Registration No. 33-44565

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. 33

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 234

(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: Personal 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, 2017 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 LIFE INSURANCE COMPANY

SEPARATE ACCOUNT B

PERSONAL VARIABLE

This prospectus is dated May 1, 2017

This prospectus describes Personal Variable Annuity, a group variable annuity contract for employer-sponsored qualified and non-qualified retirement plans (the “Contract”), issued by Principal Life Insurance Company (the “Company”) and is designed to aid in retirement planning. The Company no longer offers or issues the Contract. This prospectus is only for the use of current Contractholders. It is funded with the Principal Life Insurance Company Separate Account B (“Separate Account”). The assets of the Separate Account Division (“Divisions”) are invested in the following underlying mutual funds:

Fidelity Variable Insurance Products – Initial Class	Principal Variable Contracts Funds, Inc. – Class 1 (cont.)
• Government Money Market Portfolio(1)	• Diversified International Account
Principal Variable Contracts Funds, Inc. – Class 1	• Government & High Quality Bond Account
• Balanced Account(2)	• LargeCap Growth Account
• Core Plus Bond Account	• LargeCap Value Account
• Diversified Balanced Account(3)(4)	• MidCap Account

⁽¹⁾   All references to the Money Market Division in this prospectus will mean the Fidelity VIP Government Money Market Division.

⁽²⁾     The Balanced Account will be merging with the Diversified Balanced Account on May 26, 2017.

⁽³⁾      Investment option will be available May 26, 2017.

⁽⁴⁾   This underlying mutual fund is a fund of funds. The fund of funds expenses may be higher than other fund types because the expenses of the selected fund include the expenses of the funds it holds.

This prospectus provides information about the Contract and the Separate Account that an investor ought to know before investing. It should be read and retained for future reference.

Additional information about the Contract, including a Statement of Additional Information (“SAI”), dated May 1, 2017, has been filed with the Securities and Exchange Commission (“SEC”). The SAI is part of this prospectus. The table of contents of the SAI appears at the end of this prospectus. A copy of the SAI can be obtained, free of charge, upon request by writing or calling:

Principal Securities, Inc.

Des Moines, IA 50392-2080

Telephone: 1-800-633-1373

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION 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 prospectus for underlying mutual funds which should be kept for future reference.

The Contract offered by this prospectus may not be available in all states. This prospectus does not constitute an offer to sell, or solicitation of any offer to buy, any interest in or participation in the Contract in any jurisdiction in which such an offer or solicitation may not lawfully be made. No person is authorized to give any information or to make any representations in connection with the Contract other than those contained in this prospectus.

TABLE OF CONTENTS

	Page
Glossary of Special Terms	3
Synopsis	5
Summary	6
The Company	7
The Separate Account	8
The Underlying Mutual Funds	8
Deductions under the Contract	9
Other Expenses	10
Surplus Distribution at Sole Discretion of the Company	10
The Contract	10
Statement of Values	20
Services Available by Telephone	20
Distribution of the Contract	20
Federal Tax Status	20
State Regulation	25
General Information	25
Table of Separate Account Divisions	28
Table of Contents of the SAI	30
Condensed Financial Information	31
Appendix A	33

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GLOSSARY OF SPECIAL TERMS

Aggregate Investment Account Value – The sum of the Investment Account Values for Investment Accounts which correlate to a Plan Participant.

Annuity Change Factor – The factor used to determine the change in value of a Variable Annuity in the course of payment.

Annuity Commencement Date – The beginning date for Annuity Payments.

Annuity Premium – The amount applied under the Contract to purchase an annuity.

Annuity Purchase Date – The date an Annuity Premium is applied to purchase an annuity.

Associated Contract – An annuity contract issued by the Company to the same Contractholder to fund the same or a comparable Plan as determined by the Company.

Average Annual Balance – The total value at the beginning of the Deposit Year of all Investment Accounts which correlate to a Plan Participant under the Contract and other Plan assets that correlate to a Plan Participant that are not allocated to the Contract or an Associated or Companion Contract but for which the Company provides record keeping services (“Outside Assets”), adjusted by the time weighted average of Contributions to, and withdrawals from, Investment Accounts and Outside Assets (if any) which correlate to the Plan Participant during the period.

Commuted Value – The dollar value, as of a given date, of remaining Variable Annuity Payments. It is determined by the Company using the interest rate assumed in determining the initial amount of monthly income and assuming no variation in the amount of monthly payments after the date of determination.

Companion Contract – An unregistered group annuity contract offering guaranteed interest crediting rates and which is issued by the Company to the Contractholder for the purpose of funding benefits under the Plan. The Company must agree in writing that a contract is a Companion Contract.

Contract Administration Expense/Recordkeeping Charge – A charge deducted or paid separately by the Contractholder on a quarterly basis each Deposit Year prior to the Annuity Commencement Date or on a complete redemption of Investment Accounts which correlate to a Plan Participant from the Aggregate Investment Accounts that correlate to each Plan Participant.

Contract Date – The date this Contract is effective, as shown on the face page of the Contract.

Contract Year – A period beginning on a Yearly Date and ending on the day before the next Yearly Date.

Contractholder – The entity to which the Contract will be issued, which will normally be an Employer, an association, or a trust established for the benefit of Plan Participants and their beneficiaries.

Contributions – Amounts contributed under the Contract which are accepted by the Company.

Deposit Year – The twelve-month period ending on a day selected by the Contractholder.

Division – The part of the Separate Account B which is invested in shares of an underlying Mutual Fund.

Employer – The corporation, sole proprietor, firm, organization, agency or political subdivision named as employer in the Plan and any successor.

Flexible Income Option – A periodic distribution from the Contract in an amount equal to the minimum annual amount determined in accordance with the minimum distribution rules of the Internal Revenue Code, or a greater amount as requested by the Owner of Benefits.

Funding Agent – An insurance company, custodian or trustee designated by the Contractholder and authorized to receive any amount or amounts transferred from the Contract described in this prospectus. Funding Agent will also mean the Company where the Contractholder directs the Company to transfer such amounts from the Contract described in this prospectus to another group annuity contract issued by the Company to the Contractholder.

Internal Revenue Code (“Code”) – The Internal Revenue Code of 1986, as amended, and the regulations thereunder. Reference to the Internal Revenue Code means such Code or the corresponding provisions of any subsequent revenue code and any regulations thereunder.

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Investment Account – An account that correlates to a Plan Participant established under the Contract for each type of Contribution and for each Division in which the Contribution is invested.

Investment Account Value – The value of an Investment Account for a Division which on any date will be equal to the number of units then credited to such Investment Account account multiplied by the Unit Value of this series of Contracts for that Division for the Valuation Period in which such date occurs.

Mutual Fund – A registered open-end investment company in which a Division of the Separate Account B invests.

Net Investment Factor – The factor used to determine the change in Unit Value of a Division during a Valuation Period.

Notification – Any form of notice received by the Company at the Company’s home office and approved in advance by the Company including written forms, electronic transmissions, telephone transmissions, facsimiles or photocopies.

Owner of Benefits – The entity or individual that has the exclusive right to be paid benefits and exercise rights and privileges pursuant to such benefits. The Owner of Benefits is the Plan Participant under all Contracts except Contracts used for General Creditor Non-Qualified Plans (see “Summary”) wherein the Contractholder is the Owner of Benefits.

Plan – The plan established by the Employer in effect on the date the Contract is executed and as amended from time to time, which the Employer has designated to the Company in writing as the Plan funded by the Contract.

Plan Participant – A person who (i) is a participant under the Plan, (ii) a beneficiary of a deceased participant, or (iii) an alternate payee under a Qualified Domestic Relations Order in whose name an Investment Account has been established under this Contract.

Qualified Domestic Relations Order – A Qualified Domestic Relations Order as defined in Code Section  414(p)(1)(A).

Quarterly Date – The last Valuation Date of the third, sixth, ninth and twelfth month of each Deposit Year.

Separate Account B – A separate account established by the Company under Iowa law to receive Contributions under the Contract offered by this Prospectus and other contracts issued by the Company. It is divided into Divisions, each of which invest in a corresponding Account of the Principal Variable Contracts Fund, Inc.

Termination of Employment – A Plan Participant’s termination of employment with the Employer, determined under the Plan and as reported to the Company.

Unit Value – The value of a unit of a Division of the Separate Account.

Valuation Date – The date as of which the net asset value of an underlying mutual fund is determined.

Valuation Period – The period of time between when the net asset value of an underlying mutual fund is determined on one Valuation Date and when such value is determined on the next following Valuation Date.

Variable Annuity Payments – A series of periodic payments, the amounts of which are not guaranteed but which will increase or decrease to reflect the investment experience of the LargeCap Value Division of the Separate Account. Periodic payments made pursuant to the Flexible Income Option are not Variable Annuity Payments.

Variable Annuity Reserves – The reserves held for annuities in the course of payment for the Contract.

Yearly Date – The Contract Date and the same day of each year thereafter.

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SYNOPSIS

The following tables describe the fees and expenses that a Contractholder will pay when they own and/or surrender the Contract. The first table describes the fees and expenses that a Contractholder will pay at the time that the Contract is surrendered or cash value transferred between investment options.

Contractholder transaction expenses
Sales charge imposed on contributions (as a percentage of contributions)	none
Contingent Deferred Sales Charge	N/A
Transaction Fees (as a percentage of amount surrendered) •    guaranteed maximum •    current	• the lesser of $25 or 2% of each unscheduled partial surrender after the 12th in a Contract Year • none
Transfer Fee •    guaranteed maximum •    current	• the lesser of $30 or 2% of each unscheduled transfer after the 12th in a Contract Year plus a $15 charge if transfers are made via paper instruction • a $15 charge is imposed if transfers are made via paper instruction
Documentation Expense •    Principal Standard Plan •    Principal Custom-written plan initial plan document plan amendments summary plan booklet •    Plan not provided by Principal - summary plan booklet	•    $350 •    $1,000 •    $500 •    $500 •    minimum $100

The next table describes the fees and expenses that a Contractholder will pay periodically during the time that they own the Contract, not including underlying mutual fund fees and expenses.

Contractholder Periodic Expenses
Annual Contract Fee (Contract Administration Expense/Recordkeeping Charge)(1)	$37/Plan Participant + (0.35% of the Balance of the Plan’s Investment Accounts and Outside Assets).The minimum annual charge is $3,000.
Separate Account Annual Expenses (as a percentage of average account value) •    guaranteed maximum •    Current	1.25% 0.64%
Annual Recordkeeping Expense for Outside Assets(2) •    maximum charge (5,000 plan participants or more) •    minimum charge (1 through 25 plan participants)	$4.50 per member + $11,392 $1,000
Flexible Income Option (if elected by the Owner of Benefits)	$25 per year

⁽¹⁾  If benefit plan reports are mailed to the Plan’s home address, the $37 charge will be decreased to $34. If more than one 401(k) or 401(m) non-discrimination tests are provided by the Company in any Deposit Year, the Contract Administration Expense may be increased by 3% for each additional test. If benefit plan reports are mailed monthly instead of quarterly, the charge will be increased by 24%; if reports are provided annually, the recordkeeping expense is reduced by 9%; if reports are provided semi-annually, the recordkeeping expense is reduced by 6%. (See “Deductions Under the Contract.”)

⁽²⁾  The charge calculated will be increased by 15% for the second and each additional Outside Asset for which the Company provides recordkeeping services.

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The next item shows the minimum and maximum total operating expenses charged by the underlying mutual funds that a Contractholder may pay periodically during the time that they own the Contract. More detail concerning the fees and expenses of each underlying mutual fund is contained in its prospectus.

Annual Underlying Mutual Fund Operating Expenses as of December 31, 2016:

	Minimum	Maximum
Total annual underlying mutual fund operating expenses (expenses that are deducted from underlying mutual fund assets, including management fees and other expenses)	0.25%	0.91%

EXAMPLE

This 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 Contractholder transaction expenses, contract fees, Separate Account annual expenses, and underlying mutual fund fees and expenses.

This Example assumes

• the Plan Participant invests $10,000 in the Contract for the time periods indicated;

• the investment has a 6% return each year; and

• the maximum annual fees and operating expenses for any underlying mutual fund as of December 31, 2016 (without voluntary waivers of fees by the underlying fund, if any).

Although your actual costs may be higher or lower, based on these assumptions, your costs would be as shown below:

	If the Owner of Benefits Surrenders the Contract at the End of the Applicable Time Period				If the Owner of Benefits Does Not Surrender the Contract at the End of the Applicable Time Period
Separate Account Divisions	1 Year	3 Years	5 Years	10 Years	1 Year	3 Years	5 Years	10 Years
Maximum Total Underlying Mutual Fund Operating Expenses (0.91%)	$158	$496	$865	$1,936	$158	$496	$865	$1,936
Minimum Total Underlying Mutual Fund Operating Expenses (0.25%)	$91	$288	$505	$1,151	$91	$288	$505	$1,151

SUMMARY

The group variable annuity contract described by this prospectus was issued by the Company and designed to aid in retirement planning. The Contract provides for the accumulation of Contributions and the payment of Variable Annuity Payments on a completely variable basis. As of January 1, 1998, the Contract was no longer offered.

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

Contributions

The Contract prescribes no limits on the minimum Contribution which may be made to an Investment Account. Plan Participant maximum Contributions are discussed under “Federal Tax Status.” Contributions may also be limited by the Plan. The Company may also limit Contributions on 60-days notice.

All Contributions made pursuant to the Contract are allocated to one or more Investment Accounts. Each Investment Account correlates to a Division of the Separate Account B. 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 the underlying mutual fund.

Distributions, Transfers and Withdrawals

Variable Annuity Payments will be made on and after a Plan Participant’s Annuity Commencement Date. All Variable Annuity Payments will reflect the performance of the Mutual Fund underlying the LargeCap Value Division and therefore the annuitant is subject to the risk that the amount of variable annuity payments may decline. (See “Income Benefits.”)

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Generally, at any time prior to the Annuity Purchase Date, the Owner of Benefits may transfer all or any portion of an Investment Account which correlates to a Plan Participant to another available Investment Account correlating to such Plan Participant. If a Companion Contract has been issued to the Contractholder to fund the Plan, and if permitted by the Plan and Companion Contract, amounts transferred from such Companion Contract may be invested in this Contract to establish Investment Accounts which correlate to a Plan Participant at any time at least one month before the Annuity Commencement Date. Similarly, if the Company has issued a Companion Contract to the Contractholder, and if permitted by the Plan and the Companion Contract, the Owner of Benefits, subject to certain limitations, may file a Notification with the Company to transfer all or a portion of the Investment Account values which correlate to a Plan Participant to the Companion Contract. (See “Withdrawals and Transfers.”) In addition, subject to any Plan limitations or any reduction for vesting provided for in the Plan as to amounts available, the Owner of Benefits may withdraw cash from the Investment Accounts that correlate to the Plan Participant at any time prior to the Plan Participant’s Termination of Employment, disability, retirement or the Annuity Purchase Date subject to any charges that may be applied. (See “Withdrawals and Transfers.”) Note that withdrawals before age 59½ may involve an income tax penalty. (See “Federal Tax Status.”) No withdrawals are permitted after the Annuity Purchase Date.

Performance Calculation

From time to time, the Separate Account will advertise the average annual total return of its various Divisions for the Contract. 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 Investment Account Value. The yield and total return figures 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 the Contract. Both yield figures are based on historical earnings and are not intended to indicate future performance. The “yield” of the Division refers to the income generated by an investment under the Contract in the Division over a seven-day period (which period will be stated in the advertisement). This income is then “annualized.” 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.

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

Financial Statements

The financial statements for Separate Account B and the Company are included in the SAI.

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. 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 Company’s current organizational structure.

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THE SEPARATE ACCOUNT

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. The Company does not guarantee the investment results of the Separate Account. There is no assurance that the value of the Contract will equal the total of the contributions made under the Contract.

The Separate Account is not affected by the rate of return of the Company’s General Account or by the investment performance of any of the Company’s 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 the company’s 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 the Company’s 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 Company does not guarantee the investment results of the Separate Account. There is no assurance that the value of your Contract will equal the total of your purchase payments.

In a low interest rate environment, yields for the Money Market division, after deduction of all applicable Contract and rider charges, may be negative even though the underlying money market fund’s yield, before deducting for such charges, is positive. If you allocate a portion of your Contract value to a Money Market division or participate in a scheduled automatic transfers program or Automatic Portfolio Rebalancing program where the Contract value is allocated to a Money Market division, that portion of your Contract value allocated to the Money Market division may decrease in value.

THE UNDERLYING MUTUAL FUNDS

The underlying mutual funds are registered under the Investment Company Act of 1940 as open-end investment management companies. The underlying mutual funds provide the investment vehicles for the Separate Account. A full description of the underlying mutual funds, the investment objectives, policies and restrictions, charges and expenses and other operational information are contained in the accompanying prospectuses (which should be read carefully before investing) and the Statement of Additional Information (“SAI”). You may request additional copies of these documentswithout charge from your registered representative or by calling us at1-800-852-4450.

The Company purchases and sells shares of the underlying mutual funds 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 of, the advisor and, if applicable, sub-advisor for, each division.

Deletion or Substitution of Divisions

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

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Voting Rights

The Company votes shares of the underlying mutual funds owned by the Separate Account according to the instructions of the person that holds the voting interest in the units of the division.

The Company will notify the person that holds the voting interest in the units of shareholder meetings of the mutual funds underlying the divisions.

During the accumulation period, the owner of benefits is the person having the voting interest in the units of the Division attributable to the Investment Accounts which correlate to the Plan Participant. The number of units held in the Separate Account which are attributable to each Investment Account is determined by dividing the Investment Account value attributable to a Division of the Separate Account by the net asset value of one share of the underlying mutual fund.

During the annuity period, the person then entitled to variable annuity payments has the voting interest in the units of the Division attributable to the variable annuity. The number of units held in the Separate Account which are attributable to each variable annuity is determined by dividing the reserve for the variable annuity by the net asset value of one share of the underlying mutual fund. The voting interest in the shares of the underlying mutual fund attributable to the variable annuity will ordinarily decrease during the annuity period since the reserve for the variable annuity decreases due to the reduction in the expected payment period.

The Company determines the number of underlying fund shares the owner of benefits or payees of variable annuities may instruct us to vote as of the record date established by the underlying mutual fund for its shareholder meeting. The Company will send the owner of benefits or payees of variable annuities proxy materials and instructions for the owner of benefits or payees of variable annuities to provide voting instructions to the Company. The Company will arrange for the handling and tallying of proxies received. If no voting instructions are received, the Company will vote those shares in the same proportion as shares for which the Company received instructions. In the event that applicable law changes or the Company is required by regulators to disregard voting instructions, the Company may decide to vote the shares of the underlying mutual funds in its own right.

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

DEDUCTIONS UNDER THE CONTRACT

Mortality and Expense Risks Charge

A mortality and expense risks charge is deducted under the Contract. There are also deductions from and expenses paid out of the assets of the Accounts, as described in the prospectus for each Fund.

Variable Annuity Payments will not be affected by adverse mortality experience or by any excess in the actual sales and administrative expenses over the charges provided for in the Contract. The Company assumes the risks that (i) Variable Annuity Payments will continue for a longer period than anticipated and (ii) the allowance for administration expenses in the annuity conversion rates will be insufficient to cover the actual costs of administration relating to Variable Annuity Payments. For assuming these risks, the Company, in determining Unit Values and Variable Annuity Payments, makes a charge as of the end of each Valuation Period against the assets of the Separate Account held with respect to the Contract. The charge is equivalent to a simple annual rate of 0.64%.

The Company does not believe that it is possible to specifically identify that portion of the 0.64% deduction applicable to the separate risks involved, but estimates that a reasonable approximate allocation would be 0.43% for the mortality risks and 0.21% for the expense risks. The mortality and expense risks charge may be changed by the Company at any time by giving not less than 60-days prior written notice to the Contractholder. However, the charge may not exceed 1.25% on an annual basis, and only one change may be made in any one-year period. If the charge is insufficient to cover the actual costs of the mortality and expense risks assumed, the financial loss will fall on the Company; conversely, if the charge proves more than sufficient, the excess will be a gain to the Company.

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Transaction Fee

The Company reserves the right to charge a transaction fee of the lesser of $25 or 2% of each cash withdrawal after the twelfth cash withdrawal in a Contract Year. The fee will be taken by redeeming a sufficient number of units from the Investment Account(s) from which the withdrawal is made by an amount equal to the fee. If the Investment Account(s) from which the withdrawal is made is insufficient to permit the full amount of the fee to be taken, a sufficient number of units from the Plan Participant’s other Investment Accounts will be redeemed on a pro rata basis in an amount equal to the fee. If the amounts in the Plan Participant’s Investment Accounts are insufficient to permit the full amount of the fee to be taken, the amount of the withdrawal will be reduced by an amount equal to the fee.

Transfer Fee

The Company also reserves the right to charge a transfer fee of the lesser of $30 or 2% of each unscheduled transfer after the twelfth unscheduled transfer in a Contract Year. The fee will be taken by redeeming a sufficient number of units from the Investment Account(s) from which the withdrawal is made by an amount equal to the charge. If the Investment Account(s) from which the withdrawal is made is insufficient to permit the full amount of the fee to be taken, a sufficient number of units from the Plan Participant’s other Investment Accounts will be redeemed on a pro rata basis in an amount equal to the fee.

Contingent Deferred Sales Charge

Although the contract provides for a contingent deferred sales charge, the Company has elected not to take this charge since January 1, 2006.

OTHER EXPENSES

The Contract provides for Contract Administration Expense/Recordkeeping Charge and Other Expenses, as described in Appendix A. The Contract also provides that Contractholders shall direct the Company either to bill the Contractholder or to charge the Contract for these expenses. Subsequent to introduction of the Contract in 1992, the Company made available to Contractholders an alternative service and expense arrangement that expands the administration and recordkeeping services (Plan-level services) to include (a) a broader variety of funding vehicles (e.g., mutual funds) and (b) enhanced technology-based services for Plans and their Participants that are not available under the Contract. Contractholders, in their sole discretion, may elect this alternative arrangement and enter into a separate service and expense agreement with the Company. Any such service and expense agreement is customized by the Contractholder and the Company to meet the Plan’s needs.

SURPLUS DISTRIBUTION AT SOLE DISCRETION OF THE COMPANY

It is not anticipated that any divisible surplus will ever be distributable to the Contract in the future because the Contract is not expected to result in a contribution to the divisible surplus of the Company. However, if any distribution of divisible surplus is made, it will be made to Investment Accounts in the form of additional units.

THE CONTRACT

The Contract is significantly different from a fixed annuity. The owner of a variable annuity assumes the risk of investment gain or loss (as to amounts in the divisions) rather than the Company. The amount available for annuity payments under the Contract is not guaranteed and varies with the investment performance of the underlying mutual funds. There can be no assurance that the owner’s investment objectives will be achieved.

The Contract was normally issued to an Employer or association or a trust established for the benefit of Plan Participants and their beneficiaries. The Company issued a pre-retirement certificate describing the benefits under the Contract to Plan Participants who reside in a state that requires the issuance of such certificates. The Contribution which correlates to a Plan Participant will be invested in the Division or Divisions that are chosen as of the end of the Valuation Period in which such Contribution is received by the Company at its home office in Des Moines, Iowa. If the allocation instructions by the participant are late, or not completed, the Company will invest such unallocated Contributions in the Money Market Division, as instructed by the Employer, on the date such Contributions are received. After complete allocation instructions have been received by the Company, all future Contributions will be allocated to the chosen Divisions as of the end of the Valuation Period in which such

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Contributions are received. The Contractholder may limit the number of Divisions available to the Owner of Benefits, but the Money Market Division may not be so restricted to the extent the Division is necessary to permit the Company to allocate initial Contributions and the LargeCap Value Division may not be so restricted to the extent the Division is necessary to permit the Company to pay Variable Annuity Payments.

A.    Contract Values and Accounting Before Annuity Commencement Date

1.    Investment Accounts

An Investment Account or Accounts correlating to a Plan Participant will be established for each type of Contribution and for each Division of the Separate Account in which such Contribution is invested.

Investment Accounts will be maintained until the Investment Account Values are either (a) applied to effect Variable Annuity Payments (b) paid to the Owner of Benefits or the beneficiary or (c) transferred in accordance with the provisions of the Contract.

Each Contribution will be allocated to the Division or Divisions designated by the Notification on file with the Company and will result in a credit of units to the appropriate Investment Account. The number of units so credited will be determined by dividing the portion of the Contributions allocated to a Division by the Unit Value for such Division for the Valuation Period within which the Contribution was received by the Company at its home office in Des Moines, Iowa.

2.    Unit Value

The Unit Value for a Contract which participates in a Division of the Separate Account determines the value of an Investment Account consisting of Contributions allocated to that Division. The Unit Value for each Division for the Contract is determined on each day on which the net asset value of its underlying mutual fund is determined. The Unit Value for a Valuation Period is determined as of the end of that period. The investment performance of the underlying mutual fund and deducted expenses affect the Unit Value.

For this series of Contracts, the Unit Value for each Division will be fixed at $1.00 for the Valuation Period in which the first amount of money is credited to the Division. A Division’s Unit Value for any later Valuation Period is equal to its Unit Value for the immediately preceding Valuation Period multiplied by the Net Investment Factor (see below) for that Division for this series of Contracts for the later Valuation Period.

3.    Net Investment Factor

Each Net Investment Factor is the quantitative measure of the investment performance of each Division of the Separate Account B.

For any specified Valuation Period the Net Investment Factor for a Division for this series of Contracts is equal to

a)    the quotient obtained by dividing (i) the net asset value of a share of the underlying mutual fund as of the end of the Valuation Period, plus the per share amount of any dividend or other distribution made by the mutual fund during the Valuation Period (less an adjustment for taxes, if any) by (ii) the net asset value of a share of the mutual fund as of the end of the immediately preceding Valuation Period, reduced by

b)    a mortality and expense risks charge, equal to a simple interest rate for the number of days within the Valuation Period at an annual rate of 0.64%.

The amounts derived from applying the rate specified in subparagraph b) above and the amount of any taxes referred to in subparagraph a) above will be accrued daily and will be transferred from the Separate Account at the discretion of the Company.

4.    Hypothetical Example of Calculation of Unit Value for All Divisions Except theMoney Market Division

The computation of the Unit Value may be illustrated by the following hypothetical example. Assume that the current net asset value of an underlying mutual fund share is $14.8000; that there were no dividends or other distributions made by the mutual fund and no adjustment for taxes since the last determination; that the net asset value of an mutual fund share last determined was $14.7800; that the last Unit Value was $1.0185363; and that the Valuation Period was one day. To determine the current Net Investment Factor, divide $14.8000 by $14.7800 which produces 1.0013532 and deduct from this amount the mortality and expense risks charge of 0.0000175, which is the rate for one day that is equivalent to a simple annual rate of 0.64%. The result, 1.0013381, is the current Net Investment Factor. The last Unit Value ($1.0185363) is then multiplied by the current Net Investment Factor (1.0013381) which produces a current Unit Value of $1.0198992.

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5.    Hypothetical Example of Calculation of Unit Value for the Money Market Division

The computation of the Unit Value may be illustrated by the following hypothetical example. Assume that the current net asset value of an underlying mutual fund share is $1.0000; that a dividend of 0.0328767 cents per share was declared by the mutual fund prior to calculation of the net asset value of the share and that no other distributions and no adjustment for taxes were made since the last determination; that the net asset value of a mutual fund share last determined was $1.0000; that the last Unit Value was $1.0162734; and that the Valuation Period was one day.

To determine the current Net Investment Factor, add the current net asset value ($1.0000) to the amount of the dividend ($.000328767) and divide by the last net asset value ($1.0000), which when rounded to seven places equals 1.0003288. Deduct from this amount the mortality and expense risks charge of 0.0000175 (the proportionate rate for one day based on a simple annual rate of 0.64%). The result (1.0003137) is the current Net Investment Factor. The last Unit Value ($1.0162734) is then multiplied by the current Net Investment Factor (1.0003137), resulting in a current Unit Value of $1.0165922.

B.    Income Benefits

Income Benefits consist of either monthly Variable Annuity Payments or periodic payments made on a monthly, quarterly, semi-annual or annual basis pursuant to the Flexible Income Option.

1.    Variable Annuity Payments

The amount applied to provide Variable Annuity Payments must be at least $1,750. Variable Annuity Payments will be provided by the Investment Accounts which correlate to the Plan Participant held under the LargeCap Value Division. Thus, if the Owner of Benefits elects Variable Annuity Payments, any amounts that are to be used to provide Variable Annuity Payments will be transferred to Investment Accounts held under the LargeCap Value Division as of the last Valuation Date in the month which begins two months before the Annuity Commencement Date. After any such transfer, the value of the LargeCap Value Division Investment Accounts will be applied on the Annuity Purchase Date to provide Variable Annuity Payments. The Annuity Commencement Date, which will be one month following the Annuity Purchase Date, will be the first day of a month. Thus, if the Annuity Commencement Date is August 1, the Annuity Purchase Date will be July 1, and the date of any transfers to a LargeCap Value Division Investment Account will be the Valuation Date immediately preceding July 1.

The annuity commencement date must be no later than the date the Plan Participant must take a required distribution under the Internal Revenue Code. See “Federal Tax Status.”

a.    Selecting a Variable Annuity

Variable Annuity Payments will be made to an Owner of Benefits beginning on the Annuity Commencement Date and continuing thereafter on the first day of each month. An Owner of Benefits may select an Annuity Commencement Date by Notification to the Company. The date selected may be the first day of any month the Plan allows which is at least one month after the Notification. Generally, the Annuity Commencement Date cannot begin before the Plan Participant is age 59½, separated from service, or is totally disabled. See “Federal Tax Status” for a discussion of required distributions and the federal income tax consequences of distributions.

At any time not less than one month preceding the desired Annuity Commencement Date, an Owner of Benefits may, by Notification, select one of the annuity options described below (see “Forms of Variable Annuities”). If no annuity option has been selected at least one month before the Annuity Commencement Date, and if the Plan does not provide one, payments which correlate to an unmarried Plan Participant will be made under the annuity option providing Variable Life Annuity with Monthly Payments Certain for Ten Years. Payments which correlate to a married Plan Participant will be made under the annuity option providing a Variable Life Annuity with One-Half Survivorship.

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b.    Forms of Variable Annuities

Because of certain restrictions contained in the Code and regulations thereunder, an annuity option is not available under a Contract used to fund a TDA Plan, or 401(a) Plan unless (i) the joint or contingent annuitant is the Plan Participant’s spouse or (ii) on the Plan Participant’s Annuity Commencement Date, the present value of the amount to be paid while the Plan Participant is living is greater than 50% of the present value of the total benefit to the Plan Participant and the Plan Participant’s beneficiary (or contingent annuitant, if applicable).

An Owner of Benefits may elect to have all or a portion of Investment Account Values applied under one of the following annuity options. However, if the monthly Variable Annuity Payment at any time would be less than $20, the Company may, at its sole option, pay the Variable Annuity Reserves in full settlement of all benefits otherwise available.

Variable Life Annuity with Monthly Payments Certain for Zero, Five, Ten, Fifteen orTwenty Years or Installment Refund Period – a variable annuity which provides monthly payments during the Plan Participant’s lifetime, and further provides that if, at the death of the Plan Participant, monthly payments have been made for less than a minimum period, e.g. five years, any remaining payments for the balance of such period shall be paid to the Owner of Benefits, if the Owner of Benefits is not the Plan Participant, or to a designated beneficiary unless the Owner of Benefits or the beneficiary requests in writing that the Commuted Value of the remaining payments be paid in a single sum. (Persons entitled to take the remaining payments or the Commuted Value thereof rather than continuing monthly payments should consult with their tax advisor to be made aware of the differences in tax treatment.)

The minimum period may be either zero, five, ten, fifteen or twenty years or the period (called “installment refund period”) consisting of the number of months determined by dividing the amount applied under the option by the initial payment. If, for example, $14,400 is applied under a life option with an installment refund period, and if the first monthly payment provided by that amount, as determined from the applicable annuity conversion rates, would be $100, the minimum period would be 144 months ($14,400 divided by $100 per month) or 12 years. A variable life annuity with an installment refund period guarantees a minimum number of payments, but not the amount of any monthly payment or the amount of aggregate monthly payments. The longer the minimum period selected, the smaller will be the amount of the first annuity payment.

Under the Variable Life Annuity with Zero Years Certain, which provides monthly payments to the Owner of Benefits during the Plan Participant’s lifetime, it would be possible for the Owner of Benefits to receive no Annuity Payments if the Plan Participant died prior to the due date of the first payment since payment is made only during the lifetime of the Plan Participant.

Joint and Survivor Variable Life Annuity with Monthly Payments Certain for Ten Years – a variable annuity which provides monthly payments for a minimum period of ten years and thereafter during the joint lifetimes of the Plan Participant on whose life the annuity is based and the contingent annuitant named at the time this option is elected, and continuing after the death of either of them for the amount that would have been payable while both were living during the remaining lifetime of the survivor. In the event the Plan Participant and the contingent annuitant do not survive beyond the minimum ten year period, any remaining payments for the balance of such period will be paid to the Owner of Benefits, if the owner of Benefits is not the Plan Participant, or to a designated beneficiary unless the Owner of Benefits or the beneficiary requests in writing that the Commuted Value of the remaining payments be paid in a single sum. (Designated beneficiaries entitled to take the remaining payments or the Commuted Value thereof rather than continuing monthly payments should consult with their tax advisor to be made aware of the differences in tax treatment.)

Joint and Two-Thirds Survivor Variable Life Annuity – a variable annuity which provides monthly payments during the joint lives of a Plan Participant and the person designated as contingent annuitant with two-thirds of the amount that would have been payable while both were living continuing until the death of the survivor.

Variable Life Annuity with One-Half Survivorship – a variable annuity which provides monthly payments during the life of the Plan Participant with one-half of the amount otherwise payable continuing so long as the contingent annuitant lives.

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Under the Joint and Two-thirds Survivor Variable Life Annuity and under the Variable Life Annuity with One-Half Survivorship, it would be possible for the Owner of Benefits and/or contingent annuitant to receive no annuity payments if the Plan Participant and contingent annuitant both died prior to the due date of the first payment since payment is made only during their lifetimes.

Other Options – Other variable annuity options permitted under the applicable Plan may be arranged by mutual agreement of the Owner of Benefits and the Company.

c.    Basis of Annuity Conversion Rates

Because women as a class live longer than men, it has been common that retirement annuities of equal cost for women and men of the same age will provide women less periodic income at retirement. The Supreme Court of the United States ruled in Arizona Governing Committee vs. Norris that sex distinct annuity tables under an employer-sponsored benefit plan result in discrimination that is prohibited by Title VII of the Federal Civil Rights Act of 1964. The Court further ruled that sex distinct annuity tables will be deemed discriminatory only when used with values accumulated from employer contributions made after August 1, 1983, the date of the ruling.

Title VII applies only to employers with 15 or more employees. However, certain State Fair Employment Laws and Equal Payment Laws may apply to employers with less than 15 employees.

The Contract described in this Prospectus offers both sex distinct and sex neutral annuity conversion rates. The annuity rates are used to convert a Plan Participant’s pre-retirement Investment Account Values to a monthly lifetime income at retirement. Usage of either sex distinct or sex neutral annuity rates will be determined by the Contractholder.

For each form of variable annuity, the annuity conversion rates determine how much the first monthly Variable Annuity Payment will be for each $1,000 of the Investment Account Value applied to effect the variable annuity. The conversion rates vary with the form of annuity, date of birth, and, if distinct rates are used, the sex of the Plan Participant and the contingent annuitant, if any. The sex neutral guaranteed annuity conversion rates are based upon (i) an interest rate of 2.5% per annum and (ii) mortality according to the “1983 Table a for Individual Annuity Valuation” projected with Scale G to the year 2001 set back five years in age. The sex distinct female rates are determined for all Plan Participants in the same way as sex neutral rates, as described above. The sex distinct male rates are determined for all Plan Participants in the same way as the sex neutral rates, as described above, except mortality is not set back five years in age. The guaranteed annuity conversion rates may be changed, but no change which would be less favorable to the Owner of Benefits will take effect for a current Plan Participant.

The Contract provides that an interest rate of not less than 2.5% per annum will represent the assumed investment return. Currently the assumed investment return used in determining the amount of the first monthly payment is 4% per annum. This rate may be increased or decreased by the Company in the future but in no event will it be less than 2.5% per annum. If, under the Contract, the actual investment return (as measured by an Annuity Change Factor, defined below) should always equal the assumed investment return, Variable Annuity Payments would remain level. If the actual investment return should always exceed the assumed investment return, Variable Annuity Payments would increase; conversely, if it should always be less than the assumed investment return, Variable Annuity Payments would decrease.

The current 4% assumed investment return is higher than the 2.5% interest rate reflected in the annuity conversion rates contained in the Contract. With a 4% assumption, Variable Annuity Payments will commence at a higher level, will increase less rapidly when actual investment return exceeds 4%, and will decrease more rapidly when actual investment return is less than 4%, than would occur with a lower assumption.

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d.    Determining the Amount of the First Variable Annuity Payment

The initial amount of monthly annuity income shall be based on the option selected, the age of the Plan Participant and contingent annuitant, if any, and the Investment Account Values applied as of the Annuity Purchase Date. The initial monthly income payment will be determined on the basis of the annuity conversion rates applicable on such date to such conversions under all contracts of this class issued by the Company. However, the basis for the annuity conversion rates will not produce payments less beneficial to the Owner of Benefits than the annuity conversion rate basis described above.

e.    Determining the Amount of the Second and Subsequent Monthly Variable AnnuityPayments

The second and subsequent monthly Variable Annuity Payments will increase or decrease in response to the investment experience of the mutual fund underlying the LargeCap Value Division. The amount of each payment will be determined by multiplying the amount of the monthly Variable Annuity Payment due in the immediately preceding calendar month by the Annuity Change Factor for the LargeCap Value Division for the Contract for the calendar month in which the Variable Annuity Payment is due.

The Annuity Change Factor for the LargeCap Value Division for a calendar month is the quotient of 1) divided by 2), below:

1)    The number which results from dividing (i) the Contract’s Unit Value for the LargeCap Value Division for the first Valuation Date in the calendar month beginning one month before the given calendar month by (ii) the Contract’s Unit Value for such Division for the first Valuation Date in the calendar month beginning two months before the given calendar month.

2)    An amount equal to one plus the effective interest rate for the number of days between the two Valuation Dates specified in subparagraph (1) above at the interest rate assumed to determine the initial payment of variable benefits to the Owner of Benefits.

f.    Hypothetical Example of Calculation of Variable Annuity Payments

Assume that on the date one month before the Annuity Commencement Date the Investment Account Value that is invested in the LargeCap Value Division which correlates to a Plan Participant is $37,592. Using the appropriate annuity conversion factor (assuming $5.88 per $1,000 applied) the Investment Account Value provides a first monthly Variable Annuity Payment of $221.04. To determine the amount of the second monthly payment assume that the LargeCap Value Division Unit Value as of the first Valuation Date in the preceding calendar month was $1.3712044 and the Unit Value as of the first Valuation Date in the second preceding calendar month was $1.3273110. The Annuity Change Factor is determined by dividing $1.3712044 by $1.3273110, which equals 1.0330694, and dividing the result by an amount corresponding to the amount of one increased by an assumed investment return of 4% (which for a thirty day period is 1.0032288). 1.0330694 divided by 1.0032288 results in an Annuity Change Factor for the month of 1.0297446. Applying this factor to the amount of Variable Annuity Payment for the previous month results in a current monthly payment of $227.61 ($221.04 multiplied by 1.0297446 equals $227.61).

2.    Flexible Income Option

Instead of Variable Annuity Payments an Owner of Benefits may choose to receive income benefits under the Flexible Income Option. Unlike Variable Annuity Payments, payments under the Flexible Income Option may be made from any Division of the Separate Account. Under the Flexible Income Option, the Company will pay to the Owner of Benefits a portion of the Aggregate Investment Accounts on a monthly, quarterly, semi-annual or annual basis on the date or dates requested each Year and continuing for a period not to exceed the life or life expectancy of the Plan Participant, or the joint lives or life expectancy of such Plan Participant and the contingent annuitant, if the contingent annuitant is the Plan Participant’s spouse. If the Notification does not specify from which Investment Accounts payments are to be made, amounts will be withdrawn on a pro rata basis from all Investment Accounts which correlate to the Plan Participant. Payments will end, however, on the date no amounts remain in such Accounts or the date such Accounts are paid or applied in full as described below. Payments will be subject to the following:

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a.    The life expectancy of the Plan Participant and the Plan Participant’s spouse, if applicable, will be determined in accordance with the life expectancy tables contained in Internal Revenue Regulation Section 1.72-9. Life expectancy will be determined as of the date on which the first payment is made. Life expectancy will be redetermined annually thereafter.

b.    Payments may begin any time after the Flexible Income Option is requested. Payments must begin no later than the latest date permitted or required by the Plan or regulation to be the Owner of Benefit’s Annuity Commencement Date.

c.    Payments will be made annually, semiannually, quarterly, or monthly as requested by the Owner of Benefits and agreed to by the Company. The annual amount payable will be the lesser of the Aggregate Investment Account Value which correlates to the Plan Participant or the minimum annual amount determined in accordance with the minimum distribution rules of the Code.

d.    If the Plan Participant should die before the Aggregate Investment Account Value has been paid or applied in full, the remaining Investment Account Values will be treated as benefits payable at death as described in this prospectus.

e.    Year for purposes of determining payments under the Flexible Income Option means the twelve month period starting on the installment payment starting date and each corresponding twelve month period thereafter.

An Owner of Benefits may request a payment in excess of the minimum described above. Such payment may be equal to all or any portion of the Investment Accounts which correlate to the Plan Participant; provided, however, that if the requested payment would reduce the total value of such accounts to a total balance of less than $1,750 then such request will be a request for the total of such Investment Accounts. The Owner of Benefits may terminate the Flexible Income Payments by giving the Company Notification (i) requesting an excess payment equal to the remaining balance of the Aggregate Investment Account Values which correlate to a Plan Participant, (ii) requesting that the remaining balance of the Aggregate Investment Account Values be applied to provide Variable Annuity Payments or (iii) a combination of (i) and (ii), as long as the amount applied to provide an annuity is at least $1,750. The Company will make such excess payment on the later of (i) the date requested, or (ii) the date seven (7) calendar days after the Company receives the Notification. The Annuity Commencement Date for amounts so applied will be one month after the Annuity Purchase Date. The Annuity Purchase Date for amounts so applied will be the first Valuation Date in the month following the Company’s receipt of the Notification or the first Valuation Date of such subsequent month as requested.

If the Owner of Benefits chooses the Flexible Income Option, an additional charge $25.00 will be deducted annually on a pro rata basis from the Investment Accounts which correlate to the Plan Participant.

C. Payment on Death of Plan Participant

1.    Prior to Annuity Purchase Date

If a Plan Participant dies prior to the Annuity Purchase Date, the Company (upon receipt of due proof of death and any waiver or consent required by applicable state law) will pay the death benefit in accordance with the provisions of the Plan. The Owner of Benefits may elect to either (1) leave the assets in the Contract to the extent permitted by applicable laws; (2) receive such value as a single sum benefit; or (3) apply the Investment Account Values which correlate to the Plan Participant to purchase Variable Annuity Payments for the beneficiary if the aggregate value of such Investment Accounts is at least $1,750. If the beneficiary does not provide Notification to the Company within 120 days of the date the Company receives due proof of death (i.e. a certified copy of the death certificate, a certified copy of a decree of a court of competent jurisdiction as to the finding of death, a written statement by a medical doctor who attended the deceased during his last illness), the beneficiary will be deemed a Plan Participant under the Contract.

A beneficiary may elect to have all or a part of the amount available under this Contract transferred to any Companion Contract. Alternatively, this Contract may accept all or part of the amount available under a Companion Contract to establish an Investment Account or Accounts for a beneficiary under this Contract. If the aggregate value of such Investment Accounts is less than $1,750, the Company may at its option pay the beneficiary the value of such accounts in lieu of all other benefits.

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An election to receive Variable Annuity Payments must be made prior to the single sum payment to the beneficiary. The amount of the death benefit is determined by the terms of the Plan. Annuity income must be payable as lifetime annuity income with no benefits beyond the beneficiary’s life or life expectancy. In addition, the amount of the monthly Variable Annuity Payments must be at least $20, or the Company may at its option pay the beneficiary the value of the Variable Annuity Reserves in lieu of all other benefits. The beneficiary’s Annuity Purchase Date will be the first day of the calendar month specified in the election, but in no event prior to the first day of the calendar month following the date Notification is received by the Company. The amount to be applied will be determined as of the Annuity Purchase Date. The beneficiary’s Annuity Commencement Date will be the first day of the calendar month following the Annuity Purchase Date. The beneficiary must be a natural person in order to elect Variable Annuity Payments. The annuity conversion rates applicable to a beneficiary shall be the annuity conversion rates the Company makes available to Owners of Benefits under this Contract. The beneficiary will receive a written description of the options available.

2.    Subsequent to Annuity Purchase Date

Upon the death of a Plan Participant subsequent to the Annuity Purchase Date, no benefits will be available except as may be provided under the form of annuity selected. If provided for under the form of annuity, the Owner of Benefits or the beneficiary will continue receiving any remaining payments unless the Owner of Benefits or the beneficiary requests in writing that the Commuted Value of the remaining payments be paid in a single sum.

D.    Withdrawals and Transfers

1.    Cash Withdrawals

The Contract is designed for and intended to be used for retirement Plans. However, subject to any Plan limitations or any reduction for vesting provided for in the Plan as to amounts available, the Owner of Benefits may withdraw cash from the Investment Accounts which correlate to a Plan Participant at any time prior to the Annuity Purchase Date subject to any charges that may be applied. The Code generally provides that distributions from the contracts (except those used for Creditor Exempt or General Creditor Non-qualified Plans) may begin only after the Plan Participant attains age 59½, terminates employment, dies or becomes disabled, or in the case of deemed hardship (or, for 457 Plans, unforeseen emergencies). Withdrawals before age 59½ may involve an income tax penalty. (See “Federal Tax Status.”)

The procedure with respect to cash withdrawals is as follows:

a.    The Plan must allow for such withdrawal.

b.    The Company must receive a Notification requesting a cash withdrawal from the Owner of Benefits on a form either furnished or approved by the Company. The Notification must specify the amount to be withdrawn for each Investment Account from which withdrawals are to be made. If no specification is made, withdrawals from Investment Accounts will be made on a pro rata basis.

c.    If a certificate has been issued to the Owner of Benefits the Company may require that any Notification be accompanied by such certificate.

d.    In the case of a withdrawal of the Aggregate Investment Account Value, it will be subject to the Contract Administration Expense/Recordkeeping Charge. If the Aggregate Investment Account Values are insufficient to satisfy the amount of the requested withdrawal and applicable charges, the amount paid will be reduced to satisfy such charges.

Any cash withdrawal will result in the cancellation of a number of units from each Investment Account from which values have been withdrawn. The number of units cancelled from an Investment Account will be equal to the amount withdrawn from that Account divided by the Unit Value for the Division of the Separate Account in which the Account is invested for the Valuation Period in which the cancellation is effective. Units will also be cancelled to cover any charges assessed under (d) above.

(Special Note: Under the Texas Education Code, Plan Participants under Contracts issued in connection with Optional Retirement Programs for certain employees of Texas institutions of higher education are prohibited from making withdrawals except in the event of termination of employment, retirement or death of the Plan Participant. Also, see “Federal Tax Status” for a description of further withdrawal restrictions.)

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2.    Transfers Between Divisions

Upon Notification, all or a portion of the value of an Investment Account which correlates to a Plan Participant may be transferred to another available Investment Account correlating to such Plan Participant for the same type of Contribution. Transfers may be made at any time before the Annuity Purchase Date.

A transfer will be effective as of the end of the Valuation Period in which the request is received. Any amount transferred will result in the cancellation of units in the Investment Account from which the transfer is made. The number of units cancelled will be equal to the amount transferred from the Investment Account divided by the Unit Value of the Division for the Valuation Period in which the transfer is effective. The transferred amount will result in the crediting of Units in the Investment Account to which the transfer is made. The number of Units credited will be equal to the amount transferred to the Investment Account divided by the Unit Value of the Division for the Valuation Period in which the transfer is effective.

3.    Transfers to the Contract

If a Companion Contract has been issued by the Company to fund the Plan, and except as otherwise provided by the applicable Plan, the Contract may accept all or a portion of the proceeds available under the Companion Contract at any time at least one month before Annuity Commencement Date, subject to the terms of the Companion Contract.

4.    Transfers to Companion Contract

If a Companion Contract has been issued by the Company to fund the Plan, except as otherwise provided by the applicable Plan and the provisions of the Companion Contract, an Owner of Benefits may by Notification transfer all or a portion of the Investment Account Values which correlate to a Plan Participant to the Companion Contract. If the Notification does not state otherwise, amounts will be transferred on a pro rata basis from the Investment Accounts which correlate to the Plan Participant. Transfers with respect to a Plan Participant from this Contract to the Companion Contract will not be permitted if this Contract has accepted, within the six-month period preceding the proposed transfer from this Contract to the Companion Contract, a transfer from an unmatured Investment Account which correlates to the Plan Participant established under the Companion Contract. An unmatured Investment Account is an Investment Account which has not reached the end of its interest guarantee period. In all other respects, such transfers are subject to the same provisions regarding frequency of transfer, effective date of transfer and cancellation of units as described above in “Transfers Between Divisions.”

5.    Special Situation Involving Alternate Funding Agents

The Contract allows the Investment Account Values of all Plan Participants to be transferred to an alternate Funding Agent with or without the consent of the Plan Participants. Transfers to an alternate Funding Agent require Notification from the Contractholder.

The amount to be transferred will be equal to the Investment Account Values determined as of the end of the Valuation Period in which the Notification is received. Such transfers will be subject to the Contract Administration Expense/Recordkeeping Charge.

6.    Postponement of Cash Withdrawal or Transfer

Any cash withdrawal or transfer to be made from the Contract or between Investment Accounts in accordance with the preceding paragraphs will be made (i) within seven calendar days after Notification for such payment or transfer is received by the Company at its Home Office or (ii) on the requested date of payment or transfer, if later. However, such withdrawal or transfer may be deferred during any period when the right to redeem shares is suspended as permitted under provisions of the Investment Company Act of 1940, as amended. The right to redeem shares may be suspended during any period when (a) trading on the New York Stock Exchange is restricted as determined by the Securities and Exchange Commission or such exchange is closed for other than weekends and holidays; (b) an emergency exists, as determined by the Securities and Exchange Commission, as a result of which (i) disposal by the underlying mutual fund of securities owned by it is not reasonably practicable or (ii) it is not reasonably practicable for the mutual fund to fairly determine the value of its net assets; or (c) the Securities and Exchange Commission so permits by order for the protection of security holders. If any deferment of transfer or withdrawal is in effect and has not been cancelled by Notification to the Company within the period of deferment, the amount to be transferred

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or withdrawn shall be determined as of the first Valuation Date following expiration of the permitted deferment, and transfer or withdrawal will be made within seven calendar days thereafter. The Company will notify the Contractholder of any deferment exceeding 30 days.

7.    Loans

The Company will not make available a loan option for the Contract.

E.    Other Contractual Provisions

1.    Contribution Limits

The Contract prescribes no limits on the minimum Contribution which may be made to an Investment Account which correlates to a Plan Participant. Plan Participant maximum Contributions are discussed under “Federal Tax Status.” Contributions may also be limited by the Plan. The Company may also limit Contributions on 60-days notice.

2.    Assignment

No benefits in the course of payment under a Contract used to fund a TDA Plan, 401(a) Plan, governmental 457(b) Plan or Creditor-Exempt Non-Qualified Plan are assignable, by any Owner of Benefits, Plan Participant, beneficiary or contingent annuitant and all such benefits under such Contracts, shall be exempt from the claims of creditors to the maximum extent permitted by law. Benefits in the course of payment for Contracts used for fund tax exempt 457(b) Plans, 457(f) Plans and General Creditor Non-Qualified Plans are assignable only by the Contractholder and such benefits are subject to the claims of the Contractholder’s general creditors.

Investment Account Values which correlate to a Plan Participant are non-forfeitable by the Owner of Benefits; provided, however, if the Plan specifically so provides, Investment Account Values which correlate to a Plan Participant shall be reduced to the extent required by the vesting provisions of the Plan as of the date the Company receives Notification of the event requiring the reduction.

3.    Cessation of Contributions

A cessation of Contributions with respect to all Plan Participants shall occur at the election of the Contractholder upon Notification to the Company, on the date the Plan terminates or on the date no Investment Account Values remain under the Contract or at the election of the Company upon 60-days notice to the Contractholder. Following a cessation of Contributions all terms of the Contract will continue to apply except that no further Contributions may be made.

4.    Changes in the Contract

The terms of a Contract may be changed at any time by written agreement between the Company and the Contractholder without the consent of any Plan Participant, Owner of Benefits, beneficiary, or contingent annuitant. However, except as required by law or regulation, no such change shall apply to variable annuities which were in the course of payment prior to the effective date of the change. The Company will notify any Contractholder affected by any change under this paragraph.

The Company may unilaterally change the Contract at any time, including retroactive changes, in order to meet the requirements of any law or regulation issued by any governmental agency to which the Company is subject. The Company may also add Divisions to the Separate Account at any time. In addition, the Company may, on 60-days prior notice to the Contractholder, unilaterally change the basis for determining Investment Account Values, the Net Investment Factors, the Annuity Purchase Rates and the Annuity Change Factors; the guaranteed annuity conversion rates; the provisions with respect to transfers to or from a Companion Contract or between Investment Accounts; and the Contract Administration Expense/Recordkeeping Charge.

However, no amendment or change will apply to annuities in the course of payment except to the extent necessary to meet the requirements of any law or regulation issued by any governmental agency to which the company is subject. In addition, no change on the guaranteed annuity conversion rates will be effective for any current Plan Participant if the effect of such amendment or change would be less favorable to the Owner of Benefits. Also, any change in the Contract Administration Expense/Recordkeeping Charge will not take affect as to any Investment Accounts to be transferred to an Alternate Funding Agent if, prior to the date

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of the amendment or change is to take affect, the Company receives a written request from the Contractholder for payment of all such Investment Account Values to the Alternate Funding Agent and such request is not revoked.

Furthermore, the Company may, on 60-days notice to the Contractholder, unilaterally change the mortality and expense risks charge provided that (a) the charge shall in no event exceed 1.25%, (b) the charge shall not be changed more frequently than once in any one year period and (c) no change shall apply to annuities which were in the course of payment prior to the effective date of the change.

STATEMENT OF VALUES

The Company will furnish each Owner of Benefits at least once during each year a statement showing the number of units credited to the Investment Account or Accounts which correlate to the Plan Participant, Unit Values for such Investment Accounts and the resulting Investment Account Values.

SERVICES AVAILABLE BY TELEPHONE

Telephone Transactions. The following transactions may be exercised by telephone by any Owner of Benefits: 1) transfers between Investment Accounts; and 2) changes in Contribution allocation percentages. The telephone transactions may be exercised by calling 1-800-547-7754. Telephone transfer requests must be received by the close of the New York Stock Exchange on a day when the Company is open for business to be effective that day. Requests made after the close of the New York Stock Exchange or on a day when the Company is not open for business will be effective the next business day. Plan Participants may obtain daily account information, investment information and counselor assistance by calling the toll free number.

Although neither the Separate Account nor the Company is responsible for the authenticity of telephone transaction requests, the right is reserved to refuse to accept telephone requests when in the opinion of the Company it seems prudent to do so. The Owner of Benefits bears the risk of loss caused by fraudulent telephone instructions the Company reasonably believes to be genuine. The Company will employ reasonable procedures to assure telephone instructions are genuine and if such procedures are not followed, the Company may be liable for losses due to unauthorized or fraudulent transactions. Such procedures include recording all telephone instructions, requesting personal identification information such as the caller’s name, daytime telephone number, social security number and/ or birthdate and sending a written confirmation of the transaction to the Owner of Benefits’ address of record. Owners of Benefits may obtain additional information and assistance by telephoning the toll free number.

DISTRIBUTION OF THE CONTRACT

The Contract is no longer offered.

FEDERAL TAX STATUS

It should be recognized that the descriptions below of the federal income tax status of amounts received under the contracts are not exhaustive and do not purport to cover all situations. A tax advisor should be consulted for complete information. (For the federal tax status of the Company and Separate Account B, see “Principal Life Insurance Company Separate Account B”.)

A.    Taxes Payable by Owners of Benefits and Annuitants

The Contract offered in connection with this prospectus is used with retirement programs which receive favorable tax deferred treatment under Federal income tax law or deferred annuity contracts purchased with after tax dollars. Annuity payments or other amounts received under the Contract are subject to income tax withholding. The amounts withheld will vary among recipients depending on the tax status of the taxpayer and the type of payments from which taxes are withheld.

Contributions to Contracts used for Creditor-Exempt and General Creditor Non-Qualified Plans do not enjoy the advantages available to qualified retirement plans, but Contributions invested in Contracts used to Fund Creditor - Exempt Non-qualified Retirement Plans may receive tax-deferred treatment of the earnings, until distributed from the Contract as retirement benefits.

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1. Tax-Deferred Annuity Plans – (Section 403(b) Annuities for Employees of Certain Tax-Exempt Organizations or Public Educational Institutions)

Contributions. Under section 403(b) of the Code, payments made by certain employers (i.e., tax-exempt organizations, meeting the requirements of section 501(c)(3) of the Code and public educational institutions) to purchase annuity contracts for their employees are excludable from the gross income of employees to the extent that the aggregate contributions do not exceed the limitations prescribed by section 402(g) and section 415 of the Code. This gross income exclusion applies to employer contributions and voluntary salary reduction contributions.

For 2017, an individual’s voluntary salary reduction contributions under section 403(b) are generally limited to $18,000; additional catch-up contributions up to $6,000 are permitted for those age 50 and older. Combined employer and salary reduction contributions are generally limited to the lesser of 100% of the participant’s compensation, or $54,000 (plus, if applicable, the $6,000 catch-up contribution). In addition, for plan years beginning after December 31, 1988, employer contributions must comply with various nondiscrimination rules; these rules may have the effect of further limiting the rate of employer contributions for highly compensated employees.

Taxation of Distributions. Distributions are restricted. The restrictions apply to amounts accumulated after December 31, 1988 (including voluntary contributions after that date and earnings on prior and current voluntary contributions). These restrictions require that no distributions will be permitted prior to one of the following events: (1) attainment of age 59 ½, (2) severance from employment, (3) death, (4) disability, (5) hardship (hardship distributions will be limited to the amount of salary reduction contributions exclusive of earnings thereon), (6) plan termination, or (7) qualified reservist distribution.

All distributions from a section 403(b) Plan are taxed as ordinary income of the recipient in accordance with section 72 of the Code and are subject to 20% income tax withholding if they are eligible rollover distributions. Distributions received before the recipient attains age 59½ generally are subject to a 10% penalty tax in addition to regular income tax. Certain distributions are excepted from this penalty tax, including distributions following (1) death, (2) disability, (3) separation from service during or after the year the Participant reaches age 55, (4) severance from employment at any age if the distribution is in the form of substantially equal periodic payments over the life (or life expectancy) of the Plan Participant (or the Plan Participant and Beneficiary), (5) distributions to alternate payee pursuant to a qualified domestic relations order, (6) made on account of certain levies on income or payments, (7) not in excess of tax deductible medical expenses, (8) qualified reservist distributions or (9) distribution for certain natural disaster victims.

Required Distributions. The first year for which a minimum distribution is required is the later of the calendar year in which the participant reaches age 70½ or the calendar year in which the participant retires and such distributions must be made over a period that does not exceed the life expectancy of the Plan Participant (or the Plan Participant and Beneficiary). Plan Participants employed by governmental entities and certain church organizations may delay the commencement of payments until April 1 of the calendar year following retirement if they remain employed after attaining age 70½.

However, upon the death of the Plan Participant 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 Plan Participant’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. If the surviving spouse is the beneficiary of the 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. In certain instances the distributions may be payable over the remaining life expectancy of the deceased owner. Amounts accumulated under a contract on December 31, 1986, are not subject to these minimum distributions requirements. A penalty tax of 50% will be imposed on the amount by which the minimum required distribution in any year exceeds the amount actually distributed in that year.

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Tax-Free Transfers and Rollovers. The Code provides for the tax-free exchange of one annuity contract for another annuity contract, and the IRS has ruled that total or partial amounts transferred between section 403(b) annuity contracts and/or 403(b)(7) custodial accounts may qualify as tax-free exchanges under certain circumstances. In addition, section 403(b) of the Code permits tax-free rollovers of eligible rollover distributions from section 403(b) programs to Individual Retirement Accounts (IRAs) and eligible retirement plans. If an eligible rollover distribution is taken as a direct rollover to an IRA or other eligible retirement plans the mandatory 20% income tax withholding does not apply. However, the 20% mandatory withholding requirement does apply to an eligible rollover distribution that is not made as a direct rollover. In addition, such an indirect rollover must be completed within 60 days of receipt of the distribution.

2.    457 Plans

Contributions. Under section 457 of the Code, there are three types of 457 plans: tax exempt 457(b), governmental 457(b) and 457(f) plans, Tax exempt 457(b) plans and 457(f) plans may only be established for a select group of management or highly compensated employees and/or independent contractors.

These plans allow individuals to defer the receipt of compensation which would otherwise be presently payable and to therefore defer the payment of Federal income taxes on the amounts. For 2017, participants in a tax exempt 457(b) or a governmental 457(b) may defer both employee and employer contributions up to the 402(g) limit, $18,000. Catch up contributions of $6,000 are also allowed for governmental 457(b) plan participants age 50 and older. Special catch-up contributions rules may also apply to tax exempt 457(b) plans. The amounts which are deferred may be used by the employer to purchase the Contract. The amounts in a tax exempt 457(b) plan and a 457(f) plan are owned by the employer and are subject to the claims of the employer’s creditors. The amounts which are deferred for a governmental 457(b) plan are held for the exclusive benefit of the participants and beneficiaries.

Taxation of Distributions. For a governmental 457(b) plan, the amounts are taxable to the participant in the year they are distributed. For a tax exempt 457(b), the amounts are taxable to the participant in the year they are paid or otherwise made available. Amounts otherwise made available may be deferred in certain circumstances. For a 457(f) plan, amounts are taxable to the participant at the time there is no substantial risk of forfeiture.

Distributions Before Severance from Employment. Distributions for tax exempt 457(b) plans and governmental 457(b) plans are not permitted until severance from employment except for unforeseeable emergencies, certain de minimis withdrawals and the calendar year in which participant reaches age 70 ½. Distributions from 457(f) plans may be allowed at certain times as allowed by a plan document.

Required Distributions. The minimum distribution requirements for tax exempt 457(b) plans and governmental 457(b) plans are generally the same as for those for qualified plans and section 403(b) plans. There are no minimum distribution requirements for 457(f) plans.

Tax Free Transfers and Rollovers. Federal income tax law permits rollovers from governmental 457(b) plans to another eligible retirement plan or IRA. Federal tax law does not permit rollovers from tax exempt 457(b) plans or 457(f) plans to any other retirement plan or IRA. Federal tax law does permit the transfer from one tax exempt 457(b) plan to another.

3.    401(a) Plans

Contributions. Under Section 401(a) of the Code, payments made by employers to purchase annuity Contracts for their employees are excludable from the gross income of employees to the extent that the aggregate contributions do not exceed the limitations prescribed by section 402(g), and section 415 of the Code. This gross income exclusion applies to employer contributions and voluntary salary reduction contributions.

For 2017, an individual’s voluntary salary reduction contributions for a 401(k) plan are generally limited to $18,000. In addition, an individual over age 50 may make a “catch-up” contribution of up to $6,000.

For 401(a) qualified plans, the maximum annual contribution that a member can receive is limited to the lesser of 100% of includible compensation or $54,000 (plus, if applicable, the $6,000 catch-up contribution).

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Taxation of Distributions. Distributions are restricted. These restrictions require that no distributions of employee elective salary deferrals will be permitted prior to one of the following events: (1) attainment of age 59 ½, (2) severance from employment, (3) death, (4) disability, (5) plan termination or (6) for certain 401(a) Plans, hardship (hardship distributions will be limited to the amount of salary reduction contributions exclusive of earnings thereon). In-service distributions may be permitted under various circumstances in certain plans. Please consult with the terms of your plan to determine the applicable distribution restrictions.

To the extent distributions do not represent voluntary after-tax distributions, distributions from a section 401(a) Plan are taxed as ordinary income of the recipient in accordance with section 72 of the Code. Distributions received before the recipient attains age 59 ½ generally are subject to a 10% penalty tax in addition to regular income tax. Certain distributions are excepted from this penalty tax, including distributions following (1) death, (2) disability, (3) separation from service during or after the year the Participant reaches age 55, (4) severance from employment at any age if the distribution is in the form of substantially equal periodic payments over the life (or life expectancy) of the Plan Participant (or the Plan Participant and Beneficiary), and distributions (5) to alternate payee pursuant to a qualified domestic relations order, (6) made on account of certain levies on income or payments, (7) not in excess of tax deductible medical expenses, (8) qualified reservist distributions or (9) distribution for certain natural disaster victims.

Required Distributions. Distributions must commence no later than April 1^st of the calendar year following the later of the calendar year in which the participant reaches age 70 ½ or the calendar year in which the participant retires and such distributions must be made over a period that does not exceed the life expectancy of the Plan Participant (or the Plan Participant and Beneficiary). For 5% or greater owners distributions must commence by April 1 of the year following attaining age 70 ½. Following the death of the Plan Participant, the distribution requirements are generally the same as those described with respect to 403(b) Plans. A penalty tax of 50% will be imposed on the amount by which the minimum required distribution in any year exceeds the amount actually distributed in that year. Please consult with the terms of your plan to determine the applicable distribution requirements for your plan.

Tax-Free Transfers and Rollovers. The Code provides for the tax-free exchange of one annuity contract for another annuity contract. Distributions from a 401(a) Plan may also be transferred to an IRA or other eligible retirement plan. If an eligible rollover distribution is taken as a direct rollover to an IRA or other eligible retirement plans the mandatory 20% income tax withholding does not apply. However, the 20% mandatory withholding requirement does apply to an eligible rollover distribution that is not made as a direct rollover. In addition, such an indirect rollover must be completed within 60 days of receipt of the distribution.

4.    Creditor-Exempt Non-Qualified Plans

Certain employers may establish Creditor-Exempt Non-Qualified Plans. Under such Plans the employer formally funds the Plan either by purchasing an annuity contract or by transferring funds on behalf of Plan Participants to a trust established for the benefit of such Plan Participants with a direction to the trustee to use the funds to purchase an annuity contract.

The Trustee is the Contractholder and is considered the nominal owner of the Contract. Each Plan Participant as a Trust beneficiary, is an Owner of Benefits under the Contract and is treated as the owner for income tax purposes.

Taxation of Contract Earnings. Since each Plan Participant for income tax purposes is considered the owner of the Investment Account or Accounts which correlate to such Participant, any increase in a Participant’s Investment Account Value resulting from the investment performance of the Contract is not taxable to the Plan Participant until received by such Plan Participant.

Contributions. Payments made by the employer to the Trust on behalf of a Plan Participant are currently includible in the Plan Participant’s gross income as additional compensation and, if such payments coupled with the Plan Participant’s other compensation is reasonable in amount, such payments are currently deductible as compensation by the Employer.

