485BPOS 1 vaplis485b2017filingbody.htm PRINCIPAL LIFETIME INCOME SOLUTIONS VAR ANN - PEA #13 VA-PLIS-485B-2017 Combined Document


Registration No. 333-171650
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. 13
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 239
(Check appropriate box or boxes)
Principal Life Insurance Company Separate Account B
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(Exact Name of Registrant)
Principal Life Insurance Company
--------------------------------------------------------------------------------
(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: Principal Lifetime Income SolutionsSM  
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 LIFETIME INCOME SOLUTIONSSM 

VARIABLE ANNUITY

Prospectus dated May 1, 2017

This prospectus describes Principal Lifetime Income SolutionsSM, an individual, flexible premium, deferred variable annuity (the “Contract”), issued by Principal Life Insurance Company (“the Company”, “we”, “our” or “us”) through Principal Life Insurance Company Separate Account B (“Separate Account”).
This prospectus provides information about the Contract and the Separate Account that you, as owner , should know before investing. The prospectus should be read and retained for future reference. Additional information about the Contract and the Separate Account is included in the Statement of Additional Information (“SAI”), dated May 1, 2017, which has been filed with the Securities and Exchange Commission (the “SEC”) and is considered a part of this prospectus. The table of contents of the SAI is at the end of this prospectus. You may obtain a free copy of the SAI and all additional information by writing or calling: Principal Lifetime Income Solutions SM , Principal Financial Group, P.O. Box 9382, Des Moines, Iowa 50306-9382, Telephone: 1-800-852-4450. You can also visit the SEC’s website at www.sec.gov, which contains the SAI, material incorporated into this prospectus by reference, and other information about registrants that file electronically with the SEC.
These securities have not been approved or disapproved by the SEC or any state securities commission nor has the SEC or any state securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
This Contract automatically includes a Guaranteed Minimum Withdrawal Benefit (“GMWB”) feature that you cannot remove from the Contract for 5 years. There is a charge for this feature that is deducted quarterly.
You generally may allocate your investment in the Contract in the Fixed Account and the divisions of the Separate Account. The Fixed Account is a part of our General Account. Each Separate Account division invests in shares of a corresponding mutual fund (the “underlying mutual funds”). A list of the underlying mutual funds available under the Contract is shown below.
Your accumulated value will vary according to the investment performance of the underlying mutual funds in which your selected division(s) are invested. We do not guarantee the investment performance of the underlying mutual funds.
The following underlying mutual funds are available under the Contract(1)(2):
Principal Variable Contracts Funds - Class 2
• Diversified Balanced Managed Volatility Account(3)
• Diversified Growth Managed Volatility Account(3)
• Diversified Income Account(3)
(1)  
In California, we allocate initial premium payments to the Fidelity VIP Government Money Market Division during the examination offer period unless you elect to immediately invest in the allocations you selected. This division is not available under the Contract at any other time or in any other state.
(2)  
Previously, we made available Diversified Balanced Account and Diversified Growth Account. If the contract has the GMWB rider in force and the application was signed December 1, 2013 or later, these investment options are no longer available.
(3)  
This underlying mutual fund is a fund of funds and expenses may be higher due to the tiered level of expenses.
Over time, modifications have been made to the features of the GMWB rider (for new sales only). These changes are described in the table set forth in the "GMWB Summary" in Section 4 of the prospectus.
An investment in the Contract is not a deposit or obligation of any bank and is not insured or guaranteed by any bank, the Federal Deposit Insurance Corporation or any other government agency.
This prospectus is valid only when accompanied by the current prospectuses for the underlying mutual funds. These prospectuses should be kept for future reference. This prospectus is not an offer to sell, or solicitation of an offer to buy, the Contract in states in which the offer or solicitation may not be lawfully made. No person is authorized to give any information or to make any representation in connection with this Contract other than those contained in this prospectus.


TABLE OF CONTENTS

GLOSSARY
SUMMARY OF EXPENSE INFORMATION
SUMMARY
 
 
1. THE CONTRACT
How To Buy a Contract
Premium Payments
Allocating Premium Payments
Exchange Credit (for exchange(s) from our fixed deferred annuities)
Right to Examine the Contract (free look)
Accumulated Value
Telephone and Internet Services
 
 
2. CHARGES AND DEDUCTIONS
Surrender Charge
Free Surrender Amount
When Surrender Charges Do Not Apply
Waiver of Surrender Charge Rider
Transaction Fee
Premium Taxes
Annual Fee
GMWB Charge
Separate Account Annual Expenses
Mortality and Expense Risks Charge
Administration Charge
Special Provisions for Group or Sponsored Arrangements
 
 
3. INVESTMENT OPTIONS
Separate Account Divisions
Fixed Account
 
 
4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
Overview
Withdrawal Benefit Base
Withdrawal Benefit Payment
Covered Life Change
Effect of Withdrawals
Excess Withdrawals
Required Minimum Distribution (RMD) Program for GMWB Riders
GMWB Bonus
GMWB Step-Up
Effect of Reaching the Maximum Annuitization Date Under the Rider
Effect of the Contract Accumulated Value Reaching Zero Under the Rider
Termination and Reinstatement of the Rider
GMWB Upon Divorce
GMWB Summary


2


5. TRANSFERS AND SURRENDERS
Division Transfers
Unscheduled Transfers
Scheduled Transfers (Dollar Cost Averaging)
Fixed Account Transfers, Total and Partial Surrenders
Automatic Portfolio Rebalancing (APR)
Surrenders
Total Surrender
Unscheduled Partial Surrender
Scheduled Partial Surrender
 
 
6. THE ANNUITIZATION PERIOD
Annuitization Date
Full Annuitization
Partial Annuitization
Annuity Benefit Payment Options
Tax Considerations Regarding Annuity Benefit Payment Options
Death of Annuitant (During the Annuitization Period)
 
 
7. DEATH BENEFIT
Payment of Death Benefit
Standard Death Benefit Formula
GMWB Death Benefit
 
 
8. ADDITIONAL INFORMATION ABOUT THE CONTRACT
The Contract
Delay of Payments
Misstatement of Age or Gender
Assignment
Change of Owner or Annuitant
Beneficiary
Contract Termination
Reinstatement
Reports
Important Information About Customer Identification Procedures
Frequent Trading and Market-Timing (Abusive Trading Practices)
Distribution of the Contract
Performance Calculation
 
 
9. FEDERAL TAX MATTERS
Taxation of Non-Qualified Contracts
Taxation of Qualified Contracts
Withholding
 
 
 
 
 
 
 
 
 
 


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10. GENERAL INFORMATION ABOUT THE COMPANY
Corporate Organization and Operation
Legal Opinions
Legal Proceedings
Other Variable Annuity Contracts
Payments to Financial Intermediaries
Service Arrangements and Compensation
Mutual Fund Diversification
State Regulation
Independent Registered Public Accounting Firm
Financial Statements
 
 
11. TABLE OF SEPARATE ACCOUNT DIVISIONS
 
 
12. REGISTRATION STATEMENT
 
 
13. TABLE OF CONTENTS OF THE SAI
 
 
APPENDIX A — GMWB EXAMPLES (applications signed on or after August 1, 2015)
 
 
APPENDIX B — GMWB EXAMPLES (applications signed before August 1, 2015)
 
 
APPENDIX C — GMWB DEATH BENEFIT EXAMPLES
 
 
APPENDIX D — CONDENSED FINANCIAL INFORMATION





4

GLOSSARY
accumulated value – the sum of the values invested in the Fixed Account and the Separate Account divisions.
anniversary(ies) – the same date and month of each year following the contract date.
annuitant – the person, including any joint annuitant, on whose life the annuity benefit payment is based. This person may or may not be the owner.
annuitization – application of a portion or all of the accumulated value to an annuity benefit payment option to make income payments.
annuitization date – the date all of the owner’s accumulated value is applied to an annuity benefit payment option.
Automatic Portfolio Rebalancing (APR) – the transfer of money among your Separate Account divisions on a set schedule to maintain a specified percentage in each Separate Account division.
average quarterly withdrawal benefit base – the value used to calculate the GMWB quarterly rider charge. This value is (1) the withdrawal benefit base at the beginning of the calendar quarter plus (2) the withdrawal benefit base at the end of the calendar quarter and this sum is divided by two.
cash surrender value – the accumulated value minus any applicable surrender charges and fee(s) (contract fee and/or prorated share of the charge(s) for optional rider(s)).
contract date – the date the Contract is issued and which is used to determine contract years.
contract year – the one-year period beginning on the contract date and ending one day before the Contract anniversary and any subsequent one-year period beginning on a Contract anniversary (for example, if the contract date is June 5, 2013, the first contract year ends on June 4, 2014, and the first Contract anniversary falls on June 5, 2013).
data page – that portion of the Contract which contains the following: owner and annuitant data (names, gender, annuitant age); the Contract issue date; maximum annuitization date; contract charges and limits; benefits; and a summary of any optional benefits chosen by the Contract owner.
Fixed Account – an account which uses a guaranteed interest rate to calculate interest earned.
Fixed Account value – the amount invested in the Fixed Account (plus interest earned and less any surrenders and/or transfers).
good order – an instruction or request is in good order when it is received in our home office, or other place we may specify, and has such clarity and completeness that we do not have to exercise any discretion to carry out the instruction or request. We may require that the instruction or request be given in a certain form.
home office – Company’s corporate headquarters located at Principal Financial Group, Des Moines, Iowa 50392-1770.
investment options – the Fixed Account and Separate Account divisions.
joint annuitant – an annuitant whose life determines the annuity benefit under this Contract. Any reference to the death of the annuitant means the death of the first annuitant to die.
joint owner – an owner who has an undivided interest with the right of survivorship in this Contract with another owner. Any reference to the death of the owner means the death of the first owner to die.
non-qualified contract – a Contract which does not qualify for favorable tax treatment as a Qualified Plan, Individual Retirement Annuity, Roth IRA, SEP IRA, Simple-IRA or Tax Sheltered Annuity.


