,539	$	407,741
The Principal Variable Annuity		539,790		497,687
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		10,517,889		8,078,588
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		644,996		2,183,742

Principal LifeTime 2030 Class 2 Division:
Principal Pivot Series Variable Annuity	$	518	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		17,666		1,071

Principal LifeTime 2040 Class 1 Division:
Principal Freedom Variable Annuity 2	$	22,166	$	80,937
The Principal Variable Annuity		351,313		58,655
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,810,946		1,585,173
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		183,149		480,849

Principal LifeTime 2040 Class 2 Division:
Principal Pivot Series Variable Annuity	$	500	$	1
Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—

Principal LifeTime 2050 Class 1 Division:
Principal Freedom Variable Annuity 2	$	12,469	$	1,623
The Principal Variable Annuity		28,071		123,222
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		2,812,267		1,382,177
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		52,474		456,283

181



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015
Division:	Purchases		Sales
Principal LifeTime 2050 Class 2 Division:
Principal Pivot Series Variable Annuity	$	28,700	$	166
Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—

Real Estate Securities Class 1 Division:
Premier Variable	$	140,970	$	122,769
Principal Freedom Variable Annuity 2		16,712		36,687
The Principal Variable Annuity		5,382,306		11,547,129
The Principal Variable Annuity with Purchase Payment Credit Rider		—		269,491
Principal Investment Plus Variable Annuity		10,192,104		8,292,652
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,398,115		2,923,710

Real Estate Securities Class 2 Division:
Principal Pivot Series Variable Annuity	$	836,760	$	119,122
Principal Pivot Series Variable Annuity with Liquidity Max Rider		960,356		111,060

Rydex Basic Materials Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—

Rydex Commodities Strategy Division:
The Principal Variable Annuity	$	26,612	$	61
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		53,117		240
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—
Principal Pivot Series Variable Annuity		4,324		1,229
Principal Pivot Series Variable Annuity with Liquidity Max Rider		4,409		154

Rydex NASDAQ 100 Division:
Principal Pivot Series Variable Annuity	$	181,203	$	5,909
Principal Pivot Series Variable Annuity with Liquidity Max Rider		430,475		44,335

SAM Balanced Portfolio Class 1 Division:
Premier Variable	$	186,985	$	46,365
Principal Freedom Variable Annuity 2		606,995		224,488
The Principal Variable Annuity		12,118,754		12,271,112
The Principal Variable Annuity with Purchase Payment Credit Rider		—		432,943
Principal Investment Plus Variable Annuity		90,289,583		96,405,945
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		6,765,380		18,373,003

SAM Balanced Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	$	2,884,350	$	1,181,074
Principal Pivot Series Variable Annuity with Liquidity Max Rider		2,057,096		257,068

SAM Conservative Balanced Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	$	97,240	$	279,111
The Principal Variable Annuity		4,015,720		3,408,888
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		20,362,777		23,292,957
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		4,329,934		5,832,981

SAM Conservative Balanced Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	$	1,530,751	$	69,976
Principal Pivot Series Variable Annuity with Liquidity Max Rider		1,407,928		181,431

182



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015
Division:	Purchases		Sales
SAM Conservative Growth Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	$	217,574	$	222,126
The Principal Variable Annuity		3,655,823		3,133,855
The Principal Variable Annuity with Purchase Payment Credit Rider		154,522		223,089
Principal Investment Plus Variable Annuity		20,034,117		9,711,690
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		3,039,372		4,470,741

SAM Conservative Growth Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	$	4,777,530	$	185,552
Principal Pivot Series Variable Annuity with Liquidity Max Rider		1,213,092		125,668

SAM Flexible Income Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	$	246,362	$	82,906
The Principal Variable Annuity		5,265,373		7,235,686
The Principal Variable Annuity with Purchase Payment Credit Rider		—		77,176
Principal Investment Plus Variable Annuity		28,282,379		25,094,423
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		2,052,432		4,826,539

SAM Flexible Income Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	$	3,469,290	$	2,055,882
Principal Pivot Series Variable Annuity with Liquidity Max Rider		3,191,860		280,749

SAM Strategic Growth Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	$	90,452	$	23,761
The Principal Variable Annuity		1,282,571		1,511,000
The Principal Variable Annuity with Purchase Payment Credit Rider		—		10,639
Principal Investment Plus Variable Annuity		14,322,895		6,531,882
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		4,343,709		3,557,095

SAM Strategic Growth Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	$	1,570,995	$	698,303
Principal Pivot Series Variable Annuity with Liquidity Max Rider		406,660		47,918

Short-Term Income Class 1 Division:
Principal Freedom Variable Annuity	$	87,709	$	185,282
Principal Freedom Variable Annuity 2		2,271		14,910
The Principal Variable Annuity		2,420,637		4,678,138
The Principal Variable Annuity with Purchase Payment Credit Rider		423		36,001
Principal Investment Plus Variable Annuity		17,888,791		30,185,881
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		891,685		7,110,180

Short-Term Income Class 2 Division:
Principal Pivot Series Variable Annuity	$	801,139	$	477,843
Principal Pivot Series Variable Annuity with Liquidity Max Rider		394,819		16,190

SmallCap Blend Class 1 Division:
Premier Variable	$	503,727	$	39,476
Principal Freedom Variable Annuity		1,348,022		516,625
Principal Freedom Variable Annuity 2		268,885		17,543
The Principal Variable Annuity		51,241,424		9,546,888
The Principal Variable Annuity with Purchase Payment Credit Rider		69,187		109,068
Principal Investment Plus Variable Annuity		54,003,527		8,346,386
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		6,727,648		2,842,526

183



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015
Division:	Purchases		Sales
SmallCap Blend Class 2 Division:
Principal Pivot Series Variable Annuity	$	694,955	$	29,098
Principal Pivot Series Variable Annuity with Liquidity Max Rider		228,511		27,532

T. Rowe Price Blue Chip Growth Portfolio II Division:
Principal Investment Plus Variable Annuity	$	6,090,806	$	3,014,821
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		872,081		967,859

T. Rowe Price Health Sciences Portfolio II Division:
Principal Investment Plus Variable Annuity	$	14,392,317	$	8,869,755
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,768,177		2,994,812

Templeton Global Bond VIP Class 4 Division:
The Principal Variable Annuity	$	33,326	$	319
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		325,807		85,753
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		9,703		—
Principal Pivot Series Variable Annuity		363,691		14,316
Principal Pivot Series Variable Annuity with Liquidity Max Rider		473,689		9,908

Templeton Growth VIP Class 2 Division:
Principal Freedom Variable Annuity	$	76,905	$	78,224

The Merger Fund Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—

Van Eck Global Hard Assets Class S Division:
The Principal Variable Annuity	$	371,216	$	457,843
The Principal Variable Annuity with Purchase Payment Credit Rider		—		1,988
Principal Investment Plus Variable Annuity		1,439,783		1,133,938
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		388,898		325,390
Principal Pivot Series Variable Annuity		192,465		5,193
Principal Pivot Series Variable Annuity with Liquidity Max Rider		25,587		7,875

184

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015

5. Changes in Units Outstanding

Transactions in units were as follows for each of the periods ended December 31:



	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
AllianceBernstein Small Cap Growth Class A Division:
Principal Investment Plus Variable Annuity	25,157	30,592	31,807	47,758
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	726	14,513	1,744	27,400

AllianceBernstein Small/Mid Cap Value Class A Division:
The Principal Variable Annuity	7,750	6,811	11,477	7,185
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	84,236	32,481	113,956	39,887
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	17,614	17,218	24,787	7,908

Alps/Red Rocks Listed Private Equity Class III Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	2,641	1	—	—

American Century VP Capital Appreciation Class I Division:
Principal Investment Plus Variable Annuity	52,558	39,919	230,626	31,775
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	4,155	27,902	74,933	32,480

American Century VP Income & Growth Class I Division:
Principal Freedom Variable Annuity	4,682	22,734	9,549	29,998
Principal Freedom Variable Annuity 2	19	1,875	3,953	478
The Principal Variable Annuity	20,639	116,918	24,011	126,769
The Principal Variable Annuity with Purchase Payment Credit Rider	—	200	78	6,454

American Century VP Inflation Protection Class II Division:
Principal Investment Plus Variable Annuity	656,289	1,272,897	933,410	1,508,391
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	21,156	328,008	77,157	687,048
Principal Pivot Series Variable Annuity	2,848	1,094	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	2,923	444	1,583	—
The Principal Variable Annuity	6,826	102	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—

American Century VP MidCap Value Class II Division:
The Principal Variable Annuity	16,836	34,501	33,670	30,094
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	20	4,345
Principal Investment Plus Variable Annuity	98,177	22,612	84,920	37,853
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	17,805	6,615	21,450	17,600

American Century VP Ultra Class I Division:
The Principal Variable Annuity	34,950	48,954	14,519	58,530
The Principal Variable Annuity with Purchase Payment Credit Rider	—	1,874	—	4,420

American Century VP Ultra Class II Division:
Principal Investment Plus Variable Annuity	228,575	622,696	369,714	804,296
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	10,768	184,165	37,632	381,737

185



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
American Century VP Value Class II Division:
The Principal Variable Annuity	34,982	135,436	79,127	233,617
The Principal Variable Annuity with Purchase Payment Credit Rider	6	2,742	720	26,366
Principal Pivot Series Variable Annuity	9,845	63	2,093	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	22,039	638	1,385	—

American Funds Insurance Series Asset Allocation Fund Class 4 Division:
Principal Pivot Series Variable Annuity	26,797	18	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	56,390	4	—	—

American Funds Insurance Series Blue Chip Income & Growth Fund Class 4 Division:
Principal Pivot Series Variable Annuity	34,215	218	7,327	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	55,021	6,963	2,798	—

American Funds Insurance Series Global Small Capitalization Fund Class 2 Division:
The Principal Variable Annuity	49,656	22,687	11,077	1,699
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	55,101	627	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	348	348	—	—

American Funds Insurance Series Global Small Capitalization Fund Class 4 Division:
Principal Pivot Series Variable Annuity	5,907	808	798	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	8,112	338	—	—

American Funds Insurance Series High-Income Bond Class 2 Division:
The Principal Variable Annuity	53,310	34,015	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	5,033	3,126	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	4,543	23	—	—

American Funds Insurance Series Managed Risk Growth Fund Class P2 Division:
Principal Pivot Series Variable Annuity	4,779	157	3,056	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	7,692	108	—	—

American Funds Insurance Series Managed Risk International Fund Class P2 Division:
Principal Pivot Series Variable Annuity	1,227	18	1,897	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,223	13	—	—

American Funds Insurance Series New World Fund Class 2 Division:
The Principal Variable Annuity	16,878	6,605	17,429	671
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	25,578	2,524	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	243	243	—	—

American Funds Insurance Series New World Fund Class 4 Division:
Principal Pivot Series Variable Annuity	22,842	1,156	5,772	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	19,076	719	—	—

186



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
Balanced Class 1 Division:
Personal Variable	13,625	7,120	12,099	33,836
Premier Variable	196,903	406,436	143,248	178,933
The Principal Variable Annuity	16,707	158,034	41,599	177,907
The Principal Variable Annuity with Purchase Payment Credit Rider	—	1,791	204	8,329

BlackRock Global Allocation Class III Division:
The Principal Variable Annuity	6,242	—	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	43,154	463	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	918	—	—	—
Principal Pivot Series Variable Annuity	433	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	5,942	—	—	—

BlackRock iShares Alternative Strategies Class III Division:
The Principal Variable Annuity	3,775	—	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	17,440	9,046	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,204	—	—	—
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	547	—	—	—

BlackRock iShares Dynamic Allocation Class III Division:
The Principal Variable Annuity	—	—	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	3,041	—	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	3,574	—	—	—
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	—	—	—	—

BlackRock iShares Dynamic Fixed Income Class III Division:
The Principal Variable Annuity	3,642	1,464	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	9,302	111	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	—	—	—	—
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	62	1	—	—

BlackRock iShares Equity Appreciation Class III Division:
The Principal Variable Annuity	340	—	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	7,494	—	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	4,388	—	—	—
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	615	1	—	—

BlackRock Value Opportunities Class III Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	92	—	—	—

187

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
Bond & Mortgage Securities Class 1 Division:
Personal Variable	7,427	13,621	9,341	28,745
Premier Variable	221,577	497,154	137,940	199,154
Principal Freedom Variable Annuity	9,070	43,355	40,860	60,236
Principal Freedom Variable Annuity 2	684	3,004	6,715	9,954
The Principal Variable Annuity	108,015	519,965	317,975	675,917
The Principal Variable Annuity with Purchase Payment Credit Rider	109	9,782	3,827	70,872
Principal Investment Plus Variable Annuity	504,168	971,570	739,215	1,089,990
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	116,305	310,944	76,856	509,568

Bond & Mortgage Securities Class 2 Division:
Principal Pivot Series Variable Annuity	2,033	2,033	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,948	32	—	—

Calvert EAFE International Index Class F Division:
Principal Pivot Series Variable Annuity	407	2	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	678	4	593	—

Calvert Russell 2000 Small Cap Index Class F Division:
Principal Pivot Series Variable Annuity	6,875	301	1,208	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	2,034	127	841	—

Calvert S&P MidCap 400 Index Class F Division:
Principal Pivot Series Variable Annuity	26,045	945	2,456	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	25,351	4,951	1,038	—

ClearBridge Small Cap Growth Series II Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	903	1	—	—

Columbia Limited Duration Credit Class 2 Division:
The Principal Variable Annuity	5,537	102	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	7,429	135	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	828	—	—	—
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,145	32	—	—

Columbia Small Cap Value Class 2 Division:
Principal Pivot Series Variable Annuity	105	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	8,265	107	—	—

Delaware Limited Term Diversified Income Service Class Division:
The Principal Variable Annuity	6,957	—	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	13,792	267	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,343	—	—	—
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,172	—	—	—

188

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
Delaware Small Cap Value Service Class Division:
The Principal Variable Annuity	1,765	2,913	3,420	1,690
The Principal Variable Annuity with Purchase Payment Credit Rider	—	146	167	442
Principal Investment Plus Variable Annuity	38,351	18,345	59,953	26,516
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	11,633	784	5,614	585

Deutsche Alternative Asset Allocation Class B Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	4,534	81	—	—

Deutsche Equity 500 Index Class B2 Division:
Principal Pivot Series Variable Annuity	27,681	678	1,704	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	36,681	2,887	4,079	—

Deutsche Small Mid Cap Value Class B Division:
The Principal Variable Annuity	2,233	2,013	2,295	17
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	28,829	7,958	32,430	1,124
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,540	233	6,467	699
Principal Pivot Series Variable Annuity	1,746	25	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	9,409	267	—	—

Diversified Balanced Class 2 Division:
Principal Investment Plus Variable Annuity	9,494,507	7,370,267	13,176,718	6,333,753
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	912,151	538,171	1,583,756	1,023,838
Principal Lifetime Income Solutions	17,579	172,601	82,089	142,995
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	—	—	—	—

Diversified Balanced Managed Volatility Class 2 Division:
The Principal Variable Annuity	731	—	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	6,185,575	2,050,668	6,414,941	342,414
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	355,288	113,851	442,869	50,954
Principal Lifetime Income Solutions	1,059,621	217,166	1,466,513	52,000
Principal Pivot Series Variable Annuity	16,562	53	743	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	30,037	6,216	—	—

Diversified Growth Class 2 Division:
Principal Investment Plus Variable Annuity	37,780,731	14,609,692	44,630,770	11,290,992
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	2,032,888	1,308,702	3,514,870	1,115,165
Principal Lifetime Income Solutions	47,710	149,441	91,547	189,499
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	—	—	—	—

189

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
Diversified Growth Managed Volatility Class 2 Division:
The Principal Variable Annuity	—	—	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	10,403,220	2,194,361	11,620,242	619,952
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	941,925	114,271	1,158,656	181,215
Principal Lifetime Income Solutions	853,835	128,843	1,880,856	55,399
Principal Pivot Series Variable Annuity	27,434	195	2,641	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	3,014	100	—	—

Diversified Income Class 2 Division:
Principal Investment Plus Variable Annuity	6,696,554	3,914,718	7,244,955	3,165,366
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	297,469	296,616	251,987	176,002
Principal Lifetime Income Solutions	72,265	75,702	192,860	73,862

Diversified International Class 1 Division:
Personal Variable	10,729	22,894	11,312	30,733
Premier Variable	278,980	434,646	71,509	200,863
Principal Freedom Variable Annuity	13,165	18,186	3,984	20,971
Principal Freedom Variable Annuity 2	1,427	8,477	6,771	11,591
The Principal Variable Annuity	156,441	517,331	242,883	754,308
The Principal Variable Annuity with Purchase Payment Credit Rider	57	11,894	3,670	59,705
Principal Investment Plus Variable Annuity	306,188	366,496	363,166	367,243
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	22,203	152,333	42,960	224,750

Diversified International Class 2 Division:
Principal Pivot Series Variable Annuity	12,529	1,496	2,773	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	10,056	1,013	—	—

Dreyfus IP MidCap Stock Service Shares Division:
Principal Pivot Series Variable Annuity	2,124	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	2,703	113	—	—

Dreyfus Investment Portfolio Technology Growth Service Shares Division:
Principal Investment Plus Variable Annuity	78,140	32,869	71,968	63,463
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	7,799	13,211	20,753	20,037

Equity Income Class 1 Division:
Premier Variable	47,744	42,235	39,296	50,758
The Principal Variable Annuity	148,701	630,153	283,778	944,386
The Principal Variable Annuity with Purchase Payment Credit Rider	8	11,205	3,025	59,782
Principal Investment Plus Variable Annuity	1,567,799	2,907,996	1,822,346	4,054,169
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	85,971	952,740	150,929	1,786,979

Equity Income Class 2 Division:
Principal Pivot Series Variable Annuity	41,604	2,049	5,846	1
Principal Pivot Series Variable Annuity with Liquidity Max Rider	59,634	3,147	2,088	—

Fidelity VIP Contrafund Service Class Division:
The Principal Variable Annuity	66,755	295,937	110,980	439,435
The Principal Variable Annuity with Purchase Payment Credit Rider	—	9,213	1,325	20,363

190

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
Fidelity VIP Contrafund Service Class 2 Division:
Principal Investment Plus Variable Annuity	366,992	481,110	389,788	511,310
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	34,020	143,358	33,117	201,867
Principal Pivot Series Variable Annuity	55,974	3,509	9,899	1
Principal Pivot Series Variable Annuity with Liquidity Max Rider	68,592	7,592	2,595	—

Fidelity VIP Equity-Income Service Class 2 Division:
The Principal Variable Annuity	55,428	249,363	70,388	297,369
The Principal Variable Annuity with Purchase Payment Credit Rider	8	8,914	2,059	23,779
Principal Investment Plus Variable Annuity	105,690	111,332	113,925	110,826
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	10,889	42,810	19,150	55,455

Fidelity VIP Growth Service Class Division:
The Principal Variable Annuity	52,037	169,961	53,615	257,201
The Principal Variable Annuity with Purchase Payment Credit Rider	—	1,958	33	6,949

Fidelity VIP Growth Service Class 2 Division:
Principal Investment Plus Variable Annuity	123,289	82,826	148,377	100,317
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	20,090	61,182	34,838	68,836

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	144,998	94,522	180,264	101,276
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	19,842	27,794	18,885	29,418
Principal Pivot Series Variable Annuity	50,751	5,673	14,188	1
Principal Pivot Series Variable Annuity with Liquidity Max Rider	39,687	5,341	1,364	—

Fidelity VIP Overseas Service Class 2 Division:
The Principal Variable Annuity	19,243	9,862	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	335,832	575,353	543,810	539,423
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	14,631	224,493	64,570	306,860
Principal Pivot Series Variable Annuity	6,375	323	155	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	6,476	499	295	—

Franklin Global Real Estate VIP Class 2 Division:
The Principal Variable Annuity	6,577	3,038	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	6,372	231	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	537	—	—	—
Principal Pivot Series Variable Annuity	19,101	573	1,516	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	17,554	1,950	2,418	—

Franklin Rising Dividends VIP Class 4 Division:
Principal Pivot Series Variable Annuity	16,314	524	989	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	27,287	2,131	5,916	—

191

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
Franklin Small Cap Value VIP Class 2 Division:
The Principal Variable Annuity	6,006	4,167	9,921	8,029
The Principal Variable Annuity with Purchase Payment Credit Rider	—	315	353	107
Principal Investment Plus Variable Annuity	25,632	34,621	53,173	46,097
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	11,377	4,431	8,437	11,652

Goldman Sachs VIT Mid Cap Value Institutional Shares Division:
The Principal Variable Annuity	5,064	2,999	5,805	1,608
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	114,397	139,669	205,487	172,073
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	9,491	67,432	19,336	129,616

Goldman Sachs VIT Mid Cap Value Service Shares Division:
Principal Pivot Series Variable Annuity	14,781	1,261	976	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	37,079	1,024	728	—

Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,306	—	—	—

Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division:
The Principal Variable Annuity	6,449	6,813	136	289
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	47,942	65,122	74,699	47,951
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,513	15,255	5,683	66,801

Goldman Sachs VIT Small Cap Equity Insights Service Shares Division:
Principal Pivot Series Variable Annuity	4,655	362	488	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	5,709	7	—	—

Government & High Quality Bond Class 1 Division:
Pension Builder Plus	—	5,128	—	12,053
Pension Builder Plus – Rollover IRA	—	38	—	39
Personal Variable	6,792	19,822	6,702	10,668
Premier Variable	486,722	610,326	143,540	208,680
Principal Freedom Variable Annuity	15,848	26,355	34,200	67,835
Principal Freedom Variable Annuity 2	432	3,338	4,662	9,544
The Principal Variable Annuity	273,217	1,028,584	571,823	1,585,012
The Principal Variable Annuity with Purchase Payment Credit Rider	30	15,037	6,529	109,802
Principal Investment Plus Variable Annuity	584,541	1,146,774	805,260	1,265,587
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	38,280	239,437	118,933	520,569

Government & High Quality Bond Class 2 Division:
Principal Pivot Series Variable Annuity	83,509	4,280	1,173	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	20,100	1,712	796	—

192

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
Guggenheim Floating Rate Strategies Series F Division:
The Principal Variable Annuity	20,139	1,855	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	59,429	8,077	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	12,346	10,348	—	—
Principal Pivot Series Variable Annuity	6,561	3,806	226	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	5,574	378	1,074	—

Guggenheim Investments Global Managed Futures Strategy Division:
The Principal Variable Annuity	862	862	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	487	6	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	—	—	—	—
Principal Pivot Series Variable Annuity	6,475	208	1,984	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	2,368	154	—	—

Guggenheim Investments Long Short Equity Division:
The Principal Variable Annuity	5,945	—	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	2,336	—	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	331	—	—	—
Principal Pivot Series Variable Annuity	631	629	3,580	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	5,313	580	524	—

Guggenheim Investments Multi-Hedge Strategies Division:
The Principal Variable Annuity	1,618	1,087	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	2,070	53	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	—	—	—	—
Principal Pivot Series Variable Annuity	574	311	409	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	5,055	34	358	—

Guggenheim Macro Opportunities Series M Division:
The Principal Variable Annuity	8,198	—	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	2,961	—	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	540	—	—	—
Principal Pivot Series Variable Annuity	5,398	66	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	5,367	9	—	—

Income Class 1 Division:
The Principal Variable Annuity	7,516	106	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	52,288	1,338	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,615	—	—	—

Income Class 2 Division:
Principal Pivot Series Variable Annuity	1,099	1,099	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,783	—	—	—

193



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
International Emerging Markets Class 1 Division:
Premier Variable	17,999	11,836	14,755	18,267
The Principal Variable Annuity	75,652	159,354	112,574	247,367
The Principal Variable Annuity with Purchase Payment Credit Rider	25	8,006	3,264	30,267
Principal Investment Plus Variable Annuity	228,920	211,714	237,683	215,155
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	17,065	96,747	28,257	114,896

International Emerging Markets Class 2 Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	4,257	1	—	—

Invesco American Franchise Series I Division:
The Principal Variable Annuity	20,333	46,476	16,164	78,933
The Principal Variable Annuity with Purchase Payment Credit Rider	—	1,235	14	1,180

Invesco Balanced-Risk Allocation Series II Division:
Principal Pivot Series Variable Annuity	2,510	20	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	17,668	26	—	—

Invesco Core Equity Series I Division:
The Principal Variable Annuity	49,263	197,601	80,693	316,964
The Principal Variable Annuity with Purchase Payment Credit Rider	—	667	80	859

Invesco Global Health Care Series I Division:
The Principal Variable Annuity	97,008	118,446	80,899	139,007
The Principal Variable Annuity with Purchase Payment Credit Rider	—	3,007	893	8,206

Invesco Global Health Care Series II Division:
Principal Pivot Series Variable Annuity	24,982	1,823	6,479	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	57,993	10,476	427	—

Invesco International Growth Series I Division:
Principal Investment Plus Variable Annuity	187,755	170,789	302,882	170,032
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	20,123	25,486	42,048	23,662

Invesco International Growth Series II Division:
Principal Pivot Series Variable Annuity	22,651	994	2,766	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	21,853	437	588	—

Invesco Mid Cap Growth Series I Division:
The Principal Variable Annuity	31,706	25,264	17,369	28,294
The Principal Variable Annuity with Purchase Payment Credit Rider	—	3,502	112	5,456

Invesco Small Cap Equity Series I Division:
The Principal Variable Annuity	16,236	33,481	11,239	61,481
The Principal Variable Annuity with Purchase Payment Credit Rider	—	993	2	1,774
Principal Investment Plus Variable Annuity	37,768	46,185	53,854	52,241
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	7,867	17,320	12,454	23,278

Invesco Technology Series I Division:
The Principal Variable Annuity	39,034	90,954	92,795	82,330
The Principal Variable Annuity with Purchase Payment Credit Rider	—	2,544	274	9,495

194



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
Invesco Value Opportunities Series I Division:
Principal Investment Plus Variable Annuity	54,836	60,434	38,007	57,523
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	9,942	26,185	6,060	28,076

Janus Aspen Enterprise Service Shares Division:
The Principal Variable Annuity	30,129	87,883	22,438	121,380
The Principal Variable Annuity with Purchase Payment Credit Rider	—	4,610	598	3,156