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Taxation of Distributions. In general, partial redemptions from an Investment Account that are not received by a Plan Participant as an annuity under the Contract allocated to post-August 13, 1982 Contributions under a preexisting Contract are taxed as ordinary income to the extent of the accumulated income or gain under the Contract. Partial redemptions from a contract that are allocated to pre-August 14, 1982 Contributions under a preexisting Contract are taxed only after the Plan Participant has received all of the “investment in the contract” (Contributions less any amounts previously received and excluded from gross income).

In the case of a complete redemption of an Investment Account under the Contract (regardless of the date of purchase), the amount received will be taxed as ordinary income to the extent that it exceeds the Plan Participant’s investment in the contract.

If a Plan Participant purchases two or more contracts from the Company (or an affiliated company) within any calendar year after October 21, 1988, those contracts are treated as a single contract for purposes of measuring the income on a partial redemption or complete surrender.

When payments are received as an annuity, the Plan Participant’s investment in the Contract is treated as received ratably over the expected payment period of the annuity and excluded from gross income as a tax-free return of capital. Individuals who commence receiving annuity payments on or after January 1, 1987, can exclude from income only their unrecovered investment in the Contract. Where such individuals die before they have recovered their entire investment in the contract on a tax-free basis, they may be entitled to a deduction of the unrecovered amount on their final tax return.

In addition to regular income taxes, there is a 10% penalty tax on the taxable portion of a distribution received before the Plan Participant attains age 59 ½ under the Contract, unless the distribution is; (1) made to a Beneficiary on or after death of the Plan Participant, (2) made upon the disability of the Plan Participant; (3) part of a series of substantially equal periodic payments for the life or life expectancy of the Plan Participant or the Plan Participant and Beneficiary; (4) made under an immediate annuity contract, or (5) allocable to Contributions made prior to August 14, 1982.

Required Distributions. The Code does not require a Plan Participant under a Creditor-Exempt Non-Qualified Plan to commence receiving distributions at any particular time and does not limit the duration of annuity payments. However, upon the death of the Plan Participant prior to the commencement of annuity payments, the amount accumulated under the Contract must be distributed within five years or, if distributions to a designated beneficiary under the Contract commence within one year of 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. 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.

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. Transferring Investment Account Values from this contract to a Companion Contract would fall within the provisions of Section 1035 of the Code.

5.    General Creditor Non-Qualified Plans

Contributions. Private taxable employers may establish informally financed, General Creditor Non-Qualified Plans for a select group of management or highly compensated employees and/or independent contractors. Certain arrangements of nonprofit employers entered into prior to August 16, 1989, and not subsequently modified, are subject to the rules discussed below.

Informally financed General Creditor Non-Qualified Plans represent a bare contractual promise on the part of the employer to pay wages at some future time. The Contract used to informally finance the employer’s obligation is owned by the employer and is subject to the claims of the employer’s creditors. The Plan Participant has no present right or vested interest in the Contract and is only entitled to payment in accordance with Plan provisions. If the Employer who is the Contractholder is not a natural person, the Contract does not receive tax-deferred treatment afforded other Contractholders under the Code.

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Taxation of Distributions. Amounts received by an individual from a General Creditor Non-Qualified Plan are includible in the employee’s gross income for the taxable year in which such amounts are paid or otherwise made available. Such amounts are deductible by the employer when made taxable to the individual.

B.    Fund Diversification

Separate Account investments must be adequately diversified in order for the increase in the value of Creditor-Exempt 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 Creditor-Exempt Non-Qualified Contractholders.

The investment opportunities of the mutual fund could conceivably be limited by adhering to the above diversification requirements. This would affect all Contractholders, including those 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 the operations of the Company for the preceding year and its financial condition on December 31st of such year. Its books and assets are subject to review or examination by the Commissioner of Insurance of the State of Iowa, or the Commissioner’s representatives, at all times, and a full examination of its 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, the Company is subject to the insurance laws and regulations of other states and jurisdictions in which it is 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

Frequent Trading and Market-Timing (Abusive Trading Practices)

This Contract is not designed for frequent trading or market timing activity of the investment options. If you intend to trade frequently and/or use market timing investment strategies, this Contract is not an appropriate investment. The Company does not accommodate market timing.

The Company considers frequent trading and market timing activities to be abusive trading practices because they:

•Disrupt the management of the underlying mutual funds by;

• forcing the mutual fund to hold short-term (liquid) assets rather than investing for long term growth, which results in lost investment opportunities for the mutual fund; and

• causing unplanned portfolio turnover;

•Hurt the portfolio performance of the underlying mutual funds; and

•Increase expenses of the underlying mutual fund and separate account due to;

•increased broker-dealer commissions; and

•increased recordkeeping and related costs.

If the Company is 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.

The Company has adopted policies and procedures to help it identify and prevent abusive trading practices. In addition, the underlying mutual funds monitor trading activity to identify and take action against abuses. While the Company’s policies and procedures are designed to identify and protect against abusive trading practices, there can be no certainty that the Company will identify and prevent abusive trading in all instances. When the Company does identify abusive trading, the Company will apply its policies and procedures in a fair and uniform manner.

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If the Company, or an underlying mutual fund that is an investment option with the Contract, deem abusive trading practices to be occurring, the Company will take action that may include, but is not limited to:

• Rejecting transfer instructions from a contractholder or other person authorized by the contractholder 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 requests to 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); and

• Taking such other action as directed by the underlying mutual fund.

The Company 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, the Company 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. The Company will give you notice in writing in this instance.

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, other than redemptions, will be permitted while we attempt to reconcile the concerns. If we are unable to verify your identity within 30 days of our receipt of your original purchase, 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.

Legal Opinions

Legal matters applicable to the issue and sale of the Contracts, including the right of the Company to issue Contracts under Iowa Insurance Law, have been passed upon by Karen E. Shaff, Executive Vice President, General Counsel and Secretary of the Company.

Legal Proceedings

There are no legal proceedings pending to which the Separate Account is a party or which would materially affect the Separate Account.

Other Variable Annuity Contracts

The Company currently offers other variable annuity contracts that participate in the Separate Account. In the future, we may designate additional group or individual variable annuity contracts as participating in the Separate Account.

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.

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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 which are included in the Statement of Additional Information 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 thereon which appear in the Statement of Additional Information.

Financial Statements

The financial statements of the 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.

Customer Inquiries

Your questions should be directed to Principal Securities, Inc. ("PSI") formerly Princor Financial Services Corporation, a company of the Principal Financial Group, Des Moines, Iowa 50392-2080, (800) 852-4450.

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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.

Balanced Division (This fund will merge into the Diversified Balanced Division on 05/26/2017)
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 Division (This fund is available beginning 05/26/2017) (This underlying mutual fund is a fund of funds.)
Invests in:	Principal Variable Contracts Funds Diversified Balanced Account – Class 1
Investment Advisor:	Principal Management Corporation
Investment Objective:	seeks to provide as high a level of total return (consisting of reinvested income and capital appreciation) as is consistent with reasonable risk.

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

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.

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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.

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 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
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.

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Registration Statement

This prospectus (Part A of the registration statement) omits some information contained in the SAI (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 SAI and Part C of the registration statement) can be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the public reference room may be obtained by calling the SEC at 202-551-8090. Reports and other information about the Contract are available on the SEC’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 SEC, 100 F Street NE, Washington, D.C. 20549-0102.

The registration number for the Contract is 33-44565.

Customer Inquiries

Your questions should be directed to: Principal Personal 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
GENERAL INFORMATION AND HISTORY	3
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	3
UNDERWRITING COMMISSIONS	3
CALCULATION OF PERFORMANCE DATA	3
Principal Life Insurance Company Separate Account B
Report of Independent Registered Public Accounting Firm	5
Financial Statements	6
Principal Life Insurance Company
Report of Independent Auditors	229
Consolidated Financial Statements	230

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

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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.

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
2016	$3.150	$3.307	4.98%	213
2015	3.157	3.150	-0.22	181
2014	2.920	3.157	8.12	174
2013	2.459	2.920	18.75	196
2012	2.189	2.459	12.33	202
2011	2.117	2.189	3.40	231
2010	1.875	2.117	12.92	223
2009	1.558	1.875	20.35	351
2008	2.270	1.558	-31.37	379
2007	2.168	2.270	4.70	510
Core Plus Bond
2016	2.679	2.771	3.43	76
2015	2.709	2.679	-1.11	73
2014	2.591	2.709	4.55	79
2013	2.630	2.591	-1.48	99
2012	2.461	2.630	6.87	94
2011	2.313	2.461	6.40	128
2010	2.085	2.313	10.96	122
2009	1.736	2.085	20.10	149
2008	2.107	1.736	-17.61	130
2007	2.050	2.107	2.78	174
Diversified International
2016	3.030	3.021	-0.30	92
2015	3.060	3.030	-0.98	80
2014	3.182	3.060	-3.83	93
2013	2.705	3.182	17.63	112
2012	2.298	2.705	17.71	110
2011	2.576	2.298	-10.79	225
2010	2.280	2.576	12.98	224
2009	1.796	2.280	26.95	234
2008	3.361	1.796	-46.56	264
2007	2.914	3.361	15.34	349
Fidelity Government Money Market
2016(1)	10.000	0.997	-90.03	423
Government & High Quality Bond
2016	2.656	2.687	1.17	50
2015	2.652	2.656	0.15	46
2014	2.540	2.652	4.41	59
2013	2.583	2.540	-1.66	63
2012	2.502	2.583	3.23	58
2011	2.370	2.502	5.57	64
2010(2)	2.367	2.370	0.13	54

31

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
2016	$3.306	$3.116	-5.75%	215
2015	3.169	3.306	4.32	242
2014	2.870	3.169	10.42	244
2013	2.157	2.870	33.06	268
2012	1.858	2.157	16.10	256
2011	1.953	1.858	-4.86	361
2010	1.660	1.953	17.63	344
2009	1.315	1.660	26.24	404
2008	2.329	1.315	-43.54	530
2007	1.903	2.329	22.39	628
LargeCap Value
2016	4.946	5.316	7.48	67
2015	5.033	4.946	-1.73	72
2014	4.557	5.033	10.45	70
2013	3.505	4.557	30.01	89
2012	2.975	3.505	17.82	94
2011	2.959	2.975	0.54	168
2010	2.611	2.959	13.34	164
2009	2.259	2.611	15.58	230
2008	3.507	2.259	-35.59	328
2007	3.533	3.507	-0.74	446
MidCap
2016	9.141	10.025	9.67	101
2015	9.051	9.141	0.99	116
2014	8.062	9.051	12.27	122
2013	6.059	8.062	33.06	142
2012	5.105	6.059	18.68	138
2011	4.745	5.105	7.59	221
2010	3.848	4.745	23.30	215
2009	2.895	3.848	32.92	255
2008	4.410	2.895	-34.35	318
2007	4.055	4.410	8.75	428

⁽¹⁾ Commenced operations on April 8, 2016.

⁽²⁾ Commenced operations on July 19, 2010.

32

APPENDIX A

The Contract provided for contract administration and recordkeeping services and fees as well as certain other services and fees, as follows:

Contract Administration Expense/Recordkeeping Charge

An annual Contract Administration Expense/Recordkeeping Charge of $34 per Plan Participant plus 0.35% of the Annual Balance ($3,000 minimum) will be assessed on a quarterly basis during each Deposit Year. The Annual Balance used to compute the charge is the aggregate value of Investment Accounts which correlate to a Plan Participant, and other Plan assets that correlate to a Plan Participant that are not allocated to the Contract or an Associated or Companion Contract but for which the Company provides record keeping services (“Outside Assets”), at the end of each quarter. The $34 per Plan Participant charge is increased to $37 if the Company distributes benefit plan reports directly to the homes of the Plan Participants.

The Contract Administration Expense/Recordkeeping Charge will be assessed on the earlier of (i) the date the Investment Accounts are paid in full (a total redemption) or (ii) each Quarterly Date. One-fourth of the annual charge is normally assessed on each Quarterly Date.

If the accounts are paid in full (a total redemption) at any time during the Deposit Year, that portion of the $34 ($37) per Plan Participant charge for the Deposit Year in which such total redemption occurs not yet paid to the Company will be assessed in full. However, the remaining part of the Contract Administration Expense/Recordkeeping Charge consisting of the 0.35% of the Average Annual Balance will be assessed on a pro rata basis for any fractional part of the Deposit Year.

The record keeping expense will be $34 ($37). The record keeping expense is increased by 10% if Plan contributions are not reported in the Company’s standard form by modem. In addition, if benefit plan reports are mailed on other than a quarterly basis the $34 ($37) per Plan Participant charge is adjusted according to the following schedule:

Reporting Frequency	Adjustment to $34 ($37) Charge
Annual	9% decrease
Semi-Annual	6% decrease
Monthly	24% increase

The $34 ($37) per Plan Participant charge is also adjusted if the Company performs more (or less) than one 401(k) and 401(m) non-discrimination test in a Deposit Year. Such a charge is increased by 3% for each additional test and is reduced by 3% for each test not performed by the Company.

The 0.35% portion of the Contract Administration Expense/Recordkeeping charge will be reduced by 10% if the Company has issued an Associated Contract to the Contractholder.

If the Owner of Benefits chooses the Flexible Income Option, an additional charge of $25 will be assessed annually.

As part of the Company’s policy of ensuring client satisfaction with the services it provides, the Company may agree to waive the assessment of all or a portion of the Contract Administration Expense/Recordkeeping Charge in response to any reasonably-based complaint the Company is unable to rectify from the Contractholder as to the quality of the services covered by such charge.

A Contractholder may agree to pay all or a portion of the Contract Administration Expense/Recordkeeping Charge separately or have the fees deducted from Investment Accounts which correlate to a Plan Participant.

If deducted from Investment Accounts, the charge will be allocated among Investment Accounts which correlate to the Plan Participant in proportion to the relative values of such Accounts and will be effected by cancelling a number of units in each such Investment Account equal to such Account’s proportionate share of the deduction.

If the Company provides record keeping services for any Outside Assets, the Contractholder can elect to deduct from Investment Accounts only the $34 ($37) portion of the Contract Administration Expense/Recordkeeping Charges which correlate to Plan Participants.

33

Documentation Expense

The Company can provide a sample Plan document and summary plan descriptions to the Contractholder. The Contractholder will be billed $300 if the Contractholder uses a Principal Financial Group Prototype for Savings Plans or Standardized Plan. If the Company provides a sample custom-written Plan, the Contractholder will be billed $1000 for the initial Plan or for any restatement thereof, $500 for any amendments thereto, and $500 for standard summary plan description booklets. If the Contractholder adopts a Plan other than one provided by the Company, a minimum $100 charge will be made for summary plan description booklets requested by the Contractholder, if any.

Location Fee

Contractholders may request the Company to provide services to groups of employees at multiple locations. If the Company agrees to provide such services, the Contractholder will be billed $150 on a quarterly basis ($600 annually) for each additional employee group or location. In addition, separate contract administration/record keeping charges and documentation fees may apply for each employee group or location requiring separate government reports and/or sample plan documents.

Outside Asset Recordkeeping Charge

If the Company provides record keeping services for Plan assets which correlate to a Plan Participant other than assets under this Contract or an Associated or Companion Contract (“Outside Assets”), the Company will bill the Contractholder an Outside Asset Recordkeeping Charge. The annual charge is calculated based upon the following table:

Number of Members with Outside Accounts	Outside Asset Annual Recordkeeping Expense
1 - 25	$1,000
26 - 49	$15.30 per member + $614.70
50 - 99	$13.95 per member + $682.20
100 - 299	$12.60 per member + $817.20
300 - 499	$10.35 per member + $1,492.20
500 - 999	$8.55 per member + $2,392.20
1000 - 2499	$6.30 per member + $4,642.20
2500 - 4999	$5.40 per member + $6,892.20
5000 and over	$4.50 per member + $11,392.20

34

PART B

PRINCIPAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT B

PERSONAL VARIABLE

(A Group Variable Annuity Contract for Employer Sponsored

Qualified and Non-Qualified Retirement Plans)

Statement of Additional Information

dated May 1, 2017

This Statement of Additional Information provides information about Principal Life Insurance Company Separate Account B Personal Variable - Group Variable Annuity Contracts (the “Contract” or the “Contracts”) in addition to the information that is contained in the Contract’s Prospectus, dated May 1, 2017.

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 Securities, Inc.

a company of

the Principal Financial Group

Des Moines Iowa 50392-2080

Telephone: 1-800-633-1373

TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY	3
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	3
UNDERWRITING COMMISSIONS	3
CALCULATION OF PERFORMANCE DATA	3
Principal Life Insurance Company Separate Account B
Report of Independent Registered Public Accounting Firm	5
Financial Statements	6
Principal Life Insurance Company
Report of Independent Auditors	229
Consolidated Financial Statements	230

2

GENERAL INFORMATION AND HISTORY

The Company is a stock life insurance company with its home office at: Principal Financial Group, Des Moines, Iowa 50392. It is authorized to transact life and annuity business in all states of the United States and the District of Columbia. The Company is a wholly owned indirect subsidiary of Principal Financial Group, Inc., a publicly-traded company.

On June 24, 1879, the Company was incorporated under Iowa law as a mutual life insurance company named Bankers Life Association. It changed its name to Bankers Life Company in 1911 and then to Principal Mutual Life Insurance Company in 1986. The name change to Principal Life Insurance Company and reorganization into a mutual holding company structure took place July 1, 1998. Effective October 26, 2001, Principal Mutual Holding Company converted to a stock company and Principal Financial Group, Inc. completed its initial public offering.

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Ernst & Young LLP, 801 Grand, 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.

UNDERWRITING COMMISSIONS

Aggregate dollar amount of underwriting commissions paid to and retained by Principal Securities, Inc. ("PSI") formerly Princor Financial Services Corporation for the Separate Account B Personal Variable Annuity contracts:

Year	Paid To	Retained by
2016	$0	—
2015	$0	—
2014	$78.55	—

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 July 15, 1992. 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 and do not include the effects of the subsequent class’ annual fees and expenses. The yield and total return figures described below will vary depending upon market conditions, the composition of the underlying Account’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 Account advertises its Fidelity VIP Government 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).

3

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 sales load deducted from purchase payments that, if included, would reduce the “yield” and “effective yield.” For the period ended December 31, 2016, the 7-day annualized and effective yields of the Fidelity VIP Government Money Market Division were -4.31% and -4.22%, respectively.

From time to time, the Separate Account will advertise the average annual total return of its various divisions for these Contracts. 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 the ending value is reduced by a contingent deferred sales charge that decreases from 5% to 0% over a period of 7 years. The Separate Account may also advertise total return figures of its Divisions for a specified period that does not take into account the sales charge in order to illustrate the change in the Division’s unit value over time. See “Deductions Under the Contract” for a discussion of contingent deferred sales charges.

Assuming the Contract had been offered as of the dates indicated in the table below, the hypothetical average annual total returns for the periods ending December 31, 2016 are:

	With Contingent Deferred Sales Charge
	Effective Date	One Year	Five Years	Ten Years
Balanced	12/18/1987	-0.62%	7.91%	4.06%
Core Plus Bond	12/18/1987	-2.13%	1.68%	2.82%
Diversified International	05/02/1994	-5.65%	4.94%	0.07%
Fidelity Government Money Market	04/01/1982	-5.82%	-1.29%	0.04%
Government & High Quality Bond	05/06/1993	-4.28%	0.72%	3.12%
LargeCap Growth	05/02/1994	-10.83%	10.22%	4.82%
LargeCap Value	05/13/1970	1.73%	11.63%	3.90%
MidCap	12/18/1987	3.80%	13.77%	9.27%

	Without Contingent Deferred Sales Charge
	Effective Date	One Year	Five Years	Ten Years
Balanced	12/18/1987	4.61%	8.35%	4.06%
Core Plus Bond	12/18/1987	3.02%	2.09%	2.82%
Diversified International	05/02/1994	-0.68%	5.36%	0.07%
Fidelity Government Money Market	04/01/1982	-0.86%	-0.89%	0.04%
Government & High Quality Bond	05/06/1993	0.75%	1.13%	3.12%
LargeCap Growth	05/02/1994	-6.14%	10.67%	4.82%
LargeCap Value	05/13/1970	7.08%	12.08%	3.90%
MidCap	12/18/1987	9.27%	14.23%	9.27%

4

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, 2016, 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, 2016 and 2015. 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, 2016, 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, 2016, 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, 2016 and 2015, in conformity with U.S. generally accepted accounting principles.

/s/Ernst & Young LLP

Des Moines, Iowa

April 28, 2017

5

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		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		$	4,082,326	$	4,054,972	$	30,052
Liabilities			—		—		—
Net assets		$	4,082,326	$	4,054,972	$	30,052
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		—		296,932		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		3,670,633		2,851,060		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		411,693		906,980		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		30,052
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	4,082,326	$	4,054,972	$	30,052
Investments in shares of mutual funds, at cost		$	5,471,503	$	3,966,534	$	28,916
Shares of mutual funds owned			312,343		199,851		2,717
Accumulation units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		—		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		—		21,030		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		139,301		202,616		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		16,828		65,873		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		3,148
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		—		14.12		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		13.82		—
	Principal Investment Plus Variable Annuity		26.35		14.07		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		24.47		13.77		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		9.59
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		9.55
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.

6

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
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 Mid Cap 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
$	2,356,936	$	10,858,788	$	45,284,552	$	9,556,157	$	3,071,867	$	32,114,194	$	16,312,064
	—		—		—		—		—		—		—
$	2,356,936	$	10,858,788	$	45,284,552	$	9,556,157	$	3,071,867	$	32,114,194	$	16,312,064
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		2,800,541		—		—		—		—		—
	—		33,947		—		—		—		—		—
	—		8,024,300		220,551		1,434,961		3,071,867		—		15,771,588
	—		—		—		—		—		—		—
	2,134,906		—		44,252,227		6,938,973		—		31,436,735		—
	222,030		—		656,565		1,182,223		—		677,459		—
	—		—		—		—		—		—		—
	—		—		17,629		—		—		—		122,951
	—		—		137,580		—		—		—		417,525
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	2,356,936	$	10,858,788	$	45,284,552	$	9,556,157	$	3,071,867	$	32,114,194	$	16,312,064
$	2,417,798	$	7,971,621	$	49,264,853	$	8,567,365	$	2,359,933	$	22,196,043	$	10,102,413
	168,594		1,165,106		4,479,184		452,255		198,826		2,111,387		1,555,011
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		144,350		—		—		—		—		—
	—		1,944		—		—		—		—		—
	—		439,018		22,211		63,673		180,955		—		659,650
	—		—		—		—		—		—		—
	193,249		—		3,409,541		308,954		—		1,583,373		—
	20,425		—		54,484		54,769		—		36,750		—
	—		—		—		—		—		—		—
	—		—		1,783		—		—		—		10,743
	—		—		13,991		—		—		—		36,690
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		19.40		—		—		—		—		—
	—		17.46		—		—		—		—		—
	—		18.28		9.93		22.54		16.97		—		23.91
	—		16.64		9.83		21.66		15.45		—		21.90
	11.05		—		12.98		22.46		—		19.85		—
	10.87		—		12.05		21.59		—		18.43		—
	—		—		—		—		—		—		—
	—		—		9.89		—		—		—		11.45
	—		—		9.83		—		—		—		11.38
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

7

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		American Funds Insurance Series Asset Allocation Fund Class 2 Division		American Funds Insurance Series Asset Allocation Fund Class 4 Division		American Funds Insurance Series Blue Chip Income and Growth Fund Class 2 Division
Assets
Investments in shares of mutual funds, at market		$	878,377	$	597,778	$	1,695,523
Liabilities			—		—		—
Net assets		$	878,377	$	597,778	$	1,695,523
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		154,031		—		297,409
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		440,355		—		1,065,367
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		283,991		—		332,747
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		308,499		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		289,279		—
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	878,377	$	597,778	$	1,695,523
Investments in shares of mutual funds, at cost		$	874,493	$	578,368	$	1,651,103
Shares of mutual funds owned			40,874		27,894		126,626
Accumulation units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		—		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		14,462		—		26,590
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		41,371		—		95,307
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		26,779		—		29,877
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		29,450		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		27,728		—
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		10.65		—		11.19
	The Principal Variable Annuity with Purchase Payment Credit Rider		10.61		—		11.14
	Principal Investment Plus Variable Annuity		10.64		—		11.18
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		10.61		—		11.14
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		10.48		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		10.43		—
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.

8

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
American Funds Insurance Series Blue Chip Income and Growth Fund Class 4 Division		American Funds Insurance Series Global Small Capitalization Fund Class 2 Division		American Funds Insurance Series Global Small Capitalization Fund Class 4 Division		American Funds Insurance Series High-Income Bond Class 2 Division		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
$	1,061,398	$	975,952	$	146,625	$	1,320,044	$	275,553	$	164,525	$	41,473
	—		—		—		—		—		—		—
$	1,061,398	$	975,952	$	146,625	$	1,320,044	$	275,553	$	164,525	$	41,473
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		315,864		—		1,320,044		—		—		—
	—		—		—		—		—		—		—
	—		589,421		—		—		—		—		—
	—		70,667		—		—		—		—		—
	—		—		—		—		—		—		—
	511,604		—		60,861		—		132,439		78,640		26,070
	549,794		—		85,764		—		143,114		85,885		15,403
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	1,061,398	$	975,952	$	146,625	$	1,320,044	$	275,553	$	164,525	$	41,473
$	1,019,138	$	1,138,506	$	147,471	$	1,314,495	$	271,518	$	176,410	$	46,536
	79,268		49,491		7,364		131,478		22,944		15,463		4,697
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		30,964		—		128,164		—		—		—
	—		—		—		—		—		—		—
	—		66,997		—		—		—		—		—
	—		8,111		—		—		—		—		—
	—		—		—		—		—		—		—
	44,634		—		6,203		—		12,889		7,967		3,120
	48,240		—		8,791		—		14,008		8,751		1,854
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		10.21		—		10.30		—		—		—
	—		10.05		—		10.14		—		—		—
	—		8.80		—		—		—		—		—
	—		8.71		—		—		—		—		—
	—		—		—		—		—		—		—
	11.46		—		9.81		—		10.28		9.87		8.36
	11.40		—		9.76		—		10.22		9.81		8.31
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

9

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		American Funds Insurance Series New World Fund Class 2 Division		American Funds Insurance Series New World Fund Class 4 Division		Balanced Class 1 Division
Assets
Investments in shares of mutual funds, at market		$	1,195,154	$	328,755	$	27,697,338
Liabilities			—		—		—
Net assets		$	1,195,154	$	328,755	$	27,697,338
Net assets
Applicable to accumulation units:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		704,615
	Premier Variable		—		—		2,297,185
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		387,675		—		24,695,538
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		683,678		—		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		123,801		—		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		220,044		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		108,711		—
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	1,195,154	$	328,755	$	27,697,338
Investments in shares of mutual funds, at cost		$	1,199,736	$	335,295	$	23,541,686
Shares of mutual funds owned			61,165		16,851		1,599,153
Accumulation units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		213,040
	Premier Variable		—		—		661,450
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		42,922		—		837,667
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		73,790		—		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		13,493		—		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		24,640		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		12,243		—
Accumulation unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		3.31
	Premier Variable		—		—		3.47
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		9.03		—		29.48
	The Principal Variable Annuity with Purchase Payment Credit Rider		8.89		—		26.77
	Principal Investment Plus Variable Annuity		9.27		—		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		9.18		—		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		8.93		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		8.88		—
Annuitized units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Annuitized unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus – Rollover IRA		—		—		—
See accompanying notes.

10

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
BlackRock Global Allocation Class III Division		BlackRock iShares Alternative Strategies Class III Division		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		Calvert EAFE International Index Class F Division
$	996,211	$	632,140	$	106,657	$	872,324	$	496,840	$	30,842	$	18,533
	—		—		—		—		—		—		—
$	996,211	$	632,140	$	106,657	$	872,324	$	496,840	$	30,842	$	18,533
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	70,162		36,800		—		24,451		3,176		—		—
	—		—		—		—		—		—		—
	812,196		546,136		49,583		801,450		379,796		—		—
	40,212		12,157		54,873		1,365		106,045		—		—
	—		—		—		—		—		—		—
	4,142		31,026		—		—		—		—		9,218
	69,499		6,021		2,201		45,058		7,823		30,842		9,315
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	996,211	$	632,140	$	106,657	$	872,324	$	496,840	$	30,842	$	18,533
$	990,676	$	651,040	$	105,578	$	887,662	$	471,823	$	31,905	$	19,477
	74,511		62,465		10,850		88,561		50,802		1,409		246
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	7,368		3,780		—		2,473		340		—		—
	—		—		—		—		—		—		—
	85,427		56,190		5,186		81,192		40,810		—		—
	4,271		1,263		5,796		140		11,507		—		—
	—		—		—		—		—		—		—
	434		3,179		—		—		—		—		1,036
	7,310		619		230		4,565		841		2,820		1,053
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	9.52		9.74		9.58		9.89		9.32		—		—
	9.43		9.64		9.48		9.79		9.23		—		—
	9.51		9.72		9.56		9.87		9.31		—		—
	9.42		9.63		9.47		9.78		9.22		—		—
	—		—		—		—		—		—		—
	9.55		9.76		9.60		9.91		9.34		10.98		8.90
	9.51		9.72		9.56		9.87		9.31		10.94		8.85
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

11

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		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		$	155,220	$	750,689	$	12,593
Liabilities			—		—		—
Net assets		$	155,220	$	750,689	$	12,593
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		57,057		443,453		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		98,163		307,236		12,593
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	155,220	$	750,689	$	12,593
Investments in shares of mutual funds, at cost		$	157,173	$	706,601	$	12,460
Shares of mutual funds owned			1,994		6,996		612
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		4,882		38,092		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		8,447		26,542		1,278
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		11.69		11.64		9.89
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		11.62		11.58		9.85
Annuitized units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Annuitized unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus – Rollover IRA		—		—		—
See accompanying notes.

12

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
Columbia Limited Duration Credit Class 2 Division		Columbia Small Cap Value Class 2 Division		Core Plus Bond Class 1 Division		Core Plus Bond 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
$	185,401	$	243,839	$	138,244,287	$	221,427	$	931,015	$	2,248,175	$	42,455
	0		0		0		0		0		0		0
$	185,401	$	243,839	$	138,244,287	$	221,427	$	931,015	$	2,248,175	$	42,455
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		211,911		—		—		—		—
	—		—		1,978,436		—		0		—		—
	—		—		5,070,873		—		0		—		—
	—		—		325,985		—		0		—		—
	57,724		—		57,990,329		—		408,499		259156		—
	0		—		0		—		0		—		—
	119,390		—		68,328,176		—		487,200		1,562,009		—
	8,287		0		4,338,577		0		13,400		427,010		—
	0		0		0		0		0		—		—
	0		102,227		0		150,432		5,864		—		—
	0		141612		0		70,995		16,052		0		42,455
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	185,401	$	243,839	$	138,244,287	$	221,427	$	931,015	$	2,248,175	$	42,455
$	185,804	$	216,158	$	136,131,874	$	224,815	$	937,090	$	2,078,728	$	42,925
	19,661		12,827		12,398,591		19,930		95,489		56,672		3,276
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		76487		—		—		—		—
	—		—		679952		—		0		—		—
	—		—		278345		—		0		—		—
	—		—		24028		—		0		—		—
	5806		—		2415285		—		41,243		18256		—
	0		—		0		—		0		—		—
	12028		—		2855601		—		49269		110415		—
	843		0		199,717		0		1,368		30848		—
	0		0		0		0		0		—		—
	0		8,559		0		15,057		591		—		—
	0		11905		0		7135		1623		0		4,532
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		2.77		—		—		—		—
	—		—		2.91		—		0.00		—		—
	—		—		18.22		—		0.00		—		—
	—		—		13.57		—		0.00		—		—
	9.94		—		24.01		—		9.91		14.2		—
	9.85		—		21.80		—		9.81		13.89		—
	9.93		—		23.93		—		9.89		14.15		—
	9.83		0.00		21.72		0.00		9.80		13.84		—
	0.00		0.00		0.00		0.00		0.00		—		—
	9.97		11.94		0.00		9.99		9.93		—		9.42
	9.93		11.9		0.00		9.95		9.89		0.00		9.37
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—

13

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		Deutsche Equity 500 Index Class B2 Division		Deutsche Small Mid Cap Value Class B Division		Diversified Balanced Class 2 Division
Assets
Investments in shares of mutual funds, at market		$	919,332	$	1,156,870	$	1,099,761,901
Liabilities			—		—		—
Net assets		$	919,332	$	1,156,870	$	1,099,761,901
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		—		21,651		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		850,096		981,252,466
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		118,252		87,781,306
	Principal Lifetime Income Solutions		—		—		30,728,129
	Principal Pivot Series Variable Annuity		460,712		59,173		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		458,620		107,698		—
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	919,332	$	1,156,870	$	1,099,761,901
Investments in shares of mutual funds, at cost		$	915,849	$	1,144,323	$	938,445,565
Shares of mutual funds owned			46,977		69,565		74,509,614
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		—		1,652		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		65,072		66,152,980
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		9,251		6,171,830
	Principal Lifetime Income Solutions		—		—		2,071,589
	Principal Pivot Series Variable Annuity		41,055		5,271		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		41,102		9,648		—
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		—		13.11		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		12.83		—
	Principal Investment Plus Variable Annuity		—		13.06		14.83
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		12.78		14.22
	Principal Lifetime Income Solutions		—		—		14.83
	Principal Pivot Series Variable Annuity		11.22		11.23		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		11.16		11.16		—
Annuitized units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Annuitized unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus – Rollover IRA		—		—		—
See accompanying notes.

14

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
Diversified Balanced Managed Volatility Class 2 Division		Diversified Growth Class 2 Division		Diversified Growth Managed Volatility Class 2 Division		Diversified Income Class 2 Division		Diversified International Class 1 Division		Diversified International Class 2 Division		Dreyfus IP MidCap Stock Service Shares Division
$	168,723,353	$	3,589,241,933	$	313,613,080	$	254,023,076	$	117,980,668	$	197,448	$	105,114
	—		—		—		—		—		—		—
$	168,723,353	$	3,589,241,933	$	313,613,080	$	254,023,076	$	117,980,668	$	197,448	$	105,114
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		278,107		—		—
	—		—		—		—		2,452,998		—		—
	—		—		—		—		1,971,186		—		—
	—		—		—		—		339,185		—		—
	7,416		—		45,192		—		75,035,200		—		—
	—		—		—		—		—		—		—
	129,826,290		3,336,704,285		260,796,513		235,732,134		35,801,310		—		—
	10,529,309		216,291,485		23,999,729		10,830,080		2,102,682		—		—
	26,329,151		36,246,163		28,237,188		7,460,862		—		—		—
	168,317		—		335,333		—		—		129,565		63,179
	1,862,870		—		199,125		—		—		67,883		41,935
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	168,723,353	$	3,589,241,933	$	313,613,080	$	254,023,076	$	117,980,668	$	197,448	$	105,114
$	161,782,787	$	3,012,540,713	$	297,175,397	$	243,045,028	$	99,944,006	$	216,997	$	97,997
	14,971,016		225,313,367		27,365,888		20,585,338		8,791,406		14,604		5,253
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		92,044		—		—
	—		—		—		—		773,203		—		—
	—		—		—		—		118,846		—		—
	—		—		—		—		27,914		—		—
	731		—		4,434		—		2,834,951		—		—
	—		—		—		—		—		—		—
	11,816,659		208,330,004		23,324,420		19,429,307		1,357,263		—		—
	976,512		14,083,674		2,187,056		917,723		87,806		—		—
	2,396,533		2,263,051		2,525,381		614,953		—		—		—
	15,923		—		31,434		—		—		14,213		5,982
	177,233		—		18,773		—		—		7,489		3,987
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		3.02		—		—
	—		—		—		—		3.17		—		—
	—		—		—		—		16.59		—		—
	—		—		—		—		12.15		—		—
	10.15		—		10.19		—		26.47		—		—
	10.05		—		10.09		—		24.03		—		—
	10.99		16.02		11.18		12.13		26.38		—		—
	10.78		15.36		10.97		11.80		23.95		—		—
	10.99		16.02		11.18		12.13		—		—		—
	10.57		—		10.67		—		—		9.12		10.56
	10.51		—		10.61		—		—		9.06		10.52
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

15

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		Dreyfus IP Technology Growth Service Shares Division		Equity Income Class 1 Division		Equity Income Class 2 Division
Assets
Investments in shares of mutual funds, at market		$	6,464,383	$	198,800,850	$	1,262,942
Liabilities			—		—		—
Net assets		$	6,464,383	$	198,800,850	$	1,262,942
Net assets
Applicable to accumulation units:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		87,912		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		—		46,721,990		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		5,213,791		148,628,538		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,250,592		3,362,410		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		473,172
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		789,770
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	6,464,383	$	198,800,850	$	1,262,942
Investments in shares of mutual funds, at cost		$	6,443,204	$	148,957,957	$	1,258,519
Shares of mutual funds owned			382,961		8,569,002		54,839
Accumulation units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		40,551		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		—		2,880,816		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		215,120		9,195,614		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		55,575		220,890		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		42,778
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		71,810
Accumulation unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		2.17		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		—		16.22		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		15.27		—
	Principal Investment Plus Variable Annuity		24.24		16.16		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		22.50		15.22		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		11.06
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		11.00
Annuitized units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Annuitized unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus – Rollover IRA		—		—		—
See accompanying notes.

16

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
Fidelity VIP Contrafund Service Class Division		Fidelity VIP Contrafund Service Class 2 Division		Fidelity VIP Equity-Income Service Class 2 Division		Fidelity VIP Government Money Market Initial Class Division		Fidelity VIP Government Money Market Service Class Division		Fidelity VIP Growth Service Class Division		Fidelity VIP Growth Service Class 2 Division
$	39,392,398	$	48,208,479	$	31,629,785	$	47,449,987	$	3,864,755	$	11,979,106	$	8,860,631
	—		—		—		—		—		—		—
$	39,392,398	$	48,208,479	$	31,629,785	$	47,449,987	$	3,864,755	$	11,979,106	$	8,860,631
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		75,537		—		—		—
	—		—		—		—		—		—		—
	—		—		—		421,815		—		—		—
	—		—		—		3,978,313		—		—		—
	—		—		—		1,363,567		—		—		—
	—		—		—		219,731		—		—		—
	39,392,398		—		20,937,115		17,849,029		—		11,979,106		—
	—		—		—		—		—		—		—
	—		44,124,914		9,542,179		21,992,478		—		—		8,076,443
	—		2,597,549		1,150,491		1,549,517		—		—		784,188
	—		—		—		—		—		—		—
	—		688,323		—		—		249,739		—		—
	—		797,693		—		—		3,615,016		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	39,392,398	$	48,208,479	$	31,629,785	$	47,449,987	$	3,864,755	$	11,979,106	$	8,860,631
$	31,813,395	$	37,440,150	$	29,861,272	$	47,449,987	$	3,864,755	$	8,833,568	$	7,781,330
	1,192,264		1,485,623		1,473,895		47,449,987		3,864,755		202,692		151,619
	—		—		—		—		—		—		—
	—		—		—		76,259		—		—		—
	—		—		—		—		—		—		—
	—		—		—		423,198		—		—		—
	—		—		—		3,984,941		—		—		—
	—		—		—		137,144		—		—		—
	—		—		—		22,120		—		—		—
	1,566,116		—		1,070,190		1,802,537		—		778,643		—
	—		—		—		—		—		—		—
	—		1,833,632		489,432		2,222,981		—		—		388,950
	—		116,259		64,426		157,473		—		—		40,675
	—		—		—		—		—		—		—
	—		64,049		—		—		25,232		—		—
	—		74,651		—		—		366,059		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		0.99		—		—		—
	—		—		—		—		—		—		—
	—		—		—		1.00		—		—		—
	—		—		—		1.00		—		—		—
	—		—		—		9.94		—		—		—
	—		—		—		9.93		—		—		—
	25.15		—		19.56		9.90		—		15.38		—
	22.84		—		17.92		9.85		—		13.97		—
	—		24.06		19.50		9.89		—		—		20.76
	—		22.34		17.86		9.84		—		—		19.28
	—		—		—		9.89		—		—		—
	—		10.75		—		—		9.90		—		—
	—		10.69		—		—		9.88		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

17

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		Fidelity VIP Mid Cap Service Class Division		Fidelity VIP Mid Cap Service Class 2 Division		Fidelity VIP Overseas Service Class 2 Division
Assets
Investments in shares of mutual funds, at market		$	563,472	$	21,339,251	$	26,312,655
Liabilities			—		—		—
Net assets		$	563,472	$	21,339,251	$	26,312,655
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		563,472		—		—
	The Principal Variable Annuity		—		—		37,129
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		18,411,698		25,437,999
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		1,941,177		706,773
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		513,471		53,698
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		472,905		77,056
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	563,472	$	21,339,251	$	26,312,655
Investments in shares of mutual funds, at cost		$	509,034	$	20,981,345	$	23,413,274
Shares of mutual funds owned			16,720		646,057		1,490,802
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		48,779		—		—
	The Principal Variable Annuity		—		—		4,379
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		663,104		1,662,113
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		75,298		49,739
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		47,450		5,953
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		43,952		8,591
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		11.55		—		—
	The Principal Variable Annuity		—		—		8.48
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		8.40
	Principal Investment Plus Variable Annuity		—		27.77		15.30
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		25.78		14.21
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		10.82		9.02
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		10.76		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.

18

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
Franklin Global Real Estate VIP Class 2 Division		Franklin Rising Dividends VIP Class 4 Division		Franklin Small Cap Value VIP Class 2 Division		Goldman Sachs VIT Mid Cap Value Institutional Shares Division		Goldman Sachs VIT Mid Cap Value Service Shares Division		Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division		Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division
$	612,511	$	807,587	$	5,529,437	$	14,216,405	$	458,622	$	—	$	6,917,960
	—		—		—		—		—		—		—
$	612,511	$	807,587	$	5,529,437	$	14,216,405	$	458,622	$	—	$	6,917,960
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	31,115		—		594,377		186,223		—		—		126,763
	—		—		—		—		—		—		—
	180,975		—		4,218,262		13,406,315		—		—		6,440,636
	27,148		—		716,798		623,867		—		—		350,561
	—		—		—		—		—		—		—
	188,200		397,486		—		—		144,342		—		—
	185,073		410,101		—		—		314,280		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	612,511	$	807,587	$	5,529,437	$	14,216,405	$	458,622	$	—	$	6,917,960
$	635,548	$	824,829	$	5,648,940	$	13,696,742	$	455,524	$	—	$	6,536,808
	39,722		32,329		285,611		875,934		28,223		—		501,665
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	3,273		—		26,927		7,627		—		—		5,871
	—		—		—		—		—		—		—
	19,069		—		191,759		550,894		—		—		299,304
	2,889		—		33,983		27,611		—		—		17,546
	—		—		—		—		—		—		—
	18,042		35,242		—		—		14,063		—		—
	17,843		36,569		—		—		30,794		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	9.51		—		22.07		24.42		—		—		21.59
	9.41		—		21.17		22.67		—		—		20.05
	9.49		—		22.00		24.34		—		—		21.52
	9.40		—		21.09		22.59		—		—		19.98
	—		—		—		—		—		—		—
	10.43		11.28		—		—		10.26		9.26		—
	10.37		11.21		—		—		10.21		9.22		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

19

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		Goldman Sachs VIT Small Cap Equity Insights Service Shares Division		Government & High Quality Bond Class 1 Division		Government & High Quality Bond Class 2 Division
Assets
Investments in shares of mutual funds, at market		$	98,986	$	110,034,001	$	1,342,308
Liabilities			—		—		—
Net assets		$	98,986	$	110,034,001	$	1,342,308
Net assets
Applicable to accumulation units:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		52,492		—
	Pension Builder Plus – Rollover IRA		—		6,393		—
	Personal Variable		—		134,326		—
	Premier Variable		—		2,789,598		—
	Principal Freedom Variable Annuity		—		2,431,458		—
	Principal Freedom Variable Annuity 2		—		211,261		—
	The Principal Variable Annuity		—		57,564,994		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		42,591,104		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		4,252,375		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		60,861		—		1,035,232
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		38,125		—		307,076
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	98,986	$	110,034,001	$	1,342,308
Investments in shares of mutual funds, at cost		$	87,647	$	116,184,361	$	1,398,790
Shares of mutual funds owned			7,225		11,025,452		134,500
Accumulation units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus		—		15,955		—
	Pension Builder Plus – Rollover IRA		—		1,680		—
	Personal Variable		—		49,996		—
	Premier Variable		—		983,925		—
	Principal Freedom Variable Annuity		—		194,128		—
	Principal Freedom Variable Annuity 2		—		17,006		—
	The Principal Variable Annuity		—		4,755,754		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		3,530,676		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		370,088		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		4,890		—		102,380
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		3,081		—		30,542
Accumulation unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		3.29		—
	Pension Builder Plus – Rollover IRA		—		3.80		—
	Personal Variable		—		2.69		—
	Premier Variable		—		2.84		—
	Principal Freedom Variable Annuity		—		12.52		—
	Principal Freedom Variable Annuity 2		—		12.42		—
	The Principal Variable Annuity		—		12.10		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		11.53		—
	Principal Investment Plus Variable Annuity		—		12.06		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		11.49		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		12.45		—		10.11
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		12.38		—		10.05
Annuitized units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Annuitized unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus – Rollover IRA		—		—		—
See accompanying notes.

20

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
Guggenheim Floating Rate Strategies Series F Division		Guggenheim Investments Global Managed Futures Strategy Division		Guggenheim Investments Long Short Equity Division		Guggenheim Investments Multi-Hedge Strategies Division		Income Class 1 Division		Income Class 2 Division		International Emerging Markets Class 1 Division
$	1,597,901	$	143,412	$	126,955	$	438,123	$	4,669,342	$	445,729	$	49,426,074
	—		—		—		—		—		—		—
$	1,597,901	$	143,412	$	126,955	$	438,123	$	4,669,342	$	445,729	$	49,426,074
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		462,990
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	237,407		8,674		21,230		19,032		672,691		—		19,702,405
	—		—		—		—		—		—		—
	1,209,983		55,862		18,996		342,263		3,405,465		—		27,895,622
	55,071		8,895		3,396		17,776		591,186		—		1,365,057
	—		—		—		—		—		—		—
	36,005		67,358		39,044		8,190		—		108,981		—
	59,435		2,623		44,289		50,862		—		336,748		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	1,597,901	$	143,412	$	126,955	$	438,123	$	4,669,342	$	445,729	$	49,426,074
$	1,587,713	$	167,484	$	125,114	$	438,792	$	4,724,320	$	458,803	$	52,237,606
	60,942		9,003		8,260		18,293		451,581		43,275		3,545,629
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		136,918
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	22,793		1,068		2,161		1,937		66,373		—		673,886
	—		—		—		—		—		—		—
	116,358		6,886		1,937		34,900		336,560		—		957,373
	5,348		1,107		350		1,830		59,001		—		51,604
	—		—		—		—		—		—		—
	3,391		7,640		3,753		806		—		10,770		—
	5,629		299		4,281		5,033		—		33,416		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		3.38
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	10.42		8.13		9.82		9.82		10.14		—		29.24
	10.31		8.05		9.73		9.73		10.04		—		26.54
	10.40		8.11		9.81		9.81		10.12		—		29.14
	10.30		8.03		9.71		9.71		10.02		—		26.45
	—		—		—		—		—		—		—
	10.62		8.82		10.40		10.16		—		10.12		—
	10.56		8.77		10.35		10.11		—		10.08		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

21

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		International Emerging Markets Class 2 Division		Invesco American Franchise Series I Division		Invesco Balanced-Risk Allocation Series II Division
Assets
Investments in shares of mutual funds, at market		$	115,252	$	3,877,605	$	202,940
Liabilities			—		—		—
Net assets		$	115,252	$	3,877,605	$	202,940
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		—		3,877,605		—
	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		22,670		—		40,143
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		92,582		—		162,797
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	115,252	$	3,877,605	$	202,940
Investments in shares of mutual funds, at cost		$	113,400	$	3,011,684	$	212,788
Shares of mutual funds owned			8,297		72,370		18,087
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		—		258,611		—
	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		2,696		—		3,822
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		11,055		—		15,588
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		—		15.00		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		14.58		—
	Principal Investment Plus Variable Annuity		—		—		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		8.41		—		10.50
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		8.38		—		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.

22

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
Invesco Core Equity Series I Division		Invesco Global Health Care Series I Division		Invesco Global Health Care Series II Division		Invesco International Growth Series I Division		Invesco International Growth Series II Division		Invesco Mid Cap Growth Series I Division		Invesco Small Cap Equity Series I Division
$	16,899,690	$	7,476,525	$	762,081	$	9,472,356	$	417,949	$	1,101,948	$	7,699,966
	—		—		—		—		—		—		—
$	16,899,690	$	7,476,525	$	762,081	$	9,472,356	$	417,949	$	1,101,948	$	7,699,966
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	16,899,690		7,179,982		—		—		—		1,101,948		2,066,881
	—		—		—		—		—		—		—
	—		269,167		—		8,726,354		—		—		4,958,739
	—		27,376		—		746,002		—		—		674,346
	—		—		—		—		—		—		—
	—		—		202,845		—		296,817		—		—
	—		—		559,236		—		121,132		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	16,899,690	$	7,476,525	$	762,081	$	9,472,356	$	417,949	$	1,101,948	$	7,699,966
$	13,681,026	$	8,585,759	$	897,487	$	9,274,692	$	451,994	$	1,109,496	$	8,070,978
	488,713		310,101		33,033		288,001		12,884		225,347		418,932
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	1,063,311		358,368		—		—		—		78,489		87,003
	—		—		—		—		—		—		—
	—		27,583		—		831,597		—		—		209,480
	—		2,816		—		74,871		—		—		30,683
	—		—		—		—		—		—		—
	—		—		22,094		—		32,682		—		—
	—		—		61,262		—		13,414		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	15.89		20.03		—		—		—		14.04		23.75
	14.43		18.24		—		—		—		13.65		22.05
	—		9.76		—		10.49		—		—		23.67
	—		9.72		—		9.96		—		—		21.98
	—		—		—		—		—		—		—
	—		—		9.18		—		9.08		—		—
	—		—		9.13		—		9.03		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

23

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		Invesco Technology Series I Division		Invesco Value Opportunities Series I Division		Janus Aspen Enterprise Service Shares Division
Assets
Investments in shares of mutual funds, at market		$	2,689,778	$	4,558,350	$	8,696,456
Liabilities			—		—		—
Net assets		$	2,689,778	$	4,558,350	$	8,696,456
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		2,689,778		—		8,696,456
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		4,155,773		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		402,577		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		—
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	2,689,778	$	4,558,350	$	8,696,456
Investments in shares of mutual funds, at cost		$	2,783,346	$	4,919,270	$	6,069,902
Shares of mutual funds owned			150,351		703,449		154,686
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		283,692		—		518,600
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		268,818		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		28,048		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		—
Accumulation unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		—		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		—		—
	The Principal Variable Annuity		9.48		—		16.77
	The Principal Variable Annuity with Purchase Payment Credit Rider		8.63		—		15.22
	Principal Investment Plus Variable Annuity		—		15.46		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		14.35		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		—
Annuitized units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Annuitized unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus – Rollover IRA		—		—		—
See accompanying notes.

24

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
Janus Aspen Flexible Bond Service Shares Division		LargeCap Growth Class 1 Division		LargeCap Growth Class 2 Division		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
$	1,933,140	$	40,321,888	$	307,355	$	94,520,745	$	127,126	$	92,870,342	$	765,977
	—		—		—		—		—		—		—
$	1,933,140	$	40,321,888	$	307,355	$	94,520,745	$	127,126	$	92,870,342	$	765,977
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		669,619		—		—		—		—		—
	—		3,272,522		—		624,870		—		623,846		—
	—		—		—		1,682,200		—		7,894,766		—
	—		—		—		102,089		—		527,616		—
	295,225		25,977,665		—		73,980,170		—		41,238,381		—
	—		—		—		—		—		—		—
	802,038		9,258,648		—		17,025,036		—		39,212,738		—
	—		1,143,434		—		1,106,380		—		3,372,995		—
	—		—		—		—		—		—		—
	476,974		—		194,710		—		—		—		96,558
	358,903		—		112,645		—		127,126		—		669,419
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	1,933,140	$	40,321,888	$	307,355	$	94,520,745	$	127,126	$	92,870,342	$	765,977
$	1,994,513	$	27,983,220	$	311,902	$	88,735,585	$	132,761	$	62,194,756	$	744,913
	153,059		1,652,536		12,654		3,850,132		5,197		6,014,919		49,803
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		214,894		—		—		—		—		—
	—		1,000,126		—		279,227		—		279,958		—
	—		—		—		88,091		—		414,862		—
	—		—		—		5,397		—		27,541		—
	29,826		914,855		—		1,268,638		—		2,329,781		—
	—		—		—		—		—		—		—
	81,079		327,207		—		292,955		—		2,222,960		—
	—		44,512		—		20,970		—		210,621		—
	—		—		—		—		—		—		—
	47,536		—		19,876		—		—		—		9,087
	35,974		—		11,564		—		12,782		—		63,257
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		3.12		—		—		—		—		—
	—		3.27		—		2.24		—		2.23		—
	—		—		—		19.09		—		19.03		—
	—		—		—		18.91		—		19.16		—
	9.90		28.39		—		58.31		—		17.70		—
	9.86		25.78		—		52.94		—		16.07		—
	9.89		28.30		—		58.11		—		17.64		—
	9.86		25.69		—		52.76		—		16.01		—
	—		—		—		—		—		—		—
	10.03		—		9.80		—		9.99		—		10.63
	9.98		—		9.74		—		9.95		—		10.58
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

25

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		LargeCap Value Class 1 Division		LargeCap Value Class 2 Division		MFS International Value Service Class Division
Assets
Investments in shares of mutual funds, at market		$	74,504,248	$	55,623	$	3,307,744
Liabilities			—		—		—
Net assets		$	74,504,248	$	55,623	$	3,307,744
Net assets
Applicable to accumulation units:
	Bankers Flexible Annuity	$	1,372,497	$	—	$	—
	Pension Builder Plus		1,981,326		—		—
	Pension Builder Plus – Rollover IRA		36,546		—		—
	Personal Variable		356,955		—		—
	Premier Variable		5,025,178		—		—
	Principal Freedom Variable Annuity		2,523,234		—		—
	Principal Freedom Variable Annuity 2		410,067		—		—
	The Principal Variable Annuity		46,958,557		—		561,361
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		14,145,836		—		2,093,530
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,608,486		—		69,429
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		1,704		351,435
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		53,919		231,989
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		85,566		—		—
Total net assets		$	74,504,248	$	55,623	$	3,307,744
Investments in shares of mutual funds, at cost		$	71,555,044	$	54,319	$	3,329,019
Shares of mutual funds owned			2,480,994		1,858		148,796
Accumulation units outstanding:
	Bankers Flexible Annuity		21,117		—		—
	Pension Builder Plus		195,790		—		—
	Pension Builder Plus – Rollover IRA		9,985		—		—
	Personal Variable		67,142		—		—
	Premier Variable		895,787		—		—
	Principal Freedom Variable Annuity		139,817		—		—
	Principal Freedom Variable Annuity 2		24,882		—		—
	The Principal Variable Annuity		1,130,899		—		57,727
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		341,844		—		215,638
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		42,815		—		7,222
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		167		33,121
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		5,299		21,989
Accumulation unit value:
	Bankers Flexible Annuity	$	64.98	$	—	$	—
	Pension Builder Plus		10.10		—		—
	Pension Builder Plus – Rollover IRA		12.24		—		—
	Personal Variable		5.32		—		—
	Premier Variable		5.61		—		—
	Principal Freedom Variable Annuity		18.05		—		—
	Principal Freedom Variable Annuity 2		16.48		—		—
	The Principal Variable Annuity		41.52		—		9.72
	The Principal Variable Annuity with Purchase Payment Credit Rider		37.70		—		9.63
	Principal Investment Plus Variable Annuity		41.38		—		9.71
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		37.57		—		9.61
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		10.22		10.61
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		10.18		10.55
Annuitized units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		6,992		—		—
Annuitized unit value:
	Bankers Flexible Annuity	$	64.98	$	—	$	—
	Pension Builder Plus – Rollover IRA		12.24		—		—
See accompanying notes.

26

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
MFS New Discovery Service Class Division		MFS Utilities Service Class Division		MFS Value Service Class Division		MidCap Class 1 Division		Multi-Asset Income Class 1 Division		Multi-Asset Income Class 2 Division		Neuberger Berman AMT Large Cap Value Class I Division
$	1,031,307	$	11,829,449	$	5,780,196	$	324,262,727	$	170,427	$	—	$	4,992,582
	—		—		—		—		—		—		—
$	1,031,307	$	11,829,449	$	5,780,196	$	324,262,727	$	170,427	$	—	$	4,992,582
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		1,012,234		—		—		—
	—		—		—		6,246,655		—		—		—
	—		—		—		8,996,711		—		—		—
	—		—		—		688,105		—		—		—
	175,185		—		—		194,174,594		69,586		—		—
	—		—		—		—		—		—		—
	671,080		10,007,527		5,049,447		107,859,249		92,404		—		4,684,966
	101,496		932,691		730,749		5,285,179		8,437		—		307,616
	—		—		—		—		—		—		—
	58,104		211,704		—		—		—		—		—
	25,442		677,527		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	1,031,307	$	11,829,449	$	5,780,196	$	324,262,727	$	170,427	$	—	$	4,992,582
$	1,054,272	$	13,783,913	$	5,607,132	$	279,235,944	$	169,782	$	—	$	4,234,244
	68,708		448,595		310,930		6,363,084		16,643		—		327,597
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		100,974		—		—		—
	—		—		—		593,316		—		—		—
	—		—		—		183,475		—		—		—
	—		—		—		25,936		—		—		—
	15,622		—		—		2,176,388		6,691		—		—
	—		—		—		—		—		—		—
	60,048		480,326		211,086		1,213,061		8,891		—		224,169
	9,281		46,863		31,979		65,473		815		—		15,853
	—		—		—		—		—		—		—
	5,906		23,305		—		—		—		—		—
	2,597		75,011		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		10.02		—		—		—
	—		—		—		10.53		—		—		—
	—		—		—		49.04		—		—		—
	—		—		—		26.53		—		—		—
	11.21		—		—		89.22		10.40		—		—
	10.97		—		—		81.00		10.36		—		—
	11.18		20.84		23.92		88.91		10.39		—		20.90
	10.94		19.90		22.85		80.72		10.36		—		19.40
	—		—		—		—		—		—		—
	9.84		9.08		—		—		—		10.39		—
	9.80		9.03		—		—		—		10.37		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

27

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		Neuberger Berman AMT Mid-Cap Growth Portfolio Class S Division		Neuberger Berman AMT Socially Responsive Class I Division		Oppenheimer Main Street Small Cap Service Shares Division
Assets
Investments in shares of mutual funds, at market		$	2,447,553	$	4,563,370	$	555,279
Liabilities			—		—		—
Net assets		$	2,447,553	$	4,563,370	$	555,279
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		—		—		555,279
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		2,295,715		4,254,546		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		101,291		308,824		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		19,362		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		31,185		—		—
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	2,447,553	$	4,563,370	$	555,279
Investments in shares of mutual funds, at cost		$	2,560,997	$	3,584,803	$	542,699
Shares of mutual funds owned			115,888		202,187		23,380
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		—		—		40,572
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		233,012		189,339		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		10,352		14,802		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		2,046		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		3,309		—		—
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		—		—		13.69
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		13.39
	Principal Investment Plus Variable Annuity		9.85		22.47		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		9.78		20.86		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		9.46		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		9.43		—		—
Annuitized units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Annuitized unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus – Rollover IRA		—		—		—
See accompanying notes.

28

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
PIMCO All Asset Administrative Class Division		PIMCO All Asset Advisor Class Division		PIMCO Commodity Real Return Strategy M Class Division		PIMCO High Yield Administrative Class Division		PIMCO Low Duration Advisor Class Division		PIMCO Total Return Administrative Class Division		Principal Capital Appreciation Class 1 Division
$	3,837,833	$	52,673	$	11,729	$	21,316,043	$	315,289	$	25,990,162	$	109,609,383
	—		—		—		—		—		—		—
$	3,837,833	$	52,673	$	11,729	$	21,316,043	$	315,289	$	25,990,162	$	109,609,383
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		43,840
	—		—		—		—		12,773		—		33,184,505
	—		—		—		—		—		—		—
	3,534,235		—		—		18,698,360		277,334		23,982,347		72,564,783
	303,598		—		—		1,856,698		—		1,484,023		3,816,255
	—		—		—		—		—		—		—
	—		—		5,665		389,238		11,369		287,877		—
	—		52,673		6,064		371,747		13,813		235,915		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	3,837,833	$	52,673	$	11,729	$	21,316,043	$	315,289	$	25,990,162	$	109,609,383
$	4,163,060	$	51,457	$	11,706	$	21,651,865	$	316,357	$	27,830,825	$	104,616,411
	383,400		5,205		1,498		2,750,457		30,790		2,442,685		4,578,504
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		2,431
	—		—		—		—		1,293		—		3,152,598
	—		—		—		—		—		—		—
	245,918		—		—		1,255,161		28,114		1,905,689		4,164,316
	22,115		—		—		129,982		—		123,449		232,098
	—		—		—		—		—		—		—
	—		—		691		36,439		1,148		28,252		—
	—		5,406		743		35,000		1,400		23,285		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		18.03
	—		—		—		—		9.88		—		10.53
	—		—		—		—		9.78		—		10.42
	14.37		—		—		14.91		9.86		12.58		17.43
	13.73		—		—		14.30		9.77		12.02		16.44
	—		—		—		—		—		—		—
	—		9.78		8.20		10.68		9.90		10.19		—
	—		9.74		8.17		10.62		9.86		10.13		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

29

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		Principal Capital Appreciation Class 2 Division		Principal LifeTime 2010 Class 1 Division		Principal LifeTime 2020 Class 1 Division
Assets
Investments in shares of mutual funds, at market		$	431,660	$	26,897,585	$	107,765,196
Liabilities			—		—		—
Net assets		$	431,660	$	26,897,585	$	107,765,196
Net assets
Applicable to accumulation units:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		—		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		—		1,097,674		3,854,984
	The Principal Variable Annuity		—		1,620,707		4,946,727
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		23,378,798		95,769,395
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		800,406		3,194,090
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		244,461		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		187,199		—		—
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	431,660	$	26,897,585	$	107,765,196
Investments in shares of mutual funds, at cost		$	398,447	$	22,773,092	$	93,112,491
Shares of mutual funds owned			18,206		2,155,255		8,512,259
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		—		79,463		260,325
	The Principal Variable Annuity		—		104,276		288,201
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		—		1,509,722		5,598,433
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		55,660		201,070
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		21,852		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		16,829		—		—
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		—		13.81		14.81
	The Principal Variable Annuity		—		15.54		17.16
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		14.43		15.94
	Principal Investment Plus Variable Annuity		—		15.49		17.11
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		14.38		15.89
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		11.19		—		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		11.12		—		—
Annuitized units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Annuitized unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus – Rollover IRA		—		—		—
See accompanying notes.

30

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
Principal LifeTime 2020 Class 2 Division		Principal LifeTime 2030 Class 1 Division		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
$	16,129	$	64,964,505	$	82,097	$	13,886,121	$	120,683	$	9,241,996	$	84,066
	—		—		—		—		—		—		—
$	16,129	$	64,964,505	$	82,097	$	13,886,121	$	120,683	$	9,241,996	$	84,066
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		2,395,733		—		331,853		—		173,692		—
	—		1,405,199		—		751,528		—		245,331		—
	—		—		—		—		—		—		—
	—		52,997,492		—		12,216,989		—		8,391,198		—
	—		8,166,081		—		585,751		—		431,775		—
	—		—		—		—		—		—		—
	—		—		12,633		—		1,919		—		71,440
	16,129		—		69,464		—		118,764		—		12,626
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	16,129	$	64,964,505	$	82,097	$	13,886,121	$	120,683	$	9,241,996	$	84,066
$	17,812	$	63,176,200	$	81,936	$	13,092,349	$	118,840	$	9,019,821	$	87,137
	1,278		5,673,756		7,201		1,027,080		8,959		707,657		6,462
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		160,696		—		21,817		—		11,383		—
	—		81,329		—		41,883		—		13,569		—
	—		—		—		—		—		—		—
	—		3,077,678		—		683,172		—		465,692		—
	—		510,673		—		35,273		—		25,804		—
	—		—		—		—		—		—		—
	—		—		1,296		—		198		—		7,379
	1,652		—		7,153		—		12,307		—		1,309
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		14.91		—		15.21		—		15.26		—
	—		17.28		—		17.94		—		18.08		—
	—		16.05		—		16.66		—		16.79		—
	—		17.22		—		17.88		—		18.02		—
	—		15.99		—		16.61		—		16.73		—
	—		—		—		—		—		—		—
	9.81		—		9.75		—		9.69		—		9.68
	9.77		—		9.71		—		9.65		—		9.64
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

31

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		Principal LifeTime Strategic Income Class 1 Division		Real Estate Securities Class 1 Division		Real Estate Securities Class 2 Division
Assets
Investments in shares of mutual funds, at market		$	16,091,601	$	77,553,935	$	3,951,070
Liabilities			—		—		—
Net assets		$	16,091,601	$	77,553,935	$	3,951,070
Net assets
Applicable to accumulation units:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		294,711		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		140,186		201,103		—
	The Principal Variable Annuity		2,544,131		38,469,380		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		12,156,934		33,848,288		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,250,350		4,740,453		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		977,834
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		2,973,236
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	16,091,601	$	77,553,935	$	3,951,070
Investments in shares of mutual funds, at cost		$	15,151,644	$	60,557,179	$	4,111,485
Shares of mutual funds owned			1,411,544		3,641,030		184,975
Accumulation units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		55,446		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		10,807		10,212		—
	The Principal Variable Annuity		179,210		688,587		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		859,253		607,948		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		95,167		93,783		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		80,057
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		244,815
Accumulation unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		5.32		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		12.97		19.69		—
	The Principal Variable Annuity		14.20		55.87		—
	The Principal Variable Annuity with Purchase Payment Credit Rider		13.18		50.72		—
	Principal Investment Plus Variable Annuity		14.15		55.68		—
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		13.14		50.55		—
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		12.21
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		12.15
Annuitized units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Annuitized unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus – Rollover IRA		—		—		—
See accompanying notes.