5

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



6

SUMMARY OF EXPENSE INFORMATION
The tables below describe the fees and expenses that you will pay when buying, owning and surrendering the Contract.
The following table describes the fees and expenses you will pay at the time you buy the Contract, surrender the Contract or transfer cash value between investment options.
Contract owner transaction expenses(1)
 
Maximum
Current
Surrender charge (as a percentage of amount surrendered)(2)
6%
6%
Transaction Fees
 
 
• for each unscheduled partial surrender
the lesser of $25 or 2% of each unscheduled partial surrender after the 12th unscheduled partial surrender in a contract year
$0
• for each unscheduled transfer(3)
the lesser of $25 or 2% of each unscheduled transfer after the first unscheduled transfer in a contract year
$0
State Premium Taxes (vary by state)(4)
3.50% of premium payments made
0%
The following table describes the fees and expenses that are deducted periodically during the time that you own the Contract, not including underlying mutual fund fees and expenses.
Periodic Expenses
 
Maximum Annual Charge
Current Annual Charge
Annual Fee (waived for Contracts with accumulated value of $30,000 or more)
The lesser of $30 or 2.00% of the accumulated value
The lesser of $30 or 2.00% of the accumulated value
 
 
 
Mortality and Expense Risks Charge (as a percentage of average daily Separate Account value)
1.25%
1.25%
Administration Charge (as a percentage of average daily Separate Account value)
0.15%
0.15%
Total Separate Account Annual Expense
1.40%
1.40%
GMWB Charge (as a percentage of the average quarterly withdrawal benefit base)(5)
 
 
•    for applications signed before August 1, 2013(6)
1.65%
0.73%
•    for applications signed on or after August 1, 2013(6) but before August 1, 2015
1.65%
0.95%
•    for applications signed on or after August 1, 2015
1.65%
1.05%
Total Separate Account Annual Expense plus Optional Riders Annual Expense(7)
 
 
•    for applications signed before August 1, 2013(6)
3.05%
2.13%
•    for applications signed on or after August 1, 2013(6) but before August 1, 2015
3.05%
2.35%
•    for applications signed on or after August 1, 2015
3.05%
2.45%


7

This table shows the minimum and maximum total operating expenses charged by the underlying mutual funds that you may be required to pay periodically during the time that you own the Contract. More detail concerning the fees and expenses of each underlying mutual fund is contained in its prospectus.
Minimum and Maximum Annual Underlying Mutual Fund Operating Expenses
as of December 1, 2016 (includes funds no longer available for new contracts)
 
Minimum
Maximum
Total annual underlying mutual fund operating expenses (expenses that are deducted from underlying mutual fund assets, including management fees, distribution and/or service (12b-1) fees and other expenses)*
0.55%
0.65%
*
The funds available are structured as a “fund of funds”. A fund of funds is a mutual fund that invests primarily in a portfolio of other mutual funds. The expenses shown include all the fees and expenses of the funds that a fund of funds holds in its portfolio.
(1) 
For additional information about the fees and expenses described in the table, see 2. CHARGES AND DEDUCTIONS.
(2) 
Surrender charge, as a percentage of the amount surrendered:
Table of Surrender Charges
Number of completed contract years
since each premium payment was made
Surrender charge applied to all premium
payments received in that contract year
0 (year of premium payment)
6%
1
6%
2
6%
3
5%
4
4%
5
3%
6
2%
7 and later
0%
(3) 
Please note that in addition to the fees shown, the Separate Account and/or sponsors of the underlying mutual funds may adopt requirements pursuant to rules and/or regulations adopted by federal and/or state regulators which require us to collect additional transfer fees and/or impose restrictions on transfers.
(4) 
We do not currently assess premium taxes for any Contract issued, but reserve the right in the future to assess up to 3.50% of premium payments made for Contract owners in those states where a premium tax is assessed.
(5) 
At the end of each calendar quarter, one-fourth of the annual charge is multiplied by the average quarterly withdrawal benefit base. The average quarterly withdrawal benefit base is equal to (1) the withdrawal benefit base at the beginning of the calendar quarter plus (2) the withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is higher than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters.
(6) 
For Illinois and Montana, August 15, 2013.
(7) 
This amount includes the GMWB charge (in addition to the 1.25% Mortality and Expense Risks Charge and the 0.15% Administration Charge). This assumes the withdrawal benefit base is equal to the initial premium payment. If the withdrawal benefit base changes, the charge for your optional rider and your Total Separate Account Annual Expense would be higher or lower.


8

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 contract owner transaction expenses, contract fees, Separate Account annual expenses, and underlying mutual fund fees and expenses.
The example reflects the maximum charges imposed in purchasing the Contract. The amounts below are calculated using the maximum GMWB fee and not the current GMWB fee.
The example assumes(1):
•
a $10,000 premium payment to issue the Contract;
•
a 5% return each year;
•
includes GMWB rider(2);
•
an annual contract fee of $30 (expressed as a percentage of the average accumulated value);
•
the minimum and maximum annual underlying mutual fund operating expenses as of December 31, 2016 (without voluntary waivers of fees by the underlying funds, if any); and
•
no premium taxes are deducted.
Although your actual costs may be higher or lower, based on these assumptions, your costs would be as shown below:
 
If you surrender your
Contract at the end of the
applicable time period
If you do not
surrender your Contract
If you fully annuitize your
Contract at the end of the
applicable time period
 
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
Maximum Total Underlying Mutual Fund Operating Expenses (0.65%)
$913
$1,688
$2,291
$3,906
$366
$1,126
$1,906
$3,906
$366
$1,126
$1,906
$3,906
Minimum Total Underlying Mutual Fund Operating Expenses (0.55%)
$904
$1,661
$2,245
$3,815
$356
$1,097
$1,858
$3,815
$356
$1,097
$1,858
$3,815
(1) 
This amount includes the GMWB charge (in addition to the 1.25% Mortality and Expense Risks Charge and the 0.15% Administration Charge). This assumes the withdrawal benefit base is equal to the initial premium payment. If the withdrawal benefit base changes, the charge for your optional rider and your Total Separate Account Annual Expense would be higher or lower.
(2) 
The withdrawal benefit base is used to calculate the GMWB rider charge. The withdrawal benefit base is equal to your premiums and increased for any applicable GMWB Bonus and any applicable GMWB Step-Up and decreased for any excess withdrawals. At the end of each calendar quarter, one-fourth of the annual GMWB rider charge is multiplied by the average quarterly withdrawal benefit base. The average quarterly withdrawal benefit base is equal to (1) the withdrawal benefit base at the beginning of the calendar quarter plus (2) the withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two.
For Condensed Financial Information, see Appendix D.
SUMMARY
This prospectus describes an individual flexible premium deferred variable annuity offered by the Company. Material contract variations have been set forth in this prospectus. The Contract is designed to provide individuals with retirement benefits, including:
•
non-qualified retirement programs; and
•
Individual Retirement Annuities (“IRA”), Simplified Employee Pension plans (“SEPs”) and Savings Incentive Match Plan for Employees (“SIMPLE”) IRAs adopted according to Section 408 of the Internal Revenue Code (see 9. FEDERAL TAX MATTERS – Taxation of Qualified Contracts). The Contract does not provide any additional tax deferral if you purchase it to fund an IRA or other investment vehicle that already provides tax deferral.
For information on how to purchase the Contract, please see 1. THE CONTRACT — How to Buy a Contract. This section is a brief summary of the Contract’s features. More detailed information follows later in this prospectus.
Customer Inquiries
Your questions should be directed to: Principal Lifetime Income Solutions, Principal Financial Group, P.O. Box 9382, Des Moines, Iowa 50306-9382, 1-800-852-4450. You may also contact us through our internet site: www.principal.com.