Janus Aspen Flexible Bond Service Shares Division:
Principal Pivot Series Variable Annuity	26,635	652	2,408	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	48,154	1,012	4,825	—

LargeCap Growth Class 1 Division:
Personal Variable	19,212	21,586	23,452	46,918
Premier Variable	803,054	965,194	933,973	1,047,935
The Principal Variable Annuity	29,166	141,736	36,529	198,939
The Principal Variable Annuity with Purchase Payment Credit Rider	—	2,602	381	5,289
Principal Investment Plus Variable Annuity	61,301	96,908	66,664	108,499
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	7,158	34,244	10,828	43,567

LargeCap Growth Class 2 Division:
Principal Pivot Series Variable Annuity	26,869	4,827	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	19,771	129	591	—

LargeCap Growth I Class 1 Division:
Premier Variable	50,233	636	20,383	44,086
Principal Freedom Variable Annuity	7,964	6,016	2,907	18,504
Principal Freedom Variable Annuity 2	—	1,338	3,918	615
The Principal Variable Annuity	38,031	213,177	61,644	293,976
The Principal Variable Annuity with Purchase Payment Credit Rider	40	2,018	452	9,400
Principal Investment Plus Variable Annuity	55,301	49,494	66,683	44,835
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	3,694	16,340	7,886	32,892

LargeCap Growth I Class 2 Division:
Principal Pivot Series Variable Annuity	37,961	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	11,182	4	—	—

LargeCap S&P 500 Index Class 1 Division:
Premier Variable	99,436	25,693	78,341	103,055
Principal Freedom Variable Annuity	4,135	56,356	13,646	64,426
Principal Freedom Variable Annuity 2	207	3,079	12,557	15,731
The Principal Variable Annuity	135,539	543,461	195,145	710,188
The Principal Variable Annuity with Purchase Payment Credit Rider	131	10,926	490	27,123
Principal Investment Plus Variable Annuity	567,611	606,694	561,507	475,443
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	52,920	169,544	69,822	237,196

LargeCap S&P 500 Index Class 2 Division:
Principal Pivot Series Variable Annuity	3,292	1	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	12,553	190	—	—

195

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
LargeCap Value Class 1 Division:
Bankers Flexible Annuity	—	264	—	3,653
Pension Builder Plus	—	13,155	50	15,269
Pension Builder Plus – Rollover IRA	—	3,049	—	9,806
Personal Variable	5,748	4,146	7,142	25,816
Premier Variable	172,805	415,958	72,897	242,157
Principal Freedom Variable Annuity	4,200	13,563	13,770	46,330
Principal Freedom Variable Annuity 2	3,594	1,393	11	1,753
The Principal Variable Annuity	31,000	204,380	47,045	282,621
The Principal Variable Annuity with Purchase Payment Credit Rider	—	790	295	9,483
Principal Investment Plus Variable Annuity	78,092	94,938	117,046	112,256
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	8,630	41,391	14,712	63,052

LargeCap Value Class 2 Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,084	1	—	—

MFS VIT International Value Service Class Division:
The Principal Variable Annuity	42,764	732	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	66,113	6,522	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	4,588	367	—	—
Principal Pivot Series Variable Annuity	25,590	1,411	5,858	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	28,147	4,309	354	—

MFS VIT New Discovery Service Class Division:
The Principal Variable Annuity	32,054	10,128	19,365	17,556
The Principal Variable Annuity with Purchase Payment Credit Rider	—	539	581	454
Principal Investment Plus Variable Annuity	29,354	19,933	43,307	8,570
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	432	378	3,681	3,425
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	2,407	108	—	—

MFS VIT Utilities Service Class Division:
Principal Investment Plus Variable Annuity	122,134	95,192	224,837	126,283
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	11,636	36,358	52,088	40,907
Principal Pivot Series Variable Annuity	19,468	3,234	11,274	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	66,242	8,846	3,748	—

MFS VIT Value Service Class Division:
Principal Investment Plus Variable Annuity	42,013	33,338	63,970	47,445
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	7,253	10,561	5,752	6,147

196

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
MidCap Class 1 Division:
Personal Variable	6,106	12,477	9,089	28,270
Premier Variable	167,449	291,062	43,072	141,811
Principal Freedom Variable Annuity	2,806	18,262	3,420	31,278
Principal Freedom Variable Annuity 2	2,145	1,509	5,029	8,615
The Principal Variable Annuity	71,681	370,527	106,360	540,716
The Principal Variable Annuity with Purchase Payment Credit Rider	—	8,406	2,020	29,262
Principal Investment Plus Variable Annuity	167,760	361,944	205,013	421,152
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	9,416	112,232	12,849	183,362

Money Market Class 1 Division:
Pension Builder Plus	—	7,700	—	657
Pension Builder Plus – Rollover IRA	—	—	—	—
Personal Variable	60,668	41,098	50,198	39,295
Premier Variable	2,707,080	2,995,908	2,793,612	2,260,325
Principal Freedom Variable Annuity	4,141	29,641	4,029	50,339
Principal Freedom Variable Annuity 2	2,421	1,207	290	4,280
The Principal Variable Annuity	565,733	893,130	755,485	1,096,247
The Principal Variable Annuity with Purchase Payment Credit Rider	15,812	18,295	(2,698)	48,870
Principal Investment Plus Variable Annuity	3,017,296	2,996,136	2,713,589	2,951,076
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	545,654	560,123	468,706	597,179
Principal Lifetime Income Solutions	—	9,295	23,121	13,826

Money Market Class 2 Division:
Principal Pivot Series Variable Annuity	169,779	151,276	29,505	7,703
Principal Pivot Series Variable Annuity with Liquidity Max Rider	586,275	486,096	—	—

Neuberger Berman AMT Large Cap Value I Class Division:
Principal Investment Plus Variable Annuity	31,057	47,441	52,753	53,559
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	574	15,696	3,183	38,382

Neuberger Berman AMT Mid-Cap Growth Portfolio S Class Division:
Principal Investment Plus Variable Annuity	266,732	6,726	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	27,133	5,418	—	—
Principal Pivot Series Variable Annuity	3,057	1,188	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	2,877	1	—	—

Neuberger Berman AMT Socially Responsive I Class Division:
Principal Investment Plus Variable Annuity	36,017	60,788	51,342	120,597
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,356	20,387	6,346	33,917

Oppenheimer Main Street Small Cap Service Shares Division:
The Principal Variable Annuity	16,684	20,682	36,352	17,036
The Principal Variable Annuity with Purchase Payment Credit Rider	—	140	197	473

PIMCO All Asset Administrative Class Division:
Principal Investment Plus Variable Annuity	37,934	68,857	105,927	69,340
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	3,552	16,416	4,820	20,839

PIMCO All Asset Advisor Class Division:
Principal Pivot Series Variable Annuity	623	623	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	—	—	—	—

197



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
PIMCO Commodity Real Return Strategy M Class Division:
Principal Pivot Series Variable Annuity	361	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,377	—	—	—

PIMCO High Yield Administrative Class Division:
Principal Investment Plus Variable Annuity	237,417	242,802	311,483	194,141
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	14,468	55,392	42,682	49,837
Principal Pivot Series Variable Annuity	34,398	567	197	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	47,438	4,648	1,823	—

PIMCO Low Duration Advisor Class Division:
The Principal Variable Annuity	268	101	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	33,935	46	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	468	468	—	—
Principal Pivot Series Variable Annuity	1,148	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,335	9	—	—

PIMCO Total Return Administrative Class Division:
Principal Investment Plus Variable Annuity	267,536	402,644	467,065	653,099
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	17,794	69,753	66,119	109,151
Principal Pivot Series Variable Annuity	26,083	305	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	25,132	1,474	3,500	—

Principal Capital Appreciation Class 1 Division:
Principal Freedom Variable Annuity 2	—	231	—	202
The Principal Variable Annuity	4,133,710	468,203	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	4,547,487	891,554	188,783	188,602
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	497,358	296,531	37,512	45,447

Principal Capital Appreciation Class 2 Division:
Principal Pivot Series Variable Annuity	12,615	2,001	18,647	1
Principal Pivot Series Variable Annuity with Liquidity Max Rider	33,406	1,753	—	—

Principal LifeTime Strategic Income Class 1 Division:
Principal Freedom Variable Annuity 2	—	47,874	—	5,534
The Principal Variable Annuity	18,939	85,663	30,044	45,858
The Principal Variable Annuity with Purchase Payment Credit Rider	—	3,678	3,678	43
Principal Investment Plus Variable Annuity	86,253	232,187	120,737	283,587
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,726	48,062	20,781	88,353

Principal LifeTime 2010 Class 1 Division:
Principal Freedom Variable Annuity 2	180	28,771	485	63,731
The Principal Variable Annuity	5,860	24,966	11,531	15,259
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	41
Principal Investment Plus Variable Annuity	136,296	349,184	193,043	306,577
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	11,823	49,220	14,913	142,138

198



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
Principal LifeTime 2020 Class 1 Division:
Principal Freedom Variable Annuity 2	6,548	26,773	8,309	24,697
The Principal Variable Annuity	11,042	42,948	22,058	104,753
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	39
Principal Investment Plus Variable Annuity	781,583	1,555,686	955,654	2,228,842
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	33,436	607,497	45,724	1,102,279

Principal LifeTime 2020 Class 2 Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,656	2	—	—

Principal LifeTime 2030 Class 1 Division:
Principal Freedom Variable Annuity 2	349	26,597	26,520	35,684
The Principal Variable Annuity	23,426	27,675	12,875	25,020
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	40
Principal Investment Plus Variable Annuity	389,686	433,395	215,217	298,170
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	23,897	117,152	39,815	72,247

Principal LifeTime 2030 Class 2 Division:
Principal Pivot Series Variable Annuity	53	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,809	105	—	—

Principal LifeTime 2040 Class 1 Division:
Principal Freedom Variable Annuity 2	340	5,188	892	630
The Principal Variable Annuity	17,646	2,860	13,635	7,199
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	39
Principal Investment Plus Variable Annuity	62,244	82,168	152,495	77,089
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	6,295	24,925	12,204	48,529

Principal LifeTime 2040 Class 2 Division:
Principal Pivot Series Variable Annuity	53	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	—	—	—	—

Principal LifeTime 2050 Class 1 Division:
Principal Freedom Variable Annuity 2	—	—	71	2,537
The Principal Variable Annuity	450	6,677	1,766	18,833
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	859
Principal Investment Plus Variable Annuity	128,410	72,910	73,861	41,245
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	2,396	24,069	5,803	26,779

Principal LifeTime 2050 Class 2 Division:
Principal Pivot Series Variable Annuity	2,735	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	—	—	—	—

Real Estate Securities Class 1 Division:
Premier Variable	25,484	24,229	41,489	21,416
Principal Freedom Variable Annuity 2	403	1,853	3,722	4,816
The Principal Variable Annuity	63,123	209,269	100,687	223,712
The Principal Variable Annuity with Purchase Payment Credit Rider	—	4,884	1,240	21,133
Principal Investment Plus Variable Annuity	165,065	154,093	181,581	153,534
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	22,643	54,328	40,022	62,774

199



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
Real Estate Securities Class 2 Division:
Principal Pivot Series Variable Annuity	70,612	9,987	14,613	1
Principal Pivot Series Variable Annuity with Liquidity Max Rider	81,042	9,311	1,275	—

Rydex Basic Materials Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	—	—	—	—

Rydex Commodities Strategy Division:
The Principal Variable Annuity	3,445	—	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	6,475	—	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	—	—	—	—
Principal Pivot Series Variable Annuity	715	176	962	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	729	22	645	—

Rydex NASDAQ 100 Division:
Principal Pivot Series Variable Annuity	15,954	528	9,463	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	37,901	3,962	—	—

SAM Balanced Portfolio Class 1 Division:
Premier Variable	79,716	21,550	96,495	112,375
Principal Freedom Variable Annuity 2	28,642	14,131	14,989	23,820
The Principal Variable Annuity	395,823	817,568	504,346	921,128
The Principal Variable Annuity with Purchase Payment Credit Rider	—	28,845	8,776	102,422
Principal Investment Plus Variable Annuity	2,439,123	6,402,911	2,124,034	9,622,213
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	182,763	1,220,264	363,384	1,612,112

SAM Balanced Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	267,622	113,523	54,571	2
Principal Pivot Series Variable Annuity with Liquidity Max Rider	190,866	24,709	8,597	—

SAM Conservative Balanced Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	6	18,501	365	23,916
The Principal Variable Annuity	188,290	228,842	218,060	305,326
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	27,522
Principal Investment Plus Variable Annuity	811,810	1,571,495	1,233,331	2,250,567
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	172,623	393,531	227,008	347,807

SAM Conservative Balanced Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	142,416	6,328	24,371	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	130,989	16,407	30,751	2

SAM Conservative Growth Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	5,531	14,592	9,398	1,575
The Principal Variable Annuity	175,951	213,986	147,622	244,524
The Principal Variable Annuity with Purchase Payment Credit Rider	7,437	15,233	203	26,752
Principal Investment Plus Variable Annuity	980,464	649,537	1,079,221	491,083
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	148,746	299,012	196,964	169,169

200



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions
SAM Conservative Growth Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	436,837	16,109	44,683	2,796
Principal Pivot Series Variable Annuity with Liquidity Max Rider	110,920	10,910	924	—

SAM Flexible Income Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	10,096	4,648	881	37,816
The Principal Variable Annuity	234,373	488,748	545,432	576,852
The Principal Variable Annuity with Purchase Payment Credit Rider	—	5,213	2,652	54,528
Principal Investment Plus Variable Annuity	1,460,756	1,698,660	1,539,032	1,757,754
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	106,006	326,712	138,645	440,493

SAM Flexible Income Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	333,199	200,163	2,034	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	306,554	27,334	39,690	1

SAM Strategic Growth Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	—	1,040	1,737	14,277
The Principal Variable Annuity	30,708	102,402	41,999	176,823
The Principal Variable Annuity with Purchase Payment Credit Rider	—	721	—	2,390
Principal Investment Plus Variable Annuity	742,229	440,904	657,215	253,966
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	225,096	240,105	273,867	214,514

SAM Strategic Growth Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	142,153	67,444	63,135	2,782
Principal Pivot Series Variable Annuity with Liquidity Max Rider	36,797	4,628	1,514	—

Short-Term Income Class 1 Division:
Principal Freedom Variable Annuity	4,057	14,420	16,758	41,521
Principal Freedom Variable Annuity 2	39	1,204	208	1,034
The Principal Variable Annuity	165,988	381,773	366,408	647,792
The Principal Variable Annuity with Purchase Payment Credit Rider	29	2,938	1,483	47,054
Principal Investment Plus Variable Annuity	1,335,934	2,523,047	2,174,462	2,910,705
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	66,591	594,295	154,153	992,944

Short-Term Income Class 2 Division:
Principal Pivot Series Variable Annuity	78,588	47,077	1,445	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	38,730	1,595	7,919	1

SmallCap Blend Class 1 Division:
Premier Variable	396,841	201,098	35,154	23,062
Principal Freedom Variable Annuity	42,485	17,349	4,050	16,455
Principal Freedom Variable Annuity 2	14,645	908	2,320	4,941
The Principal Variable Annuity	2,228,528	409,647	74,942	291,929
The Principal Variable Annuity with Purchase Payment Credit Rider	3,009	4,680	1,624	15,549
Principal Investment Plus Variable Annuity	2,419,963	375,559	139,739	15,014
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	301,474	127,904	17,013	7,535

SmallCap Blend Class 2 Division:
Principal Pivot Series Variable Annuity	68,595	2,658	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	22,555	2,515	—	—

201

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



	2015		2014
Division:	Purchases	Redemptions	Purchases	Redemptions

T. Rowe Price Blue Chip Growth Portfolio II Division:
Principal Investment Plus Variable Annuity	261,608	124,937	124,080	113,695
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	37,457	40,109	44,408	39,545

T. Rowe Price Health Sciences Portfolio II Division:
Principal Investment Plus Variable Annuity	240,103	171,933	233,425	158,823
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	29,498	58,052	66,692	87,079

Templeton Global Bond VIP Class 4 Division:
The Principal Variable Annuity	3,394	17	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	34,015	9,058	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,013	—	—	—
Principal Pivot Series Variable Annuity	35,444	1,114	1,520	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	46,164	771	5,412	—

Templeton Growth VIP Class 2 Division:
Principal Freedom Variable Annuity	2,385	3,455	2,480	5,891

The Merger Fund Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	—	—	—	—

Van Eck Global Hard Assets Class S Division:
The Principal Variable Annuity	33,413	38,684	45,291	72,470
The Principal Variable Annuity with Purchase Payment Credit Rider	—	168	48	1,160
Principal Investment Plus Variable Annuity	137,504	98,416	141,497	121,470
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	37,141	28,241	19,249	17,965
Principal Pivot Series Variable Annuity	28,794	604	12,646	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	3,828	916	1,679	—

202

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015

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 2015, 2014, 2013, 2012, and 2011 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 contract options as discussed in Note 2.



						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
AllianceBernstein Small Cap Growth Class A Division:
	2015	175	$25.10 to $23.45		$4,350	–%		1.40% to 2.00%	(2.64)% to (3.18)%
	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%

AllianceBernstein Small/Mid Cap Value Class A Division:
	2015	243	$11.44 to $11.23		$2,766	0.82	%	1.30% to 2.00%	(6.69)% to (7.34)%
	2014	190	$12.26 to $12.12		$2,320	0.76	%	1.30% to 2.00%	7.83% to 7.07%
	2013 (6)	95	$11.37 to $11.32		$1,075	0.35	%	1.30% to 2.00%	13.25% to 12.75%

Alps/Red Rocks Listed Private Equity Class III Division:
	2015 (12)	3	$8.98 to $8.97		$24	0.22	%	1.15% to 1.40%	(10.02)% to (10.12)%

American Century VP Capital Appreciation Class I Division:
	2015	230	$10.85 to $10.74		$2,496	–%		1.40% to 2.00%	0.46% to (0.09)%
	2014 (8)	241	$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:
	2015	699	$17.24 to $14.94		$11,548	2.10	%	0.85% to 1.90%	(6.41)% to (7.43)%
	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%

203



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
American Century VP Inflation Protection Class II Division:
	2015	4,091	$9.58 to $11.78		$51,380	2.04	%	1.15% to 2.00%	(3.62)% to (4.38)%
	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%

American Century VP MidCap Value Class II Division:
	2015	349	$18.61 to $17.95		$6,444	1.48	%	1.30% to 2.00%	(2.82)% to (3.49)%
	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)%

American Century VP Ultra Class I Division:
	2015	220	$16.46 to $15.08		$3,618	0.45	%	1.30% to 1.90%	4.91% to 4.29%
	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)%

American Century VP Ultra Class II Division:
	2015	1,882	$19.29 to $18.02		$36,158	0.32	%	1.40% to 2.00%	4.55% to 3.92%
	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)%

American Century VP Value Class II Division:
	2015	787	$9.63 to $18.56		$15,478	1.99	%	1.15% to 1.90%	(5.12)% to (5.79)%
	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)%

204

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



							For the Year Ended December 31,
		December 31					Except as Noted
			Unit Fair Value							Total Return (3)
			Corresponding						Expense	Corresponding
			to Lowest		Net		Investment		Ratio (2)	to Lowest
		Units	to Highest		Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio		(000's)		Ratio (1)		Highest	Expense Ratio
American Funds Insurance Series Asset Allocation Fund Class 4 Division:
	2015 (12)	83	$9.71 to $9.69			$806	7.44	%	1.15% to 1.40%	(2.90)% to (3.10)%

American Funds Insurance Series Blue Chip Income & Growth Fund Class 4 Division:
	2015	92	$9.79 to $9.75			$900	2.51	%	1.15% to 1.40%	(4.30)% to (4.60)%
	2014 (10)	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:
	2015	91	$10.13 to $8.71			$844	–%		1.30% to 2.00%	(0.98)% to (13.42)%
	2014 (9)	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:
	2015	14	$9.75 to $9.71			$133	–%		1.15% to 1.40%	(1.12)% to (1.42)%
	2014 (10)	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:
	2015	41	$8.87 to $8.78			$364	6.87	%	1.30% to 1.90%	(8.46)% to (9.02)%
	2014 (9)	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:
	2015	6	$9.69 to $9.66			$62	1.57	%	1.15% to 1.40%	(2.22)% to (2.42)%
	2014 (10)	–	$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:
	2015	15	$9.74 to $9.71			$148	–%		1.15% to 1.40%	(0.41)% to (0.72)%
	2014 (10)	3		$9.78		$30	–%		1.15% to 1.40%	(1.61)% to (1.51)%

205

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



							For the Year Ended December 31,
		December 31					Except as Noted
			Unit Fair Value							Total Return (3)
			Corresponding						Expense	Corresponding
			to Lowest		Net		Investment		Ratio (2)	to Lowest
		Units	to Highest		Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio		(000's)		Ratio (1)		Highest	Expense Ratio
American Funds Insurance Series Managed Risk International Fund Class P2 Division:
	2015	4	$8.72 to $8.69			$38	0.02	%	1.15% to 1.40%	(7.53)% to (7.85)%
	2014 (10)	2		$9.43		$18	–%		1.15% to 1.40%	(3.87	)%

American Funds Insurance Series New World Fund Class 2 Division:
	2015	50	$8.69 to $8.89			$441	0.67	%	1.30% to 2.00%	(4.40)% to (10.83)%
	2014 (9)	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:
	2015	46	$8.60 to $8.57			$394	0.63	%	1.15% to 1.40%	(4.44)% to (4.78)%
	2014 (10)	6		$9.00		$52	7.63	%	1.15% to 1.40%	(7.22)% to (7.12)%

Balanced Class 1 Division:
	2015	1,821	$3.30 to $25.81			$29,965	1.77	%	0.48% to 1.90%	0.00% to (1.49)%
	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%

BlackRock Global Allocation Class III Division:
	2015 (12)	56	$9.30 to $9.25			$522	1.85	%	1.15% to 2.00%	(7.00)% to (7.50)%

BlackRock iShares Alternative Strategies Class III Division:
	2015 (12)	14	$9.29 to $9.24			$129	8.05	%	1.15% to 2.00%	(6.82)% to (7.32)%

BlackRock iShares Dynamic Allocation Class III Division:
	2015 (12)	7	$9.15 to $9.10			$60	6.90	%	1.15% to 2.00%	(8.32)% to (8.82)%

BlackRock iShares Dynamic Fixed Income Class III Division:
	2015 (12)	11	$9.70 to $9.65			$111	5.79	%	1.15% to 2.00%	(2.71)% to (3.21)%

206

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



							For the Year Ended December 31,
		December 31					Except as Noted
			Unit Fair Value							Total Return (3)
			Corresponding						Expense	Corresponding
			to Lowest		Net		Investment		Ratio (2)	to Lowest
		Units	to Highest		Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio		(000's)		Ratio (1)		Highest	Expense Ratio
BlackRock iShares Equity Appreciation Class III Division:
	2015 (12)	13	$8.67 to $8.62			$111	6.14	%	1.15% to 2.00%	(13.21)% to (13.71)%

BlackRock Value Opportunities Class III Division:
	2015 (12)	–	$9.00 to $8.99			$1	0.94	%	1.15% to 1.40%	(10.89)% to (10.99)%

Bond & Mortgage Securities Class 1 Division:
	2015	7,246	$2.81 to $21.29			$151,328	3.09	%	0.43% to 2.00%	(0.90)% to (2.47)%
	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%

Bond & Mortgage Securities Class 2 Division:
	2015 (12)	2	$9.73 to $9.72			$19	6.38	%	1.15% to 1.40%	(2.31)% to (2.41)%

Calvert EAFE International Index Class F Division:
	2015	2	$8.98 to $8.95			$15	0.04	%	1.15% to 1.40%	(2.92)% to (3.24)%
	2014 (10)	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:
	2015	11	$9.80 to $9.77			$103	–%		1.15% to 1.40%	(6.49)% to (6.69)%
	2014 (10)	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:
	2015	49	$9.82 to $9.79			$480	–%		1.15% to 1.40%	(4.01)% to (4.21)%
	2014 (10)	3	$10.23 to $10.22			$36	5.13	%	1.15% to 1.40%	(0.10	)%

ClearBridge Small Cap Growth Series II Division:
	2015 (12)	1	$9.48 to $9.47			$9	–%		1.15% to 1.40%	(6.51)% to (6.61)%

Columbia Limited Duration Credit Class 2 Division:
	2015 (12)	15	$9.58 to $9.52			$140	–%		1.15% to 2.00%	(4.20)% to (4.80)%

207



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
Columbia Small Cap Value Class 2 Division:
	2015 (12)	8	$9.10 to $9.09		$75	0.73	%	1.15% to 1.40%	(9.90)% to (9.91)%

Delaware Limited Term Diversified Income Service Class Division:
	2015 (12)	23	$9.88 to $9.82		$227	1.11	%	1.15% to 2.00%	(1.00)% to (1.60)%

Delaware Small Cap Value Service Class Division:
	2015	93	$10.97 to $10.77		$1,009	0.42	%	1.30% to 2.00%	(7.66)% to (8.34)%
	2014	63	$11.88 to $11.75		$746	0.29	%	1.30% to 2.00%	4.21% to 3.52%
	2013 (6)	23	$11.40 to $11.35		$262	–%		1.30% to 2.00%	13.66% to 13.16%

Deutsche Alternative Asset Allocation Class B Division:
	2015 (13)	4	$9.08 to $9.05		$40	–%		1.15% to 1.40%	(7.63)% to (7.84)%
	2014 (10)	–	$9.83 to $9.82	$–		–%		1.15% to 1.40%	(1.60)% to (1.70)%

Deutsche Equity 500 Index Class B2 Division:
	2015 (14)	67	$10.21 to $10.18		$678	1.24	%	1.15% to 1.40%	(0.39)% to (0.59)%
	2014 (10)	6	$10.25 to $10.24		$59	–%		1.15% to 1.40%	(0.49	)%

Deutsche Small Mid Cap Value Class B Division:
	2015 (15)	85	$9.75 to $11.20		$953	–%		1.15% to 2.00%	(3.37)% to (4.11)%
	2014	52	$10.09 to $11.68		$615	0.40	%	1.15% to 2.00%	(0.69)% to 3.00%
	2013 (6)	13	$11.39 to $11.34		$146	–%		1.30% to 2.00%	13.56% to 13.06%