32

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
										SAM Conservative Balanced Portfolio Class 1 Division		SAM Conservative Balanced Portfolio Class 2 Division
Rydex Basic Materials Division		Rydex Commodities Strategy Division		Rydex NASDAQ 100 Division		SAM Balanced Portfolio Class 1 Division		SAM Balanced Portfolio Class 2 Division
$	339,859	$	269,630	$	581,092	$	541,175,217	$	3,651,180	$	137,719,871	$	3,073,745
	—		—		—		—		—		—		—
$	339,859	$	269,630	$	581,092	$	541,175,217	$	3,651,180	$	137,719,871	$	3,073,745
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		470,553		—		—		—
	—		—		—		—		—		—		—
	—		—		—		2,284,877		—		1,124,336		—
	—		16,444		—		54,156,510		—		13,793,429		—
	—		—		—		—		—		—		—
	—		104,086		—		451,009,762		—		113,945,890		—
	—		14,006		—		33,253,515		—		8,856,216		—
	—		—		—		—		—		—		—
	64,883		99,192		197,430		—		1,980,510		—		1,751,180
	274,976		35,902		383,662		—		1,670,670		—		1,322,565
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	339,859	$	269,630	$	581,092	$	541,175,217	$	3,651,180	$	137,719,871	$	3,073,745
$	330,398	$	261,356	$	610,816	$	564,586,097	$	3,798,144	$	144,087,106	$	3,275,761
	5,028		3,220		18,228		37,477,508		255,327		11,975,641		270,101
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		221,525		—		—		—
	—		—		—		—		—		—		—
	—		—		—		152,864		—		76,334		—
	—		2,346		—		3,736,161		—		965,643		—
	—		—		—		—		—		—		—
	—		14,877		—		31,220,687		—		8,004,503		—
	—		2,022		—		2,439,544		—		659,323		—
	—		—		—		—		—		—		—
	6,502		19,616		17,125		—		191,377		—		169,847
	27,666		7,141		33,469		—		162,360		—		129,010
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		2.12		—		—		—
	—		—		—		—		—		—		—
	—		—		—		14.95		—		14.73		—
	—		7.01		—		14.50		—		14.28		—
	—		6.94		—		13.68		—		13.48		—
	—		7.00		—		14.45		—		14.24		—
	—		6.93		—		13.63		—		13.43		—
	—		—		—		—		—		—		—
	9.98		5.06		11.53		—		10.35		—		10.31
	9.94		5.03		11.46		—		10.29		—		10.25
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

33

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		SAM Conservative Growth Portfolio Class 1 Division		SAM Conservative Growth Portfolio Class 2 Division		SAM Flexible Income Portfolio Class 1 Division
Assets
Investments in shares of mutual funds, at market		$	98,935,581	$	5,812,996	$	164,165,581
Liabilities			—		—		—
Net assets		$	98,935,581	$	5,812,996	$	164,165,581
Net assets
Applicable to accumulation units:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
	Personal Variable		—		—		—
	Premier Variable		—		—		—
	Principal Freedom Variable Annuity		—		—		—
	Principal Freedom Variable Annuity 2		1,586,338		—		2,080,787
	The Principal Variable Annuity		12,047,450		—		28,800,717
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		74,006,615		—		116,576,344
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		11,295,178		—		16,707,733
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		4,603,704		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		1,209,292		—
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	98,935,581	$	5,812,996	$	164,165,581
Investments in shares of mutual funds, at cost		$	100,783,096	$	6,295,840	$	170,143,873
Shares of mutual funds owned			5,745,388		341,740		13,185,990
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		108,491		—		140,200
	The Principal Variable Annuity		849,662		—		2,001,079
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		5,237,053		—		8,127,405
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		847,088		—		1,234,444
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		444,922		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		117,540		—
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		14.62		—		14.84
	The Principal Variable Annuity		14.18		—		14.39
	The Principal Variable Annuity with Purchase Payment Credit Rider		13.38		—		13.58
	Principal Investment Plus Variable Annuity		14.13		—		14.34
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		13.33		—		13.53
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		10.35		—
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		10.29		—
Annuitized units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Annuitized unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus – Rollover IRA		—		—		—
See accompanying notes.

34

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
SAM Flexible Income Portfolio Class 2 Division		SAM Strategic Growth Portfolio Class 1 Division		SAM Strategic Growth Portfolio Class 2 Division		Short-Term Income Class 1 Division		Short-Term Income Class 2 Division		SmallCap Class 1 Division		SmallCap Class 2 Division
$	4,297,229	$	62,692,692	$	2,708,237	$	99,558,356	$	1,062,896	$	116,092,220	$	870,672
	—		—		—		—		—		—		—
$	4,297,229	$	62,692,692	$	2,708,237	$	99,558,356	$	1,062,896	$	116,092,220	$	870,672
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		553,620		—
	—		—		—		1,326,416		—		4,023,324		—
	—		867,956		—		59,601		—		384,236		—
	—		7,258,024		—		17,722,411		—		63,003,806		—
	—		—		—		—		—		—		—
	—		44,069,635		—		78,227,002		—		45,292,658		—
	—		10,497,077		—		2,222,926		—		2,834,576		—
	—		—		—		—		—		—		—
	1,303,852		—		1,454,714		—		452,965		—		683,787
	2,993,377		—		1,253,523		—		609,931		—		186,885
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	4,297,229	$	62,692,692	$	2,708,237	$	99,558,356	$	1,062,896	$	116,092,220	$	870,672
$	4,426,055	$	65,360,100	$	2,802,524	$	101,108,427	$	1,070,715	$	108,593,255	$	804,670
	348,236		3,381,483		147,749		39,196,203		420,116		7,632,624		57,394
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		219,207		—
	—		—		—		110,125		—		129,150		—
	—		60,145		—		4,990		—		20,131		—
	—		518,646		—		1,522,556		—		2,660,124		—
	—		—		—		—		—		—		—
	—		3,159,772		—		6,743,562		—		1,918,868		—
	—		797,638		—		201,184		—		132,280		—
	—		—		—		—		—		—		—
	126,606		—		141,981		—		45,145		—		64,632
	292,325		—		123,045		—		61,136		—		17,740
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
	—		—		—		—		—		2.53		—
	—		—		—		12.04		—		31.15		—
	—		14.43		—		11.95		—		19.08		—
	—		13.99		—		11.64		—		23.68		—
	—		13.21		—		11.09		—		21.50		—
	—		13.95		—		11.60		—		23.60		—
	—		13.16		—		11.05		—		21.43		—
	—		—		—		—		—		—		—
	10.30		—		10.25		—		10.03		—		10.58
	10.24		—		10.19		—		9.98		—		10.54
	—		—		—		—		—		—		—
	—		—		—		—		—		—		—
$	—	$	—	$	—	$	—	$	—	$	—	$	—
	—		—		—		—		—		—		—

35

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities
December 31, 2016
		T. Rowe Price Blue Chip Growth Portfolio II Division		T. Rowe Price Health Sciences Portfolio II Division		Templeton Global Bond VIP Class 4 Division
Assets
Investments in shares of mutual funds, at market		$	16,507,067	$	24,917,812	$	1,185,140
Liabilities			—		—		—
Net assets		$	16,507,067	$	24,917,812	$	1,185,140
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		—		—		58,160
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		14,631,739		22,441,794		443,092
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,875,328		2,476,018		6,860
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		346,658
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		330,370
Applicable to contracts in annuitization period:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Total net assets		$	16,507,067	$	24,917,812	$	1,185,140
Investments in shares of mutual funds, at cost		$	13,194,524	$	25,140,924	$	1,194,563
Shares of mutual funds owned			733,974		746,489		71,265
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		—		—		6,106
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		—
	Principal Investment Plus Variable Annuity		616,035		518,142		46,595
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		85,039		61,571		729
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		36,992
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		35,456
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		—		—		9.53
	The Principal Variable Annuity with Purchase Payment Credit Rider		—		—		9.43
	Principal Investment Plus Variable Annuity		23.75		43.31		9.51
	Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		22.05		40.21		9.42
	Principal Lifetime Income Solutions		—		—		—
	Principal Pivot Series Variable Annuity		—		—		9.37
	Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—		9.32
Annuitized units outstanding:
	Bankers Flexible Annuity		—		—		—
	Pension Builder Plus – Rollover IRA		—		—		—
Annuitized unit value:
	Bankers Flexible Annuity	$	—	$	—	$	—
	Pension Builder Plus – Rollover IRA		—		—		—
See accompanying notes.

36

Principal Life Insurance Company - Separate Account B
Statements of Assets and Liabilities (continued)
December 31, 2016
Templeton Growth VIP Class 2 Division		The Merger Fund Division		VanEck Global Hard Assets Class S Division
$	853,557	$	—	$	8,016,516
	—		—		—
$	853,557	$	—	$	8,016,516
$	—	$	—	$	—
	—		—		—
	—		—		—
	—		—		—
	—		—		—
	853,557		—		—
	—		—		—
	—		—		1,718,388
	—		—		—
	—		—		5,316,034
	—		—		704,609
	—		—		—
	—		—		167,614
	—		—		109,871
	—		—		—
	—		—		—
$	853,557	$	—	$	8,016,516
$	734,216	$	—	$	8,471,725
	62,303		—		343,614
	—		—		—
	—		—		—
	—		—		—
	—		—		—
	—		—		—
	40,060		—		—
	—		—		—
	—		—		152,388
	—		—		—
	—		—		473,049
	—		—		65,640
	—		—		—
	—		—		23,669
	—		—		15,604
$	—	$	—	$	—
	—		—		—
	—		—		—
	—		—		—
	—		—		—
	21.31		—		—
	—		—		—
	—		—		11.28
	—		—		10.77
	—		—		11.24
	—		—		10.73
	—		—		—
	—		9.77		7.08
	—		9.73		7.04
	—		—		—
	—		—		—
$	—	$	—	$	—
	—		—		—

37

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		AllianceBernstein Small Cap Growth Class A Division			AllianceBernstein Small/Mid Cap Value Class A Division			Alps/Red Rocks Listed Private Equity Class III Division
Investment income (loss)
Income
	Dividends	$	—		$	18,447		$	220
Expenses
	Mortality and expense risks		50,038			38,492			328
	Administrative charges		6,005			4,407			40
	Separate account rider charges		2,446			3,815			—
Net investment income (loss)			(58,489	)		(28,267	)		(148	)
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(185,916	)		(184,295	)		(139	)
Capital gains distributions			1,193,872			173,322			9
Total realized gains (losses) on investments			1,007,956			(10,973	)		(130	)
Change in net unrealized appreciation or depreciation of investments			(765,636	)		713,889			2,128
Net gains (losses) on investments			183,831			674,649			1,850
Payment from affiliate			—			—			—
Net increase (decrease) in net assets resulting from operations		$	183,831		$	674,649		$	1,850
See accompanying notes.

38

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
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 Mid Cap 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
$	—		$	262,300	$	908,094		$	116,785	$	11,866		$	66,691		$	245,816
	30,343			127,630		611,848			92,660		40,908			424,451			194,124
	3,642			4,174		73,256			10,006		1,637			50,940			8,159
	1,428			—		7,999			5,575		—			7,317			—
	(35,413	)		130,496		214,991			8,544		(30,679	)		(416,017	)		43,533
	(19,141	)		581,640		(963,734	)		189,748		413,076			4,305,013			504,309
	248,545			213,663		380,747			317,010		140,640			1,408,587			—
	229,404			795,303		(582,987	)		506,758		553,716			5,713,600			504,309
	(141,129	)		335,552		1,894,152			884,995		(439,133	)		(4,352,512	)		2,137,950
	52,862			1,261,351		1,526,156			1,400,297		83,904			945,071			2,685,792
	—			—		—			—		—			—			—
$	52,862		$	1,261,351	$	1,526,156		$	1,400,297	$	83,904		$	945,071		$	2,685,792

39

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		American Funds Insurance Series Asset Allocation Fund Class 2 Division (1)		American Funds Insurance Series Asset Allocation Fund Class 4 Division		American Funds Insurance Series Blue Chip Income and Growth Class 2 Division (1)
Investment income (loss)
Income
	Dividends	$	10,052	$	7,985	$	22,749
Expenses
	Mortality and expense risks		2,159		7,059		4,580
	Administrative charges		241		935		478
	Separate account rider charges		373		—		325
Net investment income (loss)			7,279		(9)		17,366
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			310		15,891		78
Capital gains distributions			—		12,273		1,147
Total realized gains (losses) on investments			310		28,164		1,225
Change in net unrealized appreciation or depreciation of investments			3,884		21,027		44,420
Net gains (losses) on investments			11,473		49,182		63,011
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	11,473	$	49,182	$	63,011
(1) Commenced operations May 23, 2016. See accompanying notes.

40

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
American Funds Insurance Series Blue Chip Income and Growth Class 4 Division		American Funds Insurance Series Global Small Capitalization Fund Class 2 Division		American Funds Insurance Series Global Small Capitalization Fund Class 4 Division		American Funds Insurance Series High-Income Bond Class 2 Division		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
$	21,432	$	2,428	$	142	$	68,710	$	2,668	$	298	$	356
	13,487		11,005		3,828		8,554		2,192		1,719		418
	1,752		981		476		342		287		229		57
	—		187		—		—		—		—		—
	6,193		(9,745)		(4,162)		59,814		189		(1,650)		(119)
	(99,900)		(69,602)		(63,527)		(9,258)		(1,592)		(332)		(313)
	110,643		165,271		98,002		—		5,853		13,617		924
	10,743		95,669		34,475		(9,258)		4,261		13,285		611
	167,824		(78,348)		10,162		52,138		6,611		(9,308)		(2,138)
	184,760		7,576		40,475		102,694		11,061		2,327		(1,646)
	—		—		—		—		—		—		—
$	184,760	$	7,576	$	40,475	$	102,694	$	11,061	$	2,327	$	(1,646)

41

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		American Funds Insurance Series New World Fund Class 2 Division		American Funds Insurance Series New World Fund Class 4 Division		Balanced Class 1 Division
Investment income (loss)
Income
	Dividends	$	8,866	$	2,037	$	560,523
Expenses
	Mortality and expense risks		9,190		4,054		334,514
	Administrative charges		836		560		12,869
	Separate account rider charges		191		—		—
Net investment income (loss)			(1,351)		(2,577)		213,140
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(9,071)		(8,895)		769,565
Capital gains distributions			—		—		1,544,624
Total realized gains (losses) on investments			(9,071)		(8,895)		2,314,189
Change in net unrealized appreciation or depreciation of investments			36,070		28,452		(1,300,098)
Net gains (losses) on investments			25,648		16,980		1,227,231
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	25,648	$	16,980	$	1,227,231
See accompanying notes.

42

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
BlackRock Global Allocation Class III Division		BlackRock iShares Alternative Strategies Class III Division		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		Calvert EAFE International Index Class F Division
$	12,230	$	16,325	$	2,038	$	14,989	$	7,195	$	44	$	514
	10,848		3,570		1,087		7,437		3,740		40		147
	1,245		389		130		869		444		4		19
	143		73		283		6		431		—		—
	(6)		12,293		538		6,677		2,580		—		348
	(7,579)		1,414		(103)		(357)		(1,787)		2		(482)
	—		—		—		—		—		1,003		—
	(7,579)		1,414		(103)		(357)		(1,787)		1,005		(482)
	45,664		(13,836)		3,229		(12,157)		32,208		(988)		17
	38,079		(129)		3,664		(5,837)		33,001		17		(117)
	—		—		—		—		—		—		—
$	38,079	$	(129)	$	3,664	$	(5,837)	$	33,001	$	17	$	(117)

43

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		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
Investment income (loss)
Income
	Dividends	$	545	$	3,697	$	—
Expenses
	Mortality and expense risks		1,143		5,997		136
	Administrative charges		155		814		16
	Separate account rider charges		—		—		—
Net investment income (loss)			(753)		(3,114)		(152)
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(2,875)		(4,716)		(68)
Capital gains distributions			11,923		23,716		479
Total realized gains (losses) on investments			9,048		19,000		411
Change in net unrealized appreciation or depreciation of investments			10,527		86,103		646
Net gains (losses) on investments			18,822		101,989		905
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	18,822	$	101,989	$	905
(1) Represented the operations of Bond & Mortgage Securities Class 1 Division until May 21, 2016. (2) Represented the operations of Bond & Mortgage Securities Class 2 Division until May 21, 2016. See accompanying notes.

44

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
Columbia Limited Duration Credit Class 2 Division		Columbia Small Cap Value Class 2 Division		Core Plus Bond Class 1 Division (1)		Core Plus Bond Class 2 Division (2)		Delaware Limited Term Diversified Income Service Class Division		Delaware Small Cap Value Service Class Division		Deutsche Alternative Asset Allocation Class B Division
$	2,649	$	278	$	4,506,625	$	610	$	12,799	$	8,593	$	796
	1,370		1,199		1,798,287		623		11,576		16,151		522
	123		151		147,347		85		1,002		1,884		63
	48		—		32,253		—		81		1,702		—
	1,108		(1,072)		2,528,738		(98)		140		(11,144)		211
	(1,283)		(3,483)		854,404		492		1,527		(41,285)		(137)
	—		7,069		—		—		—		106,987		—
	(1,283)		3,586		854,404		492		1,527		65,702		(137)
	2,366		37,111		767,565		(3,161)		(4,794)		319,598		1,277
	2,191		39,625		4,150,707		(2,767)		(3,127)		374,156		1,351
	—		—		—		—		—		—		—
$	2,191	$	39,625	$	4,150,707	$	(2,767)	$	(3,127)	$	374,156	$	1,351

45

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		Deutsche Equity 500 Index Class B2 Division		Deutsche Small Mid Cap Value Class B Division		Diversified Balanced Class 2 Division
Investment income (loss)
Income
	Dividends	$	11,812	$	2,253	$	13,374,366
Expenses
	Mortality and expense risks		8,842		12,524		13,351,245
	Administrative charges		1,178		1,495		1,602,337
	Separate account rider charges		—		701		514,032
Net investment income (loss)			1,792		(12,467)		(2,093,248)
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(13,519)		(30,444)		15,166,779
Capital gains distributions			53,312		102,705		10,356,484
Total realized gains (losses) on investments			39,793		72,261		25,523,263
Change in net unrealized appreciation or depreciation of investments			34,284		84,838		32,597,740
Net gains (losses) on investments			75,869		144,632		56,027,755
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	75,869	$	144,632	$	56,027,755
See accompanying notes.

46

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
Diversified Balanced Managed Volatility Class 2 Division		Diversified Growth Class 2 Division		Diversified Growth Managed Volatility Class 2 Division		Diversified Income Class 2 Division		Diversified International Class 1 Division		Diversified International Class 2 Division		Dreyfus IP MidCap Stock Service Shares Division
$	1,064,485	$	42,304,254	$	1,717,442	$	2,297,469	$	2,916,982	$	4,394	$	1,622
	1,920,421		42,189,415		3,546,222		2,839,495		1,537,801		2,245		2,659
	230,521		5,063,321		425,663		340,780		101,540		307		329
	45,972		1,268,533		130,677		60,695		15,921		—		—
	(1,132,429)		(6,217,015)		(2,385,120)		(943,501)		1,261,720		1,842		(1,366)
	599,230		23,514,557		831,314		3,313,196		3,957,572		(1,609)		7,128
	891,329		39,061,798		2,062,499		1,363,943		—		—		13,564
	1,490,559		62,576,355		2,893,813		4,677,139		3,957,572		(1,609)		20,692
	6,945,344		163,417,887		16,589,135		5,024,183		(6,592,841)		(1,448)		7,218
	7,303,474		219,777,227		17,097,828		8,757,821		(1,373,549)		(1,215)		26,544
	—		—		—		—		—		—		—
$	7,303,474	$	219,777,227	$	17,097,828	$	8,757,821	$	(1,373,549)	$	(1,215)	$	26,544

47

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		Dreyfus IP Technology Growth Service Shares Division		Equity Income Class 1 Division		Equity Income Class 2 Division
Investment income (loss)
Income
	Dividends	$	—	$	5,360,962	$	28,917
Expenses
	Mortality and expense risks		77,910		2,493,177		12,571
	Administrative charges		9,350		252,580		1,644
	Separate account rider charges		7,311		32,148		—
Net investment income (loss)			(94,571)		2,583,057		14,702
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			208,822		10,864,858		(5,029)
Capital gains distributions			320,068		9,837,415		58,679
Total realized gains (losses) on investments			528,890		20,702,273		53,650
Change in net unrealized appreciation or depreciation of investments			(249,360)		3,016,984		76,221
Net gains (losses) on investments			184,959		26,302,314		144,573
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	184,959	$	26,302,314	$	144,573
(1) Commenced operations February 8, 2016. See accompanying notes.

48

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
Fidelity VIP Contrafund Service Class Division		Fidelity VIP Contrafund Service Class 2 Division		Fidelity VIP Equity-Income Service Class 2 Division		Fidelity VIP Government Money Market Initial Class Division (1)		Fidelity VIP Government Money Market Service Class Division (1)		Fidelity VIP Growth Service Class Division		Fidelity VIP Growth Service Class 2 Division
$	277,361	$	290,583	$	631,390	$	75,511	$	356	$	—	$	—
	494,438		601,004		383,533		399,700		24,671		160,074		116,234
	19,780		72,327		25,630		31,834		3,130		6,404		13,950
	—		18,122		6,339		8,860		—		—		5,170
	(236,857)		(400,870)		215,888		(364,883)		(27,445)		(166,478)		(135,354)
	1,101,975		2,907,109		(300,329)		—		1		727,408		749,715
	3,240,194		4,010,715		2,065,631		—		—		1,290,676		929,015
	4,342,169		6,917,824		1,765,302		—		1		2,018,084		1,678,730
	(1,686,160)		(3,667,574)		2,603,294		—		—		(1,987,894)		(1,648,216)
	2,419,152		2,849,380		4,584,484		(364,883)		(27,444)		(136,288)		(104,840)
	—		—		—		—		—		—		—
$	2,419,152	$	2,849,380	$	4,584,484	$	(364,883)	$	(27,444)	$	(136,288)	$	(104,840)

49

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		Fidelity VIP Mid Cap Service Class Division		Fidelity VIP Mid Cap Service Class 2 Division		Fidelity VIP Overseas Service Class 2 Division
Investment income (loss)
Income
	Dividends	$	2,282	$	63,544	$	336,748
Expenses
	Mortality and expense risks		3,921		249,503		357,676
	Administrative charges		—		30,106		42,891
	Separate account rider charges		—		11,173		7,486
Net investment income (loss)			(1,639)		(227,238)		(71,305)
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(658)		99,894		1,034,759
Capital gains distributions			4,312		1,230,076		46,852
Total realized gains (losses) on investments			3,654		1,329,970		1,081,611
Change in net unrealized appreciation or depreciation of investments			63,348		984,040		(3,010,806)
Net gains (losses) on investments			65,363		2,086,772		(2,000,500)
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	65,363	$	2,086,772	$	(2,000,500)
See accompanying notes.

50

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
Franklin Global Real Estate VIP Class 2 Division		Franklin Rising Dividends VIP Class 4 Division		Franklin Small Cap Value VIP Class 2 Division		Goldman Sachs VIT Mid Cap Value Institutional Shares Division		Goldman Sachs VIT Mid Cap Value Service Shares Division		Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division		Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division
$	6,982	$	6,909	$	29,507	$	185,795	$	4,980	$	—	$	70,932
	6,740		6,406		47,213		177,097		5,417		109		76,702
	835		838		5,377		21,053		690		13		9,105
	134		—		3,139		4,202		—		—		1,361
	(727)		(335)		(26,222)		(16,557)		(1,127)		(122)		(16,236)
	1,124		(20,558)		(60,509)		186,419		(34,704)		(418)		16,473
	—		61,163		542,260		7,505		239		—		169,230
	1,124		40,605		481,751		193,924		(34,465)		(418)		185,703
	(6,874)		36,118		520,702		1,387,312		88,776		534		1,052,343
	(6,477)		76,388		976,231		1,564,679		53,184		(6)		1,221,810
	—		—		—		—		—		—		—
$	(6,477)	$	76,388	$	976,231	$	1,564,679	$	53,184	$	(6)	$	1,221,810

51

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		Goldman Sachs VIT Small Cap Equity Insights Service Shares Division		Government & High Quality Bond Class 1 Division		Government & High Quality Bond Class 2 Division
Investment income (loss)
Income
	Dividends	$	797	$	4,124,308	$	53,539
Expenses
	Mortality and expense risks		2,433		1,446,066		15,149
	Administrative charges		307		106,059		2,100
	Separate account rider charges		—		28,158		—
Net investment income (loss)			(1,943)		2,544,025		36,290
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			13,469		(442,522)		(15,719)
Capital gains distributions			2,442		20,206		275
Total realized gains (losses) on investments			15,911		(422,316)		(15,444)
Change in net unrealized appreciation or depreciation of investments			32,643		(1,398,353)		(21,520)
Net gains (losses) on investments			46,611		723,356		(674)
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	46,611	$	723,356	$	(674)
See accompanying notes.

52

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
Guggenheim Floating Rate Strategies Series F Division		Guggenheim Investments Global Managed Futures Strategy Division		Guggenheim Investments Long Short Equity Division		Guggenheim Investments Multi-Hedge Strategies Division		Income Class 1 Division		Income Class 2 Division		International Emerging Markets Class 1 Division
$	54,046	$	4,129	$	—	$	200	$	113,804	$	29,680	$	586,057
	12,474		1,318		1,756		2,138		29,851		4,810		627,480
	1,310		179		179		244		3,287		585		54,815
	126		12		19		48		341		—		10,328
	40,136		2,620		(1,954)		(2,230)		80,325		24,285		(106,566)
	(5,535)		(9,626)		(2,657)		(100)		(8,309)		2,263		(2,157,544)
	2,818		—		—		—		—		—		—
	(2,717)		(9,626)		(2,657)		(100)		(8,309)		2,263		(2,157,544)
	30,925		(14,440)		2,294		(642)		(40,355)		(12,937)		6,218,114
	68,344		(21,446)		(2,317)		(2,972)		31,661		13,611		3,954,004
	—		—		—		—		—		—		—
$	68,344	$	(21,446)	$	(2,317)	$	(2,972)	$	31,661	$	13,611	$	3,954,004

53

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		International Emerging Markets Class 2 Division		Invesco American Franchise Series I Division		Invesco Balanced-Risk Allocation Series II Division
Investment income (loss)
Income
	Dividends	$	697	$	—	$	412
Expenses
	Mortality and expense risks		692		49,816		2,369
	Administrative charges		88		1,993		295
	Separate account rider charges		—		—		—
Net investment income (loss)			(83)		(51,809)		(2,252)
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(370)		255,087		(8,035)
Capital gains distributions			—		351,741		—
Total realized gains (losses) on investments			(370)		606,828		(8,035)
Change in net unrealized appreciation or depreciation of investments			4,581		(534,066)		27,433
Net gains (losses) on investments			4,128		20,953		17,146
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	4,128	$	20,953	$	17,146
See accompanying notes.

54

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
Invesco Core Equity Series I Division		Invesco Global Health Care Series I Division		Invesco Global Health Care Series II Division		Invesco International Growth Series I Division		Invesco International Growth Series II Division		Invesco Mid Cap Growth Series I Division		Invesco Small Cap Equity Series I Division
$	130,075	$	—	$	—	$	136,300	$	5,098	$	—	$	—
	216,924		104,080		11,133		122,900		4,566		16,588		94,794
	8,678		4,232		1,411		14,750		627		664		9,316
	—		42		—		4,814		—		—		3,755
	(95,527)		(108,354)		(12,544)		(6,164)		(95)		(17,252)		(107,865)
	702,741		986,241		(173,599)		134,570		(6,563)		582,597		(69,834)
	1,165,901		1,199,414		129,173		—		—		124,916		550,276
	1,868,642		2,185,655		(44,426)		134,570		(6,563)		707,513		480,442
	(302,595)		(3,382,595)		(24,204)		(308,118)		(1,775)		(712,657)		369,136
	1,470,520		(1,305,294)		(81,174)		(179,712)		(8,433)		(22,396)		741,713
	—		—		—		—		—		—		—
$	1,470,520	$	(1,305,294)	$	(81,174)	$	(179,712)	$	(8,433)	$	(22,396)	$	741,713

55

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		Invesco Technology Series I Division		Invesco Value Opportunities Series I Division		Janus Aspen Enterprise Service Shares Division
Investment income (loss)
Income
	Dividends	$	—	$	17,504	$	61,798
Expenses
	Mortality and expense risks		36,936		53,651		108,006
	Administrative charges		1,478		6,439		4,321
	Separate account rider charges		—		2,258		—
Net investment income (loss)			(38,414)		(44,844)		(50,529)
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			103,979		116,658		726,895
Capital gains distributions			134,975		1,304,589		662,883
Total realized gains (losses) on investments			238,954		1,421,247		1,389,778
Change in net unrealized appreciation or depreciation of investments			(293,796)		(698,104)		(470,216)
Net gains (losses) on investments			(93,256)		678,299		869,033
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	(93,256)	$	678,299	$	869,033
See accompanying notes.

56

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
Janus Aspen Flexible Bond Service Shares Division		LargeCap Growth Class 1 Division		LargeCap Growth Class 2 Division		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
$	31,651	$	120,911	$	399	$	—	$	—	$	1,505,569	$	8,327
	12,250		518,670		4,846		1,208,081		3,737		1,091,780		4,737
	1,508		31,247		642		65,758		449		81,098		579
	—		8,820		—		7,494		—		19,045		—
	17,893		(437,826)		(5,089)		(1,281,333)		(4,186)		313,646		3,011
	(2,026)		2,836,336		(13,002)		4,105,960		(87,027)		6,339,881		4,629
	—		—		—		7,885,303		41,355		2,211,043		12,391
	(2,026)		2,836,336		(13,002)		11,991,263		(45,672)		8,550,924		17,020
	(39,047)		(5,445,756)		(5,229)		(10,989,531)		63,377		(188,275)		23,392
	(23,180)		(3,047,246)		(23,320)		(279,601)		13,519		8,676,295		43,423
	—		—		—		—		—		—		—
$	(23,180)	$	(3,047,246)	$	(23,320)	$	(279,601)	$	13,519	$	8,676,295	$	43,423

57

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		LargeCap Value Class 1 Division		LargeCap Value Class 2 Division		MFS International Value Service Class Division
Investment income (loss)
Income
	Dividends	$	1,432,082	$	265	$	38,303
Expenses
	Mortality and expense risks		862,344		205		33,088
	Administrative charges		46,796		25		3,543
	Separate account rider charges		10,322		—		544
Net investment income (loss)			512,620		35		1,128
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(73,720)		(77)		(1,733)
Capital gains distributions			2,198,114		454		77,445
Total realized gains (losses) on investments			2,124,394		377		75,712
Change in net unrealized appreciation or depreciation of investments			2,046,436		1,656		(3,909)
Net gains (losses) on investments			4,683,450		2,068		72,931
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	4,683,450	$	2,068	$	72,931
(1) Represented the operations of MFS VIT New Discovery Service Class Division until May 21, 2016. (2) Represented the operations of MFS VIT Utilities Service Class Division until May 21, 2016. (3) Represented the operations of MFS VIT Value Service Class Division until May 21, 2016. (4) Commenced operations May 23, 2016. See accompanying notes.

58

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
MFS New Discovery Service Class Division (1)		MFS Utilities Service Class Division (2)		MFS Value Service Class Division (3)		MidCap Class 1 Division		Multi-Asset Income Class 1 Division (4)		Multi-Asset Income Class 2 Division (4)		Neuberger Berman AMT Large Cap Value Class I Division
$	—	$	432,705	$	97,951	$	1,351,111	$	—	$	—	$	33,052
	12,713		144,608		67,345		3,990,231		555		—		53,047
	1,267		17,428		8,082		269,924		55		—		6,367
	601		5,639		3,681		39,271		8		—		1,163
	(14,581)		265,030		18,843		(2,948,315)		(618)		—		(27,525)
	(132,432)		(349,305)		268,298		21,996,101		(74)		—		220,051
	46,334		274,822		432,500		54,317,364		—		—		362,319
	(86,098)		(74,483)		700,798		76,313,465		(74)		—		582,370
	141,978		805,522		(77,828)		(45,577,816)		645		—		421,981
	41,299		996,069		641,813		27,787,334		(47)		—		976,826
	—		—		—		—		—		—		—
$	41,299	$	996,069	$	641,813	$	27,787,334	$	(47)	$	—	$	976,826

59

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		Neuberger Berman AMT Mid-Cap Growth Portfolio Class S Division		Neuberger Berman AMT Socially Responsive Class I Division		Oppenheimer Main Street Small Cap Service Shares Division
Investment income (loss)
Income
	Dividends	$	—	$	30,865	$	1,422
Expenses
	Mortality and expense risks		30,981		57,945		7,050
	Administrative charges		3,724		6,954		282
	Separate account rider charges		744		2,257		—
Net investment income (loss)			(35,449)		(36,291)		(5,910)
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(45,040)		303,125		(43,979)
Capital gains distributions			122,395		158,484		21,897
Total realized gains (losses) on investments			77,355		461,609		(22,082)
Change in net unrealized appreciation or depreciation of investments			7,209		(72,636)		114,280
Net gains (losses) on investments			49,115		352,682		86,288
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	49,115	$	352,682	$	86,288
See accompanying notes.

60

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
PIMCO All Asset Administrative Class Division		PIMCO All Asset Advisor Class Division		PIMCO Commodity Real Return Strategy M Class Division		PIMCO High Yield Administrative Class Division		PIMCO Low Duration Advisor Class Division		PIMCO Total Return Administrative Class Division		Principal Capital Appreciation Class 1 Division
$	101,647	$	843	$	219	$	950,670	$	3,735	$	562,847	$	1,250,082
	49,055		150		265		227,062		3,305		337,401		1,390,388
	5,887		18		35		27,358		395		40,578		132,957
	1,798		—		—		7,791		1		8,494		29,327
	44,907		675		(81)		688,459		34		176,374		(302,590)
	(210,507)		78		(1,417)		(188,859)		(7,420)		(296,729)		73,554
	—		—		—		—		—		—		847,945
	(210,507)		78		(1,417)		(188,859)		(7,420)		(296,729)		921,499
	591,652		1,215		1,704		1,317,754		6,434		463,639		7,379,260
	426,052		1,968		206		1,817,354		(952)		343,284		7,998,169
	—		—		—		—		—		—		—
$	426,052	$	1,968	$	206	$	1,817,354	$	(952)	$	343,284	$	7,998,169

61

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		Principal Capital Appreciation Class 2 Division		Principal LifeTime 2010 Class 1 Division		Principal LifeTime 2020 Class 1 Division
Investment income (loss)
Income
	Dividends	$	8,694	$	590,055	$	2,172,249
Expenses
	Mortality and expense risks		8,683		345,192		1,394,977
	Administrative charges		1,125		38,507		157,752
	Separate account rider charges		—		5,391		27,901
Net investment income (loss)			(1,114)		200,965		591,619
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			11,169		864,670		183,406
Capital gains distributions			7,446		159,706		3,930,736
Total realized gains (losses) on investments			18,615		1,024,376		4,114,142
Change in net unrealized appreciation or depreciation of investments			43,982		(179,273)		(30,737)
Net gains (losses) on investments			61,483		1,046,068		4,675,024
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	61,483	$	1,046,068	$	4,675,024
See accompanying notes.

62

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
Principal LifeTime 2020 Class 2 Division		Principal LifeTime 2030 Class 1 Division		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
$	289	$	1,058,720	$	756	$	201,860	$	169	$	116,815	$	461
	195		805,570		547		170,069		461		109,273		359
	24		92,375		70		19,262		55		12,690		52
	—		54,374		—		4,121		—		2,729		—
	70		106,401		139		8,408		(347)		(7,877)		50
	(105)		2,028,182		(546)		432,020		1,334		239,565		(75)
	558		2,634,668		1,935		533,289		472		371,187		1,597
	453		4,662,850		1,389		965,309		1,806		610,752		1,522
	81		(2,138,404)		879		(418,422)		1,848		(258,009)		(5)
	604		2,630,847		2,407		555,295		3,307		344,866		1,567
	—		—		—		—		—		—		—
$	604	$	2,630,847	$	2,407	$	555,295	$	3,307	$	344,866	$	1,567

63

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		Principal LifeTime Strategic Income Class 1 Division		Real Estate Securities Class 1 Division		Real Estate Securities Class 2 Division
Investment income (loss)
Income
	Dividends	$	414,129	$	1,120,008	$	26,907
Expenses
	Mortality and expense risks		209,682		1,003,595		29,081
	Administrative charges		22,481		79,263		3,770
	Separate account rider charges		7,731		29,547		—
Net investment income (loss)			174,235		7,603		(5,944)
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			443,415		4,729,275		(28,470)
Capital gains distributions			—		6,833,672		183,653
Total realized gains (losses) on investments			443,415		11,562,947		155,183
Change in net unrealized appreciation or depreciation of investments			(65,598)		(8,121,242)		(152,839)
Net gains (losses) on investments			552,052		3,449,308		(3,600)
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	552,052	$	3,449,308	$	(3,600)
See accompanying notes.

64

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
Rydex Basic Materials Division		Rydex Commodities Strategy Division		Rydex NASDAQ 100 Division		SAM Balanced Portfolio Class 1 Division		SAM Balanced Portfolio Class 2 Division		SAM Conservative Balanced Portfolio Class 1 Division		SAM Conservative Balanced Portfolio Class 2 Division
$	—	$	—	$	—	$	11,916,910	$	87,444	$	3,607,402	$	72,399
	1,775		2,614		6,606		7,086,705		44,761		1,790,734		34,911
	220		299		861		792,146		5,991		198,191		4,704
	—		29		—		257,869		—		68,567		—
	(1,995)		(2,942)		(7,467)		3,780,190		36,692		1,549,910		32,784
	146		(4,605)		(11,796)		13,501,193		(303,876)		1,360,793		(35,594)
	4,436		—		59,803		34,361,164		286,324		5,417,088		120,781
	4,582		(4,605)		48,007		47,862,357		(17,552)		6,777,881		85,187
	9,461		30,537		(19,101)		(22,647,532)		220,566		(1,536,046)		33,535
	12,048		22,990		21,439		28,995,015		239,706		6,791,745		151,506
	—		—		—		—		—		—		—
$	12,048	$	22,990	$	21,439	$	28,995,015	$	239,706	$	6,791,745	$	151,506

65

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		SAM Conservative Growth Portfolio Class 1 Division		SAM Conservative Growth Portfolio Class 2 Division		SAM Flexible Income Portfolio Class 1 Division
Investment income (loss)
Income
	Dividends	$	1,398,527	$	64,011	$	5,434,884
Expenses
	Mortality and expense risks		1,210,973		57,565		2,055,747
	Administrative charges		131,265		8,263		215,857
	Separate account rider charges		76,435		—		103,547
Net investment income (loss)			(20,146)		(1,817)		3,059,733
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			2,544,911		(69,196)		826,988
Capital gains distributions			5,126,480		282,604		3,175,692
Total realized gains (losses) on investments			7,671,391		213,408		4,002,680
Change in net unrealized appreciation or depreciation of investments			(2,525,153)		90,753		1,694,802
Net gains (losses) on investments			5,126,092		302,344		8,757,215
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	5,126,092	$	302,344	$	8,757,215
(1) Represented the operations of SmallCap Blend Class 1 Division until May 21, 2016. (2) Represented the operations of SmallCap Blend Class 2 Division until May 21, 2016. See accompanying notes.

66

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
SAM Flexible Income Portfolio Class 2 Division		SAM Strategic Growth Portfolio Class 1 Division		SAM Strategic Growth Portfolio Class 2 Division		Short-Term Income Class 1 Division		Short-Term Income Class 2 Division		SmallCap Class 1 Division (1)		SmallCap Class 2 Division (2)
$	130,579	$	909,891	$	18,401	$	2,179,250	$	27,851	$	275,193	$	815
	50,874		787,969		17,111		1,299,547		13,622		1,352,956		9,675
	6,491		85,632		2,373		137,076		1,751		98,876		1,344
	—		71,228		—		18,909		—		19,163		—
	73,214		(34,938)		(1,083)		723,718		12,478		(1,195,802)		(10,204)
	(126,192)		2,033,907		(92,870)		27,358		(13,026)		2,751,427		(32,125)
	82,812		3,414,072		83,128		—		—		4,697,046		44,948
	(43,380)		5,447,979		(9,742)		27,358		(13,026)		7,448,473		12,823
	201,730		(2,681,020)		90,513		24,748		8,372		9,897,300		146,041
	231,564		2,732,021		79,688		775,824		7,824		16,149,971		148,660
	—		—		—		—		—		—		—
$	231,564	$	2,732,021	$	79,688	$	775,824	$	7,824	$	16,149,971	$	148,660

67

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
		T. Rowe Price Blue Chip Growth Portfolio II Division		T. Rowe Price Health Sciences Portfolio II Division		Templeton Global Bond VIP Class 4 Division
Investment income (loss)
Income
	Dividends	$	—	$	—	$	—
Expenses
	Mortality and expense risks		204,899		357,281		12,844
	Administrative charges		24,591		42,879		1,594
	Separate account rider charges		10,988		17,353		49
Net investment income (loss)			(240,478)		(417,513)		(14,487)
Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			1,359,449		3,356,881		(39,546)
Capital gains distributions			—		190,624		882
Total realized gains (losses) on investments			1,359,449		3,547,505		(38,664)
Change in net unrealized appreciation or depreciation of investments			(1,257,312)		(7,270,684)		73,599
Net gains (losses) on investments			(138,341)		(4,140,692)		20,448
Payment from affiliate			—		—		—
Net increase (decrease) in net assets resulting from operations		$	(138,341)	$	(4,140,692)	$	20,448
(1) Represented the operations of Van Eck Global Hard Assets Class S Division until May 21, 2016. See accompanying notes.

68

Principal Life Insurance Company
Separate Account B
Statements of Operations
December 31, 2016
Templeton Growth VIP Class 2 Division		The Merger Fund Division		VanEck Global Hard Assets Class S Division (1)
$	16,895	$	—	$	25,310
	7,119		—		82,729
	—		—		8,727
	—		—		4,053
	9,776		—		(70,199)
	3,302		—		(518,970)
	32,493		—		—
	35,795		—		(518,970)
	24,739		—		2,838,392
	70,310		—		2,249,223
	—		—		—
$	70,310	$	—	$	2,249,223

69

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		AllianceBernstein Small Cap Growth Class A Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(58,489)	$	(71,141)
	Total realized gains (losses) on investments		1,007,956		952,960
	Change in net unrealized appreciation or depreciation of investments		(765,636)		(980,379)
	Net gains (losses) from investments		183,831		(98,560)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			183,831		(98,560)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		456,512		692,012
	Administration charges		(202)		(407)
	Contingent sales charges		(3,168)		(4,994)
	Contract terminations		(276,822)		(563,413)
	Death benefit payments		—		(25,911)
	Flexible withdrawal option payments		(27,076)		(22,903)
	Transfers to other contracts		(600,990)		(570,163)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(451,746)		(495,779)
Total increase (decrease)			(267,915)		(594,339)
Net assets at beginning of period			4,350,241		4,944,580
Net assets at end of period		$	4,082,326	$	4,350,241
(1) Commenced operations May 18, 2015. See accompanying notes.

70

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
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
2016		2015		2016		2015		2016		2015
$	(28,267)	$	(17,933)	$	(148)	$	(75)	$	(35,413)	$	(39,346)
	(10,973)		403,743		(130)		5		229,404		219,030
	713,889		(586,927)		2,128		(992)		(141,129)		(169,766)
	674,649		(201,117)		1,850		(1,062)		52,862		9,918
	—		—		—		—		—		—
	674,649		(201,117)		1,850		(1,062)		52,862		9,918
	1,321,497		1,332,689		5,989		24,745		478,898		645,130
	(90)		—		(41)		(8)		(1,105)		(1,550)
	(1,257)		(1,040)		(1)		—		(2,289)		(2,290)
	(151,575)		(118,349)		(699)		—		(199,972)		(258,314)
	(18,527)		(23,425)		—		—		(10,938)		(27,500)
	(21,699)		(19,743)		—		—		(22,920)		(24,857)
	(514,041)		(523,465)		(721)		—		(433,798)		(447,846)
	—		—		—		—		—		—
	614,308		646,667		4,527		24,737		(192,124)		(117,227)
	1,288,957		445,550		6,377		23,675		(139,262)		(107,309)
	2,766,015		2,320,465		23,675		—		2,496,198		2,603,507
$	4,054,972	$	2,766,015	$	30,052	$	23,675	$	2,356,936	$	2,496,198

71

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		American Century VP Income & Growth Class I Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	130,496	$	114,087
	Total realized gains (losses) on investments		795,303		1,834,516
	Change in net unrealized appreciation or depreciation of investments		335,552		(2,846,462)
	Net gains (losses) from investments		1,261,351		(897,859)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			1,261,351		(897,859)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		251,043		429,765
	Administration charges		(1,378)		(1,061)
	Contingent sales charges		(1,441)		(1,747)
	Contract terminations		(1,324,781)		(1,560,280)
	Death benefit payments		(15,332)		(116,724)
	Flexible withdrawal option payments		(130,184)		(152,106)
	Transfers to other contracts		(728,927)		(587,166)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(1,951,000)		(1,989,319)
Total increase (decrease)			(689,649)		(2,887,178)
Net assets at beginning of period			11,548,437		14,435,615
Net assets at end of period		$	10,858,788	$	11,548,437
See accompanying notes.

72

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
American Century VP Inflation Protection Class II Division				American Century VP Mid Cap Value Class II Division				American Century VP Ultra Class I Division
2016		2015		2016		2015		2016		2015
$	214,991	$	340,760	$	8,544	$	2,505	$	(30,679)	$	(31,269)
	(582,987)		(1,104,330)		506,758		475,978		553,716		713,014
	1,894,152		(1,423,679)		884,995		(680,016)		(439,133)		(500,969)
	1,526,156		(2,187,249)		1,400,297		(201,533)		83,904		180,776
	—		—		—		—		—		—
	1,526,156		(2,187,249)		1,400,297		(201,533)		83,904		180,776
	4,971,089		8,848,538		3,777,153		2,523,086		200,408		566,985
	(193,737)		(299,369)		(1,028)		(391)		(503)		(722)
	(48,743)		(53,212)		(6,436)		(1,614)		(370)		(394)
	(4,259,005)		(6,003,190)		(779,432)		(333,932)		(353,904)		(350,601)
	(392,831)		(597,826)		—		(91,015)		(6,421)		(10,583)
	(1,768,814)		(1,871,537)		(42,845)		(45,033)		(53,493)		(47,184)
	(5,929,210)		(11,648,589)		(1,236,011)		(734,456)		(415,786)		(416,178)
	—		—		—		—		—		—
	(7,621,251)		(11,625,185)		1,711,401		1,316,645		(630,069)		(258,677)
	(6,095,095)		(13,812,434)		3,111,698		1,115,112		(546,165)		(77,901)
	51,379,647		65,192,081		6,444,459		5,329,347		3,618,032		3,695,933
$	45,284,552	$	51,379,647	$	9,556,157	$	6,444,459	$	3,071,867	$	3,618,032

73

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		American Century VP Ultra Class II Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(416,017)	$	(468,389)
	Total realized gains (losses) on investments		5,713,600		9,583,284
	Change in net unrealized appreciation or depreciation of investments		(4,352,512)		(7,134,566)
	Net gains (losses) from investments		945,071		1,980,329
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			945,071		1,980,329
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		4,290,609		4,602,185
	Administration charges		(143,589)		(226,359)
	Contingent sales charges		(29,028)		(39,443)
	Contract terminations		(2,536,334)		(4,449,811)
	Death benefit payments		(358,885)		(406,576)
	Flexible withdrawal option payments		(1,351,736)		(1,393,167)
	Transfers to other contracts		(4,860,363)		(8,773,849)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(4,989,326)		(10,687,020)
Total increase (decrease)			(4,044,255)		(8,706,691)
Net assets at beginning of period			36,158,449		44,865,140
Net assets at end of period		$	32,114,194	$	36,158,449
(1) Commenced operations May 23, 2016. (2) Commenced operations May 18, 2015. See accompanying notes.

74

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
American Century VP Value Class II Division				American Funds Insurance Series Asset Allocation Fund Class 2 Division (1)		American Funds Insurance Series Asset Allocation Fund Class 4 Division (2)
2016		2015		2016		2016		2015
$	43,533	$	112,095	$	7,279	$	(9)	$	8,662
	504,309		499,170		310		28,164		34
	2,137,950		(1,501,643)		3,884		21,027		(1,616)
	2,685,792		(890,378)		11,473		49,182		7,080
	—		—		—		—		—
	2,685,792		(890,378)		11,473		49,182		7,080
	691,659		1,050,927		872,381		180,518		799,566
	(2,518)		(2,991)		(17)		(720)		(175)
	(1,596)		(2,043)		(10)		(761)		—
	(1,434,319)		(1,809,594)		(856)		(405,874)		(37)
	(36,094)		(71,351)		—		—		—
	(176,405)		(207,941)		(885)		—		—
	(892,147)		(799,496)		(3,709)		(31,001)		—
	—		—		—		—		—
	(1,851,420)		(1,842,489)		866,904		(257,838)		799,354
	834,372		(2,732,867)		878,377		(208,656)		806,434
	15,477,692		18,210,559		—		806,434		—
$	16,312,064	$	15,477,692	$	878,377	$	597,778	$	806,434

75

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		American Funds Insurance Series Blue Chip Income and Growth Class 2 Division (1)
		2016
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	17,366
	Total realized gains (losses) on investments		1,225
	Change in net unrealized appreciation or depreciation of investments		44,420
	Net gains (losses) from investments		63,011
Payment from affiliate			—
Net increase (decrease) in net assets resulting from operations			63,011
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		1,677,715
	Administration charges		—
	Contingent sales charges		(133)
	Contract terminations		(13,059)
	Death benefit payments		—
	Flexible withdrawal option payments		(3,616)
	Transfers to other contracts		(28,395)
	Annuity payments		—
Increase (decrease) in net assets from policy related transactions			1,632,512
Total increase (decrease)			1,695,523
Net assets at beginning of period			—
Net assets at end of period		$	1,695,523
(1) Commenced operations May 23, 2016. See accompanying notes.

76

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
American Funds Insurance Series Blue Chip Income and Growth Class 4 Division				American Funds Insurance Series Global Small Capitalization Fund Class 2 Division				American Funds Insurance Series Global Small Capitalization Fund Class 4 Division
2016		2015		2016		2015		2016		2015
$	6,193	$	8,702	$	(9,745)	$	(5,696)	$	(4,162)	$	(872)
	10,743		64,708		95,669		12,329		34,475		4,964
	167,824		(124,673)		(78,348)		(83,834)		10,162		(11,033)
	184,760		(51,263)		7,576		(77,201)		40,475		(6,941)
	—		—		—		—		—		—
	184,760		(51,263)		7,576		(77,201)		40,475		(6,941)
	749,169		916,573		317,461		1,081,691		407,165		144,281
	(875)		(616)		—		—		(241)		(106)
	(512)		(33)		(348)		(75)		(123)		(2)
	(272,997)		(3,014)		(82,254)		(43,326)		(65,860)		(199)
	—		(591)		(391)		—		—		—
	(6,368)		(3,300)		(4,369)		(2,772)		(631)		—
	(492,171)		(60,885)		(105,683)		(210,335)		(367,150)		(11,908)
	—		—		—		—		—		—
	(23,754)		848,134		124,416		825,183		(26,840)		132,066
	161,006		796,871		131,992		747,982		13,635		125,125
	900,392		103,521		843,960		95,978		132,990		7,865
$	1,061,398	$	900,392	$	975,952	$	843,960	$	146,625	$	132,990

77

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		American Funds Insurance Series High-Income Bond Class 2 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	59,814	$	17,794
	Total realized gains (losses) on investments		(9,258)		(23,602)
	Change in net unrealized appreciation or depreciation of investments		52,138		(31,252)
	Net gains (losses) from investments		102,694		(37,060)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			102,694		(37,060)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		1,036,274		514,915
	Administration charges		(64)		(6)
	Contingent sales charges		(29)		(33)
	Contract terminations		(27,802)		(29,259)
	Death benefit payments		(1,862)		—
	Flexible withdrawal option payments		(11,801)		(5,380)
	Transfers to other contracts		(141,530)		(290,011)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			853,186		190,226
Total increase (decrease)			955,880		153,166
Net assets at beginning of period			364,164		210,998
Net assets at end of period		$	1,320,044	$	364,164
See accompanying notes.

78

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
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
2016		2015		2016		2015		2016		2015
$	189	$	120	$	(1,650)	$	(1,443)	$	(119)	$	(398)
	4,261		796		13,285		379		611		1
	6,611		(2,576)		(9,308)		(2,464)		(2,138)		(2,825)
	11,061		(1,660)		2,327		(3,528)		(1,646)		(3,222)
	—		—		—		—		—		—
	11,061		(1,660)		2,327		(3,528)		(1,646)		(3,222)
	234,303		94,893		16,255		124,649		8,021		23,207
	(90)		(34)		(290)		(179)		(75)		(8)
	(16)		—		—		(2)		—		(1)
	(8,686)		—		—		(198)		—		(99)
	(3,237)		—		—		—		—		—
	—		—		(200)		—		(100)		—
	(19,909)		(31,072)		(1,972)		(2,236)		(2,316)		(184)
	—		—		—		—		—		—
	202,365		63,787		13,793		122,034		5,530		22,915
	213,426		62,127		16,120		118,506		3,884		19,693
	62,127		—		148,405		29,899		37,589		17,896
$	275,553	$	62,127	$	164,525	$	148,405	$	41,473	$	37,589

79

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		American Funds Insurance Series New World Fund Class 2 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(1,351)	$	(1,791)
	Total realized gains (losses) on investments		(9,071)		(1,639)
	Change in net unrealized appreciation or depreciation of investments		36,070		(18,268)
	Net gains (losses) from investments		25,648		(21,698)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			25,648		(21,698)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		823,198		392,640
	Administration charges		(2)		(2)
	Contingent sales charges		(173)		(139)
	Contract terminations		(21,172)		(15,920)
	Death benefit payments		(404)		—
	Flexible withdrawal option payments		(1,775)		(631)
	Transfers to other contracts		(70,932)		(65,841)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			728,740		310,107
Total increase (decrease)			754,388		288,409
Net assets at beginning of period			440,766		152,357
Net assets at end of period		$	1,195,154	$	440,766
(1) Commenced operations May 18, 2015. See accompanying notes.

80

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
American Funds Insurance Series New World Fund Class 4 Division				Balanced Class 1 Division				BlackRock Global Allocation Class III Division (1)
2016		2015		2016		2015		2016		2015
$	(2,577)	$	(1,336)	$	213,140	$	176,457	$	(6)	$	1,282
	(8,895)		10,712		2,314,189		3,600,707		(7,579)		27,424
	28,452		(34,555)		(1,300,098)		(3,988,979)		45,664		(40,129)
	16,980		(25,179)		1,227,231		(211,815)		38,079		(11,423)
	—		—		—		—		—		—
	16,980		(25,179)		1,227,231		(211,815)		38,079		(11,423)
	33,646		383,239		728,277		1,182,321		490,365		538,180
	(558)		(378)		(12,869)		(10,601)		(16)		(6)
	(6)		—		(2,128)		(3,246)		(106)		(40)
	(3,296)		—		(2,475,191)		(4,255,018)		(12,767)		(4,460)
	—		—		(266,990)		(319,838)		—		—
	(331)		(191)		(516,365)		(632,582)		(10,582)		—
	(111,186)		(15,951)		(949,696)		(738,415)		(31,008)		(5)
	—		—		—		—		—		—
	(81,731)		366,719		(3,494,962)		(4,777,379)		435,886		533,669
	(64,751)		341,540		(2,267,731)		(4,989,194)		473,965		522,246
	393,506		51,966		29,965,069		34,954,263		522,246		—
$	328,755	$	393,506	$	27,697,338	$	29,965,069	$	996,211	$	522,246

81

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		BlackRock iShares Alternative Strategies Class III Division (1)
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	12,293	$	3,163
	Total realized gains (losses) on investments		1,414		(17)
	Change in net unrealized appreciation or depreciation of investments		(13,836)		(5,064)
	Net gains (losses) from investments		(129)		(1,918)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			(129)		(1,918)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		595,410		217,766
	Administration charges		(11)		—
	Contingent sales charges		(49)		(19)
	Contract terminations		(4,246)		(2,163)
	Death benefit payments		(4,124)		—
	Flexible withdrawal option payments		(1,537)		(314)
	Transfers to other contracts		(82,322)		(84,204)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			503,121		131,066
Total increase (decrease)			502,992		129,148
Net assets at beginning of period			129,148		—
Net assets at end of period		$	632,140	$	129,148
(1) Commenced operations May 18, 2015. See accompanying notes.

82

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
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)
2016		2015		2016		2015		2016		2015
$	538	$	898	$	6,677	$	1,610	$	2,580	$	1,500
	(103)		(6)		(357)		30		(1,787)		(200)
	3,229		(2,151)		(12,157)		(3,180)		32,208		(7,191)
	3,664		(1,259)		(5,837)		(1,540)		33,001		(5,891)
	—		—		—		—		—		—
	3,664		(1,259)		(5,837)		(1,540)		33,001		(5,891)
	42,740		61,556		857,756		127,778		367,103		116,848
	—		—		(23)		(39)		(46)		(5)
	—		—		(83)		—		—		—
	—		—		(7,282)		—		—		—
	—		—		—		—		—		—
	—		—		(2,493)		(1,080)		—		—
	(44)		—		(80,468)		(14,365)		(14,170)		—
	—		—		—		—		—		—
	42,696		61,556		767,407		112,294		352,887		116,843
	46,360		60,297		761,570		110,754		385,888		110,952
	60,297		—		110,754		—		110,952		—
$	106,657	$	60,297	$	872,324	$	110,754	$	496,840	$	110,952

83

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		BlackRock Value Opportunities Class III Division (1)
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	—	$	—
	Total realized gains (losses) on investments		1,005		60
	Change in net unrealized appreciation or depreciation of investments		(988)		(75)
	Net gains (losses) from investments		17		(15)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			17		(15)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		30,166		841
	Administration charges		(4)		—
	Contingent sales charges		—		—
	Contract terminations		—		—
	Death benefit payments		—		—
	Flexible withdrawal option payments		—		—
	Transfers to other contracts		(163)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			29,999		841
Total increase (decrease)			30,016		826
Net assets at beginning of period			826		—
Net assets at end of period		$	30,842	$	826
(1) Commenced operations May 18, 2015. See accompanying notes.

84

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
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
2016		2015		2016		2015		2016		2015
$	348	$	(143)	$	(753)	$	(949)	$	(3,114)	$	(4,266)
	(482)		(26)		9,048		2,516		19,000		4,141
	17		(677)		10,527		(10,338)		86,103		(39,192)
	(117)		(846)		18,822		(8,771)		101,989		(39,317)
	—		—		—		—		—		—
	(117)		(846)		18,822		(8,771)		101,989		(39,317)
	8,306		10,391		128,058		94,943		283,427		541,126
	(52)		(19)		(134)		(106)		(530)		(322)
	—		—		(78)		—		(77)		(24)
	—		(18)		(41,860)		—		(41,216)		(2,184)
	—		—		—		—		—		(586)
	—		—		(4,799)		—		(304)		—
	(4,576)		(16)		(47,911)		(4,410)		(72,883)		(54,130)
	—		—		—		—		—		—
	3,678		10,338		33,276		90,427		168,417		483,880
	3,561		9,492		52,098		81,656		270,406		444,563
	14,972		5,480		103,122		21,466		480,283		35,720
$	18,533	$	14,972	$	155,220	$	103,122	$	750,689	$	480,283

85

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		ClearBridge Small Cap Growth Series II Division (1)
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(152)	$	(48)
	Total realized gains (losses) on investments		411		126
	Change in net unrealized appreciation or depreciation of investments		646		(514)
	Net gains (losses) from investments		905		(436)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			905		(436)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		3,712		8,977
	Administration charges		(9)		(5)
	Contingent sales charges		—		—
	Contract terminations		—		—
	Death benefit payments		—		—
	Flexible withdrawal option payments		—		—
	Transfers to other contracts		(551)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			3,152		8,972
Total increase (decrease)			4,057		8,536
Net assets at beginning of period			8,536		—
Net assets at end of period		$	12,593	$	8,536
(1) Commenced operations May 18, 2015. (2) Represented the operations of Bond & Mortgage Securities Class 1 Division until May 21, 2016. See accompanying notes.

86

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Columbia Limited Duration Credit Class 2 Division (1)				Columbia Small Cap Value Class 2 Division (1)				Core Plus Bond Class 1 Division (2)
2016		2015		2016		2015		2016		2015
$	1,108	$	(600)	$	(1,072)	$	(216)	$	2,528,738	$	2,860,680
	(1,283)		(17)		3,586		3,168		854,404		2,799,443
	2,366		(2,769)		37,111		(9,429)		767,565		(8,435,344)
	2,191		(3,386)		39,625		(6,477)		4,150,707		(2,775,221)
	—		—		—		—		—		—
	2,191		(3,386)		39,625		(6,477)		4,150,707		(2,775,221)
	129,765		146,269		165,090		82,607		11,411,351		17,875,923
	(19)		(7)		(56)		(38)		(242,467)		(363,601)
	(583)		(3)		—		—		(75,130)		(96,660)
	(52,963)		(301)		—		—		(12,102,565)		(19,282,067)
	—		—		—		—		(1,473,773)		(1,508,435)
	(440)		(1,320)		—		—		(3,670,043)		(3,963,183)
	(32,815)		(987)		(35,915)		(997)		(11,081,588)		(19,499,104)
	—		—		—		—		—		—
	42,945		143,651		129,119		81,572		(17,234,215)		(26,837,127)
	45,136		140,265		168,744		75,095		(13,083,508)		(29,612,348)
	140,265		—		75,095		—		151,327,795		180,940,143
$	185,401	$	140,265	$	243,839	$	75,095	$	138,244,287	$	151,327,795

87

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Core Plus Bond Class 2 Division (1)(2)
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(98)	$	281
	Total realized gains (losses) on investments		492		(382)
	Change in net unrealized appreciation or depreciation of investments		(3,161)		(227)
	Net gains (losses) from investments		(2,767)		(328)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			(2,767)		(328)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		216,975		39,327
	Administration charges		(52)		(9)
	Contingent sales charges		—		(3)
	Contract terminations		—		(301)
	Death benefit payments		—		—
	Flexible withdrawal option payments		—		—
	Transfers to other contracts		(11,355)		(20,060)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			205,568		18,954
Total increase (decrease)			202,801		18,626
Net assets at beginning of period			18,626		—
Net assets at end of period		$	221,427	$	18,626
(1) Represented the operations of Bond & Mortgage Securities Class 2 Division until May 21, 2016. (2) Commenced operations May 18, 2015. See accompanying notes.

88

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Delaware Limited Term Diversified Income Service Class Division (2)				Delaware Small Cap Value Service Class Division				Deutsche Alternative Asset Allocation Class B Division
2016		2015		2016		2015		2016		2015
$	140	$	(89)	$	(11,144)	$	(10,295)	$	211	$	(255)
	1,527		(1)		65,702		60,296		(137)		(43)
	(4,794)		(1,282)		319,598		(143,899)		1,277		(1,747)
	(3,127)		(1,372)		374,156		(93,898)		1,351		(2,045)
	—		—		—		—		—		—
	(3,127)		(1,372)		374,156		(93,898)		1,351		(2,045)
	1,147,184		230,703		1,141,745		613,946		3,975		43,087
	(44)		(1)		(30)		(5)		(48)		(32)
	(2,028)		—		(814)		(695)		—		—
	(179,817)		—		(75,202)		(88,431)		—		—
	—		—		—		(727)		—		—
	(880)		(2,640)		(8,329)		(2,452)		(1,440)		(720)
	(256,963)		—		(191,968)		(164,705)		(1,673)		—
	—		—		—		—		—		—
	707,452		228,062		865,402		356,931		814		42,335
	704,325		226,690		1,239,558		263,033		2,165		40,290
	226,690		—		1,008,617		745,584		40,290		—
$	931,015	$	226,690	$	2,248,175	$	1,008,617	$	42,455	$	40,290

89

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Deutsche Equity 500 Index Class B2 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	1,792	$	32
	Total realized gains (losses) on investments		39,793		23,042
	Change in net unrealized appreciation or depreciation of investments		34,284		(31,577)
	Net gains (losses) from investments		75,869		(8,503)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			75,869		(8,503)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		337,935		664,544
	Administration charges		(781)		(646)
	Contingent sales charges		(279)		(126)
	Contract terminations		(148,765)		(11,546)
	Death benefit payments		—		—
	Flexible withdrawal option payments		(1,590)		(2,259)
	Transfers to other contracts		(21,497)		(22,263)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			165,023		627,704
Total increase (decrease)			240,892		619,201
Net assets at beginning of period			678,440		59,239
Net assets at end of period		$	919,332	$	678,440
See accompanying notes.

90

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Deutsche Small Mid Cap Value Class B Division				Diversified Balanced Class 2 Division				Diversified Balanced Managed Volatility Class 2 Division
2016		2015		2016		2015		2016		2015
$	(12,467)	$	(11,838)	$	(2,093,248)	$	(4,644,265)	$	(1,132,429)	$	(679,830)
	72,261		68,471		25,523,263		24,947,316		1,490,559		1,263,372
	84,838		(104,085)		32,597,740		(33,963,056)		6,945,344		(2,817,972)
	144,632		(47,452)		56,027,755		(13,660,005)		7,303,474		(2,234,430)
	—		—		—		—		—		—
	144,632		(47,452)		56,027,755		(13,660,005)		7,303,474		(2,234,430)
	301,455		512,154		132,420,776		148,297,223		40,076,309		81,082,062
	(194)		(131)		(8,228,133)		(10,208,600)		(1,323,186)		(1,345,576)
	(230)		(194)		(469,629)		(307,866)		(61,897)		(26,521)
	(23,642)		(22,290)		(40,601,783)		(33,834,764)		(4,851,867)		(2,855,738)
	(12,282)		—		(5,462,618)		(4,339,389)		(649,784)		(159,363)
	(5,620)		(5,528)		(19,057,843)		(15,733,181)		(2,577,154)		(1,724,784)
	(199,880)		(98,976)		(45,863,486)		(50,351,557)		(7,570,438)		(18,902,170)
	—		—		—		—		—		—
	59,607		385,035		12,737,284		33,521,866		23,041,983		56,067,910
	204,239		337,583		68,765,039		19,861,861		30,345,457		53,833,480
	952,631		615,048		1,030,996,862		1,011,135,001		138,377,896		84,544,416
$	1,156,870	$	952,631	$	1,099,761,901	$	1,030,996,862	$	168,723,353	$	138,377,896

91

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Diversified Growth Class 2 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(6,217,015)	$	(12,551,749)
	Total realized gains (losses) on investments		62,576,355		51,530,795
	Change in net unrealized appreciation or depreciation of investments		163,417,887		(82,522,145)
	Net gains (losses) from investments		219,777,227		(43,543,099)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			219,777,227		(43,543,099)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		434,075,589		607,720,734
	Administration charges		(26,730,115)		(31,268,064)
	Contingent sales charges		(1,158,329)		(737,875)
	Contract terminations		(100,595,454)		(82,565,699)
	Death benefit payments		(10,914,082)		(5,252,123)
	Flexible withdrawal option payments		(43,786,714)		(34,611,268)
	Transfers to other contracts		(83,703,198)		(89,103,085)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			167,187,697		364,182,620
Total increase (decrease)			386,964,924		320,639,521
Net assets at beginning of period			3,202,277,009		2,881,637,488
Net assets at end of period		$	3,589,241,933	$	3,202,277,009
See accompanying notes.