9

Age Requirements
You and any joint owner must be at least age 55 and younger than age 81 to purchase this Contract. If the owner is not a natural person, the annuitant(s) must meet these age requirements.
Investment Limitations
•
Initial premium payment must be at least $15,000 for non-qualified contracts.
•
Initial premium payment must be at least $5,000 for all other contracts.
•
Each subsequent premium payment must be at least $2,000.
•
If you are a member of a retirement plan covering three or more persons and premium payments are made through an automatic investment program, the initial and subsequent premium payments for the Contract must average at least $100 and not be less than $50.
•
The total sum of all premium payments may not be greater than $2,000,000 without our prior approval.
You may allocate your net premium payments to the investment options.
•
The divisions available are Diversified Balanced Managed Volatility, Diversified Growth Managed Volatility, and Diversified Income. For more information on these divisions, see 11. TABLE OF SEPARATE ACCOUNT DIVISIONS. Each division invests in shares of an underlying mutual fund. More detailed information about the underlying mutual funds may be found in the current prospectus for each underlying mutual fund. These underlying mutual fund prospectuses are bound together with this prospectus.
•
The investment options also include the Fixed Account.
•
The GMWB rider imposes limitations on the investment options available by requiring you to allocate 100% of your Separate Account assets to one of the designated fund options for the life of the rider.
Transfers
During the accumulation period:
•
a dollar amount or percentage of transfer must be specified;
•
a transfer may occur on a scheduled or unscheduled basis; and
•
transfers to the Fixed Account are not permitted if a transfer has been made from the Fixed Account to a division within six months.
During the annuitization period, transfers are not permitted (no transfers once payments have begun).
See 5. TRANSFERS AND SURRENDERS for additional restrictions.
Surrenders
During the accumulation period:
•
the gross dollar amount to be surrendered must be specified;
•
surrendered amounts may be subject to surrender charges:
•
the maximum surrender charge is 6% of the amount(s) surrendered.
•
full surrender of your Contract may be subject to an annual Contract fee; and
•
during a contract year, each partial surrender that is less than the Free Surrender Amount is not subject to a surrender charge.
•
surrenders before age 59½ may involve an income tax penalty (see 9. FEDERAL TAX MATTERS).
During the annuitization period, surrenders are not allowed.
See 5. TRANSFERS AND SURRENDERS for additional information.


10

Charges and Deductions
•
No sales charge is deducted from premium payments at the time received. However, the Contract may impose a surrender charge on surrenders greater than the Free Surrender Amount.
•
A contingent deferred surrender charge is imposed on certain total or partial surrenders.
•
An annual mortality and expense risks charge equal to 1.25% of amounts in the Separate Account divisions is imposed daily.
•
For applications signed before August 1, 2013 (August 15, 2013 for Illinois and Montana), the current annual charge for the GMWB rider is 0.73% of the average quarterly withdrawal benefit base. The maximum annual charge for the GMWB rider is 1.65%.
•
For applications signed August 1, 2013 (August 15, 2013 for Illinois and Montana) through and including July 31, 2015, the current annual charge for the GMWB rider is 0.95% of the average quarterly withdrawal benefit base. The maximum annual charge for the GMWB rider is 1.65%.
•
For applications signed on or after August 1, 2015, the current annual charge for the GMWB rider is 1.05% of the average quarterly withdrawal benefit base. The maximum annual charge for the GMWB rider is 1.65%.
•
An annual Separate Account administration charge equal to 0.15% of amounts in the Separate Account division value(s) is imposed daily.
•
There are underlying mutual fund expenses. More detailed information about the underlying mutual fund expenses may be found in the current prospectus for each underlying mutual fund.
•
Contracts with an accumulated value of less than $30,000 are subject to an annual fee of the lesser of $30 or 2% of the accumulated value. Currently we do not charge the annual fee if your accumulated value is $30,000 or more. If you own more than one variable annuity contract with us, then all the contracts you own or jointly own are aggregated on each contract’s anniversary to determine if the $30,000 minimum has been met and whether that contract will be charged.
•
Certain states and local governments impose a premium tax. We reserve the right to deduct the amount of the tax from premium payments or the accumulated value.
See 2. CHARGES AND DEDUCTIONS for additional information.
Annuity Benefit Payments
•
Any time after the first contract year, you may choose from several fixed annuity benefit payment options which are described in 6. THE ANNUITIZATION PERIOD – Annuity Benefit Payment Options.
•
Payments are made to the owner (or beneficiary depending on the annuity benefit payment option selected). You should carefully consider the tax implications of each annuity benefit payment option.
See 6. THE ANNUITIZATION PERIOD and 9. FEDERAL TAX MATTERS for additional information.
Death Benefit
If the Contract accumulated value is greater than zero:
•
The standard death benefit generally is the greatest of the accumulated value, the total of premium payments minus an adjustment for surrenders, or the highest accumulated value on any Contract anniversary wholly divisible by seven. See 7. DEATH BENEFIT for more specific details.
•
If the owner dies before the annuitization date, a death benefit is payable. The death benefit may be paid as either a single payment or under an annuity benefit payment option. If no election is made within the required period of time, the full amount will be paid in a lump sum to the applicable state.
•
If the annuitant dies after the annuitization date, payments will continue only as provided by the annuity benefit payment option in effect.
If the Contract accumulated value has reached zero:
•
If receiving “Single Life” withdrawal benefit payments, there is no death benefit.
•
If receiving “Joint Life” withdrawal benefit payments, the payments will continue until the death of the surviving covered life. Upon the death of the surviving covered life, there is no death benefit.
See 7. DEATH BENEFIT and 6. THE ANNUITIZATION PERIOD – Death of Annuitant (During the Annuitization Period) for additional information.


11

Examination Offer Period (free look)
You may return the Contract during the examination offer period, which is generally 10 days from the date you receive the Contract. The examination offer period may be longer in certain states.
•
The amount refunded will be a full refund of your accumulated value plus any contract charges and premium taxes you paid unless state law requires otherwise. The underlying mutual fund fees and charges are not refunded to you as they are already factored into the Separate Account division value.
•
The amount refunded may be more or less than the premium payments made.
See 1. THE CONTRACT — Right to Examine the Contract (free look) for additional information.
Termination
The Contract will terminate:
•
If no premiums are paid during two consecutive calendar years and the accumulated value (or total premium payments less partial surrenders and applicable surrender charges) is less than $2,000 unless you have a GMWB rider.
•
If you fully annuitize and your accumulated value on the annuitization date is less than $2,000 or if the amount applied under an annuity benefit payment option is less than the minimum requirement.
The GMWB rider will terminate:
•
The date you send us notice to terminate the rider (after the 5th Contract anniversary following the rider effective date).
•
The date you fully annuitize, fully surrender or otherwise terminate the Contract.
•
If the For Life withdrawal benefit base is zero.
•
The date the Contract owner is changed (annuitant is changed if the owner is not a natural person), except when the change in owner is due to a spousal continuation of the rider or the removal/addition of a joint life.
•
The date your surviving spouse elects to continue the Contract without this rider (even if prior to the 5th Contract anniversary following the rider effective date).
•
The date you make an impermissible change in a covered life.
The Waiver of Surrender Charge rider will terminate the date the Contract owner is changed.
1. THE CONTRACT
Principal Lifetime Income Solutions is significantly different from a fixed annuity. As the owner of a variable annuity, you assume the risk of investment gain or loss (as to amounts in the Separate Account divisions) rather than the Company. The Separate Account division value under a variable annuity is not guaranteed and varies with the investment performance of the underlying mutual funds.
Based on your investment objectives, you direct the allocation of premium payments and accumulated values. There can be no assurance that your investment objectives will be achieved.
How to Buy a Contract
If you want to buy a Contract, you must submit an application and make an initial premium payment . If you are buying the Contract to fund a SIMPLE-IRA or SEP, an initial premium payment is not required at the time you send in the application. If the application is complete and the Contract applied for is suitable and meets all other regulatory requirements, the Contract is issued. If the completed application is received in good order , the initial premium payment is credited within two valuation days after the later of receipt of the application or receipt of the initial premium payment at our home office . If the initial premium payment is not credited within five valuation days , it is refunded unless we have received your permission to retain the premium payment until we receive the information necessary to issue the Contract.
The date the Contract is issued is the contract date. The contract date is the date used to determine contract years, regardless of when the Contract is delivered.