Diversified Balanced Class 2 Division:
	2015	73,477	$14.07 to $13.57		$1,030,997	1.00	%	1.40% to 2.00%	(1.26)% to (1.88)%
	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%

208

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
Diversified Balanced Managed Volatility Class 2 Division:
	2015	13,227	$10.05 to $10.34		$138,378	0.84	%	1.15% to 2.00%	(1.08)% to (1.90)%
	2014	7,967	$10.16 to $10.54		$84,544	0.01	%	1.15% to 2.00%	(0.20)% to 4.77%
	2013 (7)	87	$10.07 to $10.06		$877	–%		1.40% to 2.00%	0.90% to 0.80%

Diversified Growth Class 2 Division:
	2015	213,718	$15.02 to $14.49		$3,202,277	1.03	%	1.40% to 2.00%	(1.18)% to (1.83)%
	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%

Diversified Growth Managed Volatility Class 2 Division:
	2015	23,991	$10.03 to $10.41		$252,642	1.04	%	1.15% to 2.00%	(1.08)% to (1.89)%
	2014	14,199	$10.14 to $10.61		$151,625	0.02	%	1.15% to 2.00%	(0.39)% to 4.95%
	2013 (7)	393	$10.12 to $10.11		$3,979	–%		1.40% to 2.00%	1.40% to 1.30%

Diversified Income Class 2 Division:
	2015	17,071	$11.66 to $11.41		$198,791	0.78	%	1.40% to 2.00%	(1.19)% to (1.81)%
	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 (5)	5,225	$10.49 to $10.45		$54,791	–%		1.25% to 1.85%	4.38% to 3.98%

Diversified International Class 1 Division:
	2015	5,938	$3.17 to $24.34		$136,019	2.51	%	0.44% to 2.00%	(0.77)% to (2.33)%
	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)%

Diversified International Class 2 Division:
	2015	23	$9.21 to $9.18		$210	3.16	%	1.15% to 1.40%	(1.81)% to (2.03)%
	2014 (10)	3	$9.38 to $9.37		$26	–%		1.15% to 1.40%	(3.89)% to (4.00)%

Dreyfus IP MidCap Stock Service Shares Division:
	2015 (12)	5	$9.27 to $9.26		$44	–%		1.15% to 1.40%	(8.13)% to (8.23)%

209



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
Dreyfus Investment Portfolio Technology Growth Service Shares Division:
	2015	266	$23.55 to $21.99		$6,205	–%		1.40% to 2.00%	4.43% to 3.78%
	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)%

Equity Income Class 1 Division:
	2015	14,715	$1.88 to $13.42		$207,674	2.43	%	0.55% to 2.00%	(4.33)% to (5.82)%
	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%

Equity Income Class 2 Division:
	2015	104	$9.69 to $9.66		$1,006	3.12	%	1.15% to 1.40%	(5.28)% to (5.48)%
	2014 (10)	8	$10.23 to $10.22		$81	–%		1.15% to 1.40%	(0.97	)%

Fidelity VIP Contrafund Service Class Division:
	2015	1,786	$23.61 to $21.57		$42,171	0.90	%	1.30% to 1.90%	(0.76)% to (1.33)%
	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)%

Fidelity VIP Contrafund Service Class 2 Division:
	2015	2,325	$10.09 to $21.16		$50,809	0.80	%	1.15% to 2.00%	(0.79)% to (1.58)%
	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)%

210

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



							For the Year Ended December 31,
		December 31					Except as Noted
			Unit Fair Value								Total Return (3)
			Corresponding						Expense		Corresponding
			to Lowest		Net		Investment		Ratio (2)		to Lowest
		Units	to Highest		Assets		Income		Lowest to		to Highest
	Division	(000's)	Expense Ratio		(000's)		Ratio (1)		Highest		Expense Ratio
Fidelity VIP Equity-Income Service Class 2 Division:
	2015	1,877	$16.84 to $15.48			$31,472	2.86	%	1.30% to 2.00%		(5.45)% to (6.12)%
	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)%

Fidelity VIP Growth Service Class Division:
	2015	917	$15.48 to $14.13			$14,193	0.16	%	1.30% to 1.90%		5.74% to 4.98%
	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)%

Fidelity VIP Growth Service Class 2 Division:
	2015	480	$20.94 to $19.56			$9,985	0.03	%	1.40% to 2.00%		5.39% to 4.77%
	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)%

Fidelity VIP Mid Cap Service Class Division:
	2015	7		$10.40		$69	0.41	%	0.95	%	(2.44	)%
	2014 (9)	7		$10.66		$71	0.32	%	0.95	%	5.75	%

Fidelity VIP Mid Cap Service Class 2 Division:
	2015	829	$9.78 to $23.50			$19,266	0.27	%	1.15% to 2.00%		(2.78)% to (3.57)%
	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)%

211

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



							For the Year Ended December 31,
		December 31					Except as Noted
			Unit Fair Value							Total Return (3)
			Corresponding						Expense	Corresponding
			to Lowest		Net		Investment		Ratio (2)	to Lowest
		Units	to Highest		Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio		(000's)		Ratio (1)		Highest	Expense Ratio
Fidelity VIP Overseas Service Class 2 Division:
	2015	1,940	$9.63 to $15.30			$31,477	1.08	%	1.15% to 2.00%	2.12% to 1.26%
	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)%

Franklin Global Real Estate VIP Class 2 Division:
	2015	48	$10.50 to $9.54			$497	3.78	%	1.15% to 2.00%	(0.57)% to (4.02)%
	2014 (10)	4	$10.56 to $10.55			$42	–%		1.15% to 1.40%	1.05% to 0.96%

Franklin Rising Dividends VIP Class 4 Division:
	2015	48	$9.84 to $9.81			$470	1.49	%	1.15% to 1.40%	(4.84)% to (5.13)%
	2014 (10)	7		$10.34		$71	–%		1.15% to 1.40%	(0.39	)%

Franklin Small Cap Value VIP Class 2 Division:
	2015	191	$17.18 to $16.53			$3,252	0.62	%	1.30% to 2.00%	(8.57)% to (9.23)%
	2014	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)%

Goldman Sachs VIT Mid Cap Value Institutional Shares Division:
	2015	689	$21.79 to $20.30			$14,902	0.38	%	1.30% to 2.00%	(10.40)% to (11.04)%
	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)%

Goldman Sachs VIT Mid Cap Value Service Shares Division:
	2015	51	$9.17 to $9.14			$469	0.18	%	1.15% to 1.40%	(10.54)% to (10.74)%
	2014 (10)	2	$10.25 to $10.24			$17	5.08	%	1.15% to 1.40%	0.59% to 0.49%

212

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



							For the Year Ended December 31,
		December 31					Except as Noted
			Unit Fair Value							Total Return (3)
			Corresponding						Expense	Corresponding
			to Lowest		Net		Investment		Ratio (2)	to Lowest
		Units	to Highest		Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio		(000's)		Ratio (1)		Highest	Expense Ratio
Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division:
	2015 (12)	1	$9.34 to $9.33			$12	6.02	%	1.15% to 1.40%	(6.69)% to (6.79)%

Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division:
	2015	351	$17.76 to $16.54			$6,193	0.28	%	1.30% to 2.00%	(3.37)% to (4.12)%
	2014	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)%

Goldman Sachs VIT Small Cap Equity Insights Service Shares Division:
	2015	10	$10.24 to $10.20			$107	0.05	%	1.15% to 1.40%	(3.58)% to (3.86)%
	2014 (10)	–	$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:
	2015	10,832	$2.80 to $11.51			$121,664	3.26	%	0.42% to 2.00%	0.37% to (1.20)%
	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%

Government & High Quality Bond Class 2 Division:
	2015	100	$10.07 to $10.04			$1,003	3.74	%	1.15% to 1.40%	(0.49)% to (0.79)%
	2014 (10)	2		$10.12		$20	–%		1.15% to 1.40%	0.00% to 0.10%

Guggenheim Floating Rate Strategies Series F Division:
	2015	81	$9.90 to $9.68			$787	2.66	%	1.15% to 2.00%	(0.40)% to (3.20)%
	2014 (10)	1	$9.94 to $9.93			$13	–%		1.15% to 1.40%	(0.80)% to (0.90)%

213

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
Guggenheim Investments Global Managed Futures Strategy Division:
	2015	11	$10.46 to $9.62		$114	3.08	%	1.15% to 2.00%	(2.70)% to (3.99)%
	2014 (10)	2	$10.75 to $10.74		$21	–%		1.15% to 1.40%	5.50% to 5.40%

Guggenheim Investments Long Short Equity Division:
	2015	17	$10.46 to $9.84		$177	–%		1.15% to 2.00%	0.10% to (2.09)%
	2014 (10)	4	$10.45 to $10.44		$43	–%		1.15% to 1.40%	2.96% to 2.86%

Guggenheim Investments Multi-Hedge Strategies Division:
	2015	9	$10.33 to $9.96		$88	0.63	%	1.15% to 2.00%	0.68% to (0.60)%
	2014 (10)	1	$10.26 to $10.25		$8	–%		1.15% to 1.40%	2.29% to 2.30%

Guggenheim Macro Opportunities Series M Division:
	2015	22	$9.91 to $9.66		$219	2.06	%	1.15% to 2.00%	(1.49)% to (3.40)%
	2014 (10)	–	$10.06 to $10.05	$–		–%		1.15% to 1.40%	–%

Income Class 1 Division:
	2015 (12)	60	$9.71 to $9.67		$582	4.78	%	1.30% to 2.00%	(2.61)% to (3.01)%

Income Class 2 Division:
	2015 (12)	2	$9.70 to $9.69		$17	11.21	%	1.15% to 1.40%	(2.71)% to (2.81)%

International Emerging Markets Class 1 Division:
	2015	1,992	$3.10 to $24.67		$50,665	1.67	%	0.41% to 2.00%	(14.17)% to (15.51)%
	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)%

International Emerging Markets Class 2 Division:
	2015 (12)	4	$7.80 to $7.78		$33	1.58	%	1.15% to 1.40%	(21.84)% to (21.97)%

214

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



							For the Year Ended December 31,
		December 31					Except as Noted
			Unit Fair Value							Total Return (3)
			Corresponding						Expense	Corresponding
			to Lowest		Net		Investment		Ratio (2)	to Lowest
		Units	to Highest		Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio		(000's)		Ratio (1)		Highest	Expense Ratio
Invesco American Franchise Series I Division:
	2015	294	$14.86 to $14.53			$4,369	–%		1.30% to 1.90%	3.70% to 3.05%
	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 (4)	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:
	2015	20	$9.53 to $9.50			$191	4.91	%	1.15% to 1.40%	(5.46)% to (5.75)%
	2014 (10)	–		$10.08	$–		–%		1.15% to 1.40%	(0.69	)%

Invesco Core Equity Series I Division:
	2015	1,220	$14.60 to $13.34			$17,820	1.11	%	1.30% to 1.90%	(7.01)% to (7.49)%
	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)%

Invesco Global Health Care Series I Division:
	2015	461	$22.92 to $21.00			$10,562	–%		1.30% to 1.90%	1.82% to 1.25%
	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%

Invesco Global Health Care Series II Division:
	2015	78	$10.52 to $10.48			$814	–%		1.15% to 1.40%	1.74% to 1.45%
	2014 (10)	7	$10.34 to $10.33			$71	–%		1.15% to 1.40%	0.39	%

Invesco International Growth Series I Division:
	2015	954	$10.69 to $10.21			$10,161	1.50	%	1.40% to 2.00%	(3.69)% to (4.31)%
	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)%

215

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
Invesco International Growth Series II Division:
	2015	46	$9.25 to $9.22		$429	1.81	%	1.15% to 1.40%	(3.75)% to (3.96)%
	2014 (10)	3	$9.61 to $9.60		$32	–%		1.15% to 1.40%	(3.12)% to (3.23)%

Invesco Mid Cap Growth Series I Division:
	2015	113	$14.11 to $13.81		$1,594	–%		1.30% to 1.90%	(0.14)% to (0.65)%
	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 (4)	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:
	2015	372	$21.47 to $20.01		$7,928	–%		1.30% to 2.00%	(6.77)% to (7.40)%
	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)%

Invesco Technology Series I Division:
	2015	357	$9.68 to $8.86		$3,452	–%		1.30% to 1.90%	5.45% to 4.73%
	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)%

Invesco Value Opportunities Series I Division:
	2015	338	$13.25 to $12.38		$4,445	2.63	%	1.40% to 2.00%	(11.67)% to (12.14)%
	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%

Janus Aspen Enterprise Service Shares Division:
	2015	580	$15.15 to $13.84		$8,794	0.76	%	1.30% to 1.90%	2.43% to 1.84%
	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)%

216



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
Janus Aspen Flexible Bond Service Shares Division:
	2015	80	$9.93 to $9.90		$796	2.28	%	1.15% to 1.40%	(1.19)% to (1.39)%
	2014 (10)	7	$10.05 to $10.04		$73	4.49	%	1.15% to 1.40%	(0.10)% to (0.20)%

LargeCap Growth Class 1 Division:
	2015	2,849	$3.46 to $27.63		$49,543	0.14	%	0.47% to 2.00%	4.54% to 2.91%
	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)%

LargeCap Growth Class 2 Division:
	2015	42	$10.47 to $10.44		$442	–%		1.15% to 1.40%	3.46% to 3.26%
	2014 (10)	1	$10.12 to $10.11		$6	–%		1.15% to 1.40%	(0.39)% to (0.49)%

LargeCap Growth I Class 1 Division:
	2015	2,158	$2.22 to $53.15		$105,642	0.23	%	0.45% to 2.00%	7.32% to 5.62%
	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)%

LargeCap Growth I Class 2 Division:
	2015 (12)	49	$9.99 to $9.98		$491	0.50	%	1.15% to 1.40%	(0.60)% to (0.70)%

LargeCap S&P 500 Index Class 1 Division:
	2015	5,945	$2.01 to $14.64		$92,317	1.44	%	0.48% to 2.00%	0.72% to (0.88)%
	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)%

LargeCap S&P 500 Index Class 2 Division:
	2015 (12)	16	$9.66 to $9.64		$151	2.15	%	1.15% to 1.40%	(3.69)% to (3.89)%

217

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



							For the Year Ended December 31,
		December 31					Except as Noted
			Unit Fair Value							Total Return (3)
			Corresponding						Expense	Corresponding
			to Lowest		Net		Investment		Ratio (2)	to Lowest
		Units	to Highest		Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio		(000's)		Ratio (1)		Highest	Expense Ratio
LargeCap Value Class 1 Division:
	2015	3,206	$5.21 to $35.43			$79,223	1.69	%	0.46% to 2.00%	(1.51)% to (3.06)%
	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)%

LargeCap Value Class 2 Division:
	2015 (12)	1	$9.58 to $9.56			$10	1.46	%	1.15% to 1.40%	(4.68)% to (4.88)%

MFS VIT International Value Service Class Division:
	2015	160	$10.34 to $9.45			$1,563	2.01	%	1.15% to 2.00%	5.19% to (5.41)%
	2014 (10)	6		$9.83		$61	–%		1.15% to 1.40%	(2.090	)%

MFS VIT New Discovery Service Class Division:
	2015	121	$9.15 to $10.25			$1,253	–%		1.15% to 2.00%	(9.50)% to (4.12)%
	2014	88	$10.81 to $10.69			$944	–%		1.30% to 2.00%	(8.70)% to (9.33)%
	2013 (6)	51	$11.84 to $11.79			$598	–%		1.30% to 2.00%	17.00% to 16.50%

MFS VIT Utilities Service Class Division:
	2015	626	$8.26 to $18.25			$10,898	4.07	%	1.15% to 2.00%	(15.71)% to (16.48)%
	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%

MFS VIT Value Service Class Division:
	2015	244	$21.32 to $20.49			$5,168	2.12	%	1.40% to 2.00%	(2.34)% to (2.89)%
	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)%

218

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
MidCap Class 1 Division:
	2015	4,922	$9.58 to 74.62		$339,892	0.51	%	0.48% to 2.00%	1.22% to (0.36)%
	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%

Money Market Class 1 Division:
	2015	6,067	$1.67 to $12.09		$49,380	–%		0.38% to 2.00%	(0.42)% to (1.95)%
	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)%

Money Market Class 2 Division:
	2015	140	$9.85 to $9.82		$1,381	–%		1.15% to 1.40%	(1.20)% to (1.41)%
	2014 (10)	22	$9.97 to $9.96		$217	–%		1.15% to 1.40%	(0.10	)%

Neuberger Berman AMT Large Cap Value I Class Division:
	2015	244	$16.64 to $15.54		$4,048	0.76	%	1.40% to 2.00%	(13.02)% to (13.57)%
	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)%

Neuberger Berman AMT Mid-Cap Growth Portfolio S Class Division:
	2015 (12)	286	$9.19 to $9.58		$2,746	–%		1.15% to 2.00%	(8.83)% to (4.49)%

Neuberger Berman AMT Socially Responsive I Class Division:
	2015	246	$20.74 to $19.37		$5,077	0.55	%	1.40% to 2.00%	(1.85)% to (2.47)%
	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)%

219

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
Oppenheimer Main Street Small Cap Service Shares Division:
	2015	48	$11.78 to $11.60		$561	0.70	%	1.30% to 1.90%	(7.32)% to (7.86)%
	2014	52	$12.71 to $12.59		$658	0.67	%	1.30% to 1.90%	10.23% to 9.57%
	2013 (6)	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:
	2015	322	$12.91 to $12.40		$4,147	3.26	%	1.40% to 2.00%	(10.22)% to (10.79)%
	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%

PIMCO All Asset Advisor Class Division:
	2015 (12)	–	$8.77 to $8.75	$–		–%		1.15% to 1.40%	(12.12)% to (12.32)%

PIMCO Commodity Real Return Strategy M Class Division:
	2015 (12)	2	$7.24 to $7.22		$13	–%		1.15% to 1.40%	(27.45)% to (27.66)%

PIMCO High Yield Administrative Class Division:
	2015	1,190	$9.61 to $12.97		$15,656	5.25	%	1.15% to 2.00%	(2.73)% to (3.57)%
	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%

PIMCO Low Duration Advisor Class Division:
	2015 (12)	37	$9.89 to $9.84		$361	11.09	%	1.15% to 2.00%	(1.10)% to (1.60)%

PIMCO Total Return Administrative Class Division:
	2015	2,192	$10.04 to $11.94		$27,067	4.91	%	1.15% to 2.00%	(0.69)% to (1.57)%
	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%

220

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
Principal Capital Appreciation Class 1 Division:
	2015	8,683	$16.68 to $15.37		$116,745	0.32	%	0.95% to 2.00%	1.21% to 0.13%
	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)%

Principal Capital Appreciation Class 2 Division:
	2015	61	$10.40 to $10.36		$632	0.05	%	1.15% to 1.40%	0.78% to 0.48%
	2014 (10)	19	$10.32 to $10.31		$192	–%		1.15% to 1.40%	(0.29	)%

Principal LifeTime Strategic Income Class 1 Division:
	2015	1,254	$12.50 to $12.79		$17,075	2.13	%	0.95% to 2.00%	(1.88)% to (2.96)%
	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%

Principal LifeTime 2010 Class 1 Division:
	2015	1,925	$13.25 to $13.94		$28,521	2.18	%	0.95% to 2.00%	(2.14)% to (3.13)%
	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)%

Principal LifeTime 2020 Class 1 Division:
	2015	7,249	$14.14 to $15.32		$117,718	2.54	%	0.95% to 2.00%	(2.01)% to (3.10)%
	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)%

Principal LifeTime 2020 Class 2 Division:
	2015 (12)	2	$9.40 to $9.38		$16	6.44	%	1.15% to 1.40%	(6.00)% to (6.20)%

221

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
Principal LifeTime 2030 Class 1 Division:
	2015	4,235	$14.22 to $15.41		$68,802	2.56	%	0.95% to 2.00%	(2.00)% to (3.02)%
	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)%

Principal LifeTime 2030 Class 2 Division:
	2015 (12)	2	$9.34 to $9.33		$16	3.07	%	1.15% to 1.40%	(6.69)% to (6.79)%

Principal LifeTime 2040 Class 1 Division:
	2015	804	$14.56 to $16.07		$13,719	2.40	%	0.95% to 2.00%	(1.82)% to (2.78)%
	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)%

Principal LifeTime 2040 Class 2 Division:
	2015 (12)	–	$9.32 to $9.31	$–		–%		1.15% to 1.40%	(6.89)% to (6.99)%

Principal LifeTime 2050 Class 1 Division:
	2015	520	$14.59 to $16.17		$8,937	2.52	%	0.95% to 2.00%	(1.62)% to (2.65)%
	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)%

Principal LifeTime 2050 Class 2 Division:
	2015 (12)	3	$9.31 to $9.29		$25	3.71	%	1.15% to 1.40%	(7.09)% to (7.29)%

Real Estate Securities Class 1 Division:
	2015	1,589	$5.04 to $48.72		$81,337	1.51	%	0.46% to 2.00%	3.77% to 2.14%
	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%

222



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
							For the Year Ended December 31,
		December 31					Except as Noted
			Unit Fair Value							Total Return (3)
			Corresponding						Expense	Corresponding
			to Lowest		Net		Investment		Ratio (2)	to Lowest
		Units	to Highest		Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio		(000's)		Ratio (1)		Highest	Expense Ratio
Real Estate Securities Class 2 Division:
	2015	148	$11.71 to $11.67			$1,733	1.89	%	1.15% to 1.40%	2.81% to 2.55%
	2014 (10)	16	$11.39 to $11.38			$181	–%		1.15% to 1.40%	3.45% to 3.36%

Rydex Basic Materials Division:
	2015 (12)	–	$7.71 to $7.70		$–		–%		1.15% to 1.40%	(22.75)% to (22.85)%

Rydex Commodities Strategy Division:
	2015	13	$4.63 to $6.40			$77	–%		1.15% to 2.00%	(34.60)% to (35.81)%
	2014 (10)	2	$7.08 to $7.07			$11	–%		1.15% to 1.40%	(20.00)% to (20.11)%

Rydex NASDAQ 100 Division:
	2015	59	$11.00 to $10.97			$646	–%		1.15% to 1.40%	7.00% to 6.71%
	2014 (10)	9		$10.28		$97	–%		1.15% to 1.40%	(1.34	)%

SAM Balanced Portfolio Class 1 Division:
	2015	44,023	$2.00 to $13.02			$598,643	2.90	%	0.42% to 2.00%	(1.23)% to (2.76)%
	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)%

SAM Balanced Portfolio Class 2 Division:
	2015	383	$9.82 to $9.79			$3,759	3.22	%	1.15% to 1.40%	(2.19)% to (2.39)%
	2014 (10)	63	$10.04 to $10.03			$634	–%		1.15% to 1.40%	(0.69)% to (0.79)%

SAM Conservative Balanced Portfolio Class 1 Division:
	2015	11,177	$13.98 to $12.88			$150,875	3.19	%	0.95% to 2.00%	(1.69)% to (2.79)%
	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%

SAM Conservative Balanced Portfolio Class 2 Division:
	2015	306	$9.83 to $9.80			$3,002	3.57	%	1.15% to 1.40%	(2.09)% to (2.29)%
	2014 (10)	55	$10.04 to $10.03			$553	–%		1.15% to 1.40%	(0.50)% to (0.59)%

223



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015
							For the Year Ended December 31,
		December 31					Except as Noted
			Unit Fair Value							Total Return (3)
			Corresponding						Expense	Corresponding
			to Lowest		Net		Investment		Ratio (2)	to Lowest
		Units	to Highest		Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio		(000's)		Ratio (1)		Highest	Expense Ratio
SAM Conservative Growth Portfolio Class 1 Division:
	2015	7,589	$13.80 to $12.71			$100,958	2.27	%	0.95% to 2.00%	(1.99)% to (3.05)%
	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)%

SAM Conservative Growth Portfolio Class 2 Division:
	2015	564	$9.80 to $9.77			$5,522	2.62	%	1.15% to 1.40%	(2.49)% to (2.79)%
	2014 (10)	43		$10.05		$430	–%		1.15% to 1.40%	(0.79	)%

SAM Flexible Income Portfolio Class 1 Division:
	2015	12,622	$14.00 to $12.90			$170,645	3.57	%	0.95% to 2.00%	(2.23)% to (3.23)%
	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%

SAM Flexible Income Portfolio Class 2 Division:
	2015	454	$9.76 to $9.73			$4,421	4.01	%	1.15% to 1.40%	(2.69)% to (2.89)%
	2014 (10)	42	$10.03 to $10.02			$418	–%		1.15% to 1.40%	(0.50	)%

SAM Strategic Growth Portfolio Class 1 Division:
	2015	5,064	$13.73 to $12.65			$66,773	2.26	%	0.95% to 2.00%	(2.49)% to (3.58)%
	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)%

SAM Strategic Growth Portfolio Class 2 Division:
	2015	169	$9.79 to $9.76			$1,650	2.36	%	1.15% to 1.40%	(2.97)% to (3.17)%
	2014 (10)	62	$10.09 to $10.08			$624	–%		1.15% to 1.40%	(0.69)% to (0.79)%

224

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



						For the Year Ended December 31,
		December 31				Except as Noted
			Unit Fair Value						Total Return (3)
			Corresponding					Expense	Corresponding
			to Lowest	Net		Investment		Ratio (2)	to Lowest
		Units	to Highest	Assets		Income		Lowest to	to Highest
	Division	(000's)	Expense Ratio	(000's)		Ratio (1)		Highest	Expense Ratio
Short-Term Income Class 1 Division:
	2015	9,431	$11.89 to $11.04		$108,512	2.61	%	0.85% to 2.00%	(0.17)% to (1.25)%
	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)%

Short-Term Income Class 2 Division:
	2015	78	$9.95 to $9.92		$775	3.33	%	1.15% to 1.40%	(0.60)% to (0.80)%
	2014 (10)	9	$10.01 to $10.00		$94	–%		1.15% to 1.40%	(0.10	)%

SmallCap Blend Class 1 Division:
	2015	5,906	$2.16 to $18.62		$116,459	0.08	%	0.55% to 2.00%	(0.50)% to (2.10)%
	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)%

SmallCap Blend Class 2 Division:
	2015 (11)	86	$9.14 to $9.12		$785	0.09	%	1.15% to 1.40%	(7.21)% to (7.41)%

T. Rowe Price Blue Chip Growth Portfolio II Division:
	2015	715	$23.96 to $22.38		$16,984	–%		1.40% to 2.00%	9.26% to 8.59%
	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)%

T. Rowe Price Health Sciences Portfolio II Division:
	2015	725	$49.19 to $45.95		$35,403	–%		1.40% to 2.00%	10.89% to 10.24%
	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%

225

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



							For the Year Ended December 31,
		December 31					Except as Noted
			Unit Fair Value								Total Return (3)
			Corresponding						Expense		Corresponding
			to Lowest		Net		Investment		Ratio (2)		to Lowest
		Units	to Highest		Assets		Income		Lowest to		to Highest
	Division	(000's)	Expense Ratio		(000's)		Ratio (1)		Highest		Expense Ratio
Templeton Global Bond VIP Class 4 Division:
	2015	116	$9.22 to $9.34			$1,072	6.23	%	1.15% to 2.00%		(5.44)% to (6.60)%
	2014 (10)	7	$9.75 to $9.74			$68	–%		1.15% to 1.40%		(2.30)% to (2.31)%

Templeton Growth VIP Class 2 Division:
	2015	44		$19.60		$869	2.66	%	0.85	%	(7.28	)%
	2014	45		$21.14		$960	1.34	%	0.85	%	(3.65	)%
	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	%	(7.75	)%

The Merger Fund Division:
	2015 (12)	–	$9.65 to $9.64		$–		–%		1.15% to 1.40%		(3.50)% to (3.60)%

Van Eck Global Hard Assets Class S Division:
	2015	665	$5.00 to $7.64			$5,127	0.03	%	1.15% to 2.00%		(34.30)% to (34.92)%
	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)%

226

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



(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 divisions invest. 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, April 27, 2012. Investment income ratios have been annualized for the period ended December 31, 2012.
(5)	Commencement of operations, May 21, 2012. Investment income ratios have been annualized for the period ended December 31, 2012.
(6)	Commencement of operations, May 20, 2013. Investment income ratios have been annualized for the period ended December 31, 2013.
(7)	Commencement of operations, December 2, 2013. Investment income ratios have been annualized for the period December 31, 2013.
(8)	Commencement of operations, April 24, 2014. Investment income ratios have been annualized for the period December 31, 2014.
(9)	Commencement of operations, May 17, 2014. Investment income ratios have been annualized for the period December 31, 2014.
(10)	Commencement of operations, November 10, 2014. Investment income ratios have been annualized for the period December 31, 2014.
(11)	Commencement of operations, April 17, 2015. Investment income ratios have been annualized for the period December 31, 2015.
(12)	Commencement of operations, May 18, 2015. Investment income ratios have been annualized for the period December 31, 2015.
(13)	Represented the operations of DWS Alternative Asset Allocation Class B Division until May 18, 2015.
(14)	Represented the operations of DWS Equity 500 Index Class B2 Division until May 18, 2015.
(15)	Represented the operations of DWS Small Mid Cap Value Class B Division until May 18, 2015.