92

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Diversified Growth Managed Volatility Class 2 Division				Diversified Income Class 2 Division				Diversified International Class 1 Division
2016		2015		2016		2015		2016		2015
$	(2,385,120)	$	(801,008)	$	(943,501)	$	(1,185,330)	$	1,261,720	$	1,743,240
	2,893,813		2,388,724		4,677,139		4,025,045		3,957,572		2,833,709
	16,589,135		(5,771,107)		5,024,183		(5,329,705)		(6,592,841)		(6,432,512)
	17,097,828		(4,183,391)		8,757,821		(2,489,990)		(1,373,549)		(1,855,563)
	—		—		—		—		—		—
	17,097,828		(4,183,391)		8,757,821		(2,489,990)		(1,373,549)		(1,855,563)
	68,160,816		130,875,606		93,616,168		83,072,684		7,001,303		14,634,219
	(2,280,562)		(2,220,053)		(1,765,980)		(1,863,532)		(77,340)		(111,940)
	(103,683)		(35,183)		(159,272)		(106,534)		(63,815)		(62,004)
	(6,258,029)		(3,695,433)		(12,828,604)		(11,739,459)		(13,035,888)		(16,496,579)
	(949,384)		(713,173)		(129,478)		(771,288)		(831,765)		(831,074)
	(2,709,192)		(1,886,963)		(3,721,060)		(2,907,293)		(1,629,403)		(1,662,894)
	(11,986,760)		(17,124,645)		(28,537,204)		(32,923,101)		(8,027,846)		(11,604,130)
	—		—		—		—		—		—
	43,873,206		105,200,156		46,474,570		32,761,477		(16,664,754)		(16,134,402)
	60,971,034		101,016,765		55,232,391		30,271,487		(18,038,303)		(17,989,965)
	252,642,046		151,625,281		198,790,685		168,519,198		136,018,971		154,008,936
$	313,613,080	$	252,642,046	$	254,023,076	$	198,790,685	$	117,980,668	$	136,018,971

93

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Diversified International Class 2 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	1,842	$	2,903
	Total realized gains (losses) on investments		(1,609)		197
	Change in net unrealized appreciation or depreciation of investments		(1,448)		(17,869)
	Net gains (losses) from investments		(1,215)		(14,769)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			(1,215)		(14,769)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		17,737		222,972
	Administration charges		(316)		(208)
	Contingent sales charges		(50)		(95)
	Contract terminations		(26,605)		(8,764)
	Death benefit payments		—		—
	Flexible withdrawal option payments		—		—
	Transfers to other contracts		(2,299)		(14,946)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(11,533)		198,959
Total increase (decrease)			(12,748)		184,190
Net assets at beginning of period			210,196		26,006
Net assets at end of period		$	197,448	$	210,196
(1) Commenced operations May 18, 2015. See accompanying notes.

94

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Dreyfus IP MidCap Stock Service Shares Division (1)				Dreyfus IP Technology Growth Service Shares Division				Equity Income Class 1 Division
2016		2015		2016		2015		2016		2015
$	(1,366)	$	(142)	$	(94,571)	$	(85,228)	$	2,583,057	$	2,327,082
	20,692		(4)		528,890		752,088		20,702,273		18,361,241
	7,218		(101)		(249,360)		(450,567)		3,016,984		(32,719,713)
	26,544		(247)		184,959		216,293		26,302,314		(12,031,390)
	—		—		—		—		—		—
	26,544		(247)		184,959		216,293		26,302,314		(12,031,390)
	367,755		44,969		1,550,335		2,001,336		12,154,857		26,323,857
	(103)		(19)		(450)		(576)		(518,145)		(795,423)
	(98)		—		(6,064)		(2,512)		(153,660)		(180,753)
	(52,398)		—		(529,837)		(283,401)		(17,901,867)		(24,867,854)
	—		—		(2,801)		(56,253)		(1,616,359)		(2,019,345)
	—		—		(51,908)		(49,500)		(5,614,159)		(5,951,129)
	(280,261)		(1,028)		(884,935)		(660,895)		(21,525,868)		(31,771,106)
	—		—		—		—		—		—
	34,895		43,922		74,340		948,199		(35,175,201)		(39,261,753)
	61,439		43,675		259,299		1,164,492		(8,872,887)		(51,293,143)
	43,675		—		6,205,084		5,040,592		207,673,737		258,966,880
$	105,114	$	43,675	$	6,464,383	$	6,205,084	$	198,800,850	$	207,673,737

95

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Equity Income Class 2 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	14,702	$	14,151
	Total realized gains (losses) on investments		53,650		(706)
	Change in net unrealized appreciation or depreciation of investments		76,221		(73,132)
	Net gains (losses) from investments		144,573		(59,687)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			144,573		(59,687)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		345,840		1,035,730
	Administration charges		(1,020)		(867)
	Contingent sales charges		(172)		(274)
	Contract terminations		(91,541)		(25,196)
	Death benefit payments		—		(599)
	Flexible withdrawal option payments		(12,885)		(9,470)
	Transfers to other contracts		(127,882)		(14,753)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			112,340		984,571
Total increase (decrease)			256,913		924,884
Net assets at beginning of period			1,006,029		81,145
Net assets at end of period		$	1,262,942	$	1,006,029
See accompanying notes.

96

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Fidelity VIP Contrafund Service Class Division				Fidelity VIP Contrafund Service Class 2 Division				Fidelity VIP Equity-Income Service Class 2 Division
2016		2015		2016		2015		2016		2015
$	(236,857)	$	(186,829)	$	(400,870)	$	(357,371)	$	215,888	$	515,186
	4,342,169		5,952,857		6,917,824		6,331,549		1,765,302		3,827,546
	(1,686,160)		(6,027,355)		(3,667,574)		(6,432,389)		2,603,294		(6,251,868)
	2,419,152		(261,327)		2,849,380		(458,211)		4,584,484		(1,909,136)
	—		—		—		—		—		—
	2,419,152		(261,327)		2,849,380		(458,211)		4,584,484		(1,909,136)
	1,015,304		1,597,789		5,034,122		10,439,325		2,140,402		2,997,713
	(6,704)		(8,542)		(71,995)		(109,943)		(4,595)		(5,586)
	(3,835)		(4,817)		(49,879)		(45,617)		(20,786)		(16,443)
	(3,672,589)		(4,291,254)		(4,538,646)		(5,136,128)		(3,990,962)		(4,446,515)
	(95,353)		(157,093)		(191,142)		(397,888)		(159,385)		(353,785)
	(511,071)		(554,040)		(748,048)		(844,779)		(363,821)		(434,131)
	(1,923,053)		(2,289,887)		(4,884,812)		(7,778,786)		(2,027,297)		(1,903,882)
	—		—		—		—		—		—
	(5,197,301)		(5,707,844)		(5,450,400)		(3,873,816)		(4,426,444)		(4,162,629)
	(2,778,149)		(5,969,171)		(2,601,020)		(4,332,027)		158,040		(6,071,765)
	42,170,547		48,139,718		50,809,499		55,141,526		31,471,745		37,543,510
$	39,392,398	$	42,170,547	$	48,208,479	$	50,809,499	$	31,629,785	$	31,471,745

97

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Fidelity VIP Government Money Market Initial Class Division (1)
		2016
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(364,883)
	Total realized gains (losses) on investments		—
	Change in net unrealized appreciation or depreciation of investments		—
	Net gains (losses) from investments		(364,883)
Payment from affiliate			—
Net increase (decrease) in net assets resulting from operations			(364,883)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		77,663,254
	Administration charges		(25,563)
	Contingent sales charges		(38,033)
	Contract terminations		(6,472,581)
	Death benefit payments		(233,976)
	Flexible withdrawal option payments		(708,242)
	Transfers to other contracts		(22,369,989)
	Annuity payments		—
Increase (decrease) in net assets from policy related transactions			47,814,870
Total increase (decrease)			47,449,987
Net assets at beginning of period			—
Net assets at end of period		$	47,449,987
(1) Commenced operations February 8, 2016. See accompanying notes.

98

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Fidelity VIP Government Money Market Service Class Division (1)		Fidelity VIP Growth Service Class Division				Fidelity VIP Growth Service Class 2 Division
2016		2016		2015		2016		2015
$	(27,445)	$	(166,478)	$	(169,074)	$	(135,354)	$	(144,277)
	1		2,018,084		1,346,077		1,678,730		1,183,686
	—		(1,987,894)		(336,213)		(1,648,216)		(541,150)
	(27,444)		(136,288)		840,790		(104,840)		498,259
	—		—		—		—		—
	(27,444)		(136,288)		840,790		(104,840)		498,259
	7,084,731		699,700		786,926		1,472,598		2,931,834
	(1,065)		(2,288)		(3,401)		(1,037)		(1,271)
	(542)		(1,836)		(1,636)		(9,324)		(8,880)
	(289,060)		(1,758,421)		(1,457,604)		(814,732)		(1,001,787)
	—		(79,249)		(93,984)		(46,249)		(34,768)
	(2)		(125,211)		(142,151)		(56,569)		(51,248)
	(2,901,863)		(810,253)		(920,669)		(1,564,534)		(1,788,406)
	—		—		—		—		—
	3,892,199		(2,077,558)		(1,832,519)		(1,019,847)		45,474
	3,864,755		(2,213,846)		(991,729)		(1,124,687)		543,733
	—		14,192,952		15,184,681		9,985,318		9,441,585
$	3,864,755	$	11,979,106	$	14,192,952	$	8,860,631	$	9,985,318

99

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Fidelity VIP Mid Cap Service Class Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(1,639)	$	(396)
	Total realized gains (losses) on investments		3,654		8,378
	Change in net unrealized appreciation or depreciation of investments		63,348		(9,713)
	Net gains (losses) from investments		65,363		(1,731)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			65,363		(1,730)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		428,662		—
	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			428,662		—
Total increase (decrease)			494,025		(1,730)
Net assets at beginning of period			69,447		71,177
Net assets at end of period		$	563,472	$	69,447
See accompanying notes.

100

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Fidelity VIP Mid Cap Service Class 2 Division				Fidelity VIP Overseas Service Class 2 Division				Franklin Global Real Estate VIP Class 2 Division
2016		2015		2016		2015		2016		2015
$	(227,238)	$	(230,201)	$	(71,305)	$	(140,166)	$	(727)	$	8,813
	1,329,970		2,522,045		1,081,611		3,636,125		1,124		(3,729)
	984,040		(2,950,636)		(3,010,806)		(2,528,939)		(6,874)		(16,233)
	2,086,772		(658,792)		(2,000,500)		967,020		(6,477)		(11,149)
	—		—		—		—		—		—
	2,086,772		(658,792)		(2,000,500)		967,020		(6,477)		(11,149)
	4,075,097		5,265,430		4,799,820		6,100,177		212,249		522,134
	(2,504)		(2,071)		(83,811)		(131,466)		(482)		(365)
	(15,746)		(13,152)		(29,831)		(35,886)		(83)		(87)
	(1,417,715)		(1,481,963)		(2,676,594)		(4,051,999)		(20,222)		(8,410)
	(35,663)		(109,265)		(201,398)		(287,764)		—		—
	(122,367)		(129,565)		(771,973)		(807,640)		(196)		—
	(2,494,883)		(1,559,897)		(4,199,982)		(8,016,886)		(68,991)		(46,920)
	—		—		—		—		—		—
	(13,781)		1,969,517		(3,163,769)		(7,231,464)		122,275		466,352
	2,072,991		1,310,725		(5,164,269)		(6,264,444)		115,798		455,203
	19,266,260		17,955,535		31,476,924		37,741,368		496,713		41,510
$	21,339,251	$	19,266,260	$	26,312,655	$	31,476,924	$	612,511	$	496,713

101

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Franklin Rising Dividends VIP Class 4 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(335)	$	783
	Total realized gains (losses) on investments		40,605		35,166
	Change in net unrealized appreciation or depreciation of investments		36,118		(53,955)
	Net gains (losses) from investments		76,388		(18,006)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			76,388		(18,006)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		374,688		443,109
	Administration charges		(679)		(481)
	Contingent sales charges		(122)		(14)
	Contract terminations		(65,351)		(1,254)
	Death benefit payments		—		(299)
	Flexible withdrawal option payments		(5,369)		(4,518)
	Transfers to other contracts		(41,884)		(20,001)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			261,283		416,542
Total increase (decrease)			337,671		398,536
Net assets at beginning of period			469,916		71,380
Net assets at end of period		$	807,587	$	469,916
See accompanying notes.

102

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
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
2016		2015		2016		2015		2016		2015
$	(26,222)	$	(28,575)	$	(16,557)	$	(185,072)	$	(1,127)	$	(3,661)
	481,751		591,494		193,924		1,430,586		(34,465)		36,133
	520,702		(872,202)		1,387,312		(3,039,327)		88,776		(85,686)
	976,231		(309,283)		1,564,679		(1,793,813)		53,184		(53,214)
	—		—		—		—		—		—
	976,231		(309,283)		1,564,679		(1,793,813)		53,184		(53,214)
	2,056,174		783,593		1,310,201		3,023,991		100,319		526,409
	(184)		(5)		(762)		(1,187)		(267)		(245)
	(1,383)		(2,189)		(19,263)		(19,913)		(161)		(193)
	(147,666)		(285,364)		(1,687,858)		(2,259,462)		(85,986)		(17,719)
	(17,439)		(29,378)		(71,312)		(60,543)		—		(292)
	(22,587)		(13,711)		(111,099)		(144,313)		—		—
	(565,950)		(468,763)		(1,669,821)		(2,385,747)		(77,413)		(3,262)
	—		—		—		—		—		—
	1,300,965		(15,817)		(2,249,914)		(1,847,174)		(63,508)		504,698
	2,277,196		(325,100)		(685,235)		(3,640,987)		(10,324)		451,484
	3,252,241		3,577,341		14,901,640		18,542,627		468,946		17,462
$	5,529,437	$	3,252,241	$	14,216,405	$	14,901,640	$	458,622	$	468,946

103

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division (1)
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(122)	$	196
	Total realized gains (losses) on investments		(418)		18
	Change in net unrealized appreciation or depreciation of investments		534		(535)
	Net gains (losses) from investments		(6)		(321)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			(6)		(321)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		608		12,500
	Administration charges		—		—
	Contingent sales charges		(20)		—
	Contract terminations		(10,621)		—
	Death benefit payments		—		—
	Flexible withdrawal option payments		(1,600)		—
	Transfers to other contracts		(540)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(12,173)		12,500
Total increase (decrease)			(12,179)		12,179
Net assets at beginning of period			12,179		—
Net assets at end of period		$	—	$	12,179
(1) Commenced operations May 18, 2015. See accompanying notes.

104

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
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
2016		2015		2016		2015		2016		2015
$	(16,236)	$	(79,957)	$	(1,943)	$	(781)	$	2,544,025	$	2,516,719
	185,703		1,129,832		15,911		13,369		(422,316)		(251,780)
	1,052,343		(1,288,027)		32,643		(20,751)		(1,398,353)		(2,913,168)
	1,221,810		(238,152)		46,611		(8,163)		723,356		(648,229)
	—		—		—		—		—		—
	1,221,810		(238,152)		46,611		(8,163)		723,356		(648,229)
	718,509		1,050,298		222,347		113,930		12,945,849		12,419,375
	(97)		(238)		(68)		(74)		(128,846)		(191,449)
	(5,226)		(6,889)		(8)		—		(50,828)		(62,235)
	(460,589)		(778,536)		(4,268)		—		(10,834,964)		(14,653,632)
	(29,277)		(94,178)		—		—		(1,319,167)		(1,800,129)
	(45,462)		(47,557)		—		—		(2,734,786)		(3,114,987)
	(674,757)		(669,514)		(272,750)		(3,749)		(10,230,665)		(11,643,312)
	—		—		—		—		—		—
	(496,899)		(546,614)		(54,747)		110,107		(12,353,407)		(19,046,369)
	724,911		(784,766)		(8,136)		101,944		(11,630,051)		(19,694,598)
	6,193,049		6,977,815		107,122		5,178		121,664,052		141,358,650
$	6,917,960	$	6,193,049	$	98,986	$	107,122	$	110,034,001	$	121,664,052

105

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Government & High Quality Bond Class 2 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	36,290	$	21,093
	Total realized gains (losses) on investments		(15,444)		733
	Change in net unrealized appreciation or depreciation of investments		(21,520)		(34,980)
	Net gains (losses) from investments		(674)		(13,154)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			(674)		(13,154)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		840,772		1,056,425
	Administration charges		(1,444)		(964)
	Contingent sales charges		(222)		(160)
	Contract terminations		(118,258)		(14,662)
	Death benefit payments		—		—
	Flexible withdrawal option payments		(20,711)		(3,616)
	Transfers to other contracts		(359,710)		(41,238)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			340,427		995,785
Total increase (decrease)			339,753		982,631
Net assets at beginning of period			1,002,555		19,924
Net assets at end of period		$	1,342,308	$	1,002,555
See accompanying notes.

106

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Guggenheim Floating Rate Strategies Series F Division				Guggenheim Investments Global Managed Futures Strategy Division				Guggenheim Investments Long Short Equity Division
2016		2015		2016		2015		2016		2015
$	40,136	$	4,859	$	2,620	$	1,606	$	(1,954)	$	(1,323)
	(2,717)		(4,354)		(9,626)		2,568		(2,657)		348
	30,925		(20,662)		(14,440)		(9,969)		2,294		(453)
	68,344		(20,157)		(21,446)		(5,795)		(2,317)		(1,428)
	—		—		—		—		—		—
	68,344		(20,157)		(21,446)		(5,795)		(2,317)		(1,428)
	936,451		1,035,121		95,911		110,546		53,783		148,724
	(183)		(73)		(103)		(129)		(86)		(38)
	(398)		(649)		(36)		—		(205)		(1)
	(39,333)		(73,160)		(17,963)		—		(34,024)		(99)
	—		—		—		—		—		—
	(5,706)		(1,804)		(622)		(317)		(349)		—
	(148,485)		(164,975)		(26,387)		(11,578)		(67,201)		(12,663)
	—		—		—		—		—		—
	742,346		794,460		50,800		98,522		(48,082)		135,923
	810,690		774,303		29,354		92,727		(50,399)		134,495
	787,211		12,908		114,058		21,331		177,354		42,859
$	1,597,901	$	787,211	$	143,412	$	114,058	$	126,955	$	177,354

107

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Guggenheim Investments Multi-Hedge Strategies Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(2,230)	$	(370)
	Total realized gains (losses) on investments		(100)		(84)
	Change in net unrealized appreciation or depreciation of investments		(642)		(142)
	Net gains (losses) from investments		(2,972)		(596)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			(2,972)		(596)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		388,569		95,362
	Administration charges		(77)		(39)
	Contingent sales charges		(30)		(1)
	Contract terminations		(2,883)		(99)
	Death benefit payments		—		—
	Flexible withdrawal option payments		(628)		—
	Transfers to other contracts		(31,656)		(14,696)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			353,295		80,527
Total increase (decrease)			350,323		79,931
Net assets at beginning of period			87,800		7,869
Net assets at end of period		$	438,123	$	87,800
(1) Commenced operations May 18, 2015. See accompanying notes.

108

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Income Class 1 Division (1)				Income Class 2 Division (1)				International Emerging Markets Class 1 Division
2016		2015		2016		2015		2016		2015
$	80,325	$	7,307	$	24,285	$	617	$	(106,566)	$	156,207
	(8,309)		(1,904)		2,263		(825)		(2,157,544)		(1,561,454)
	(40,355)		(14,624)		(12,937)		(137)		6,218,114		(7,499,679)
	31,661		(9,221)		13,611		(345)		3,954,004		(8,904,926)
	—		—		—		—		—		—
	31,661		(9,221)		13,611		(345)		3,954,004		(8,904,926)
	4,564,533		605,521		808,880		28,432		5,631,951		9,844,478
	(30)		—		(167)		—		(6,073)		(7,754)
	(469)		(2)		(122)		—		(33,604)		(35,354)
	(45,957)		(241)		(65,141)		—		(4,908,619)		(6,671,281)
	—		—		—		—		(149,899)		(244,634)
	(15,251)		(4,267)		—		—		(401,324)		(478,002)
	(447,260)		(9,675)		(328,597)		(10,822)		(5,325,111)		(7,092,429)
	—		—		—		—		—		—
	4,055,566		591,336		414,853		17,610		(5,192,679)		(4,684,976)
	4,087,227		582,115		428,464		17,265		(1,238,675)		(13,589,902)
	582,115		—		17,265		—		50,664,749		64,254,651
$	4,669,342	$	582,115	$	445,729	$	17,265	$	49,426,074	$	50,664,749

109

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		International Emerging Markets Class 2 Division (1)
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(83)	$	25
	Total realized gains (losses) on investments		(370)		(23)
	Change in net unrealized appreciation or depreciation of investments		4,581		(2,729)
	Net gains (losses) from investments		4,128		(2,727)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			4,128		(2,727)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		80,229		35,857
	Administration charges		(15)		(7)
	Contingent sales charges		(1)		—
	Contract terminations		(285)		—
	Death benefit payments		—		—
	Flexible withdrawal option payments		—		—
	Transfers to other contracts		(1,927)		—
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			78,001		35,850
Total increase (decrease)			82,129		33,123
Net assets at beginning of period			33,123		—
Net assets at end of period		$	115,252	$	33,123
(1) Commenced operations May 18, 2015. See accompanying notes.

110

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Invesco American Franchise Series I Division				Invesco Balanced-Risk Allocation Series II Division				Invesco Core Equity Series I Division
2016		2015		2016		2015		2016		2015
$	(51,809)	$	(58,372)	$	(2,252)	$	5,380	$	(95,527)	$	(38,679)
	606,828		254,661		(8,035)		16,266		1,868,642		2,966,757
	(534,066)		(24,532)		27,433		(37,280)		(302,595)		(4,292,405)
	20,953		171,757		17,146		(15,634)		1,470,520		(1,364,327)
	—		—		—		—		—		—
	20,953		171,757		17,146		(15,634)		1,470,520		(1,364,327)
	227,267		292,097		38,699		207,357		269,066		759,713
	(792)		(908)		(202)		(124)		(2,576)		(3,355)
	(342)		(544)		(38)		—		(1,653)		(1,906)
	(327,484)		(484,740)		(20,247)		—		(1,582,706)		(1,697,944)
	(39,460)		(29,979)		(3,241)		—		(123,721)		(139,339)
	(49,134)		(49,918)		—		—		(257,193)		(294,518)
	(322,127)		(136,045)		(20,453)		(323)		(691,778)		(935,226)
	—		—		—		—		—		—
	(512,072)		(410,037)		(5,482)		206,910		(2,390,561)		(2,312,575)
	(491,119)		(238,280)		11,664		191,276		(920,041)		(3,676,902)
	4,368,724		4,607,004		191,276		—		17,819,731		21,496,633
$	3,877,605	$	4,368,724	$	202,940	$	191,276	$	16,899,690	$	17,819,731

111

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Invesco Global Health Care Series I Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(108,354)	$	(150,654)
	Total realized gains (losses) on investments		2,185,655		2,200,295
	Change in net unrealized appreciation or depreciation of investments		(3,382,595)		(1,850,670)
	Net gains (losses) from investments		(1,305,294)		198,971
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			(1,305,294)		198,971
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		960,088		2,342,510
	Administration charges		(1,431)		(2,472)
	Contingent sales charges		(965)		(1,367)
	Contract terminations		(890,867)		(1,218,076)
	Death benefit payments		(7,403)		(116,359)
	Flexible withdrawal option payments		(118,787)		(165,323)
	Transfers to other contracts		(1,721,008)		(1,392,953)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(1,780,373)		(554,040)
Total increase (decrease)			(3,085,667)		(355,069)
Net assets at beginning of period			10,562,192		10,917,261
Net assets at end of period		$	7,476,525	$	10,562,192
See accompanying notes.

112

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Invesco Global Health Care Series II Division				Invesco International Growth Series I Division				Invesco International Growth Series II Division
2016		2015		2016		2015		2016		2015
$	(12,544)	$	(6,549)	$	(6,164)	$	4,504	$	(95)	$	1,891
	(44,426)		66,391		134,570		281,670		(6,563)		467
	(24,204)		(110,805)		(308,118)		(689,168)		(1,775)		(32,194)
	(81,174)		(50,963)		(179,712)		(402,994)		(8,433)		(29,836)
	—		—		—		—		—		—
	(81,174)		(50,963)		(179,712)		(402,994)		(8,433)		(29,836)
	644,324		922,960		1,255,781		2,317,822		112,664		439,861
	(1,130)		(477)		(14,193)		(20,401)		(330)		(285)
	(174)		(244)		(5,861)		(5,114)		(57)		(10)
	(92,631)		(22,419)		(512,127)		(576,983)		(30,326)		(882)
	—		—		—		(68,389)		—		—
	(2,472)		(1,607)		(90,171)		(86,275)		(1,211)		(191)
	(518,881)		(104,431)		(1,142,086)		(1,422,431)		(83,227)		(12,018)
	—		—		—		—		—		—
	29,036		793,782		(508,657)		138,229		(2,487)		426,475
	(52,138)		742,819		(688,369)		(264,765)		(10,920)		396,639
	814,219		71,400		10,160,725		10,425,490		428,869		32,230
$	762,081	$	814,219	$	9,472,356	$	10,160,725	$	417,949	$	428,869

113

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Invesco Mid Cap Growth Series I Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(17,252)	$	(20,666)
	Total realized gains (losses) on investments		707,513		482,359
	Change in net unrealized appreciation or depreciation of investments		(712,657)		(459,061)
	Net gains (losses) from investments		(22,396)		2,632
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			(22,396)		2,632
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		116,897		459,853
	Administration charges		(190)		(289)
	Contingent sales charges		(179)		(222)
	Contract terminations		(171,013)		(197,600)
	Death benefit payments		(7,066)		(7,745)
	Flexible withdrawal option payments		(18,254)		(20,226)
	Transfers to other contracts		(390,288)		(195,687)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(470,093)		38,084
Total increase (decrease)			(492,489)		40,716
Net assets at beginning of period			1,594,437		1,553,721
Net assets at end of period		$	1,101,948	$	1,594,437
See accompanying notes.

114

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Invesco Small Cap Equity Series I Division				Invesco Technology Series I Division				Invesco Value Opportunities Series I Division
2016		2015		2016		2015		2016		2015
$	(107,865)	$	(127,287)	$	(38,414)	$	(46,386)	$	(44,844)	$	55,969
	480,442		2,016,048		238,954		640,685		1,421,247		718,631
	369,136		(2,480,337)		(293,796)		(412,929)		(698,104)		(1,361,289)
	741,713		(591,576)		(93,256)		181,370		678,299		(586,689)
	—		—		—		—		—		—
	741,713		(591,576)		(93,256)		181,370		678,299		(586,689)
	693,365		1,413,906		254,175		372,266		566,629		920,508
	(6,994)		(10,113)		(184)		(244)		(11,622)		(16,359)
	(4,767)		(4,703)		(353)		(441)		(4,890)		(2,599)
	(632,953)		(840,380)		(337,928)		(393,113)		(427,264)		(293,189)
	(46,030)		(39,310)		(4,743)		(129,071)		(20,660)		(86,354)
	(94,515)		(98,534)		(33,569)		(36,384)		(73,940)		(64,689)
	(877,838)		(1,228,625)		(546,756)		(314,437)		(593,505)		(772,885)
	—		—		—		—		—		—
	(969,732)		(807,759)		(669,358)		(501,424)		(565,252)		(315,567)
	(228,019)		(1,399,335)		(762,614)		(320,054)		113,047		(902,256)
	7,927,985		9,327,320		3,452,392		3,772,446		4,445,303		5,347,559
$	7,699,966	$	7,927,985	$	2,689,778	$	3,452,392	$	4,558,350	$	4,445,303

115

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Janus Aspen Enterprise Service Shares Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(50,529)	$	(51,071)
	Total realized gains (losses) on investments		1,389,778		1,699,557
	Change in net unrealized appreciation or depreciation of investments		(470,216)		(1,403,548)
	Net gains (losses) from investments		869,033		244,938
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			869,033		244,938
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		513,772		463,698
	Administration charges		(2,549)		(2,764)
	Contingent sales charges		(913)		(959)
	Contract terminations		(874,415)		(854,388)
	Death benefit payments		(20,601)		(61,729)
	Flexible withdrawal option payments		(60,097)		(60,274)
	Transfers to other contracts		(522,172)		(437,253)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(966,975)		(953,669)
Total increase (decrease)			(97,942)		(708,731)
Net assets at beginning of period			8,794,398		9,503,129
Net assets at end of period		$	8,696,456	$	8,794,398
See accompanying notes.

116

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Janus Aspen Flexible Bond Service Shares Division				LargeCap Growth Class 1 Division				LargeCap Growth Class 2 Division
2016		2015		2016		2015		2016		2015
$	17,893	$	6,089	$	(437,826)	$	(589,322)	$	(5,089)	$	(3,338)
	(2,026)		2,330		2,836,336		3,556,456		(13,002)		1,311
	(39,047)		(22,250)		(5,445,756)		(1,049,459)		(5,229)		755
	(23,180)		(13,831)		(3,047,246)		1,917,675		(23,320)		(1,272)
	—		—		—		—		—		—
	(23,180)		(13,831)		(3,047,246)		1,917,675		(23,320)		(1,272)
	1,409,114		754,108		3,153,392		5,779,961		361,389		488,375
	(597)		(599)		(29,896)		(37,237)		(397)		(277)
	(194)		(54)		(18,266)		(19,082)		(380)		(17)
	(95,375)		(4,931)		(5,859,745)		(7,704,396)		(202,634)		(1,595)
	(3,184)		(292)		(412,469)		(455,041)		—		—
	(4,108)		(1,151)		(601,898)		(665,528)		(1,910)		(633)
	(145,591)		(9,653)		(2,405,065)		(2,742,766)		(267,460)		(48,488)
	—		—		—		—		—		—
	1,160,065		737,428		(6,173,947)		(5,844,089)		(111,392)		437,365
	1,136,885		723,597		(9,221,193)		(3,926,414)		(134,712)		436,093
	796,255		72,658		49,543,081		53,469,495		442,067		5,974
$	1,933,140	$	796,255	$	40,321,888	$	49,543,081	$	307,355	$	442,067

117

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		LargeCap Growth I Class 1 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(1,281,333)	$	(1,178,721)
	Total realized gains (losses) on investments		11,991,263		21,613,871
	Change in net unrealized appreciation or depreciation of investments		(10,989,531)		(13,707,976)
	Net gains (losses) from investments		(279,601)		6,727,174
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			(279,601)		6,727,174
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		4,625,058		5,819,047
	Administration charges		(27,091)		(32,264)
	Contingent sales charges		(22,438)		(22,483)
	Contract terminations		(8,379,317)		(8,729,110)
	Death benefit payments		(874,187)		(1,095,484)
	Flexible withdrawal option payments		(988,357)		(1,046,816)
	Transfers to other contracts		(5,175,177)		(5,203,875)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(10,841,509)		(10,310,985)
Total increase (decrease)			(11,121,110)		(3,583,811)
Net assets at beginning of period			105,641,855		109,225,666
Net assets at end of period		$	94,520,745	$	105,641,855
(1) Commenced operations May 18, 2015. See accompanying notes.

118

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
LargeCap Growth I Class 2 Division (1)				LargeCap S&P 500 Index Class 1 Division				LargeCap S&P 500 Index Class 2 Division (1)
2016		2015		2016		2015		2016		2015
$	(4,186)	$	(1,200)	$	313,646	$	101,428	$	3,011	$	405
	(45,672)		58,885		8,550,924		8,876,654		17,020		710
	63,377		(69,012)		(188,275)		(9,066,908)		23,392		(2,328)
	13,519		(11,327)		8,676,295		(88,826)		43,423		(1,213)
	—		—		—		—		—		—
	13,519		(11,327)		8,676,295		(88,826)		43,423		(1,213)
	399,572		502,321		8,574,568		12,367,727		726,822		154,007
	(136)		(40)		(46,340)		(67,555)		(275)		(43)
	(19)		—		(39,864)		(45,950)		(191)		—
	(9,938)		—		(7,620,120)		(10,132,170)		(101,879)		—
	—		—		(788,537)		(511,844)		—		—
	(232)		—		(1,209,170)		(1,340,338)		(877)		—
	(766,594)		—		(6,993,776)		(10,227,245)		(52,034)		(1,763)
	—		—		—		—		—		—
	(377,347)		502,281		(8,123,239)		(9,957,375)		571,566		152,201
	(363,828)		490,954		553,056		(10,046,201)		614,989		150,988
	490,954		—		92,317,286		102,363,487		150,988		—
$	127,126	$	490,954	$	92,870,342	$	92,317,286	$	765,977	$	150,988

119

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		LargeCap Value Class 1 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	512,620	$	355,943
	Total realized gains (losses) on investments		2,124,394		11,426,987
	Change in net unrealized appreciation or depreciation of investments		2,046,436		(13,740,865)
	Net gains (losses) from investments		4,683,450		(1,957,935)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			4,683,450		(1,957,935)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		3,914,255		5,630,214
	Administration charges		(47,430)		(67,653)
	Contingent sales charges		(26,555)		(21,751)
	Contract terminations		(8,144,463)		(8,906,081)
	Death benefit payments		(1,079,842)		(1,048,917)
	Flexible withdrawal option payments		(1,090,972)		(1,260,641)
	Transfers to other contracts		(2,926,955)		(4,629,833)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(9,401,962)		(10,304,662)
Total increase (decrease)			(4,718,512)		(12,262,597)
Net assets at beginning of period			79,222,760		91,485,357
Net assets at end of period		$	74,504,248	$	79,222,760
(1) Commenced operations May 18, 2015. (2) Represented the operations of MFS VIT New Discovery Service Class Division until May 21, 2016. See accompanying notes.

120

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
LargeCap Value Class 2 Division (1)				MFS International Value Service Class Division				MFS New Discovery Service Class Division (2)
2016		2015		2016		2015		2016		2015
$	35	$	11	$	1,128	$	5,889	$	(14,581)	$	(16,025)
	377		486		75,712		7,439		(86,098)		(39,188)
	1,656		(352)		(3,909)		(16,783)		141,978		4,980
	2,068		145		72,931		(3,455)		41,299		(50,233)
	—		—		—		—		—		—
	2,068		145		72,931		(3,455)		41,299		(50,233)
	43,482		10,225		2,655,953		1,634,129		234,923		703,477
	(26)		(9)		(613)		(391)		(89)		(41)
	—		—		(224)		(251)		(411)		(203)
	(179)		—		(43,572)		(27,121)		(72,390)		(38,286)
	—		—		—		—		(11,065)		—
	—		—		(20,711)		(5,694)		(13,223)		(10,169)
	(83)		—		(919,373)		(94,948)		(401,098)		(294,991)
	—		—		—		—		—		—
	43,194		10,216		1,671,460		1,505,724		(263,353)		359,787
	45,262		10,361		1,744,391		1,502,269		(222,054)		309,554
	10,361		—		1,563,353		61,084		1,253,361		943,807
$	55,623	$	10,361	$	3,307,744	$	1,563,353	$	1,031,307	$	1,253,361

121

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		MFS Utilities Service Class Division (1)
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	265,030	$	320,869
	Total realized gains (losses) on investments		(74,483)		1,064,442
	Change in net unrealized appreciation or depreciation of investments		805,522		(3,494,394)
	Net gains (losses) from investments		996,069		(2,109,083)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			996,069		(2,109,083)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		2,685,902		3,716,029
	Administration charges		(1,401)		(940)
	Contingent sales charges		(9,677)		(5,514)
	Contract terminations		(1,073,751)		(616,234)
	Death benefit payments		(13,740)		(60,712)
	Flexible withdrawal option payments		(86,362)		(84,001)
	Transfers to other contracts		(1,565,712)		(2,122,826)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(64,741)		825,802
Total increase (decrease)			931,328		(1,283,281)
Net assets at beginning of period			10,898,121		12,181,402
Net assets at end of period		$	11,829,449	$	10,898,121
(1) Represented the operations of MFS VIT Utilities Service Class Division until May 21, 2016. (2) Represented the operations of MFS VIT Value Service Class Division until May 21, 2016. (3) Commenced operations May 23, 2016. See accompanying notes.

122

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
MFS Value Service Class Division (2)				MidCap Class 1 Division				Multi-Asset Income Class 1 Division (3)
2016		2015		2016		2015		2016
$	18,843	$	32,066	$	(2,948,315)	$	(3,081,141)	$	(618)
	700,798		474,383		76,313,465		65,682,724		(74)
	(77,828)		(632,553)		(45,577,816)		(59,850,213)		645
	641,813		(126,104)		27,787,334		2,751,370		(47)
	—		—		—		—		—
	641,813		(126,104)		27,787,334		2,751,370		(47)
	1,860,590		1,057,713		12,388,654		22,672,291		210,380
	(186)		(104)		(273,416)		(391,774)		—
	(3,479)		(2,037)		(129,138)		(149,784)		(21)
	(304,020)		(229,800)		(29,521,158)		(36,441,353)		(19,979)
	—		(15,830)		(2,175,286)		(2,288,766)		—
	(72,709)		(63,981)		(4,686,174)		(5,056,785)		(590)
	(1,509,739)		(626,978)		(19,020,230)		(30,494,178)		(19,316)
	—		—		—		—		—
	(29,543)		118,983		(43,416,748)		(52,150,349)		170,474
	612,270		(7,121)		(15,629,414)		(49,398,979)		170,427
	5,167,926		5,175,047		339,892,141		389,291,120		—
$	5,780,196	$	5,167,926	$	324,262,727	$	339,892,141	$	170,427

123

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Multi-Asset Income Class 2 Division (1)
		2016
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	—
	Total realized gains (losses) on investments		—
	Change in net unrealized appreciation or depreciation of investments		—
	Net gains (losses) from investments		—
Payment from affiliate			—
Net increase (decrease) in net assets resulting from operations			—
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		—
	Administration charges		—
	Contingent sales charges		—
	Contract terminations		—
	Death benefit payments		—
	Flexible withdrawal option payments		—
	Transfers to other contracts		—
	Annuity payments		—
Increase (decrease) in net assets from policy related transactions			—
Total increase (decrease)			—
Net assets at beginning of period			—
Net assets at end of period		$	—
(1) Commenced operations May 23, 2016. (2) Commenced operations May 18, 2015. See accompanying notes.

124

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Neuberger Berman AMT Large Cap Value Class I Division				Neuberger Berman AMT Mid-Cap Growth Portfolio Class S Division (2)				Neuberger Berman AMT Socially Responsive Class I Division
2016		2015		2016		2015		2016		2015
$	(27,525)	$	(32,795)	$	(35,449)	$	(6,288)	$	(36,291)	$	(51,414)
	582,370		647,348		77,355		(937)		461,609		1,046,464
	421,981		(1,246,521)		7,209		(120,653)		(72,636)		(1,096,068)
	976,826		(631,968)		49,115		(127,878)		352,682		(101,018)
	—		—		—		—		—		—
	976,826		(631,968)		49,115		(127,878)		352,682		(101,018)
	998,272		571,136		395,379		3,003,327		332,815		779,432
	(860)		(823)		(2,481)		(1,035)		(14,813)		(22,503)
	(7,057)		(6,051)		(3,334)		(478)		(5,215)		(3,946)
	(616,620)		(682,648)		(293,323)		(53,887)		(455,656)		(445,154)
	(6,890)		(57,257)		—		—		(11,876)		(23,757)
	(18,700)		(37,075)		(22,156)		(5,347)		(118,700)		(130,187)
	(380,267)		(348,631)		(421,322)		(69,027)		(593,209)		(1,052,798)
	—		—		—		—		—		—
	(32,122)		(561,349)		(347,237)		2,873,553		(866,654)		(898,913)
	944,704		(1,193,317)		(298,122)		2,745,675		(513,972)		(999,931)
	4,047,878		5,241,195		2,745,675		—		5,077,342		6,077,273
$	4,992,582	$	4,047,878	$	2,447,553	$	2,745,675	$	4,563,370	$	5,077,342

125

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Oppenheimer Main Street Small Cap Service Shares Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(5,910)	$	(3,862)
	Total realized gains (losses) on investments		(22,082)		56,688
	Change in net unrealized appreciation or depreciation of investments		114,280		(97,581)
	Net gains (losses) from investments		86,288		(44,755)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			86,288		(44,755)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		113,601		207,404
	Administration charges		(70)		(207)
	Contingent sales charges		(54)		(103)
	Contract terminations		(51,524)		(91,394)
	Death benefit payments		—		—
	Flexible withdrawal option payments		(2,355)		(4,652)
	Transfers to other contracts		(151,980)		(163,133)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(92,382)		(52,085)
Total increase (decrease)			(6,094)		(96,840)
Net assets at beginning of period			561,373		658,213
Net assets at end of period		$	555,279	$	561,373
(1) Commenced operations May 18, 2015. See accompanying notes.

126

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
PIMCO All Asset Administrative Class Division				PIMCO All Asset Advisor Class Division (1)				PIMCO Commodity Real Return Strategy M Class Division (1)
2016		2015		2016		2015		2016		2015
$	44,907	$	88,731	$	675	$	(2)	$	(81)	$	(56)
	(210,507)		(177,260)		78		(70)		(1,417)		(4)
	591,652		(434,074)		1,215		(1)		1,704		(1,681)
	426,052		(522,603)		1,968		(73)		206		(1,741)
	—		—		—		—		—		—
	426,052		(522,603)		1,968		(73)		206		(1,741)
	428,785		579,848		51,229		5,676		32,342		14,300
	(118)		(114)		(13)		—		—		—
	(3,614)		(2,504)		—		—		(11)		—
	(315,772)		(282,541)		—		—		(6,026)		—
	(4,170)		—		—		—		—		—
	(50,188)		(55,604)		—		—		(800)		—
	(790,380)		(815,831)		(511)		(5,603)		(26,541)		—
	—		—		—		—		—		—
	(735,457)		(576,746)		50,705		73		(1,036)		14,300
	(309,405)		(1,099,349)		52,673		—		(830)		12,559
	4,147,238		5,246,587		—		—		12,559		—
$	3,837,833	$	4,147,238	$	52,673	$	—	$	11,729	$	12,559

127

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		PIMCO High Yield Administrative Class Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	688,459	$	624,562
	Total realized gains (losses) on investments		(188,859)		189,889
	Change in net unrealized appreciation or depreciation of investments		1,317,754		(1,327,188)
	Net gains (losses) from investments		1,817,354		(512,737)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			1,817,354		(512,737)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		7,527,227		4,340,966
	Administration charges		(1,252)		(1,456)
	Contingent sales charges		(10,958)		(11,674)
	Contract terminations		(1,078,729)		(1,316,009)
	Death benefit payments		(36,100)		(11,238)
	Flexible withdrawal option payments		(228,570)		(197,776)
	Transfers to other contracts		(2,328,639)		(2,649,159)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			3,842,979		153,654
Total increase (decrease)			5,660,333		(359,083)
Net assets at beginning of period			15,655,710		16,014,793
Net assets at end of period		$	21,316,043	$	15,655,710
(1) Commenced operations May 18, 2015. See accompanying notes.

128

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
PIMCO Low Duration Advisor Class Division (1)				PIMCO Total Return Administrative Class Division				Principal Capital Appreciation Class 1 Division
2016		2015		2016		2015		2016		2015
$	34	$	6,210	$	176,374	$	991,318	$	(302,590)	$	(1,022,076)
	(7,420)		(20)		(296,729)		261,224		921,499		2,308,451
	6,434		(7,503)		463,639		(1,527,726)		7,379,260		(2,510,117)
	(952)		(1,313)		343,284		(275,184)		7,998,169		(1,223,742)
	—		—		—		—		—		—
	(952)		(1,313)		343,284		(275,184)		7,998,169		(1,223,742)
	318,009		368,267		3,932,950		4,119,218		7,925,340		123,197,595
	(28)		(11)		(2,520)		(3,232)		(190,108)		(213,072)
	(154)		(4)		(21,304)		(19,235)		(76,968)		(58,257)
	(20,162)		(454)		(2,000,572)		(2,168,399)		(10,028,274)		(8,995,555)
	—		—		(152,427)		(84,142)		(1,141,703)		(770,561)
	(5,929)		—		(356,443)		(318,089)		(2,389,609)		(1,763,649)
	(336,227)		(5,753)		(2,819,732)		(3,343,233)		(9,232,571)		(11,933,116)
	—		—		—		—		—		—
	(44,491)		362,045		(1,420,048)		(1,817,112)		(15,133,893)		99,463,385
	(45,443)		360,732		(1,076,764)		(2,092,296)		(7,135,724)		98,239,643
	360,732		—		27,066,926		29,159,222		116,745,107		18,505,464
$	315,289	$	360,732	$	25,990,162	$	27,066,926	$	109,609,383	$	116,745,107

129

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Principal Capital Appreciation Class 2 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(1,114)	$	(5,502)
	Total realized gains (losses) on investments		18,615		11,192
	Change in net unrealized appreciation or depreciation of investments		43,982		(12,067)
	Net gains (losses) from investments		61,483		(6,377)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			61,483		(6,377)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		569,906		484,532
	Administration charges		(640)		(591)
	Contingent sales charges		(303)		(162)
	Contract terminations		(161,426)		(14,898)
	Death benefit payments		—		—
	Flexible withdrawal option payments		(1,874)		(1,099)
	Transfers to other contracts		(667,719)		(21,544)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(262,056)		446,238
Total increase (decrease)			(200,573)		439,861
Net assets at beginning of period			632,233		192,372
Net assets at end of period		$	431,660	$	632,233
(1) Commenced operations May 18, 2015. See accompanying notes.

130

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Principal LifeTime 2010 Class 1 Division				Principal LifeTime 2020 Class 1 Division				Principal LifeTime 2020 Class 2 Division (1)
2016		2015		2016		2015		2016		2015
$	200,965	$	238,776	$	591,619	$	1,422,655	$	70	$	329
	1,024,376		481,787		4,114,142		8,189,270		453		728
	(179,273)		(1,445,646)		(30,737)		(12,413,841)		81		(1,763)
	1,046,068		(725,083)		4,675,024		(2,801,916)		604		(706)
	—		—		—		—		—		—
	1,046,068		(725,083)		4,675,024		(2,801,916)		604		(706)
	2,417,910		2,358,317		9,314,862		14,036,904		464		16,250
	(73,730)		(113,584)		(425,978)		(651,509)		—		—
	(24,217)		(26,688)		(96,549)		(98,472)		—		—
	(2,330,017)		(3,394,795)		(9,003,730)		(11,711,518)		—		—
	(120,278)		(128,430)		(832,281)		(317,278)		—		—
	(1,163,603)		(1,182,374)		(3,500,869)		(3,718,001)		—		—
	(1,375,525)		(2,009,050)		(10,083,009)		(20,715,435)		(460)		(23)
	—		—		—		—		—		—
	(2,669,460)		(4,496,604)		(14,627,554)		(23,175,309)		4		16,227
	(1,623,392)		(5,221,687)		(9,952,530)		(25,977,225)		608		15,521
	28,520,977		33,742,664		117,717,726		143,694,951		15,521		—
$	26,897,585	$	28,520,977	$	107,765,196	$	117,717,726	$	16,129	$	15,521

131

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Principal LifeTime 2030 Class 1 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	106,401	$	775,408
	Total realized gains (losses) on investments		4,662,850		5,488,994
	Change in net unrealized appreciation or depreciation of investments		(2,138,404)		(7,969,079)
	Net gains (losses) from investments		2,630,847		(1,704,677)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			2,630,847		(1,704,677)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		4,243,168		7,389,783
	Administration charges		(270,318)		(380,121)
	Contingent sales charges		(42,186)		(42,146)
	Contract terminations		(4,133,534)		(5,148,538)
	Death benefit payments		(234,898)		(10,512)
	Flexible withdrawal option payments		(1,068,712)		(849,852)
	Transfers to other contracts		(4,961,806)		(3,685,067)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(6,468,286)		(2,726,453)
Total increase (decrease)			(3,837,439)		(4,431,130)
Net assets at beginning of period			68,801,944		73,233,074
Net assets at end of period		$	64,964,505	$	68,801,944
(1) Commenced operations May 18, 2015. See accompanying notes.

132

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Principal LifeTime 2030 Class 2 Division (1)				Principal LifeTime 2040 Class 1 Division				Principal LifeTime 2040 Class 2 Division (1)
2016		2015		2016		2015		2016		2015
$	139	$	87	$	8,408	$	137,407	$	(347)	$	(1)
	1,389		197		965,309		667,474		1,806		—
	879		(718)		(418,422)		(1,119,014)		1,848		(5)
	2,407		(434)		555,295		(314,133)		3,307		(6)
	—		—		—		—		—		—
	2,407		(434)		555,295		(314,133)		3,307		(6)
	67,980		17,838		1,245,774		1,529,020		156,906		500
	(40)		(7)		(5,015)		(5,328)		(24)		—
	—		—		(12,878)		(9,437)		(75)		—
	—		—		(1,210,098)		(1,147,112)		(39,925)		—
	—		—		(1,964)		(4,435)		—		—
	(945)		(945)		(29,911)		(36,766)		—		—
	(3,692)		(65)		(373,600)		(797,183)		—		—
	—		—		—		—		—		—
	63,303		16,821		(387,692)		(471,241)		116,882		500
	65,710		16,387		167,603		(785,374)		120,189		494
	16,387		—		13,718,518		14,503,892		494		—
$	82,097	$	16,387	$	13,886,121	$	13,718,518	$	120,683	$	494

133

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Principal LifeTime 2050 Class 1 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(7,877)	$	94,705
	Total realized gains (losses) on investments		610,752		529,944
	Change in net unrealized appreciation or depreciation of investments		(258,009)		(762,417)
	Net gains (losses) from investments		344,866		(137,768)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			344,866		(137,768)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		879,715		2,294,787
	Administration charges		(4,422)		(4,528)
	Contingent sales charges		(4,378)		(9,805)
	Contract terminations		(393,028)		(1,144,908)
	Death benefit payments		—		—
	Flexible withdrawal option payments		(37,372)		(22,419)
	Transfers to other contracts		(480,280)		(656,354)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(39,765)		456,773
Total increase (decrease)			305,101		319,005
Net assets at beginning of period			8,936,895		8,617,890
Net assets at end of period		$	9,241,996	$	8,936,895
(1) Commenced operations May 18, 2015. See accompanying notes.

134

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Principal LifeTime 2050 Class 2 Division (1)				Principal LifeTime Strategic Income Class 1 Division				Real Estate Securities Class 1 Division
2016		2015		2016		2015		2016		2015
$	50	$	407	$	174,235	$	136,386	$	7,603	$	97,294
	1,522		1,000		443,415		970,488		11,562,947		8,288,486
	(5)		(3,066)		(65,598)		(1,507,441)		(8,121,242)		(6,248,173)
	1,567		(1,659)		552,052		(400,567)		3,449,308		2,137,607
	—		—		—		—		—		—
	1,567		(1,659)		552,052		(400,567)		3,449,308		2,137,607
	57,094		27,110		1,394,726		1,497,294		9,311,718		13,293,791
	(40)		—		(35,860)		(54,103)		(19,957)		(22,851)
	—		—		(13,270)		(13,564)		(40,585)		(34,200)
	—		—		(1,285,002)		(2,314,975)		(7,180,096)		(8,361,629)
	—		—		(183,689)		(112,974)		(710,925)		(426,032)
	—		—		(678,789)		(789,084)		(864,282)		(856,904)
	(6)		—		(733,660)		(2,475,326)		(7,727,991)		(12,325,219)
	—		—		—		—		—		—
	57,048		27,110		(1,535,544)		(4,262,732)		(7,232,118)		(8,733,044)
	58,615		25,451		(983,492)		(4,663,299)		(3,782,810)		(6,595,437)
	25,451		—		17,075,093		21,738,392		81,336,745		87,932,182
$	84,066	$	25,451	$	16,091,601	$	17,075,093	$	77,553,935	$	81,336,745

135

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Real Estate Securities Class 2 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(5,944)	$	8,160
	Total realized gains (losses) on investments		155,183		41,861
	Change in net unrealized appreciation or depreciation of investments		(152,839)		(9,501)
	Net gains (losses) from investments		(3,600)		40,520
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			(3,600)		40,520
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		2,974,820		1,727,261
	Administration charges		(1,713)		(1,203)
	Contingent sales charges		(829)		(231)
	Contract terminations		(442,223)		(21,258)
	Death benefit payments		—		—
	Flexible withdrawal option payments		(11,618)		(8,160)
	Transfers to other contracts		(296,676)		(184,925)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			2,221,761		1,511,484
Total increase (decrease)			2,218,161		1,552,004
Net assets at beginning of period			1,732,909		180,905
Net assets at end of period		$	3,951,070	$	1,732,909
(1) Commenced operations May 18, 2015. See accompanying notes.

136

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Rydex Basic Materials Division (1)				Rydex Commodities Strategy Division				Rydex NASDAQ 100 Division
2016		2015		2016		2015		2016		2015
$	(1,995)	$	—	$	(2,942)	$	(477)	$	(7,467)	$	(5,427)
	4,582		—		(4,605)		(1,126)		48,007		33,336
	9,461		—		30,537		(20,055)		(19,101)		(10,106)
	12,048		—		22,990		(21,658)		21,439		17,803
	—		—		—		—		—		—
	12,048		—		22,990		(21,658)		21,439		17,803
	328,879		—		414,915		88,462		128,092		575,850
	(6)		—		(7)		(3)		(773)		(449)
	—		—		(1,241)		—		(56)		—
	—		—		(108,430)		—		(29,816)		—
	—		—		—		—		—		—
	—		—		(383)		—		(1,992)		—
	(1,062)		—		(135,184)		(1,204)		(181,953)		(44,368)
	—		—		—		—		—		—
	327,811		—		169,670		87,255		(86,498)		531,033
	339,859		—		192,660		65,597		(65,059)		548,836
	—		—		76,970		11,373		646,151		97,315
$	339,859	$	—	$	269,630	$	76,970	$	581,092	$	646,151

137

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		SAM Balanced Portfolio Class 1 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	3,780,190	$	9,374,533
	Total realized gains (losses) on investments		47,862,357		70,461,519
	Change in net unrealized appreciation or depreciation of investments		(22,647,532)		(93,512,609)
	Net gains (losses) from investments		28,995,015		(13,676,557)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			28,995,015		(13,676,557)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		36,727,484		42,878,760
	Administration charges		(2,567,741)		(3,776,977)
	Contingent sales charges		(591,420)		(380,646)
	Contract terminations		(56,807,971)		(48,656,930)
	Death benefit payments		(3,532,938)		(3,440,873)
	Flexible withdrawal option payments		(13,619,314)		(14,292,327)
	Transfers to other contracts		(46,071,264)		(47,758,625)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(86,463,164)		(75,427,618)
Total increase (decrease)			(57,468,149)		(89,104,175)
Net assets at beginning of period			598,643,366		687,747,541
Net assets at end of period		$	541,175,217	$	598,643,366
See accompanying notes.

138

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
SAM Balanced Portfolio Class 2 Division				SAM Conservative Balanced Portfolio Class 1 Division				SAM Conservative Balanced Portfolio Class 2 Division
2016		2015		2016		2015		2016		2015
$	36,692	$	49,694	$	1,549,910	$	2,778,779	$	32,784	$	46,338
	(17,552)		208,051		6,777,881		11,687,839		85,187		103,988
	220,566		(366,087)		(1,536,046)		(17,902,602)		33,535		(233,687)
	239,706		(108,342)		6,791,745		(3,435,984)		151,506		(83,361)
	—		—		—		—		—		—
	239,706		(108,342)		6,791,745		(3,435,984)		151,506		(83,361)
	1,562,219		4,642,656		10,531,121		16,191,319		267,520		2,760,536
	(5,852)		(3,447)		(385,735)		(571,557)		(4,385)		(2,797)
	(496)		(859)		(145,772)		(94,116)		(507)		(455)
	(264,872)		(78,883)		(15,577,844)		(12,416,351)		(270,713)		(41,814)
	(9,476)		—		(601,054)		(1,295,958)		—		(585)
	(92,360)		(6,835)		(3,649,968)		(3,720,077)		(17,505)		—
	(1,536,849)		(1,319,303)		(10,117,855)		(12,363,565)		(54,183)		(182,671)
	—		—		—		—		—		—
	(347,686)		3,233,329		(19,947,107)		(14,270,305)		(79,773)		2,532,214
	(107,980)		3,124,987		(13,155,362)		(17,706,289)		71,733		2,448,853
	3,759,160		634,173		150,875,233		168,581,522		3,002,012		553,159
$	3,651,180	$	3,759,160	$	137,719,871	$	150,875,233	$	3,073,745	$	3,002,012

139

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		SAM Conservative Growth Portfolio Class 1 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(20,146)	$	815,127
	Total realized gains (losses) on investments		7,671,391		9,839,282
	Change in net unrealized appreciation or depreciation of investments		(2,525,153)		(13,344,263)
	Net gains (losses) from investments		5,126,092		(2,689,854)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			5,126,092		(2,689,854)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		12,283,398		18,126,551
	Administration charges		(12,432)		(14,810)
	Contingent sales charges		(86,116)		(53,596)
	Contract terminations		(9,136,371)		(7,747,125)
	Death benefit payments		(144,134)		(601,397)
	Flexible withdrawal option payments		(885,311)		(829,477)
	Transfers to other contracts		(9,167,902)		(6,989,428)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(7,148,868)		1,890,718
Total increase (decrease)			(2,022,776)		(799,136)
Net assets at beginning of period			100,958,357		101,757,493
Net assets at end of period		$	98,935,581	$	100,958,357
See accompanying notes.

140

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
SAM Conservative Growth Portfolio Class 2 Division				SAM Flexible Income Portfolio Class 1 Division				SAM Flexible Income Portfolio Class 2 Division
2016		2015		2016		2015		2016		2015
$	(1,817)	$	57,878	$	3,059,733	$	3,842,785	$	73,214	$	84,382
	213,408		304,267		4,002,680		6,275,169		(43,380)		99,759
	90,753		(572,909)		1,694,802		(15,012,560)		201,730		(331,837)
	302,344		(210,764)		8,757,215		(4,894,606)		231,564		(147,696)
	—		—		—		—		—		—
	302,344		(210,764)		8,757,215		(4,894,606)		231,564		(147,696)
	801,341		5,570,624		22,113,236		24,992,192		1,215,683		6,447,810
	(12,502)		(7,919)		(237,173)		(372,349)		(4,655)		(3,593)
	(477)		(254)		(143,347)		(106,058)		(2,519)		(1,665)
	(254,239)		(23,362)		(14,769,194)		(15,162,620)		(1,343,642)		(153,011)
	(9,490)		(39,701)		(2,691,047)		(2,005,147)		(91,256)		(1,173)
	(67,897)		(12,763)		(4,052,173)		(4,139,297)		(67,708)		(93,579)
	(468,050)		(184,260)		(15,457,280)		(12,902,231)		(61,330)		(2,044,130)
	—		—		—		—		—		—
	(11,314)		5,302,365		(15,236,978)		(9,695,510)		(355,427)		4,150,659
	291,030		5,091,601		(6,479,763)		(14,590,116)		(123,863)		4,002,963
	5,521,966		430,365		170,645,344		185,235,460		4,421,092		418,129
$	5,812,996	$	5,521,966	$	164,165,581	$	170,645,344	$	4,297,229	$	4,421,092

141

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		SAM Strategic Growth Portfolio Class 1 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(34,938)	$	500,409
	Total realized gains (losses) on investments		5,447,979		7,225,423
	Change in net unrealized appreciation or depreciation of investments		(2,681,020)		(9,852,418)
	Net gains (losses) from investments		2,732,021		(2,126,586)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			2,732,021		(2,126,586)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		6,813,435		13,546,079
	Administration charges		(10,331)		(12,400)
	Contingent sales charges		(49,267)		(39,721)
	Contract terminations		(4,852,442)		(5,255,487)
	Death benefit payments		(176,328)		(154,270)
	Flexible withdrawal option payments		(419,727)		(362,685)
	Transfers to other contracts		(8,117,433)		(4,794,550)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(6,812,093)		2,926,966
Total increase (decrease)			(4,080,072)		800,380
Net assets at beginning of period			66,772,764		65,972,384
Net assets at end of period		$	62,692,692	$	66,772,764
See accompanying notes.

142

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
SAM Strategic Growth Portfolio Class 2 Division				Short-Term Income Class 1 Division				Short-Term Income Class 2 Division
2016		2015		2016		2015		2016		2015
$	(1,083)	$	15,968	$	723,718	$	1,407,417	$	12,478	$	13,364
	(9,742)		93,791		27,358		534,051		(13,026)		(4,694)
	90,513		(183,660)		24,748		(2,714,781)		8,372		(16,114)
	79,688		(73,901)		775,824		(773,313)		7,824		(7,444)
	—		—		—		—		—		—
	79,688		(73,901)		775,824		(773,313)		7,824		(7,444)
	1,508,489		1,830,809		17,746,454		18,193,280		934,543		1,175,305
	(1,752)		(954)		(297,075)		(451,497)		(1,279)		(791)
	(129)		(640)		(87,168)		(95,995)		(187)		(64)
	(68,839)		(58,837)		(9,754,607)		(12,627,559)		(100,005)		(5,926)
	(9,498)		—		(839,961)		(1,214,866)		(3,154)		—
	(27,983)		(14,625)		(3,539,062)		(3,796,702)		(7,359)		(2,223)
	(422,102)		(655,616)		(12,957,992)		(22,332,953)		(542,233)		(477,740)
	—		—		—		—		—		—
	978,186		1,100,137		(9,729,411)		(22,326,292)		280,326		688,561
	1,057,874		1,026,236		(8,953,587)		(23,099,605)		288,150		681,117
	1,650,363		624,127		108,511,943		131,611,548		774,746		93,629
$	2,708,237	$	1,650,363	$	99,558,356	$	108,511,943	$	1,062,896	$	774,746

143

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		SmallCap Class 1 Division (1)
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(1,195,802)	$	(1,263,962)
	Total realized gains (losses) on investments		7,448,473		7,858,943
	Change in net unrealized appreciation or depreciation of investments		9,897,300		(13,749,436)
	Net gains (losses) from investments		16,149,971		(7,154,455)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			16,149,971		(7,154,455)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		6,860,115		110,159,536
	Administration charges		(94,655)		(107,433)
	Contingent sales charges		(58,120)		(42,982)
	Contract terminations		(11,096,356)		(9,480,406)
	Death benefit payments		(684,710)		(539,136)
	Flexible withdrawal option payments		(1,592,611)		(1,340,187)
	Transfers to other contracts		(9,849,985)		(8,564,730)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			(16,516,322)		90,084,662
Total increase (decrease)			(366,351)		82,930,207
Net assets at beginning of period			116,458,571		33,528,364
Net assets at end of period		$	116,092,220	$	116,458,571
(1) Represented the operations of SmallCap Blend Class 1 Division until May 21, 2016. (2) Represented the operations of SmallCap Blend Class 2 Division until May 21, 2016. (3) Commenced operations April 27, 2015. See accompanying notes.

144

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
SmallCap Class 2 Division (2) (3)				T. Rowe Price Blue Chip Growth Portfolio II Division				T. Rowe Price Health Sciences Portfolio II Division
2016		2015		2016		2015		2016		2015
$	(10,204)	$	(5,342)	$	(240,478)	$	(212,519)	$	(417,513)	$	(525,062)
	12,823		20,966		1,359,449		934,600		3,547,505		5,814,462
	146,041		(80,039)		(1,257,312)		456,116		(7,270,684)		(2,151,210)
	148,660		(64,415)		(138,341)		1,178,197		(4,140,692)		3,138,190
	—		—		—		—		—		—
	148,660		(64,415)		(138,341)		1,178,197		(4,140,692)		3,138,190
	320,798		900,333		3,730,658		6,962,887		3,654,681		13,496,896
	(1,101)		(714)		(14,952)		(23,065)		(10,240)		(15,884)
	(153)		(50)		(12,594)		(8,657)		(21,632)		(29,482)
	(81,518)		(4,580)		(1,100,436)		(976,660)		(1,890,151)		(3,326,062)
	—		—		(59,886)		(63,287)		(7,670)		(272,554)
	(22,058)		(15,360)		(178,992)		(150,007)		(265,941)		(261,586)
	(279,046)		(30,124)		(2,701,992)		(2,548,485)		(7,803,286)		(7,433,937)
	—		—		—		—		—		—
	(63,078)		849,505		(338,194)		3,192,726		(6,344,239)		2,157,391
	85,582		785,090		(476,535)		4,370,923		(10,484,931)		5,295,581
	785,090		—		16,983,602		12,612,679		35,402,743		30,107,162
$	870,672	$	785,090	$	16,507,067	$	16,983,602	$	24,917,812	$	35,402,743

145

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
		Templeton Global Bond VIP Class 4 Division
		2016		2015
Increase (decrease) in net assets
Operations:
	Net investment income (loss)	$	(14,487)	$	36,764
	Total realized gains (losses) on investments		(38,664)		(6,152)
	Change in net unrealized appreciation or depreciation of investments		73,599		(82,235)
	Net gains (losses) from investments		20,448		(51,623)
Payment from affiliate			—		—
Net increase (decrease) in net assets resulting from operations			20,448		(51,623)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and applicable premium taxes		371,701		1,158,444
	Administration charges		(614)		(501)
	Contingent sales charges		(408)		(769)
	Contract terminations		(143,578)		(86,222)
	Death benefit payments		—		—
	Flexible withdrawal option payments		(1,442)		—
	Transfers to other contracts		(133,095)		(14,755)
	Annuity payments		—		—
Increase (decrease) in net assets from policy related transactions			92,564		1,056,197
Total increase (decrease)			113,012		1,004,574
Net assets at beginning of period			1,072,128		67,554
Net assets at end of period		$	1,185,140	$	1,072,128
(1) Commenced operations May 18, 2015. (2) Represented the operations of Van Eck Global Hard Assets Class S Division until May 21, 2016. See accompanying notes.