12

Tax-qualified retirement arrangements, such as IRAs, SEPs, and SIMPLE-IRAs, are tax-deferred. You derive no additional benefit from the tax deferral feature of the annuity. Consequently, an annuity should be used to fund an IRA or other tax qualified retirement arrangement to benefit from the annuity’s features other than tax deferral. These features may include guaranteed lifetime income, death benefits without surrender charges, guaranteed caps on fees, and the ability to make scheduled transfers among investment options without transaction fees.
Premium Payments
•
The initial premium payment must be at least $15,000 for non-qualified contracts.
•
The initial premium payment must be at least $5,000 for all other contracts.
•
If you are making premium payments through a payroll deduction plan or through a bank (or similar financial institution) account under an automated investment program, your initial and subsequent premium payments must be at least $100.
•
All premium payments are subject to a surrender charge period that begins in the contract year each premium payment is received.
•
Subsequent premium payments must be at least $2,000 and can be made until the annuitization date.
•
Premium payments are to be made by personal or financial institution check (for example, a cashier’s check). We reserve the right to refuse any premium payment that we feel presents a fraud or money laundering risk. Examples of the types of premium payments we will not accept are cash, money orders, starter checks, travelers checks, credit card checks, and foreign checks.
•
If you are a member of a retirement plan covering three or more persons, the initial and subsequent premium payments for the Contract must average at least $100 and cannot be less than $50.
•
The total sum of all premium payments for a Contract may not be greater than $2,000,000 (maximum premium limit) without our prior approval. For further information, please call 1-800-852-4450.
•
We reserve the right to treat all of your and/or your spouse’s Principal deferred variable annuity contracts, with a guaranteed minimum withdrawal benefit rider attached, as one contract for purposes of determining whether you have exceeded the maximum premium limit (without home office approval).
•
The Company reserves the right to increase the minimum amount for each premium payment with advance notice.
•
Premium payments are credited on the basis of the unit value next determined after we receive a premium payment.
•
If no premium payments are made during two consecutive calendar years and the accumulated value is less than $2,000, we reserve the right to terminate the Contract (see 8. ADDITIONAL INFORMATION ABOUT THE CONTRACT – Contract Termination).
Allocating Premium Payments
•
On your application, you direct how your premium payments will be allocated to the investment options.
•
Allocations must be in percentages.
•
Percentages must be in whole numbers and total 100%.
•
Subsequent premium payments are allocated according to your then current allocation instructions.
•
Changes to the allocation instructions are made without charge.
•
A change is effective on the next valuation period after we receive your new instructions in good order.
•
You can change the current allocations and future allocation instructions by:
•
mailing your instructions to us;
•
calling us at 1-800-852-4450 (if telephone privileges apply);
•
faxing your instructions to us at 1-866-894-2093; or
•
visiting www.principal.com.
•
Changes to premium payment allocations do not result in the transfer of any existing investment option accumulated values. You must provide specific instructions to transfer existing accumulated values. We currently do not charge a transaction fee for these transfers but reserve the right to charge such a fee in the future.
Exchange Credit (for exchange(s) from our fixed deferred annuities)
If you own a fixed deferred annuity issued by us and are no longer subject to surrender charges, you may transfer the accumulated value, without charge, to the Contract described in this prospectus. We will add 1% of the fixed annuity contract’s surrender value at the time of exchange to this Contract’s accumulated value. There is no charge or cost to you for this exchange credit.


13

This exchange credit is allocated among the Contract’s investment options in the same ratio as your allocation of premium payments. The credit is treated as earnings.
NOTE:
The exchange may not be suitable for you if you do not want to accept market risk. Fixed deferred annuities provide a fixed rate of accumulation. This Contract provides Separate Account divisions. The value of this Contract will increase or decrease depending on the investment performance of the Separate Account divisions you select.
NOTE:
The charges and provisions of a fixed annuity contract and this Contract differ. The charges for this Contract are typically higher than charges for a fixed annuity. In some instances, your existing fixed annuity contract may have benefits that are not available under this Contract.
NOTE:
This exchange credit may not be available in all states. In addition, we reserve the right to change or discontinue the exchange credit. You may obtain more specific information regarding the exchange credit from your registered representative or by calling us at 1-800-852-4450.
Right to Examine the Contract (free look)
It is important to us that you are satisfied with the purchase of your Contract. Under state law, you have the right to return the Contract for any reason during the examination offer period (a “free look”). The examination offer period is the later of 10 days after the Contract is delivered to you, or such later date as specified by applicable state law.
Although we currently allocate your initial premium payments to the investment options you have selected, during times of economic uncertainty and with prior notice to you, we may exercise our right to allocate initial premium payments to the Money Market Division during the examination offer period. If your initial premium payments are allocated to the Money Market Division and the free look is exercised, you will receive the greater of premium payments or the accumulated value.
NOTE:
All references to the Money Market division in this prospectus will mean the Fidelity VIP Government Money Market Division.
In California, we allocate initial premium payments to the Money Market Division during the examination offer period unless you elect to immediately invest in the allocations you selected. If your premium payments were allocated to the Money Market Division, after the free look period ends, your accumulated value will be converted into units of the division(s) according to your allocation instructions. The units allocated will be based on the unit value next determined for each division.
To exercise your free look, you must send the Contract and a written request to us postmarked before the close of business on the last day of the examination offer period.
If you properly exercise your free look, we will cancel the Contract. In the states that require us to return your premium payments, we will return the greater of your premium payments or accumulated value. In all states we will return at least your accumulated value plus any premium tax charge deducted, and minus any applicable federal and state income tax withholding. The amount returned may be higher or lower than the premium payment(s) applied during the examination offer period.
If you are purchasing this Contract to fund an IRA, SIMPLE-IRA, or SEP-IRA and you return it on or before the seventh day of the examination offer period, we will return the greater of:
•
the total premium payment(s) made; or
•
your accumulated value plus any premium tax charge deducted, less any applicable federal and state income tax withholding, and depending upon the state in which the Contract was issued, any applicable fees and charges.
You may obtain more specific information regarding the free look from your registered representative or by calling us at 1-800-852-4450.
Accumulated Value
The accumulated value of your Contract is the total of the Separate Account division value plus the Fixed Account value. The Fixed Account is described in the section titled 3. INVESTMENT OPTIONS – Fixed Account.


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There is no guaranteed minimum Separate Account division value. The value reflects the investment experience of the divisions that you choose and also reflects your premium payments, partial surrenders, surrender charges, partial annuitizations and the Contract expenses deducted from the Separate Account. See 3. INVESTMENT OPTIONS – Separate Account Divisions for additional information.
The Separate Account division value changes from day to day. To the extent the accumulated value is allocated to the Separate Account divisions, you bear the investment risk. At the end of any valuation period, your Contract’s value in a division is:
•
the number of units you have in a division multiplied by
•
the value of a unit in the division.
The number of units is equal to the total units purchased by allocations to the division from:
•
your initial premium payment;
•
subsequent premium payments;
•
your exchange credit; and
•
transfers from another investment option
minus units sold:
•
for partial surrenders and/or partial annuitizations from the division;
•
as part of a transfer to another division or the Fixed Account; and
•
to pay contract charges and fees (not deducted as part of the daily unit value calculation).
Unit values are calculated each valuation date at the close of normal trading of the NYSE. To calculate the unit value of a division, the unit value from the previous valuation date is multiplied by the division’s net investment factor for the current valuation period. The number of units does not change due to a change in unit value.
The net investment factor measures the performance of each division. The net investment factor for a valuation period is [(a plus b) divided by (c)] minus d where:
a = the share price (net asset value) of the underlying mutual fund at the end of the valuation period;
b = the per share amount of any dividend* (or other distribution) made by the mutual fund during the valuation period;
c = the share price (net asset value) of the underlying mutual fund at the end of the previous valuation period; and
d = the daily charge for Total Separate Account Annual Expenses and any Optional Riders, if applicable. The daily charge is calculated by dividing the annual amount of these expenses by 365 and multiplying by the number of days in the valuation period.
*
When an investment owned by an underlying mutual fund pays a dividend, the dividend increases the net asset value of a share of the underlying mutual fund as of the date the dividend is recorded. As the net asset value of a share of an underlying mutual fund increases, the unit value of the corresponding division also reflects an increase. Payment of a dividend under these circumstances does not increase the number of units you own in the division.
The Company reserves the right to terminate a Contract and send you the accumulated value if no premiums are paid during two consecutive calendar years and the accumulated value (or total premium payments less partial surrenders and applicable surrender charges) is less than $2,000 unless you have a GMWB rider. The Company will first notify you of its intent to exercise this right and give you 60 days to increase the accumulated value to at least $2,000.
Telephone and Internet Services
If you elect telephone services or you elect internet services and satisfy our internet service requirements (which are designed to ensure compliance with federal UETA and E-SIGN laws), instructions for the following transactions may be given to us via the telephone or internet:
•
make premium payment allocation changes;
•
set up Dollar Cost Averaging (DCA) scheduled transfers; and
•
make transfers.