227



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015

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	2015 Unit Value ($)	2015 Total Return (%)
American Century VP Inflation Protection Class II Division	9.55 and 12.61	(3.31)
American Century VP Value Class II Division	9.59 and 20.14	–
American Funds Insurance Series New World Fund Class 2 Division	8.61 and 8.93	–
Balanced Class 1 Division	3.15 and 28.26	–
Bond & Mortgage Securities Class 1 Division	2.68, 21.34, 23.31 and 23.37	–
Deutsche Small Mid Cap Value Class B Division	9.72,11.22, 11.38 and 11.40	–
Diversified Balanced Managed Volatility Class 2 Division	9.63, 9.66, 10.02 and 10.47	(3.60) and (3.30)
Diversified Growth Managed Volatility Class 2 Division	9.56, 9.60, 10.00 and 10.54	(4.50) and (4.10)
Diversified International Class 1 Division	3.03, 24.40, 26.65 and 26.72	–
Equity Income Class 1 Division	13.45, 14.16 and 14.20	–
Fidelity VIP Contrafund Service Class 2 Division	10.06 and 22.65	–
Fidelity VIP Mid Cap Service Class 2 Division	9.75 and 25.16	–
Fidelity VIP Overseas Service Class 2 Division	9.03, 9.07, 9.60 and 16.38	(9.43) and (9.03)
Government & High Quality Bond Class 1 Division	2.66, 11.54, 12.02, 12.05, 12.32 and 12.41	–
International Emerging Markets Class 1 Division	24.73, 27.01 and 27.08	–
LargeCap Growth Class 1 Division	3.31, 27.69, 30.25 and 30.32	–
LargeCap Growth I Class 1 Division	53.28, 58.20 and 58.34	–
LargeCap S&P 500 Index Class 1 Division	14.68, 16.03, 16.07, 17.20 and 17.33	–
LargeCap Value Class 1 Division	4.95, 35.52, 38.80, 38.89 and 60.35	(1.57)
MFS VIT New Discovery Service Class Division	9.13, 10.28, 10.42 and 10.44	(9.69), (4.01), (3.52) and (3.42)
MFS VIT Utilities Service Class Division	8.23 and 19.00	–
MidCap Class 1 Division	9.14, 74.80, 81.70 and 81.89	–
Money Market Class 1 Division	1.58, 12.12, 13.23 and 13.27	–
Neuberger Berman AMT Mid-Cap Growth Portfolio S Class Division	9.18 and 9.59	(8.93) and (4.39)
PIMCO High Yield Administrative Class Division	9.58 and 13.44	–
PIMCO Total Return Administrative Class Division	10.00 and 12.43	–

228



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015

Division	2015 Unit Value ($)	2015 Total Return (%)
Principal Capital Appreciation Class 1 Division	9.73 and 9.77	(1.72) and (1.31)
Principal LifeTime Strategic Income Class 1 Division	12.82, 13.69 and 13.73	–
Principal LifeTime 2010 Class 1 Division	13.97, 14.92 and 14.96	–
Principal LifeTime 2020 Class 1 Division	15.36, 16.40 and 16.44	–
Principal LifeTime 2030 Class 1 Division	15.45, 16.50 and 16.54	–
Principal LifeTime 2040 Class 1 Division	16.10, 17.20 and 17.24	–
Principal LifeTime 2050 Class 1 Division	16.21, 17.31 and 17.35	–
Real Estate Securities Class 1 Division	48.84, 53.34 and 53.47	–
Rydex Commodities Strategy Division	4.62, 6.41 and 6.43	–
SAM Balanced Portfolio Class 1 Division	13.05, 13.71, 13.75 and 14.13	–
SmallCap Blend Class 1 Division	18.67, 20.39, 20.44 and 26.76	–
Templeton Global Bond VIP Class 4 Division	9.19, 9.35, 9.37 and 9.38	–
Van Eck Global Hard Assets Service Class Division	4.98, 7.65, 7.95 and 7.97	–

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
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	–

229



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015

Division	2014 Unit Value ($)	2014 Total Return (%)
Government & High Quality Bond Class 1 Division	2.65, 11.67, 12.09, 12.11, 12.34 and 12.42	–
International Emerging Markets Class 1 Division	29.24, 31.78 and 31.82	–
LargeCap Growth Class 1 Division	3.17, 26.88, 29.22 and 29.26	–
LargeCap Growth I Class 1 Division	50.39, 54.76 and 54.84	–
LargeCap S&P 500 Index Class 1 Division	14.79, 16.07, 16.10, 17.15 and 17.30	–
LargeCap Value Class 1 Division	5.03, 5.29, 9.73, 11.67, 15.70 and 17.16	10.70
MFS VIT Utilities Service Class Division	22.60	10.89
MidCap Class 1 Division	9.05, 75.00, 81.51 and 81.62	–
Money Market Class 1 Division	12.35, 13.42 and 13.44	(1.91), (1.49), (1.40), (1.32), (0.92), (0.86), (0.64) and (0.42)
PIMCO High Yield Administrative Class Division	13.86	1.91
PIMCO Total Return Administrative Class Division	12.55	2.78
Principal LifeTime Strategic Income Class 1 Division	13.20, 14.02 and 14.04	–
Principal LifeTime 2010 Class 1 Division	14.41, 15.31 and 15.33	–
Principal LifeTime 2020 Class 1 Division	15.84, 16.82 and 16.85	–
Principal LifeTime 2030 Class 1 Division	15.91, 16.91 and 16.93	–
Principal LifeTime 2040 Class 1 Division	16.55, 17.59 and 17.61	–
Principal LifeTime 2050 Class 1 Division	16.63, 17.67 and 17.70	–
Real Estate Securities Class 1 Division	47.76, 51.91 and 51.98	–
SAM Balanced Portfolio Class 1 Division	13.41, 14.02, 14.04 and 14.38	–
SAM Strategic Growth Portfolio Class 1 Division	–	6.57
SmallCap Blend Class 1 Division	19.05, 20.70, 20.73 and 27.02	–
SmallCap Growth II Class 1 Division	16.16, 16.32, 16.68, 17.56 and 17.59	–
SmallCap Value I Class 1 Division	34.27, 37.24 and 37.30	–
Division	2014 Unit Value ($)	2014 Total Return (%)
Van Eck Global Hard Assets Service Class Division	11.75, 12.14 and 12.16	(13.72)

230



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015

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	–
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	–

231

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015




Division	2015 Unit Value ($)	2015 Total Return (%)
Diversified Balanced Managed Volatility Class 2 Division	9.63, 9.66, 10.02 and 10.47	(3.60) and (3.30)
Diversified Growth Managed Volatility Class 2 Division	9.56, 9.60, 10.00 and 10.54	(4.50) and (4.10)
Diversified International Class 1 Division	3.03, 24.40, 26.65 and 26.72	–
Equity Income Class 1 Division	13.45, 14.16 and 14.20	–
Fidelity VIP Contrafund Service Class 2 Division	10.06 and 22.65	–
Fidelity VIP Mid Cap Service Class 2 Division	9.75 and 25.16	–
Fidelity VIP Overseas Service Class 2 Division	9.03, 9.07, 9.60 and 16.38	(9.43) and (9.03)
Government & High Quality Bond Class 1 Division	2.66, 11.54, 12.02, 12.05, 12.32 and 12.41	–
International Emerging Markets Class 1 Division	24.73, 27.01 and 27.08	–
LargeCap Growth Class 1 Division	3.31, 27.69, 30.25 and 30.32	–
LargeCap Growth I Class 1 Division	53.28, 58.20 and 58.34	–
LargeCap S&P 500 Index Class 1 Division	14.68, 16.03, 16.07, 17.20 and 17.33	–
LargeCap Value Class 1 Division	4.95, 35.52, 38.80 and 38.89	(1.57)
MFS VIT New Discovery Service Class Division	9.13, 10.28, 10.42 and 10.44	(9.69), (4.01), (3.52) and (3.42)
MFS VIT Utilities Service Class Division	8.23 and 19.00	–
MidCap Class 1 Division	9.14, 74.80, 81.70 and 81.89	–
Money Market Class 1 Division	1.58, 12.12, 13.23 and 13.27	–
Neuberger Berman AMT Mid-Cap Growth Portfolio S Class Division	9.18 and 9.59	(8.93) and (4.39)
PIMCO High Yield Administrative Class Division	9.58 and 13.44	–
PIMCO Total Return Administrative Class Division	10.00 and 12.43	–
Division	2015 Unit Value ($)	2015 Total Return (%)
Principal Capital Appreciation Class 1 Division	9.73 and 9.77	(1.72) and (1.31)

232



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015

Division	2015 Unit Value ($)	2015 Total Return (%)
Principal LifeTime Strategic Income Class 1 Division	12.82, 13.69 and 13.73	–
Principal LifeTime 2010 Class 1 Division	13.97, 14.92 and 14.96	–
Principal LifeTime 2020 Class 1 Division	15.36, 16.40 and 16.44	–
Principal LifeTime 2030 Class 1 Division	15.45, 16.50 and 16.54	–
Principal LifeTime 2040 Class 1 Division	16.10, 17.20 and 17.24	–
Principal LifeTime 2050 Class 1 Division	16.21, 17.31 and 17.35	–
Real Estate Securities Class 1 Division	48.84, 53.34 and 53.47	–
Rydex Commodities Strategy Division	4.62, 6.41 and 6.43	–
SAM Balanced Portfolio Class 1 Division	13.05, 13.71, 13.75 and 14.13	–
SmallCap Blend Class 1 Division	18.67, 20.39, 20.44 and 26.76	–
Templeton Global Bond VIP Class 4 Division	9.19, 9.35, 9.37 and 9.38	–
Van Eck Global Hard Assets Service Class Division	4.98, 7.65, 7.95 and 7.97	–

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
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	–

233



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015

Division	2014 Unit Value ($)	2014 Total Return (%)
Government & High Quality Bond Class 1 Division	2.65, 11.67, 12.09, 12.11, 12.34 and 12.42	–
International Emerging Markets Class 1 Division	29.24, 31.78 and 31.82	–
LargeCap Growth Class 1 Division	3.17, 26.88, 29.22 and 29.26	–
LargeCap Growth I Class 1 Division	50.39, 54.76 and 54.84	–
LargeCap S&P 500 Index Class 1 Division	14.79, 16.07, 16.10, 17.15 and 17.30	–
LargeCap Value Class 1 Division	5.03, 5.29, 9.73, 11.67, 15.70 and 17.16	10.70
MFS VIT Utilities Service Class Division	22.60	10.89
MidCap Class 1 Division	9.05, 75.00, 81.51 and 81.62	–
Money Market Class 1 Division	12.35, 13.42 and 13.44	(1.91), (1.49), (1.40), (1.32), (0.92), (0.86), (0.64) and (0.42)
PIMCO High Yield Administrative Class Division	13.86	1.91
PIMCO Total Return Administrative Class Division	12.55	2.78
Principal LifeTime Strategic Income Class 1 Division	13.20, 14.02 and 14.04	–
Principal LifeTime 2010 Class 1 Division	14.41, 15.31 and 15.33	–
Principal LifeTime 2020 Class 1 Division	15.84, 16.82 and 16.85	–
Principal LifeTime 2030 Class 1 Division	15.91, 16.91 and 16.93	–
Principal LifeTime 2040 Class 1 Division	16.55, 17.59 and 17.61	–
Principal LifeTime 2050 Class 1 Division	16.63, 17.67 and 17.70	–
Real Estate Securities Class 1 Division	47.76, 51.91 and 51.98	–
SAM Balanced Portfolio Class 1 Division	13.41, 14.02, 14.04 and 14.38	–
SAM Strategic Growth Portfolio Class 1 Division	–	6.57
SmallCap Blend Class 1 Division	19.05, 20.70, 20.73 and 27.02	–
SmallCap Growth II Class 1 Division	16.16, 16.32, 16.68, 17.56 and 17.59	–
SmallCap Value I Class 1 Division	34.27, 37.24 and 37.30	–
Division	2014 Unit Value ($)	2014 Total Return (%)
Van Eck Global Hard Assets Service Class Division	11.75, 12.14 and 12.16	(13.72)

234



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015

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	–
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	–

235

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2015



Division	2013 Unit Value ($)	2013 Total Return (%)
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	–
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	–

236



Principal Life Insurance Company Separate Account B Notes to Financial Statements December 31, 2015

Division	2011 Unit Value ($)	2011 Total Return (%)
Asset Allocation Class 1 Division	25.22	–
Balanced Class 1 Division	2.19 and 20.16	–
Bond & Mortgage Securities Class 1 Division	2.46 and 22.03	–
Diversified Balanced Class 2 Division	–	2.39
Diversified Growth Class 2 Division	–	1.00
Diversified International Class 1 Division	2.30 and 20.73	–
Division	2011 Unit Value ($)	2011 Total Return (%)
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	–

7. Subsequent Events

The account has performed an evaluation of subsequent events through April 29, 2016, and has determined that no items required recognition or disclosure.

237

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238

Report of Independent Registered Public Accounting Firm

The Board of Directors and Stockholder

Principal Life Insurance Company

We have audited the consolidated financial statements of Principal Life Insurance Company (the Company) as of December 31, 2015 and 2014, and for each of the three years in the period ended December 31, 2015, and have issued our report thereon dated March 11, 2016 (included elsewhere in this Registration Statement). Our audits also included the financial statement schedules listed in Item 24(a)(3) of this Registration Statement. These schedules are the responsibility of the Company’s management. Our responsibility is to express an opinion on these schedules based on our audits.

In our opinion, the financial statement schedules referred to above, when considered in relation to the basic financial statements taken as a whole, present fairly in all material respects the information set forth therein.

/s/Ernst & Young LLP

Des Moines, Iowa

March 11, 2016

239



Principal Life Insurance Company
Consolidated Statements of Financial Position
		December 31, 2015		December 31, 2014
		(in millions)
Assets
Fixed maturities, available-for-sale (2015 and 2014 include $257.4 million and $278.2 million related to
	consolidated variable interest entities)	$	46,463.4	$	46,549.4
Fixed maturities, trading (2015 and 2014 both include $100.4 million related to consolidated variable
	interest entities)		538.8		400.3
Equity securities, available-for-sale			101.8		108.9
Equity securities, trading			204.4		191.6
Mortgage loans			11,791.0		11,164.4
Real estate (2015 and 2014 include $354.5 million and $284.9 million related to consolidated variable
	interest entities)		1,447.2		1,340.4
Policy loans			786.3		799.0
Other investments (2015 and 2014 include $29.5 million and $40.6 million related to consolidated variable
	interest entities and $53.4 million and $127.2 million measured at fair value under the fair value option)		1,378.0		1,428.4
	Total investments		62,710.9		61,982.4
Cash and cash equivalents			1,905.5		1,274.0
Accrued investment income			521.8		497.3
Premiums due and other receivables			1,496.2		1,134.7
Deferred acquisition costs			3,057.3		2,754.6
Property and equipment			590.6		544.8
Goodwill			227.5		295.8
Other intangibles			127.7		144.3
Separate account assets			94,762.8		94,328.4
Other assets			893.3		958.5
	Total assets	$	166,293.6	$	163,914.8
Liabilities
Contractholder funds		$	33,151.6	$	33,428.3
Future policy benefits and claims			21,838.3		19,691.6
Other policyholder funds			719.5		744.2
Short-term debt			108.8		154.5
Long-term debt (2015 and 2014 include $42.8 million and $82.3 million related to consolidated variable
	interest entities)		42.8		82.3
Income taxes currently payable			4.4		5.3
Deferred income taxes			892.8		1,082.8
Separate account liabilities			94,762.8		94,328.4
Other liabilities (2015 and 2014 include $345.9 million and $344.0 million related to consolidated variable
	interest entities, of which $68.1 million and $71.0 million are measured at fair value under the fair
	value option)		6,518.4		6,151.7
Total liabilities			158,039.4		155,669.1

Redeemable noncontrolling interest			—		21.1

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			5,334.4		5,275.0
Retained earnings			2,232.6		1,817.2
Accumulated other comprehensive income			641.3		1,086.7
	Total stockholder's equity attributable to Principal Life Insurance Company		8,210.8		8,181.4
Noncontrolling interest			43.4		43.2
	Total stockholder's equity		8,254.2		8,224.6
	Total liabilities and stockholder's equity	$	166,293.6	$	163,914.8

See accompanying notes.

240



Principal Life Insurance Company
Consolidated Statements of Operations

		For the year ended December 31,
		2,015			2,014			2,013
		(in millions)
Revenues
Premiums and other considerations		$	5,057.4		$	3,497.2		$	2,862.4
Fees and other revenues			2,537.3			2,392.7			2,234.6
Net investment income			2,552.0			2,663.5			2,681.5
Net realized capital gains (losses), excluding impairment losses on
	available-for-sale securities		4.0			136.4			(99.5	)
Net other-than-temporary impairment (losses) recoveries on available-
	for-sale securities		(0.8	)		28.5			(89.8	)
Other-than-temporary impairment losses on fixed maturities,
	available-for-sale reclassified from other comprehensive
	income		(29.2	)		(102.2	)		(22	)
Net impairment losses on available-for-sale securities			(30	)		(73.7	)		(111.8	)
Net realized capital gains (losses)			(26	)		62.7			(211.3	)
	Total revenues		10,120.7			8,616.1			7,567.2
Expenses
Benefits, claims and settlement expenses			6,135.1			4,610.0			4,114.5
Dividends to policyholders			163.5			177.4			189.0
Operating expenses			2,598.8			2,603.2			2,376.3
	Total expenses		8,897.4			7,390.6			6,679.8
Income before income taxes			1,223.3			1,225.5			887.4
Income taxes			281.9			243.0			173.2
Net income			941.4			982.5			714.2
Net income attributable to noncontrolling interest			10.8			30.0			17.6
Net income attributable to Principal Life Insurance Company		$	930.6		$	952.5		$	696.6

See accompanying notes.

241



Principal Life Insurance Company
Consolidated Statements of Comprehensive Income

		For the year ended December 31,
		2,015			2,014			2,013
		(in millions)
Net income		$	941.4		$	982.5		$	714.2
Other comprehensive income (loss), net:
	Net unrealized gains (losses) on available-for-sale securities		(447.7	)		261.2			(477.7	)
	Noncredit component of impairment losses on fixed maturities, available-for-sale		18.8			61.9			5.1
	Net unrealized gains (losses) on derivative instruments		14.3			56.6			(6.5	)
	Foreign currency translation adjustment		(0.1	)		(3.7	)		—
	Net unrecognized postretirement benefit obligation		(30.8	)		(8	)		332.6
Other comprehensive income (loss)			(445.5	)		368.0			(146.5	)
Comprehensive income			495.9			1,350.5			567.7
Comprehensive income attributable to noncontrolling interest			10.7			28.7			18.0
Comprehensive income attributable to Principal Life Insurance Company		$	485.2		$	1,321.8		$	549.7

See accompanying notes.

242



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, 2013		$	2.5	$	5,747.6	$	1,167.7	$	642.6	$	16.9	$	7,577.3
Capital 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
Capital 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
Capital distribution to parent			—		(25.5)		—		—		—		(25.5)
Stock-based compensation and additional related
	tax benefits		—		57.0		(3.9)		—		0.1		53.2
Transfer to affiliate			—		44.4		(8.2)		—		—		36.2
Dividends to parent			—		—		(503.1)		—		—		(503.1)
Distributions to noncontrolling interest			—		—		—		—		(14.1)		(14.1)
Contributions from noncontrolling interest			—		—		—		—		7.7		7.7
Purchase of subsidiary shares from noncontrolling
	interest		—		(16.5)		—		—		(3.5)		(20.0)
Net income (excludes $0.8 million attributable to
	redeemable noncontrolling interest)		—		—		930.6		—		10.0		940.6
Other comprehensive loss (excludes $(0.1) million
	attributable to redeemable noncontrolling interest)		—		—		—		(445.4)		—		(445.4)
Balances at December 31, 2015		$	2.5	$	5,334.4	$	2,232.6	$	641.3	$	43.4	$	8,254.2

See accompanying notes.

243



Principal Life Insurance Company
Consolidated Statements of Cash Flows
		For the year ended December 31,
		2015		2014		2013
		(in millions)
Operating activities
Net income		$	941.4	$	982.5	$	714.2
Adjustments to reconcile net income to net cash provided by operating activities:
	Amortization of deferred acquisition costs		251.7		348.5		170.6
	Additions to deferred acquisition costs		(356.5)		(347.4)		(393.0)
	Accrued investment income		(24.5)		25.9		52.8
	Net cash flows for trading securities		(166.3)		14.4		18.5
	Premiums due and other receivables		(202.6)		34.5		(152.7)
	Contractholder and policyholder liabilities and dividends		2,924.9		1,488.2		1,296.8
	Current and deferred income taxes		100.2		239.3		187.6
	Net realized capital (gains) losses		26.0		(62.7)		211.3
	Depreciation and amortization expense		110.3		107.1		96.8
	Mortgage loans held for sale, sold or repaid, net of gain		—		43.3		0.2
	Real estate acquired through operating activities		(43.9)		(49.4)		(107.2)
	Real estate sold through operating activities		51.9		158.0		20.1
	Stock-based compensation		53.4		47.5		45.1
	Other		640.2		172.3		324.1
Net adjustments			3,364.8		2,219.5		1,771.0
Net cash provided by operating activities			4,306.2		3,202.0		2,485.2
Investing activities
Available-for-sale securities:
	Purchases		(9,314.6)		(8,598.2)		(8,554.0)
	Sales		1,069.5		2,100.1		1,521.4
	Maturities		6,475.9		6,047.1		7,142.4
Mortgage loans acquired or originated			(2,177.2)		(2,081.6)		(2,049.5)
Mortgage loans sold or repaid			1,532.7		1,671.6		1,989.0
Real estate acquired			(322.0)		(281.7)		(85.6)
Net purchases of property and equipment			(128.7)		(117.9)		(51.2)
Net change in other investments			203.8		266.2		213.0
Net cash provided by (used in) investing activities			(2,660.6)		(994.4)		125.5
Financing activities
Proceeds from financing element derivatives			0.3		15.1		47.0
Payments for financing element derivatives			(82.0)		(58.0)		(48.0)
Excess tax benefits from share-based payment arrangements			11.0		6.8		7.4
Purchase of subsidiary shares from noncontrolling interest			(21.7)		(179.9)		—
Sale of subsidiary shares to noncontrolling interest			—		—		31.8
Dividends paid to parent			(503.1)		(850.0)		(80.0)
Capital contributions from (distributions to) parent			18.9		(17.7)		(163.8)
Issuance of long-term debt			13.2		38.5		38.2
Principal repayments of long-term debt			(52.6)		(100.1)		(14.6)
Net proceeds from (repayments of) short-term borrowings			(45.7)		(137.9)		5.7
Investment contract deposits			6,214.8		5,349.1		6,355.1
Investment contract withdrawals			(6,655.5)		(7,088.8)		(8,846.6)
Net increase (decrease) in banking operation deposits			91.1		30.7		(225.7)
Other			(2.8)		(13.0)		(4.7)
Net cash used in financing activities			(1,014.1)		(3,005.2)		(2,898.2)
Net increase (decrease) in cash and cash equivalents			631.5		(797.6)		(287.5)
Cash and cash equivalents at beginning of period			1,274.0		2,071.6		2,359.1
Cash and cash equivalents at end of period		$	1,905.5	$	1,274.0	$	2,071.6
Supplemental Information:
Cash paid for interest		$	0.1	$	5.3	$	9.2
Cash paid for income taxes		$	154.5	$	9.0	$	19.6
Supplemental disclosure of non-cash investing and financing activities:
Note receivable from parent in consideration of subsidiaries transferred to parent		$	156.0	$	—	$	—
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.