146

Principal Life Insurance Company
Separate Account B
Statements of Changes in Net Assets
Years ended December 31, 2016 and 2015, except as noted
Templeton Growth VIP Class 2 Division				The Merger Fund Division (1)				VanEck Global Hard Assets Class S Division (2)
2016		2015		2016		2015		2016		2015
$	9,776	$	17,068	$	—	$	—	$	(70,199)	$	(93,535)
	35,795		6,034		—		—		(518,970)		(526,299)
	24,739		(95,558)		—		—		2,838,392		(1,919,469)
	70,310		(72,456)		—		—		2,249,223		(2,539,303)
	—		—		—		—		—		—
	70,310		(72,456)		—		—		2,249,223		(2,539,303)
	27,980		51,714		—		—		2,591,022		2,415,914
	—		—		—		—		(626)		(480)
	(98)		(54)		—		—		(4,370)		(2,588)
	(74,885)		(47,158)		—		—		(452,858)		(325,524)
	(8,812)		—		—		—		(18,883)		(23,712)
	(9,457)		(10,344)		—		—		(43,067)		(46,402)
	(20,661)		(12,545)		—		—		(1,430,937)		(1,437,952)
	—		—		—		—		—		—
	(85,933)		(18,387)		—		—		640,281		579,256
	(15,623)		(90,843)		—		—		2,889,504		(1,960,047)
	869,180		960,023		—		—		5,127,012		7,087,059
$	853,557	$	869,180	$	—	$	—	$	8,016,516	$	5,127,012

147

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

1. Nature of Operations and Significant Accounting Policies

Description of Business

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, 2016, contractholder investment options included the following diversified open-end management investment companies:

Principal Variable Contracts Funds, Inc. – Class 1: (1)

Balanced Account

Core Plus Bond Account (13)

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

Multi-Asset Income Account (12)

Principal Capital Appreciation Account

Principal LifeTime 2010 Account

Principal LifeTime 2020 Account

Principal LifeTime 2030 Account

Principal LifeTime 2040 Account

Principal LifeTime 2050 Account

Principal LifeTime Strategic Income Account

Real Estate Securities Account

Short-Term Income Account

SmallCap Account (18)

Strategic Asset Management (“SAM”) Balanced Portfolio

SAM Conservative Balanced Portfolio

SAM Conservative Growth Portfolio

SAM Flexible Income Portfolio

SAM Strategic Growth Portfolio

148

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

Principal Variable Contracts Funds, Inc. – Class 2: (1)

Core Plus Bond Account (10) (14)

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 Account I (10)

LargeCap S&P 500 Index Account (10)

LargeCap Value Account (10)

Multi-Asset Income Account (12)

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)

Short-Term Income Account (8)

SmallCap Account (9) (19)

SAM Balanced Portfolio (8)

SAM Conservative Balanced Portfolio (8)

SAM Conservative Growth Portfolio (8)

SAM Flexible Income Portfolio (8)

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 Fund – Class I (6)

VP Income & Growth Fund – Class I

VP Inflation Protection Fund – Class II

VP Mid Cap Value Fund – Class II

VP Ultra® Fund – Class I

VP Ultra® Fund – Class II

VP Value Fund – Class II

149

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

American Funds Insurance Series:

Asset Allocation Fund – Class 2 (12)

Asset Allocation Fund – Class 4 (10)

Blue Chip Income and Growth Fund – Class 2 (12)

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 Fund – 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 VP Portfolio:

EAFE International Index – Class F (8)

Russell 2000 Small Cap Index – Class F (8)

S&P MidCap 400 Index – 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 VIP® Trust:

Small Cap Value Series Service Class (4)

Deutsche Variable Series II:

Alternative Asset Allocation VIP – Class B (8)

Equity 500 Index VIP – Class B2 (8)

Small Mid Cap Value VIP – Class B (4)

Dreyfus Investment Portfolios:

MidCap Stock – Service Shares (10)

Technology Growth – Service Shares

Fidelity® Variable Insurance Products:

Contrafund® Portfolio – Service Class

Contrafund® Portfolio – Service Class 2

Equity-Income Portfolio – Service Class 2

Government Money Market Portfolio – Initial Class (11)

Government Money Market Portfolio – Service Class (11)

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

150

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

Franklin Templeton Variable Insurance Products Trust:

Franklin Global Real Estate VIP Fund – Class 2 (8)

Franklin Rising Dividends VIP Fund – Class 4 (8)

Franklin Small Cap Value VIP Fund – Class 2

Templeton Global Bond VIP Fund – Class 4 (8)

Templeton Growth VIP Fund – Class 2

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)

Multi-Hedge Strategies (8)

Invesco V.I. Fund:

American Franchise Fund – Series I Shares (2)

Balanced-Risk Allocation Fund – 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)

Mid Cap Growth Fund – Series I Shares (2)

Small Cap Equity Fund – Series I Shares

Technology Fund – Series I Shares

Value Opportunities Fund – Series I Shares

Janus Aspen Series:

Janus Aspen Enterprise Portfolio – Service Shares

Janus Aspen Flexible Bond Portfolio – Service Shares (8)

MFS®:

International Value – Service Class (8)

New Discovery – Service Class (4) (15)

Utilities Series – Service Class (16)

Value Series – Service Class (17)

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:

All Asset Portfolio – Administrative Class

All Asset Portfolio – Advisor Class (10)

Commodity Real Return Portfolio – Strategy M Class (10)

High Yield Portfolio – Administrative Class

Low Duration Portfolio – Advisor Class (10)

Total Return Portfolio – Administrative Class

151

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

Rydex Funds:

Basic Materials (10)

Commodities Strategy (8)

NASDAQ 100 (8)

T. Rowe Price Equity Series, Inc.

Blue Chip Growth Portfolio – II

Health Sciences Portfolio – II

The Merger Fund (10)

VanEck VIP Trust:

Global Hard Assets Fund –Class S Shares (20)

(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) Commencement of operations, February 8, 2016.

(12) Commencement of operations, May 23, 2016.

(13) Represented the operations of Bond & Mortgage Securities Class 1 Division until May 21, 2016.

(14) Represented the operations of Bond & Mortgage Securities Class 2 Division until May 21, 2016.

(15) Represented the operations of MFS VIT New Discovery Service Class Division until May 21, 2016.

(16) Represented the operations of MFS VIT Utilities Service Class Division until May 21, 2016.

(17) Represented the operations of MFS VIT Value Service Class Division until May 21, 2016.

(18) Represented the operations of SmallCap Blend Class 1 Division until May 21, 2016.

(19) Represented the operations of SmallCap Blend Class 2 Division until May 21, 2016.

(20) Represented the operations of Van Eck Global Hard Assets Class S Division until May 21, 2016.

Commencement of operations date is the date the division became available to contractholders.

152

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

During 2016, the following divisions were liquidated and subsequently reinvested:

Date	Liquidation Division	Reinvested Division	Transferred Assets
April 9, 2016	Money Market Class 1 Division	Fidelity VIP Government Money Market Initial    Class Division	$	49,380,027
April 9, 2016	Money Market Class 2 Division	Fidelity VIP Government Money Market Service    Class Division		1,381,070
August 6, 2016	Guggenheim Macro Opportunities    Series M Division	Fidelity VIP Government Money Market Service    Class Division		219,308

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; Principal Pivot Series Variable Annuity and 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.

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, 2016. Net realized capital gains and losses on sales of investments are determined on the basis of specific identification under the first-in, first-out (“FIFO”) method. Investment transactions are accounted for on a trade date basis. Dividends and realized gains (losses) on investments are recognized on an accrual basis as of the ex-dividend date and are automatically reinvested in shares of the funds on the payable date.The NAV as of December 31, 2016, does not reflect $16,059,397 of accrued administrative fees that were reported in expense and liabilities for applicable separate accounts in the separate account annual statement filed with the National Association of Insurance Commissioners.

153

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels:

• Level 1 – Fair values are based on unadjusted quoted prices in active markets for identical assets or liabilities.

• Level 2 – Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset or

liability, either directly or indirectly.

• Level 3 – Fair values are based on at least one significant unobservable input 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% (1.00% for a Rollover IRA) of the asset value of each contract. A contingent sales charge of up to 7.00% 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 the number of participants under the retirement plan and their participant investment account values.

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 contract account balance. The annual charge ranges from $2,250 to $25,316 plus $10 per participant. The amount varies by total plan participants. No contingent sales charges were provided for in these contracts.

154

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

Principal Freedom 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 0.85% of the asset value of each contract. Principal Life reserves the right to increase this charge but guarantees it will not exceed 1.25% per year. A surrender charge up to 6.00% 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 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 0.95% of the asset value of each contract. Principal Life reserves the right to increase this charge but guarantees it will not exceed 1.25% per year. A surrender charge up to 3.00% 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 6.00% 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 0.60%. 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 8.00% from withdrawals made during the first eight years.

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 6.00% 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 2.00% 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 0.60%. 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 8.00% from withdrawals made during the first eight years.

Principal Lifetime Income Solutions^SM – 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 6.00% 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.

155

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

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 6.00% 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 2.00% 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, 2016, investment advisory and management fees were paid indirectly to Principal Management Corporation (“Manager”) (wholly owned by Principal Financial Services, Inc.), an affiliate of Principal Life, in its capacity as advisor to Principal Variable Contracts Funds. A portion of the management fee is paid by the Manager to the sub-advisor of each of the divisions, some of which are affiliates of the Manager. On March 1, 2016, the investment and advisory fees paid by each of the Principal LifeTime Accounts were eliminated. Prior to March 1, 2016, the annual rate paid by each of the Principal LifeTime Accounts was 0.03% of each of the Principal LifeTime Accounts’ average 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 divisions are 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		%
Core Plus Bond 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
Real Estate Securities Account		0.90			0.85			0.80			0.75			0.70
SmallCap Account		0.85			0.80			0.75			0.70			0.65
		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

156

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	Net Assets of Accounts						Net Assets of Accounts
	(in millions)						(in millions)
	First $500	Next $500	Next $1 billion	Next $1 billion	Over $3 billion		First $500	Over $500
						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
Multi-Asset Income Account	0.03

The Manager has contractually agreed to limit the Separate Account’s management and investment advisory fees for certain of the divisions through the period ended April 30, 2017. The expense limit will reduce the Separate Account’s management and investment advisory fees by the following amounts for certain of the divisions:

LargeCap Growth Account I 0.016%

The Manager has contractually agreed to limit the expenses (excluding interest expense, expense related to fund investments, acquired fund fees and expenses and other extraordinary expenses) for certain classes of shares of certain of the divisions. 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 were as follows:

	From January 1, 2016 through December 31, 2016
	Class 1	Class 2	Expiration
Diversified Balanced Managed Volatility Account	N/A	0.31%	April 30, 2017
Diversified Growth Managed Volatility Account	N/A	0.31	April 30, 2017
International Emerging Markets Account	1.35%^	1.60^	April 30, 2018
Multi-Asset Income Account	0.08	0.33	April 30, 2017

^ Period from November 1, 2016 to December 31, 2016.

157

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

The Manager has contractually agreed to reduce the Short-Term Income Account’s expenses by 0.01% through the period ended April 30, 2017.

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 were as follows:

	Expense Limit
Diversified Balanced Account	0.31%
Diversified Growth Account	0.31
Diversified Income Account	0.31

3. Federal Income Taxes

The operations of Separate Account B 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 Separate Account B.

158

4. Purchases and Sales of Investments

The aggregate cost of purchases and proceeds from sales of investments were as follows for the year ended December 31, 2016:

	2016
Division	Purchases		Sales
AllianceBernstein Small Cap Growth Class A Division:
Principal Investment Plus Variable Annuity	$	1,501,305	$	795,061
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		149,080		171,687
AllianceBernstein Small/Mid Cap Value Class A Division:
The Principal Variable Annuity	$	121,313	$	118,058
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		933,291		587,018
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		458,663		48,828
Alps/Red Rocks Listed Private Equity Class III Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		6,218		1,830
American Century VP Capital Appreciation Class I Division:
Principal Investment Plus Variable Annuity	$	437,331	$	517,508
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		290,112		188,927
American Century VP Income & Growth Class I Division:
Principal Freedom Variable Annuity	$	223,897	$	341,211
Principal Freedom Variable Annuity 2		3,237		62,902
The Principal Variable Annuity		499,870		1,929,733
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
American Century VP Inflation Protection Class II Division:
Principal Investment Plus Variable Annuity	$	5,783,075	$	11,225,690
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		113,546		1,948,807
Principal Pivot Series Variable Annuity		3,075		3,417
Principal Pivot Series Variable Annuity with Liquidity Max Rider		104,377		3,190
The Principal Variable Annuity		255,858		104,340
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
American Century VP Mid Cap Value Class II Division:
The Principal Variable Annuity	$	819,987	$	627,369
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		3,118,965		1,465,718
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		271,996		80,906
American Century VP Ultra Class I Division:
The Principal Variable Annuity	$	352,914	$	873,022
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
American Century VP Ultra Class II Division:
Principal Investment Plus Variable Annuity	$	5,573,723	$	8,020,429
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		192,165		1,742,215

159

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
American Century VP Value Class II Division:
The Principal Variable Annuity	$	664,539	$	2,617,091
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Pivot Series Variable Annuity		7,637		19,098
Principal Pivot Series Variable Annuity with Liquidity Max Rider		265,300		109,173
American Funds Insurance Series Asset Allocation Fund Class 2 Division:
The Principal Variable Annuity	$	155,527	$	1,120
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		439,100		928
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		287,805		6,200
American Funds Insurance Series Asset Allocation Fund Class 4 Division:
Principal Pivot Series Variable Annuity	$	30,384	$	699
Principal Pivot Series Variable Annuity with Liquidity Max Rider		170,392		445,651
American Funds Insurance Series Blue Chip Income and Growth Class 2 Division:
The Principal Variable Annuity	$	304,595	$	17,114
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,060,752		22,265
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		336,263		11,207
American Funds Insurance Series Blue Chip Income and Growth Class 4 Division:
Principal Pivot Series Variable Annuity	$	80,656	$	36,955
Principal Pivot Series Variable Annuity with Liquidity Max Rider		800,588		751,207
American Funds Insurance Series Global Small Capitalization Fund Class 2 Division:
The Principal Variable Annuity	$	126,263	$	118,155
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		261,467		87,063
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		97,430		—
American Funds Insurance Series Global Small Capitalization Fund Class 4 Division:
Principal Pivot Series Variable Annuity	$	10,860	$	6,631
Principal Pivot Series Variable Annuity with Liquidity Max Rider		494,448		431,677
American Funds Insurance Series High-Income Bond Class 2 Division:
The Principal Variable Annuity	$	1,104,983	$	191,984
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	$	136,121	$	24,657
Principal Pivot Series Variable Annuity with Liquidity Max Rider		106,704		9,761
American Funds Insurance Series Managed Risk Growth Fund Class P2 Division:
Principal Pivot Series Variable Annuity	$	6,491	$	1,362
Principal Pivot Series Variable Annuity with Liquidity Max Rider		23,678		3,047
American Funds Insurance Series Managed Risk International Fund Class P2 Division:
Principal Pivot Series Variable Annuity	$	2,762	$	2,706
Principal Pivot Series Variable Annuity with Liquidity Max Rider		6,540		261

160

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
American Funds Insurance Series New World Fund Class 2 Division:
The Principal Variable Annuity	$	176,729	$	33,543
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		530,899		71,132
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		124,436		—
American Funds Insurance Series New World Fund Class 4 Division:
Principal Pivot Series Variable Annuity	$	20,530	$	47,524
Principal Pivot Series Variable Annuity with Liquidity Max Rider		15,152		72,467
Balanced Class 1 Division:
Personal Variable	$	216,935	$	73,501
Premier Variable		470,996		383,168
The Principal Variable Annuity		2,145,494		4,113,953
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
BlackRock Global Allocation Class III Division:
The Principal Variable Annuity	$	14,623	$	3,657
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		436,411		54,059
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		33,465		3,273
Principal Pivot Series Variable Annuity		10		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		18,086		5,725
BlackRock iShares Alternative Strategies Class III Division:
The Principal Variable Annuity	$	37,339	$	36,784
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		539,549		59,095
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		595		—
Principal Pivot Series Variable Annuity		33,291		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		963		443
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		20,938		1,539
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		21,639		—
Principal Pivot Series Variable Annuity		—		4
Principal Pivot Series Variable Annuity with Liquidity Max Rider		2,201		1
BlackRock iShares Dynamic Fixed Income Class III Division:
The Principal Variable Annuity	$	34,596	$	31,504
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		791,593		67,070
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,420		—
Principal Pivot Series Variable Annuity		—		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		45,137		87

161

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
BlackRock iShares Equity Appreciation Class III Division:
The Principal Variable Annuity	$	46	$	37
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		309,079		18,689
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		63,061		—
Principal Pivot Series Variable Annuity		—		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		2,112		105
BlackRock Value Opportunities Class III Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		31,213		211
Calvert EAFE International Index Class F Division:
Principal Pivot Series Variable Annuity	$	8,699	$	2,745
Principal Pivot Series Variable Annuity with Liquidity Max Rider		121		2,049
Calvert Russell 2000 Small Cap Index Class F Division:
Principal Pivot Series Variable Annuity	$	9,144	$	39,368
Principal Pivot Series Variable Annuity with Liquidity Max Rider		131,383		56,712
Calvert S&P MidCap 400 Index Class F Division:
Principal Pivot Series Variable Annuity	$	148,584	$	25,117
Principal Pivot Series Variable Annuity with Liquidity Max Rider		162,256		96,705
ClearBridge Small Cap Growth Series II Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		4,191		712
Columbia Limited Duration Credit Class 2 Division:
The Principal Variable Annuity	$	30,331	$	24,470
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		101,256		52,494
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		423		266
Principal Pivot Series Variable Annuity		405		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		11,131
Columbia Small Cap Value Class 2 Division:
Principal Pivot Series Variable Annuity	$	92,717	$	646
Principal Pivot Series Variable Annuity with Liquidity Max Rider		79,719		36,675
Core Plus Bond Class 1 Division:
Personal Variable	$	35,144	$	20,027
Premier Variable		293,211		200,525
Principal Freedom Variable Annuity		370,873		701,028
Principal Freedom Variable Annuity 2		12,463		16,337
The Principal Variable Annuity		4,386,003		10,826,190
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		10,418,741		15,821,844
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		401,541		3,037,502
Core Plus Bond Class 2 Division:
Principal Pivot Series Variable Annuity	$	153,184	$	22
Principal Pivot Series Variable Annuity with Liquidity Max Rider		64,400		12,093

162

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
Delaware Limited Term Diversified Income Service Class Division:
The Principal Variable Annuity	$	365,264	$	25,426
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		783,325		426,203
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		523		273
Principal Pivot Series Variable Annuity		5,994		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		4,878		489
Delaware Small Cap Value Service Class Division:
The Principal Variable Annuity	$	230,813	$	12,485
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		878,767		252,528
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		147,745		31,067
Deutsche Alternative Asset Allocation Class B Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		4,771		3,746
Deutsche Equity 500 Index Class B2 Division:
Principal Pivot Series Variable Annuity	$	177,506	$	20,245
Principal Pivot Series Variable Annuity with Liquidity Max Rider		225,553		162,687
Deutsche Small Mid Cap Value Class B Division:
The Principal Variable Annuity	$	2,102	$	19,342
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		344,518		205,754
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		2,866		24,489
Principal Pivot Series Variable Annuity		48,925		5,100
Principal Pivot Series Variable Annuity with Liquidity Max Rider		8,002		1,882
Diversified Balanced Class 2 Division:
Principal Investment Plus Variable Annuity	$	138,476,567	$	120,567,478
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		16,965,013		12,462,241
Principal Lifetime Income Solutions		710,046		2,121,387
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	$	89	$	91
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		32,101,352		15,898,631
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		5,096,134		1,346,897
Principal Lifetime Income Solutions		3,152,765		1,906,783
Principal Pivot Series Variable Annuity		3,374		20,273
Principal Pivot Series Variable Annuity with Liquidity Max Rider		1,678,410		58,566
Diversified Growth Class 2 Division:
Principal Investment Plus Variable Annuity	$	481,263,343	$	276,967,824
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		33,240,278		35,835,519
Principal Lifetime Income Solutions		938,021		2,605,818
Principal Pivot Series Variable Annuity		—		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—

163

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
Diversified Growth Managed Volatility Class 2 Division:
The Principal Variable Annuity	$	42,620	$	369
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		63,344,175		22,865,728
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		6,214,347		2,459,683
Principal Lifetime Income Solutions		2,105,617		3,010,605
Principal Pivot Series Variable Annuity		19,039		2,784
Principal Pivot Series Variable Annuity with Liquidity Max Rider		214,958		51,002
Diversified Income Class 2 Division:
Principal Investment Plus Variable Annuity	$	90,455,862	$	45,906,038
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		5,665,722		3,622,090
Principal Lifetime Income Solutions		1,155,996		854,440
Diversified International Class 1 Division:
Personal Variable	$	51,654	$	12,378
Premier Variable		322,085		304,713
Principal Freedom Variable Annuity		102,388		315,970
Principal Freedom Variable Annuity 2		17,642		34,076
The Principal Variable Annuity		4,799,858		13,473,183
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		4,414,693		9,739,570
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		209,963		1,441,428
Diversified International Class 2 Division:
Principal Pivot Series Variable Annuity	$	8,368	$	3,414
Principal Pivot Series Variable Annuity with Liquidity Max Rider		13,762		28,408
Dreyfus IP MidCap Stock Service Shares Division:
Principal Pivot Series Variable Annuity	$	37,304	$	19
Principal Pivot Series Variable Annuity with Liquidity Max Rider		345,637		335,830
Dreyfus IP Technology Growth Service Shares Division:
Principal Investment Plus Variable Annuity	$	1,214,298	$	1,289,250
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		656,105		281,317
Equity Income Class 1 Division:
Premier Variable	$	30,633	$	10,657
The Principal Variable Annuity		4,920,555		9,461,300
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		22,027,670		34,311,450
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		374,376		6,324,555
Equity Income Class 2 Division:
Principal Pivot Series Variable Annuity	$	13,819	$	40,028
Principal Pivot Series Variable Annuity with Liquidity Max Rider		419,617		207,687
Fidelity VIP Contrafund Service Class Division:
The Principal Variable Annuity	$	4,532,859	$	6,726,823
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—

164

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
Fidelity VIP Contrafund Service Class 2 Division:
Principal Investment Plus Variable Annuity	$	8,246,269	$	9,124,905
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		564,117		1,752,629
Principal Pivot Series Variable Annuity		96,397		61,750
Principal Pivot Series Variable Annuity with Liquidity Max Rider		428,637		236,690
Fidelity VIP Equity-Income Service Class 2 Division:
The Principal Variable Annuity	$	2,426,273	$	4,022,678
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,858,079		2,273,368
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		553,072		686,302
Fidelity VIP Government Money Market Initial Class Division:
Pension Builder Plus	$	78,573	$	3,037
Personal Variable		684,004		262,189
Premier Variable		4,246,881		268,567
Principal Freedom Variable Annuity		1,542,831		179,264
Principal Freedom Variable Annuity 2		231,051		11,320
The Principal Variable Annuity		24,357,604		6,508,576
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		42,108,241		20,110,970
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		4,489,580		2,944,856
Principal Lifetime Income Solutions		—		—
Fidelity VIP Government Money Market Service Class Division:
Principal Pivot Series Variable Annuity	$	1,002,735	$	758,120
Principal Pivot Series Variable Annuity with Liquidity Max Rider		6,082,351		2,462,212
Fidelity VIP Growth Service Class Division:
The Principal Variable Annuity	$	1,990,376	$	2,943,735
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Fidelity VIP Growth Service Class 2 Division:
Principal Investment Plus Variable Annuity	$	2,163,245	$	2,158,872
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		238,368		468,926
Fidelity VIP Mid Cap Service Class Division:
Principal Freedom Variable Annuity 2	$	435,256	$	3,921
Fidelity VIP Mid Cap Service Class 2 Division:
Principal Investment Plus Variable Annuity	$	4,112,073	$	3,130,442
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		741,643		732,814
Principal Pivot Series Variable Annuity		75,242		191,656
Principal Pivot Series Variable Annuity with Liquidity Max Rider		439,759		324,748
Fidelity VIP Overseas Service Class 2 Division:
The Principal Variable Annuity	$	10,203	$	53,519
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		4,623,633		6,356,896
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		143,554		1,556,678
Principal Pivot Series Variable Annuity		570		2,994
Principal Pivot Series Variable Annuity with Liquidity Max Rider		405,460		401,554

165

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
Franklin Global Real Estate VIP Class 2 Division:
The Principal Variable Annuity	$	29,086	$	32,215
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		136,417		10,432
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		34,212		12,055
Principal Pivot Series Variable Annuity		8,208		31,034
Principal Pivot Series Variable Annuity with Liquidity Max Rider		11,307		11,946
Franklin Rising Dividends VIP Class 4 Division:
Principal Pivot Series Variable Annuity	$	274,351	$	34,245
Principal Pivot Series Variable Annuity with Liquidity Max Rider		168,410		86,404
Franklin Small Cap Value VIP Class 2 Division:
The Principal Variable Annuity	$	451,085	$	101,945
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,914,014		635,406
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		262,843		73,588
Goldman Sachs VIT Mid Cap Value Institutional Shares Division:
The Principal Variable Annuity	$	28,136	$	59,152
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,263,814		3,081,391
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		211,551		621,925
Goldman Sachs VIT Mid Cap Value Service Shares Division:
Principal Pivot Series Variable Annuity	$	18,475	$	23,121
Principal Pivot Series Variable Annuity with Liquidity Max Rider		87,064		146,814
Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		608		12,903
Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division:
The Principal Variable Annuity	$	51,527	$	30,831
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		726,036		1,061,886
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		181,108		209,859
Goldman Sachs VIT Small Cap Equity Insights Service Shares Division:
Principal Pivot Series Variable Annuity	$	3,615	$	2,817
Principal Pivot Series Variable Annuity with Liquidity Max Rider		221,970		277,017
Government & High Quality Bond Class 1 Division:
Pension Builder Plus	$	1,895	$	6,766
Pension Builder Plus – Rollover IRA		1,292		26,926
Personal Variable		32,572		18,627
Premier Variable		1,210,339		742,465
Principal Freedom Variable Annuity		317,445		447,707
Principal Freedom Variable Annuity 2		10,369		31,446
The Principal Variable Annuity		5,391,505		13,095,951
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		9,748,915		11,213,861
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		376,032		1,295,790

166

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
Government & High Quality Bond Class 2 Division:
Principal Pivot Series Variable Annuity	$	292,730	$	51,630
Principal Pivot Series Variable Annuity with Liquidity Max Rider		601,855		465,964
Guggenheim Floating Rate Strategies Series F Division:
The Principal Variable Annuity	$	145,708	$	87,764
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		798,293		108,965
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		36,197		507
Principal Pivot Series Variable Annuity		10,974		2,063
Principal Pivot Series Variable Annuity with Liquidity Max Rider		2,143		8,715
Guggenheim Investments Global Managed Futures Strategy Division:
The Principal Variable Annuity	$	9,206	$	30
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		60,802		4,413
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		9,773		—
Principal Pivot Series Variable Annuity		18,196		21,333
Principal Pivot Series Variable Annuity with Liquidity Max Rider		2,063		20,843
Guggenheim Investments Long Short Equity Division:
The Principal Variable Annuity	$	14,722	$	52,283
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		21,756		25,658
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		288		106
Principal Pivot Series Variable Annuity		2,835		1,168
Principal Pivot Series Variable Annuity with Liquidity Max Rider		14,182		24,604
Guggenheim Investments Multi-Hedge Strategies Division:
The Principal Variable Annuity	$	14,053	$	352
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		348,873		26,564
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		19,596		1,668
Principal Pivot Series Variable Annuity		1,418		44
Principal Pivot Series Variable Annuity with Liquidity Max Rider		4,829		9,075
Income Class 1 Division:
The Principal Variable Annuity	$	640,559	$	29,235
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		3,441,708		510,392
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		596,071		2,820
Income Class 2 Division:
Principal Pivot Series Variable Annuity	$	111,781	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		726,778		399,421
International Emerging Markets Class 1 Division:
Premier Variable	$	83,899	$	34,566
The Principal Variable Annuity		1,525,329		3,965,469
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		4,416,695		6,259,885
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		192,084		1,257,332

167

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
International Emerging Markets Class 2 Division:
Principal Pivot Series Variable Annuity	$	22,377	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		58,549		3,008
Invesco American Franchise Series I Division:
The Principal Variable Annuity	$	579,009	$	791,149
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Invesco Balanced-Risk Allocation Series II Division:
Principal Pivot Series Variable Annuity	$	33,420	$	19,525
Principal Pivot Series Variable Annuity with Liquidity Max Rider		5,692		27,320
Invesco Core Equity Series I Division:
The Principal Variable Annuity	$	1,565,042	$	2,885,229
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Invesco Global Health Care Series I Division:
The Principal Variable Annuity	$	1,833,687	$	2,844,239
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		293,268		1,345
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		32,547		3,230
Invesco Global Health Care Series II Division:
Principal Pivot Series Variable Annuity	$	40,769	$	110,625
Principal Pivot Series Variable Annuity with Liquidity Max Rider		732,728		517,207
Invesco International Growth Series I Division:
Principal Investment Plus Variable Annuity	$	1,256,228	$	1,665,740
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		135,853		241,162
Invesco International Growth Series II Division:
Principal Pivot Series Variable Annuity	$	102,440	$	21,050
Principal Pivot Series Variable Annuity with Liquidity Max Rider		15,322		99,295
Invesco Mid Cap Growth Series I Division:
The Principal Variable Annuity	$	241,813	$	604,242
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Invesco Small Cap Equity Series I Division:
The Principal Variable Annuity	$	260,175	$	520,473
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		794,138		1,113,587
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		189,327		136,901
Invesco Technology Series I Division:
The Principal Variable Annuity	$	389,150	$	961,947
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Invesco Value Opportunities Series I Division:
Principal Investment Plus Variable Annuity	$	1,810,552	$	1,020,269
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		78,169		173,959

168

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
Janus Aspen Enterprise Service Shares Division:
The Principal Variable Annuity	$	1,238,453	$	1,593,074
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Janus Aspen Flexible Bond Service Shares Division:
Principal Pivot Series Variable Annuity	$	228,153	$	17,275
Principal Pivot Series Variable Annuity with Liquidity Max Rider		43,915		211,746
The Principal Variable Annuity		312,786		6,933
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		855,910		26,853
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		—		—
LargeCap Growth Class 1 Division:
Personal Variable	$	101,058	$	189,889
Premier Variable		937,755		1,325,220
The Principal Variable Annuity		628,532		5,364,922
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,496,652		2,241,299
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		110,306		764,746
LargeCap Growth Class 2 Division:
Principal Pivot Series Variable Annuity	$	18,875	$	40,843
Principal Pivot Series Variable Annuity with Liquidity Max Rider		342,912		437,425
LargeCap Growth I Class 1 Division:
Premier Variable	$	85,517	$	44,982
Principal Freedom Variable Annuity		267,643		357,525
Principal Freedom Variable Annuity 2		8,340		71,059
The Principal Variable Annuity		8,034,682		12,650,805
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		3,821,004		3,133,545
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		293,174		489,984
LargeCap Growth I Class 2 Division:
Principal Pivot Series Variable Annuity	$	—	$	375,745
Principal Pivot Series Variable Annuity with Liquidity Max Rider		440,927		405,360
LargeCap S&P 500 Index Class 1 Division:
Premier Variable	$	118,796	$	9,004
Principal Freedom Variable Annuity		399,178		962,210
Principal Freedom Variable Annuity 2		24,184		21,188
The Principal Variable Annuity		3,296,618		7,522,752
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		7,348,837		8,208,316
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,103,568		1,166,261
LargeCap S&P 500 Index Class 2 Division:
Principal Pivot Series Variable Annuity	$	77,735	$	17,757
Principal Pivot Series Variable Annuity with Liquidity Max Rider		669,805		142,815

169

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
LargeCap Value Class 1 Division:
Bankers Flexible Annuity	$	511,119	$	37,645
Pension Builder Plus		95,756		161,859
Pension Builder Plus – Rollover IRA		6,826		79,834
Personal Variable		71,849		79,445
Premier Variable		630,933		716,915
Principal Freedom Variable Annuity		176,744		450,821
Principal Freedom Variable Annuity 2		21,675		16,920
The Principal Variable Annuity		3,161,124		8,672,543
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		2,753,853		3,362,244
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		114,571		657,454
LargeCap Value Class 2 Division:
Principal Pivot Series Variable Annuity	$	1,943	$	466
Principal Pivot Series Variable Annuity with Liquidity Max Rider		42,258		52
MFS International Value Service Class Division:
The Principal Variable Annuity	$	400,496	$	238,255
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,787,490		234,159
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		82,616		54,450
Principal Pivot Series Variable Annuity		86,091		52,406
Principal Pivot Series Variable Annuity with Liquidity Max Rider		415,008		442,398
MFS New Discovery Service Class Division:
The Principal Variable Annuity	$	25,771	$	285,892
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		193,369		213,727
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		76		12,619
Principal Pivot Series Variable Annuity		59,003		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		3,037		619
MFS Utilities Service Class Division:
Principal Investment Plus Variable Annuity	$	2,554,172	$	2,117,255
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		304,602		406,386
Principal Pivot Series Variable Annuity		57,627		91,170
Principal Pivot Series Variable Annuity with Liquidity Max Rider		477,029		303,508
MFS Value Service Class Division:
Principal Investment Plus Variable Annuity	$	1,978,309	$	1,563,924
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		412,731		405,316
MidCap Class 1 Division:
Personal Variable	$	274,670	$	234,770
Premier Variable		1,470,989		638,556
Principal Freedom Variable Annuity		1,726,200		1,207,716
Principal Freedom Variable Annuity 2		117,107		102,076
The Principal Variable Annuity		36,659,049		31,399,179
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		26,376,481		21,535,504
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,432,634		4,987,027

170

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
Multi-Asset Income Class 1 Division:
The Principal Variable Annuity	$	89,844	$	20,744
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		97,930		5,437
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		22,606		14,343
Multi-Asset Income Class 2 Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—
Neuberger Berman AMT Large Cap Value Class I Division:
Principal Investment Plus Variable Annuity	$	1,213,408	$	996,695
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		180,235		94,276
Neuberger Berman AMT Mid-Cap Growth Portfolio Class S Division:
Principal Investment Plus Variable Annuity	$	489,135	$	647,703
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		18,115		126,764
Principal Pivot Series Variable Annuity		2,255		255
Principal Pivot Series Variable Annuity with Liquidity Max Rider		8,269		3,343
Neuberger Berman AMT Socially Responsive Class I Division:
Principal Investment Plus Variable Annuity	$	438,084	$	981,787
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		84,079		284,837
Oppenheimer Main Street Small Cap Service Shares Division:
The Principal Variable Annuity	$	136,922	$	213,315
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
PIMCO All Asset Administrative Class Division:
Principal Investment Plus Variable Annuity	$	496,578	$	1,153,554
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		33,855		67,430
PIMCO All Asset Advisor Class Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		52,071		692
PIMCO Commodity Real Return Strategy M Class Division:
Principal Pivot Series Variable Annuity	$	30,700	$	26,917
Principal Pivot Series Variable Annuity with Liquidity Max Rider		1,861		6,762
PIMCO High Yield Administrative Class Division:
Principal Investment Plus Variable Annuity	$	6,533,918	$	2,965,050
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,317,556		292,280
Principal Pivot Series Variable Annuity		55,118		28,665
Principal Pivot Series Variable Annuity with Liquidity Max Rider		571,305		660,465
PIMCO Low Duration Advisor Class Division:
The Principal Variable Annuity	$	13,573	$	2,412
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		295,877		352,254
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		4,146		4,130
Principal Pivot Series Variable Annuity		—		—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		8,147		7,404

171

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
PIMCO Total Return Administrative Class Division:
Principal Investment Plus Variable Annuity	$	3,519,637	$	4,878,975
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		444,874		313,990
Principal Pivot Series Variable Annuity		44,062		18,152
Principal Pivot Series Variable Annuity with Liquidity Max Rider		487,225		528,354
Principal Capital Appreciation Class 1 Division:
Principal Freedom Variable Annuity 2	$	789	$	2,893
The Principal Variable Annuity		1,758,324		6,649,286
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		7,902,639		14,305,984
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		361,614		3,653,741
Principal Capital Appreciation Class 2 Division:
Principal Pivot Series Variable Annuity	$	39,902	$	120,721
Principal Pivot Series Variable Annuity with Liquidity Max Rider		546,145		721,049
Principal LifeTime 2010 Class 1 Division:
Principal Freedom Variable Annuity 2	$	30,371	$	77,466
The Principal Variable Annuity		224,836		252,688
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		2,779,264		4,860,782
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		133,200		285,524
Principal LifeTime 2020 Class 1 Division:
Principal Freedom Variable Annuity 2	$	252,095	$	719,188
The Principal Variable Annuity		1,006,967		656,373
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		13,324,501		18,862,814
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		834,284		5,284,672
Principal LifeTime 2020 Class 2 Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		1,311		679
Principal LifeTime 2030 Class 1 Division:
Principal Freedom Variable Annuity 2	$	157,873	$	251,101
The Principal Variable Annuity		172,301		713,429
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		7,439,904		8,761,112
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		166,476		1,938,130
Principal LifeTime 2030 Class 2 Division:
Principal Pivot Series Variable Annuity	$	14,570	$	2,576
Principal Pivot Series Variable Annuity with Liquidity Max Rider		56,101		2,718
Principal LifeTime 2040 Class 1 Division:
Principal Freedom Variable Annuity 2	$	45,412	$	2,910
The Principal Variable Annuity		109,102		163,803
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,801,828		1,335,511
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		24,581		324,694

172

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
Principal LifeTime 2040 Class 2 Division:
Principal Pivot Series Variable Annuity	$	1,389	$	9
Principal Pivot Series Variable Annuity with Liquidity Max Rider		156,158		40,531
Principal LifeTime 2050 Class 1 Division:
Principal Freedom Variable Annuity 2	$	9,272	$	1,579
The Principal Variable Annuity		38,610		31,273
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,284,641		835,701
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		35,193		175,619
Principal LifeTime 2050 Class 2 Division:
Principal Pivot Series Variable Annuity	$	46,153	$	456
Principal Pivot Series Variable Annuity with Liquidity Max Rider		12,998		—
Principal LifeTime Strategic Income Class 1 Division:
Principal Freedom Variable Annuity 2	$	3,692	$	31,853
The Principal Variable Annuity		268,356		292,766
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,523,093		2,707,350
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		13,715		138,195
Real Estate Securities Class 1 Division:
Premier Variable	$	61,039	$	35,208
Principal Freedom Variable Annuity 2		92,027		82,616
The Principal Variable Annuity		6,057,885		8,125,506
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		10,021,504		8,048,755
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		1,032,945		1,364,157
Real Estate Securities Class 2 Division:
Principal Pivot Series Variable Annuity	$	251,201	$	177,498
Principal Pivot Series Variable Annuity with Liquidity Max Rider		2,934,180		608,412
Rydex Basic Materials Division:
Principal Pivot Series Variable Annuity	$	64,276	$	3,036
Principal Pivot Series Variable Annuity with Liquidity Max Rider		269,040		28
Rydex Commodities Strategy Division:
The Principal Variable Annuity	$	25,249	$	31,914
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		252,844		207,708
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		15,259		2,493
Principal Pivot Series Variable Annuity		89,441		1,670
Principal Pivot Series Variable Annuity with Liquidity Max Rider		32,122		4,401
Rydex NASDAQ 100 Division:
Principal Pivot Series Variable Annuity	$	16,475	$	97,419
Principal Pivot Series Variable Annuity with Liquidity Max Rider		171,420		124,638

173

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
SAM Balanced Portfolio Class 1 Division:
Premier Variable	$	62,712	$	1,918
Principal Freedom Variable Annuity 2		478,454		92,381
The Principal Variable Annuity		7,545,147		10,979,100
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		66,928,085		92,567,249
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		7,991,160		27,686,720
SAM Balanced Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	$	108,686	$	273,016
Principal Pivot Series Variable Annuity with Liquidity Max Rider		1,827,301		1,687,642
SAM Conservative Balanced Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	$	292,354	$	370,101
The Principal Variable Annuity		1,620,863		4,812,746
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		17,015,822		17,836,638
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		626,572		9,516,236
SAM Conservative Balanced Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	$	216,467	$	39,531
Principal Pivot Series Variable Annuity with Liquidity Max Rider		244,233		347,377
SAM Conservative Growth Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	$	161,799	$	150,086
The Principal Variable Annuity		1,456,611		3,639,151
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		14,251,449		10,926,786
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		2,938,545		6,134,916
SAM Conservative Growth Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	$	610,646	$	651,994
Principal Pivot Series Variable Annuity with Liquidity Max Rider		537,310		226,489
SAM Flexible Income Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	$	412,494	$	124,872
The Principal Variable Annuity		4,592,304		6,324,616
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		23,629,077		28,583,384
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		2,089,937		4,692,492
SAM Flexible Income Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	$	86,773	$	164,559
Principal Pivot Series Variable Annuity with Liquidity Max Rider		1,342,302		1,463,916
SAM Strategic Growth Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	$	62,079	$	97,209
The Principal Variable Annuity		690,779		1,812,571
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		8,217,174		6,892,349
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		2,167,366		5,768,228

174

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
SAM Strategic Growth Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	$	598,095	$	495,242
Principal Pivot Series Variable Annuity with Liquidity Max Rider		1,011,923		54,544
Short-Term Income Class 1 Division:
Principal Freedom Variable Annuity	$	99,960	$	243,019
Principal Freedom Variable Annuity 2		157,773		166,586
The Principal Variable Annuity		5,399,187		5,223,409
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		13,989,831		20,498,069
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		278,954		2,800,315
Short-Term Income Class 2 Division:
Principal Pivot Series Variable Annuity	$	265,025	$	139,136
Principal Pivot Series Variable Annuity with Liquidity Max Rider		697,369		530,454
SmallCap Class 1 Division:
Premier Variable	$	53,710	$	99,621
Principal Freedom Variable Annuity		250,453		561,789
Principal Freedom Variable Annuity 2		78,116		26,607
The Principal Variable Annuity		4,324,612		10,879,501
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		6,174,398		10,915,567
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		951,065		2,364,347
SmallCap Class 2 Division:
Principal Pivot Series Variable Annuity	$	29,796	$	41,966
Principal Pivot Series Variable Annuity with Liquidity Max Rider		336,765		352,930
T. Rowe Price Blue Chip Growth Portfolio II Division:
Principal Investment Plus Variable Annuity	$	3,255,376	$	3,676,872
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		475,282		632,458
T. Rowe Price Health Sciences Portfolio II Division:
Principal Investment Plus Variable Annuity	$	3,437,458	$	8,908,967
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		407,847		1,507,466
Templeton Global Bond VIP Class 4 Division:
The Principal Variable Annuity	$	27,596	$	3,517
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		232,647		39,316
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		2,771		6,076
Principal Pivot Series Variable Annuity		37,055		27,554
Principal Pivot Series Variable Annuity with Liquidity Max Rider		72,514		217,161
Templeton Growth VIP Class 2 Division:
Principal Freedom Variable Annuity	$	77,368	$	121,032
The Merger Fund Division:
Principal Pivot Series Variable Annuity	$	—	$	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider		—		—

175

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016
Division	Purchases		Sales
VanEck Global Hard Assets Class S Division:
The Principal Variable Annuity	$	760,040	$	442,552
The Principal Variable Annuity with Purchase Payment Credit Rider		—		—
Principal Investment Plus Variable Annuity		1,652,022		1,189,581
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider		110,379		265,209
Principal Pivot Series Variable Annuity		18,244		140,400
Principal Pivot Series Variable Annuity with Liquidity Max Rider		75,646		8,508

176

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

5. Changes in Units Outstanding

Transactions in units were as follows for each of the years ended December 31:

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
AllianceBernstein Small Cap Growth Class A Division:
Principal Investment Plus Variable Annuity	17,442	31,087	25,157	30,592
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,732	6,713	726	14,513
AllianceBernstein Small/Mid Cap Value Class A Division:
The Principal Variable Annuity	8,303	9,921	7,750	6,811
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	65,419	45,636	84,236	32,481
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	32,150	3,796	17,614	17,218
Alps/Red Rocks Listed Private Equity Class III Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	670	162	2,641	1
American Century VP Capital Appreciation Class I Division:
Principal Investment Plus Variable Annuity	28,087	46,328	52,558	39,919
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	18,632	16,913	4,155	27,902
American Century VP Income & Growth Class I Division:
Principal Freedom Variable Annuity	5,780	17,623	4,682	22,734
Principal Freedom Variable Annuity 2	16	3,953	19	1,875
The Principal Variable Annuity	8,396	106,505	20,639	116,918
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	200
American Century VP Inflation Protection Class II Division:
Principal Investment Plus Variable Annuity	346,997	824,614	656,289	1,272,897
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	6,813	143,155	21,156	328,008
Principal Pivot Series Variable Annuity	300	271	2,848	1,094
Principal Pivot Series Variable Annuity with Liquidity Max Rider	10,182	253	2,923	444
The Principal Variable Annuity	25,500	10,013	6,826	102
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
American Century VP Mid Cap Value Class II Division:
The Principal Variable Annuity	37,011	32,032	16,836	34,501
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	134,645	68,806	98,177	22,612
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	11,742	3,798	17,805	6,615
American Century VP Ultra Class I Division:
The Principal Variable Annuity	12,550	51,335	34,950	48,954
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	1,874
American Century VP Ultra Class II Division:
Principal Investment Plus Variable Annuity	219,625	401,575	228,575	622,696
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	7,572	87,231	10,768	184,165

177

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
American Century VP Value Class II Division:
The Principal Variable Annuity	20,279	112,684	34,982	135,436
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	6	2,742
Principal Pivot Series Variable Annuity	702	1,834	9,845	63
Principal Pivot Series Variable Annuity with Liquidity Max Rider	24,388	10,484	22,039	638
American Funds Insurance Series Asset Allocation Fund Class 2 Division:
The Principal Variable Annuity	14,545	83	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	41,427	56	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	27,153	374	—	—
American Funds Insurance Series Asset Allocation Fund Class 4 Division:
Principal Pivot Series Variable Annuity	2,740	69	26,797	18
Principal Pivot Series Variable Annuity with Liquidity Max Rider	15,366	44,024	56,390	4
American Funds Insurance Series Blue Chip Income and Growth Class 2 Division:
The Principal Variable Annuity	28,088	1,498	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	97,109	1,802	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	30,784	907	—	—
American Funds Insurance Series Blue Chip Income and Growth Class 4 Division:
Principal Pivot Series Variable Annuity	6,720	3,410	34,215	218
Principal Pivot Series Variable Annuity with Liquidity Max Rider	66,703	69,319	55,021	6,963
American Funds Insurance Series Global Small Capitalization Fund Class 2 Division:
The Principal Variable Annuity	6,259	11,642	49,656	22,687
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	21,767	9,244	55,101	627
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	8,111	—	348	348
American Funds Insurance Series Global Small Capitalization Fund Class 4 Division:
Principal Pivot Series Variable Annuity	966	660	5,907	808
Principal Pivot Series Variable Annuity with Liquidity Max Rider	43,984	42,967	8,112	338
American Funds Insurance Series High-Income Bond Class 2 Division:
The Principal Variable Annuity	105,936	18,860	53,310	34,015
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	13,248	2,266	5,033	3,126
Principal Pivot Series Variable Annuity with Liquidity Max Rider	10,385	897	4,543	23
American Funds Insurance Series Managed Risk Growth Fund Class P2 Division:
Principal Pivot Series Variable Annuity	369	80	4,779	157
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,346	179	7,692	108
American Funds Insurance Series Managed Risk International Fund Class P2 Division:
Principal Pivot Series Variable Annuity	283	269	1,227	18
Principal Pivot Series Variable Annuity with Liquidity Max Rider	670	26	1,223	13

178

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
American Funds Insurance Series New World Fund Class 2 Division:
The Principal Variable Annuity	19,482	3,591	16,878	6,605
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	57,567	6,831	25,578	2,524
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	13,493	—	243	243
American Funds Insurance Series New World Fund Class 4 Division:
Principal Pivot Series Variable Annuity	2,309	5,127	22,842	1,156
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,704	7,818	19,076	719
Balanced Class 1 Division:
Personal Variable	54,153	21,873	13,625	7,120
Premier Variable	92,728	111,097	196,903	406,436
The Principal Variable Annuity	8,372	131,466	16,707	158,034
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	1,791
BlackRock Global Allocation Class III Division:
The Principal Variable Annuity	1,454	328	6,242	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	47,443	4,707	43,154	463
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	3,638	285	918	—
Principal Pivot Series Variable Annuity	1	—	433	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,876	508	5,942	—
BlackRock iShares Alternative Strategies Class III Division:
The Principal Variable Annuity	3,624	3,619	3,775	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	53,463	5,667	17,440	9,046
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	59	—	1,204	—
Principal Pivot Series Variable Annuity	3,179	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	92	20	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	2,150	5	3,041	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	2,222	—	3,574	—
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	230	—	—	—
BlackRock iShares Dynamic Fixed Income Class III Division:
The Principal Variable Annuity	3,455	3,160	3,642	1,464
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	78,034	6,033	9,302	111
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	140	—	—	—
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	4,506	2	62	1

179

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
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	34,892	1,576	7,494	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	7,119	—	4,388	—
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	229	2	615	1
BlackRock Value Opportunities Class III Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	2,745	17	92	—
Calvert EAFE International Index Class F Division:
Principal Pivot Series Variable Annuity	935	304	407	2
Principal Pivot Series Variable Annuity with Liquidity Max Rider	13	227	678	4
Calvert Russell 2000 Small Cap Index Class F Division:
Principal Pivot Series Variable Annuity	764	3,664	6,875	301
Principal Pivot Series Variable Annuity with Liquidity Max Rider	10,977	5,278	2,034	127
Calvert S&P MidCap 400 Index Class F Division:
Principal Pivot Series Variable Annuity	12,857	2,321	26,045	945
Principal Pivot Series Variable Annuity with Liquidity Max Rider	14,040	8,936	25,351	4,951
ClearBridge Small Cap Growth Series II Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	434	58	903	1
Columbia Limited Duration Credit Class 2 Division:
The Principal Variable Annuity	2,918	2,547	5,537	102
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	10,058	5,324	7,429	135
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	42	27	828	—
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	—	1,113	1,145	32
Columbia Small Cap Value Class 2 Division:
Principal Pivot Series Variable Annuity	8,517	63	105	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	7,323	3,576	8,265	107
Core Plus Bond Class 1 Division:
Personal Variable	10,261	6,735	7,427	13,621
Premier Variable	80,067	66,400	221,577	497,154
Principal Freedom Variable Annuity	10,961	35,852	9,070	43,355
Principal Freedom Variable Annuity 2	152	962	684	3,004
The Principal Variable Annuity	102,776	415,530	108,015	519,965
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	109	9,782
Principal Investment Plus Variable Annuity	338,218	626,680	504,168	971,570
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	13,035	120,311	116,305	310,944
Core Plus Bond Class 2 Division:
Principal Pivot Series Variable Annuity	15,059	2	2,033	2,033
Principal Pivot Series Variable Annuity with Liquidity Max Rider	6,331	1,112	1,948	32

180

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
Delaware Limited Term Diversified Income Service Class Division:
The Principal Variable Annuity	36,339	2,053	6,957	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	77,874	42,130	13,792	267
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	52	27	1,343	—
Principal Pivot Series Variable Annuity	591	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	481	30	1,172	—
Delaware Small Cap Value Service Class Division:
The Principal Variable Annuity	17,404	988	1,765	2,913
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	146
Principal Investment Plus Variable Annuity	62,393	19,850	38,351	18,345
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	10,490	2,442	11,633	784
Deutsche Alternative Asset Allocation Class B Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	416	337	4,534	81
Deutsche Equity 500 Index Class B2 Division:
Principal Pivot Series Variable Annuity	14,190	1,842	27,681	678
Principal Pivot Series Variable Annuity with Liquidity Max Rider	18,031	14,802	36,681	2,887
Deutsche Small Mid Cap Value Class B Division:
The Principal Variable Annuity	—	1,912	2,233	2,013
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	22,002	16,913	28,829	7,958
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	183	2,013	1,540	233
Principal Pivot Series Variable Annuity	3,913	363	1,746	25
Principal Pivot Series Variable Annuity with Liquidity Max Rider	640	134	9,409	267
Diversified Balanced Class 2 Division:
Principal Investment Plus Variable Annuity	8,263,800	7,469,921	9,494,507	7,370,267
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,012,413	772,115	912,151	538,171
Principal Lifetime Income Solutions	2,462	117,045	17,579	172,601
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	2,867,509	1,322,756	6,185,575	2,050,668
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	455,221	112,061	355,288	113,851
Principal Lifetime Income Solutions	264,639	147,671	1,059,621	217,166
Principal Pivot Series Variable Annuity	318	1,647	16,562	53
Principal Pivot Series Variable Annuity with Liquidity Max Rider	158,170	4,758	30,037	6,216
Diversified Growth Class 2 Division:
Principal Investment Plus Variable Annuity	26,518,691	15,282,745	37,780,731	14,609,692
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,831,614	1,977,360	2,032,888	1,308,702
Principal Lifetime Income Solutions	5,276	136,479	47,710	149,441
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	—	—	—	—

181

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
Diversified Growth Managed Volatility Class 2 Division:
The Principal Variable Annuity	4,434	—	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	5,608,806	1,802,600	10,403,220	2,194,361
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	550,249	193,907	941,925	114,271
Principal Lifetime Income Solutions	161,370	244,953	853,835	128,843
Principal Pivot Series Variable Annuity	1,794	240	27,434	195
Principal Pivot Series Variable Annuity with Liquidity Max Rider	20,255	4,396	3,014	100
Diversified Income Class 2 Division:
Principal Investment Plus Variable Annuity	7,276,849	3,584,384	6,696,554	3,914,718
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	455,787	282,816	297,469	296,616
Principal Lifetime Income Solutions	88,228	62,758	72,265	75,702
Diversified International Class 1 Division:
Personal Variable	15,048	3,487	10,729	22,894
Premier Variable	83,300	96,882	278,980	434,646
Principal Freedom Variable Annuity	3,355	18,406	13,165	18,186
Principal Freedom Variable Annuity 2	814	2,574	1,427	8,477
The Principal Variable Annuity	113,971	473,701	156,441	517,331
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	57	11,894
Principal Investment Plus Variable Annuity	134,945	355,838	306,188	366,496
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	6,418	52,663	22,203	152,333
Diversified International Class 2 Division:
Principal Pivot Series Variable Annuity	740	333	12,529	1,496
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,217	2,771	10,056	1,013
Dreyfus IP MidCap Stock Service Shares Division:
Principal Pivot Series Variable Annuity	3,860	2	2,124	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	35,764	34,367	2,703	113
Dreyfus IP Technology Growth Service Shares Division:
Principal Investment Plus Variable Annuity	44,920	53,235	78,140	32,869
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	24,271	11,616	7,799	13,211
Equity Income Class 1 Division:
Premier Variable	12,479	5,832	47,744	42,235
The Principal Variable Annuity	89,931	594,489	148,701	630,153
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	8	11,205
Principal Investment Plus Variable Annuity	712,651	2,198,903	1,567,799	2,907,996
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	12,112	405,319	85,971	952,740
Equity Income Class 2 Division:
Principal Pivot Series Variable Annuity	1,066	3,688	41,604	2,049
Principal Pivot Series Variable Annuity with Liquidity Max Rider	32,370	19,135	59,634	3,147
Fidelity VIP Contrafund Service Class Division:
The Principal Variable Annuity	43,092	262,828	66,755	295,937
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	9,213

182

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
Fidelity VIP Contrafund Service Class 2 Division:
Principal Investment Plus Variable Annuity	192,914	381,557	366,992	481,110
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	13,197	73,286	34,020	143,358
Principal Pivot Series Variable Annuity	7,486	5,800	55,974	3,509
Principal Pivot Series Variable Annuity with Liquidity Max Rider	33,287	22,231	68,592	7,592
Fidelity VIP Equity-Income Service Class 2 Division:
The Principal Variable Annuity	35,800	213,641	55,428	249,363
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	8	8,914
Principal Investment Plus Variable Annuity	66,862	124,384	105,690	111,332
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	19,902	37,550	10,889	42,810
Fidelity VIP Government Money Market Initial Class Division:
Pension Builder Plus	78,468	2,209	—	—
Personal Variable	683,911	260,713	—	—
Premier Variable	4,241,914	256,973	—	—
Principal Freedom Variable Annuity	154,244	17,100	—	—
Principal Freedom Variable Annuity 2	23,100	980	—	—
The Principal Variable Annuity	2,440,290	637,753	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	4,220,982	1,998,001	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	450,041	292,568	—	—
Principal Lifetime Income Solutions	—	—	—	—
Fidelity VIP Government Money Market Service Class Division:
Principal Pivot Series Variable Annuity	100,821	75,589	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	611,556	245,497	—	—
Fidelity VIP Growth Service Class Division:
The Principal Variable Annuity	48,024	186,515	52,037	169,961
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	1,958
Fidelity VIP Growth Service Class 2 Division:
Principal Investment Plus Variable Annuity	66,703	102,611	123,289	82,826
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	7,350	22,288	20,090	61,182
Fidelity VIP Mid Cap Service Class Division:
Principal Freedom Variable Annuity 2	42,103	—	—	—
Fidelity VIP Mid Cap Service Class 2 Division:
Principal Investment Plus Variable Annuity	123,721	114,933	144,998	94,522
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	22,314	26,905	19,842	27,794
Principal Pivot Series Variable Annuity	6,810	18,625	50,751	5,673
Principal Pivot Series Variable Annuity with Liquidity Max Rider	39,801	31,559	39,687	5,341
Fidelity VIP Overseas Service Class 2 Division:
The Principal Variable Annuity	1,076	6,078	19,243	9,862
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	275,188	393,376	335,832	575,353
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	8,544	96,330	14,631	224,493
Principal Pivot Series Variable Annuity	63	317	6,375	323
Principal Pivot Series Variable Annuity with Liquidity Max Rider	44,836	42,517	6,476	499

183

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
Franklin Global Real Estate VIP Class 2 Division:
The Principal Variable Annuity	2,887	3,153	6,577	3,038
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	13,912	984	6,372	231
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	3,489	1,137	537	—
Principal Pivot Series Variable Annuity	596	2,598	19,101	573
Principal Pivot Series Variable Annuity with Liquidity Max Rider	821	1,000	17,554	1,950
Franklin Rising Dividends VIP Class 4 Division:
Principal Pivot Series Variable Annuity	21,520	3,057	16,314	524
Principal Pivot Series Variable Annuity with Liquidity Max Rider	13,210	7,713	27,287	2,131
Franklin Small Cap Value VIP Class 2 Division:
The Principal Variable Annuity	20,092	5,298	6,006	4,167
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	315
Principal Investment Plus Variable Annuity	71,669	30,817	25,632	34,621
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	9,842	3,569	11,377	4,431
Goldman Sachs VIT Mid Cap Value Institutional Shares Division:
The Principal Variable Annuity	1,197	2,481	5,064	2,999
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	50,881	133,571	114,397	139,669
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	8,517	26,959	9,491	67,432
Goldman Sachs VIT Mid Cap Value Service Shares Division:
Principal Pivot Series Variable Annuity	1,979	2,412	14,781	1,261
Principal Pivot Series Variable Annuity with Liquidity Max Rider	9,326	15,315	37,079	1,024
Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	66	1,372	1,306	—
Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division:
The Principal Variable Annuity	2,441	1,535	6,449	6,813
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	28,531	54,152	47,942	65,122
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	7,117	10,702	1,513	15,255
Goldman Sachs VIT Small Cap Equity Insights Service Shares Division:
Principal Pivot Series Variable Annuity	361	252	4,655	362
Principal Pivot Series Variable Annuity with Liquidity Max Rider	22,166	24,787	5,709	7
Government & High Quality Bond Class 1 Division:
Pension Builder Plus	—	1,778	—	5,128
Pension Builder Plus – Rollover IRA	—	6,830	—	38
Personal Variable	10,484	6,620	6,792	19,822
Premier Variable	385,969	255,614	486,722	610,326
Principal Freedom Variable Annuity	17,913	33,486	15,848	26,355
Principal Freedom Variable Annuity 2	197	2,329	432	3,338
The Principal Variable Annuity	262,238	999,152	273,217	1,028,584
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	30	15,037
Principal Investment Plus Variable Annuity	658,981	868,090	584,541	1,146,774
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	25,418	100,310	38,280	239,437

184

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
Government & High Quality Bond Class 2 Division:
Principal Pivot Series Variable Annuity	26,832	4,854	83,509	4,280
Principal Pivot Series Variable Annuity with Liquidity Max Rider	55,167	43,809	20,100	1,712
Guggenheim Floating Rate Strategies Series F Division:
The Principal Variable Annuity	12,947	8,438	20,139	1,855
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	74,896	9,890	59,429	8,077
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	3,396	46	12,346	10,348
Principal Pivot Series Variable Annuity	589	179	6,561	3,806
Principal Pivot Series Variable Annuity with Liquidity Max Rider	115	756	5,574	378
Guggenheim Investments Global Managed Futures Strategy Division:
The Principal Variable Annuity	1,068	—	862	862
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	6,887	482	487	6
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,107	—	—	—
Principal Pivot Series Variable Annuity	1,526	2,137	6,475	208
Principal Pivot Series Variable Annuity with Liquidity Max Rider	173	2,088	2,368	154
Guggenheim Investments Long Short Equity Division:
The Principal Variable Annuity	1,523	5,307	5,945	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	2,267	2,666	2,336	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	30	11	331	—
Principal Pivot Series Variable Annuity	285	114	631	629
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,426	2,402	5,313	580
Guggenheim Investments Multi-Hedge Strategies Division:
The Principal Variable Annuity	1,421	15	1,618	1,087
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	35,447	2,564	2,070	53
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,991	161	—	—
Principal Pivot Series Variable Annuity	138	4	574	311
Principal Pivot Series Variable Annuity with Liquidity Max Rider	470	816	5,055	34
Income Class 1 Division:
The Principal Variable Annuity	61,444	2,481	7,516	106
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	332,853	47,243	52,288	1,338
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	57,647	261	1,615	—
Income Class 2 Division:
Principal Pivot Series Variable Annuity	10,770	—	1,099	1,099
Principal Pivot Series Variable Annuity with Liquidity Max Rider	70,025	38,392	1,783	—
International Emerging Markets Class 1 Division:
Premier Variable	23,109	10,967	17,999	11,836
The Principal Variable Annuity	46,985	130,460	75,652	159,354
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	25	8,006
Principal Investment Plus Variable Annuity	147,343	212,043	228,920	211,714
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	6,408	42,590	17,065	96,747

185

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
International Emerging Markets Class 2 Division:
Principal Pivot Series Variable Annuity	2,696	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	7,054	255	4,257	1
Invesco American Franchise Series I Division:
The Principal Variable Annuity	15,513	51,019	20,333	46,476
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	1,235
Invesco Balanced-Risk Allocation Series II Division:
Principal Pivot Series Variable Annuity	3,188	1,856	2,510	20
Principal Pivot Series Variable Annuity with Liquidity Max Rider	543	2,597	17,668	26
Invesco Core Equity Series I Division:
The Principal Variable Annuity	17,918	174,924	49,263	197,601
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	667
Invesco Global Health Care Series I Division:
The Principal Variable Annuity	31,729	134,109	97,008	118,446
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	3,007
Principal Investment Plus Variable Annuity	27,690	107	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	3,073	257	—	—
Invesco Global Health Care Series II Division:
Principal Pivot Series Variable Annuity	3,654	11,198	24,982	1,823
Principal Pivot Series Variable Annuity with Liquidity Max Rider	65,672	52,354	57,993	10,476
Invesco International Growth Series I Division:
Principal Investment Plus Variable Annuity	108,208	146,521	187,755	170,789
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	11,702	21,213	20,123	25,486
Invesco International Growth Series II Division:
Principal Pivot Series Variable Annuity	10,410	2,151	22,651	994
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,557	10,147	21,853	437
Invesco Mid Cap Growth Series I Division:
The Principal Variable Annuity	8,655	43,120	31,706	25,264
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	3,502
Invesco Small Cap Equity Series I Division:
The Principal Variable Annuity	5,143	23,277	16,236	33,481
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	993
Principal Investment Plus Variable Annuity	21,971	47,919	37,768	46,185
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	5,238	5,891	7,867	17,320
Invesco Technology Series I Division:
The Principal Variable Annuity	28,113	101,139	39,034	90,954
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	2,544
Invesco Value Opportunities Series I Division:
Principal Investment Plus Variable Annuity	41,599	72,286	54,836	60,434
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,796	12,325	9,942	26,185

186

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
Janus Aspen Enterprise Service Shares Division:
The Principal Variable Annuity	33,170	94,896	30,129	87,883
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	4,610
Janus Aspen Flexible Bond Service Shares Division:
Principal Pivot Series Variable Annuity	20,776	1,631	26,635	652
Principal Pivot Series Variable Annuity with Liquidity Max Rider	3,999	19,992	48,154	1,012
The Principal Variable Annuity	30,427	601	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	83,524	2,445	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	—	—	—	—
LargeCap Growth Class 1 Division:
Personal Variable	31,139	58,336	19,212	21,586
Premier Variable	291,457	412,114	803,054	965,194
The Principal Variable Annuity	19,296	172,918	29,166	141,736
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	2,602
Principal Investment Plus Variable Annuity	51,654	75,658	61,301	96,908
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	3,807	25,815	7,158	34,244
LargeCap Growth Class 2 Division:
Principal Pivot Series Variable Annuity	1,948	4,114	26,869	4,827
Principal Pivot Series Variable Annuity with Liquidity Max Rider	35,392	44,061	19,771	129
LargeCap Growth I Class 1 Division:
Premier Variable	17,072	19,950	50,233	636
Principal Freedom Variable Annuity	7,284	18,524	7,964	6,016
Principal Freedom Variable Annuity 2	7	3,901	—	1,338
The Principal Variable Annuity	32,804	205,083	38,031	213,177
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	40	2,018
Principal Investment Plus Variable Annuity	43,948	52,025	55,301	49,494
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	3,372	8,135	3,694	16,340
LargeCap Growth I Class 2 Division:
Principal Pivot Series Variable Annuity	—	37,961	37,961	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	42,557	40,953	11,182	4
LargeCap S&P 500 Index Class 1 Division:
Premier Variable	45,084	3,588	99,436	25,693
Principal Freedom Variable Annuity	4,381	50,215	4,135	56,356
Principal Freedom Variable Annuity 2	206	935	207	3,079
The Principal Variable Annuity	98,035	424,324	135,539	543,461
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	131	10,926
Principal Investment Plus Variable Annuity	363,903	478,073	567,611	606,694
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	54,647	67,926	52,920	169,544
LargeCap S&P 500 Index Class 2 Division:
Principal Pivot Series Variable Annuity	7,455	1,659	3,292	1
Principal Pivot Series Variable Annuity with Liquidity Max Rider	64,237	13,343	12,553	190

187

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
LargeCap Value Class 1 Division:
Bankers Flexible Annuity	7,271	592	—	264
Pension Builder Plus	6	14,422	—	13,155
Pension Builder Plus – Rollover IRA	144	6,503	—	3,049
Personal Variable	10,823	15,431	5,748	4,146
Premier Variable	76,735	139,460	172,805	415,958
Principal Freedom Variable Annuity	3,043	25,374	4,200	13,563
Principal Freedom Variable Annuity 2	142	839	3,594	1,393
The Principal Variable Annuity	22,059	208,218	31,000	204,380
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	790
Principal Investment Plus Variable Annuity	52,471	83,236	78,092	94,938
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	2,183	16,276	8,630	41,391
LargeCap Value Class 2 Division:
Principal Pivot Series Variable Annuity	194	27	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	4,219	3	1,084	1
MFS International Value Service Class Division:
The Principal Variable Annuity	39,311	23,616	42,764	732
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	178,650	22,603	66,113	6,522
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	8,257	5,256	4,588	367
Principal Pivot Series Variable Annuity	7,798	4,714	25,590	1,411
Principal Pivot Series Variable Annuity with Liquidity Max Rider	37,591	39,794	28,147	4,309
MFS New Discovery Service Class Division:
The Principal Variable Annuity	1,471	28,263	32,054	10,128
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	539
Principal Investment Plus Variable Annuity	15,361	20,765	29,354	19,933
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	6	1,226	432	378
Principal Pivot Series Variable Annuity	5,906	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	304	6	2,407	108
MFS Utilities Service Class Division:
Principal Investment Plus Variable Annuity	96,288	98,984	122,134	95,192
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	11,483	18,999	11,636	36,358
Principal Pivot Series Variable Annuity	5,629	9,832	19,468	3,234
Principal Pivot Series Variable Annuity with Liquidity Max Rider	46,598	32,731	66,242	8,846
MFS Value Service Class Division:
Principal Investment Plus Variable Annuity	69,655	67,397	42,013	33,338
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	14,532	17,467	7,253	10,561
MidCap Class 1 Division:
Personal Variable	8,407	23,480	6,106	12,477
Premier Variable	46,626	67,000	167,449	291,062
Principal Freedom Variable Annuity	4,245	24,656	2,806	18,262
Principal Freedom Variable Annuity 2	148	3,905	2,145	1,509
The Principal Variable Annuity	41,290	343,198	71,681	370,527
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	8,406
Principal Investment Plus Variable Annuity	95,149	245,582	167,760	361,944
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	5,168	56,870	9,416	112,232