15

Neither the Company nor the Separate Account is responsible for the authenticity of telephone service or internet transaction requests. We reserve the right to refuse telephone service or internet transaction requests. You are liable for a loss resulting from a fraudulent telephone or internet order that we reasonably believe is genuine. We follow procedures in an attempt to assure genuine telephone service or internet transactions. If these procedures are not followed, we may be liable for loss caused by unauthorized or fraudulent transactions. The procedures may include recording telephone service transactions, requesting personal identification (for example, name, address, security phrase, password, daytime telephone number, or birth date) and sending written confirmation to your address of record.
Instructions received via our telephone services and/or the internet are binding on both owners if the Contract is jointly owned.
If the Contract is owned by a business entity or a trust, an authorized individual (with the proper password) may use telephone and/or internet services. Instructions provided by the authorized individual are binding on the owner.
We reserve the right to modify or terminate telephone service or internet transaction procedures at any time. Whenever reasonably feasible, we will provide you with prior notice (by mail or by email, if previously authorized by you) if we modify or terminate telephone service or internet transaction procedures. In some instances, it may not be reasonably feasible to provide prior notice if we modify or terminate telephone service or internet transaction procedures; however, any modification or termination will apply to all Contract owners in a non-discriminatory fashion.
Telephone Services
Telephone services are automatically available to you. You may also elect telephone authorization for your registered representative by providing us written notice. Telephone services may be declined on the application or at any later date by providing us with written notice.
If you elect telephone privileges, instructions:
•
may be given by calling us at 1-800-852-4450 while we are open for business (generally, between 8 a.m. and 6 p.m. Eastern Time on any day that the NYSE is open).
•
that are in good order and received by us before the close of a valuation period will receive the price next determined (the value as of the close of that valuation period).
•
that are in good order and received by us after the close of a valuation period will receive the price next determined (the value as of the close of the next valuation period).
•
that are not in good order when received by us will be effective the next valuation date that we receive good order instructions.
Internet
Internet services are available to you if you register for a secure login on the Principal Financial Group web site, www.principal.com. You may also elect internet authorization for your registered representative by providing us written notice.
If you register for internet privileges, instructions:
•
that are in good order and received by us before the close of a valuation period will receive the price next determined (the value as of the close of that valuation period).
•
that are in good order and received by us after the close of a valuation period will receive the price next determined (the value as of the close of the next valuation period).
•
that are not in good order when received by us will be effective the next valuation day that we receive good order instructions.
2. CHARGES AND DEDUCTIONS
Certain charges are deducted under the Contract. If the charge is not sufficient to cover our costs, we bear the loss. If the expense is more than our costs, the excess is profit to the Company. We expect a profit from all the fees and charges listed below, except the Annual Fee, Transaction Fee and Premium Tax. See SUMMARY OF EXPENSE INFORMATION for additional information.
In addition to the charges under the Contract, there are also deductions from and expenses paid out of the assets of the underlying mutual funds which are described in the underlying mutual funds’ prospectuses.


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Surrender Charge
No sales charge is collected or deducted when premium payments are applied under the Contract. A surrender charge is assessed on certain total or partial surrenders. The amounts we receive from the surrender charge are used to cover some of the expenses of the sale of the Contract (primarily, commissions, as well as other promotional or distribution expenses). If the surrender charge collected is not enough to cover the actual costs of distribution, the costs are paid from the Company’s General Account assets which include profit, if any, from the mortality and expense risks charge.
NOTE:
If you plan to make multiple premium payments, you need to be aware that each premium payment has its own surrender charge period (shown below). The surrender charge for any total or partial surrender is a percentage of all the premium payments surrendered which were received by us during the contract years prior to the surrender. The applicable percentage which is applied to the premium payments surrendered is determined by the following tables.
Surrender charge for Contracts (as a percentage of amounts surrendered):
Number of completed contract years
since each premium payment
was made
Surrender charge applied to all
premium payments received in
that contract year
0 (year of premium payment)
6%
1
6%
2
6%
3
5%
4
4%
5
3%
6
2%
7 and later
0%
Each premium payment begins in year 0 for purposes of calculating the percentage applied to that premium payment. However, premium payments are added together by contract year for purposes of determining the applicable surrender charge. If your contract year begins April 1 and ends March 31 the following year, all premium payments received during that period are considered to have been made in that contract year.
NOTE:
For Contracts written in the states of Alabama, Massachusetts, and Washington, the surrender charges are applicable only to premium payments made in the first three contract years.
For purpose of calculating surrender charges, we assume that surrenders and transfers are made in the following order:
•
first from premium payments no longer subject to a surrender charge;
•
then from the free surrender privilege (first from the earnings, then from the oldest premium payments (i.e., on a first-in, first-out basis)) described below; and
•
then from premium payments subject to a surrender charge on a first-in, first-out basis.
NOTE:
Partial surrenders may be subject to both a surrender charge and a transaction fee.
Free Surrender Amount
The free surrender amount may be surrendered without a surrender charge. This amount is the greater of:
•
earnings in the Contract (earnings equal accumulated value less unsurrendered premium payments as of the date of the surrender); or
•
10% of the premium payments, decreased by any partial surrenders and partial annuitizations since the last Contract anniversary.
Any remaining free surrender amount in a contract year is not added to the free surrender amount for any future contract year(s).
Unscheduled partial surrenders of the free surrender amount may be subject to the transaction fee described below.


17

When Surrender Charges Do Not Apply
Surrender charges do not apply to:
•
amounts applied under an annuity benefit payment option; or
•
payment of any death benefit; however, the surrender charge does apply to premium payments made by a surviving spouse after an owner’s death; or
•
amounts distributed to satisfy the minimum distribution requirement of Section 401(a)9 of the Internal Revenue Code, provided that the amount surrendered does not exceed the minimum distribution amount which would have been calculated based on the value of this Contract alone; or
•
an amount transferred from a Contract used to fund an IRA to another annuity contract issued by the Company to fund an IRA of the participant’s spouse when the distribution is made pursuant to a divorce decree.
Waiver of Surrender Charge Rider
This rider is automatically added to the Contract at issue (subject to state approval and state variations may apply). There is no charge for this benefit.
This rider waives the surrender charge on surrenders made after the first Contract anniversary if the owner or annuitant has a critical need. A critical need is limited to confinement to a health care facility, terminal illness diagnosis, or total and permanent disability.
The benefits are available for a critical need if the following conditions are met:
•
the owner or annuitant has a critical need; and
•
the critical need did not exist before the contract date.
For the purposes of this rider, the following definitions apply:
•
health care facility — a licensed hospital or inpatient nursing facility providing daily medical treatment and keeping daily medical records for each patient (not primarily providing just residency or retirement care). This does not include a facility owned or operated by the owner, annuitant or a member of their immediate family. If the critical need is confinement to a health care facility, the confinement must continue for at least 60 consecutive days after the contract date and the surrender must occur within 90 days of the confinement’s end. Notice must be provided within 90 days after confinement ends.
•
terminal illness — sickness or injury that results in the owner’s or annuitant’s life expectancy being 12 months or less from the date notice to receive a distribution from the Contract is received by the Company.
•
total and permanent disability — the owner or annuitant is unable to engage in any occupation for pay or profit due to sickness or injury.
Transaction Fee
To assist in covering our administration costs, we reserve the right to charge a transaction fee of the lesser of $25 or 2% of each unscheduled partial surrender after the 12th unscheduled partial surrender in a contract year. The transaction fee would be deducted from the accumulated value remaining in the investment option(s) from which the amount is surrendered, on a pro rata basis.
To assist in covering our administration costs or to discourage market timing, we also reserve the right to charge a transaction fee of the lesser of $25 or 2% of each unscheduled transfer after the first unscheduled transfer in a contract year. The transaction fee would be deducted from the investment option(s) from which the amount is transferred, on a pro rata basis.
If we elect to begin charging for the transaction fees, we will provide you with advance written notice.
Premium Taxes
We reserve the right to deduct an amount to cover any premium taxes imposed by states or other jurisdictions. If we elect to begin deducting any premium taxes, we will provide you with advance written notice. Any deduction is made from either a premium payment when we receive it, or the accumulated value when you request a surrender (total or partial) or you request application of the accumulated value (full or partial) to an annuity benefit payment option. Premium taxes range from 0% in most states to as high as 3.50%.