244

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

1. Nature of Operations and Significant Accounting Policies

Description of Business

Principal Life Insurance Company (“PLIC”) along with its consolidated subsidiaries is a diversified financial services organization offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement, asset management and insurance 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 PLIC 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.

In the fourth quarter of 2015 we implemented changes to our organizational structure to better align businesses, distribution teams and product offerings for future growth. The Retirement and Investor Services segment has been renamed to Retirement and Income Solutions. Additionally, information used by our chief operating decision maker in assessing segment performance has changed to pre-tax operating earnings. Our segment results have been modified to reflect these changes. See Note 17, Segment Information, for financial results of our segments.

We have evaluated subsequent events through March 11, 2016, 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:
Financial instruments - recognition and measurements	January 1,	We are currently evaluating
This authoritative guidance addresses certain aspects of recognition,	2018	the impact this guidance
measurement, presentation and disclosure of financial instruments. The		will have on our
primary focus of this guidance is to supersede the guidance to classify		consolidated financial
equity securities with readily determinable fair values into different categories		statements.
(trading or available-for-sale) and requires equity securities to be measured
at fair value with changes in the fair value recognized through net income.
This guidance requires adoption through a cumulative-effect adjustment to
the balance sheet as of the beginning of the fiscal year of adoption.

Revenue recognition	January 1,	We are currently evaluating
This authoritative guidance replaces all general and most industry specific	2018	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 in exchange for that
good or service. The guidance may be applied using one of the following
two methods: (1) retrospectively to each prior reporting period presented,
or (2) retrospectively with the cumulative effect of initially applying the
standard recognized at the date of initial application.

245

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



		Effect on our consolidated
	Date of	financial statements or
Description	adoption	other significant matters
Short-duration insurance contracts	December 31,	We are currently evaluating
This authoritative guidance requires additional disclosures related to short-	2016	the impact this guidance
duration insurance contracts. Retrospective application through comparative		will have on our
disclosures is required.		consolidated financial
		statements.

Net asset value per share as a practical expedient for fair value	January 1,	The guidance will be
This authoritative guidance removes the requirement to categorize within the	2016	adopted retrospectively
fair value hierarchy all investments for which fair value is measured using the		and will not have a material
net asset value per share practical expedient.		impact on our consolidated
		financial statements.

Simplifying the presentation of debt issuance costs	January 1,	The guidance will be
This authoritative guidance requires debt issuance costs related to a	2016	adopted retrospectively
recognized debt liability to be presented in the balance sheet as a direct		and will not have a material
deduction from the carrying amount of that debt liability, consistent with		impact on our consolidated
debt discounts.		financial statements.

Consolidations	January 1,	The guidance will be
This authoritative guidance makes changes to both the variable interest	2016	adopted using the modified
and voting interest consolidation models and eliminates the investment		retrospective approach
company deferral for portions of the variable interest model. The amendments		on January 1, 2016, and will
in the standard impact the consolidation analysis for interests in investment		not have a significant
companies and limited partnerships and similar entities.		impact to our consolidated
		financial statements.


Standards adopted:
Discontinued operations	January 1,	This guidance was adopted
This authoritative guidance amends the definition of discontinued	2015	prospectively and did not
operations and requires entities to provide additional disclosures associated		have a material impact on
with discontinued operations, as well as disposal transactions that do not		our consolidated financial
meet the discontinued operations criteria. The guidance requires discontinued		statements.
operations treatment for disposals of a component or group of components of
an entity 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.

Fair value of financial assets and liabilities of a consolidated collateralized	January 1,	This guidance was adopted
financing entity	2015	using a modified
This authoritative guidance provides a measurement alternative for a		retrospective approach and
reporting entity to measure both the financial assets and financial liabilities		did not have a material
of consolidated collateralized financing entities ("CCFEs") using the more		impact on our consolidated
observable of the fair value of the financial assets or of the financial liabilities		financial statements.
for both the financial assets and financial liabilities.
		See Note 15, Fair Value
		Measurements, for further
		details.

246

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



		Effect on our consolidated
	Date of	financial statements or
Description	adoption	other significant matters
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.

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 was adopted
changes in AOCI balances by component and significant items reclassified		retrospectively and did not
out of AOCI by component either on the face of the income statement or as		have a material impact on
a separate footnote to the financial statements.		our consolidated financial
		statements.

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.

247

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 other comprehensive income (“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 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 $166.8 million and $171.8 million as of December 31, 2015 and 2014, 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 due to investment strategy 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.

248

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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.

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

249

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

rules and the existing basis adjustment is amortized to the consolidated statements of operations line associated with the asset or liability. The component of AOCI 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 AOCI 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.

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 9%, 11% and 12% of our life insurance in force and 36%, 40% and 43% of the number of life insurance policies in force at December 31, 2015, 2014 and 2013, respectively. Participating business represented approximately 49%, 53% and 58% of life insurance premiums for the years ended December 31, 2015, 2014 and 2013, 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 (“EGPs”).

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.

250

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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.

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. Maintenance costs and acquisition costs that are not deferrable are charged to operations as incurred.

DAC for universal life-type insurance contracts and certain investment contracts are being amortized over the lives of the policies and contracts in relation to the emergence of 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 universal 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 on participating life insurance policies are being amortized in proportion to estimated gross margins. The DAC on 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.

251

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 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, 2015 and 2014, we had $388.9 million and $320.2 million of net ceded reinsurance recoverables related to claims that have been received, respectively. At December 31, 2015 and 2014, our largest exposures to a single third party reinsurer was in our life insurance business, which totaled $40.6 billion and $38.9 billion of life insurance in force, representing 15% and 16% 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 $58.9 million and $48.1 million at December 31, 2015 and 2014, respectively.

The effects of reinsurance on premiums and other considerations and policy and contract benefits were as follows:



		For the year ended December 31,
		2015		2014		2013
		(in millions)
Premiums and other considerations:
	Direct	$	5,275.8	$	3,755.4	$	3,132.8
	Assumed		183.2		143.9		102.0
	Ceded		(401.6)		(402.1)		(372.4)
Net premiums and other considerations		$	5,057.4	$	3,497.2	$	2,862.4

Benefits, claims and settlement expenses:
	Direct		6,355.4		4,650.6		4,190.1
	Assumed		306.0		289.6		204.5
	Ceded		(526.3)		(330.2)		(280.1)
Net benefits, claims and settlement expenses		$	6,135.1	$	4,610.0	$	4,114.5

252

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015 and 2014, the separate accounts include a separate account valued at $158.2 million and $205.4 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. In the consolidated statements of financial position, 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 us and 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.

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, 2015, 2014 and 2013, we received $266.7 million, $334.5 million and $327.1 million, respectively, of expense reimbursements from affiliated entities.

253

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 $385.0 million and $400.7 million at December 31, 2015 and 2014, respectively, and earned interest of $0.5 million, $0.3 million and $0.4 million during 2015, 2014 and 2013, respectively.

We have short-term affiliated debt and long-term affiliated debt with our parent. See Note 10, Debt, for additional information.

During the third quarter of 2015, we transferred our ownership interests in PGI Finisterre Holding Company Ltd., Finisterre Holdings Limited, Finisterre Capital LLP, PGI Origin Holding Company Ltd. and Origin Asset Management LLP to PFSI. We received a $156.0 million 10-year note from PFSI for the carrying value of those subsidiaries. The note bears interest at 2.87% with semi-annual principal and interest payments due in February and August each year. Our ultimate parent, PFG, is a guarantor of the note. We recorded interest income of less than $0.1 million for the year ended December 31, 2015.

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 $2,166.9 million and $1,853.6 million as of December 31, 2015 and 2014, respectively. In addition, we recognized premiums and other fees of $337.4 million, $278.1 million and $223.6 million for the years ended December 31, 2015, 2014 and 2013, respectively, associated with this agreement. Furthermore, we recognized expenses of $493.6 million, $473.1 million and $428.6 million for the years ended December 31, 2015, 2014 and 2013, respectively, associated with this agreement.

We receive commission fees, distribution and services fees from Princor Financial Services Corporation and Principal Management Corporation for distributing proprietary products on their behalf. Furthermore, we receive management and administrative fees for investments our products hold in the Principal Mutual Funds and Principal Variable Contracts. Fees and other revenue was $446.1 million, $377.4 million and $407.9 million for the years ended December 31, 2015, 2014 and 2013, respectively. In addition, we pay commission expense to affiliated registered representatives within Princor Financial Services Corporation to sell proprietary products. Commission expense was $64.4 million, $66.8 million and $87.8 million for the years ended December 31, 2015, 2014 and 2013, respectively.

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 $86.1 million of pension expense from PFG during 2015 and $9.6 million during 2014 after the change in sponsorship was effective. See Note 12, Employee and Agent Benefits, for further details.

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.

254

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 Income		Global		Insurance
		Solutions		Investors		Solutions		Consolidated
		(in millions)
Balance at January 1, 2014		$	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
	Transfer to affiliate (1)		—		(68.3)		—		(68.3)
Balance at December 31, 2015		$	18.7	$	152.4	$	56.4	$	227.5


(1)	See Note 2, Related Party Transactions, for further details.

Finite Lived Intangible Assets

Finite lived intangible assets that continue to be subject to amortization over a weighted average remaining expected life of 16 years were as follows:



	December 31,
	2015		2014
	(in millions)
Gross carrying value	$	54.8	$	77.4
Accumulated amortization		21.6		27.6
Net carrying value	$	33.2	$	49.8

During 2015, 2014 and 2013, we fully amortized finite lived intangible assets of $0.5 million, $15.8 million and $5.2 million, respectively.

The amortization expense for intangible assets with finite useful lives was $4.0 million, $6.7 million and $6.5 million for 2015, 2014 and 2013, respectively. At December 31, 2015, the estimated amortization expense for the next five years is as follows (in millions):



Year ending December 31:
	2016	$	2.6
	2017		2.7
	2018		2.6
	2019		2.7
	2020		2.9

Indefinite Lived Intangible Assets

The net carrying amount of unamortized indefinite lived intangible assets was $94.5 million as of both December 31, 2015 and 2014. 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 based on the fact that we will benefit from our parent’s acquisition.

255

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 Vehicles

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

We invest in several real estate limited partnerships and limited liability companies. The entities invest in real estate properties. Certain of 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. Due to the nature of these real estate investments, the investment balance will fluctuate as we purchase and sell interests in the entities and as capital expenditures are made to improve the underlying real estate.

256

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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		vehicles		CMBS		Real estate		Total
		(in millions)
December 31, 2015
Fixed maturities, available-for-sale		$	257.4	$	—	$	—	$	—	$	257.4
Fixed maturities, trading			—		100.4		—		—		100.4
Real estate			—		—		—		354.5		354.5
Other investments			—		—		18.3		11.2		29.5
Cash			—		—		—		15.3		15.3
Accrued investment income			0.5		—		0.1		2.5		3.1
Premiums due and other receivables			—		—		—		1.6		1.6
Other assets			—		—		—		(0.9)		(0.9)
	Total assets	$	257.9	$	100.4	$	18.4	$	384.2	$	760.9
Long-term debt		$	—	$	—	$	—	$	42.8	$	42.8
Income taxes currently payable			—		—		—		0.5		0.5
Deferred income taxes			1.5		—		—		(1.7)		(0.2)
Other liabilities (1)			230.3		85.9		—		29.7		345.9
	Total liabilities	$	231.8	$	85.9	$	—	$	71.3	$	389.0
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


(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 trusts.

We did not provide financial or other support to investees designated as VIEs for the periods ended December 31, 2015 and 2014.

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 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.

257

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015
Fixed maturities, available-for-sale:
	Corporate	$	453.4	$	359.8
	Residential mortgage-backed pass-through securities		2,614.2		2,537.2
	Commercial mortgage-backed securities		3,850.0		3,862.2
	Collateralized debt obligations		663.6		688.8
	Other debt obligations		4,471.5		4,467.7
Fixed maturities, trading:
	Residential mortgage-backed pass-through securities		25.9		25.9
	Commercial mortgage-backed securities		2.3		2.3
	Collateralized debt obligations		35.1		35.1
Other investments:
	Other limited partnership and fund interests		215.8		215.8

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


(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.

258

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

Sponsored Investment Funds

We provide asset management and other services to certain investment structures for which we earn performance-based management fees. These structures are considered VIEs. 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, 2015
Fixed maturities, available-for-sale:
	U.S. government and agencies	$	1,423.5	$	23.4	$	8.2	$	1,438.7	$	—
	Non-U.S. governments		349.7		77.1		2.8		424.0		—
	States and political subdivisions		4,450.6		232.9		19.2		4,664.3		—
	Corporate		27,552.7		1,317.8		595.4		28,275.1		6.0
	Residential mortgage-backed pass-through securities		2,537.1		89.0		11.9		2,614.2		—
	Commercial mortgage-backed securities		3,862.2		65.3		77.5		3,850.0		80.7
	Collateralized debt obligations		688.8		1.4		26.6		663.6		1.3
	Other debt obligations		4,529.7		39.2		35.4		4,533.5		58.2
Total fixed maturities, available-for-sale		$	45,394.3	$	1,846.1	$	777.0	$	46,463.4	$	146.2
Total equity securities, available-for-sale		$	110.2	$	5.8	$	14.2	$	101.8
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


(1)	Excludes $131.5 million and $167.5 million as of December 31, 2015 and December 31, 2014, 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.

259

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

The amortized cost and fair value of fixed maturities available-for-sale at December 31, 2015, by expected maturity, were as follows:



	Amortized cost		Fair value
	(in millions)
Due in one year or less	$	2,631.3	$	2,652.2
Due after one year through five years		12,677.7		12,963.9
Due after five years through ten years		7,742.9		7,846.2
Due after ten years		10,724.6		11,339.8
Subtotal		33,776.5		34,802.1
Mortgage-backed and other asset-backed securities		11,617.8		11,661.3
Total	$	45,394.3	$	46,463.4

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 components of net investment income are summarized as follows:



	For the year ended December 31,
	2015		2014		2013
	(in millions)
Fixed maturities, available-for-sale	$	1,923.4	$	2,017.0	$	2,109.3
Fixed maturities, trading		11.6		12.2		11.2
Equity securities, available-for-sale		5.6		5.4		6.9
Equity securities, trading		9.8		6.5		2.8
Mortgage loans		525.7		563.4		565.2
Real estate		96.6		103.2		60.7
Policy loans		41.4		43.8		43.5
Cash and cash equivalents		4.3		3.7		4.4
Derivatives		(66.6)		(87.9)		(115.2)
Other		75.1		71.1		67.2
Total		2,626.9		2,738.4		2,756.0
Investment expenses		(74.9)		(74.9)		(74.5)
Net investment income	$	2,552.0	$	2,663.5	$	2,681.5

260

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

Net Realized Capital Gains and Losses

Major components of net realized capital gains (losses) on investments are summarized as follows:



		For the year ended December 31,
		2015		2014		2013
		(in millions)
Fixed maturities, available-for-sale:
	Gross gains	$	17.0	$	49.5	$	22.9
	Gross losses		(4.3)		(23.8)		(10.6)
	Net impairment losses		(30.3)		(83.7)		(111.5)
	Hedging, net		(58.3)		(21.4)		(115.6)
Fixed maturities, trading			(6.1)		8.8		(5.2)
Equity securities, available-for-sale:
	Gross gains		—		—		0.7
	Net impairment recoveries (losses)		0.3		10.0		(0.3)
Equity securities, trading			(8.2)		10.7		22.4
Mortgage loans			(0.3)		(9.4)		(16.0)
Derivatives			82.5		60.3		(22.8)
Other			(18.3)		61.7		24.7
Net realized capital gains (losses)		$	(26.0)	$	62.7	$	(211.3)

Proceeds from sales of investments (excluding call and maturity proceeds) in fixed maturities, available-for-sale were $1,059.6 million, $2,068.9 million and $1,493.7 million in 2015, 2014 and 2013, 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 rate-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”).

261

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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,
		2015		2014		2013
		(in millions)
Fixed maturities, available-for-sale		$	(1.1)	$	18.5	$	(89.5)
Equity securities, available-for-sale			0.3		10.0		(0.3)
Total other-than-temporary impairment losses, net of recoveries from
	the sale of previously impaired securities		(0.8)		28.5		(89.8)
Other-than-temporary impairment losses on fixed maturities,
	available-for-sale reclassified from OCI (1)		(29.2)		(102.2)		(22.0)
Net impairment losses on available-for-sale securities		$	(30.0)	$	(73.7)	$	(111.8)

(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,
		2015		2014		2013
		(in millions)
Beginning balance		$	(140.3)	$	(235.4)	$	(329.0)
Credit losses for which an other-than-temporary impairment was
	not previously recognized		(6.1)		(7.2)		(15.1)
Credit losses for which an other-than-temporary impairment was
	previously recognized		(13.8)		(67.4)		(75.9)
Reduction for credit losses previously recognized on fixed maturities
	now sold, paid down or intended to be sold		24.7		163.1		172.0
Net reduction for positive changes in cash flows expected
	to be collected and amortization (1)		7.5		6.6		12.6
Ending balance		$	(128.0)	$	(140.3)	$	(235.4)

(1) Amounts are recognized in net investment income.

262

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015
			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		$	539.2	$	7.5	$	40.5	$	0.7	$	579.7	$	8.2
	Non-U.S. governments			55.1		2.8		—		—		55.1		2.8
	States and political subdivisions			677.6		18.8		6.5		0.4		684.1		19.2
	Corporate			7,441.3		291.1		1,244.2		304.3		8,685.5		595.4
	Residential mortgage-backed pass-
		through securities		656.7		6.7		147.9		5.2		804.6		11.9
	Commercial mortgage-backed
		securities		1,419.8		26.8		299.5		50.7		1,719.3		77.5
	Collateralized debt obligations			424.9		3.8		164.0		22.8		588.9		26.6
	Other debt obligations			2,459.3		18.8		403.5		16.6		2,862.8		35.4
Total fixed maturities, available-for-sale			$	13,673.9	$	376.3	$	2,306.1	$	400.7	$	15,980.0	$	777.0
Total equity securities, available-for-sale			$	0.8	$	1.0	$	32.7	$	13.2	$	33.5	$	14.2

Our consolidated portfolio consists of available-for-sale fixed maturities where 87% were investment grade (rated AAA through BBB-) with an average price of 95 (carrying value/amortized cost) at December 31, 2015. Gross unrealized losses in our fixed maturities portfolio increased during the year ended December 31, 2015, due primarily to an increase in interest rates and widening of credit spreads.

For those securities that had been in a continuous unrealized loss position for less than twelve months, our consolidated portfolio held 1,725 securities with a carrying value of $13,673.9 million and unrealized losses of $376.3 million reflecting an average price of 97 at December 31, 2015. Of this portfolio, 90% was investment grade (rated AAA through BBB-) at December 31, 2015, with associated unrealized losses of $298.1 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 404 securities with a carrying value of $2,306.1 million and unrealized losses of $400.7 million. The average rating of this portfolio was BBB+ with an average price of 85 at December 31, 2015. Of the $400.7 million in unrealized losses, the corporate sector accounts for $304.2 million in unrealized losses with an average price of 80 and an average credit rating of BBB-. The remaining unrealized losses consist primarily of $50.7 million within the commercial mortgage-backed securities sector with an average price of 86 and an average credit rating of 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, 2015.

263

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



			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 available-for-sale 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 corporate sector accounts for $113.0 million in unrealized losses with an average price of 91 and an average credit rating of BBB+. The remaining unrealized losses consist primarily of $59.9 million within the commercial mortgage-backed securities sector with an average price of 87 and an average credit rating of A-. 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.

264

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015		December 31, 2014
		(in millions)
Net unrealized gains on fixed maturities, available-for-sale (1)		$	1,153.0	$	2,712.3
Noncredit component of impairment losses on fixed maturities, available-for-sale			(146.2)		(175.4)
Net unrealized losses on equity securities, available-for-sale			(8.4)		(4.2)
Adjustments for assumed changes in amortization patterns			(127.0)		(346.8)
Adjustments for assumed changes in policyholder liabilities			(214.2)		(849.3)
Net unrealized gains on derivative instruments			217.0		203.8
Net unrealized gains on equity method subsidiaries and noncontrolling interest
	adjustments		70.4		42.9
Provision for deferred income taxes			(329.4)		(553.5)
Net unrealized gains on available-for-sale securities and derivative instruments		$	615.2	$	1,029.8


(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, 2015		December 31, 2014
		(in millions)
Commercial mortgage loans		$	11,222.4	$	10,684.0
Residential mortgage loans			620.0		536.4
	Total amortized cost		11,842.4		11,220.4

Valuation allowance			(51.4)		(56.0)
Total carrying value		$	11,791.0	$	11,164.4

We periodically purchase mortgage loans as well as sell mortgage loans we have originated. We purchased $227.3 million, $99.0 million and $44.9 million of residential mortgage loans in 2015, 2014 and 2013, respectively. We sold $0.0 million, $34.6 million and $0.0 million of residential mortgage loans in 2015, 2014 and 2013, respectively. We purchased $193.6 million, $57.3 million and $166.1 million of commercial mortgage loans in 2015, 2014 and 2013, respectively. We sold $1.0 million, $0.2 million and $13.0 million of commercial mortgage loans in 2015, 2014 and 2013, respectively.

265

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015					December 31, 2014
	Amortized		Percent			Amortized		Percent
	cost		of total			cost		of total
	($ in millions)
Geographic distribution
New England	$	509.4		4.5	%	$	528.0		4.9	%
Middle Atlantic		3,075.6		27.4			2,951.0		27.7
East North Central		451.8		4.0			442.1		4.1
West North Central		264.3		2.4			233.3		2.2
South Atlantic		2,072.7		18.5			1,970.9		18.5
East South Central		215.1		1.9			197.4		1.8
West South Central		1,120.6		10.0			1,023.9		9.6
Mountain		898.8		8.0			772.0		7.2
Pacific		2,614.1		23.3			2,565.4		24.0
Total	$	11,222.4		100.0	%	$	10,684.0		100.0	%

Property type distribution
Office	$	4,010.0		35.7	%	$	3,646.1		34.1	%
Retail		2,521.6		22.5			2,512.1		23.5
Industrial		1,840.9		16.4			1,916.1		18.0
Apartments		2,474.2		22.0			2,200.5		20.6
Hotel		320.5		2.9			331.5		3.1
Mixed use/other		55.2		0.5			77.7		0.7
Total	$	11,222.4		100.0	%	$	10,684.0		100.0	%

Our residential mortgage loan portfolio is composed of home equity mortgages with an amortized cost of $218.8 million and $283.4 million and first lien mortgages with an amortized cost of $401.2 million and $253.0 million as of December 31, 2015 and December 31, 2014, 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.

266

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015
	Brick and mortar		CTL		Total
	(in millions)
A- and above	$	9,825.3	$	224.0	$	10,049.3
BBB+ thru BBB-		870.1		119.5		989.6
BB+ thru BB-		158.6		0.1		158.7
B+ and below		24.1		0.7		24.8
Total	$	10,878.1	$	344.3	$	11,222.4

	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		0		148.3
B+ and below		68.8		1.6		70.4
Total	$	10,335.1	$	348.9	$	10,684.0

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, 2015
	Home equity		First liens		Total
	(in millions)
Performing	$	208.0	$	396.0	$	604.0
Nonperforming		10.8		5.2		16.0
Total	$	218.8	$	401.2	$	620.0

	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

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.

267

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

The amortized cost of mortgage loans on non-accrual status was as follows:



		December 31, 2015		December 31, 2014
		(in millions)
Commercial:
	Brick and mortar	$	—	$	9.6
Residential:
	Home equity		10.8		15.0
	First liens		5.2		5.4
Total		$	16.0	$	30.0

The aging of our mortgage loans, based on amortized cost, was as follows:



	December 31, 2015
					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	$	—	$	—	$	—	$	—	$	10,878.1	$	10,878.1
Commercial-CTL		—		—		—		—		344.3		344.3
Residential-home equity		2.0		1.0		0.6		3.6		215.2		218.8
Residential-first liens		—		0.1		4.0		4.1		397.1		401.2
Total	$	2.0	$	1.1	$	4.6	$	7.7	$	11,834.7	$	11,842.4

	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

We did not have any mortgage loans that were 90 days or more past due and still accruing interest as of either December 31, 2015 or December 31, 2014.

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.

268

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 historical 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.

269

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015
Beginning balance		$	26.9	$	29.1	$	56.0
	Provision		3.9		0.1		4.0
	Charge-offs		(3.4)		(8.9)		(12.3)
	Recoveries		0.1		3.6		3.7
Ending balance		$	27.5	$	23.9	$	51.4
Allowance ending balance by basis of impairment method:
	Individually evaluated for impairment	$	—	$	7.5	$	7.5
	Collectively evaluated for impairment		27.5		16.4		43.9
Allowance ending balance		$	27.5	$	23.9	$	51.4
Loan balance by basis of impairment method:
	Individually evaluated for impairment	$	—	$	23.1	$	23.1
	Collectively evaluated for impairment		11,222.4		596.9		11,819.3
Loan ending balance		$	11,222.4	$	620.0	$	11,842.4

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

270

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 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, 2015
				Unpaid
		Recorded		principal		Related
		investment		balance		allowance
		(in millions)
With no related allowance recorded:
	Residential-first liens	$	3.6	$	3.6	$	—
With an allowance recorded:
	Residential-home equity		13.7		14.8		7.0
	Residential-first liens		5.8		5.8		0.5
Total:
	Residential	$	23.1	$	24.2	$	7.5

		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		6.5		6.4		0.6
Total:
	Commercial	$	9.6	$	11.1	$	2.4
	Residential	$	26.4	$	26.9	$	8.8

271

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



		Average
		recorded		Interest income
		investment		recognized
		(in millions)
For the year ended December 31, 2015
With no related allowance recorded:
	Commercial-brick and mortar	$	2.6	$	—
	Residential-first liens		3.5		—
With an allowance recorded:
	Commercial-brick and mortar		2.2		0.1
	Residential-home equity		15.1		0.4
	Residential-first liens		6.1		0.2
Total:
	Commercial	$	4.8	$	0.1
	Residential	$	24.7	$	0.6

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

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 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.