188

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
Multi-Asset Income Class 1 Division:
The Principal Variable Annuity	8,668	1,977	—	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	9,405	514	—	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	2,171	1,356	—	—
Multi-Asset Income Class 2 Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	—	—	—	—
Neuberger Berman AMT Large Cap Value Class I Division:
Principal Investment Plus Variable Annuity	45,760	51,814	31,057	47,441
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	6,797	4,901	574	15,696
Neuberger Berman AMT Mid-Cap Growth Portfolio Class S Division:
Principal Investment Plus Variable Annuity	38,316	65,310	266,732	6,726
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,419	12,782	27,133	5,418
Principal Pivot Series Variable Annuity	200	23	3,057	1,188
Principal Pivot Series Variable Annuity with Liquidity Max Rider	733	300	2,877	1
Neuberger Berman AMT Socially Responsive Class I Division:
Principal Investment Plus Variable Annuity	13,474	45,250	36,017	60,788
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	2,586	13,128	1,356	20,387
Oppenheimer Main Street Small Cap Service Shares Division:
The Principal Variable Annuity	9,521	16,591	16,684	20,682
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	140
PIMCO All Asset Administrative Class Division:
Principal Investment Plus Variable Annuity	28,866	80,422	37,934	68,857
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,968	4,701	3,552	16,416
PIMCO All Asset Advisor Class Division:
Principal Pivot Series Variable Annuity	—	—	623	623
Principal Pivot Series Variable Annuity with Liquidity Max Rider	5,461	55	—	—
PIMCO Commodity Real Return Strategy M Class Division:
Principal Pivot Series Variable Annuity	3,761	3,431	361	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	228	862	1,377	—
PIMCO High Yield Administrative Class Division:
Principal Investment Plus Variable Annuity	405,066	194,187	237,417	242,802
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	81,681	19,142	14,468	55,392
Principal Pivot Series Variable Annuity	5,141	2,730	34,398	567
Principal Pivot Series Variable Annuity with Liquidity Max Rider	53,288	62,901	47,438	4,648
PIMCO Low Duration Advisor Class Division:
The Principal Variable Annuity	1,363	237	268	101
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	29,618	35,393	33,935	46
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	415	415	468	468
Principal Pivot Series Variable Annuity	—	—	1,148	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	788	714	1,335	9

189

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
PIMCO Total Return Administrative Class Division:
Principal Investment Plus Variable Annuity	240,194	357,901	267,536	402,644
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	30,360	23,033	17,794	69,753
Principal Pivot Series Variable Annuity	4,204	1,730	26,083	305
Principal Pivot Series Variable Annuity with Liquidity Max Rider	46,486	50,359	25,132	1,474
Principal Capital Appreciation Class 1 Division:
Principal Freedom Variable Annuity 2	—	155	—	231
The Principal Variable Annuity	114,828	627,737	4,133,710	468,203
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	396,209	822,993	4,547,487	891,554
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	18,130	210,192	497,358	296,531
Principal Capital Appreciation Class 2 Division:
Principal Pivot Series Variable Annuity	3,814	11,222	12,615	2,001
Principal Pivot Series Variable Annuity with Liquidity Max Rider	52,204	67,028	33,406	1,753
Principal LifeTime 2010 Class 1 Division:
Principal Freedom Variable Annuity 2	—	4,950	180	28,771
The Principal Variable Annuity	11,838	15,128	5,860	24,966
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	142,427	299,453	136,296	349,184
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	6,826	17,590	11,823	49,220
Principal LifeTime 2020 Class 1 Division:
Principal Freedom Variable Annuity 2	1,382	47,082	6,548	26,773
The Principal Variable Annuity	46,179	36,086	11,042	42,948
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	489,804	1,082,700	781,583	1,555,686
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	30,668	303,333	33,436	607,497
Principal LifeTime 2020 Class 2 Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	49	51	1,656	2
Principal LifeTime 2030 Class 1 Division:
Principal Freedom Variable Annuity 2	948	15,669	349	26,597
The Principal Variable Annuity	5,311	42,736	23,426	27,675
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	240,257	490,056	389,686	433,395
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	5,376	108,410	23,897	117,152
Principal LifeTime 2030 Class 2 Division:
Principal Pivot Series Variable Annuity	1,480	237	53	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	5,699	250	1,809	105
Principal LifeTime 2040 Class 1 Division:
Principal Freedom Variable Annuity 2	1,910	—	340	5,188
The Principal Variable Annuity	3,873	8,973	17,646	2,860
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	66,411	69,187	62,244	82,168
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	906	16,821	6,295	24,925

190

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
Principal LifeTime 2040 Class 2 Division:
Principal Pivot Series Variable Annuity	146	1	53	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	16,416	4,109	—	—
Principal LifeTime 2050 Class 1 Division:
Principal Freedom Variable Annuity 2	—	—	—	—
The Principal Variable Annuity	1,452	1,650	450	6,677
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	47,636	43,489	128,410	72,910
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	1,305	9,139	2,396	24,069
Principal LifeTime 2050 Class 2 Division:
Principal Pivot Series Variable Annuity	4,648	4	2,735	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	1,309	—	—	—
Principal LifeTime Strategic Income Class 1 Division:
Principal Freedom Variable Annuity 2	—	2,388	—	47,874
The Principal Variable Annuity	14,637	18,626	18,939	85,663
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	3,678
Principal Investment Plus Variable Annuity	83,956	179,177	86,253	232,187
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	756	9,146	1,726	48,062
Real Estate Securities Class 1 Division:
Premier Variable	6,391	6,432	25,484	24,229
Principal Freedom Variable Annuity 2	3,376	4,104	403	1,853
The Principal Variable Annuity	36,965	137,582	63,123	209,269
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	4,884
Principal Investment Plus Variable Annuity	118,198	138,831	165,065	154,093
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	12,183	23,530	22,643	54,328
Real Estate Securities Class 2 Division:
Principal Pivot Series Variable Annuity	18,816	13,996	70,612	9,987
Principal Pivot Series Variable Annuity with Liquidity Max Rider	219,783	47,974	81,042	9,311
Rydex Basic Materials Division:
Principal Pivot Series Variable Annuity	6,610	108	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	27,667	1	—	—
Rydex Commodities Strategy Division:
The Principal Variable Annuity	3,643	4,742	3,445	—
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	39,735	31,333	6,475	—
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	2,398	376	—	—
Principal Pivot Series Variable Annuity	18,430	315	715	176
Principal Pivot Series Variable Annuity with Liquidity Max Rider	6,619	830	729	22
Rydex NASDAQ 100 Division:
Principal Pivot Series Variable Annuity	1,037	8,801	15,954	528
Principal Pivot Series Variable Annuity with Liquidity Max Rider	10,790	11,260	37,901	3,962

191

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
SAM Balanced Portfolio Class 1 Division:
Premier Variable	12,765	34	79,716	21,550
Principal Freedom Variable Annuity 2	20,978	4,930	28,642	14,131
The Principal Variable Annuity	212,279	734,294	395,823	817,568
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	28,845
Principal Investment Plus Variable Annuity	2,143,490	6,280,153	2,439,123	6,402,911
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	255,931	1,878,384	182,763	1,220,264
SAM Balanced Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	8,888	26,179	267,622	113,523
Principal Pivot Series Variable Annuity with Liquidity Max Rider	149,431	161,825	190,866	24,709
SAM Conservative Balanced Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	16,370	25,320	6	18,501
The Principal Variable Annuity	46,534	328,765	188,290	228,842
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	672,761	1,224,411	811,810	1,571,495
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	24,773	653,250	172,623	393,531
SAM Conservative Balanced Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	12,902	3,514	142,416	6,328
Principal Pivot Series Variable Annuity with Liquidity Max Rider	14,557	30,878	130,989	16,407
SAM Conservative Growth Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	4,326	9,461	5,531	14,592
The Principal Variable Annuity	48,097	259,267	175,951	213,986
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	7,437	15,233
Principal Investment Plus Variable Annuity	710,025	760,203	980,464	649,537
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	146,402	426,821	148,746	299,012
SAM Conservative Growth Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	42,725	60,418	436,837	16,109
Principal Pivot Series Variable Annuity with Liquidity Max Rider	37,594	20,988	110,920	10,910
SAM Flexible Income Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	21,411	7,425	10,096	4,648
The Principal Variable Annuity	220,248	427,537	234,373	488,748
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	5,213
Principal Investment Plus Variable Annuity	1,226,386	1,941,846	1,460,756	1,698,660
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	108,471	318,790	106,006	326,712
SAM Flexible Income Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	7,411	15,875	333,199	200,163
Principal Pivot Series Variable Annuity with Liquidity Max Rider	114,641	141,225	306,554	27,334
SAM Strategic Growth Portfolio Class 1 Division:
Principal Freedom Variable Annuity 2	—	6,166	—	1,040
The Principal Variable Annuity	11,549	125,731	30,708	102,402
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	721
Principal Investment Plus Variable Annuity	400,822	497,698	742,229	440,904
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	105,721	416,525	225,096	240,105

192

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
SAM Strategic Growth Portfolio Class 2 Division:
Principal Pivot Series Variable Annuity	56,013	49,094	142,153	67,444
Principal Pivot Series Variable Annuity with Liquidity Max Rider	94,769	5,407	36,797	4,628
Short-Term Income Class 1 Division:
Principal Freedom Variable Annuity	5,808	19,195	4,057	14,420
Principal Freedom Variable Annuity 2	13,026	13,824	39	1,204
The Principal Variable Annuity	430,763	429,094	165,988	381,773
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	29	2,938
Principal Investment Plus Variable Annuity	1,052,170	1,679,467	1,335,934	2,523,047
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	20,980	229,438	66,591	594,295
Short-Term Income Class 2 Division:
Principal Pivot Series Variable Annuity	25,727	13,538	78,588	47,077
Principal Pivot Series Variable Annuity with Liquidity Max Rider	67,696	51,613	38,730	1,595
SmallCap Class 1 Division:
Premier Variable	12,969	46,675	396,841	201,098
Principal Freedom Variable Annuity	2,983	19,674	42,485	17,349
Principal Freedom Variable Annuity 2	3,422	1,457	14,645	908
The Principal Variable Annuity	80,614	491,186	2,228,528	409,647
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	3,009	4,680
Principal Investment Plus Variable Annuity	218,608	509,263	2,419,963	375,559
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	33,673	110,308	301,474	127,904
SmallCap Class 2 Division:
Principal Pivot Series Variable Annuity	2,999	4,304	68,595	2,658
Principal Pivot Series Variable Annuity with Liquidity Max Rider	33,896	36,196	22,555	2,515
T. Rowe Price Blue Chip Growth Portfolio II Division:
Principal Investment Plus Variable Annuity	144,864	153,404	261,608	124,937
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	21,150	26,387	37,457	40,109
T. Rowe Price Health Sciences Portfolio II Division:
Principal Investment Plus Variable Annuity	74,599	195,913	240,103	171,933
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	8,851	33,150	29,498	58,052
Templeton Global Bond VIP Class 4 Division:
The Principal Variable Annuity	3,046	317	3,394	17
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	—
Principal Investment Plus Variable Annuity	25,436	3,798	34,015	9,058
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	303	587	1,013	—
Principal Pivot Series Variable Annuity	4,110	2,968	35,444	1,114
Principal Pivot Series Variable Annuity with Liquidity Max Rider	8,043	23,392	46,164	771
Templeton Growth VIP Class 2 Division:
Principal Freedom Variable Annuity	1,443	5,722	2,385	3,455
The Merger Fund Division:
Principal Pivot Series Variable Annuity	—	—	—	—
Principal Pivot Series Variable Annuity with Liquidity Max Rider	—	—	—	—

193

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

	2016		2015
Division	Purchases	Redemptions	Purchases	Redemptions
VanEck Global Hard Assets Class S Division:
The Principal Variable Annuity	75,846	41,976	33,413	38,684
The Principal Variable Annuity with Purchase Payment Credit Rider	—	—	—	168
Principal Investment Plus Variable Annuity	166,476	114,370	137,504	98,416
Principal Investment Plus Variable Annuity with Premium Payment Credit Rider	11,123	25,498	37,141	28,241
Principal Pivot Series Variable Annuity	2,950	20,117	28,794	604
Principal Pivot Series Variable Annuity with Liquidity Max Rider	12,232	1,219	3,828	916

194

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

6. Financial Highlights

Principal Life sells a number of variable annuity 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.

Separate Account B has presented the following disclosures for 2016, 2015, 2014, 2013 and 2012 in accordance with the AICPA Audit and Accounting Guide for Investment Companies. The following table was developed by determining which products issued by Principal Life have the lowest and highest total return. Only product designs within each division that had units outstanding during the respective periods were considered when determining the lowest and highest total return. The summary may not reflect the minimum and maximum contract charges offered by Principal Life as the contractholder may not have selected all available and applicable contact options as discussed in Note 2.

						For the year ended December 31,
		December 31				except as noted
			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:
	2016	156	$26.35 to $24.47		$4,082	–%		1.40% to 2.00%	4.98% to 4.35%
	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%
AllianceBernstein Small/Mid   Cap Value Class A Division:
	2016	290	$14.12 to $13.77		$4,055	0.59	%	1.30% to 2.00%	23.43% to 22.62%
	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:
	2016	3	$9.59 to $9.55		$30	0.83	%	1.15% to 1.40%	6.79% to 6.47%
	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:
	2016	214	$11.05 to $10.87		$2,357	–%		1.40% to 2.00%	1.84% to 1.21%
	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%

195

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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 Income   & Growth Class I Division:
	2016	585	$19.40 to $16.64		$10,859	2.37	%	0.85% to 1.90%	12.53% to 11.38%
	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%
American Century VP Inflation   Protection Class II Division:
	2016	3,502	$9.89 to $12.05		$45,285	1.86	%	1.15% to 2.00%	3.24% to 2.29%
	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%
American Century VP Mid Cap   Value Class II Division:
	2016	427	$22.54 to $21.59		$9,556	1.54	%	1.30% to 2.00%	21.12% to 20.28%
	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%
American Century VP Ultra   Class I Division:
	2016	181	$16.97 to $15.45		$3,072	0.36	%	1.30% to 1.90%	3.10% to 2.45%
	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%
American Century VP Ultra   Class II Division:
	2016	1,620	$19.85 to $18.43		$32,114	0.20	%	1.40% to 2.00%	2.90% to 2.28%
	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%

196

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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 Value   Class II Division:
	2016	707	$11.45 to $21.90		$16,312	1.57	%	1.15% to 1.90%	18.90% to 18.00%
	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%
American Funds Insurance    Series Asset Allocation Fund    Class 2 Division:
	2016 (14)	83	$10.65 to $10.61		$878	4.92	%	1.30% to 2.00%	6.50% to 6.10%
American Funds Insurance    Series Asset Allocation Fund    Class 4 Division:
	2016	57	$10.48 to $10.43		$598	1.31	%	1.15% to 1.40%	7.93% to 7.64%
	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 and    Growth Class 2    Division:
	2016 (14)	152	$11.19 to $11.14		$1,696	5.19	%	1.30% to 2.00%	12.01% to 11.51%
American Funds Insurance    Series Blue Chip Income and    Growth Class 4    Division:
	2016	93	$11.46 to $11.40		$1,061	1.84	%	1.15% to 1.40%	17.06% to 16.92%
	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:
	2016	106	$10.21 to $8.71		$976	0.27	%	1.30% to 2.00%	0.79% to 0.00%
	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:
	2016	15	$9.81 to $9.76		$147	0.05	%	1.15% to 1.40%	0.62% to 0.51%
	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%

197

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

							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 High-Income Bond    Class 2Division:
	2016	128	$10.30 to $10.14			$1,320	9.72	%	1.30% to 1.90%	16.12% to 15.49%
	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:
	2016	27	$10.28 to $10.22			$276	1.31	%	1.15% to 1.40%	6.09% to 5.80%
	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:
	2016	17	$9.87 to $9.81			$165	0.19	%	1.15% to 1.40%	1.33% to 1.03%
	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)%
American Funds Insurance    Series Managed Risk    International Fund Class P2    Division:
	2016	5	$8.36 to $8.31			$41	0.92	%	1.15% to 1.40%	(4.13)% to (4.37)%
	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%	(3.870	)%
American Funds Insurance    Series New World Fund    Class 2 Division:
	2016	130	$9.03 to $9.18			$1,195	1.17	%	1.30% to 2.00%	3.91% to 3.26%
	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:
	2016	37	$8.93 to $8.88			$329	0.54	%	1.15% to 1.40%	3.84% to 3.62%
	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)%

198

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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
Balanced Class 1 Division:
	2016	1,712	$3.47 to $26.77		$27,697	1.96	%	0.40% to 1.90%	5.24% to 3.72%
	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%
BlackRock Global Allocation    Class III Division:
	2016	105	$9.55 to $9.42		$996	1.36	%	1.15% to 2.00%	2.69% to 1.84%
	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:
	2016	65	$9.76 to $9.63		$632	5.30	%	1.15% to 2.00%	5.06% to 4.22%
	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:
	2016	11	$9.60 to $9.47		$107	2.28	%	1.15% to 2.00%	4.92% to 4.07%
	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:
	2016	88	$9.91 to $9.78		$872	2.37	%	1.15% to 2.00%	2.16% to 1.35%
	2015 (12)	11	$9.70 to $9.65		$111	5.79	%	1.15% to 2.00%	(2.71)% to (3.21)%
BlackRock iShares Equity    Appreciation Class III    Division:
	2016	53	$9.34 to $9.22		$497	2.22	%	1.15% to 2.00%	7.73% to 6.96%
	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:
	2016	3	$10.98 to $10.94		$31	0.94	%	1.15% to 1.40%	22.00% to 21.69%
	2015 (12)	–	$9.00 to $8.99		$1	0.94	%	1.15% to 1.40%	(10.89)% to (10.99)%

199

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

							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
Calvert EAFE International    Index Class F Division:
	2016	2	$8.90 to $8.85			$19	4.06	%	1.15% to 1.40%	(0.89)% to (1.12)%
	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:
	2016	13	$11.69 to $11.62			$155	0.52	%	1.15% to 1.40%	19.29% to 18.94%
	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:
	2016	65	$11.64 to $11.58			$751	0.66	%	1.15% to 1.40%	18.53% to 18.28%
	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%	(0.100	)%
ClearBridge Small Cap Growth    Series II Division:
	2016	1	$9.89 to $9.85			$13	–%		1.15% to 1.40%	4.32% to 4.01%
	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:
	2016	19	$9.97 to $9.83			$185	2.33	%	1.15% to 2.00%	4.07% to 3.26%
	2015 (12)	15	$9.58 to $9.52			$140	–%		1.15% to 2.00%	(4.20)% to (4.80)%
Columbia Small Cap Value    Class 2 Division:
	2016	20	$11.94 to $11.90			$244	0.26	%	1.15% to 1.40%	31.21% to 30.91%
	2015 (12)	8	$9.10 to $9.09			$75	0.73	%	1.15% to 1.40%	(9.90)% to (9.91)%
Core Plus Bond Class 1   Division:
	2016 (15)	6,529	$2.91 to $21.72			$138,244	3.07	%	0.43% to 2.00%	3.65% to 2.02%
	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%

200

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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
Core Plus Bond Class 2   Division:
	2016 (16)	22	$9.99 to $9.95		$221	0.90	%	1.15% to 1.40%	2.67% to 2.37%
	2015 (12)	2	$9.73 to $9.72		$19	6.38	%	1.15% to 1.40%	(2.31)% to (2.41)%
Delaware Limited Term    Diversified Income Service    Class Division:
	2016	94	$9.93 to $9.80		$931	1.35	%	1.15% to 2.00%	0.51% to (0.20)%
	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:
	2016	160	$14.20 to $13.84		$2,248	0.64	%	1.30% to 2.00%	29.44% to 28.51%
	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:
	2016	5	$9.42 to $9.37		$42	1.90	%	1.15% to 1.40%	3.74% to 3.54%
	2015	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:
	2016	82	$11.22 to $11.16		$919	1.49	%	1.15% to 1.40%	9.89% to 9.63%
	2015	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%	(0.490	)%
Deutsche Small Mid Cap Value    Class B Division:
	2016	91	$11.23 to $12.78		$1,157	0.22	%	1.15% to 2.00%	15.18% to 14.11%
	2015	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%

201

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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 Class 2    Division:
	2016	74,396	$14.83 to $14.22		$1,099,762	1.25	%	1.40% to 2.00%	5.40% to 4.79%
	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%
Diversified Balanced Managed    Volatility Class 2 Division:
	2016	15,384	$10.57 to $10.78		$168,723	0.69	%	1.15% to 2.00%	5.17% to 4.26%
	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:
	2016	224,677	$16.02 to $15.36		$3,589,242	1.24	%	1.40% to 2.00%	6.66% to 6.00%
	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%
Diversified Growth Managed    Volatility Class 2 Division:
	2016	28,091	$10.67 to $10.97		$313,613	0.60	%	1.15% to 2.00%	6.38% to 5.38%
	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:
	2016	20,962	$12.13 to $11.80		$254,023	1.00	%	1.40% to 2.00%	4.03% to 3.42%
	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%

202

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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 International    Class 1 Division:
	2016	5,292	$3.17 to $23.95		$117,981	2.32	%	0.41% to 2.00%	(0.06)% to (1.60)%
	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%
Diversified International    Class 2 Division:
	2016	22	$9.12 to $9.06		$197	2.14	%	1.15% to 1.40%	(0.98)% to (1.31)%
	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:
	2016	10	$10.56 to $10.52		$105	0.75	%	1.15% to 1.40%	13.92% to 13.61%
	2015 (12)	5	$9.27 to $9.26		$44	–%		1.15% to 1.40%	(8.13)% to (8.23)%
Dreyfus IP Technology Growth    Service Shares Division:
	2016	271	$24.24 to $22.50		$6,464	–%		1.40% to 2.00%	2.93% to 2.32%
	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%
Equity Income Class 1    Division:
	2016	12,338	$2.17 to $15.22		$198,801	2.68	%	0.39% to 2.00%	15.24% to 13.41%
	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%
Equity Income Class 2    Division:
	2016	115	$11.06 to $11.00		$1,263	2.61	%	1.15% to 1.40%	14.14% to 13.87%
	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%	(0.970	)%

203

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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 Contrafund   Service Class Division:
	2016	1,566	$25.15 to $22.84		$39,392	0.70	%	1.30% to 1.90%	6.52% to 5.89%
	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%
Fidelity VIP Contrafund   Service Class 2 Division:
	2016	2,089	$10.75 to $22.34		$48,208	0.60	%	1.15% to 2.00%	6.54% to 5.58%
	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%
Fidelity VIP Equity-Income   Service Class 2 Division:
	2016	1,624	$19.56 to $17.86		$31,630	2.05	%	1.30% to 2.00%	16.15% to 15.37%
	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%
Fidelity VIP Government   Money Market Initial Class   Division:
	2016 (13)	8,827	$1.00 to $0.99		$47,450	0.22	%	0.59% to 2.19%	0.00% to 0.00%
Fidelity VIP Government   Money Market Service Class   Division:
	2016 (13)	391	$9.90 to $9.88		$3,865	0.02	%	1.15% to 1.40%	(1.00)% to (1.20)%
Fidelity VIP Growth Service   Class Division:
	2016	779	$15.38 to $13.97		$11,979	–%		1.30% to 1.90%	(0.65)% to (1.13)%
	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%

204

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

							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 Growth Service   Class 2 Division:
	2016	430	$20.76 to $19.28			$8,861	–%		1.40% to 2.00%		(0.86)% to (1.43)%
	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%
Fidelity VIP Mid Cap Service   Class Division:
	2016	49		$11.55		$563	0.53	%	0.95	%	11.06	%
	2015	7		$10.40		$69	0.41	%	0.95	%	(2.440	)%
	2014 (9)	7		$10.66		$71	0.32	%	0.95	%	5.75	%
Fidelity VIP Mid Cap Service   Class 2 Division:
	2016	830	$10.82 to $25.78			$21,339	0.31	%	1.15% to 2.00%		10.63% to 9.70%
	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%
Fidelity VIP Overseas Service   Class 2 Division:
	2016	1,731	$9.02 to $14.21			$26,313	1.18	%	1.15% to 2.00%		(6.33)% to (7.12)%
	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%
Franklin Global Real Estate    VIP Class 2 Division:
	2016	61	$10.43 to $9.40			$613	1.19	%	1.15% to 2.00%		(0.67)% to (1.47)%
	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:
	2016	72	$11.28 to $11.21			$808	1.21	%	1.15% to 1.40%		14.63% to 14.27%
	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%		(0.390	)%

205

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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
Franklin Small Cap Value  VIP Class 2 Division:
	2016	253	$22.07 to $21.09		$5,529	0.76	%	1.30% to 2.00%	28.46% to 27.59%
	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%
Goldman Sachs VIT Mid Cap   Value Institutional Shares   Division:
	2016	586	$24.42 to $22.59		$14,216	1.31	%	1.30% to 2.00%	12.07% to 11.28%
	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%
Goldman Sachs VIT Mid Cap   Value Service Shares   Division:
	2016	45	$10.26 to $10.21		$459	1.08	%	1.15% to 1.40%	11.89% to 11.71%
	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%
Goldman Sachs VIT    Multi-Strategy Alternatives    Portfolio Service Shares    Division:
	2016	–	$9.26 to $9.22	$–		–%		1.15% to 1.40%	(0.86)% to (1.18)%
	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:
	2016	323	$21.59 to $19.98		$6,918	1.15	%	1.30% to 2.00%	21.57% to 20.80%
	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%

206

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

							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 Small   Cap Equity Insights Service   Shares Division:
	2016	8	$12.45 to $12.38			$99	0.39	%	1.15% to 1.40%	21.58% to 21.37%
	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:
	2016	9,919	$2.84 to $11.49			$110,034	3.50	%	0.51% to 2.00%	1.37% to (0.17)%
	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%
Government & High Quality   Bond Class 2 Division:
	2016	133	$10.11 to $10.05			$1,342	3.82	%	1.15% to 1.40%	0.40% to 0.10%
	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:
	2016	154	$10.62 to $10.30			$1,598	5.18	%	1.15% to 2.00%	7.27% to 6.40%
	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)%
Guggenheim Investments    Global Managed Futures    Strategy Division:
	2016	17	$8.82 to $8.03			$143	3.42	%	1.15% to 2.00%	(15.68)% to (16.53)%
	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:
	2016	12	$10.40 to $9.71			$127	–%		1.15% to 2.00%	(0.57)% to (1.32)%
	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%

207

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

							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    Multi-Hedge Strategies    Division:
	2016	45	$10.16 to $9.71			$438	0.11	%	1.15% to 2.00%	(1.65)% to (2.51)%
	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%
Income Class 1 Division:
	2016	462	$10.14 to $10.02			$4,669	4.48	%	1.30% to 2.00%	4.43% to 3.62%
	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:
	2016	44	$10.12 to $10.08			$446	7.41	%	1.15% to 1.40%	4.33% to 4.02%
	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:
	2016	1,820	$3.38 to $26.45			$49,426	1.16	%	0.40% to 2.00%	8.94% to 7.22%
	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%
International Emerging Markets    Class 2 Division:
	2016	14	$8.41 to $8.38			$115	1.15	%	1.15% to 1.40%	7.82% to 7.71%
	2015 (12)	4	$7.80 to $7.78			$33	1.58	%	1.15% to 1.40%	(21.84)% to (21.97)%
Invesco American Franchise     Series I Division:
	2016	259	$15.00 to $14.58			$3,878	–%		1.30% to 1.90%	0.94% to 0.34%
	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:
	2016	19	$10.50 to $10.44			$203	0.21	%	1.15% to 1.40%	10.18% to 9.89%
	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%	(0.690	)%

208

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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 Core Equity   Series I Division:
	2016	1,063	$15.89 to $14.43		$16,900	0.75	%	1.30% to 1.90%	8.84% to 8.17%
	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%
Invesco Global Health Care   Series I Division:
	2016	389	$20.03 to $9.72		$7,477	–%		1.30% to 2.00%	(12.61)% to (2.70)%
	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%
Invesco Global Health Care   Series II Division:
	2016	83	$9.18 to $9.13		$762	–%		1.15% to 1.40%	(12.74)% to (12.88)%
	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:
	2016	906	$10.49 to $9.96		$9,472	1.38	%	1.40% to 2.00%	(1.87)% to (2.45)%
	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%
Invesco International Growth   Series II Division:
	2016	46	$9.08 to $9.03		$418	1.21	%	1.15% to 1.40%	(1.84)% to (2.06)%
	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)%

209

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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 Mid Cap Growth   Series I Division:
	2016	78	$14.04 to $13.65		$1,102	–%		1.30% to 1.90%	(0.50)% to (1.16)%
	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:
	2016	327	$23.75 to $21.98		$7,700	–%		1.30% to 2.00%	10.62% to 9.85%
	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%
Invesco Technology   Series I Division:
	2016	284	$9.48 to $8.63		$2,690	–%		1.30% to 1.90%	(2.07)% to (2.60)%
	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%
Invesco Value Opportunities   Series I Division:
	2016	297	$15.46 to $14.35		$4,558	0.41	%	1.40% to 2.00%	16.68% to 15.91%
	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:
	2016	519	$16.77 to $15.22		$8,696	0.71	%	1.30% to 1.90%	10.69% to 9.97%
	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%

210

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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:
	2016	194	$10.03 to $9.86		$1,933	3.06	%	1.15% to 2.00%	1.01% to (1.40)%
	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:
	2016	2,502	$3.27 to $25.69		$40,322	0.27	%	0.40% to 2.00%	(5.53)% to (7.02)%
	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%
LargeCap Growth Class 2   Division:
	2016	31	$9.80 to $9.74		$307	0.10	%	1.15% to 1.40%	(6.40)% to (6.70)%
	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:
	2016	1,955	$2.24 to $52.76		$94,521	–%		0.41% to 2.00%	0.84% to (0.73)%
	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%
LargeCap Growth I Class 2   Division:
	2016	13	$9.99 to $9.95		$127	–%		1.15% to 1.40%	0.00% to (0.30)%
	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:
	2016	5,486	$2.23 to $16.01		$92,870	1.66	%	0.39% to 2.00%	11.12% to 9.36%
	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%

211

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

							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 S&P 500 Index   Class 2 Division:
	2016	72	$10.63 to $10.58			$766	2.04	%	1.15% to 1.40%	10.04% to 9.75%
	2015 (12)	16	$9.66 to $9.64			$151	2.15	%	1.15% to 1.40%	(3.69)% to (3.89)%
LargeCap Value Class 1   Division:
	2016	2,870	$64.98 to $37.57			$74,504	1.93	%	0.24% to 2.00%	7.67% to 6.04%
	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			$91,485	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%
LargeCap Value Class 2   Division:
	2016	5	$10.22 to $10.18			$56	1.51	%	1.15% to 1.40%	6.68% to 6.49%
	2015 (12)	1	$9.58 to $9.56			$10	1.46	%	1.15% to 1.40%	(4.68)% to (4.88)%
MFS International Value   Service Class Division:
	2016	336	$10.61 to $9.61			$3,308	1.38	%	1.15% to 2.00%	2.61% to 1.69%
	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 New Discovery Service   Class Division:
	2016 (17)	93	$9.84 to $10.94			$1,031	–%		1.15% to 2.00%	7.54% to 6.73%
	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 Utilities Service Class   Division:
	2016 (18)	626	$9.08 to $19.90			$11,829	3.68	%	1.15% to 2.00%	9.93% to 9.04%
	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%

212

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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
MFS Value Service Class   Division:
	2016 (19)	243	$23.92 to $22.85		$5,780	1.80	%	1.40% to 2.00%	12.20% to 11.52%
	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%
MidCap Class 1 Division:
	2016	4,359	$10.53 to $80.72		$324,263	0.41	%	0.40% to 2.00%	9.91% to 8.17%
	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%
Multi-Asset Income Class 1   Division:
	2016 (14)	16	$10.40 to $10.36		$170	–%		1.30% to 2.00%	4.10% to 3.70%
Multi-Asset Income Class 2   Division:
	2016 (14)	–	$10.39 to $10.37	$–		–%		1.15% to 1.40%	4.00% to 3.80%
Neuberger Berman AMT Large   Cap Value Class I Division:
	2016	240	$20.90 to $19.40		$4,993	0.77	%	1.40% to 2.00%	25.60% to 24.84%
	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%
Neuberger Berman AMT    Mid-Cap Growth Portfolio    Class S Division:
	2016	249	$9.46 to $9.78		$2,448	–%		1.15% to 2.00%	2.94% to 2.09%
	2015 (12)	286	$9.19 to $9.58		$2,746	–%		1.15% to 2.00%	(8.83)% to (4.49)%

213

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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
Neuberger Berman AMT   Socially Responsive Class I   Division:
	2016	204	$22.47 to $20.86		$4,563	0.67	%	1.40% to 2.00%	8.34% to 7.69%
	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%
Oppenheimer Main Street Small   Cap Service Shares Division:
	2016	41	$13.69 to $13.39		$555	0.25	%	1.30% to 1.90%	16.21% to 15.43%
	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:
	2016	268	$14.37 to $13.73		$3,838	2.58	%	1.40% to 2.00%	11.31% to 10.73%
	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%
PIMCO All Asset Advisor    Class Division:
	2016	5	$9.78 to $9.74		$53	6.46	%	1.15% to 1.40%	11.52% to 11.31%
	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:
	2016	1	$8.20 to $8.17		$12	0.93	%	1.15% to 1.40%	13.26% to 13.16%
	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:
	2016	1,457	$10.68 to $14.30		$21,316	5.15	%	1.15% to 2.00%	11.13% to 10.25%
	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%

214

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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
PIMCO Low Duration Advisor    Class Division:
	2016	32	$9.90 to $9.77		$315	1.41	%	1.15% to 2.00%	0.10% to (0.71)%
	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:
	2016	2,081	$10.19 to $12.02		$25,990	2.08	%	1.15% to 2.00%	1.49% to 0.67%
	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%
Principal Capital Appreciation   Class 1 Division:
	2016	7,551	$18.03 to $16.44		$109,609	1.12	%	0.95% to 2.00%	8.09% to 6.96%
	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%
Principal Capital Appreciation   Class 2 Division:
	2016	39	$11.19 to $11.12		$432	1.17	%	1.15% to 1.40%	7.60% to 7.34%
	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%	(0.290	)%
Principal LifeTime 2010   Class 1 Division:
	2016	1,749	$13.81 to $14.38		$26,898	2.11	%	0.95% to 2.00%	4.23% to 3.16%
	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%
Principal LifeTime 2020   Class 1 Division:
	2016	6,348	$14.81 to $15.89		$107,765	1.93	%	0.95% to 2.00%	4.74% to 3.72%
	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%

215

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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 2020   Class 2 Division:
	2016	2	$9.81 to $9.77		$16	1.84	%	1.15% to 1.40%	4.36% to 4.16%
	2015 (12)	2	$9.40 to $9.38		$16	6.44	%	1.15% to 1.40%	(6.00)% to (6.20)%
Principal LifeTime 2030   Class 1 Division:
	2016	3,830	$14.91 to $15.99		$64,965	1.63	%	0.95% to 2.00%	4.85% to 3.76%
	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%
Principal LifeTime 2030   Class 2 Division:
	2016	8	$9.75 to $9.71		$82	1.50	%	1.15% to 1.40%	4.39% to 4.07%
	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:
	2016	782	$15.21 to $16.61		$13,886	1.47	%	0.95% to 2.00%	4.46% to 3.36%
	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%
Principal LifeTime 2040   Class 2 Division:
	2016	13	$9.69 to $9.65		$121	0.38	%	1.15% to 1.40%	3.97% to 3.65%
	2015 (12)	–	$9.32 to $9.31	$–		–%		1.15% to 1.40%	(6.89)% to (6.99)%
Principal LifeTime 2050   Class 1 Division:
	2016	516	$15.26 to $16.73		$9,242	1.32	%	0.95% to 2.00%	4.59% to 3.46%
	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%
Principal LifeTime 2050   Class 2 Division:
	2016	9	$9.68 to $9.64		$84	1.23	%	1.15% to 1.40%	3.97% to 3.77%
	2015 (12)	3	$9.31 to $9.29		$25	3.71	%	1.15% to 1.40%	(7.09)% to (7.29)%

216

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

							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 Strategic   Income Class 1 Division:
	2016	1,144	$12.97 to $13.14			$16,092	2.46	%	0.95% to 2.00%	3.76% to 2.74%
	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%
Real Estate Securities Class 1   Division:
	2016	1,456	$5.32 to $50.55			$77,554	1.38	%	0.42% to 2.00%	5.40% to 3.76%
	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%
Real Estate Securities Class 2   Division:
	2016	325	$12.21 to $12.15			$3,951	1.02	%	1.15% to 1.40%	4.27% to 4.11%
	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:
	2016	34	$9.98 to $9.94			$340	–%		1.15% to 1.40%	29.44% to 29.09%
	2015 (12)	–	$7.71 to $7.70		$–		–%		1.15% to 1.40%	(22.75)% to (22.85)%
Rydex Commodities Strategy    Division:
	2016	46	$5.06 to $6.93			$270	–%		1.15% to 2.00%	9.29% to 8.28%
	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:
	2016	51	$11.53 to $11.46			$581	–%		1.15% to 1.40%	4.82% to 4.47%
	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%	(1.340	)%

217

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

							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 Balanced Portfolio   Class 1 Division:
	2016	37,771	$2.12 to $13.63			$541,175	2.10	%	0.42% to 2.00%	6.38% to 4.69%
	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%
SAM Balanced Portfolio   Class 2 Division:
	2016	354	$10.35 to $10.29			$3,651	2.15	%	1.15% to 1.40%	5.40% to 5.11%
	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:
	2016	9,706	$14.73 to $13.43			$137,720	2.52	%	0.95% to 2.00%	5.36% to 4.27%
	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%
SAM Conservative Balanced   Portfolio Class 2 Division:
	2016	299	$10.31 to $10.25			$3,074	2.30	%	1.15% to 1.40%	4.88% to 4.59%
	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)%
SAM Conservative Growth   Portfolio Class 1 Division:
	2016	7,042	$14.62 to $13.33			$98,936	1.43	%	0.95% to 2.00%	5.94% to 4.88%
	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%
SAM Conservative Growth   Portfolio Class 2 Division:
	2016	562	$10.35 to $10.29			$5,813	1.16	%	1.15% to 1.40%	5.61% to 5.32%
	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%	(0.790	)%

218

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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 Flexible Income Portfolio   Class 1 Division:
	2016	11,503	$14.84 to $13.53		$164,166	3.29	%	0.95% to 2.00%	6.00% to 4.88%
	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%
SAM Flexible Income Portfolio   Class 2 Division:
	2016	419	$10.30 to $10.24		$4,297	3.02	%	1.15% to 1.40%	5.53% to 5.24%
	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%	(0.500	)%
SAM Strategic Growth   Portfolio Class 1 Division:
	2016	4,536	$14.43 to $13.16		$62,693	1.44	%	0.95% to 2.00%	5.10% to 4.03%
	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%
SAM Strategic Growth   Portfolio Class 2 Division:
	2016	265	$10.25 to $10.19		$2,708	1.10	%	1.15% to 1.40%	4.70% to 4.41%
	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)%
Short-Term Income Class 1   Division:
	2016	8,582	$12.04 to $11.05		$99,558	2.09	%	0.85% to 2.00%	1.26% to 0.09%
	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%
Short-Term Income Class 2   Division:
	2016	106	$10.03 to $9.98		$1,063	2.38	%	1.15% to 1.40%	0.80% to 0.60%
	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%	(0.100	)%

219

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

							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
SmallCap Class 1 Division:
	2016 (20)	5,080	$2.53 to $21.43			$116,092	0.25	%	0.37% to 2.00%		16.90% to 15.09%
	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%
SmallCap Class 2 Division:
	2016 (21)	82	$10.58 to $10.54			$871	0.09	%	1.15% to 1.40%		15.75% to 15.57%
	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:
	2016	701	$23.75 to $22.05			$16,507	–%		1.40% to 2.00%		(0.88)% to (1.47)%
	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%
T. Rowe Price Health Sciences   Portfolio II Division:
	2016	580	$43.31 to $40.21			$24,918	–%		1.40% to 2.00%		(11.95)% to (12.49)%
	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%
Templeton Global Bond VIP   Class 4 Division:
	2016	126	$9.37 to $9.42			$1,185	–%		1.15% to 2.00%		1.63% to 0.86%
	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:
	2016	40		$21.31		$854	2.01	%	0.85	%	8.72	%
	2015	44		$19.60		$869	2.66	%	0.85	%	(7.280	)%
	2014	45		$21.14		$960	1.34	%	0.85	%	(3.650	)%
	2013	49		$21.94		$1,071	2.65	%	0.85	%	29.82	%
	2012	61		$16.90		$1,032	2.23	%	0.85	%	20.28	%

220

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

						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
The Merger Fund Division:
	2016	–	$9.77 to $9.73	$–		–%		1.15% to 1.40%	1.24% to 0.93%
	2015 (12)	–	$9.65 to $9.64	$–		–%		1.15% to 1.40%	(3.50)% to (3.60)%
VanEck Global Hard Assets   Class S Division:
	2016 (22)	730	$7.08 to $10.73		$8,017	0.37	%	1.15% to 2.00%	41.60% to 40.45%
	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%

221

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

(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 divisions, 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 contractholder 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, 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 year ended December 31, 2012.
(5)	Commencement of operations, May 21, 2012. Investment income ratios have been annualized for the year ended December 31, 2012.
(6)	Commencement of operations, May 20, 2013. Investment income ratios have been annualized for the year ended December 31, 2013.
(7)	Commencement of operations, December 2, 2013. Investment income ratios have been annualized for the year December 31, 2013.
(8)	Commencement of operations, April 24, 2014. Investment income ratios have been annualized for the year ended December 31, 2014.
(9)	Commencement of operations, May 17, 2014. Investment income ratios have been annualized for the year ended December 31, 2014.
(10)	Commencement of operations, November 10, 2014. Investment income ratios have been annualized for the year ended December 31, 2014.
(11)	Commencement of operations, April 17, 2015. Investment income ratios have been annualized for the year ended December 31, 2015.
(12)	Commencement of operations, May 18, 2015. Investment income ratios have been annualized for the year ended December 31, 2015.
(13)	Commencement of operations, February 8, 2016. Investment income ratios have been annualized for the year ended December 31, 2016.
(14)	Commencement of operations, May 23, 2016. Investment income ratios have been annualized for the year ended December 31, 2016.
(15)	Represented the operations of Bond & Mortgage Securities Class 1 Division until May 21, 2016.
(16)	Represented the operations of Bond & Mortgage Securities Class 2 Division until May 21, 2016.
(17)	Represented the operations of MFS VIT New Discovery Service Class Division until May 21, 2016.
(18)	Represented the operations of MFS VIT Utilities Service Class Division until May 21, 2016.
(19)	Represented the operations of MFS VIT Value Service Class Division until May 21, 2016.
(20)	Represented the operations of SmallCap Blend Class 1 Division until May 21, 2016.
(21)	Represented the operations of SmallCap Blend Class 2 Division until May 21, 2016.
(22)	Represented the operations of Van Eck Global Hard Assets Class S Division until May 21, 2016.

222

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

Following is a list of divisions and corresponding unit values and total return for divisions that had unit values and/or outside the ranges indicated above for applicable years.
Division	2016 Unit Value ($)
American Century VP Inflation Protection Class II Division	9.83 and 12.98
American Century VP Value Class II Division	11.38 and 23.91
American Funds Insurance Series New World Fund Class 2 Division	8.89 and 9.27
Balanced Class 1 Division	3.31 and 29.48
Core Plus Bond Class 1 Division	21.80, 23.93 and 24.01
Deutsche Small Mid Cap Value Class B Division	11.16, 12.83, 13.06 and 13.11
Diversified Balanced Managed Volatility Class 2 Division	10.05, 10.15, 10.51 and 10.99
Diversified Growth Managed Volatility Class 2 Division	10.09, 10.19, 10.61 and 11.18
Diversified International Class 1 Division	24.03, 26.38 and 26.47
Equity Income Class 1 Division	15.27, 16.16 and 16.22
Fidelity VIP Contrafund Service Class 2 Division	10.69 and 24.06
Fidelity VIP Government Money Market Initial Class Division	9.84, 9.85, 9.89, 9.90, 9.93 and 9.94
Fidelity VIP Mid Cap Service Class 2 Division	10.76 and 27.77
Fidelity VIP Overseas Service Class 2 Division	8.40, 8.48, 8.97 and 15.30
Government & High Quality Bond Class 1 Division	2.69, 11.53, 12.06, 12.10, 12.42 and 12.52
International Emerging Markets Class 1 Division	26.54, 29.14 and 29.24
LargeCap Growth Class 1 Division	3.12, 25.78, 28.30 and 28.39
LargeCap Growth I Class 1 Division	52.94, 58.11 and 58.31
LargeCap S&P 500 Index Class 1 Division	16.07, 17.64, 17.70, 19.03 and 19.16
LargeCap Value Class 1 Division	5.32, 5.61, 10.10, 12.24, 16.48 and 18.05
MFS New Discovery Service Class Division	9.80, 10.97, 11.18 and 11.21
MFS Utilities Service Class Division	9.03 and 20.84
MidCap Class 1 Division	81.00, 88.91 and 89.22
Neuberger Berman AMT Mid-Cap Growth Portfolio Class S Division	9.43 and 9.85
PIMCO High Yield Administrative Class Division	10.62 and 14.91
PIMCO Total Return Administrative Class Division	10.13 and 12.58
Principal Capital Appreciation Class 1 Division	10.42 and 10.53
Principal LifeTime 2010 Class 1 Division	14.43, 15.49 and 15.54
Principal LifeTime 2020 Class 1 Division	15.94, 17.11 and 17.16
Principal LifeTime 2030 Class 1 Division	16.05, 17.22 and 17.28
Principal LifeTime 2040 Class 1 Division	16.66, 17.88 and 17.94
Principal LifeTime 2050 Class 1 Division	16.79, 18.02 and 18.08
Principal LifeTime Strategic Income Class 1 Division	13.18, 14.15 and 14.20
Real Estate Securities Class 1 Division	50.72, 55.68 and 55.87
Rydex Commodities Strategy Division	5.03, 6.94, 7.00 and 7.01
SAM Balanced Portfolio Class 1 Division	13.68, 14.45, 14.50 and 14.95
SmallCap Class 1 Division	21.50, 23.60, 23.68 and 31.15
Templeton Global Bond VIP Class 4 Division	9.32, 9.43, 9.51 and 9.53
VanEck Global Hard Assets Class S Division	7.04, 10.77, 11.24 and 11.28

223

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

Division	2016 Total Return (%)
American Funds Insurance Series New World Fund Class 2 Division	3.25
BlackRock iShares Dynamic Allocation Class III Division	4.06
BlackRock iShares Equity Appreciation Class III Division	6.95
Fidelity VIP Government Money Market Initial Class Division	(1.60), (1.50), (1.10), (1.00), (0.70) and (0.60)
Invesco Global Health Care Series I Division	(13.14) and (2.30)
LargeCap Value Class 1 Division	0.39
MFS New Discovery Service Class Division	6.71
Rydex Commodities Strategy Division	8.27
Division	2015 Unit Value ($)
American Century VP Inflation Protection Class II Division	9.55 and 12.61
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
Diversified Growth Managed Volatility Class 2 Division	9.56, 9.60, 10.00 and 10.54
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
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
MFS VIT New Discovery Service Class Division	9.13, 10.28, 10.42 and 10.44
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
PIMCO High Yield Administrative Class Division	9.58 and 13.44
PIMCO Total Return Administrative Class Division	10.00 and 12.43
Principal Capital Appreciation Class 1 Division	9.73 and 9.77
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

224

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

Division	2015 Unit Value ($)
Principal LifeTime 2020 Class 1 Division	15.36, 16.40 and 16.44
Principal LifeTime 2030 Class 1 Division	15.45, 16.50 and 16.54
Principal LifeTime 2040 Class 1 Division	16.10, 17.20 and 17.24
Principal LifeTime 2050 Class 1 Division	16.21, 17.31 and 17.35
Real Estate Securities Class 1 Division	48.84, 53.34 and 53.47
Rydex Commodities Strategy Division	4.62, 6.41 and 6.43
SAM Balanced Portfolio Class 1 Division	13.05, 13.71, 13.75 and 14.13
SmallCap Blend Class 1 Division	18.67, 20.39, 20.44 and 26.76
Templeton Global Bond VIP Class 4 Division	9.19, 9.35, 9.37 and 9.38
Van Eck Global Hard Assets Service Class Division	4.98, 7.65, 7.95 and 7.97
Division	2015 Total Return (%)
American Century VP Inflation Protection Class II Division	(3.31)
Diversified Balanced Managed Volatility Class 2 Division	(3.60) and (3.30)
Diversified Growth Managed Volatility Class 2 Division	(4.50) and (4.10)
Fidelity VIP Overseas Service Class 2 Division	(9.43) and (9.03)
LargeCap Value Class 1 Division	(1.57)
MFS VIT New Discovery Service Class Division	(9.69), (4.01), (3.52) and (3.42)
Neuberger Berman AMT Mid-Cap Growth Portfolio S Class Division	(8.93) and (4.39)
Principal Capital Appreciation Class 1 Division	(1.72) and (1.31)
Division	2014 Unit Value ($)
American Century VP Inflation Protection Class II Division	9.93 and 13.11
American Century VP Value Class II Division	10.14 and 21.26
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
Diversified Growth Managed Volatility Class 2 Division	10.68
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
Equity Income Class 1 Division	14.27, 14.95 and 14.97
Fidelity VIP Contrafund Service Class 2 Division	10.16 and 22.88
Fidelity VIP Mid Cap Service Class 2 Division	10.05 and 25.94
Fidelity VIP Overseas Service Class 2 Division	16.08
Government & High Quality Bond Class 1 Division	2.65, 11.67, 12.09, 12.11, 12.34 and 12.42
International Emerging Markets Class 1 Division	29.24, 31.78 and 31.82
LargeCap Growth Class 1 Division	3.17, 26.88, 29.22 and 29.26
LargeCap Growth I Class 1 Division	50.39, 54.76 and 54.84
LargeCap S&P 500 Index Class 1 Division	14.79, 16.07, 16.10, 17.15 and 17.30
LargeCap Value Class 1 Division	5.03, 5.29, 9.73, 11.67, 15.70 and 17.16

225

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

Division	2014 Unit Value ($)
MFS VIT Utilities Service Class Division	22.60
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
PIMCO High Yield Administrative Class Division	13.86
PIMCO Total Return Administrative Class Division	12.55
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
SmallCap Blend Class 1 Division	19.05, 20.70, 20.73 and 27.02
SmallCap Growth II Class 1 Division	16.16, 16.32, 16.68, 17.56 and 17.59
SmallCap Value I Class 1 Division	34.27, 37.24 and 37.30
Van Eck Global Hard Assets Service Class Division	11.75, 12.14 and 12.16
Division	2014 Total Return (%)
American Century VP Inflation Protection Class II Division	(1.10) and 1.86
American Century VP Value Class II Division	11.48
Diversified Balanced Managed Volatility Class 2 Division	5.46
Diversified Growth Managed Volatility Class 2 Division	5.53
DWS Small Mid Cap Value Class B Division	3.08 and 3.69
Fidelity VIP Contrafund Service Class 2 Division	10.11
Fidelity VIP Mid Cap Service Class 2 Division	4.60
LargeCap Value Class 1 Division	10.70
MFS VIT Utilities Service Class Division	10.89
Money Market Class 1 Division	(1.91), (1.49), (1.40), (1.32), (0.92), (0.86), (0.64) and (0.42)
PIMCO High Yield Administrative Class Division	1.91
PIMCO Total Return Administrative Class Division	2.78
SAM Strategic Growth Portfolio Class 1 Division	6.57
Van Eck Global Hard Assets Service Class Division	(13.72)

226

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

Division	2013 Unit Value ($)
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
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
SmallCap Blend Class 1 Division	18.51, 20.01, 20.02 and 25.98
SmallCap Growth II Class 1 Division	15.43, 15.78, 16.68 and 16.69
SmallCap Value I Class 1 Division	32.59, 35.24 and 35.26
Division	2013 Total Return (%)
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
SAM Balanced Portfolio Class 1 Division	16.14, 16.23 and 16.65

227

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2016

Division	2012 Unit Value ($)
Asset Allocation Class 1 Division	28.28
Balanced Class 1 Division	22.50
Bond & Mortgage Securities Class 1 Division	23.40
Diversified International Class 1 Division	24.24
Equity Income Class 1 Division	10.70
Government & High Quality Bond Class 1 Division	11.94, 12.09 and 12.14
International Emerging Markets Class 1 Division	35.58
LargeCap Growth Class 1 Division	20.18
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
MidCap Blend Class 1 Division	55.35
Money Market Class 1 Division	13.79
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
SmallCap Blend Class 1 Division	13.72 and 17.72
SmallCap Growth II Class 1 Division	10.80 and 11.46
SmallCap Value I Class 1 Division	25.55
Division	2012 Total Return (%)
Balanced Class 1 Division	12.58
Bond & Mortgage Securities Class 1 Division	7.09
Diversified International Class 1 Division	17.94
Government & High Quality Bond Class 1 Division	3.48
LargeCap Growth Class 1 Division	16.36
LargeCap Value Class 1 Division	18.01 and 18.08
MidCap Blend Class 1 Division	18.94
Money Market Class 1 Division	(1.22), (1.00), (0.94), (0.82), (0.64) and (0.42)
Short-Term Income Class 1 Division	4.08

7. Subsequent Events

Separate Account B performed an evaluation of subsequent events through April 28, 2017 and determined no items required recognition or disclosure.

228

Report of Independent Auditors

The Board of Directors and Stockholder

Principal Life Insurance Company

We have audited the accompanying consolidated financial statements of Principal Life Insurance Company, which comprise the consolidated statements of financial position as of December 31, 2016 and 2015, and the related consolidated statements of operations, comprehensive income, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2016, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the 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.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Principal Life Insurance Company at December 31, 2016 and 2015, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.

Required Supplementary Information

Accounting principles generally accepted in the United States require that the Claims Development and Claim Duration and Payout information presented as unaudited within the Short-Duration Contracts disclosure on page 54-58 be presented to supplement the financial statements. Such information, although not a part of the financial statements, is required by the Financial Accounting Standards Board who considers it to be an essential part of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the financial statements, and other knowledge we obtained during our audit of the financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

	/s/ Ernst & Young LLP
Des Moines, Iowa April 25, 2017

229

Principal Life Insurance Company
Consolidated Statements of Financial Position
		December 31, 2016		December 31, 2015
		(in millions)
Assets
Fixed maturities, available-for-sale (2016 and 2015 include $232.5 million and $257.4 million related to
	consolidated variable interest entities)	$	51,252.2	$	46,463.4
Fixed maturities, trading (2016 and 2015 include $82.4 million and $100.4 million related to consolidated
	variable interest entities)		219.8		538.8
Equity securities, available-for-sale			96.3		101.8
Equity securities, trading			10.7		204.4
Mortgage loans			12,621.0		11,791.0
Real estate (2016 and 2015 include $305.7 million and $354.5 million related to consolidated variable
	interest entities)		1,365.2		1,447.2
Policy loans			784.8		786.3
Other investments (2016 and 2015 include $16.9 million and $29.5 million related to consolidated variable
	interest entities and $86.2 million and $53.4 million measured at fair value under the fair value option)		1,656.2		1,378.0
	Total investments		68,006.2		62,710.9
Cash and cash equivalents			1,490.4		1,905.5
Accrued investment income			563.7		521.8
Premiums due and other receivables			1,394.7		1,496.2
Deferred acquisition costs			3,184.2		3,057.3
Property and equipment			653.1		590.6
Goodwill			227.5		227.5
Other intangibles			125.2		127.7
Separate account assets			103,662.0		94,762.8
Other assets			1,003.1		893.3
	Total assets	$	180,310.1	$	166,293.6
Liabilities
Contractholder funds		$	35,337.7	$	33,151.6
Future policy benefits and claims			24,320.3		21,838.3
Other policyholder funds			782.0		719.5
Short-term debt			76.5		108.8
Long-term debt (2016 and 2015 include $0.0 million and $42.8 million related to consolidated variable
	interest entities)		—		42.8
Income taxes currently payable			4.5		4.4
Deferred income taxes			1,165.9		892.8
Separate account liabilities			103,662.0		94,762.8
Other liabilities (2016 and 2015 include $283.2 million and $345.9 million related to consolidated variable
	interest entities, of which $59.9 million and $68.1 million are measured at fair value under the fair
	value option)		6,721.9		6,518.4
Total liabilities			172,070.8		158,039.4
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			5,305.6		5,334.4
Retained earnings			2,139.9		2,232.6
Accumulated other comprehensive income			748.4		641.3
	Total stockholder's equity attributable to Principal Life Insurance Company		8,196.4		8,210.8
Noncontrolling interest			42.9		43.4
	Total stockholder's equity		8,239.3		8,254.2
	Total liabilities and stockholder's equity	$	180,310.1	$	166,293.6
See accompanying notes.

230

Principal Life Insurance Company
Consolidated Statements of Operations
		For the year ended December 31,
		2016		2015		2014
		(in millions)
Revenues
Premiums and other considerations		$	5,024.5	$	5,057.4	$	3,497.2
Fees and other revenues			2,513.8		2,537.3		2,392.7
Net investment income			2,785.4		2,552.0		2,663.5
Net realized capital gains, excluding impairment losses on
	available-for-sale securities		196.3		4.0		136.4
Net other-than-temporary impairment (losses) recoveries on available-
	for-sale securities		(93.7)		(0.8)		28.5
Other-than-temporary impairment losses on fixed maturities,
	available-for-sale reclassified from other comprehensive
	income		(3.1)		(29.2)		(102.2)
Net impairment losses on available-for-sale securities			(96.8)		(30.0)		(73.7)
Net realized capital gains (losses)			99.5		(26.0)		62.7
	Total revenues		10,423.2		10,120.7		8,616.1
Expenses
Benefits, claims and settlement expenses			6,339.5		6,135.1		4,610.0
Dividends to policyholders			156.6		163.5		177.4
Operating expenses			2,528.8		2,598.8		2,603.2
	Total expenses		9,024.9		8,897.4		7,390.6
Income before income taxes			1,398.3		1,223.3		1,225.5
Income taxes			285.0		281.9		243.0
Net income			1,113.3		941.4		982.5
Net income attributable to noncontrolling interest			26.6		10.8		30.0
Net income attributable to Principal Life Insurance Company		$	1,086.7	$	930.6	$	952.5
See accompanying notes.

231

Principal Life Insurance Company
Consolidated Statements of Comprehensive Income
		For the year ended December 31,
		2016		2015		2014
		(in millions)
Net income		$	1,113.3	$	941.4	$	982.5
Other comprehensive income (loss), net:
	Net unrealized gains (losses) on available-for-sale securities		103.8		(447.7)		261.2
	Noncredit component of impairment losses on fixed maturities, available-for-sale		0.3		18.8		61.9
	Net unrealized gains on derivative instruments		10.2		14.3		56.6
	Foreign currency translation adjustment		—		(0.1)		(3.7)
	Net unrecognized postretirement benefit obligation		2.9		(30.8)		(8.0)
Other comprehensive income (loss)			117.2		(445.5)		368.0
Comprehensive income			1,230.5		495.9		1,350.5
Comprehensive income attributable to noncontrolling interest			26.6		10.7		28.7
Comprehensive income attributable to Principal Life Insurance Company		$	1,203.9	$	485.2	$	1,321.8
See accompanying notes.

232

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 as of January 1, 2014		$	2.5	$	5,505.0	$	1,738.1	$	495.7	$	38.2	$	7,779.5
Capital distributions 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)
Net assets transferred to affiliate due to change in
	benefit plan sponsorship		—		(247.7)		—		221.7		—		(26.0)
Net income (1)			—		—		952.5		—		20.3		972.8
Other comprehensive income (1)			—		—		—		369.3		—		369.3
Balances as of December 31, 2014			2.5		5,275.0		1,817.2		1,086.7		43.2		8,224.6
Capital distributions 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 (1)			—		—		930.6		—		10.0		940.6
Other comprehensive loss (1)			—		—		—		(445.4)		—		(445.4)
Balances as of December 31, 2015			2.5		5,334.4		2,232.6		641.3		43.4		8,254.2
Capital distributions to parent			—		(20.0)		—		—		—		(20.0)
Stock-based compensation and additional related
	tax benefits		—		59.7		(4.4)		—		0.4		55.7
Dividends to parent			—		—		(1,175.0)		—		—		(1,175.0)
Distributions to noncontrolling interest			—		—		—		—		(33.0)		(33.0)
Contributions from noncontrolling interest			—		—		—		—		5.5		5.5
Net assets transferred to affiliate due to change in
	benefit plan sponsorship		—		(68.5)		—		(10.1)		—		(78.6)
Net income			—		—		1,086.7		—		26.6		1,113.3
Other comprehensive income			—		—		—		117.2		—		117.2
Balances as of December 31, 2016		$	2.5	$	5,305.6	$	2,139.9	$	748.4	$	42.9	$	8,239.3
(1) Excludes amounts attributable to redeemable noncontrolling interest. See Note 14, Stockholder's Equity, for further details.
See accompanying notes.

233

Principal Life Insurance Company
Consolidated Statements of Cash Flows
		For the year ended December 31,
		2016		2015		2014
		(in millions)
Operating activities
Net income		$	1,113.3	$	941.4	$	982.5
Adjustments to reconcile net income to net cash provided by operating activities:
	Amortization of deferred acquisition costs		262.6		251.7		348.5
	Additions to deferred acquisition costs		(377.7)		(356.5)		(347.4)
	Accrued investment income		(41.9)		(24.5)		25.9
	Net cash flows for trading securities		301.9		(166.3)		14.4
	Premiums due and other receivables		108.0		(202.6)		34.5
	Contractholder and policyholder liabilities and dividends		2,019.5		2,924.9		1,488.2
	Current and deferred income taxes		69.5		100.2		239.3
	Net realized capital (gains) losses		(99.5)		26.0		(62.7)
	Depreciation and amortization expense		117.8		110.3		107.1
	Mortgage loans held for sale, sold or repaid, net of gain		—		—		43.3
	Real estate acquired through operating activities		(58.2)		(43.9)		(49.4)
	Real estate sold through operating activities		227.6		51.9		158.0
	Stock-based compensation		54.7		53.4		47.5
	Other		590.0		640.2		172.3
Net adjustments			3,174.3		3,364.8		2,219.5
Net cash provided by operating activities			4,287.6		4,306.2		3,202.0
Investing activities
Available-for-sale securities:
	Purchases		(13,308.7)		(9,314.6)		(8,598.2)
	Sales		1,368.7		1,069.5		2,100.1
	Maturities		7,562.0		6,475.9		6,047.1
Mortgage loans acquired or originated			(2,798.9)		(2,177.2)		(2,081.6)
Mortgage loans sold or repaid			1,968.1		1,532.7		1,671.6
Real estate acquired			(109.7)		(322.0)		(281.7)
Net purchases of property and equipment			(133.4)		(128.7)		(117.9)
Net change in other investments			(125.3)		203.8		266.2
Net cash used in investing activities			(5,577.2)		(2,660.6)		(994.4)
Financing activities
Proceeds from financing element derivatives			0.4		0.3		15.1
Payments for financing element derivatives			(87.7)		(82.0)		(58.0)
Excess tax benefits from share-based payment arrangements			7.8		11.0		6.8
Purchase of subsidiary shares from noncontrolling interest			—		(21.7)		(179.9)
Dividends paid to parent			(1,175.0)		(503.1)		(850.0)
Capital contributions from (distributions to) parent			(20.0)		18.9		(17.7)
Issuance of long-term debt			12.0		13.2		38.5
Principal repayments of long-term debt			(54.8)		(52.6)		(100.1)
Net repayments of short-term borrowings			(32.3)		(45.7)		(137.9)
Investment contract deposits			10,462.4		6,214.8		5,349.1
Investment contract withdrawals			(8,373.3)		(6,655.5)		(7,088.8)
Net increase in banking operation deposits			129.0		91.1		30.7
Other			6.0		(2.8)		(13.0)
Net cash provided by (used in) financing activities			874.5		(1,014.1)		(3,005.2)
Net increase (decrease) in cash and cash equivalents			(415.1)		631.5		(797.6)
Cash and cash equivalents at beginning of period			1,905.5		1,274.0		2,071.6
Cash and cash equivalents at end of period		$	1,490.4	$	1,905.5	$	1,274.0
Supplemental information:
Cash paid for interest		$	0.3	$	0.1	$	5.3
Cash paid for income taxes		$	189.2	$	154.5	$	9.0
Supplemental disclosure of non-cash activities:
Assets received in kind for pension risk transfer transactions		$	594.3	$	—	$	—
Note receivable from parent in consideration of subsidiaries transferred to parent		$	—	$	156.0	$	—
Assets transferred to parent due to change in benefit plan sponsorship		$	304.1	$	—	$	308.2
Liabilities assumed by parent due to change in benefit plan sponsorship		$	(225.5)	$	—	$	(282.2)
See accompanying notes.

234

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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. The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). All significant intercompany accounts and transactions have been eliminated.

We evaluated subsequent events through April 25, 2017, which was the date our consolidated financial statements were issued.

Consolidation

We have relationships with various special purpose entities and other legal entities that must be evaluated to determine if the entities meet the criteria of a VIE or a voting interest entity (“VOE”). This assessment is performed by reviewing contractual, ownership and other rights, including involvement of related parties, and requires use of judgment. First, we determine if we hold a variable interest in an entity by assessing if we have the right to receive expected losses and expected residual returns of the entity. If we hold a variable interest, then the entity is assessed to determine if it is a VIE. An entity is a VIE if the equity at risk is not sufficient to support its activities, if the equity holders lack a controlling financial interest or if the entity is structured with non-substantive voting rights. In addition to the previous criteria, if the entity is a limited partnership or similar entity, it is a VIE if the limited partners do not have the power to direct the entity’s most significant activities through substantive kick-out rights or participating rights. A VIE is evaluated to determine the primary beneficiary. The primary beneficiary of a VIE is 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. When we are the primary beneficiary, we are required to consolidate the entity in our financial statements. We reassess our involvement with VIEs on a quarterly basis. For further information about VIEs, refer to Note 4, Variable Interest Entities.

If an entity is not a VIE it is considered a VOE. VOEs are generally consolidated if we own a greater than 50% voting interest. If we determine our involvement in an entity no longer meets the requirements for consolidation under either the VIE or VOE models, the entity is deconsolidated. 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.