18

Annual Fee
Contracts with an accumulated value of less than $30,000 are subject to an annual Contract fee of the lesser of $30 or 2% of the accumulated value. Currently, we do not charge the annual fee if your accumulated value is $30,000 or more. If we elect to begin charging the annual fee if your accumulated value is $30,000 or more, we will provide you with advance written notice. If you own more than one variable annuity contract with us, all the Contracts you own or jointly own are aggregated, on each Contract’s anniversary, to determine if the $30,000 minimum has been met and whether that Contract will be charged. The fee is deducted from the investment option that has the greatest value. The fee is deducted on each Contract anniversary and upon total surrender of the Contract. The fee assists in covering administration costs, primarily costs to establish and maintain the records which relate to the Contract.
GMWB Charge
For applications signed on or after August 1, 2015, the current annual charge is 1.05% of the average quarterly For Life withdrawal benefit base. The charge is calculated and deducted from your accumulated value at the end of the calendar quarter at a quarterly rate of 0.2625%, based on the average quarterly withdrawal benefit base during the calendar quarter. The average quarterly withdrawal benefit base is equal to (1) the withdrawal benefit base at the beginning of the calendar quarter plus (2) the withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is different than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters.
For applications signed on or after August 1, 2013 (August 15, 2013 for Illinois and Montana) but before August 1, 2015, the current annual charge is 0.95% of the average quarterly For Life withdrawal benefit base. The charge is calculated and deducted from your accumulated value at the end of the calendar quarter at a quarterly rate of 0.2375%, based on the average quarterly withdrawal benefit base during the calendar quarter. The average quarterly withdrawal benefit base is equal to (1) the withdrawal benefit base at the beginning of the calendar quarter plus (2) the withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is different than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters.
For applications signed before August 1, 2013 (August 15, 2013 for Illinois and Montana), the current annual charge is 0.73% of the average quarterly For Life withdrawal benefit base. The charge is calculated and deducted from your accumulated value at the end of the calendar quarter at a quarterly rate of 0.1825%, based on the average quarterly withdrawal benefit base during the calendar quarter. The average quarterly withdrawal benefit base is equal to (1) the withdrawal benefit base at the beginning of the calendar quarter plus (2) the withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is different than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters.
For existing contracts, advance notice will be sent if the rider charge will increase. Before the effective date of the rider charge increase, you have the following options:
•
Accept the increased rider charge and continue to be eligible to receive a GMWB Step-Up at each rider anniversary; or
•
Decline the increased rider charge by sending us notice that you are opting out of the GMWB Step-Up and electing to remain at your current rider charge. Once you opt out of the GMWB Step-Up, you will no longer be eligible for any future GMWB Step-Ups and the feature cannot be added back to this rider.
At the end of each calendar quarter (or on the next valuation date, if the calendar quarter ends on a non-valuation date), the rider charge is deducted through the redemption of units from your accumulated value in the same proportion as the surrender allocation percentages. If this Contract/rider is purchased after the beginning of a calendar quarter, the rider charge is prorated according to the number of days this rider is in effect during the calendar quarter. Upon termination of this rider, the rider charge will be based on the number of days this rider is in effect during the calendar quarter.
We reserve the right to increase the rider charge up to the maximum annual charge. The maximum annual charge is 1.65% (0.4125% quarterly) of the average quarterly withdrawal benefit base.
The rider charge is intended to reimburse us for the cost of the protection provided by this rider.


19

Separate Account Annual Expenses
Mortality and Expense Risks Charge
We assess each division with a daily charge for mortality and expense risks. The annual rate of the charge is 1.25% of the average daily net assets of the Separate Account divisions. We agree not to increase this charge for the duration of the Contract. This charge is assessed only prior to the annuitization date. This charge is assessed daily when the value of a unit is calculated.
This charge is intended to compensate us for the mortality risk on the Contract. We have a mortality risk in that we guarantee payment of a death benefit in a single payment or under an annuity benefit payment option. We do not impose a surrender charge on a death benefit payment, which is an additional mortality risk.
This charge is also intended to cover our expenses, primarily related to operation of the Contract, including
•
furnishing periodic Contract statements, confirmations and other customer communications;
•
preparation and filing of regulatory documents (such as this prospectus);
•
preparing, distributing and tabulating proxy voting materials related to the underlying mutual funds; and
•
providing computer, actuarial and accounting services.
If the mortality and expense risks charge is not enough to cover our costs, we bear the loss. If the mortality and expense risks charge is more than our costs, the excess is profit to the Company.
Administration Charge
We assess each Separate Account division with a daily administration charge. The annual rate of the charge is 0.15% of the average daily net assets of the Separate Account divisions. This charge is assessed only prior to the annuitization date. This charge is assessed daily when the value of a unit is calculated. The administration charge is intended to cover our costs for administration of the Contract that are not covered in the mortality and expense risks charge, above.
If the administration charge is not enough to cover our costs, we bear the loss. If the administration charge is more than our costs, the excess is profit to the Company.
Special Provisions for Group or Sponsored Arrangements
Where permitted by state law, Contracts may be purchased under group or sponsored arrangements as well as on an individual basis.
Group Arrangement – program under which a trustee, employer or similar entity purchases Contracts covering a group of individuals on a group basis.
Sponsored Arrangement – program under which an employer permits group solicitation of its employees or an association permits group solicitation of its members for the purchase of Contracts on an individual basis.
The charges and deductions described above may be reduced or eliminated for Contracts issued in connection with group or sponsored arrangements. The rules in effect at the time the application is approved will determine if reductions apply. Reductions may include but are not limited to sales of Contracts without, or with reduced, mortality and expense risks charges, annual fees or surrender charges.
Eligibility for and the amount of these reductions are determined by a number of factors, including the number of individuals in the group, the amount of expected premium payments, total assets under management for the owner, the relationship among the group’s members, the purpose for which the Contract is being purchased, the expected persistency of the Contract, and any other circumstances which, in our opinion, are rationally related to the expected reduction in expenses. Reductions reflect the reduced sales efforts and administration costs resulting from these arrangements. We may modify the criteria for and the amount of the reduction in the future. Modifications will not unfairly discriminate against any person, including affected owners and other owners with contracts funded by the Separate Account.


20

3. INVESTMENT OPTIONS
Separate Account Divisions
You must allocate 100% of this Contract’s Separate Account division value and your premium payments to one of the available investment options (the “investment options”). Any future premium payments are allocated to the investment option your Separate Account division value is invested in at the time of the new premium payments.
The available investment options are:
•
Diversified Balanced Managed Volatility Account;
•
Diversified Growth Managed Volatility Account; or
•
Diversified Income Account.
NOTE:
Previously, we made available Diversified Balanced Account and Diversified Growth Account. If the contract has the GMWB rider in force and the application was signed December 1, 2013 or later, these investment options are no longer available.
For more information about the Diversified Balanced Managed Volatility Account, Diversified Growth Managed Volatility Account, and Diversified Income Account, see the underlying fund’s prospectus provided with this prospectus.
NOTE:
The investment options available reflect a balanced investment objective and if your investment goal is aggressive growth, these investment options may not support your investment objective.
You may allocate premium payments and transfer Contract value to the Fixed Account. Such allocations and transfers are subject to the provisions of your Contract. See 5. TRANSFERS AND SURRENDERS.
You may transfer 100% of your Separate Account division value from your current investment option to one other investment option which is available at the time of the transfer. You may make a transfer by providing us notice (we will effect the transfer at the price next determined after we receive your notice in good order).
We reserve the right to modify the list of available investment options, subject to compliance with applicable regulations. Changes or restrictions will apply only to new purchasers of the Contract or to you if you transfer out of a investment option and wish to transfer back to that investment option. If you transfer from a discontinued investment option, you will not be able to transfer back to that investment option.
You should note that the investment options are series of Principal Variable Contracts Funds, Inc., which is managed by Principal Management Corporation ("PMC"), an affiliate of ours. PMC will receive additional compensation from the management fee of the underlying fund. However, we do not take such potential financial benefit into account in selecting the underlying fund to be an investment option.
NOTE:
If the GMWB rider terminates, you may invest among any of the available investment options. See 4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) - Termination and Reinstatement of the Rider.
Fixed Account
This prospectus is intended to serve as a disclosure document only for the Contract as it relates to the Separate Account and contains only selected information regarding the Fixed Account. The Fixed Account is a part of our General Account. Because of exemptions and exclusions contained in the Securities Act of 1933 and the Investment Company Act of 1940, the Fixed Account, and any interest in it, are not subject to the provisions of these acts. As a result the SEC has not reviewed the disclosures in this prospectus relating to the Fixed Account. However, related disclosures are subject to generally applicable provisions of the federal securities laws relating to the accuracy and completeness of statements made in prospectuses.
Our obligations with respect to the Fixed Account are supported by our General Account. The General Account is the assets of the Company other than those assets allocated to any of our Separate Accounts. Subject to applicable law, we have sole discretion over the assets in the General Account. Separate Account expenses are not assessed against any Fixed Account values.
We reserve the right to refuse premium payment allocations and transfers from the other investment options to the Fixed Account. We will send you a written notice at least 30 days prior to the date we exercise this right. We will also notify you if we lift such restrictions.