272

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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:



	For the year ended December 31, 2015
	TDRs			TDRs in payment default
	Number of	Recorded		Number of	Recorded
	contracts	investment		contracts	investment
		(in millions)			(in millions)
Residential-home equity	14	$	0.6	2	$	—
Total	14	$	0.6	2	$	—

	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

Commercial mortgage loans that have been designated as a TDR have been previously reserved for in the mortgage loan valuation allowance at 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 $49.3 million, $46.4 million and $44.4 million in 2015, 2014 and 2013, respectively. Accumulated depreciation was $409.1 million and $387.8 million as of December 31, 2015 and 2014, respectively.

273

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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:



			December 31,
			2015		2014
			(in millions)
Total assets			$	60,234.7	$	14,066.7
Total liabilities				14,165.9		3,773.7
Total equity			$	46,068.8	$	10,293.0
Net investment in unconsolidated entities			$	466.1	$	521.6

	For the year ended December 31,
	2015		2014		2013
	(in millions)
Total revenues	$	7,693.6	$	1,485.2	$	773.7
Net income		4,443.0		747.3		368.3
Our share of net income of unconsolidated entities		57.4		52.9		43.9

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 $935.7 million in fixed maturities, available-for-sale securities at December 31, 2015, to satisfy collateral requirements primarily associated with a reinsurance arrangement, our derivative credit support annex (collateral) agreements, Futures Commission Merchant (“FCM”) agreements and a lending arrangement. In addition, we posted $2,705.5 million in commercial mortgage loans and home equity mortgages as of December 31, 2015, to satisfy collateral requirements associated with our obligation under funding agreements with the Federal Home Loan Bank of 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, $295.2 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, 2015
Derivative assets	$	656.5	$	(409.7)	$	(227.7)	$	19.1
December 31, 2014
Derivative assets	$	650.8	$	(478.9)	$	(159.4)	$	12.5


(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.

274

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015


(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.

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, 2015
Derivative liabilities	$	729.0	$	(409.7)	$	(253.9)	$	65.4
December 31, 2014
Derivative liabilities	$	763.8	$	(478.9)	$	(220.6)	$	64.3

(1)

The gross amount of recognized derivative liabilities is reported with other liabilities on the consolidated statements of financial position. The above excludes $381.4 million and $395.0 million of derivative liabilities as of December 31, 2015 and December 31, 2014, respectively, which are primarily embedded derivatives that are not subject to master netting agreements or similar agreements. The gross amount of derivative liabilities is 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, 2015 and December 31, 2014.

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.

275

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 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.

276

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 contracts in which the return is tied to a leveraged inflation index. We economically hedge the risk associated with these investment 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.

277

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 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 $342.7 million and $271.6 million in cash and securities under collateral arrangements as of December 31, 2015 and December 31, 2014, 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, 2015 and December 31, 2014, was $606.5 million and $656.2 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 $342.7 million and $271.6 million as of December 31, 2015 and December 31, 2014, 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, 2015, we would be required to post an additional $75.8 million of collateral to our counterparties.

As of December 31, 2015 and December 31, 2014, we had received $211.6 million and $138.7 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.

278

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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:



		December 31, 2015		December 31, 2014
		(in millions)
Notional amounts of derivative instruments
Interest rate contracts:
	Interest rate swaps	$	21,704.2	$	19,182.6
	Interest rate options		4,900.0		4,900.0
	Swaptions		159.0		260.0
	Interest rate futures		162.0		147.5
Foreign exchange contracts:
	Currency swaps		1,589.2		1,835.1
Equity contracts:
	Equity options		3,604.8		3,293.4
	Equity futures		514.2		498.1
Credit contracts:
	Credit default swaps		1,084.5		1,234.5
	Total return swaps		90.0		90.0
	Futures		13.1		10.4
Other contracts:
	Embedded derivatives		9,294.1		8,646.8
Total notional amounts at end of period		$	43,115.1	$	40,098.4

Credit exposure of derivative instruments
Interest rate contracts:
	Interest rate swaps	$	505.5	$	510.8
	Interest rate options		34.1		41.0
Foreign exchange contracts:
	Currency swaps		99.8		87.6
Equity contracts:
	Equity options		39.9		30.2
Credit contracts:
	Credit default swaps		13.4		13.3
	Total return swaps		0.5		—
Total gross credit exposure			693.2		682.9
Less: collateral received			228.3		173.9
Net credit exposure		$	464.9	$	509.0

279

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

The fair value of our derivative instruments classified as assets and liabilities was as follows:



		Derivative assets (1)				Derivative liabilities (2)
		December 31, 2015		December 31, 2014		December 31, 2015		December 31, 2014
		(in millions)
Derivatives designated as hedging
	instruments
Interest rate contracts		$	9.4	$	8.8	$	132.2	$	193.9
Foreign exchange contracts			94.1		80.0		164.2		69.1
Total derivatives designated as hedging
	instruments	$	103.5	$	88.8	$	296.4	$	263.0

Derivatives not designated as hedging
	instruments
Interest rate contracts		$	493.0	$	508.6	$	255.8	$	321.5
Foreign exchange contracts			6.1		9.9		24.8		12.0
Equity contracts			40.0		30.2		112.3		131.7
Credit contracts			13.9		13.3		39.7		35.6
Other contracts			—		—		381.4		395.0
Total derivatives not designated as hedging
	instruments		553.0		562.0		814.0		895.8

Total derivative instruments		$	656.5	$	650.8	$	1,110.4	$	1,158.8

(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 liabilities with a fair value of $151.1 million and $155.9 million as of December 31, 2015 and December 31, 2014, 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 $0.0 million as of December 31, 2015 and $10.0 million as of December 31, 2014. These purchased credit derivative transactions had a net asset (liability) fair value of $0.0 million as of December 31, 2015 and $(0.1) million as of December 31, 2014. 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.

280

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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.



			December 31, 2015
									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	$	0.8	$	30.0		3.2
		AA		74.0		1.1		74.0		2.3
		A		195.0		2.2		195.0		2.2
		BBB		310.0		(0.9)		310.0		2.9
		BB		30.0		(4.6)		30.0		3.1
		CCC		10.0		(6.8)		10.0		4.0
	Government/municipalities
		AA		30.0		0.6		30.0		3.3
	Sovereign
		AA		10.0		—		10.0		3.7
		BBB		40.0		(0.9)		40.0		3.7
Total single name credit default swaps				729.0		(8.5)		729.0		2.8

Basket and index credit default swaps
	Corporate debt
		Near default (1)		100.4		(17.7)		100.4		1.2
	Government/municipalities
		AA		30.0		(1.1)		30.0		1.7
	Structured finance
		AAA		11.9		—		11.9		0.6
Total basket and index credit default swaps				142.3		(18.8)		142.3		1.3
Total credit default swap protection sold			$	871.3	$	(27.3)	$	871.3		2.5

281

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



			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


(1)	Includes $78.0 million as of both December 31, 2015 and 2014, 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 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.

282

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



		December 31, 2015
						Weighted
						average
		Amortized		Carrying		expected life
		cost		value		(in years)
		(in millions)
Corporate debt
	A	$	24.6	$	24.6		1.0
Total corporate debt			24.6		24.6		1.0

Structured finance
	A		52.2		52.2		1.1
	BBB		3.4		3.4		1.6
	BB		2.3		2.3		1.6
	CCC		4.8		4.8		1.9
Total structured finance			62.7		62.7		1.2
Total fixed maturities with credit derivatives		$	87.3	$	87.3		1.1



		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

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.

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.

283

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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		2015		2014		2013		relationships		2015		2014		2013
		(in millions)								(in millions)
								Fixed maturities,
Interest rate contracts		$	26.4	$	25.4	$	139.5		available-for-sale	$	(26.1)	$	(27.7)	$	(133.3)
Interest rate contracts			0.8		2.0		(0.7)	Investment contracts			(0.7)		(1.9)		0.2
Foreign exchange								Fixed maturities,
	contracts		3.8		5.5		(0.2)		available-for-sale		(3.8)		(5.4)		0.4
Foreign exchange
	contracts		—		0.2		(36.7)	Investment contracts			—		(0.2)		36.5
Total		$	31.0	$	33.1	$	101.9	Total		$	(30.6)	$	(35.2)	$	(96.2)


(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	2015		2014		2013
	(in millions)
Fixed maturities, available-for-sale (1)	$	(72.8)	$	(93.0)	$	(120.7)
Investment contracts (2)		3.7		4.3		33.2

(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.

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 4.5 years. At December 31, 2015, we had $44.1 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 $0.0 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, 2015 and 2014, respectively.

284

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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		2015		2014		2013		(effective portion)		2015		2014		2013
				(in millions)								(in millions)
Interest rate		Fixed maturities,								Net investment
	contracts		available-for-sale	$	33.1	$	29.0	$	(80.5)		income	$	16.8	$	13.8	$	11.7
Interest rate										Benefits, claims and
	contracts	Investment contracts			4.7		2.0		2.5		settlement expenses		—		—		—
Foreign exchange		Fixed maturities,								Net realized capital
	contracts		available-for-sale		16.9		68.7		(0.9)		gains (losses)		28.4		(10.2)		(16.7)
Foreign exchange										Benefits, claims and
	contracts	Investment contracts			2.4		7.2		5.0		settlement expenses		—		—		—
Total				$	57.1	$	106.9	$	(73.9)	Total		$	45.2	$	3.6	$	(5.0)

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	2015		2014		2013
	(in millions)
Fixed maturities, available-for-sale (1)	$	6.1	$	5.1	$	7.7
Investment contracts (2)		(18.3)		(11.1)		(11.0)

(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, $0.0 million and $0.8 million for the years ended December 31, 2015, 2014 and 2013, respectively.

We expect to reclassify net gains of $6.6 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.

285

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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	2015		2014		2013
	(in millions)
Interest rate contracts	$	74.0	$	246.1	$	(137.6)
Foreign exchange contracts		(11.2)		(31.4)		6.1
Equity contracts		(50.5)		21.9		(159.4)
Credit contracts		3.5		(34.7)		40.6
Other contracts		(5.7)		(190.2)		148.3
Total	$	10.1	$	11.7	$	(102.0)

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, 2015 and 2014, 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 $88.7 million and $165.2 million as of December 31, 2015 and 2014, respectively.

286

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

Closed Block liabilities and assets designated to the Closed Block were as follows:



		December 31, 2015		December 31, 2014
		(in millions)
Closed Block liabilities
Future policy benefits and claims		$	4,229.2	$	4,366.5
Other policyholder funds			9.2		9.6
Policyholder dividends payable			246.4		259.2
Policyholder dividends obligation			88.7		165.2
Other liabilities			8.2		17.6
	Total Closed Block liabilities		4,581.7		4,818.1

Assets designated to the Closed Block
Fixed maturities, available-for-sale			2,211.5		2,399.5
Fixed maturities, trading			10.3		11.9
Equity securities, available-for-sale			3.8		3.8
Mortgage loans			899.1		912.1
Policy loans			587.2		610.0
Other investments			81.9		101.1
	Total investments		3,793.8		4,038.4
Cash and cash equivalents			88.8		29.2
Accrued investment income			45.3		48.8
Premiums due and other receivables			11.3		13.6
Deferred tax asset			55.2		58.1
Other assets			0.2		—
	Total assets designated to the Closed Block		3,994.6		4,188.1
Excess of Closed Block liabilities over assets designated to the Closed Block			587.1		630.0
Amounts included in accumulated other comprehensive income			9.3		18.9
Maximum future earnings to be recognized from Closed Block assets and
	liabilities	$	596.4	$	648.9

Closed Block revenues and expenses were as follows:



		For the year ended December 31,
		2015		2014		2013
		(in millions)
Revenues
Premiums and other considerations		$	325.6	$	351.9	$	379.9
Net investment income			187.0		201.9		207.7
Net realized capital losses			(0.2)		(2.3)		(12.3)
	Total revenues		512.4		551.5		575.3

Expenses
Benefits, claims and settlement expenses			283.2		313.3		320.1
Dividends to policyholders			160.4		173.2		184.4
Operating expenses			3.9		4.3		4.7
	Total expenses		447.5		490.8		509.2
Closed Block revenues, net of Closed Block expenses, before income taxes			64.9		60.7		66.1
Income taxes			20.7		19.5		21.1
Closed Block revenues, net of Closed Block expenses and income taxes			44.2		41.2		45.0
Funding adjustment charges			8.3		(4.8)		(6.5)
Closed Block revenues, net of Closed Block expenses, income taxes and
	funding adjustment charges	$	52.5	$	36.4	$	38.5

287

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

The change in maximum future earnings of the Closed Block was as follows:



	For the year ended December 31,
	2015		2014		2013
	(in millions)
Beginning of year	$	648.9	$	685.3	$	723.8
End of year		596.4		648.9		685.3
Change in maximum future earnings	$	(52.5)	$	(36.4)	$	(38.5)

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,
		2015		2014		2013
		(in millions)

Balance at beginning of year		$	2,754.6	$	2,848.8	$	2,394.7
Cost deferred during the year			356.5		347.4		393.0
Amortized to expense during the year (1)			(251.7)		(348.5)		(170.6)
Adjustment related to unrealized gains on available-for-sale securities and
	derivative instruments		197.9		(93.1)		231.7
Balance at end of year		$	3,057.3	$	2,754.6	$	2,848.8

(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,
		2015		2014
		(in millions)
Liabilities for investment contracts:
	Liabilities for individual annuities	$	10,147.4	$	10,077.7
	GICs		10,222.8		10,115.3
	Funding agreements		6,863.4		7,338.1
	Other investment contracts		996.6		1,008.5
Total liabilities for investment contracts			28,230.2		28,539.6
Universal life and other reserves			4,921.4		4,888.7
Total contractholder funds		$	33,151.6	$	33,428.3

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.

288

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015 and 2014, $107.5 million and $111.2 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, 2015 and 2014, $1,021.0 million and $1,137.1 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, 2015 and 2014, $201.4 million and $505.8 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 $9.0 billion of funding agreements under a program that was originally established in March 2004 to support the prospective issuance of medium term notes by unaffiliated entities in both domestic and international markets. 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, 2015 and 2014, $246.0 million and $549.2 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 that was originally 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. In June 2015, this program was amended to authorize issuance of up to an additional $4.0 billion in recognition of the use of nearly all $5.0 billion of existing issuance authorization. As of December 31, 2015 and 2014, $3,537.0 million and $3,284.7 million, respectively, of liabilities are being held with respect to 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.

289

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

Future Policy Benefits and Claims

Activity associated with unpaid disability and health claims is summarized as follows:



		December 31,
		2015		2014		2013
		(in millions)

Balance at beginning of year		$	1,240.1	$	1,144.7	$	1,066.0
Incurred:
	Current year		810.2		760.5		712.0
	Prior years		—		1.2		1.0
Total incurred			810.2		761.7		713.0
Payments:
	Current year		484.3		445.5		432.1
	Prior years		243.3		220.8		202.2
Total payments			727.6		666.3		634.3
Balance at end of year:
	Current year		325.9		315.0		279.9
	Prior years		996.8		925.1		864.8
Total balance at end of year		$	1,322.7	$	1,240.1	$	1,144.7

Amounts not included in the rollforward above:
	Claim adjustment expense liabilities	$	51.5	$	47.5	$	43.4
	Reinsurance recoverables for unpaid claims	$	325.2	$	304.6	$	265.8

Incurred liability adjustments relating to prior years, which affected current operations during 2015, 2014 and 2013, 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, 2015 and 2014, we had $108.8 million and $154.5 million, respectively, of outstanding borrowings related to affiliated credit facilities, which consisted of a payable to PFSI, with no assets pledged as support. Interest paid on intercompany debt was $0.4 million, $0.5 million and $0.8 million during 2015, 2014 and 2013, respectively. As of both December 31, 2015 and 2014, we had external short-term credit facilities with various financial institutions in an aggregate amount of $945.0 million. These 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, 2015 and 2014.

The weighted‑average interest rate on short-term borrowings as of December 31, 2015 and 2014, was 0.2% and 0.1%, respectively.

290

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

Long-Term Debt

The components of long-term debt were as follows:



	December 31,
	2015		2014
	(in millions)

Non-recourse mortgages and notes payable	$	42.8	$	82.3
Total long-term debt	$	42.8	$	82.3

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, 2015, ranged from $1.7 million to $41.1 million per development with interest rates being variable. 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 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 $79.5 million and $155.6 million as of December 31, 2015 and 2014, respectively.

At December 31, 2015, future annual maturities of the long-term debt were as follows (in millions):



Year ending December 31:
	2016	$	42.8
	2017		—
	2018		—
	2019		—
	2020		—
	Thereafter		—
	Total future maturities of the long-term debt	$	42.8

291

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

11. Income Taxes

Income Tax Expense

Our income tax expense was as follows:



		For the year ended December 31,
		2015		2014		2013
		(in millions)
Current income taxes (benefits):
	U.S. federal	$	266.2	$	218.8	$	98.2
	State		9.3		6.0		4.9
	Foreign		0.7		4.9		17.9
	Tax benefit of operating loss carryforward		(42.3)		(161.4)		(130.4)
Total current income taxes (benefits)			233.9		68.3		(9.4)
Deferred income taxes:
	U.S. federal		46.4		172.7		181.3
	State		1.6		2.0		1.3
Total deferred income taxes			48.0		174.7		182.6
Total income taxes		$	281.9	$	243.0	$	173.2

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,
	2015		2014		2013
U.S. corporate income tax rate	35	%	35	%	35	%
Dividends received deduction	(13)		(12)		(13)
Interest exclusion from taxable income	(2)		(2)		(2)
Tax credits	(2)		(2)		—
Impact of court ruling on some uncertain tax positions	4		—		—
Other	1		1		—
Effective income tax rate	23	%	20	%	20	%

Unrecognized Tax Benefits

A summary of the changes in unrecognized tax benefits follows.



		For the year ended December 31,
		2015		2014
		(in millions)
Balance at beginning of period		$	168.5	$	106.0
	Additions based on tax positions related to the current year		12.8		12.1
	Additions for tax positions of prior years		45.2		58.8
	Reductions for tax positions related to the current year		(8.7)		(8.4)
	Reductions for tax positions of prior years		(2.6)		—
Balance at end of period (1)		$	215.2	$	168.5

(1) Of this amount, $75.7 million, if recognized, would reduce the 2015 effective income tax rate. We recognize interest and penalties related to uncertain tax positions in operating expenses.

As of December 31, 2015 and 2014, we had recognized $137.9 million and $100.4 million of accumulated pre-tax interest and penalties related to unrecognized tax benefits, respectively.

292

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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,
			2015		2014
			(in millions)
Deferred income tax assets:
	Insurance liabilities		$	109.6	$	390.8
	Investments, including derivatives			354.2		380.6
	Net operating loss carryforwards			0.5		42.8
	Tax credit carryforwards			158.5		71.6
	Employee benefits			158.4		147.3
	Foreign currency translation			123.4		61.8
		Total deferred income tax assets		904.6		1,094.9
Deferred income tax liabilities:
	Deferred acquisition costs			(831.0)		(728.3)
	Investments, including derivatives			(355.3)		(374.2)
	Net unrealized gains on available-for-sale securities			(373.0)		(901.0)
	Real estate			(122.1)		(132.7)
	Intangible assets			(16.4)		(22.4)
	Other deferred income tax liabilities			(99.6)		(19.1)
		Total deferred income tax liabilities		(1,797.4)		(2,177.7)
		Total net deferred income tax liabilities	$	(892.8)	$	(1,082.8)

Net deferred income taxes by jurisdiction were as follows:



		December 31,
		2015		2014
		(in millions)
Deferred income tax liabilities:
	U.S. federal	$	(887.3)	$	(1,078.8)
	State		(5.5)		(4.0)
Total net deferred income tax liabilities		$	(892.8)	$	(1,082.8)

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 tax carryforwards available to offset future taxable income or income taxes. As of December 31, 2015 and 2014, we have tax credit carryforwards for U.S. federal income tax purposes of $158.5 million and $71.6 million, respectively. Alternative minimum, foreign and general business tax credit carryovers were generated during the period we utilized net operating losses, primarily attributable to our captive reinsurance companies that joined our consolidated U.S. federal income tax return beginning in 2012 and 2013. Some of these tax credit carryforwards will expire in 2023 while others never expire. As of December 31, 2015, all accumulated U.S. federal tax credit carryforwards are anticipated to be utilized before expiration; therefore, no valuation allowance has been provided for the related deferred income tax assets.

As of December 31, 2015 and 2014, domestic state net operating loss carryforwards were $9.4 million and $11.8 million, 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. As of December 31, 2015, all accumulated state net operating loss carryforwards are anticipated to be utilized before expiration; therefore, no valuation allowance has been provided for the related deferred income tax assets.

293

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 believe there is a reasonable possibility this litigation can be resolved within the next twelve months. As of December 31, 2015 and 2014, we had $232.1 million and $300.7 million, respectively, of current income tax receivables associated with outstanding audit issues reported as other assets in our consolidated statements of financial position.

We filed claims for refund for tax years 2006 through 2008 in 2015. The IRS commenced audit of our U.S. federal income tax return for 2009 in the fourth quarter of 2011, 2010 in the first quarter of 2012, 2011 in the first quarter of 2013, and 2012 in the third quarter of 2015. 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 denied cross-motions for partial summary judgment on February 4, 2015, and ordered a trial on the previously taxed income issue in the case of Principal Life Insurance Company and Subsidiaries v. the United States. Previously, in the same case, on May 9, 2014, the court ruled against our tax treatment of transactions involving the purchase and sale of principal-only certificates. These recent events caused the re-evaluation of all our pending uncertain tax positions, which resulted in a $30.3 million reduction in net income in the first quarter of 2015 and 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 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 uncertain 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 postretirement 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.

294

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 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,
	2015		2014		2015		2014
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	—	$	(2,440.2)	$	(169.7)	$	(140.6)
Service cost		—		(45.0)		(2.0)		(1.4)
Interest cost		—		(97.6)		(6.6)		(6.6)
Actuarial gain		—		—		(2.7)		(26.0)
Participant contribution		—		—		(6.4)		(6.6)
Benefits paid		—		69.5		12.7		12.2
Plan transfer due to change in sponsorship		—		2,513.3		—		—
Other		—		—		9.0		(0.7)
Benefit obligation at end of year	$	—	$	—	$	(165.7)	$	(169.7)

Change in plan assets
Fair value of plan assets at beginning of year	$	—	$	1,925.6	$	639.7	$	613.0
Actual return on plan assets		—		110.0		(6.9)		31.9
Employer contribution		—		116.4		0.5		0.4
Participant contributions		—		—		6.4		6.6
Benefits paid		—		(69.5)		(12.7)		(12.2)
Plan transfer due to change in sponsorship		—		(2,082.5)		—		—
Fair value of plan assets at end of year	$	—	$	—	$	627.0	$	639.7

Amount recognized in statement of financial position
Other assets	$	—	$	—	$	461.9	$	470.7
Other liabilities		—		—		(0.6)		(0.7)
Total	$	—	$	—	$	461.3	$	470.0

Amount recognized in accumulated other comprehensive
income
Total net actuarial gain	$	—	$	—	$	(8.6)	$	(53.0)
Prior service benefit		—		—		(33.0)		(35.9)
Pre-tax accumulated other comprehensive income	$	—	$	—	$	(41.6)	$	(88.9)

295

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

Other Postretirement Plan Changes and Plan Gains/Losses

The Medicare Prescription Drug, Improvement and Modernization Act of 2003 (the “Medicare Modernization Act”) provides 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, 2015, 2014 and 2013, the Medicare subsidies we received and accrued for were $0.7 million, $0.7 million and $0.8 million, respectively.

Effective January 1, 2016, post-65 medical coverage for employees who retired from January 1, 1992, to December 31, 2010, will transition from a traditional medical plan to a stipend health reimbursement arrangement. This plan change reduced our accumulated postretirement benefit obligation by $15.5 million as of December 31, 2015. Offsetting this reduction is an adjustment in accumulated postretirement benefit obligation (recognized in fourth quarter 2015 expense) of $5.8 million related to dental plan benefits.

An actuarial loss occurred during 2015 for the other postretirement benefit plans. This was primarily due to a greater than expected increase in claim costs and a longer trend rate for participants under age 65. 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.



Information for Other Postretirement Benefit Plans With an Accumulated Postretirement Benefit Obligation
in Excess of Plan Assets

	December 31,
	2015		2014
	(in millions)
Accumulated postretirement benefit obligation	$	1.3	$	1.5
Fair value of plan assets		0.7		0.8



Components of Net Periodic Benefit Cost

	Pension benefits						Other postretirement benefits
	For the year ended December 31,
	2015		2014		2013		2015		2014		2013
	(in millions)
Service cost	$	—	$	45.0	$	57.1	$	2.0	$	1.4	$	1.0
Interest cost		—		97.6		103.8		6.6		6.6		5.7
Expected return on plan assets		—		(110.0)		(127.4)		(34.0)		(32.6)		(28.8)
Amortization of prior service benefit		—		(3.9)		(8.7)		(18.4)		(20.3)		(25.9)
Recognized net actuarial (gain) loss		—		42.1		118.5		(0.8)		(3.4)		1.0
Other		—		—		—		5.8		—		—
Net periodic benefit cost (income)	$	—	$	70.8	$	143.3	$	(38.8)	$	(48.3)	$	(47.0)

296

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

For the other postretirement benefit plans, actuarial gains and losses were amortized with use of the corridors allowed.



						Other postretirement
		Pension benefits				benefits
		For the year ended December 31,
		2015		2014		2015		2014
		(in millions)
Other changes recognized in accumulated other comprehensive
	(income) loss
Net actuarial loss		$	—	$	—	$	43.6	$	26.7
Amortization of gain (loss)			—		(42.1)		0.8		3.4
Amortization of prior service benefit			—		3.9		18.4		20.3
Plan changes			—		—		(15.5)		—
Total recognized in pre-tax accumulated other comprehensive (income) loss		$	—	$	(38.2)	$	47.3	$	50.4
Total recognized in net periodic benefit cost and pre-tax accumulated
	other comprehensive loss	$	—	$	32.6	$	8.5	$	2.1

In connection with the pension plan sponsorship change, at December 31, 2014, 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 2016 fiscal year are $0.2 million and $(20.3) million, respectively.