235

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Recent Accounting Pronouncements

Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
Standards not yet adopted:
Goodwill impairment testing This authoritative guidance is to simplify how an entity is required to test goodwill for impairment by eliminating Step 2 (which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill with the carrying amount of that goodwill) from the goodwill impairment test. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. Early adoption is permitted.	January 1, 2020	We are currently evaluating the impact this guidance will have on our consolidated financial statements.
Credit losses This authoritative guidance requires entities to use a current expected credit loss (“CECL”) model to measure impairment for most financial assets that are not recorded at fair value through net income. Under the CECL model, an entity will estimate lifetime expected credit losses considering available relevant information about historical events, current conditions and reasonable and supportable forecasts. The CECL model does not apply to available-for-sale debt securities. This guidance also expands the required credit loss disclosures and will be applied using a modified retrospective approach by recording a cumulative-effect adjustment to retained earnings as of the beginning of the period of adoption. Early adoption is permitted.	January 1, 2020	We are currently evaluating the impact this guidance will have on our consolidated financial statements. We believe estimated credit losses under the CECL model will generally result in earlier loss recognition for loans and other receivables.
Leases This authoritative guidance requires lessee recognition of lease assets and lease liabilities on the balance sheet. The concept of an operating lease, where the lease assets and liabilities are off balance sheet, is eliminated under the new guidance. For lessors, the guidance modifies lease classification criteria and accounting for certain types of leases. Other key aspects of the guidance relate to the removal of the current real estate-specific guidance and new presentation and disclosure requirements. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach, which includes certain optional practical expedients that may be elected. Early adoption is permitted.	January 1, 2019	This guidance will require us to add our operating leases to the balance sheet. We are currently evaluating other impacts this guidance will have on our consolidated financial statements.

236

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
Definition of a business This authoritative guidance clarifies the definition of a business to assist with evaluating when transactions involving an integrated set of assets and activities (a “set”) should be accounted for as acquisitions or disposals of assets or businesses. The guidance requires that when substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The guidance also requires a set to include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output to be considered a business. Lastly, the guidance removes the evaluation of whether a market participant could replace missing elements and narrows the definition of outputs by more closely aligning it with how outputs are described in the revenue recognition guidance. The guidance will be applied prospectively. Early application is permitted in certain circumstances.	January 1, 2018	We are currently evaluating the impact this guidance will have on our consolidated financial statements.
Financial instruments - recognition and measurement This authoritative guidance addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The primary focus of this guidance is to supersede the guidance to classify equity securities with readily determinable fair values into different categories (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.	January 1, 2018	We are currently evaluating the impact this guidance will have on our consolidated financial statements. As of December 31, 2016, we do not hold material equity securities accounted for at fair value through other comprehensive income that will be accounted for at fair value through net income under the updated guidance. This change is not expected to have a material impact on our consolidated financial statements.

237

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
Revenue recognition This authoritative guidance replaces all general and most industry specific revenue recognition guidance (excluding insurance) currently prescribed by U.S. GAAP. The core principle is that an entity recognizes revenue to reflect the transfer of a promised good or service to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for that good or service. This guidance also provides clarification on when an entity is a principal or an agent in a transaction. 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.	January 1, 2018	We are currently evaluating the impact this guidance will have on our consolidated financial statements. Only a portion of our revenues are impacted by this guidance because the guidance does not apply to revenue on contracts accounted for under the financial instruments or insurance contracts standards. Our evaluation process includes, but is not limited to, identifying contracts within the scope of the guidance, reviewing and documenting our accounting for these contracts, and identifying and determining the accounting for any related contract costs.
Income tax - intra-entity transfers of assets This authoritative guidance requires entities to recognize current and deferred income tax resulting from an intra-entity asset transfer when the transfer occurs. Prior to issuance of this guidance, U.S. GAAP did not allow recognition of income tax consequences until the asset had been sold to a third party. This guidance requires adoption through a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption with early adoption permitted.	January 1, 2018	We are currently evaluating the impact this guidance will have on our consolidated financial statements.
Employee share-based payment accounting This authoritative guidance changes certain aspects of accounting for and reporting share-based payments to employees including changes related to the income tax effects of share-based payments, tax withholding requirements and accounting for forfeitures. Various transition methods will apply depending on the situation being addressed.	January 1, 2017	The guidance will be adopted prospectively as indicated by the guidance for each area of change and will not have a material impact on our consolidated financial statements.
Standards adopted:
Short-duration insurance contracts This authoritative guidance requires additional disclosures related to short-duration insurance contracts.	December 31, 2016	The disclosure requirements of this guidance were adopted retrospectively. See Note 9, Insurance Liabilities, for further details.

238

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
Net asset value per share as a practical expedient for fair value This authoritative guidance removes the requirement to categorize within the fair value hierarchy all investments for which fair value is measured using the net asset value per share practical expedient.	January 1, 2016	The guidance was adopted retrospectively and did not have a material impact on our consolidated financial statements. See Note 15, Fair Value Measurements, for further details.
Simplifying the presentation of debt issuance costs This authoritative guidance requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts.	January 1, 2016	The guidance was adopted retrospectively and did not have a material impact on our consolidated financial statements.
Consolidations This authoritative guidance makes changes to both the variable interest and voting interest consolidation models and eliminates the investment company deferral for portions of the variable interest model. The amendments in the standard impact the consolidation analysis for interests in investment companies and limited partnerships and similar entities.	January 1, 2016	The guidance was adopted using the modified retrospective approach. See Note 4, Variable Interest Entities, for further details.
Discontinued operations This authoritative guidance amends the definition of discontinued operations and requires entities to provide additional disclosures associated with discontinued operations, as well as disposal transactions that do not meet the discontinued operations criteria. The guidance requires discontinued 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.	January 1, 2015	This guidance was adopted prospectively and did not have a material impact on our consolidated financial statements.
Fair value of financial assets and liabilities of a consolidated collateralized financing entity This authoritative guidance provides a measurement alternative for a reporting entity to measure both the financial assets and financial liabilities of consolidated collateralized financing entities ("CCFEs") using the more observable of the fair value of the financial assets or of the financial liabilities for both the financial assets and financial liabilities.	January 1, 2015	This guidance was adopted using a modified retrospective approach and did not have a material impact on our consolidated financial statements. See Note 15, Fair Value Measurements, for further details.
Foreign currency cumulative translation adjustment This authoritative guidance clarifies how the cumulative translation adjustment related to a parent’s investment in a foreign entity should be released when certain transactions related to the foreign entity occur.	January 1, 2014	The guidance was adopted prospectively and did not have a material impact on our consolidated financial statements.

239

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

When we adopt new accounting standards, we have a process in place to perform a thorough review of the pronouncement, identify the financial statement and system impacts and create an implementation plan among our impacted business units to ensure we are compliant with the pronouncement on the date of adoption. This includes having effective processes and controls in place to support the reported amounts. Each of the standards listed above is in varying stages in our implementation process based on its issuance and adoption dates. We are on track to implement guidance by the respective effective dates.

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 other postretirement benefit obligations and

• accounting for income taxes and the valuation of deferred tax assets.

A description of such critical estimates is incorporated within the discussion of the related accounting policies that follow. In applying these policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Many of these policies, estimates and related judgments are common in the insurance and financial services industries; others are specific to our businesses and operations. Actual results could differ from these estimates.

Closed Block

We operate a closed block (“Closed Block”) for the benefit of individual participating dividend‑paying policies in force at the time of the 1998 mutual insurance holding company (“MIHC”) formation. See Note 7, Closed Block, for further details.

Cash and Cash Equivalents

Cash and cash equivalents include cash on hand, money market instruments and other debt issues with a maturity date of three months or less when purchased.

Investments

Fixed maturities include bonds, asset-backed securities (“ABS”), redeemable preferred stock and certain non-redeemable preferred securities. Equity securities include mutual funds, common stock and non-redeemable 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.

240

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 bases 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 $128.7 million and $166.8 million as of December 31, 2016 and 2015, 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 and 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 sponsored investment funds, 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 of 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 certain other investments are reported at cost. Interests in unconsolidated entities, joint ventures and partnerships are generally accounted for using the equity method. We have other investments reported at fair value or for which the fair value option has been elected. See Note 15, Fair Value Measurements, for detail on these investments.

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. 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.

241

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 consolidated statements of financial position or with specific firm commitments or forecasted transactions. Effectiveness of the hedge is formally assessed at inception and throughout the life of the hedging relationship. Even if a derivative is highly effective and qualifies for hedge accounting treatment, the hedge might have some ineffectiveness.

We use qualitative and quantitative methods to assess hedge effectiveness. Qualitative methods may include monitoring changes to terms and conditions and counterparty credit ratings. Quantitative methods may include statistical tests including regression analysis and minimum variance and dollar offset techniques.

Termination of Hedge Accounting. We prospectively discontinue hedge accounting when (1) the criteria to qualify for hedge accounting is no longer met, e.g., a derivative is determined to no longer be highly effective in offsetting the change in fair value or cash flows of a hedged item; (2) the derivative expires, is sold, terminated or exercised or (3) we remove the designation of the derivative being the hedging instrument for a fair value or cash flow hedge.

If it is determined that a derivative no longer qualifies as an effective hedge, the derivative will continue to be carried on the consolidated statements of financial position at its fair value, with changes in fair value recognized prospectively in net realized capital gains (losses). The asset or liability under a fair value hedge will no longer be adjusted for changes in fair value pursuant to hedging rules and the existing basis adjustment is amortized to the consolidated statements of operations line associated with the asset or liability. The component of accumulated other comprehensive income (“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.

242

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, individual and group annuities that provide periodic income payments, 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 individual and group annuities that provide periodic income payments, 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 8%, 9% and 11% of our life insurance in force and 33%, 36% and 40% of the number of life insurance policies in force as of December 31, 2016, 2015 and 2014, respectively. Participating business represented approximately 43%, 49% and 53% of life insurance premiums for the years ended December 31, 2016, 2015 and 2014, 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 net income over the estimated lives of these policies and contracts in relation to the emergence of estimated gross profits (“EGPs”).

The liability for unpaid claims for both long-duration and short-duration contracts 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 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. Our liability for unpaid claims does not include any allocated claim adjustment expenses.

243

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

We incur claim adjustment expenses for both long-duration and short-duration contracts that cannot be allocated to a specific claim. Our claim adjustment expense liability is estimated using actuarial analyses based on historical trends of expenses and expected claim runout patterns.

Short-Duration Contracts

We include the following group products in our short-duration insurance contracts disclosures: long-term disability (“LTD”), group life waiver, dental, vision, short-term disability (“STD”) and group life.

Future policy benefits and claims include reserves for group life and disability insurance that provide periodic income payments. These reserves are computed using assumptions of mortality, morbidity and investment performance. These assumptions are based on our experience, industry results, emerging trends and future expectations. Future policy benefits and claims also include reserves for incurred but unreported group disability, dental, vision and life insurance claims. We recognize claims costs in the period the service was provided to our policyholders. However, claims costs incurred in a particular period are not known with certainty until after we receive, process and pay the claims. We determine the amount of this liability using actuarial methods based on historical claim payment patterns as well as emerging cost trends, where applicable, to determine our estimate of claim liabilities.

We have defined claim frequency as follows for each short-duration product:

• LTD: Claim frequency is based on submitted reserve claim counts.

• Group Life Waiver: Claim frequency is based on submitted reserve claim counts, consistent with LTD.

• Dental and Vision: Claim frequency is based on the claim form, which may include one or more procedures.

• STD: Claim frequency is based on submitted claims.

• Group Life: Claim frequency is based on submitted life claims (lives, not coverages).

We did not make any significant changes to our methodologies or assumptions used to calculate the liability for unpaid claims for short-duration contracts during 2016.

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.

244

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 net income as incurred.

DAC for universal life-type insurance contracts and certain investment contracts are amortized over the lives of the contracts in relation to EGPs or, in certain circumstances, estimated gross revenues. This amortization is adjusted in the current period when EGPs or estimated gross revenues are revised. For individual variable life insurance, individual variable annuities and group annuities that have separate account U.S. equity investment options, we utilize a mean reversion methodology (reversion to the mean assumption), a common industry practice, to determine the future domestic equity market growth rate assumption used for the calculation of EGPs. DAC for participating life insurance policies are amortized in proportion to estimated gross margins. DAC for non-participating term life insurance and individual disability policies are amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policyholder liabilities.

DAC on insurance policies and investment contracts are subject to recoverability testing at the time of policy issue and loss recognition testing on an annual basis, or when an event occurs that may warrant loss recognition. If loss recognition or impairment is necessary, DAC would be written off to the extent 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.

245

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Long-Term Debt

Long-term debt included 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 were classified as long-term debt in our consolidated statements 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. As of December 31, 2016 and 2015, we had $412.4 million and $397.5 million of net ceded reinsurance recoverables related to claims that have been received, respectively. As of December 31, 2016 and 2015, $390.5 million, or 95%, and $379.4 million, or 95%, were with our five largest ceded reinsurers, respectively. Our total amount recoverable from reinsurers includes net ceded reinsurance recoverables related to claims that have been received and reserves ceded to reinsurers; however, it does not reflect potentially offsetting impacts of collateral. As of December 31, 2016 and 2015, the total amount recoverable from reinsurers was $837.1 million and $857.3 million, respectively.

The effects of reinsurance on premiums and other considerations and policy and contract benefits were as follows:

		For the year ended December 31,
		2016		2015		2014
		(in millions)
Premiums and other considerations:
	Direct	$	5,254.2	$	5,275.8	$	3,755.4
	Assumed		226.0		183.2		143.9
	Ceded		(455.7)		(401.6)		(402.1)
Net premiums and other considerations		$	5,024.5	$	5,057.4	$	3,497.2
Benefits, claims and settlement expenses:
	Direct	$	6,298.8	$	6,355.4	$	4,650.6
	Assumed		356.9		306.0		289.6
	Ceded		(316.2)		(526.3)		(330.2)
Net benefits, claims and settlement expenses		$	6,339.5	$	6,135.1	$	4,610.0

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. 

246

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

As of December 31, 2016 and 2015, the separate accounts included a separate account valued at $158.4 million and $158.2 million, respectively, which primarily included shares of PFG’s common 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 and foreign jurisdictions 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, net operating loss carryforwards and tax credit carryforwards 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 net income 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, 2016, 2015 and 2014, we received $272.7 million, $266.7 million and $327.1 million, respectively, of expense reimbursements from affiliated entities.

We and our direct parent, PFSI, are parties to a cash advance agreement, which allows us, collectively, to pool our available cash in order to more efficiently and effectively invest our cash. The cash advance agreement allows (i) us to advance cash to PFSI in aggregate principal amounts not to exceed $1.0 billion, with such advanced amounts earning interest at the daily 30-day LIBOR rate (the “Internal Crediting Rate”); and (ii) PFSI to advance cash to us in aggregate principal amounts not to exceed $1.0 billion, with such advance amounts paying interest at the Internal Crediting Rate plus 10 basis points to reimburse PFSI for the costs incurred in maintaining short-term investing and borrowing programs. Under this cash advance agreement, we had a receivable from PFSI of $420.1 million and $385.0 million as of December 31, 2016 and 2015, respectively, and earned interest of $2.1 million, $0.5 million and $0.3 million during 2016, 2015 and 2014, respectively.

We have short-term affiliated debt with our parent. See Note 10, Debt, for additional information.

247

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 $2,517.8 million and $2,166.9 million as of December 31, 2016 and 2015, respectively. In addition, we recognized premiums and other fees of $404.3 million, $337.4 million and $278.1 million for the years ended December 31, 2016, 2015 and 2014, respectively, associated with this agreement. Furthermore, we recognized expenses of $565.0 million, $493.6 million and $473.1 million for the years ended December 31, 2016, 2015 and 2014, respectively, associated with this agreement.

We receive commission fees, distribution and services fees from Principal Securities, Inc. 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 $409.0 million, $446.1 million and $377.4 million for the years ended December 31, 2016, 2015 and 2014, respectively. In addition, we pay commission expense to affiliated registered representatives within Principal Securities, Inc. to sell proprietary products. Commission expense was $58.8 million, $64.4 million and $66.8 million for the years ended December 31, 2016, 2015 and 2014, respectively.

Effective December 2016, PFG became the sponsor of the qualified and nonqualified defined contribution plans for both employees and individual field agents. Prior to December 2016, we were the sponsor of these plans. We were allocated plan expenses of $3.8 million from PFG during 2016 after the change in sponsorship was effective. See Note 12, Employee and Agent Benefits, for further details.

Effective December 2016, PFG also became the sponsor of the nonqualified deferred compensation plans for select employees and individual field agents. Prior to December 2016, we were the sponsor of these plans. We were allocated plan expenses of $0.3 million from PFG during 2016 after the change in sponsorship was effective. See Note 12, Employee and Agent Benefits, for further details.

In connection with the change in sponsorships in December 2016, we transferred $227.5 million of assets to PFG and PFG assumed $225.5 million of liabilities from us. In addition, deferred tax assets of $72.5 million were transferred to PFG from us associated with the defined contribution and deferred compensation plan sponsorship changes.

Effective January 2016, PFG became the sponsor of the post-65 retiree medical plan for both employees and individual field agents. Prior to January 2016, we were the sponsor of this plan. In connection with the change in sponsorship, we transferred a $4.1 million net postretirement benefit asset for the overfunded status of the plans to PFG. See Note 12, Employee and Agent Benefits, for further details.

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. We were allocated $48.4 million and $74.1 million of pension expense from PFG during 2016 and 2015, respectively, and $9.6 million during 2014 after the change in sponsorship was effective. See Note 12, Employee and Agent Benefits, for further details.

During 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 $6.0 million and less than $0.1 million for the years ended December 31, 2016 and 2015, respectively.

Pursuant to certain regulatory requirements or otherwise in the ordinary course of business, we guarantee certain payments of our affiliates and have agreements with affiliates to provide and/or receive management, administrative and other services, all of which, individually and in the aggregate, are immaterial to our business, financial condition and net income.

248

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 as of January 1, 2015		$	18.7	$	220.7	$	56.4	$	295.8
	Transfer to affiliate (1)		—		(68.3)		—		(68.3)
Balance as of December 31, 2015		$	18.7	$	152.4	$	56.4	$	227.5
Balance as of December 31, 2016		$	18.7	$	152.4	$	56.4	$	227.5

(1) See Note 2, Related Party Transactions, for further details.

Finite Lived Intangible Assets

Amortized intangible assets that continue to be subject to amortization over a weighted average remaining expected life of 15 years were as follows:

	December 31,
	2016		2015
	(in millions)
Gross carrying value	$	54.8	$	54.8
Accumulated amortization		24.1		21.6
Net carrying value	$	30.7	$	33.2

During 2016, 2015 and 2014, we fully amortized finite lived intangible assets of $0.0 million, $0.5 million and $15.8 million, respectively.

The amortization expense for intangible assets with finite useful lives was $2.5 million, $4.0 million and $6.7 million for 2016, 2015 and 2014, respectively. As of December 31, 2016, the estimated amortization expense for the next five years is as follows (in millions):

Year ending December 31:
	2017	$	3.6
	2018		3.4
	2019		3.3
	2020		3.2
	2021		2.3

Indefinite Lived Intangible Assets

The net carrying amount of unamortized indefinite lived intangible assets was $94.5 million as of both December 31, 2016 and 2015. 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.

249

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

4. Variable Interest Entities

We have relationships with various types of entities which may be VIEs. Certain VIEs are consolidated in our financial results. See Note 1, Nature of Operations and Significant Accounting Policies, under the caption “Consolidation” for further details of our consolidation accounting policies. We did not provide financial or other support to investees designated as VIEs for the periods ended December 31, 2016 and December 31, 2015.

Adoption of New Consolidation Guidance

Both the variable interest and voting interest consolidation models were changed under authoritative guidance effective January 1, 2016. The guidance eliminated the investment company deferral for portions of the variable interest model. Prior to January 1, 2016, the primary beneficiary of an investment company VIE was the enterprise who absorbed the majority of the entity’s expected losses, received a majority of the expected residual returns or both. The new guidance requires all VIEs to be assessed under one method to determine the primary beneficiary.

The determination of whether interests in limited partnerships and similar entities are VIEs or VOEs has also changed under the pronouncement, by requiring evaluation of the equity holders’ rights to determine if they have the power to direct the entity’s most significant activities through substantive kick-out rights or participating rights. Limited partnerships and similar entities without these rights are VIEs.

We adopted the guidance using the modified retrospective approach effective January 1, 2016. Under the modified retrospective approach, the cumulative effect of initially applying the new guidance is recognized as of the date of initial application, and comparative periods are not restated. The changes resulting from the adoption were:

• We invest in partnerships and other funds. Prior to new accounting guidance certain of these investments were VOEs. Upon adoption of new accounting guidance, some of these investments are now considered VIEs. We are not the primary beneficiary of these VIEs.

• We provide asset management and other services to certain investment structures for which we earn performance-based management fees. These structures were considered VIEs prior to new accounting guidance, and we had a variable interest. We were not the primary beneficiary of these entities as we did not have the obligation to absorb losses or the right to receive benefits of the entities that could be potentially significant to the VIE. Subsequent to new accounting guidance, we no longer consider our fees a variable interest for those investment structures where our fees are deemed to be commensurate with the services provided, consistent with fees for similar services negotiated at arms-length, and we do not have additional interests in the entity that would absorb a significant amount of the entity’s expected losses and expected residual returns of the entity.

Consolidated Variable Interest Entities

Grantor Trusts

We contributed undated subordinated floating rate notes to three grantor trusts. The trusts separated their 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 significant continuing interest in the trusts.

250

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Collateralized Private Investment Vehicles

We invest in cash and 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 synthetic 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 synthetic entities because we act as the investment manager of the underlying portfolio and we have the power to make decisions and to receive benefits and the obligation to absorb losses that could be potentially significant to the VIE.

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.

Assets and Liabilities of Consolidated Variable Interest Entities

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 were as follows:

		December 31, 2016				December 31, 2015
		Total		Total		Total		Total
		assets		liabilities		assets		liabilities
		(in millions)
Grantor trusts (1)		$	233.3	$	212.3	$	257.9	$	231.8
Collateralized private investment vehicles (2)			82.4		61.5		100.4		85.9
CMBS			12.5		—		18.4		—
Real estate (3)			329.2		26.8		384.2		71.3
	Total	$	657.4	$	300.6	$	760.9	$	389.0

(1) The assets of grantor trusts are primarily fixed maturities, available-for-sale. The liabilities are primarily other liabilities that reflect an embedded derivative of the forecasted transaction to deliver the underlying securities.

(2) The assets of the collateralized private investment vehicles are primarily fixed maturities, trading. The liabilities include derivative liabilities and an obligation to redeem notes at maturity or termination of the trusts, which are reported in other liabilities.

(3) The assets of the real estate VIEs primarily include real estate, other investments and cash. Liabilities primarily include other liabilities. Liabilities also included long-term debt as of December 31, 2015.

251

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 certain 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.

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, which are classified as VIEs. The entities are VIEs as equity holders lack the power to control the most significant activities of the entities because the equity holders do not have either the ability by a simple majority to exercise substantive kick-out rights or substantive participating rights. We have determined we are not the primary beneficiary because we do not have the power to direct the most significant activities of the entities.

252

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, 2016
Fixed maturities, available-for-sale:
	Corporate	$	368.4	$	298.6
	Residential mortgage-backed pass-through securities		2,822.6		2,786.8
	Commercial mortgage-backed securities		4,060.2		4,116.2
	Collateralized debt obligations		758.1		779.6
	Other debt obligations		5,021.0		5,033.6
Fixed maturities, trading:
	Residential mortgage-backed pass-through securities		19.9		19.9
	Commercial mortgage-backed securities		1.9		1.9
	Collateralized debt obligations		10.6		10.6
Other investments:
	Other limited partnership and fund interests		613.6		1,014.1
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

(1) Our risk of loss is limited to our initial investment measured at amortized cost for fixed maturities, available-for-sale. Our risk of loss is limited to our investment measured at fair value for our fixed maturities, trading. Our risk of loss is limited to our carrying value plus any unfunded commitments and/or guarantees for our other investments. Unfunded commitments are not liabilities on our consolidated statements of financial position because we are only required to fund additional equity when called upon to do so by the general partner or investment manager.

253

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 were as follows:

										Other-than-
				Gross		Gross				temporary
		Amortized		unrealized		unrealized				impairments in
		cost		gains		losses		Fair value		AOCI (1)
		(in millions)
December 31, 2016
Fixed maturities, available-for-sale:
	U.S. government and agencies	$	1,398.1	$	17.2	$	10.7	$	1,404.6	$	—
	Non-U.S. governments		475.0		71.7		4.6		542.1		—
	States and political subdivisions		5,431.6		190.8		86.8		5,535.6		1.1
	Corporate		29,873.9		1,523.4		321.3		31,076.0		13.9
	Residential mortgage-backed pass-through securities		2,786.8		66.4		30.6		2,822.6		—
	Commercial mortgage-backed securities		4,116.2		31.0		87.0		4,060.2		77.5
	Collateralized debt obligations		779.6		2.8		24.3		758.1		0.3
	Other debt obligations		5,065.7		37.1		49.8		5,053.0		50.3
Total fixed maturities, available-for-sale		$	49,926.9	$	1,940.4	$	615.1	$	51,252.2	$	143.1
Total equity securities, available-for-sale		$	103.7	$	3.5	$	10.9	$	96.3
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

(1) Excludes $119.5 million and $131.5 million as of December 31, 2016 and December 31, 2015, 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.

254

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

The amortized cost and fair value of fixed maturities available-for-sale as of December 31, 2016, by expected maturity, were as follows:

	Amortized cost		Fair value
	(in millions)
Due in one year or less	$	3,118.7	$	3,132.7
Due after one year through five years		11,968.7		12,337.4
Due after five years through ten years		8,067.2		8,246.6
Due after ten years		14,024.0		14,841.6
Subtotal		37,178.6		38,558.3
Mortgage-backed and other asset-backed securities		12,748.3		12,693.9
Total	$	49,926.9	$	51,252.2

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 were as follows:

	For the year ended December 31,
	2016		2015		2014
	(in millions)
Fixed maturities, available-for-sale	$	2,048.6	$	1,923.4	$	2,017.0
Fixed maturities, trading		11.4		11.6		12.2
Equity securities, available-for-sale		5.4		5.6		5.4
Equity securities, trading		11.6		9.8		6.5
Mortgage loans		533.7		525.7		563.4
Real estate		127.7		96.6		103.2
Policy loans		41.3		41.4		43.8
Cash and cash equivalents		8.3		4.3		3.7
Derivatives (1)		(36.1)		(66.6)		(87.9)
Other		114.8		75.1		71.1
Total		2,866.7		2,626.9		2,738.4
Investment expenses		(81.3)		(74.9)		(74.9)
Net investment income	$	2,785.4	$	2,552.0	$	2,663.5
(1) Relates to periodic settlements of derivatives used in fair value and cash flow hedges of fixed maturities, available-for-
sale. See Note 6, Derivative Financial Instruments, for further details.

255

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Net Realized Capital Gains and Losses

Major components of net realized capital gains (losses) on investments were as follows:

		For the year ended December 31,
		2016		2015		2014
		(in millions)
Fixed maturities, available-for-sale:
	Gross gains	$	56.6	$	17.0	$	49.5
	Gross losses		(22.4)		(4.3)		(23.8)
	Net impairment losses		(95.1)		(30.3)		(83.7)
	Hedging, net		(37.9)		(58.3)		(21.4)
Fixed maturities, trading			(5.0)		(6.1)		8.8
Equity securities, available-for-sale:
	Net impairment (losses) recoveries		(1.7)		0.3		10.0
Equity securities, trading			(5.3)		(8.2)		10.7
Mortgage loans			4.4		(0.3)		(9.4)
Derivatives			198.8		82.5		60.3
Other			7.1		(18.3)		61.7
Net realized capital gains (losses)		$	99.5	$	(26.0)	$	62.7

Proceeds from sales of investments (excluding call and maturity proceeds) in fixed maturities, available-for-sale were $1,370.0 million, $1,059.6 million and $2,068.9 million in 2016, 2015 and 2014, respectively.

Other-Than-Temporary Impairments

We have a process in place to identify fixed maturity and equity securities that could potentially have an 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 determinewhether 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 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”).

256

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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,
		2016		2015		2014
		(in millions)
Fixed maturities, available-for-sale		$	(92.0)	$	(1.1)	$	18.5
Equity securities, available-for-sale			(1.7)		0.3		10.0
Total other-than-temporary impairment losses, net of recoveries from
	the sale of previously impaired securities		(93.7)		(0.8)		28.5
Other-than-temporary impairment losses on fixed maturities,
	available-for-sale reclassified from OCI (1)		(3.1)		(29.2)		(102.2)
Net impairment losses on available-for-sale securities		$	(96.8)	$	(30.0)	$	(73.7)

(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,
		2016		2015		2014
		(in millions)
Beginning balance		$	(128.0)	$	(140.3)	$	(235.4)
Credit losses for which an other-than-temporary impairment was
	not previously recognized		(41.9)		(6.1)		(7.2)
Credit losses for which an other-than-temporary impairment was
	previously recognized		(31.7)		(13.8)		(67.4)
Reduction for credit losses previously recognized on fixed maturities
	now sold, paid down or intended to be sold		60.5		24.7		163.1
Net reduction for positive changes in cash flows expected
	to be collected and amortization (1)		6.4		7.5		6.6
Ending balance		$	(134.7)	$	(128.0)	$	(140.3)

(1) Amounts are recognized in net investment income.

257

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 were as follows:

			December 31, 2016
			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		$	555.3	$	10.7	$	8.2	$	—	$	563.5	$	10.7
	Non-U.S. governments			159.2		4.6		—		—		159.2		4.6
	States and political subdivisions			2,222.1		86.3		4.8		0.5		2,226.9		86.8
	Corporate			6,243.6		179.4		1,156.5		141.9		7,400.1		321.3
	Residential mortgage-backed pass-
		through securities		1,265.6		29.8		16.0		0.8		1,281.6		30.6
	Commercial mortgage-backed
		securities		1,615.6		40.1		612.5		46.9		2,228.1		87.0
	Collateralized debt obligations			265.7		0.9		195.6		23.4		461.3		24.3
	Other debt obligations			2,222.3		32.8		375.9		17.0		2,598.2		49.8
Total fixed maturities, available-for-sale			$	14,549.4	$	384.6	$	2,369.5	$	230.5	$	16,918.9	$	615.1
Total equity securities, available-for-sale			$	18.2	$	0.4	$	35.4	$	10.5	$	53.6	$	10.9

Our consolidated portfolio consisted of available-for-sale fixed maturities where 94% were investment grade (rated AAA through BBB-) with an average price of 96 (carrying value/amortized cost) as of December 31, 2016. Gross unrealized losses in our fixed maturities portfolio decreased during the year ended December 31, 2016, primarily due to tightening of credit spreads, partially offset by an increase in interest rates.

For those securities that had been in a continuous unrealized loss position for less than twelve months, our consolidated portfolio held 1,911 securities reflecting an average price of 97 as of December 31, 2016. Of this portfolio, 98% was investment grade (rated AAA through BBB-) as of December 31, 2016, with associated unrealized losses of $374.1 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 453 securities reflecting an average price of 91 and an average credit rating of A- as of December 31, 2016. The corporate sector accounted for $141.9 million in unrealized losses with an average price of 89 and an average credit rating of BBB-. The remaining unrealized losses consisted primarily of $46.9 million within the commercial mortgage-backed securities sector with an average price of 93 and an average credit rating of AA-. 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.

258

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 as of December 31, 2016.

			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 consisted 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) as of December 31, 2015. Gross unrealized losses in our fixed maturities portfolio increased during the year ended December 31, 2015, primarily due 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 reflecting an average price of 97 as of December 31, 2015. Of this portfolio, 90% was investment grade (rated AAA through BBB-) as of 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 reflecting an average price of 85 and an average credit rating of BBB+ as of December 31, 2015. The corporate sector accounted for $304.2 million in unrealized losses with an average price of 80 and an average credit rating of BBB-. The remaining unrealized losses consisted 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 as of December 31, 2015.

259

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Net Unrealized Gains and Losses on Available-for-Sale Securities and Derivative Instruments

The net unrealized gains and losses on investments in available-for-sale securities, the noncredit component of impairment losses on fixed maturities available-for-sale and the net unrealized gains and losses on derivative instruments in cash flow hedge relationships are reported as separate components 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, 2016		December 31, 2015
		(in millions)
Net unrealized gains on fixed maturities, available-for-sale (1)		$	1,387.7	$	1,153.0
Noncredit component of impairment losses on fixed maturities, available-for-sale			(143.1)		(146.2)
Net unrealized losses on equity securities, available-for-sale			(7.4)		(8.4)
Adjustments for assumed changes in amortization patterns			(121.9)		(127.0)
Adjustments for assumed changes in policyholder liabilities			(237.0)		(214.2)
Net unrealized gains on derivative instruments			212.8		217.0
Net unrealized gains on equity method subsidiaries and noncontrolling interest
	adjustments		29.0		70.4
Provision for deferred income taxes			(390.6)		(329.4)
Net unrealized gains on available-for-sale securities and derivative instruments		$	729.5	$	615.2

(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, 2016		December 31, 2015
		(in millions)
Commercial mortgage loans		$	11,968.0	$	11,222.4
Residential mortgage loans			697.5		620.0
	Total amortized cost		12,665.5		11,842.4
Valuation allowance			(44.5)		(51.4)
Total carrying value		$	12,621.0	$	11,791.0

260

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

We periodically purchase mortgage loans as well as sell mortgage loans we have originated. Mortgage loans purchased and sold were as follows:

		For the year ended December 31,
		2016		2015		2014
		(in millions)
Commercial mortgage loans:
	Purchased	$	120.5	$	193.6	$	57.3
	Sold		—		1.0		0.2
Residential mortgage loans:
	Purchased		242.9		227.3		99.0
	Sold		—		—		34.6

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, 2016					December 31, 2015
	Amortized		Percent			Amortized		Percent
	cost		of total			cost		of total
	($ in millions)
Geographic distribution
New England	$	532.1		4.4	%	$	509.4		4.5	%
Middle Atlantic		3,317.3		27.7			3,075.6		27.4
East North Central		652.6		5.5			451.8		4.0
West North Central		185.6		1.6			264.3		2.4
South Atlantic		2,189.5		18.3			2,072.7		18.5
East South Central		239.3		2.0			215.1		1.9
West South Central		1,211.7		10.1			1,120.6		10.0
Mountain		932.6		7.8			898.8		8.0
Pacific		2,707.3		22.6			2,614.1		23.3
Total	$	11,968.0		100.0	%	$	11,222.4		100.0	%
Property type distribution
Office	$	4,417.6		36.9	%	$	4,010.0		35.7	%
Retail		2,671.1		22.3			2,521.6		22.5
Industrial		1,802.4		15.1			1,840.9		16.4
Apartments		2,741.4		22.9			2,474.2		22.0
Hotel		260.7		2.2			320.5		2.9
Mixed use/other		74.8		0.6			55.2		0.5
Total	$	11,968.0		100.0	%	$	11,222.4		100.0	%

Our residential mortgage loan portfolio is composed of home equity mortgages with an amortized cost of $165.6 million and $218.8 million and first lien mortgages with an amortized cost of $531.9 million and $401.2 million as of December 31, 2016 and December 31, 2015, respectively. Our residential home equity mortgages are generally second lien mortgages comprised of closed-end loans and lines of credit.

261

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 an S&P Global (“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.

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, 2016
	Brick and mortar		CTL		Total
	(in millions)
A- and above	$	10,565.5	$	158.5	$	10,724.0
BBB+ thru BBB-		1,008.2		100.6		1,108.8
BB+ thru BB-		133.8		—		133.8
B+ and below		0.5		0.9		1.4
Total	$	11,708.0	$	260.0	$	11,968.0
	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

262

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 potential 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, 2016
	Home equity		First liens		Total
	(in millions)
Performing	$	156.8	$	528.5	$	685.3
Non-performing		8.8		3.4		12.2
Total	$	165.6	$	531.9	$	697.5
	December 31, 2015
	Home equity		First liens		Total
	(in millions)
Performing	$	208.0	$	396.0	$	604.0
Non-performing		10.8		5.2		16.0
Total	$	218.8	$	401.2	$	620.0

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 non-accrual status, the accrued unpaid interest receivable is reversed against interest income. Accrual of interest resumes after factors resulting in doubts about collectability have improved.

263

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

The amortized cost of mortgage loans on non-accrual status was as follows:

		December 31, 2016		December 31, 2015
		(in millions)
Residential:
	Home equity	$	8.8	$	10.8
	First liens		3.4		5.2
Total		$	12.2	$	16.0

The aging of our mortgage loans, based on amortized cost, was as follows:

	December 31, 2016
					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	$	—	$	—	$	—	$	—	$	11,708.0	$	11,708.0
Commercial-CTL		—		—		—		—		260.0		260.0
Residential-home equity		1.9		1.1		1.4		4.4		161.2		165.6
Residential-first liens		1.5		0.8		2.2		4.5		527.4		531.9
Total	$	3.4	$	1.9	$	3.6	$	8.9	$	12,656.6	$	12,665.5
	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

We did not have any mortgage loans that were 90 days or more past due and still accruing interest as of either December 31, 2016 or December 31, 2015.

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 we will be unable to collect all amounts due according to contractual terms of the loan agreement. When we determine 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.

264

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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.

265

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, 2016
Beginning balance		$	27.5	$	23.9	$	51.4
	Provision		1.4		(5.6)		(4.2)
	Charge-offs		(1.5)		(4.8)		(6.3)
	Recoveries		—		3.6		3.6
Ending balance		$	27.4	$	17.1	$	44.5
Allowance ending balance by basis of impairment method:
	Individually evaluated for impairment	$	—	$	5.9	$	5.9
	Collectively evaluated for impairment		27.4		11.2		38.6
Allowance ending balance		$	27.4	$	17.1	$	44.5
Loan balance by basis of impairment method:
	Individually evaluated for impairment	$	—	$	19.2	$	19.2
	Collectively evaluated for impairment		11,968.0		678.3		12,646.3
Loan ending balance		$	11,968.0	$	697.5	$	12,665.5
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

266

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, 2016
				Unpaid
		Recorded		principal		Related
		investment		balance		allowance
		(in millions)
With no related allowance recorded:
	Residential-first liens	$	1.5	$	1.5	$	—
With an allowance recorded:
	Residential-home equity		13.0		14.1		5.5
	Residential-first liens		4.7		4.5		0.4
Total:
	Residential	$	19.2	$	20.1	$	5.9
		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

267

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

		Average
		recorded		Interest income
		investment		recognized
		(in millions)
For the year ended December 31, 2016
With no related allowance recorded:
	Residential-first liens	$	2.6	$	—
With an allowance recorded:
	Residential-home equity		13.4		0.3
	Residential-first liens		5.3		0.1
Total:
	Residential	$	21.3	$	0.4
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

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.

268

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, 2016
	TDRs			TDRs in payment default
	Number of	Recorded		Number of	Recorded
	contracts	investment		contracts	investment
		(in millions)			(in millions)
Residential-home equity	9	$	0.5	—	$	—
Residential-first liens	1		0.1	—		—
Total	10	$	0.6	—	$	—
	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

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 $52.0 million, $49.3 million and $46.4 million in 2016, 2015 and 2014, respectively. Accumulated depreciation was $450.2 million and $405.5 million as of December 31, 2016 and 2015, respectively.

269

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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,
			2016		2015
			(in millions)
Total assets			$	58,388.3	$	60,234.7
Total liabilities				11,149.3		14,165.9
Total equity			$	47,239.0	$	46,068.8
Net investment in unconsolidated entities			$	460.4	$	466.1
	For the year ended December 31,
	2016		2015		2014
	(in millions)
Total revenues	$	6,859.6	$	7,693.6	$	1,485.2
Net income		2,884.1		4,443.0		747.3
Our share of net income of unconsolidated entities		93.2		57.4		52.9

Derivative assets are carried at fair value and reported as a component of other investments. Certain sponsored investment funds 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

As of December 31, 2016 and 2015, we posted $2,562.8 million and $2,705.5 million, respectively, in commercial mortgage loans and home equity mortgages to satisfy collateral requirements associated with our obligation under funding agreements with Federal Home Loan Bank of Des Moines (“FHLB Des Moines”). In addition, as of December 31, 2016 and 2015, we posted $2,219.6 million and $935.7 million, respectively, in fixed maturities, available-for-sale securities to satisfy collateral requirements primarily associated with a reinsurance arrangement, our derivative credit support annex (collateral) agreements, Futures Commission Merchant (“FCM”) agreements, a lending arrangement and our obligation under funding agreements with FHLB Des Moines. Since we did not relinquish ownership rights on these instruments, they are reported as fixed maturities, available-for-sale and mortgage loans, respectively, on our consolidated statements of financial position. Of the securities posted as collateral, as of December 31, 2016 and 2015, $272.8 million and $295.2 million, respectively, could be sold or repledged by the secured party.

270

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, 2016
Derivative assets	$	871.5	$	(290.5)	$	(570.9)	$	10.1
December 31, 2015
Derivative assets	$	656.5	$	(409.7)	$	(227.7)	$	19.1

(1) The gross amount of recognized derivative assets is reported with other investments on the consolidated statements of financial position. The gross amount of derivative assets is not netted against offsetting liabilities for presentation on the consolidated statements of financial position.

(2) Represents amount of offsetting derivative liabilities that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative assets for presentation on the consolidated statements of financial position.

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, 2016
Derivative liabilities	$	552.3	$	(290.5)	$	(243.9)	$	17.9
December 31, 2015
Derivative liabilities	$	729.0	$	(409.7)	$	(253.9)	$	65.4

(1) The gross amount of recognized derivative liabilities is reported with other liabilities on the consolidated statements of financial position. The above excludes $343.0 million and $381.4 million of derivative liabilities as of December 31, 2016 and December 31, 2015, 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.

271

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 expenses 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, 2016 and December 31, 2015.

6. Derivative Financial Instruments

Derivatives are generally used to hedge or reduce exposure to market risks associated with assets held or expected to be purchased or sold and liabilities incurred or expected to be incurred. Derivatives are used to change the characteristics of our asset/liability mix consistent with our risk management activities. Derivatives are also used in asset replication strategies.

Types of Derivative Instruments

Interest Rate Contracts

Interest rate risk is the risk we will incur economic losses due to adverse changes in interest rates. Sources of interest rate risk include the difference between the maturity and interest rate changes of assets with the liabilities they support, timing differences between the pricing of liabilities and the purchase or procurement of assets and changing cash flow profiles from original projections due to prepayment options embedded within asset and liability contracts. We use various derivatives to manage our exposure to fluctuations in interest rates.

Interest rate swaps are contracts in which we agree with other parties to exchange, at specified intervals, the difference between fixed rate and floating rate interest amounts based upon designated market rates or rate indices and an agreed upon notional principal amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by any party. Cash 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 theagreed-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.

272

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 fluctuations in 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 prices. 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.

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.

273

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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.

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 $310.3 million and $342.7 million in cash and securities under collateral arrangements as of December 31, 2016 and December 31, 2015, 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, 2016 and December 31, 2015, was $453.8 million and $606.5 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 $310.3 million and $342.7 million as of December 31, 2016 and December 31, 2015, 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, 2016, we would be required to post an additional $41.2 million of collateral to our counterparties.

As of December 31, 2016 and December 31, 2015, we had received $565.4 million and $211.6 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.

274

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, 2016		December 31, 2015
		(in millions)
Notional amounts of derivative instruments
Interest rate contracts:
	Interest rate swaps	$	23,520.4	$	21,704.2
	Interest rate options		4,950.5		4,900.0
	Interest rate futures		96.0		162.0
	Swaptions		77.0		159.0
Foreign exchange contracts:
	Currency swaps		1,333.9		1,589.2
Equity contracts:
	Equity options		3,505.8		3,604.8
	Equity futures		545.1		514.2
Credit contracts:
	Credit default swaps		961.3		1,084.5
	Total return swaps		90.0		90.0
	Futures		11.9		13.1
Other contracts:
	Embedded derivatives		9,574.5		9,294.1
Total notional amounts at end of period		$	44,666.4	$	43,115.1
Credit exposure of derivative instruments
Interest rate contracts:
	Interest rate swaps	$	733.1	$	505.5
	Interest rate options		27.3		34.1
Foreign exchange contracts:
	Currency swaps		90.5		99.8
Equity contracts:
	Equity options		28.2		39.9
Credit contracts:
	Credit default swaps		7.0		13.4
	Total return swaps		0.7		0.5
Total gross credit exposure			886.8		693.2
Less: collateral received			575.9		228.3
Net credit exposure		$	310.9	$	464.9

275

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

The fair value of our derivative instruments classified as assets and liabilities was as follows:

		Derivative assets (1)				Derivative liabilities (2)
		December 31, 2016		December 31, 2015		December 31, 2016		December 31, 2015
		(in millions)
Derivatives designated as hedging
	instruments
Interest rate contracts		$	4.4	$	9.4	$	71.3	$	132.2
Foreign exchange contracts			86.8		94.1		143.4		164.2
Total derivatives designated as hedging
	instruments	$	91.2	$	103.5	$	214.7	$	296.4
Derivatives not designated as hedging
	instruments
Interest rate contracts		$	739.3	$	493.0	$	200.6	$	255.8
Foreign exchange contracts			5.1		6.1		35.4		24.8
Equity contracts			28.2		40.0		95.9		112.3
Credit contracts			7.7		13.9		5.7		39.7
Other contracts			—		—		343.0		381.4
Total derivatives not designated as hedging
	instruments		780.3		553.0		680.6		814.0
Total derivative instruments		$	871.5	$	656.5	$	895.3	$	1,110.4

(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 $130.8 million and $151.1 million as of December 31, 2016 and December 31, 2015, 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 OTC 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. As of December 31, 2016 and December 31, 2015, we did not purchase credit protection relating to our sold protection transactions. 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.

276

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, 2016
									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	$	0.6	$	30.0		2.2
		AA		94.0		0.8		94.0		1.2
		A		145.0		1.2		145.0		1.3
		BBB		290.0		2.3		290.0		2.1
		B		20.0		(1.8)		20.0		2.8
		Near default		10.0		0.2		10.0		3.0
	Government/municipalities
		AA		30.0		0.4		30.0		2.3
	Sovereign
		AA		10.0		0.1		10.0		2.7
		BBB		40.0		0.3		40.0		2.7
Total single name credit default swaps				669.0		4.1		669.0		1.9
Basket and index credit default swaps
	Corporate debt
		Near default (1)		82.3		(1.6)		82.3		0.2
	Government/municipalities
		AA		30.0		(0.4)		30.0		0.7
	Structured finance
		AA		3.5		—		3.5		0.8
Total basket and index credit default swaps				115.8		(2.0)		115.8		0.4
Total credit default swap protection sold			$	784.8	$	2.1	$	784.8		1.7

277

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

			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

(1) Includes $60.0 million and $78.0 million as of December 31, 2016 and December 31, 2015, respectively, notional of derivatives in consolidated collateralized private investment vehicle VIEs where the credit risk is borne by third party investors.

We also have invested in fixed maturities classified as 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.

278

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

		December 31, 2016
						Weighted
						average
		Amortized		Carrying		expected life
		cost		value		(in years)
		(in millions)
Structured finance
	AA	$	14.1	$	14.1		0.6
	BBB		3.5		3.5		0.8
	BB		2.3		2.3		0.8
	CCC		4.7		4.7		1.2
Total structured finance			24.6		24.6		0.8
Total fixed maturities with credit derivatives		$	24.6	$	24.6		0.8

		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

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.

279

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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		related hedged item for the year ended
Derivatives in fair value		ended December 31, (1)						fair value hedging		December 31, (1)
hedging relationships		2016		2015		2014		relationships		2016		2015		2014
		(in millions)								(in millions)
								Fixed maturities,
Interest rate contracts		$	19.5	$	26.4	$	25.4		available-for-sale	$	(19.2)	$	(26.1)	$	(27.7)
Interest rate contracts			(0.9)		0.8		2.0	Investment contracts			1.0		(0.7)		(1.9)
Foreign exchange								Fixed maturities,
	contracts		—		3.8		5.5		available-for-sale		—		(3.8)		(5.4)
Foreign exchange
	contracts		—		—		0.2	Investment contracts			—		—		(0.2)
Total		$	18.6	$	31.0	$	33.1	Total		$	(18.2)	$	(30.6)	$	(35.2)

(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	2016		2015		2014
	(in millions)
Fixed maturities, available-for-sale (1)	$	(41.9)	$	(72.8)	$	(93.0)
Investment contracts (2)		2.6		3.7		4.3

(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.

280

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 3.5 years. As of December 31, 2016, we had $16.2 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. During 2016 and 2015, we did not have any reclassifications from AOCI into net realized capital gains (losses) as a result of the determination that hedged cash flows were probable of not occurring.

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		2016		2015		2014		(effective portion)		2016		2015		2014
				(in millions)								(in millions)
Interest rate		Fixed maturities,								Net investment
	contracts		available-for-sale	$	(33.1)	$	33.1	$	29.0		income	$	19.4	$	16.8	$	13.8
										Net realized capital
											gains		11.2		—		—
Interest rate										Benefits, claims and
	contracts	Investment contracts			1.6		4.7		2.0		settlement expenses		—		—		—
Foreign exchange		Fixed maturities,								Net realized capital
	contracts		available-for-sale		4.0		16.9		68.7		gains (losses)		6.2		28.4		(10.2)
Foreign exchange										Benefits, claims and
	contracts	Investment contracts			6.0		2.4		7.2		settlement expenses		—		—		—
Total				$	(21.5)	$	57.1	$	106.9	Total		$	36.8	$	45.2	$	3.6

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	2016		2015		2014
	(in millions)
Fixed maturities, available-for-sale (1)	$	5.8	$	6.1	$	5.1
Investment contracts (2)		(15.7)		(18.3)		(11.1)

(1) Reported in net investment income on the consolidated statements of operations.

(2) Reported in benefits, claims and settlement expenses on the consolidated statements of operations.

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 $0.3 million, $0.0 million and $0.0 million for the years ended December 31, 2016, 2015 and 2014, respectively.

281

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

We expect to reclassify net gains of $14.5 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.

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	2016		2015		2014
	(in millions)
Interest rate contracts	$	243.3	$	74.0	$	246.1
Foreign exchange contracts		(10.7)		(11.2)		(31.4)
Equity contracts		(123.5)		(50.5)		21.9
Credit contracts		37.4		3.5		(34.7)
Other contracts		14.5		(5.7)		(190.2)
Total	$	161.0	$	10.1	$	11.7

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. 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. This includes, but is 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.

282

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 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. As of December 31, 2016, cumulative actual earnings were greater than cumulative expected earnings. Therefore, we established an additional $8.2 million liability, which was recorded within policyholder dividends obligation. As of December 31, 2015, cumulative actual earnings were less than cumulative expected earnings. However, cumulative net unrealized gains were greater than expected, resulting in the recognition of a PDO of $117.9 million and $88.7 million as of December 31, 2016 and 2015, respectively.

Closed Block liabilities and assets designated to the Closed Block were as follows:

		December 31, 2016		December 31, 2015
		(in millions)
Closed Block liabilities
Future policy benefits and claims		$	4,068.4	$	4,229.2
Other policyholder funds			8.1		9.2
Policyholder dividends payable			232.5		246.4
Policyholder dividends obligation			126.1		88.7
Other liabilities			7.7		8.2
	Total Closed Block liabilities		4,442.8		4,581.7
Assets designated to the Closed Block
Fixed maturities, available-for-sale			2,218.9		2,211.5
Fixed maturities, trading			6.7		10.3
Equity securities, available-for-sale			3.0		3.8
Mortgage loans			842.2		899.1
Policy loans			566.7		587.2
Other investments			62.4		81.9
	Total investments		3,699.9		3,793.8
Cash and cash equivalents			76.2		88.8
Accrued investment income			43.6		45.3
Premiums due and other receivables			11.7		11.3
Deferred tax asset			62.3		55.2
Other assets			—		0.2
	Total assets designated to the Closed Block		3,893.7		3,994.6
Excess of Closed Block liabilities over assets designated to the Closed Block			549.1		587.1
Amounts included in accumulated other comprehensive income			0.7		9.3
Maximum future earnings to be recognized from Closed Block assets and
	liabilities	$	549.8	$	596.4

283

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Closed Block revenues and expenses were as follows:

		For the year ended December 31,
		2016		2015		2014
		(in millions)
Revenues
Premiums and other considerations		$	298.0	$	325.6	$	351.9
Net investment income			181.6		187.0		201.9
Net realized capital losses			(1.0)		(0.2)		(2.3)
	Total revenues		478.6		512.4		551.5
Expenses
Benefits, claims and settlement expenses			267.1		283.2		313.3
Dividends to policyholders			153.5		160.4		173.2
Operating expenses			3.6		3.9		4.3
	Total expenses		424.2		447.5		490.8
Closed Block revenues, net of Closed Block expenses, before income taxes			54.4		64.9		60.7
Income taxes			17.1		20.7		19.5
Closed Block revenues, net of Closed Block expenses and income taxes			37.3		44.2		41.2
Funding adjustment charges			9.3		8.3		(4.8)
Closed Block revenues, net of Closed Block expenses, income taxes and
	funding adjustment charges	$	46.6	$	52.5	$	36.4

The change in maximum future earnings of the Closed Block was as follows:

	For the year ended December 31,
	2016		2015		2014
	(in millions)
Beginning of year	$	596.4	$	648.9	$	685.3
End of year		549.8		596.4		648.9
Change in maximum future earnings	$	(46.6)	$	(52.5)	$	(36.4)

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,
		2016		2015		2014
		(in millions)
Balance at beginning of year		$	3,057.3	$	2,754.6	$	2,848.8
Costs deferred during the year			377.7		356.5		347.4
Amortized to expense during the year (1)			(262.6)		(251.7)		(348.5)
Adjustment related to unrealized (gains) losses on available-for-sale
	securities and derivative instruments		11.8		197.9		(93.1)
Balance at end of year		$	3,184.2	$	3,057.3	$	2,754.6

(1) Includes adjustments for revisions to estimated gross profits.

284

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

9. Insurance Liabilities

Contractholder Funds

Major components of contractholder funds in the consolidated statements of financial position were as follows:

		December 31,
		2016		2015
		(in millions)
Liabilities for investment contracts:
	Liabilities for individual annuities	$	10,864.9	$	10,147.4
	GICs		10,290.7		10,222.8
	Funding agreements		8,270.3		6,863.4
	Other investment contracts		936.8		996.6
Total liabilities for investment contracts			30,362.7		28,230.2
Universal life and other reserves			4,975.0		4,921.4
Total contractholder funds		$	35,337.7	$	33,151.6

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.

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, 2016 and 2015, $106.7 million and $107.5 million, respectively, of liabilities were 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, 2016 and 2015, $702.0 million and $1,021.0 million, respectively, of liabilities were 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, 2016 and 2015, $201.5 million and $201.4 million, respectively, of liabilities were 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, 2016 and 2015, $119.8 million and $246.0 million, respectively, of liabilities were 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.

285

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, 2016 and 2015, $4,389.4 million and $3,537.0 million, respectively, of liabilities were 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.

Liability for Unpaid Claims

The liability for unpaid claims is reported in future policy benefits and claims within our consolidated statements of financial position. Activity associated with unpaid claims was as follows:

		For the year ended December 31,
		2016		2015		2014
		(in millions)
Balance at beginning of year		$	1,872.2	$	1,771.4	$	1,662.2
Less: reinsurance recoverable			314.1		284.6		254.9
Net balance at beginning of year			1,558.1		1,486.8		1,407.3
Incurred:
	Current year		1,103.5		1,037.0		994.2
	Prior years		24.4		(18.1)		(17.8)
Total incurred			1,127.9		1,018.9		976.4
Payments:
	Current year		701.9		646.7		614.2
	Prior years		323.1		300.9		282.7
Total payments			1,025.0		947.6		896.9
Net balance at end of year			1,661.0		1,558.1		1,486.8
Plus: reinsurance recoverable			340.3		314.1		284.6
Balance at end of year		$	2,001.3	$	1,872.2	$	1,771.4
Amounts not included in the rollforward above:
	Claim adjustment expense liabilities	$	49.3	$	58.9	$	55.1

Incurred liability adjustments relating to prior years, which affected current operations during 2016, 2015 and 2014, resulted in part from developed claims for prior years being different than were anticipated when the liabilities for unpaid claims were originally estimated. These trends have been considered in establishing the current year liability for unpaid claims.

Short-Duration Contracts

Claims Development

The following tables present undiscounted information about claims development by incurral year, including separate information about incurred claims and paid claims net of reinsurance for the periods indicated. The tables also include information on incurred but not reported claims and the cumulative number of reported claims.

The tables present information for the number of years for which claims incurred typically remain outstanding, but do not exceed ten years. The data is disaggregated into groupings of claims with similar characteristics, such as duration of the claim payment period and average claim amount, and with consideration to the overall size of the groupings. Outstanding liabilities equal total net incurred claims less total net paid claims plus outstanding liabilities for net unpaid claims of prior years.

286

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

LTD and Group Life Waiver Claims

																							Incurred		Cumulative
																							but not		number of
																							reported		reported
			Net incurred claims (1)																				claims		claims
			December 31,
			2007		2008		2009		2010		2011		2012		2013		2014		2015		2016		2016		2016
			($ in millions)
Incurral
	year
	2007		$	228.1	$	218.0	$	216.3	$	220.7	$	211.4	$	206.6	$	203.4	$	200.5	$	198.0	$	196.8	$	0.1	8,721
	2008					227.7		222.3		226.3		225.9		218.5		209.5		205.5		201.6		199.8		0.1	7,728
	2009							218.6		224.4		224.2		224.8		217.7		214.1		208.5		205.8		0.1	6,553
	2010									184.1		176.7		176.2		172.0		162.7		155.7		154.1		0.1	5,644
	2011											203.7		192.6		185.4		184.8		178.4		172.3		0.1	6,282
	2012													217.9		200.0		191.1		189.5		181.8		0.1	6,441
	2013															219.3		203.3		188.4		190.7		1.6	7,041
	2014																	242.2		231.4		214.4		3.8	7,560
	2015																			231.0		227.2		6.3	7,075
	2016																					229.8		83.0	3,936
	Total net incurred claims																				$	1,972.7
			Net cumulative paid claims (1)
			December 31,
			2007		2008		2009		2010		2011		2012		2013		2014		2015		2016
			(in millions)
Incurral
	year
	2007		$	14.2	$	57.3	$	85.9	$	101.5	$	113.1	$	123.7	$	131.5	$	139.1	$	145.1	$	151.0
	2008					15.1		58.1		84.0		99.4		113.3		123.2		131.7		139.4		146.4
	2009							13.4		55.2		82.6		101.0		113.8		124.6		133.1		141.8
	2010									10.4		46.5		67.1		78.4		85.9		94.2		100.9
	2011											11.2		50.0		72.5		85.7		95.4		105.2
	2012													13.8		55.1		80.8		93.7		104.6
	2013															12.5		55.0		81.4		97.0
	2014																	16.1		66.0		96.3
	2015																			16.9		67.0
	2016																					16.2
	Total net paid claims																					1,026.4
	All outstanding liabilities for unpaid claims prior to 2007 net of reinsurance																					203.7
	Total outstanding liabilities for unpaid claims net of reinsurance																				$	1,150.0
		(1) 2007-2015 unaudited.

287

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Dental, Vision and STD Claims

								Incurred	Cumulative
								but not	number of
								reported	reported
			Net incurred claims (1)					claims	claims
			December 31,
			2015		2016		2016		2016
			($ in millions)
Incurral year
	2015		$	508.7	$	501.6	$	0.1	2,390,598
	2016					544.2		29.5	2,429,004
	Total net incurred claims				$	1,045.8
			Net cumulative
			paid claims (1)
			December 31,
			2015		2016
			(in millions)
Incurral year
	2015		$	461.0	$	501.6
	2016					495.4
	Total net paid claims					997.0
	All outstanding liabilities for unpaid claims prior to 2015 net of
		reinsurance				—
	Total outstanding liabilities for unpaid claims net of reinsurance				$	48.8
	(1) 2015 unaudited.

288

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Group Life Claims

								Incurred	Cumulative
								but not	number of
								reported	reported
			Net incurred claims (1)					claims	claims
			December 31,
			2015		2016		2016		2016
			($ in millions)
Incurral year
	2015		$	194.4	$	195.0	$	0.4	4,718
	2016					222.6		21.0	4,634
	Total net incurred claims				$	417.6
			Net cumulative
			paid claims (1)
			December 31,
			2015		2016
			(in millions)
Incurral year
	2015		$	159.3	$	193.8
	2016					179.0
	Total net paid claims					372.8
	All outstanding liabilities for unpaid claims prior to 2015 net of
		reinsurance				0.6
	Total outstanding liabilities for unpaid claims net of reinsurance				$	45.4
	(1) 2015 unaudited.

289

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Reconciliation of Unpaid Claims to Liability for Unpaid Claims

Our reconciliation of net outstanding liabilities for unpaid claims of short-duration contracts to the liability for unpaid claims follows:

		December 31, 2016
		LTD and Group		Dental, Vision and
		Life Waiver		STD		Group Life		Consolidated
		(in millions)
Net outstanding liabilities for unpaid claims		$	1,150.0	$	48.8	$	45.4	$	1,244.2
Reconciling items:
	Reinsurance recoverable on unpaid claims		76.8		—		0.5		77.3
	Impact of discounting		(234.1)		—		—		(234.1)
Liability for unpaid claims - short-duration
	contracts	$	992.7	$	48.8	$	45.9		1,087.4
Insurance contracts other than short-duration									913.9
Liability for unpaid claims								$	2,001.3

Claim Duration and Payout

Our historical average percentage of claims paid in each year from incurral was as follows:

	December 31, 2016 (1)
	LTD and Group Life		Dental, Vision and
Year	Waiver		STD		Group Life
1	7.1	%	91.8	%	81.7	%
2	22.2		8.0		17.4
3	13.7
4	7.9
5	6.0
6	5.3
7	4.2
8	4.0
9	3.3
10	3.0
(1) Unaudited.

290

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Discounting

The following table provides the carrying amount of liabilities reported at present value for short-duration contract unpaid claims. We use a range of discount rates to derive the present value of the unpaid claims. The ranges of discount rates as well as the aggregate amount of discount deducted to derive the liabilities for unpaid claims and interest accretion recognized are also disclosed. Interest accretion is included in benefits, claims and settlement expenses within our consolidated statements of operations.

			LTD and Group					Dental, Vision and
			Life Waiver					STD					Group Life
			($ in millions)
Carrying amount of liabilities for unpaid claims
	December 31, 2016		$	992.7				$	48.8				$	45.9
	December 31, 2015			984.4					47.8					36.4
Range of discount rates
	December 31, 2016			3.3	-	7.0	%		—	-	—	%		—	-	—	%
	December 31, 2015			3.3	-	7.0			—	-	—			—	-	—
Aggregate amount of discount
	December 31, 2016		$	234.1				$	—				$	—
	December 31, 2015			246.1					—					—
Interest accretion
	For the year ended:
		December 31, 2016	$	36.3				$	—				$	—
		December 31, 2015		37.6					—					—
		December 31, 2014		38.1					—					—

10. Debt

Short-Term Debt

As of December 31, 2016 and 2015, we had $76.5 million and $108.8 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 $0.6 million, $0.4 million and $0.5 million during 2016, 2015 and 2014, respectively. As of both December 31, 2016 and 2015, we had 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 2021, with PFG, PFSI and us as co-borrowers, a $300.0 million 364-day facility with us as borrower that matures in March 2017, and a $200.0 million 5-year facility with PFG, PFSI, Principal Financial Services V (UK) LTD and us as the co-borrowers that matures in March 2021. These facilities may be used for general corporate purposes, including commercial paper back-stop. In addition to the revolving credit facilities, we have a $45.0 million unsecured line of credit. Our commercial paper programs require 100% back-stop support, of which we had no outstanding balances as of December 31, 2016 and 2015.

The weighted‑average interest rate on short-term borrowings as of December 31, 2016 and 2015, was 0.6% and 0.3%, respectively.

291

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Long-Term Debt

The components of long-term debt were as follows:

	December 31,
	2016		2015
	(in millions)
Non-recourse mortgages and notes payable	$	—	$	42.8
Total long-term debt	$	—	$	42.8

The non-recourse mortgages and notes payable were primarily financings for real estate developments. Outstanding principal balances as of December 31, 2016, were $0.0 million due to outstanding debt maturing in 2016. 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 debt was 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 as of December 31, 2015.

11. Income Taxes

Income Tax Expense

Our income tax expense was as follows:

		For the year ended December 31,
		2016		2015		2014
		(in millions)
Current income taxes:
	U.S. federal	$	137.7	$	266.2	$	218.8
	State		9.8		9.3		6.0
	Foreign		(0.3)		0.7		4.9
	Tax benefit of operating loss carryforward		—		(42.3)		(161.4)
Total current income taxes			147.2		233.9		68.3
Deferred income taxes:
	U.S. federal		138.0		46.4		172.7
	State		(0.2)		1.6		2.0
Total deferred income taxes			137.8		48.0		174.7
Total income taxes		$	285.0	$	281.9	$	243.0

292

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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,
	2016		2015		2014
U.S. corporate income tax rate	35	%	35	%	35	%
Dividends received deduction	(12)		(13)		(12)
Interest exclusion from taxable income	(2)		(2)		(2)
Tax credits	(2)		(2)		(2)
Impact of court ruling on some uncertain tax positions	—		4		—
Other	1		1		1
Effective income tax rate	20	%	23	%	20	%

Our income before income taxes was as follows:

		For the year ended December 31,
		2016		2015		2014
		(in millions)
Domestic		$	1,398.0	$	1,217.8	$	1,216.3
Foreign			0.3		5.5		9.2
	Total income before income taxes	$	1,398.3	$	1,223.3	$	1,225.5

Unrecognized Tax Benefits

Our changes in unrecognized tax benefits were as follows:

		For the year ended December 31,
		2016		2015
		(in millions)
Balance at beginning of period		$	215.2	$	168.5
	Additions based on tax positions related to the current year		—		12.8
	Additions for tax positions of prior years		—		45.2
	Reductions for tax positions related to the current year		(12.6)		(8.7)
	Reductions for tax positions of prior years		—		(2.6)
Balance at end of period (1)		$	202.6	$	215.2

(1) Of this amount, $75.8 million, if recognized, would reduce the 2016 effective income tax rate. We recognize interest and penalties related to uncertain tax positions in operating expenses within the consolidated statements of operations.

As of December 31, 2016 and 2015, we had recognized $142.3 million and $137.9 million of accumulated pre-tax interest and penalties related to unrecognized tax benefits, respectively.

293

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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. Our significant components of net deferred income taxes were as follows:

			December 31,
			2016		2015
			(in millions)
Deferred income tax assets:
	Insurance liabilities		$	88.2	$	109.6
	Investments, including derivatives			306.7		354.2
	Net operating loss carryforwards			0.5		0.5
	Tax credit carryforwards			199.8		158.5
	Employee benefits			75.8		158.4
	Other deferred income tax assets			51.9		43.8
		Total deferred income tax assets		722.9		825.0
Deferred income tax liabilities:
	Deferred acquisition costs			(876.8)		(831.0)
	Investments, including derivatives			(404.5)		(355.3)
	Net unrealized gains on available-for-sale securities			(449.7)		(373.0)
	Real estate			(123.0)		(122.1)
	Intangible assets			(13.9)		(16.4)
	Other deferred income tax liabilities			(20.9)		(20.0)
		Total deferred income tax liabilities		(1,888.8)		(1,717.8)
		Total net deferred income tax liabilities	$	(1,165.9)	$	(892.8)

294

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Our net deferred income taxes by jurisdiction were as follows:

		December 31,
		2016		2015
		(in millions)
Deferred income tax liabilities:
	U.S. federal	$	(1,160.7)	$	(887.3)
	State		(5.2)		(5.5)
Total net deferred income tax liabilities		$	(1,165.9)	$	(892.8)

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, 2016 and 2015, we had tax credit carryforwards for U.S. federal income tax purposes of $199.8 million and $158.5 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, 2016, 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, 2016 and 2015, domestic state net operating loss carryforwards were $7.0 million and $9.4 million, respectively, and will expire between 2017 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, 2016, 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.