21

The guaranteed minimum interest rate (“GMIR”) is determined by a formula, with the general parameters established by state law. The GMIR is set at Contract issue and will not change for the life of the Contract.
The Company guarantees that premium payments allocated and amounts transferred to the Fixed Account earn interest at the interest rate in effect on the date premium payments are received or amounts are transferred. This rate applies to each premium payment or amount transferred through the end of the contract year.
Each Contract anniversary, we declare a renewal interest rate that applies to the Fixed Account value in existence at that time. This rate, which will never be less than the GMIR, applies until the end of the contract year. Interest is earned daily and compounded annually at the end of each contract year. Once credited, the interest is guaranteed and becomes part of the Fixed Account value from which deductions for fees and charges may be made.
NOTE 1:
Transfers and surrenders from the Fixed Account are subject to certain limitations as to frequency and amount. See 5. TRANSFERS AND SURRENDERS - Fixed Account Transfers, Total and Partial Surrenders.
NOTE 2:
We may defer payment of surrender proceeds payable out of the Fixed Account for up to six months. See 8. ADDITIONAL INFORMATION ABOUT THE CONTRACT – Delay of Payments.
Your Fixed Account value on any valuation date is equal to:
•
premium payments or credits allocated to the Fixed Account;
•
plus any transfers to the Fixed Account from the other investment options;
•
plus interest credited to the Fixed Account;
•
minus any surrenders or applicable surrender charges or partial annuitizations from the Fixed Account;
•
minus any transfers to the Separate Account.
4. LIVING BENEFIT - GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB)
This Contract is issued with a Guaranteed Minimum Withdrawal Benefit (“GMWB”) rider which is designed to help protect you against the risk of a decrease in the Contract accumulated value due to market declines. This benefit is also intended to help you avoid the risk of outliving your money. The GMWB rider allows you to take certain guaranteed annual withdrawals during the Contract accumulation phase, regardless of your Contract accumulated value.
We use certain defined terms in our description of the rider. For your convenience, we have included definitions of those terms later in this section.
Overview
For Life withdrawal benefit payment percentages. This rider permits an election of “Joint Life” withdrawal benefit payments or “Single Life” withdrawal benefit payments.
Bonus feature. This rider has a Bonus feature which rewards you for not taking a withdrawal in certain early years of the rider. The GMWB Bonus does not increase your Contract accumulated value.
Step-Up feature. This rider has a Step-Up feature which can increase your rider withdrawal benefit payments if your Contract accumulated value increases. The Contract accumulated value increases whenever additional premium payments are made, the division values rise with market growth, or credits (premium payment credits or exchange credits) are applied.
Maximum annual rider charge. This rider has a maximum annual rider charge of 1.65% of the For Life withdrawal benefit base.
Spousal continuation. This rider provides that For Life withdrawal benefit payments may be available to an eligible spouse who continues the Contract with the rider.
GMWB Rider Restrictions/Limitations
This rider may not be terminated for 5 contract years following the Contract/rider date.


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This rider does not restrict or change your right to take — or not take — withdrawals under the Contract. All withdrawals reduce the Contract accumulated value by the amount withdrawn and are subject to the same conditions, limitations, fees, charges and deductions as withdrawals otherwise taken under the provisions of the Contract; for example, withdrawals will be subject to surrender charges if they exceed the free surrender amount (see 2. CHARGES AND DEDUCTIONS — Surrender Charge - Free Surrender Amount). However, any withdrawals may have an impact on the value of your rider’s benefits. If you take withdrawals in an amount that exceeds an available withdrawal benefit payment (excess withdrawal), you will lower the withdrawal benefit payments and/or cause the rider to terminate for lack of value unless you make additional premium payments or a GMWB Step-Up is applied.
There is a charge for this rider which can increase up to the guaranteed maximum charge for the rider (see SUMMARY OF EXPENSE INFORMATION).
Any ownership change, change of beneficiary or other change before the annuitization date which would cause a change in a covered life may result in termination of this rider. If your Contract is issued in California, after an ownership change, the benefits will continue and be based on the original owner. See Covered Life Change later in this section.
GMWB Terms
We use the following definitions to describe the features of this rider:
•
Excess Withdrawal — the portion of a withdrawal that exceeds the available withdrawal benefit payment.
•
GMWB Bonus — a bonus credited to the withdrawal benefit base, provided certain conditions are met.
•
GMWB Step-Up — an increase to the withdrawal benefit base to an amount equal to your Contract’s accumulated value on the most recent Contract anniversary, provided certain conditions are met.
•
Required minimum distribution (“RMD”) amount — the amount required to be distributed each calendar year for purposes of satisfying the RMD rules of Section 401(a)(9) of the Internal Revenue Code of 1986, as amended, and related Code provisions in effect as of the rider effective date.
•
Rider effective date — the date the Contract/rider is issued.
•
Withdrawal — any partial surrender (including surrender charges, if any) and/or any partial annuitization of your Contract’s accumulated value.
•
Withdrawal benefit base (also referred to as For Life withdrawal benefit base) — the basis for determining the withdrawal benefit payment available each year.
•
Withdrawal benefit payment (also referred to as For Life withdrawal benefit payment) — the amount that we guarantee you may withdraw each contract year.
Withdrawal Benefit Base
The withdrawal benefit base is used to calculate the annual withdrawal benefit payment. We calculate the withdrawal benefit base on the rider effective date and each Contract anniversary.
The initial withdrawal benefit base is equal to the initial premium payment.
On each Contract anniversary, the withdrawal benefit base is reset to the greater of 1 or 2, where:
1.
is the result of (a + b + c - d), where:
a = prior year withdrawal benefit base (or initial withdrawal benefit base if first Contract anniversary);
b = additional premiums since the previous Contract anniversary (dollar-for-dollar);
c = any GMWB Bonus credited since the previous Contract anniversary;
d = any excess withdrawals taken since the previous Contract anniversary*.
2.
is the accumulated value on the Contract anniversary.
* NOTE:
The reduction for an excess withdrawal will be greater than dollar-for-dollar if the Contract accumulated value is less than the withdrawal benefit base at the time of the excess withdrawal. See Excess Withdrawals later in this section for information about the negative effect of excess withdrawals.
If you take withdrawals prior to the oldest owner attaining age 59½, the For Life withdrawal benefit base will be reduced for excess withdrawals. If the adjustment for any withdrawals causes the For Life withdrawal benefit base to reduce to zero, the rider will terminate at the next Contract anniversary, unless you make additional premium payments or a GMWB Step-Up is applied.


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


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For applications signed on or after August 1, 2015, the following withdrawal benefit payment percentage tables apply:
•“Single Life”:
Age of Covered Life
at First Withdrawal
For Life Withdrawal Benefit Payment Percentage
55-59
3.75%
60-64
4.50%
65+
5.00%
•“Joint Life”:
Age of Younger Covered Life
at First Withdrawal
For Life Withdrawal Benefit Payment Percentage
55-59
3.25%
60-64
4.00%
65+
4.50%
For applications signed on or after August 1, 2013* but before August 1, 2015, the following withdrawal benefit payment percentage tables apply:
•“Single Life”:
Age of Covered Life
at First Withdrawal
For Life Withdrawal Benefit Payment Percentage
55-59
4.00%
60-74
5.00%
75+
5.25%
•“Joint Life”:
Age of Younger Covered Life
at First Withdrawal
For Life Withdrawal Benefit Payment Percentage
55-59
3.50%
60-74
4.50%
75+
4.75%
* For Illinois and Montana, August 15, 2013.


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For applications signed before August 1, 2013*, the following withdrawal benefit payment percentage tables apply:
•“Single Life”:
Age of Covered Life
at First Withdrawal
For Life Withdrawal Benefit Payment Percentage
55-59
4.50%
60-64
5.00%
65-69
5.25%
70-74
5.50%
75-79
6.00%
80+
6.50%
•“Joint Life”:
Age of Younger Covered Life
at First Withdrawal
For Life Withdrawal Benefit Payment Percentage
55-59
4.00%
60-64
4.50%
65-69
4.75%
70-74
5.00%
75-79
5.50%
80+
6.00%
* For Illinois and Montana, August 15, 2013.
NOTE:
All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Under 72t of the Code, a customer can receive substantially equal payments without an IRS tax penalty, even if under age 59½. If you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals. See Excess Withdrawals for additional information.
Because the withdrawal benefit payments are tiered based on the age of the younger covered life at the time of the first withdrawal, you should carefully choose when you take the first withdrawal following the rider effective date. Once a withdrawal is taken, the For Life withdrawal benefit payment percentage is locked in for the life of this rider. In addition, when you take your first withdrawal, your election of “Single Life” or “Joint Life” remains locked in and cannot be changed. For example, if you have elected “Joint Life” withdrawal benefit payments and take the first withdrawal when the younger covered life is age 57 and your application was signed on or after August 1, 2015, your For Life withdrawal benefit payment percentage will be locked in at 3.25% for the remaining life of this rider and cannot be changed.