Assumptions

Weighted‑average assumptions used to determine benefit obligations as disclosed under the Obligations and Funded Status section



	Other postretirement
	benefits
	For the year ended December 31,
	2015		2014
Discount rate	4.15	%	4.00	%
Rate of compensation increase	4.82	%	4.82	%



Weighted average assumptions used to determine net periodic benefit cost

	Pension benefits
	For the year ended December 31,
	2015		2014		2013
Discount rate	NA		4.90	%	4.00	%
Expected long-term return on plan assets	NA		6.75	%	7.50	%
Rate of compensation increase
Cash balance benefit	NA		5.29	%	5.29	%
Traditional benefit	NA		3.06	%	3.06	%

	Other postretirement benefits
	For the year ended December 31,
	2015		2014		2013
Discount rate	4.00	%	4.90	%	4.00	%
Expected long-term return on plan assets	5.36	%	5.36	%	5.62	%
Rate of compensation increase	4.82	%	4.83	%	4.83	%

297

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

For other postretirement benefits, the discount rate is determined by projecting future benefit payments inherent in the accumulated postretirement benefit obligation, and discounting those cash flows using a spot yield curve for high quality corporate bonds. The plans’ expected benefit payments are discounted to determine a present value using the yield curve and the discount rate is the level rate that produces the same present value. The 5.36% expected long-term return on plan assets for 2015 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,
	2015		2014
Health care cost trend rate assumed for next year under age 65	7.0	%	7.0	%
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)	2023		2019
Year that the rate reaches the ultimate trend rate (65 and older)	2021		2020

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	$	0.6	$	(0.5)
Effect on accumulated postretirement benefit obligation		(7.1)		6.5

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.


•	Level 3 - Fair values are based on significant unobservable inputs for the asset. Our Level 3 assets include our general account investment.

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 our 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.

298

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015
		Assets		Fair value hierarchy level
		measured at
		fair value		Level 1		Level 2		Level 3
		(in millions)
Asset category
Cash and cash equivalents		$	5.9	$	5.9	$	—	$	—
Fixed income security portfolios:
	Fixed income investment funds (1)		181.7		173.2		8.5		—
	PLIC general account investment (2)		33.5		—		—		33.5
U.S. equity portfolios (3)			339.6		278.8		60.8		—
International equity portfolios (4)			66.3		54.4		11.9		—
Total		$	627.0	$	512.3	$	81.2	$	33.5

		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		—
	PLIC 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


(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, 2015 and 2014, respectively, $81.2 million and $81.3 million of assets in the U.S. equity and international equity portfolios were included in a trust owned life insurance contract.

299

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

The reconciliation for all assets measured at fair value using significant unobservable inputs (Level 3) is as follows:

For the year ended December 31, 2015

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

as of

December 31,

reporting

during the

and

into

out of

December 31,

2014

date

period

settlements

Level 3

2015

(in millions)

Asset category

PLIC general account

investment

36.3

0.2

—

(3.0)

—

33.5

For the year ended December 31, 2014

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

as of

December 31,

reporting

during the

and

into

out of

December 31,

2013

date

period

settlements

Level 3

2014

(in millions)

Asset category

PLIC 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

as of

December 31,

reporting

during the

and

into

out of

December 31,

2012

date

period

settlements

Level 3

2013

(in millions)

Asset category

PLIC general account

investment

42.1

1.1

—

(4.4)

—

38.8

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%
International equity portfolios		30%
Fixed income security portfolios		25%

300

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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:
2016	$	14.3	$	0.2
2017		14.4		0.1
2018		14.5		0.2
2019		14.9		0.1
2020		15.2		0.1
2021-2025		83.9		0.4

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, 2015.

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,
		2015							2014
		Qualified		Nonqualified					Qualified		Nonqualified
		Plan			Plan		Total		Plan			Plan		Total
		(in millions)
Components of net periodic benefit cost
Service cost		$	—		$	—	$	—	$	39.0		$	6.0	$	45.0
Interest cost			—			—		—		82.6			15.0		97.6
Expected return on plan assets			—			—		—		(110.0)			—		(110.0)
Amortization of prior service benefit			—			—		—		(2.6)			(1.3)		(3.9)
Recognized net actuarial loss			—			—		—		35.8			6.3		42.1
Net periodic benefit cost		$	—		$	—	$	—	$	44.8		$	26.0	$	70.8

Other changes recognized in accumulated other
	comprehensive (income) loss
Amortization of net loss		$	—		$	—	$	—	$	(35.8)		$	(6.3)	$	(42.1)
Amortization of prior service benefit			—			—		—		2.6			1.3		3.9
Total recognized in pre-tax accumulated other
	comprehensive income	$	—		$	—	$	—	$	(33.2)		$	(5.0)	$	(38.2)
Total recognized in net periodic benefit cost and pre-
	tax accumulated other comprehensive loss	$	—		$	—	$	—	$	11.6		$	21.0	$	32.6

We have defined contribution plans that are generally available to all U.S. employees and agents. Eligible participants could not contribute more than $18,000 of their compensation to the plans in 2015. 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 matching contribution of 3% of the participant's

301

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

compensation. For all other participants, we match the participant's contributions at a 75% contribution rate up to a maximum matching contribution 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 $45.7 million, $41.7 million and $39.8 million in 2015, 2014 and 2013, 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 2015, 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 $4.5 million, $4.1 million and $5.0 million in 2015, 2014 and 2013, respectively, to our nonqualified deferred compensation plans.

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 United States Securities and Exchange Commission, 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, Employee Retirement Income Security Act ("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 filed a motion to dismiss the case and on December 11, 2014, the court granted the motion. On January 8, 2016, the Eighth Circuit Court of Appeals affirmed the district court’s decision dismissing the complaint against us. 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 case is set for trial on April 11, 2016. The ACE Defendants continue to aggressively defend the lawsuit.

302

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 through November 2014 (which we also dispute), was approximately $550.0 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, 2015, there were no 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, 2015.

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. The terms of these agreements range in duration and often are not explicitly defined. The maximum exposure under these agreements as of December 31, 2015, was approximately $282.0 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, 2015 and 2014, the liability balance for guaranty fund assessments, which is not discounted, was $15.1 million and $16.8 million, respectively, and was reported within other liabilities in the consolidated statements of financial position. As of December 31, 2015 and 2014, $5.7 million and $7.1 million, respectively, related to premium tax offsets were included in premiums due and other receivables in the consolidated statements of financial position.

303

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015, 2014 and 2013 was $29.5 million, $29.5 million and $26.4 million, respectively.

The following represents payments due by period for operating lease obligations (in millions):



Year ending December 31:
	2016		$	34.9
	2017			30.5
	2018			22.5
	2019			15.5
	2020			11.8
	2021 and thereafter			37.7
		Total operating lease obligations		152.9
		Less: Future sublease rental income on noncancelable leases		4.1
		Total future minimum lease payments	$	148.8

Capital Leases

We lease buildings and hardware storage equipment under capital leases. As of December 31, 2015 and 2014, these leases had a gross asset balance of $57.8 million and $54.5 million and accumulated depreciation of $28.1 million and $17.0 million, respectively. Depreciation expense for the years ended December 31, 2015, 2014 and 2013 was $11.8 million, $11.8 million and $9.3 million, respectively.

The following represents future minimum lease payments due by period for capital lease obligations (in millions).



Year ending December 31:
	2016		$	5.7
	2017			2.8
	2018			0.8
	2019			—
	2020			—
	2021 and thereafter			—
		Total		9.3
		Less: Amounts representing interest		0.3
		Net present value of minimum lease payments	$	9.0

304

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

14. Stockholder's Equity

Other Comprehensive Income (Loss)



		For the year ended December 31, 2015
		Pre-Tax		Tax		After-Tax
		(in millions)
Net unrealized losses on available-for-sale securities during the period		$	(1,552.7)	$	544.0	$	(1,008.7)
Reclassification adjustment for losses included in net income (1)			16.7		(5.8)		10.9
Adjustments for assumed changes in amortization patterns			201.2		(70.4)		130.8
Adjustments for assumed changes in policyholder liabilities			645.2		(225.9)		419.3
Net unrealized losses on available-for-sale securities			(689.6)		241.9		(447.7)

Noncredit component of impairment losses on fixed maturities,
	available-for-sale during the period		29.2		(10.3)		18.9
Adjustments for assumed changes in amortization patterns			(0.9)		0.3		(0.6)
Adjustments for assumed changes in policyholder liabilities			0.7		(0.2)		0.5
Noncredit component of impairment losses on fixed maturities,
	available-for-sale (2)		29.0		(10.2)		18.8

Net unrealized gains on derivative instruments during the period			58.4		(20.4)		38.0
Reclassification adjustment for gains included in net income (3)			(45.2)		15.9		(29.3)
Adjustments for assumed changes in amortization patterns			19.5		(6.9)		12.6
Adjustments for assumed changes in policyholder liabilities			(10.8)		3.8		(7.0)
Net unrealized gains on derivative instruments			21.9		(7.6)		14.3

Foreign currency translation adjustment			—		(0.1)		(0.1)

Unrecognized postretirement benefit obligation during the period			(28.2)		9.9		(18.3)
Amortization of prior service benefit and actuarial gain included in
	net periodic benefit cost (4)		(19.2)		6.7		(12.5)
Net unrecognized postretirement benefit obligation			(47.4)		16.6		(30.8)

Other comprehensive loss		$	(686.1)	$	240.6	$	(445.5)

305

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



		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

306

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



		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)


(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.

307

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



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, 2013		$	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 from 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
Other comprehensive income
	during the period, net of
	adjustments		304.3		—		59.0		(2.4)		(17.4)		343.5
Amounts reclassified from 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
Pension plan transfer due to
	change in sponsorship		—		—		—		—		221.7		221.7
Balances at December 31, 2014			1,057.5		(104.9)		77.2		(0.9)		57.8		1,086.7
Other comprehensive loss
	during the period, net of
	adjustments		(458.6)		—		43.6		—		(18.3)		(433.3)
Amounts reclassified from AOCI			10.9		18.8		(29.3)		—		(12.5)		(12.1)
Other comprehensive loss			(447.7)		18.8		14.3		—		(30.8)		(445.4)
Balances at December 31, 2015		$	609.8	$	(86.1)	$	91.5	$	(0.9)	$	27.0	$	641.3

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.

308

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

Following is a reconciliation of the changes in the redeemable noncontrolling interest (in millions):



Balance at January 1, 2013	$	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
Net income attributable to redeemable noncontrolling interest		0.8
Distributions to redeemable noncontrolling interest		(1.0)
Purchase of subsidiary shares from redeemable noncontrolling interest		(1.7)
Transfer to affiliate (3)		(19.1)
Foreign currency translation adjustment		(0.1)
Balance at December 31, 2015	$	—

(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.

(3) See Note 2, Related Party Transactions, for additional information.

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 2015 statutory results, we could pay approximately $937.0 million in stockholder dividends in 2016 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 contracts, are excluded from these fair value disclosure requirements.

309

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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. Our level 2 assets also include commercial mortgage loan investments of consolidated VIEs for which the fair value option was elected.

•

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, 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. Beginning in 2015 a measurement alternative is used for CCFEs utilizing the more observable of the fair value of the financial assets or the financial liabilities for both the financial assets and financial liabilities. We did not make any other significant changes to our valuation processes during 2015.

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.

310

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015, 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.

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.

311

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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.

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 fund 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 represents a quoted price in an active market for identical assets are reflected in Level 1. Seed money investments in mutual funds that do not have a quoted price in an active market and other investment funds, which are relatively illiquid due to restrictions on sale, are reflected in Level 2.

Commercial mortgage loans of consolidated VIEs valued using the measurement alternative for CCFEs are reflected in Level 2. These investments are based on the more observable fair value of the liabilities of the consolidated VIEs.

Prior to 2015, commercial mortgage loans of consolidated VIEs for which the fair value option was elected were reflected in Level 3. The fair value of the commercial mortgage loans was computed utilizing a discount rate based on the current market. The market discount rate was then adjusted based on various factors that differentiate it from our pool of loans. Equity method real estate investments for which the fair value option was elected are reflected in Level 3. 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 public real estate market data inputs such as transaction prices, market rents, vacancy levels, leasing absorption, market cap rates and discount rates. 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.

312

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

Investment Contracts

Certain annuity contracts and other investment 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 contracts and any embedded derivatives bifurcated from certain annuity and investment 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.

Additionally, obligations of consolidated VIEs for which the fair value option was elected are included in other liabilities. The VIEs’ obligations are valued either based on prices obtained from third party pricing vendors which are reflected in Level 2, or internal pricing models, which are reflected in Level 3.

313

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015
	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	$	1,438.7	$	919.8	$	518.9	$	—
Non-U.S. governments		424.0		—		384.5		39.5
States and political subdivisions		4,664.3		—		4,664.3		—
Corporate		28,275.1		38.0		28,080.8		156.3
Residential mortgage-backed securities		2,614.2		—		2,614.2		—
Commercial mortgage-backed securities		3,850.0		—		3,845.2		4.8
Collateralized debt obligations		663.6		—		600.1		63.5
Other debt obligations		4,533.5		—		4,526.0		7.5
Total fixed maturities, available-for-sale		46,463.4		957.8		45,234.0		271.6
Fixed maturities, trading		538.8		199.2		204.1		135.5
Equity securities, available-for-sale		101.8		62.2		35.5		4.1
Equity securities, trading		204.4		2.7		201.7		—
Derivative assets (1)		656.5		—		609.8		46.7
Other investments (2)		141.5		16.5		89.9		35.1
Cash equivalents (3)		948.9		—		948.9		—
Sub-total excluding separate account assets		49,055.3		1,238.4		47,323.9		493.0

Separate account assets		94,762.8		72,096.2		15,775.1		6,891.5
Total assets	$	143,818.1	$	73,334.6	$	63,099.0	$	7,384.5

Liabilities
Investment contracts (4)	$	(151.1)	$	—	$	—	$	(151.1)
Derivative liabilities (1)		(729.0)		—		(678.5)		(50.5)
Other liabilities (4)		(298.4)		—		(230.3)		(68.1)
Total liabilities	$	(1,178.5)	$	—	$	(908.8)	$	(269.7)

Net assets	$	142,639.6	$	73,334.6	$	62,190.2	$	7,114.8

314

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



	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 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

(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.

315

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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, 2015
					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
			2014		(1)		income		(4)		Level 3		Level 3		2015		held (1)
			(in millions)
Assets
Fixed maturities,
	available-for-sale:
	Non-U.S.
		governments	$	10.3	$	—	$	(0.7)	$	29.9	$	—	$	—	$	39.5	$	—
	Corporate			188.6		—		(4.8)		17.2		42.8		(87.5)		156.3		—
	Commercial
		mortgage-backed
		securities		—		0.1		—		12.3		—		(7.6)		4.8		—
	Collateralized
		debt obligations		64.2		—		(0.1)		(0.6)		—		—		63.5		—
	Other debt
		obligations		63.7		—		0.8		7.0		—		(64.0)		7.5		—
Total fixed
	maturities,
	available-for-sale			326.8		0.1		(4.8)		65.8		42.8		(159.1)		271.6		—
Fixed maturities,
	trading			139.7		(4.0)		—		(0.2)		—		—		135.5		(4.2)
Equity securities,
	available-for-sale			4.1		—		—		—		—		—		4.1		—
Derivative assets				53.7		(9.2)		—		2.2		—		—		46.7		(9.0)
Other investments				127.2		7.3		—		(64.4)		—		(35.0)		35.1		7.2
Separate account
	assets (2)			5,857.5		983.9		—		41.9		8.5		(0.3)		6,891.5		850.3

Liabilities
Investment contracts				(155.9)		(5.7)		—		10.5		—		—		(151.1)		(10.1)
Derivative liabilities				(35.5)		(17.4)		2.2		0.2		—		—		(50.5)		(18.0)
Other liabilities (3)				(66.3)		(1.8)		—		—		—		—		(68.1)		(1.9)

316

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



				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
Investment 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)

317

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



				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
Investment 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)

(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:

318

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



		For the year ended December 31, 2015
										Net purchases,
										sales, issuances
		Purchases		Sales		Issuances		Settlements		and settlements
		(in millions)
Assets
Fixed maturities, available-for-sale:
	Non-U.S. governments	$	31.2	$	—	$	—	$	(1.3)	$	29.9
	Corporate		34.6		—		—		(17.4)		17.2
	Commercial mortgage-backed securities		12.4		—		—		(0.1)		12.3
	Collateralized debt obligations		0		—		—		(0.6)		(0.6)
	Other debt obligations		16.5		—		—		(9.5)		7.0

Total fixed maturities, available-for-sale			94.7		—		—		(28.9)		65.8
Fixed maturities, trading			—		(0.2)		—		—		(0.2)
Derivative assets			2.5		(0.3)		—		—		2.2
Other investments			4.4		(68.8)		—		—		(64.4)
Separate account assets (5)			739.2		(396.4)		(323.4)		22.5		41.9

Liabilities
Investment contracts			—		—		5.1		5.4		10.5
Derivative liabilities			—		0.2		—		—		0.2



		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 contracts			—		—		20.7		4.1		24.8
Derivative liabilities			(1.5)		2.1		—		—		0.6
Other liabilities			—		9.0		—		—		9.0

319

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



		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 contracts			—		—		10.9		3.3		14.2
Derivative liabilities			(3.4)		11.2		—		—		7.8


(1)	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, 2015
			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		$	—	$	—	$	—	$	42.8	$	—	$	87.5
	Commercial mortgage-backed
		securities		—		—		—		—		—		7.6
	Other debt obligations			—		—		—		—		—		64.0
Total fixed maturities,
	available-for-sale			—		—		—		42.8		—		159.1
Other investments				—		—		22.2		—		—		35.0
Separate account assets				26.9		—		8.1		8.5		—		0.3

320

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



			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



			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

Transfers between fair value hierarchy levels are recognized at the beginning of the reporting period.

Assets transferred from Level 2 into Level 1 during 2015, 2014 and 2013, primarily included assets valued using a NAV with a quoted price in an active market for identical assets as a result of additional analysis to clarify the source of the quoted price.

Assets transferred into Level 3 during 2015, 2014 and 2013, 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 2015, 2014 and 2013, 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. In addition, during 2015, assets transferred out of Level 3 included assets valued using the measurement alternative for CCFEs for which the corresponding liabilities have the more observable fair value and are reflected in Level 2.

321

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 or the measurement alternative for CCFEs. Refer to “Assets and liabilities measured at fair value on a recurring basis” for a complete valuation hierarchy summary.

December 31, 2015

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

8.9

Discounted cash

flow

Discount rate (1)

2.2%

Illiquidity premium

50 basis points ("bps")

50bps

Corporate

43.2

Discounted cash

flow

Discount rate (1)

0%-7.5%

5.1%

Comparability

adjustment

(4)bps-7bps

0bps

Illiquidity premium

0bps-60bps

33bps

Collateralized debt obligations

3.1

Discounted cash

flow

Discount rate (1)

28.0%

Probability of default

100.0%

Potential loss

severity

67.0%

Other debt obligations

7.5

Discounted cash

flow

Discount rate (1)

5.0%

Illiquidity premium

750bps

Fixed maturities, trading

10.5

Discounted cash

flow

Discount rate (1)

1.1%-2.7%

2.6%

Illiquidity premium

0bps-300bps

240bps

Other investments

35.1

Discounted cash

flow - equity

method real estate

investments

Discount rate (1)

7.8%

Terminal

capitalization rate

6.8%

Average market rent

growth rate

3.2%

Discounted cash

flow - equity

method real estate

investments -

debt

Loan to value

52.3%

Credit spread rate

2.3%

322

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

Assets /

(liabilities)

measured at

Valuation

Unobservable

Input/range

Weighted

fair value

technique(s)

input description

of inputs

average

(in millions)

Separate account assets

6,881.8

Discounted cash

flow - mortgage

loans

Discount rate (1)

1.4%-8.2%

3.9%

Illiquidity premium

0bps-60bps

7bps

Credit spread rate

81bps-750bps

241bps

Discounted cash

flow - real estate

Discount rate (1)

5.3%-16.4%

7.2%

Terminal

capitalization rate

4.3%-9.8%

6.2%

Average market rent

growth rate

2.0%-4.3%

3.0%

Discounted cash

flow - real estate

debt

Loan to value

7.8%-63.1%

47.4%

Credit spread rate

1.4%-4.6%

2.2%

Liabilities

Investment contracts

(151.1)

Discounted cash

flow

Long duration

interest rate

2.5%-2.6% (3)

Long-term equity

market volatility

18.4%-44.4%

Non-performance risk

0.4%-1.9%

Utilization rate

See note (4)

Lapse rate

0.5%-11.8%

Mortality rate

See note (5)

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%

Illiquidity premium

50 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

323

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

December 31, 2014

Assets /

(liabilities)

measured at

Valuation

Unobservable

Input/range

Weighted

fair value

technique(s)

input description

of inputs

average

(in millions)

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)

Other investments

35.0

Discounted cash

flow - commercial

mortgage loans of

consolidated VIEs

Discount rate (1)

4.2%

Illiquidity premium

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%

324

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

December 31, 2014

Assets /

(liabilities)

measured at

Valuation

Unobservable

Input/range

Weighted

fair value

technique(s)

input description

of inputs

average

(in millions)

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%

Liabilities

Investment 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)


(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)

Prior to 2015, the assets and liabilities fair values relate 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 various observable 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.

325

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 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 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 2015, certain mortgage loans had been marked to fair value of $9.2 million. The net impact of impairments and improvements in estimated fair value of previously impaired loans resulted in a net loss of $3.2 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.

During 2015, certain real estate had been written down to fair value of $30.9 million. This write down resulted in a loss of $2.9 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 2015 were:

Discount rate = 8.6% - 10.5%

Terminal capitalization rate = 7.3% - 8.5%

Average market rent growth = 2.7% - 3.0%

326

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 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.

327

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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 $18.3 million and $17.8 million as of December 31, 2015, and $35.0 million and $32.4 million as of December 31, 2014, respectively. The change in fair value of the loans resulted in a $(2.0) million, $(1.5) million and $0.2 million pre-tax gain (loss) for the years ended December 31, 2015, 2014 and 2013, 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 $3.6 million, $6.2 million and $5.7 million for the years ended December 31, 2015, 2014 and 2013, respectively.

The fair value and aggregate unpaid principal amounts of obligations for which the fair value option has been elected were $68.1 million and $118.2 million as of December 31, 2015, and $71.0 million and $132.8 million as of December 31, 2014, respectively. For the years ended December 31, 2015, 2014 and 2013, the change in fair value of the obligations resulted in a pre-tax loss of $2.1 million, $0.7 million and $32.8 million, which includes a pre-tax loss of $1.9 million, $2.4 million and $34.3 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 $1.1 million, $3.0 million and $3.6 million for the years ended December 31, 2015, 2014 and 2013, 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 is 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 $35.1 million and $92.2 million as of December 31, 2015 and 2014, respectively. The change in fair value of the investments resulted in a $7.2 million, $17.3 million and $11.0 million pre-tax gain for the years ended December 31, 2015, 2014 and 2013, 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, 2015
					Fair value hierarchy level
	Carrying amount		Fair value		Level 1		Level 2		Level 3
	(in millions)
Assets (liabilities)
Mortgage loans	$	11,791.0	$	12,105.1	$	—	$	—	$	12,105.1
Policy loans		786.3		990.3		—		—		990.3
Other investments		148.5		160.0		—		81.1		78.9
Cash and cash equivalents		956.6		956.6		956.6		—		—
Investment contracts		(28,079.1)		(27,744.2)		—		(4,925.0)		(22,819.2)
Short-term debt		(108.8)		(108.8)		—		(108.8)		—
Long-term debt		(42.8)		(42.8)		—		—		(42.8)
Separate account liabilities		(83,316.9)		(82,582.6)		—		—		(82,582.6)
Bank deposits		(2,070.8)		(2,074.4)		(1,457.4)		(617.0)		—
Cash collateral payable		(210.4)		(210.4)		(210.4)		—		—

328

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



	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 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)		—		—

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 fair value of certain tax credit investments are estimated by discounting expected future tax benefits using estimated investment return rates. These are reflected in Level 3. The carrying value of the remaining investments reported in this line item approximate their fair value. 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 Contracts

The fair values of our reserves and liabilities for investment 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 contracts being valued. These are reflected in Level 3. Investment 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 contracts, are not required to be disclosed.

329

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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.

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, 2015, our use of prescribed statutory accounting practices has resulted in lower statutory net income of $2.1 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, 2015, our permitted statutory accounting practice relating to variable annuities with a guaranteed living benefit rider resulted in lower statutory surplus of $158.1 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.

330

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

We cede certain term and universal life insurance statutory reserves to affiliated reinsurance subsidiaries 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, 2015, affiliated reinsurance entities assumed statutory reserves of $3,934.2 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, 2015, assets admitted under these practices totaled $1,447.0 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, 2015, 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,
	2015		2014		2013
	(in millions)
Statutory net income	$	948.6	$	535.5	$	607.9
Statutory capital and surplus		4,496.7		4,202.1		4,142.2

17. Segment Information

We provide financial products and services through the following segments: Retirement and Income Solutions, 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 Income Solutions 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 specialty benefits insurance, which consists of group dental and vision insurance, individual and group disability insurance, group life insurance and non-medical fee-for-service claims administration, and individual life insurance 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 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.

Concurrent with the changes in our organizational structure, we changed our measure of segment profit or loss to pre-tax operating earnings. Management uses segment pre-tax operating earnings in evaluating performance and is consistent with financial results provided to securities analysts. We determine segment pre-tax operating earnings by adjusting U.S. GAAP income before income taxes for pre-tax net realized capital gains (losses), as adjusted, pre-tax other adjustments that management believes are not indicative of overall operating trends and certain adjustments related to equity method investments. Pre-tax net realized capital gains (losses), as adjusted, are net of 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. Pre-tax net realized capital gains (losses), as adjusted, exclude periodic settlements and accruals on derivative instruments not designated as hedging instruments and exclude

331

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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. While these items may be significant components in understanding and assessing the consolidated financial performance, management believes the presentation of segment pre-tax operating earnings enhances the understanding of our results of operations by highlighting pre-tax earnings attributable to the normal, ongoing operations of the business. The change to our new measure of segment profit or loss has been applied retrospectively.