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, 2016 and 2015, we had $243.2 million and $232.1 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 and tax year 2012 in 2016. 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 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.

295

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

12. Employee and Agent Benefits

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 the employees are providing service, taking into account the funded status of the trust. Effective November 2014, PFG became the sponsor of these plans. We continue to reflect pension expense through our expense allocation agreement with PFG. In connection with the change in sponsorship, PFG assumed the pension plan liability from us.

We provide certain health care, life insurance and long-term care benefits for retired employees. Subsidized retiree health benefits are provided for employees hired prior to January 1, 2002, and who retire prior to January 1, 2020. Employees hired on or after January 1, 2002, or hired prior to January 1, 2002, and who retire on or after January 1, 2020, 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, and who retired prior to January 1, 2011. For employees hired prior to January 1, 2002, and who retired on or after January 1, 2011, but prior to January 1, 2020, 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. The retiree group term life coverage is not subsidized for those who retire on or after January 1, 2020.

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 the employees are providing service, taking into account the funded status of the trust. Effective January 2016, PFG became the sponsor of the post-65 retiree medical plan for both employees and individual field agents. Prior to January 2016, we were the sponsor of this plan. In connection with the change in sponsorship, we transferred $27.1 million of plan assets and a $23.0 million postretirement benefit obligation to PFG.

296

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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
	benefits
	December 31,
	2016		2015
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	(165.7)	$	(169.7)
Service cost		(2.1)		(2.0)
Interest cost		(5.3)		(6.6)
Actuarial gain (loss)		0.6		(2.7)
Participant contribution		(3.9)		(6.4)
Benefits paid		9.2		12.7
Plan amendments		51.6		9.7
Plan transfer due to change in sponsorship		23.0		—
Other		—		(0.7)
Benefit obligation at end of year	$	(92.6)	$	(165.7)
Change in plan assets
Fair value of plan assets at beginning of year	$	627.0	$	639.7
Actual return on plan assets		6.3		(6.9)
Employer contribution		0.5		0.5
Participant contributions		3.9		6.4
Benefits paid		(9.2)		(12.7)
Plan transfer due to change in sponsorship		(27.1)		—
Fair value of plan assets at end of year	$	601.4	$	627.0
Amount recognized in statement of financial position
Other assets	$	510.8	$	461.9
Other liabilities		(2.0)		(0.6)
Total	$	508.8	$	461.3
Amount recognized in accumulated other comprehensive income
Total net actuarial (gain) loss	$	15.8	$	(8.6)
Prior service benefit		(46.2)		(33.0)
Pre-tax accumulated other comprehensive income	$	(30.4)	$	(41.6)

Other Postretirement Plan Changes and Plan Gains/Losses

Effective October 31, 2016, subsidies were eliminated for pre-65 retiree medical, retiree dental, and retiree group term life coverage for employees and agents who retire on or after January 1, 2020. The amendment to the OPEB plan resulted in a remeasurement, which resulted in a change in discount rate. This plan amendment reduced our accumulated postretirement benefit obligation by $51.6 million.

297

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Effective January 1, 2016, post-65 medical coverage for employees who retired from January 1, 1992, to December 31, 2010, transitioned 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.

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 and 2014, the Medicare subsidies we received and accrued for were $0.7 million and $0.7 million, respectively. Effective January 1, 2016, Medicare-eligible retirees were transitioned to a plan sponsored by PFG such that we no longer receive subsidies.

For the year ended December 31, 2016, the other postretirement benefit plans had an actuarial gain primarily due to actual and projected medical claims costs being lower than previously expected offset by a decrease in the discount rate. For the year ended December 31, 2015, the other postretirement benefit plans had an actuarial loss primarily due to a greater than expected increase in claim costs and a longer trend rate for participants under age 65.

Information for Other Postretirement Benefit Plans With an Accumulated Postretirement Benefit Obligation
in Excess of Plan Assets
	December 31,
	2016		2015
	(in millions)
Accumulated postretirement benefit obligation	$	2.6	$	1.3
Fair value of plan assets		0.6		0.7

Components of Net Periodic Benefit Cost
	Pension benefits						Other postretirement benefits
	For the year ended December 31,
	2016		2015		2014		2016		2015		2014
	(in millions)
Service cost	$	—	$	—	$	45.0	$	2.1	$	2.0	$	1.4
Interest cost		—		—		97.6		5.3		6.6		6.6
Expected return on plan assets		—		—		(110.0)		(31.5)		(34.0)		(32.6)
Amortization of prior service benefit		—		—		(3.9)		(22.9)		(18.4)		(20.3)
Recognized net actuarial (gain) loss		—		—		42.1		0.2		(0.8)		(3.4)
Plan amendments		—		—		—		—		5.8		—
Net periodic benefit cost (income)	$	—	$	—	$	70.8	$	(46.8)	$	(38.8)	$	(48.3)

298

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

For the other postretirement benefit plans, actuarial gains and losses were amortized with use of the corridors allowed.

		Other postretirement benefits
		For the year ended December 31,
			2016		2015
		(in millions)
Other changes recognized in accumulated other comprehensive loss
Net actuarial loss			$	24.6	$	43.6
Amortization of gain (loss)				(0.2)		0.8
Amortization of prior service benefit				22.9		18.4
Plan transfer due to change in sponsorship				15.5		—
Plan amendments				(51.6)		(15.5)
Total recognized in pre-tax accumulated other comprehensive loss			$	11.2	$	47.3
Total recognized in net periodic benefit cost and pre-tax accumulated
	other comprehensive (income) loss		$	(35.6)	$	8.5

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 the2017 fiscal year are $0.0 million and $(34.6) 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,
	2016		2015
Discount rate	3.75	%	4.15	%
Rate of compensation increase	2.44	%	4.82	%

Weighted average assumptions used to determine net periodic benefit cost
	Pension benefits
	For the year ended December 31,
	2016		2015		2014
Discount rate	NA		NA		4.90	%
Expected long-term return on plan assets	NA		NA		6.75	%
Rate of compensation increase:
Cash balance benefit	NA		NA		5.29	%
Traditional benefit	NA		NA		3.06	%
	Other postretirement benefits
	For the year ended December 31,
	2016		2015		2014
Discount rate (1)	3.35	%	4.00	%	4.90	%
Expected long-term return on plan assets	5.25	%	5.36	%	5.36	%
Rate of compensation increase	4.82	%	4.82	%	4.83	%

(1) The funded statuses of the affected plans were remeasured as of October 31, 2016, and a portion of the impact was reflected in the 2016 net periodic postretirement benefit cost. A discount rate of 4.15% was used until the remeasurement date at which time a discount rate of 3.35% was used.

299

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 5.25% expected long-term return on plan assets for2016 was 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 under age 65, medical age 65 and over, life and long-term care plans were 5.20%, 5.10%, 5.70% and 4.25%, respectively.

Assumed Health Care Cost Trend Rates

	December 31,
	2016		2015
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	$	0.5	$	(0.4)
Effect on accumulated postretirement benefit obligation		(1.6)		1.5

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, exchange traded equity securities and alternative mutual fund investments.

• 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 a our general account investment.

Our other postretirement benefit plan assets consist of cash, investments in fixed income security portfolios, investments in equity security portfolios, investments in alternative mutual fund portfolios and investment in a real estate mutual fund. Plan assets also previously included a general account investment of ours. Because of the nature of cash, its carrying amount approximates fair value. The fair value of fixed income investment funds, U.S. equity portfolios and international equity portfolios is based on quoted prices in active markets for identical assets. The fair value of the alternative mutual fund portfolios and the real estate mutual fund are based on quoted market prices, which represent the net asset value (“NAV”) of shares held by the other postretirement benefit plan. 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.

300

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

The fair value of the other postretirement benefit plans’ assets by asset category as of the most recent measurement date was as follows:

		December 31, 2016
		Assets		Fair value hierarchy level
		measured at
		fair value		Level 1		Level 2		Level 3
		(in millions)
Asset category
Cash and cash equivalents		$	1.2	$	1.2	$	—	$	—
Fixed income security portfolios:
	Fixed income investment funds (1)		186.8		155.6		31.2		—
U.S. equity portfolios (3)			138.4		96.1		42.3		—
International equity portfolios (4)			47.3		39.3		8.0		—
Alternative mutual fund portfolios (5)			221.3		221.3		—		—
Real estate mutual fund (6)			6.4		6.4		—		—
Total		$	601.4	$	519.9	$	81.5	$	—

		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		—
	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

(1) The portfolios invest in various fixed income securities, primarily of U.S. origin. These include, but are not limited to, corporate bonds, residential 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.

(5) The portfolios invest primarily in equities, corporate bonds, foreign currencies, convertible securities and derivatives.

(6) The mutual fund invests primarily in U.S. commercial real estate properties.

As of December 31, 2016 and 2015, $81.8 million and $81.2 million of assets, respectively, in cash, fixed income security portfolios, U.S. equity portfolios and international equity portfolios were included in a trust owned life insurance contract.

301

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

The reconciliation for all assets measured at fair value using significant unobservable inputs (Level 3) is as follows:

For the year ended December 31, 2016

Actual return gains (losses)

Beginning

on plan assets

Ending

asset

Relating to

Net

asset

balance

assets still

Relating to

purchases,

balance

as of

held at the

assets sold

sales,

Transfers

Transfers

as of

December 31,

reporting

during the

and

into

out of

December 31,

2015

date

period

settlements

Level 3

Level 3

2016

(in millions)

Asset category

General account investment

$

33.5

$

(1.7)

$

(33.6)

$

1.8

$

—

$

—

$

—

For the year ended December 31, 2015

Actual return gains (losses)

Beginning

on plan assets

Ending

assets

Relating to

Net

assets

balance

assets still

Relating to

purchases,

balance

as of

held at the

assets sold

sales,

Transfers

Transfers

as of

December 31,

reporting

during the

and

into

out of

December 31,

2014

date

period

settlements

Level 3

Level 3

2015

(in millions)

Asset category

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

Transfers

as of

December 31,

reporting

during the

and

into

out of

December 31,

2013

date

period

settlements

Level 3

Level 3

2014

(in millions)

Asset category

General account investment

$

38.8

$

0.8

$

—

$

(3.3)

$

—

$

—

$

36.3

We have established an investment policy that provides the investment objectives and guidelines for the other postretirement benefit plans. Our investment strategy is to achieve the following:

• Obtain a reasonable long-term return consistent with the level of risk assumed and at a cost of operation within prudent levels. Performance benchmarks are monitored.

• Ensure sufficient liquidity to meet the emerging benefit liabilities for the plans.

• Provide for diversification of assets in an effort to avoid the risk of large losses and maximize the investment return to the other postretirement benefit plans consistent with market and economic risk.

In administering the other postretirement benefit plans’ asset allocation strategies, we consider the projected liability stream of benefit payments, the relationship between current and projected assets of the plan and the projected actuarial liabilities streams, the historical performance of capital markets adjusted for the perception of future short‑ and long-term capital market performance and the perception of future economic conditions.

302

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

According to our investment policy, the target asset allocation for the other postretirement benefit plans is:

Asset category	Target allocation
U.S. equity portfolios	24	%
International equity portfolios	15	%
Fixed income security portfolios	32	%
Alternatives	24	%
Real estate	5	%

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:
2017	$	10.7	$	—
2018		11.2		—
2019		11.7		—
2020		10.8		—
2021		9.9		—
2022-2026		9.2		—

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, 2016.

Defined Contribution and Deferred Compensation Plans

Prior to December 2016, we had defined contribution plans that were 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 2016. 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 matched the Grandfathered Choice Participant's contribution at a 50% contribution rate up to a maximum matching contribution of 3% of the participant's compensation. For all other participants, we matched 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 $42.5 million, $45.7 million and $41.7 million in 2016, 2015 and 2014, respectively, to the qualified defined contribution plans.

303

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Prior to December 2016, we also had nonqualified deferred compensation plans available to select employees and agents that allowed them to defer compensation amounts in excess of limits imposed by federal tax law with respect to the qualified plans. For certain nonqualified deferred compensation plans that included an employer matching contribution, in 2016 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 in nonqualified deferred compensation plans that included an employer matching contribution, 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 $2.8 million, $4.5 million and $4.1 million in 2016, 2015 and 2014, respectively, to the nonqualified deferred compensation plans.

Effective December 2016, PFG became the sponsor of the defined contribution and nonqualified deferred compensation plans.  In connection with the change in sponsorship, we transferred $227.5 million of plan assets and $225.5 million of liabilities to PFG. In addition, deferred tax assets of $72.5 million were transferred to PFG from us associated with the change in sponsorship. We continue to reflect benefits expense through our expense allocation agreement with PFG.

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 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 PMC and Principal Global Investors, LLC (the “ACE Defendants”). The lawsuit alleges the ACE Defendants breached their fiduciary duty under Section 36(b) of the Investment Company Act by charging excessive fees on certain of the LifeTime series target date funds. On January 24, 2014, the court granted the motion filed by the ACE Defendants to transfer the case to the Southern District of Iowa. The ACE Defendants were granted summary judgment and the case was dismissed. ACE has appealed that grant of summary judgment and subsequent dismissal to the Eighth Circuit Court of Appeals. The ACE Defendants continue to aggressively defend the lawsuit.

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. The estate’s claim against us, including interest, was approximately $600.0 million. On June 28, 2016, the bankruptcy court granted the Defendants’ motion to dismiss directed at common issues and dismissed with prejudice all claims against us. Defendants, including us, have requested that the bankruptcy court issue an order directing entry of final judgment consistent with its June 28, 2016, decision. Lehman has the right to appeal an order of final judgment.

304

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

While the outcome of any pending or future litigation or regulatory matter cannot be predicted, management does not believe any such matter will have a material adverse effect on our business or financial position.As of December 31, 2016, we had no estimated losses accrued related to the legal matters discussed above because we believe the chance of loss from these matters is not probable and the amount of loss 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 such outcomes could require us to pay damages or make other expenditures or establish accruals in amounts we could not estimate as of December 31, 2016.

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 plans and the nonqualified deferred compensation plans. In addition, we have provided guarantees to third parties primarily related to former subsidiaries and joint ventures. The terms of these agreements range in duration and often are not explicitly defined. The maximum exposure under these agreements as of December 31, 2016, was approximately $266.0 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 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 transferred several of our administrative and reconciliation functions from our Des Moines, Iowa, office to our affiliate Principal Global Services Private Limited (“PGS”) in Pune, India. We issued a guarantee accepting liability for all acts and omissions of PGS. Because the guarantee has no limitation with respect to duration or amount, the maximum exposure of the guarantee in the future is indeterminable.

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.

305

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, 2016 and 2015, the liability balance for guaranty fund assessments, which is not discounted, was $14.9 million and $15.1 million, respectively, and was reported within other liabilities in the consolidated statements of financial position. As of both December 31, 2016 and 2015, $5.7 million related to premium tax offsets were included in premiums due and other receivables in the consolidated statements of financial position.

Operating Leases

As a lessee, we lease office space, data processing equipment, office furniture and office equipment under various operating leases. Rental expense for the years ended December 31, 2016, 2015 and 2014, was $31.2 million, $29.5 million and $29.5 million, respectively.

The following represents payments due by period for operating lease obligations (in millions):

Year ending December 31:
	2017		$	37.6
	2018			29.5
	2019			20.9
	2020			15.4
	2021			11.3
	2022 and thereafter			36.8
		Total operating lease obligations		151.5
		Less: Future sublease rental income on noncancelable leases		2.2
		Total future minimum lease payments	$	149.3

Capital Leases

We lease buildings and hardware storage equipment under capital leases. As of December 31, 2016 and 2015, these leases had a gross asset balance of $55.4 million and $57.8 million and accumulated depreciation of $27.9 million and $28.1 million, respectively. Depreciation expense for the years ended December 31, 2016, 2015 and 2014, was $12.4 million, $11.8 million and $11.8 million, respectively.

The following represents future minimum lease payments due by period for capital lease obligations (in millions).

Year ending December 31:
	2017		$	2.9
	2018			2.0
	2019			0.9
	2020			0.3
	2021			—
	2022 and thereafter			—
		Total		6.1
		Less: Amounts representing interest		0.2
		Net present value of minimum lease payments	$	5.9

306

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

14. Stockholder's Equity

Other Comprehensive Income (Loss)

		For the year ended December 31, 2016
		Pre-Tax		Tax		After-Tax
		(in millions)
Net unrealized gains on available-for-sale securities during the period		$	116.2	$	(44.4)	$	71.8
Reclassification adjustment for losses included in net income (1)			78.1		(23.3)		54.8
Adjustments for assumed changes in amortization patterns			5.6		(2.0)		3.6
Adjustments for assumed changes in policyholder liabilities			(40.5)		14.1		(26.4)
Net unrealized gains on available-for-sale securities			159.4		(55.6)		103.8
Noncredit component of impairment losses on fixed maturities,
	available-for-sale during the period		3.1		(1.1)		2.0
Adjustments for assumed changes in amortization patterns			(3.4)		1.2		(2.2)
Adjustments for assumed changes in policyholder liabilities			0.8		(0.3)		0.5
Noncredit component of impairment losses on fixed maturities,
	available-for-sale (2)		0.5		(0.2)		0.3
Net unrealized gains on derivative instruments during the period			32.6		(7.5)		25.1
Reclassification adjustment for gains included in net income (3)			(36.8)		9.1		(27.7)
Adjustments for assumed changes in amortization patterns			2.9		(1.0)		1.9
Adjustments for assumed changes in policyholder liabilities			16.9		(6.0)		10.9
Net unrealized gains on derivative instruments			15.6		(5.4)		10.2
Unrecognized postretirement benefit obligation during the period			27.1		(9.5)		17.6
Amortization of prior service benefit and actuarial gain included in
	net periodic benefit cost (4)		(22.7)		8.0		(14.7)
Net unrecognized postretirement benefit obligation			4.4		(1.5)		2.9
Other comprehensive income		$	179.9	$	(62.7)	$	117.2

307

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

		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)

308

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

		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

(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.

309

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 as of January 1, 2014		$	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
Net assets transferred to affiliate
	due to change in benefit plan
	sponsorship		—		—		—		—		221.7		221.7
Balances as of 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 as of December 31, 2015			609.8		(86.1)		91.5		(0.9)		27.0		641.3
Other comprehensive income
	during the period, net of
	adjustments		49.0		—		37.9		—		17.6		104.5
Amounts reclassified from AOCI			54.8		0.3		(27.7)		—		(14.7)		12.7
Other comprehensive income			103.8		0.3		10.2		—		2.9		117.2
Net assets transferred to affiliate
	due to change in benefit plan
	sponsorship		—		—		—		—		(10.1)		(10.1)
Balances as of December 31, 2016		$	713.6	$	(85.8)	$	101.7	$	(0.9)	$	19.8	$	748.4

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 maintained an equity interest that was redeemable at the option of the holder, which could have been exercised on varying dates. Since redemption of the noncontrolling interest was outside of our control, this interest was presented on the consolidated statements of financial position line item titled “Redeemable noncontrolling interest.”

310

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

For our redeemable noncontrolling interest related to consolidated subsidiaries, redemptions were required to be purchased at fair value or a value based on a formula that management intended to reasonably approximate fair value based on a fixed multiple of earnings over a measurement period. The carrying value of the redeemable noncontrolling interest was 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 were determined after the attribution of net income or loss of the subsidiary and were recognized in the redemption value as they occurred. Adjustments to the carrying value of redeemable noncontrolling interest resulted in adjustments to additional paid-in capital and/or retained earnings. Adjustments were recorded in retained earnings to the extent the redemption value of the redeemable noncontrolling interest exceeded its fair value. All other adjustments to the redeemable noncontrolling interest were recorded in additional paid-in capital.

Following is a reconciliation of the changes in the redeemable noncontrolling interest (in millions):

Balance as of January 1, 2014	$	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 (1)		(215.7)
Change in redemption value of redeemable noncontrolling interest		34.6
Other comprehensive income attributable to redeemable noncontrolling interest		(1.3)
Balance as of 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 (2)		(19.1)
Other comprehensive income attributable to redeemable noncontrolling interest		(0.1)
Balance as of December 31, 2015	$	—

(1) During the third quarter of 2014 we increased our ownership stake in Columbus Circle Investors.

(2) 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 its business and must receive the prior approval of the Commissioner of Insurance of the State of Iowa (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 2016 statutory results, Principal Life could pay approximately $1,143.3 million in ordinary stockholder dividends in 2017 without prior regulatory approval. However, because the dividend test is based on dividends previously paid over rolling 12-month periods, if paid before a specified date during 2017, some or all of such dividends may be extraordinary and require regulatory approval.

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.

311

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, cash equivalents, derivatives and other investments.

• Level 3 – Fair values are based on at least one significant unobservable input for the asset or liability. Our Level 3 assets and liabilities primarily include fixed maturities, real estate and commercial mortgage loan investments of our separate accounts, complex derivatives and embedded derivatives.

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 value of financial instruments are reliant on the assumptions used. Care should be exercised in deriving conclusions about our business, its value or financial position based on the fair value information of financial instruments presented below.

Fair value estimates are made based on available market information and judgments about the financial instrument at a specific point in time. Such estimates do not consider the tax impact of the realization of unrealized gains or losses. In addition, the disclosed fair value may not be realized in the immediate settlement of the financial instrument. We validate prices through an investment analyst review process, which includes validation through direct interaction with external sources, review of recent trade activity or use of internal models. In circumstances where broker quotes are used to value an instrument, we generally receive one non-binding quote. Broker quotes are validated through an investment analyst review process, which includes validation through direct interaction with external sources and use of internal models or other relevant information. We did not make any significant changes toour valuation processes during2016.

Fixed Maturities

Fixed maturities include bonds, ABS, redeemable preferred stock and certain non-redeemable 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.

312

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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. These are reflected in Level 3 in the fair value hierarchy and can include fixed maturities across all asset classes. As of December 31, 2016, less than 1% of our total fixed maturities were Level 3 securities valued using internal pricing models.

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 non-redeemable 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 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.

313

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Our non-cleared derivative contracts are generally documented under ISDA Master Agreements, which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties. Collateral arrangements are bilateral and based on current ratings of each entity. We utilize the LIBOR interest rate curve to value our positions, which includes a credit spread. This credit spread incorporates an appropriate level of nonperformance risk into our valuations given the current ratings of our counterparties, as well as the collateral agreements in place. Counterparty credit risk is routinely monitored to ensure our adjustment for non-performance risk is appropriate. Our centrally cleared derivative contracts are conducted with regulated centralized clearinghouses, which provide for daily exchange of cash collateral equal to the difference in the daily market values of those contracts that eliminates the non-performance risk on these trades.

Interest Rate Contracts. For non-cleared contracts we use discounted cash flow valuation techniques to determine the fair value of interest rate swaps using observable swap curves as the inputs. These are reflected in Level 2. For centrally cleared contracts we use published prices from clearinghouses. These are reflected in Level 2. In addition, we have a limited number of complex inflation-linked interest rate swaps, interest rate collars and swaptions that are valued using broker quotes. These are reflected in Level 3.

Foreign Exchange Contracts. We use discounted cash flow valuation techniques that utilize observable swap curves and exchange rates as the inputs to determine the fair value of foreign currency swaps. These are reflected in Level 2. In addition, we have a limited number of non-standard currency swaps that are valued using broker quotes. These are reflected within Level 3.

Equity Contracts. We use an option pricing model using observable implied volatilities, dividend yields, index prices and swap curves as the inputs to determine the fair value of equity options. These are reflected in Level 2.

Credit Contracts. We use either the ISDA Credit Default Swap Standard discounted cash flow model that utilizes observable default probabilities and recovery rates as inputs or broker prices to determine the fair value of credit default swaps. These are reflected in Level 3. In addition, we have a limited number of total return swaps that are valued based on the observable quoted price of underlying equity indices. These are reflected in Level 2.

Other Investments

Other investments reported at fair value include unconsolidated sponsored investment funds, other investment funds reported at fair value or for which the fair value option was elected, 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.

The fair value of unconsolidated sponsored investment funds 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. Investments for which the NAV represents a quoted price in an active market for identical assets are reflected in Level 1. Investments that do not have a quoted price in an active market 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.

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 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 three months or less. 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.

314

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Separate Account Assets

Separate account assets include equity securities, debt securities and derivative instruments, for which fair values are determined as previously described, and are reflected in Level 1, Level 2 and Level 3. Separate account assets also include commercial mortgage loans, for which the fair value is estimated by discounting the expected total cash flows using market rates that are applicable to the yield, credit quality and maturity of the loans. The market clearing spreads vary based on mortgage type, weighted average life, rating and liquidity. These are reflected in Level 3. Finally, separate account assets include real estate, for which the fair value is estimated using discounted cash flow valuation models that utilize various public real estate market data inputs. In addition, each property is appraised annually by an independent appraiser. The real estate included in separate account assets is recorded net of related mortgage encumbrances for which the fair value is estimated using discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. The real estate within the separate accounts is reflected in Level 3.

Investment Contracts

Certain annuity contracts and other investment contracts include embedded derivatives that have been bifurcated from the host contract and 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 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’ unaffiliated obligations are valued utilizing internal pricing models, which are reflected in Level 3.

315

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis were as follows:

	December 31, 2016
	Assets/		Amount
	(liabilities)		measured at		Fair value hierarchy level
	measured at		net asset
	fair value		value (5)		Level 1		Level 2		Level 3
	(in millions)
Assets
Fixed maturities, available-for-sale:
U.S. government and agencies	$	1,404.6	$	—	$	986.5	$	418.1	$	—
Non-U.S. governments		542.1		—		—		534.5		7.6
States and political subdivisions		5,535.6		—		—		5,535.6		—
Corporate		31,076.0		—		21.2		30,909.2		145.6
Residential mortgage-backed securities		2,822.6		—		—		2,822.6		—
Commercial mortgage-backed securities		4,060.2		—		—		3,989.1		71.1
Collateralized debt obligations		758.1		—		—		724.5		33.6
Other debt obligations		5,053.0		—		—		4,961.5		91.5
Total fixed maturities, available-for-sale		51,252.2		—		1,007.7		49,895.1		349.4
Fixed maturities, trading		219.8		—		—		126.9		92.9
Equity securities, available-for-sale		96.3		—		55.2		38.4		2.7
Equity securities, trading		10.7		—		10.0		0.7		—
Derivative assets (1)		871.5		—		—		837.9		33.6
Other investments (2)		167.4		92.7		24.4		13.4		36.9
Cash equivalents (3)		769.1		—		—		769.1		—
Sub-total excluding separate account
assets		53,387.0		92.7		1,097.3		51,681.5		515.5
Separate account assets		103,662.0		—		79,462.9		16,972.8		7,226.3
Total assets	$	157,049.0	$	92.7	$	80,560.2	$	68,654.3	$	7,741.8
Liabilities
Investment contracts (4)	$	(130.8)	$	—	$	—	$	—	$	(130.8)
Derivative liabilities (1)		(552.2)		—		—		(530.4)		(21.8)
Other liabilities (4)		(272.2)		—		—		(212.3)		(59.9)
Total liabilities	$	(955.2)	$	—	$	—	$	(742.7)	$	(212.5)
Net assets	$	156,093.8	$	92.7	$	80,560.2	$	67,911.6	$	7,529.3

316

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

	December 31, 2015
	Assets/		Amount
	(liabilities)		measured at		Fair value hierarchy level
	measured at		net asset
	fair value		value (5)		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		69.6		16.5		20.3		35.1
Cash equivalents (3)		948.9		—		—		948.9		—
Sub-total excluding separate account
assets		49,055.3		69.6		1,238.4		47,254.3		493.0
Separate account assets		94,762.8		—		72,096.2		15,775.1		6,891.5
Total assets	$	143,818.1	$	69.6	$	73,334.6	$	63,029.4	$	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	$	69.6	$	73,334.6	$	62,120.6	$	7,114.8

(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 sponsored investment funds, other investment funds, equity method investments reported at fair value and commercial mortgage loans of consolidated VIEs.

(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.

(5)Certain investments are measured at fair value using the NAV per share (or its equivalent) practical expedient and have not been classified in the fair value hierarchy. These consist of certain fund interests that are restricted until maturity with unfunded commitments totaling $57.6 million and $7.3 million as of December 31, 2016 and December 31, 2015, respectively.

317

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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) was as follows:

			For the year ended December 31, 2016
																	Changes in
			Beginning		Total realized/unrealized				Net						Ending		unrealized
			asset/		gains (losses)				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
			2015		(1)		income		(3)		Level 3		Level 3		2016		held (1)
			(in millions)
Assets
Fixed maturities,
	available-for-sale:
	Non-U.S.
		governments	$	39.5	$	—	$	2.1	$	(1.4)	$	—	$	(32.6)	$	7.6	$	—
	Corporate			156.3		(1.4)		(1.9)		(21.4)		15.7		(1.7)		145.6		(1.4)
	Commercial
		mortgage-backed
		securities		4.8		(8.3)		8.8		32.7		35.4		(2.3)		71.1		(8.3)
	Collateralized
		debt obligations		63.5		—		0.8		(30.7)		—		—		33.6		—
	Other debt
		obligations		7.5		—		0.5		100.1		—		(16.6)		91.5		—
Total fixed
	maturities,
	available-for-sale			271.6		(9.7)		10.3		79.3		51.1		(53.2)		349.4		(9.7)
Fixed maturities,
	trading			135.5		0.5		—		(43.1)		—		—		92.9		0.1
Equity securities,
	available-for-sale			4.1		(1.3)		(0.1)		—		—		—		2.7		(1.4)
Derivative assets				46.7		(13.5)		—		0.4		—		—		33.6		(13.0)
Other investments				35.1		1.5		—		0.3		—		—		36.9		1.5
Separate account
	assets (2)			6,891.5		748.2		—		(417.9)		5.3		(0.8)		7,226.3		669.7
Liabilities
Investment contracts				(151.1)		14.6		—		5.7		—		—		(130.8)		7.8
Derivative liabilities				(50.5)		27.3		0.5		0.9		—		—		(21.8)		23.9
Other liabilities				(68.1)		(9.2)		—		17.4		—		—		(59.9)		(7.5)

318

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

			For the year ended December 31, 2015
																	Changes in
			Beginning		Total realized/unrealized				Net						Ending		unrealized
			asset/		gains (losses)				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		(3)		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				(66.3)		(1.8)		—		—		—		—		(68.1)		(1.9)

319

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

				For the year ended December 31, 2014
																		Changes in
				Beginning		Total realized/unrealized				Net						Ending		unrealized
				asset/		gains (losses)				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		(3)		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					(73.9)		(1.4)		—		9.0		—		—		(66.3)		(0.8)

(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) Gross purchases, sales, issuances and settlements were:

320

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

		For the year ended December 31, 2016
										Net purchases,
										sales, issuances
		Purchases		Sales		Issuances		Settlements		and settlements
		(in millions)
Assets
Fixed maturities, available-for-sale:
	Non-U.S. governments	$	—	$	—	$	—	$	(1.4)	$	(1.4)
	Corporate		4.3		—		—		(25.7)		(21.4)
	Commercial mortgage-backed securities		35.7		—		—		(3.0)		32.7
	Collateralized debt obligations		—		—		—		(30.7)		(30.7)
	Other debt obligations		105.0		(2.3)		—		(2.6)		100.1
Total fixed maturities, available-for-sale			145.0		(2.3)		—		(63.4)		79.3
Fixed maturities, trading			—		(18.0)		—		(25.1)		(43.1)
Derivative assets			0.5		(0.1)		—		—		0.4
Other investments			0.7		(0.4)		—		—		0.3
Separate account assets (4)			453.3		(615.2)		(345.4)		89.4		(417.9)
Liabilities
Investment contracts			—		—		1.7		4.0		5.7
Derivative liabilities			—		0.9		—		—		0.9
Other liabilities			—		17.4		—		—		17.4

		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		—		—		—		(0.6)		(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 (4)			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

321

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

		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 (4)			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

(4) 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 were as follows:

			For the year ended December 31, 2016
			Transfers out		Transfers out		Transfers out		Transfers out		Transfers out		Transfers out
			of Level 1 into		of Level 1 into		of Level 2 into		of Level 2 into		of Level 3 into		of Level 3 into
			Level 2		Level 3		Level 1		Level 3		Level 1		Level 2
			(in millions)
Assets
Fixed maturities,
	available-for-sale:
	Non-U.S. governments		$	—	$	—	$	—	$	—	$	—	$	32.6
	Corporate			—		—		—		15.7		—		1.7
	Commercial mortgage-backed
		securities		—		—		—		35.4		—		2.3
	Other debt obligations			—		—		—		—		—		16.6
Total fixed maturities,
	available-for-sale			—		—		—		51.1		—		53.2
Separate account assets				45.4		—		4.9		5.3		—		0.8

322

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

			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

			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

Transfers between fair value hierarchy levels are recognized at the beginning of the reporting period.

Separate account assets transferred between Level 1 and Level 2 during 2016, 2015 and 2014, primarily related to foreign equity securities. When these securities are valued at the close price of the local exchange where the assets traded, they are reflected in Level 1. When events materially affecting the value occur between the close of the local exchange and the New York Stock Exchange, we use adjusted prices determined by a third party pricing vendor to update the foreign market closing prices and the fair value is reflected in Level 2.

Other investments transferred from Level 2 into Level 1 during 2015, 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.

323

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

Assets transferred into Level 3 during 2016, 2015 and 2014, 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 2016, 2015 and 2014, 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. Additionally, for the year ended December 31, 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.

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, 2016
		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	$	7.6	Discounted cash flow	Discount rate (1)	2.3	%	2.3	%
					Illiquidity premium	50 basis points ("bps")		50bps
					Comparability   adjustment	(25)bps		(25)bps
	Corporate		49.8	Discounted cash flow	Discount rate (1)	1.5%-7.6%		4.0	%
					Illiquidity premium	0bps-60bps		27bps
					Comparability   adjustment	0bps-20bps		6bps
	Commercial mortgage-backed   securities		49.3	Discounted cash flow	Discount rate (1)	3.1%-12.8%		10.2	%
					Probability of default	0.0%-10.0%		7.8	%
					Potential loss   severity	0.0%-99.5%		39.5	%
	Collateralized debt obligations		0.2	Discounted cash flow	Discount rate (1)	95.1	%	95.1	%
					Probability of default	100.0	%	100.0	%
					Potential loss   severity	91.2	%	91.2	%
	Other debt obligations		6.8	Discounted cash flow	Discount rate (1)	5.0	%	5.0	%
					Illiquidity premium	500bps		500bps
Fixed maturities, trading			10.5	Discounted cash flow	Discount rate (1)	2.3%-9.0%		2.7	%
					Illiquidity premium	0bps-300bps		240bps

324

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

	December 31, 2016
	Assets /
	(liabilities)
	measured at		Valuation	Unobservable	Input/range		Weighted
	fair value		technique(s)	input description	of inputs		average
	(in millions)
Other investments		36.9	Discounted cash   flow - equity   method real estate   investments	Discount rate (1)	7.6	%	7.6	%
				Terminal   capitalization rate	6.8	%	6.8	%
				Average market rent   growth rate	2.9	%	2.9	%
			Discounted cash   flow - equity   method real estate   investments -   debt	Loan to value	52.5	%	52.5	%
				Credit spread rate	2.1	%	2.1	%
Separate account assets		7,225.4	Discounted cash   flow - mortgage   loans	Discount rate (1)	1.4%-5.3%		3.7	%
				Illiquidity premium	0bps-60bps		13bps
				Credit spread rate	83bps-472bps		227bps
			Discounted cash   flow - real estate	Discount rate (1)	5.8%-16.2%		7.0	%
				Terminal   capitalization rate	4.3%-9.3%		6.1	%
				Average market rent   growth rate	1.8%-4.3%		2.9	%
			Discounted cash   flow - real estate   debt	Loan to value	6.3%-69.7%		47.0	%
				Credit spread rate	3.3%-4.6%		3.9	%
Liabilities
Investment contracts		(130.8)	Discounted cash   flow	Long duration   interest rate	2.6% (2)
				Long-term equity   market volatility	18.8%-45.9%
				Non-performance risk	0.3%-1.7%
				Utilization rate	See note (3)
				Lapse rate	0.5%-11.8%
				Mortality rate	See note (4)

325

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

		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	%	2.2	%
					Illiquidity premium	50bps		50bps
	Corporate		43.2	Discounted cash   flow	Discount rate (1)	0.0%-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	%	28.0	%
					Probability of default	100.0	%	100.0	%
					Potential loss   severity	67.0	%	67.0	%
	Other debt obligations		7.5	Discounted cash   flow	Discount rate (1)	5.0	%	5.0	%
					Illiquidity premium	750bps		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	%	7.8	%
					Terminal   capitalization rate	6.8	%	6.8	%
					Average market rent   growth rate	3.2	%	3.2	%
				Discounted cash   flow - equity   method real estate   investments -   debt	Loan to value	52.3	%	52.3	%
					Credit spread rate	2.3	%	2.3	%

326

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

	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% (2)
				Long-term equity   market volatility	18.4%-44.4%
				Non-performance risk	0.4%-1.9%
				Utilization rate	See note (3)
				Lapse rate	0.5%-11.8%
				Mortality rate	See note (4)

(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) 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.

(3) 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.

(4) This input is based on an appropriate industry mortality table and a range does not provide a meaningful presentation.

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.

327

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 2016, certain mortgage loans had been marked to fair value of $2.7 million. The net impact of write-downs of loans reclassified to held-for-sale, impairments and improvements in estimated fair value of previously impaired loans resulted in a net loss of $2.4 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 2016, certain real estate had been written down to fair value of $13.9 million. This write down resulted in a loss of $5.3 million, of which $4.5 million was a lower of cost or market adjustment on held-for-sale real estate recorded in net investment income and the remaining $0.8 million 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 2016 were:

Discount rate = 10.3%

Terminal capitalization rate = 9.0%

Average market rent growth = 0.0%

During 2015, certain mortgage loans had been marked to fair value of $9.2 million. The net impact of write-downs of loans reclassified to held-for-sale, 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.

328

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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%

During 2014, certain mortgage loans had been marked to fair value of $68.1 million. The net impact of write-downs of loans reclassified to held-for-sale, 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%

Fair Value Option

We elected fair value accounting for:

• Certain commercial mortgage loans and obligations of consolidated VIEs for which it was not practicable for us to determine the carrying value.

• Certain real estate 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.

• Certain investment funds for which we do not have enough influence to account for under the equity method in order to reflect the economics of the investment in the financial statements. We do not elect the fair value option for other similar investments as these investments are generally accounted for under the equity method of accounting.

329

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

The following tables present information regarding the assets and liabilities for which the fair value option was elected.

		December 31, 2016		December 31, 2015
		(in millions)
Commercial mortgage loans of consolidated VIEs (1) (2)
	Fair value	$	12.4	$	18.3
	Aggregate contractual principal		12.0		17.8
Obligations of consolidated VIEs (3)
	Fair value		59.9		68.1
	Aggregate unpaid principal		60.0		78.0
Real estate ventures (1)
	Fair value		36.9		35.1
Investment funds (1) (4)
	Fair value		36.9		—

(1) Reported with other investments in the consolidated statements of financial position.

(2) None of the loans were more than 90 days past due or in non-accrual status.

(3) Reported with other liabilities in the consolidated statements of financial position.

(4) We did not have any material investment funds for which we elected the fair value option for the year ended December 31, 2015.

		For the year ended December 31,
		2016		2015		2014
Commercial mortgage loans of consolidated VIEs
	Change in fair value pre-tax loss (1) (2)	$	(0.1)	$	(2.0)	$	(1.5)
	Interest income (3)		1.2		3.6		6.2
Obligations of consolidated VIEs
	Change in fair value pre-tax loss - instrument specific credit risk (2) (4)		(9.8)		(1.9)		(2.4)
	Change in fair value pre-tax loss (2)		(9.8)		(2.1)		(0.7)
	Interest expense (5)		1.1		1.1		3.0
Real estate ventures
	Change in fair value pre-tax gain (6)		1.5		7.2		17.3
Investment funds
	Change in fair value pre-tax gain (6) (7)		2.8		—		—
	Dividend income (6)		0.3		—		—

(1) None of the change in fair value related to instrument-specific credit risk.

(2) Reported in net realized capital gains (losses) on the consolidated statements of operations.

(3) Reported in net investment income on the consolidated statements of operations and recorded based on the effective interest rates as determined at the closing of the loan.

(4) Estimated based on credit spreads and quality ratings.

(5) Reported in operating expenses on the consolidated statements of operations.

(6) Reported in net investment income on the consolidated statements of operations.

(7) Absent the fair value election, the change in fair value on the investments would be reported in OCI.

330

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, 2016
					Fair value hierarchy level
	Carrying amount		Fair value		Level 1		Level 2		Level 3
	(in millions)
Assets (liabilities)
Mortgage loans	$	12,621.0	$	12,844.0	$	—	$	—	$	12,844.0
Policy loans		784.8		969.8		—		—		969.8
Other investments		193.6		200.1		—		121.0		79.1
Cash and cash equivalents		721.3		721.3		721.3		—		—
Investment contracts		(30,231.9)		(29,788.6)		—		(5,400.8)		(24,387.8)
Short-term debt		(76.5)		(76.5)		—		(76.5)		—
Separate account liabilities		(91,608.0)		(90,724.5)		—		—		(90,724.5)
Bank deposits		(2,199.8)		(2,204.1)		(1,585.1)		(619.0)		—
Cash collateral payable		(564.7)		(564.7)		(564.7)		—		—

	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)		—		—

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.

331

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 non-performing 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

The carrying amount of cash and cash equivalents not reported at fair value on a recurring basis approximates its fair value, which is 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.

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 included non-recourse mortgages and notes payable that were primarily financings for real estate developments for which the fair values were estimated using discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. These were 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.

332

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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. For the years ended, December 31, 2016, 2015 and 2014, our use of prescribed statutory accounting practices resulted in higher (lower) statutory net income of $3.8 million, $(2.1) million and $6.4 million, respectively, relative to the accounting practices and procedures of the NAIC due to its accounting for derivatives that hedge some of its equity indexed products. In addition, as of December 31, 2016 and 2015, our permitted statutory accounting practice relating to variable annuities with a guaranteed living benefit rider resulted in lower statutory surplus of $180.5 million and $158.1 million, respectively, relative to carrying certain interest rate swaps at book value rather than fair value, as if they received hedge accounting treatment for statutory. Statutory accounting practices differ from U.S. GAAP primarily due to charging policy acquisition costs to expense as incurred, establishing reserves using different actuarial assumptions, valuing investments on a different basis and not admitting certain assets, including certain net deferred income tax assets.

We cede certain term and universal life insurance statutory reserves to our 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, 2016 and 2015, our affiliated reinsurance subsidiaries assumed statutory reserves of $4,734.0 million and $3,934.2 million from us, respectively. 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, 2016 and 2015, assets admitted under these practices totaled $1,809.0 million and $1,447.0 million, respectively.   

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. As of December 31, 2016, we met 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,
	2016		2015		2014
	(in millions)
Statutory net income	$	996.7	$	948.6	$	535.5
Statutory capital and surplus		4,643.8		4,496.7		4,202.1

333

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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.

During fourth quarter 2016, we decided to move long-term care, a business we exited and fully reinsured in 1997, from the U.S. Insurance Solutions segment to the Corporate segment. This change has been applied retrospectively to our segment financial information but did not impact our consolidated financial statements.

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 income on capital not allocated to other segments, inter‑segment eliminations, income tax risks and certain income, expenses and other adjustments not allocated to other segments based on the nature of such items. Results of our exited group medical and long-term care insurance businesses are reported in this segment.

Management uses segment pre-tax operating earnings in evaluating performance, which is consistent with the financial results provided to and discussed with 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 and noncontrolling interest. 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 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 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, pre-tax other adjustments management believes are not indicative of overall operating trends 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 accounting policies of the segments are consistent with the accounting policies for the consolidated financial statements, with the exception of (1) other postretirement employee benefit cost allocations and (2) income tax allocations. For purposes of determining operating earnings, the segments are allocated the service component of other postretirement benefit costs. 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.

334

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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, 2016		December 31, 2015
		(in millions)
Assets:
Retirement and Income Solutions		$	152,682.4	$	139,639.9
Principal Global Investors			775.1		736.9
U.S. Insurance Solutions			22,868.8		21,743.8
Corporate			3,983.8		4,173.0
	Total consolidated assets	$	180,310.1	$	166,293.6

			For the year ended December 31,
			2016		2015		2014
			(in millions)
Operating revenues by segment:
Retirement and Income Solutions:
	Retirement and Income Solutions - Fee		$	1,743.2	$	1,774.0	$	1,778.9
	Retirement and Income Solutions - Spread			4,407.5		4,392.9		3,020.8
		Total Retirement and Income Solutions (1)		6,150.7		6,166.9		4,799.7
Principal Global Investors (2)				720.9		692.5		668.2
U.S. Insurance Solutions
	Specialty benefits insurance			2,009.1		1,866.0		1,724.7
	Individual life insurance			1,622.1		1,569.3		1,532.8
	Eliminations			(0.1)		(0.1)		—
		Total U.S. Insurance Solutions		3,631.1		3,435.2		3,257.5
Corporate				(95.0)		(111.0)		(99.9)
	Total segment operating revenues			10,407.7		10,183.6		8,625.5
Net realized capital gains (losses), net of related revenue adjustments				15.5		(124.4)		(9.6)
Other income on an indemnified uncertain tax position				—		60.2		—
Exited group medical insurance business				—		1.3		0.2
	Total revenues per consolidated statements of operations		$	10,423.2	$	10,120.7	$	8,616.1
Pre-tax operating earnings (loss) by segment:
Retirement and Income Solutions			$	794.5	$	740.1	$	851.2
Principal Global Investors				202.0		178.7		159.7
U.S. Insurance Solutions				359.6		428.6		343.3
Corporate				19.9		(23.5)		(30.2)
	Total segment pre-tax operating earnings			1,376.0		1,323.9		1,324.0
Pre-tax net realized capital losses, as adjusted (3)				(4.3)		(123.1)		(65.3)
Pre-tax other adjustments (4)				—		11.7		(63.1)
Certain adjustments related to equity method investments				26.6		10.8		29.9
	Income before income taxes per consolidated statements
		of operations	$	1,398.3	$	1,223.3	$	1,225.5

(1) Reflects inter-segment revenues of $373.3 million, $422.7 million and $434.8 million for the years ended December 31, 2016, 2015 and 2014, respectively.

(2) Reflects inter-segment revenues of $308.9 million, $294.5 million and $273.7 million for the years ended December 31, 2016, 2015 and 2014, respectively.

(3) Pre-tax net realized capital gains (losses), as adjusted, is derived as follows:

335

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

		For the year ended December 31,
		2016		2015		2014
		(in millions)
Net realized capital gains (losses):
Net realized capital gains (losses)		$	99.5	$	(26.0)	$	62.7
Certain derivative and hedging-related adjustments			(81.7)		(97.2)		(73.0)
Certain market value adjustments to fee revenues			(2.5)		(1.1)		—
Recognition of front-end fee revenue			0.2		(0.1)		0.7
	Net realized capital gains (losses), net of related revenue adjustments		15.5		(124.4)		(9.6)
Amortization of deferred acquisition costs and other actuarial balances			(77.0)		(13.6)		(49.6)
Capital (gains) losses distributed			7.2		15.1		(10.9)
Certain market value adjustments of embedded derivatives			50.0		(0.2)		4.8
	Pre-tax net realized capital losses, as adjusted (a)	$	(4.3)	$	(123.1)	$	(65.3)

(a) As adjusted before noncontrolling interest capital gains (losses) and net realized capital gains (losses) associated with exited group medical insurance business.

(4) 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).

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,
		2016		2015		2014
		(in millions)
Income tax expense (benefit) by segment:
Retirement and Income Solutions		$	98.6	$	76.1	$	128.5
Principal Global Investors			71.8		64.0		56.3
U.S. Insurance Solutions			118.2		142.9		112.5
Corporate			(2.4)		(8.8)		(17.5)
Total segment income taxes from operating earnings			286.2		274.2		279.8
	Tax benefit related to net realized capital losses, as adjusted		(1.2)		(36.5)		(21.9)
	Tax expense (benefit) related to other after-tax adjustments		—		44.2		(14.9)
Total income taxes per consolidated statements of operations		$	285.0	$	281.9	$	243.0

336

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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,
		2016		2015		2014
		(in millions)
Depreciation and amortization expense by segment:
Retirement and Income Solutions		$	30.4	$	28.3	$	27.5
Principal Global Investors			11.6		11.1		12.9
U.S. Insurance Solutions			20.0		17.3		16.7
Corporate			4.9		4.3		3.3
Total depreciation and amortization expense included in our
	consolidated statements of operations	$	66.9	$	61.0	$	60.4

18. Stock‑Based Compensation Plans

As of December 31, 2016, 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 under any plans. 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,
	2016		2015		2014
	(in millions)
Compensation cost	$	47.6	$	43.3	$	41.2
Related income tax benefit		14.5		14.6		14.0
Capitalized as part of an asset		2.8		2.2		2.5

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.

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	2016			2015			2014
Expected volatility		31.7	%		52.2	%		53.2	%
Expected term (in years)		6.5			6.5			6.5
Risk-free interest rate		1.5	%		1.8	%		2.0	%
Expected dividend yield		4.07	%		2.81	%		2.50	%
Weighted average estimated fair value	$	8.91		$	20.43		$	18.89

337

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 our 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, 2016, we had $2.6 million of total unrecognized compensation costs related to nonvested stock options. The cost is expected to be recognized over a weighted‑average service period of approximately 1.7 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 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 will be recognized and any previously recognized compensation cost will be reversed. These awards have no maximum contractual term. 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 2016, 2015 and 2014 was $37.38, $51.33 and $44.88, respectively.

As of December 31, 2016, we had $4.3 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 1.5 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. These awards have no maximum contractual term. 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 2016, 2015 and 2014 was $37.45, $51.31 and $45.00, respectively.

As of December 31, 2016, we had $35.1 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.

338

Principal Life Insurance Company

Notes to Consolidated Financial Statements

December 31, 2016

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 $14.00, $7.30 and $8.94 during 2016, 2015 and 2014, 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)
2016
Total revenues	$	3,024.6	$	2,262.9	$	2,557.0	$	2,578.7
Total expenses		2,613.2		2,012.2		2,198.7		2,200.8
Net income		325.1		217.0		280.7		290.5
Net income attributable to PLIC		301.3		216.0		279.8		289.6
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

20. Subsequent Event

During the second quarter of 2017, we plan to sell our ownership interest in Principal Global Investors, LLC, (“PGI”) to our direct parent, PFS, as part of a common control transaction. PGI comprises substantially all of our Principal Global Investors segment. We will receive a note from PFS for approximately the carrying value of PGI, bearing interest at the current market rate at the time of transaction. Our ultimate parent, PFG is the guarantor of the note. We have determined that the planned sale of PGI does not meet the criteria to be classified as held for sale as of December 31, 2016.

339

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, 2016

(2) Part B:

Principal Life Insurance Company Separate Account B:

Report of Independent Registered Public Accounting Firm

Statements of Assets and Liabilities, December 31, 2016

Statements of Operations for the year ended December 31, 2016

Statements of Changes in Net Assets for the years ended December 31, 2016 and 2015

Notes to Financial Statements

Principal Life Insurance Company:

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Financial Position at December 31, 2016, and 2015

Consolidated Statements of Operations for the years ended December 31, 2016, 2015 and 2014

Consolidated Statements of Stockholder's Equity for the years ended December 31, 2016, 2015 and 2014

Consolidated Statements of Cash Flows for the years ended December 31, 2016, 2015 and 2014

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, 2016*

Schedule III - Supplementary Insurance Information as of December 31, 2016, 2015 and 2014 and for each of the years then ended*

Schedule IV - Reinsurance as of December 31, 2016, 2015 and 2014 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 03/01/1996
	(3a)	Distribution Agreement (filed 03/01/1996)
	(3b)	Selling Agreement (filed 03/01/1996)
	(4a)	Form of Variable Annuity Contract (filed 12/16/1997)
	(4b)	Form of Variable Annuity Contract Endorsement (filed 12/16/1997)
	(4c)	Form of Variable Annuity Contract Rider (filed 12/16/1997)
	(5)	Form of Variable Annuity Application (filed 10/23/1997)
	(6a)	Articles of Incorporation of the Depositor (filed 03/01/1996)
	(6b)	Bylaws of Depositor (filed 03/01/1996)

(8)	Participation Agreements
	a. Principal Variable Contracts Funds, Inc.
	(1)	Participation Agreement dated 01/05/2007 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(2)	Participation Agreement Amendment No. 1 dated 06/01/2007 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(3)	Participation Agreement Amendment No. 2 dated 01/01/2010 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(4)	Participation Agreement Letter Amendment No. 3 (letter) dated 06/17/2010 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(5)	Participation Agreement Amendment No. 4 and Joinder dated 11/01/2011 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)

(6)	Participation Agreement Amendment No. 5 dated 02/09/2015 (filed with the Commission on 04/30/2015 Accession No. 0000009713-15-000052)
(7)	Participation Agreement Amendment No. 6 dated 08/10/2016 *
(8)	Rule 12b-1 Compensation Letter dated 12/30/2009 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
(9)	Amendment to Rule 12b-1 Compensation Letter dated 11/09/2011 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
(10)	Rule 22c-2 Agreement dated 04/16/2007 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
(11)	Rule 22c-2 Agreement Amendment No. 1 and Joinder dated 11/01/2011 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)

(9)	Opinion of Counsel (filed 03/01/1996)
(10a)	Consent of Ernst & Young LLP *
(10b)	Powers of Attorney *
(10c)	Consent of Counsel *
(11)	Financial Statement Schedules *
(13a)	Total Return Calculation (filed 03/01/1996)
(13b)	Annualized Yield for Separate Account B (filed 03/01/1996)

* 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 28556 Chianti Terrace Bonita Springs, FL 34135	Director Member, Audit and Executive Committees
JOCELYN CARTER-MILLER 8701 Banyan Court Tamarac, FL 33321	Director Member, Nominating and Governance Committee
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 Chair, Nominating and Governance 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 Chairman of the Board and Chair, Executive Committee Principal Life: Chairman, President and Chief Executive Officer
SCOTT M. MILLS Viacom, Inc. 1515 Broadway New York, NY 10036	Director Member, Audit and Human Resources Committees
BLAIR C. PICKERELL Lower House 1 29 Mt. Kellett Road The Peak Hong Kong	Director Member, Nominating and Governance Committee
ELIZABETH E. TALLETT 21 Deepwater Point Moultonborough, NH 03254	Director Member, Executive, Human Resources and Nominating and Governance Committees

EXECUTIVE OFFICERS (OTHER THAN DIRECTORS)

Name and Principal Business Address	Positions and Offices
REX AUYEUNG(1)	Chairman - Principal Financial Group - Asia
DAVID M. BLAKE(2)	Senior Executive Director - Fixed Income
ELIZABETH S. BRADY(2)	Senior Vice President and Chief Marketing Officer
GREGORY J. BURROWS(2)	Senior Vice President Retirement and Income Solutions
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 Income Solutions
AMY C. FRIEDRICH(2)	Senior Vice President, Specialty Benefits Division
GINA L. GRAHAM(2)	Vice President and Treasurer
PATRICK G. HALTER(2)	Chief Operating Officer - Principal Global Investors
MARK S. LAGOMARCINO(2)	Senior Vice President and Deputy General Counsel
JULIA M. LAWLER(2)	Senior Executive Director - Investments
TERRANCE J. LILLIS(2)	Executive Vice President
GREGORY A. LINDE(2)	Senior Vice President Individual Life
JAMES P. MCCAUGHAN(2)	President - Global Asset Management
BARBARA A. MCKENZIE(2)	Senior Executive Director - Investments
DENNIS J. MENKEN(2)	Senior Vice President and Chief Investment Officer - Principal Life Insurance Company
GERALD W. PATTERSON(2)	Senior Vice President Retirement and Income Solutions
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 Investments
DEANNA D. STRABLE(2)	Executive Vice President and Chief Financial Officer
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, 2016 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, 2016)
							Organized in	% Owned
PRINCIPAL FINANCIAL GROUP, INC.							Delaware	Publicly Held
	-->Principal Financial Services, Inc.*#						Iowa	100
		-->PFG DO Brasil LTDA*#					Brazil	100
			-->Brasilprev Seguros E Previdencia S.A.*				Brazil	50
			-->Principal Global Investors Participacoes, LTDA*#				Brazil	100
			-->Claritas Investments LTD*#				Cayman Islands	100
			-->Claritas Administracao de Recursos LTDA*#				Brazil	73.75
		-->Principal International, LLC.*#					Iowa	100
			-->Principal International (Asia) Limited*#				Hong Kong	100
				-->Principal Asia Pacific Investment Consulting (Beijing) Limited*#			China	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 (Hong Kong) Limited*			Hong Kong	100
				-->Principal Insurance Company (Hong Kong) Limited*#			Hong Kong	100
					-->Principal Trust Company (Bermuda) Limited*#		Bermuda	100
				-->CIMB - Principal Asset Management Berhad*			Malaysia	40
					-->CIMB Wealth Advisors Berhad*		Malaysia	100
					-->CIMB - Principal Asset Management (S) PTE LTD*#		Singapore	100
					-->CIMB - Principal Asset Management Company Limited*		Thailand	99.99
						-->Finansa Asset Management Limited *#<	Thailand	100
					-->PT CIMB Principal Asset Management*		Indonesia	99
				-->Principal Trust Company (Asia) Limited*#			Hong Kong	100
				-->Principal Investment & Retirement Services Limited*#			Hong Kong	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
					-->Principal Global Investors (Switzerland) GMBH*		Switzerland	100
				-->PGI Origin Holding Company LTD*#<			Wales/United Kingdom	100
					-->Origin Asset Management LLP*#<		Wales/United Kingdom	76.6
				-->PGI Finisterre Holding Company LTD*			Wales/United Kingdom	100
				-->Finisterre Holdings Limited*			Malta	82.5
					-->Finisterre Capital UK Limited*		Wales/United Kingdom	100
						-->Finisterre Capital LLP*	Wales/United Kingdom	86
					-->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	50
		-->Principal Financial Group (Mauritius) LTD*#					Mauritius	100
			-->Principal PNB Asset Management Company Private Limited*#				India	78.6
			-->Principal Trustee Company Private Limited*#				India	70

	-->Principal Retirement Advisors Private Limited*#						India	100
-->Principal Life Insurance Company+#							Iowa	100
	-->Principal Real Estate Fund Investors, LLC*#<						Delaware	100
	-->Principal Development Investors, LLC*#<						Delaware	100
	-->Principal Real Estate Holding Company, LLC*#<						Delaware	100
		-->GAVI PREHC HC, LLC*#<					Delaware	100
	-->Principal Global Investors, LLC*#<						Delaware	100
		-->Principal Real Estate Investors, LLC*#					Delaware	100
		-->Principal Enterprise Capital, LLC*#					Delaware	100
		-->Principal Commercial Funding, LLC*#<					Delaware	100
		-->Principal Global Columbus Circle, LLC*#<					Delaware	100
			-->CCI Capital Partners, LLC *#<				Delaware	100
		-->Post Advisory Group, LLC*#<					Delaware	80
			-->Post Advisory Europe Limited*#<				Wales/United Kingdom	100
		-->Principal Global Investors Trust*#<					Delaware	100
		-->Spectrum Asset Management, Inc.*#<					Connecticut	100
		-->CCIP, LLC*#<					Delaware	100
			-->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 Reinsurance Company of Delaware II*#<					Delaware	100
-->Principal Financial Services (Australia), Inc.*#							Iowa	100
	-->Principal Global Investors (Australia) Service Company Pty Limited*#						Australia	100
		-->Principal Global Investors (Australia) Limited*#					Australia	100
-->Principal International Holding Company, LLC*#							Delaware	100
-->Principal Management Corporation*#							Iowa	100
	-->Principal Financial Advisors, Inc.*#						Iowa	100
	-->Principal Shareholder Services, Inc.*#						Washington	100
	-->Edge Asset Management, Inc.*#						Washington	100
	-->Principal Funds Distributor, Inc.*#						Washington	100
-->Principal Global Services Private Limited*#							India	100
-->CCB Principal Asset Management Company, LTD*							China	25
-->Principal Financial Services I (US), LLC*#							Delaware	100
	-->Principal Financial Services II (US), LLC*#						Delaware	100
	-->Principal Financial Services I (UK) LLP *#						Wales/United Kingdom	100
		-->Principal Financial Services IV (UK) LLP*#					United Kingdom	100
			-->Principal Financial Services V (UK) LTD.*#				United Kingdom	100
		-->Principal Financial Services II (UK) LTD.*#					Wales/United Kingdom	100
			-->Principal Financial Services III (UK) LTD.*#				Wales/United Kingdom	100
				-->Principal Financial Services VI (UK) LTD*#			United Kingdom	100
					-->Principal Global Financial Services (Europe) LTD*#		United Kingdom	100
						-->Liongate Capital Management LLP*	Wales/United Kingdom	55
						-->LGCM (Cayman) Limited*	Cayman Islands	100

-->LG Capital (UK) Limited*

Wales/United Kingdom

100

-->Liongate Limited*

Malta

55

-->Liongate Capital Management (Cayman) Limited*

Cayman Islands

100

-->Liongate Capital Management (UK) Limited*

Wales/United Kingdom

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 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, Principal Grupo Financiero*#

Mexico

100

-->Principal Seguros, S.A. de C.V., Principal Grupo Financiero*#

Mexico

100

-->Principal Pensiones, S.A. de C.V., Principal Grupo Financiero*#

Mexico

100

-->Principal 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 Security Principal, S.A.*

Chile

49

-->Principal Holding Company Chile S.A.*#

Chile

100

-->Principal Chile Limitada*#

Chile

100

-->Administradora de Fondos de Pensiones Cuprum S.A.*#

Chile

97

-->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

-->Principal Global Investors 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, 2017

(1)	(2)
	Number of
Title of Class	Contractowners
BFA Variable Annuity Contracts	6
Pension Builder Plus Contracts	71
Personal Variable Contracts	11
Premier Variable Contracts	23
Flexible Variable Annuity Contract	19,210
Freedom Variable Annuity Contract	768
Freedom 2 Variable Annuity Contract	246
Investment Plus Variable Annuity Contract	67,266
Principal Lifetime Income Solutions	1,032
Principal Pivot Series Variable Annuity	582
Principal Lifetime Income Solutions II	N/A

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)
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)
Gina L. Graham	Vice President and Treasurer
Principal Financial Group(1)
Lee M. Harms	Chief Information Security Officer
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)

(b1)	(b2)
Name and principal	Positions and offices
business address	with principal underwriter
Jeffrey A. Van Baale	Chief Information Officer
Principal Financial Group(1)
Traci L. Weldon	Senior Vice President
Principal Financial Group(1)
Dan L. Westholm	Assistant Vice President - Treasury
Principal Financial Group(1)
(1)   655 9th Street
Des Moines, IA 50392

(c)Compensation from the Registrant

(1) Name of Principal Underwriter	(2) Net Underwriting Discounts & Commissions	(3) Compensation on Events Occasioning the Deduction of a Deferred Sales Load	(4) Brokerage Commissions	(5) Compensation
Principal Securities, Inc. (formerly Princor Financial Services Corporation)	$35,236,912.92	0	0	0

Item 30. Location of Accounts and Records

All accounts, books or other documents of the Registrant are located at the offices of the Depositor, The Principal Financial Group, Des Moines, Iowa 50392.

Item 31. Management Services

N/A

Item 32. Undertakings

The Registrant undertakes that in restricting cash withdrawals from Tax Sheltered Annuities to prohibit cash withdrawals before the Participant attains age 59 1/2, separates from service, dies, or becomes disabled or in the case of hardship, Registrant acts in reliance on SEC No Action Letter addressed to American Counsel of Life Insurance (available November 28, 1988). Registrant further undertakes that:

1. Registrant has included appropriate disclosure regarding the redemption restrictions imposed by Section 403(b)(11) in its registration statement, including the prospectus, used in connection with the offer of the contract;

2. Registrant will include appropriate disclosure regarding the redemption restrictions imposed by Section 403(b)(11) in any sales literature used in connection with the offer of the contract;

3. Registrant will instruct sales representatives who solicit Plan Participants to purchase the contract specifically to bring the redemption restrictions imposed by Section 403(b)(11) to the attention of the potential Plan Participants; and

4. Registrant will obtain from each Plan Participant who purchases a Section 403(b) annuity contract, prior to or at the time of such purchase, a signed statement acknowledging the Plan Participant's understanding of (a) the restrictions on redemption imposed by Section 403(b)(11), and (b) the investment alternatives available under the employer's Section 403(b) arrangement, to which the Plan Participant may elect to transfer his contract value.

Fee Representation

Principal Life Insurance Company represents the fees and charges deducted under the Policy, in the aggregate, are reasonable in relation to the services rendered, the expenses expected to be incurred, and the risks assumed by the Company.

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant, Principal Life Insurance Company Variable Life Separate Account, has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned thereto duly authorized, and its seal to be hereunto affixed and attested, in the City of Des Moines and State of Iowa, on the 28th day of April, 2017.

	PRINCIPAL LIFE INSURANCE COMPANY
	SEPARATE ACCOUNT B
	(Registrant)
	By :	/s/ D. J. Houston
		D. J. Houston
		Chairman, President and Chief Executive Officer
	PRINCIPAL LIFE INSURANCE COMPANY
	(Depositor)
	By :	/s/ D. J. Houston
		D. J. Houston
		Chairman of the Board
		Director, Chairman, 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, Chairman of the Board	April 28, 2017
D. J. Houston	Chairman, President, and Chief Executive Officer
/s/ A. R. Sanders	Senior Vice President and Controller	April 28, 2017
A. R. Sanders	(Principal Accounting Officer)
/s/ T. J. Lillis	Executive Vice President and	April 28, 2017
T. J. Lillis	Chief Financial Officer
	(Principal Financial Officer)
(B. J. Bernard)*	Director	April 28, 2017
B. J. Bernard
(J. Carter-Miller)*	Director	April 28, 2017
J. Carter-Miller
(M. T. Dan)*	Director	April 28, 2017
M. T. Dan
(D. H. Ferro)*	Director	April 28, 2017
D. H. Ferro
(C. D. Gelatt, Jr.)*	Director	April 28, 2017
C. D. Gelatt, Jr.
(S. L. Helton)*	Director	April 28, 2017
S. L. Helton
(R. C. Hochschild)*	Director	April 28, 2017
R. C. Hochschild
(S. M. Mills)*	Director	April 28, 2017
S. M. Mills
(B. C. Pickerell)*	Director	April 28, 2017
B. C. Pickerell
(E. E. Tallett)*	Director	April 28, 2017
E. E. Tallett
*By	/s/ D. J. Houston
	D. J. Houston
	Director, Chairman of the Board
	Chairman, President and Chief Executive Officer
*	Powers of Attorney filed herein