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. For purposes of determining operating earnings, 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, including operating revenues for our products and services, and reconcile segment totals to those reported in the consolidated financial statements:



		December 31, 2015		December 31, 2014
		(in millions)
Assets:
Retirement and Income Solutions		$	139,639.9	$	137,821.9
Principal Global Investors			736.9		928.9
U.S. Insurance Solutions			21,939.3		21,382.2
Corporate			3,977.5		3,781.8
	Total consolidated assets	$	166,293.6	$	163,914.8

332

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



			For the year ended December 31,
			2015		2014		2013

			(in millions)
Operating revenues by segment:
Retirement and Income Solutions:
	Retirement and Income Solutions - Fee		$	1,774.0	$	1,778.9	$	1,645.8
	Retirement and Income Solutions - Spread			4,392.9		3,020.8		2,566.7
		Total Retirement and Income Solutions		6,166.9		4,799.7		4,212.5
Principal Global Investors (1)				692.5		668.2		664.1
U.S. Insurance Solutions
	Specialty benefits insurance			1,866.0		1,724.7		1,616.8
	Individual life insurance			1,569.3		1,532.8		1,480.9
	Eliminations			(0.1)		—		—
		Total U.S. Insurance Solutions		3,435.2		3,257.5		3,097.7
Corporate				(111.0)		(99.9)		(109.9)
	Total segment operating revenues			10,183.6		8,625.5		7,864.4
Net realized capital losses, net of related revenue adjustments				(124.4)		(9.6)		(299.2)
Other income on an indemnified uncertain tax position				60.2		—		—
Exited group medical insurance business				1.3		0.2		2.0
	Total revenues per consolidated statements of operations		$	10,120.7	$	8,616.1	$	7,567.2

Pre-tax operating earnings (loss) by segment:
Retirement and Income Solutions			$	740.1	$	851.2	$	752.5
Principal Global Investors				178.7		159.7		135.3
U.S. Insurance Solutions				428.6		343.3		295.8
Corporate				(23.5)		(30.2)		(54.9)
	Total segment pre-tax operating earnings			1,323.9		1,324.0		1,128.7
Pre-tax net realized capital losses, as adjusted (2)				(123.1)		(65.3)		(257.3)
Pre-tax other adjustments (3)				11.7		(63.1)		(1.7)
Certain adjustments related to equity method investments				10.8		29.9		17.7
	Income before income taxes per consolidated statements
		of operations	$	1,223.3	$	1,225.5	$	887.4


(1)	Reflects inter-segment revenues of $294.5 million, $276.5 million and $250.1 million for the years ended December 31, 2015, 2014 and 2013, respectively.

(2) Pre-tax net realized capital gains (losses), as adjusted, is derived as follows:

333

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015



		For the year ended December 31,
		2015		2014		2013

		(in millions)
Net realized capital gains (losses):
Net realized capital gains (losses)		$	(26.0)	$	62.7	$	(211.3)
Certain derivative and hedging-related adjustments			(97.2)		(73.0)		(87.0)
Certain market value adjustments to fee revenues			(1.1)		—		—
Recognition of front-end fee (revenue) expense			(0.1)		0.7		(0.9)
	Net realized capital losses, net of related revenue adjustments		(124.4)		(9.6)		(299.2)
Amortization of deferred acquisition costs and other actuarial balances			(13.6)		(49.6)		47.8
Capital (gains) losses distributed			15.1		(10.9)		(24.3)
Certain market value adjustments of embedded derivatives			(0.2)		4.8		18.4
	Pre-tax net realized capital losses, as adjusted (a)	$	(123.1)	$	(65.3)	$	(257.3)


(a)	As adjusted before noncontrolling interest capital gains (losses) and net realized capital gains (losses) associated with exited group medical insurance business.


(1)	For the year ended December 31, 2015, pre-tax other adjustments included the positive effect of the impact of a court ruling on some uncertain tax positions ($15.1 million) and the negative effect of losses associated with our exited group medical insurance business that did not qualify for discontinued operations accounting treatment under U.S. GAAP ($3.4 million).

For the year ended December 31, 2014, pre-tax other adjustments included the negative effect of the impact of (a) a court ruling on some uncertain tax positions ($62.2 million) and (b) the effect of losses associated with our exited group medical insurance business that did not qualify for discontinued operations accounting treatment under U.S. GAAP ($0.9 million).

For the year ended December 31, 2013, pre-tax other adjustments included the negative effect of losses associated with our exited group medical insurance business that did not qualify for discontinued operations accounting treatment under U.S. GAAP.

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,
		2015		2014		2013

		(in millions)
Income tax expense (benefit) by segment:
Retirement and Income Solutions		$	76.1	$	128.5	$	139.2
Principal Global Investors			64.0		56.3		48.3
U.S. Insurance Solutions			142.9		112.5		95.9
Corporate			(8.8)		(17.5)		(19.6)
Total segment income taxes from operating earnings			274.2		279.8		263.8
	Tax benefit related to net realized capital losses, as adjusted		(36.5)		(21.9)		(90.0)
	Tax expense (benefit) related to other after-tax adjustments		44.2		(14.9)		(0.6)
Total income taxes per consolidated statements of operations		$	281.9	$	243.0	$	173.2

334

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

The following is a summary of depreciation and amortization expense allocated to our segments for purposes of determining pre-tax operating earnings. Segment depreciation and amortization is reconciled to depreciation and amortization included in operating expenses in our consolidated statements of operations.



			For the year ended December 31,
			2015		2014		2013

			(in millions)
Depreciation and amortization expense by segment:
Retirement and Income Solutions			$	28.3	$	27.5	$	23.1
Principal Global Investors				11.1		12.9		10.2
U.S. Insurance Solutions				17.3		16.7		13.7
Corporate				4.3		3.3		3.9
Total segment depreciation and amortization expense included in
	pre-tax operating earnings			61.0		60.4		50.9
	Depreciation and amortization expense related to pre-tax
		other adjustments		—		—		1.4
Total depreciation and amortization expense included in our
	consolidated statements of operations		$	61.0	$	60.4	$	52.3

18. Stock‑Based Compensation Plans

As of December 31, 2015, our ultimate parent, PFG, sponsored the 2014 Stock Incentive Plan, 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,
	2015		2014		2013
	(in millions)
Compensation cost	$	43.3	$	41.2	$	42.9
Related income tax benefit		14.6		14.0		12.8
Capitalized as part of an asset		2.2		2.5		2.6

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 specific types of terminations.

335

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

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	2015			2014			2013
Expected volatility		52.2	%		53.2	%		53.3	%
Expected term (in years)		6.5			6.5			6.5
Risk-free interest rate		1.8	%		2.0	%		1.1	%
Expected dividend yield		2.81	%		2.50	%		3.00	%
Weighted average estimated fair value	$	20.43		$	18.89		$	11.95

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, 2015, there was $2.3 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 1.8 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 specific types of terminations) 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 2015, 2014 and 2013 was $51.33, $44.88 and $30.70, respectively.

As of December 31, 2015, there was $6.0 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 1.8 years.

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 specific types of terminations), 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 2015, 2014 and 2013 was $51.31, $45.00 and $30.80, respectively.

336

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2015

As of December 31, 2015, there was $34.1 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 $7.30, $8.94 and $14.16 during 2015, 2014 and 2013, 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)
2015
Total revenues	$	2,325.5	$	2,792.1	$	2,775.7	$	2,227.4
Total expenses		2,074.1		2,418.8		2,538.1		1,866.4
Net income		201.6		291.6		206.8		241.4
Net income attributable to PLIC		200.8		290.8		198.9		240.1

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

337

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 10 years ended December 31, 2015


(2)	Part B:

Principal Life Insurance Company Separate Account B:

Report of Independent Registered Public Accounting Firm

Statements of Assets and Liabilities, December 31, 2015

Statements of Operations for the year ended December 31, 2015

Statements of Changes in Net Assets for the years ended December 31, 2015 and 2014

Notes to Financial Statements

Principal Life Insurance Company:

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Financial Position at December 31, 2015, and 2014

Consolidated Statements of Operations for the years ended December 31, 2015, 2014 and 2013

Consolidated Statements of Stockholder's Equity for the years ended December 31, 2015, 2014 and 2013

Consolidated Statements of Cash Flows for the years ended December 31, 2015, 2014 and 2013

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, 2015 *

Schedule III - Supplementary Insurance Information as of December 31, 2015, 2014 and 2013 and for each of the years then ended *

Schedule IV - Reinsurance as of December 31, 2015, 2014 and 2013 and for each of the years then ended *

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.

(b) Exhibits



(1)	Resolution of Board of Directors of the Depositor (filed with the Commission on filed on 5/05/1999)
(3a)	Distribution Agreement (filed 3/01/1996)
(3b)	Selling Agreement (filed 4/20/1999)
(4a)	Form of Variable Annuity Contract (filed 3/01/1996)
(4b)	Form of Variable Annuity Contract (filed 3/01/1996)
(5)	Form of Variable Annuity Application (filed 3/01/1996)
(6a)	Articles of Incorporation of the Depositor (filed 3/01/1996)
(6b)	Bylaws of Depositor (filed 3/01/1996)



(8)	Participation Agreements
	a. AllianceBernstein
	(1)	Participation Agreement with AllianceBernstein Variable Products Series Fund, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
	(2)	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)
	(3)	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)
	(4)	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)
	(5)	Rule 22c-2 Agreement with AllianceBernstein Variable Products Series Fund, (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)



	b. American Century
	(1)	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)
	(2)	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)
	(3)	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)
	(4)	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)
	(5)	Rule 22c-2 Agreement with American Century Investment Management Inc., (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
	(6)	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)



	c. American Funds
	(1)	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)
	(2)	American Funds Distributors, Inc. Business Agreement dated 05/01/2014 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(3)	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)
	(4)	American Funds Form of First Amendment To Fund Participation and Service Agreement (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000048)



	d. BlackRock
	(1)	BlackRock Variable Series Funds, Inc. Participation Agreement dated 05/19/2015 *
	(2)	BlackRock Advisors, LLC Administrative Services Agreement dated 05/19/2015 *
	(3)	BlackRock Variable Series Funds, Inc. Distribution Sub-Agreement dated 05/19/2015 *



	e. Columbia
	(1)	Columbia Funds Variable Series Trust II Participation Agreement dated 04/28/2015 *
	(2)	Columbia Management Investment Distributors, Inc. Service Agreement dated 05/01/2015 *



	f. Delaware Distributors
	(1)	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)
	(2)	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)
	(3)	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)
	(4)	Delaware VIP Trust & Delaware Distribution, L. P. Participation Agreement Amendment No. 3 dated 07/01/2015 *
	(5)	Delaware Distributions, L.P. Administrative Services Agreement dated 04/26/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)



	g. DWS
	(1)	DWS Scudder Distributors, Inc. Participation Agreement dated 12/01/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
	(2)	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)
	(3)	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)
	(4)	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)
	(5)	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)



	h. Fidelity
	(1)	Amended & Restated Participation Agreement with Fidelity Insurance Products Fund (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
	(2)	Distribution Agreement with Fidelity Variable Insurance Products Fund (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
	(3)	Service Agreement dated 03/26/2002 with Fidelity Variable Insurance Products Fund (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
	(4)	Rule 22c-2 Agreement with Fidelity Insurance Products Fund (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)



	i. Franklin Templeton
	(1)	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)
	(2)	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)
	(3)	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)
	(4)	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)
	(5)	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)
	(6)	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)
	(7)	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)
	(8)	Franklin Templeton Services, LLC Administrative Services Agreement dated 12/14/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
	(9)	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)
	(10)	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)
	(11)	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)
	(12)	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)
	(13)	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)
	(14)	Franklin Templeton Amendment to Shareholder Information Agreement (22c-2) dated April 2015 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000048)
	(15)	Franklin Templeton Amendment to Participation Agreement Addendum dated March 31, 2015 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000048)



	j. Goldman Sachs
	(1)	Participation Agreement with Goldman Sachs Variable Insurance Trust, (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
	(2)	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)
	(3)	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)
	(4)	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)
	(5)	Administrative Services Agreement with Goldman Sachs Variable Insurance Trust (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
	(6)	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)
	(7)	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)
	(8)	Rule 22c-2 Agreement with Goldman Sachs Variable Insurance Trust (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
	(9)	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)



	k. Guggenheim
	(1)	Guggenheim Variable Funds Trust and Rydex Variable Trust Participation Agreement dated 05/01/2015 *
	(2)	Guggenheim Funds Distributors, LLC Variable Product Services Agreement for the Rydex Variable Trust dated 05/01/2015 *
	(3)	Guggenheim Funds Distributors, LLC Services Agreement dated 05/01/2015 *
	(4)	Guggenheim Distributors, LLC FUND/SERV and Networking Agreement dated 10/28/2014 *



	l. Invesco (formerly AIM Advisors, Inc.)
	(1)	Participation Agreement with AIM Variable Insurance Funds, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
	(2)	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)
	(3)	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)
	(4)	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)
	(5)	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)
	(6)	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)
	(7)	Distribution Agreement with AIM Variable Insurance Funds, (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
	(8)	Rule 22c-2 Agreement with AIM Variable Insurance Funds, (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
	(9)	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)
	(10)	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)



	m. Janus
	(1)	Janus Aspen Series Participation Agreement (Service Shares) dated 04/28/2000, as amended 08/20/2007 (filed with the Commission for 033-74232 on 05/01/2008 Accession No. 0000950137-08-006521)
	(2)	Janus Aspen Series Amendment No. 7 to Fund Participation Agreement (Service Shares) dated 11/01/2011 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(3)	Janus Aspen Series Amendment No. 8 to Fund Participation Agreement (Service Shares) dated 02/24/2012 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(4)	Janus Capital Management LLC Administrative Services Letter Agreement dated 05/06/2008 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(5)	Janus Capital Management LLC Amendment to Administrative Services Letter Agreement (Service Shares) dated 11/01/2011 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(6)	Janus Distributors, Inc. Distribution and Shareholder Services Agreement dated 08/28/2000 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(7)	Janus Funds Distribution and Shareholder Services Agreement - Janus Aspen Series - Service Shares dated 10/19/2001 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(8)	Janus Distributors, LLC letter amendment to Distribution, Shareholder Servicing, Administrative Servicing and Fund/SERV Agreements dated 08/14/2006 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(9)	Janus Distributors LLC Amendment to Distribution and Shareholder Services Agreement dated 11/01/2011 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(10)	Janus Aspen Series Rule 22c-2 Agreement dated 04/16/2007 (filed with the Commission for 033-74232 on 05/01/2008 Accession No. 0000950137-08-006521)
	(11)	Janus Distributors LLC Amendment to Rule 22c-2 Agreement dated 11/01/2011 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(12)	Janus Services LLC Supplemental Agreement - Letter Regarding handling of Mutual Fund Orders dated 05/20/2005 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)



	n. MFS
	(1)	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)
	(2)	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)
	(3)	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)
	(4)	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)
	(5)	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)
	(6)	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)



	o. Oppenheimer
	(1)	Oppenheimer Variable Account Funds Participation Agreement dated 12/21/2007 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000048)
	(2)	Oppenheimer Variable Account Funds Participation Agreement Amendment No. 1 dated 11/09/2011 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000048)
	(3)	Oppenheimer Funds, Inc. Administrative Services Agreement Letter dated 12/21/2007 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000048)
	(4)	Oppenheimer Funds, Inc. Amendment No. 1 to Administrative Services Agreement Letter dated 11/09/2011 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000048)



	p. PIMCO
	(1)	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)
	(2)	PIMCO Participation Agreement Amendment and Novation dated 10/22/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
	(3)	PIMCO Novation 1 dated 10/22/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
	(4)	PIMCO Novation 2 dated 10/22/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
	(5)	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)
	(6)	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)
	(7)	PIMCO Assignment and Amendment to Services Agreement dated 03/29/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
	(8)	PIMCO Instrument of Accession and Amendment dated 08/29/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)



	q. Principal Variable Contracts Funds, Inc.
	(1)	Principal Variable Contracts Funds, Inc. Participation Agreement dated 01/05/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
	(2)	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)
	(3)	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)
	(4)	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)
	(5)	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)
	(6)	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)
	(7)	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)
	(8)	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)
	(9)	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)
	(10)	Principal Variable Contracts Fund, Inc. Participation Agreement Amendment dated 02/09/2015 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000048)



	r. Van Eck
	(1)	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)
	(2)	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)
	(3)	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)
	(4)	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)
	(5)	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)
	(6)	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)
	(7)	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)
	(8)	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)
	(9)	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)
	(10)	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 3/1/1996)
(10a)	Consent of Ernst & Young LLP *
(10b)	Powers of Attorney *
(10c)	Consent of Counsel *
(11)	Financial Statement Schedules *
(13a)	Total Return Calculation (filed 12/16/1997)
(13b)	Annualized Yield for Separate Account B (filed 12/16/1997)


*	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 Principal Financial Group Des Moines, IA 50392	Director Member, Executive Committee 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 Hunter Partners, LLC 12 Windswept Circle Thornton, NH 03285-6883	Director Member, Executive, Human Resources and Nominating and Governance Committees
LARRY D. ZIMPLEMAN Principal Financial Group Des Moines, IA 50392	Chairman of the Board and Chair, Executive Committee

EXECUTIVE OFFICERS (OTHER THAN DIRECTORS)



Name and Principal Business Address	Positions and Offices
REX AUYEUNG⁽¹⁾	Senior Vice President and President, 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
GREGORY J. BURROWS⁽²⁾	Senior Vice President Retirement and Investor Services
NICHOLAS M. CECERE⁽²⁾	Senior Vice President - USIS Distribution
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
GINA L. GRAHAM⁽²⁾	Vice President and Treasurer
PATRICK G. HALTER⁽²⁾	Senior Executive Director Principal Real Estate Investors
MARK S. LAGOMARCINO⁽²⁾	Senior Vice President and Deputy General Counsel
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
TIMOTHY J. MINARD⁽²⁾	Senior Executive Director - U.S. Distribution
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
RENEE V. SCHAAF⁽²⁾	Senior Vice President and Chief Operating Officer, Principal International
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
LEANNE M. VALENTINE⁽²⁾	Senior Vice President and Deputy General Counsel
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 December 31, 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

(December 31, 2015)

Organized in

% Owned

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

-->Principal Global Investors Participacoes, LTDA*#

Brazil

100

-->Claritas Investments LTD*#

Cayman Islands

-->Claritas Participacoes S.A.*#

Brazil

-->Claritas Administracao de Recursos LTDA *#

Brazil

-->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 Trust Company (Bermuda) Limited*#

Bermuda

100

-->Principal Insurance Company (Hong Kong) Limited*#

Hong Kong

100

-->Principal Trust Company (Hong Kong) Limited*

Hong Kong

100

-->CIMB - Principal Asset Management Berhad*

Malaysia

-->CIMB Wealth Advisors Berhad*

Malaysia

100

-->CIMB - Principal Asset Management (S) PTE LTD*#

Singapore

100

-->CIMB - Principal Asset Management Company Limited*

Thailand

99.99

-->Finansa Asset Management Limited *#<

Thailand

100

-->PT CIMB Principal Asset Management*

Indonesia

-->Principal Trust Company (Asia) Limited*#

Hong Kong

100

-->Principal Investment & Retirement Services Limited*#

Hong Kong

100

-->Principal International Mexico, LLC *#

Delaware

100

-->Principal Mexico Servicios, S.A. de C.V.*#

Mexico

100

-->Distribuidora Principal Mexico, S.A. de C.V.*#

Mexico

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,

Mexico

100

Principal Grupo Financiero *#

-->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 Consulting (India) Private Limited*#

India

100

-->Principal Global Investors Holding Company, LLC*#

Delaware

100

-->Principal Global Investors (Ireland) Limited*#

Ireland

100

-->Principal Global Financial Services (Europe) II LTD*#

United Kingdom

100

-->Principal Global Investors (Europe) Limited *

Wales/United Kingdom

100

-->PGI Origin Holding Company LTD*#<

Wales/United Kingdom

100

-->Origin Asset Management LLP*#<

Wales/United Kingdom

-->PGI Finisterre Holding Company LTD *

Wales/United Kingdom

100

-->Finisterre Holdings Limited *

Malta

56.5

-->Finisterre Capital UK Limited *

Wales/United Kingdom

100

-->Finisterre Capital LLP *

Wales/United Kingdom

-->Finisterre Hong Kong Limited *

Hong Kong

100

-->Finisterre Malta Limited *

Malta

100

-->Finisterre USA, Inc. *

Delaware

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

-->Principal Financial Group (Mauritius) LTD*#

Mauritius

100

-->Principal PNB Asset Management Company Private Limited*#

India

78.6

-->Principal Trustee Company Private Limited*#

India

-->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

-->Principal Commercial Funding, LLC*#<

Delaware

100

-->Principal Global Columbus Circle, LLC*#<

Delaware

100

-->CCI Capital Partners, LLC *#<

Delaware

100

-->Post Advisory Group, LLC*#<

Delaware

-->Post Advisory Europe Limited *#<

Wales/United Kingdom

100

-->Principal Global Investors Trust*#<

Delaware

100

-->Spectrum Asset Management, Inc.*#<

Connecticut

100

-->CCIP, LLC*#<

Delaware

-->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

-->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

-->Liongate Limited *

Malta

-->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

-->Principal Holding Company Chile S.A.*#

Chile

100

-->Principal Chile Limitada*#

Chile

100

-->Administradora de Fondos de Pensiones Cuprum S.A. *#

Chile

-->Inversiones Cuprum Internacional S.A.*#

Chile

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 & 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 March 31, 2016



(1)	(2)
	Number of
Title of Class	Contractowners
BFA Variable Annuity Contracts	6
Pension Builder Plus Contracts	71
Personal Variable Contracts	13
Premier Variable Contracts	22
Flexible Variable Annuity Contract	21,144
Freedom Variable Annuity Contract	835
Freedom 2 Variable Annuity Contract	262
Investment Plus Variable Annuity Contract	67,459
Principal Lifetime Income Solutions	1,040
Principal Pivot Series Variable Annuity	580

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

Principal Securities, Inc. (formerly 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)
Principal Financial Group⁽¹⁾

Patricia A. Barry	Assistant Corporate Secretary
Principal Financial Group⁽¹⁾

Teresa M. Button	Vice President and Treasurer
Principal Financial Group⁽¹⁾

Nicholas M. Cecere	Senior Vice President and Director
Principal Financial Group⁽¹⁾

Scott A. Christensen	Chief Financial Officer
Principal Financial Group⁽¹⁾

William Dunker	AML Officer
Principal Financial Group⁽¹⁾

Gregory B. Elming	Director
Principal Financial Group⁽¹⁾

Nora M. Everett	Director
Principal Financial Group⁽¹⁾

Stephen G. Gallaher	Assistant General Counsel/Assistant Corporate Secretary
Principal Financial Group⁽¹⁾

Kara Hoogensen	Chairman, President and Chief Executive Officer
Principal Financial Group⁽¹⁾

Jennifer Litchfield	Vice President and Chief Compliance Officer
Principal Financial Group⁽¹⁾

Julie LeClere	Senior Vice President/Managing Director
Principal Financial Group⁽¹⁾

Martin R. Richardson	Vice President - Broker Dealer Operations
Principal Financial Group⁽¹⁾

Karen E. Shaff	Executive Vice President/General Counsel/Corporate Secretary
Principal Financial Group⁽¹⁾

Deanna D. Strable-Soethout	Director
Principal Financial Group⁽¹⁾
Jeffrey A. Van Baale	Chief Information Officer
Principal Financial Group⁽¹⁾



(b1)	(b2)
Name and principal	Positions and offices
business address	with principal underwriter

Traci L. Weldon	Senior Vice President
Principal Financial Group⁽¹⁾

Dan L. Westholm	Assistant Vice President - Treasury
Principal Financial Group⁽¹⁾

John Wetherell	Private Funds Chief Compliance Officer
Principal Financial Group⁽¹⁾

⁽¹⁾ 655 9^th Street
Des Moines, IA 50392



(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
Principal Securities, Inc. (formerly Princor Financial Services Corporation)	$41,960,517.71	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

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 29th day of April, 2016.



	PRINCIPAL LIFE INSURANCE COMPANY
	SEPARATE ACCOUNT B
	(Registrant)


	By :	/s/ D. J. Houston
		D. J. Houston
		President and Chief Executive Officer


	PRINCIPAL LIFE INSURANCE COMPANY
	(Depositor)


	By :	/s/ D. J. Houston
		D. J. Houston
		Director, President and Chief Executive Officer

Attest:


/s/ Clint Woods
Clint Woods
Assistant Corporate Secretary and Governance Officer

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/ D. J. Houston	Director, President, and	April 29, 2016
D. J. Houston	Chief Executive Officer

/s/ A. R. Sanders	Senior Vice President and Controller	April 29, 2016
A. R. Sanders	(Principal Accounting Officer)

/s/ T. J. Lillis	Executive Vice President and	April 29, 2016
T. J. Lillis	Chief Financial Officer
	(Principal Financial Officer)

(B. J. Bernard)*	Director	April 29, 2016
B. J. Bernard

(J. Carter-Miller)*	Director	April 29, 2016
J. Carter-Miller

(G. E. Costley)*	Director	April 29, 2016
G. E. Costley

(M.T. Dan)*	Director	April 29, 2016
M. T. Dan

(D. H. Ferro)*	Director	April 29, 2016
D. H. Ferro

(C. D. Gelatt, Jr.)*	Director	April 29, 2016
C. D. Gelatt, Jr.

(S. L. Helton)*	Director	April 29, 2016
S. L. Helton

(R. C. Hochschild)*	Director	April 29, 2016
R. C. Hochschild

(B. C. Pickerell)*	Director	April 29, 2016
B. C. Pickerell

(E. E. Tallett)*	Director	April 29, 2016
E. E. Tallett

(L. D. Zimpleman)*	Chairman of the Board	April 29, 2016
L. D. Zimpleman

*By	/s/ D. J. Houston
	D. J. Houston
	Director, President, and Chief Executive Officer


*	Powers of Attorney filed herein