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Covered Life Change
For Contracts issued in all states except California:
Any ownership change, change of beneficiary or other change before the annuitization date which would cause a change in a covered life (a “Change”) will result in termination of this rider, except for the following permissible Changes:
1.
Spousal continuation of this rider as described in 7. DEATH BENEFIT.
2.
If withdrawals have not been taken and you have not previously elected to continue this rider as described in 7. DEATH BENEFIT, then
a.
you may add a joint owner (non-qualified contracts only) or primary beneficiary to your Contract as a covered life, provided that the new joint owner or primary beneficiary is an eligible covered life.
b.
you may remove a joint owner or primary beneficiary as a covered life.
c.
the For Life withdrawal benefit payment percentage will be based on the age of the covered lives and will lock in at the percentage applicable on the date of your first withdrawal.
3.
If withdrawals have been taken and you have locked in “Single Life” withdrawal benefit payments, then
a.
you may remove a joint owner as a covered life.
b.
you may add a primary beneficiary to your Contract, however, you may not add a primary beneficiary as a covered life for purposes of this rider.
c.
the For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.
4.
If withdrawals have been taken and you have locked in “Joint Life” withdrawal benefit payments, then
a.
you may remove a joint owner or primary beneficiary as a covered life.
b.
you may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider.
c.
the For Life withdrawal benefit payment percentage will remain locked in at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life. For Life withdrawal benefit payments will cease upon your death.
5.
If you have previously elected to continue this rider as described in 7. DEATH BENEFIT, then you may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider. If the primary beneficiary that you add is your spouse, upon your death the spouse can continue the Contract, but the rider will terminate.
No Change is effective until approved by us in writing. Upon our approval, the Change is effective as of the date you signed the notice requesting the Change.
An assignment of the Contract or this rider shall be deemed a request for a Change. If the Change is not one of the above permissible Changes, this rider will be terminated as of the date of the assignment.
For Contracts issued in California only:
Any beneficiary designation or other Contract or rider change before the annuitization date which would cause a change in the covered life (a “Change”) will result in termination of this rider, except for the following permissible Changes:
1.
Spousal continuation of this rider as described in 7. DEATH BENEFIT.
2.
If withdrawals have not been taken and you have not previously elected to continue this rider as described in 7. DEATH BENEFIT, then
a.
You may add a joint owner or primary beneficiary as a covered life, provided that the new joint owner or primary beneficiary is an eligible covered life.
b.
You may remove a joint owner or primary beneficiary as a covered life.
c.
The withdrawal benefit payment percentage will be calculated based on the age of the covered lives and will lock in at the percentage applicable on the date of your first Withdrawal.


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3.
If withdrawals have been taken and you have locked in “Single Life” withdrawal benefit payments, then
a.
You may remove a joint owner as a covered life and withdrawal benefit payments will cease upon your death.
b.
You may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider.
c.
The For Life withdrawal benefit payment percentage will remain locked at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life.
4.
If withdrawals have been taken and you have locked in “Joint Life” withdrawal benefit payments, then
a.
You may remove a joint owner or primary beneficiary as a covered life and withdrawal benefit payments will cease upon your death.
b.
You may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider.
c.
The withdrawal benefit payment percentage will remain locked at the percentage applicable on the date of your first withdrawal and will not be reset to reflect the removal of the covered life.
5.
If you have previously elected to continue the Rider as provided in 7. DEATH BENEFIT, you may add a primary beneficiary to your Contract; however, you may not add a primary beneficiary as a covered life for purposes of this rider.
No change is effective until approved by us in writing. Upon our approval, the change is effective as of the date you signed the notice requesting the change.
Effect of Ownership Change for Contracts Issued in California only
NOTE:
An ownership change does not terminate a Contract in California; therefore, these slightly different provisions apply.
If an ownership change has taken place on a Contract after withdrawals have been taken, the following provisions apply:
“Single Life” and “Joint Life” withdrawal benefit payments (ownership change after withdrawals taken for Contracts issued in California):
“Single Life” withdrawal benefit payments continue until the earlier of:
1.
the death of the first covered life to die; or
2.
the withdrawal benefit base is zero.
“Joint Life” withdrawal benefit payments continue until the earlier of:
1.
the death of the last covered life to die; or
2.
the death of the owner; or
3
the withdrawal benefit base is zero.
Effect on Rider Benefits at Death (ownership change after withdrawals taken for Contracts issued in California):
If you die when the Contract accumulated value is greater than zero:
1.
If you are the only owner, upon your death, your primary beneficiary may elect one of the following:
a.
Receive the death benefit under the Contract; or
b.
If the primary beneficiary is your spouse, your spouse may continue the Contract with or without this rider as set forth in 7. DEATH BENEFIT.
2.
If there are joint owners, upon the death of the first joint owner to die, the surviving joint owner may elect one of the following:
a.
Receive the death benefit under the Contract; or
b.
If the surviving joint owner is your spouse, your spouse may continue the Contract with or without this rider as set forth in 7. DEATH BENEFIT.


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If the Contract accumulated value has reduced to zero:
1.
If “Single Life” For Life withdrawal benefit payments have been elected, upon the death of the covered life, all payments stop and the Contract is terminated. If your (for joint owners, the last surviving joint owner) death proceeds the death of the covered life, payments will continue to the beneficiary until the death of the covered life.
2.
If “Joint Life” For Life withdrawal benefit payments have been elected, upon the death of the last surviving covered life, all payments stop and the Contract is terminated. If your (for joint owners, the last surviving joint owner) death precedes the death of the last surviving covered life, payments will continue to the beneficiary until the death of the last surviving covered life.
Spousal Continuation (ownership change after withdrawals taken for Contracts issued in California):
If you die while this rider is attached to your Contract, your spouse may NOT continue the Contract with this rider if any of the following apply:
1.
The Contract accumulated value is zero.
2.
The Contract and this rider have been previously continued.
3.
You were the sole owner and your spouse is not a primary beneficiary.
4.
There were joint owners and your spouse is not the surviving joint owner.
5.
Your spouse does not meet the minimum age requirement of our rider eligibility guidelines on the date of the continuation election.
NOTE:
Although spousal continuation may be available under the Contract for a subsequent spouse, this rider may only be continued once.
NOTE:
If your spouse is not eligible to continue this rider, or elects not to continue this rider, this rider and all rights, benefits and charges under the rider will terminate.
If none of the statements above apply and your spouse elects to continue the Contract with the rider:
If “Single Life” withdrawal benefit payments were locked in:
1.
The withdrawal benefit payment percentage will continue to be based on the original covered lives.
2.
Withdrawal benefit payments will continue to be available as long as the covered lives are alive.
If “Joint Life” withdrawal benefit payments were locked in:
1.
The withdrawal benefit payment percentage will continue to be based on the original covered lives.
2.
Your spouse may not add a new covered life.
3.
Withdrawal benefit payments will continue to be available as long as covered lives are alive.
All other provisions of this rider will continue as in effect on the date of your death.
Covered Life Change (ownership change after withdrawals taken for Contracts issued in California):
Any beneficiary designation or other Contract or rider change before the annuitization date will not cause a change in the covered life.
Effect of Withdrawals
This rider does not require you to take an available withdrawal benefit payment. If you want to take advantage of this rider’s GMWB Bonus feature, withdrawals cannot be taken during the period the GMWB Bonus is available. See GMWB Bonus later in this section for more information.
If you elect not to take an available withdrawal benefit payment, that amount will not be carried forward to the next contract year.
Each time you take a withdrawal, it is reflected immediately in your Contract accumulated value. All scheduled withdrawals (scheduled partial surrenders) occurring on the Contract anniversary are reflected in the values for the prior contract year.
If you take excess withdrawals, the withdrawal benefit base will be reduced on the next Contract anniversary. See Excess Withdrawals later in this section for information about the negative effect of excess withdrawals.


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To help you better understand the various features of this rider and to demonstrate how premium payments made and withdrawals taken from the Contract affect the values and benefits under this rider, we have provided several examples in APPENDIX A.
Excess Withdrawals
Any withdrawals that exceed the available withdrawal benefit payments are excess withdrawals. Excess withdrawals decrease the withdrawal benefit base, which will reduce future withdrawal benefit payments. The reductions can be greater than dollar-for-dollar when the Contract accumulated value is less than the withdrawal benefit base at the time of the excess withdrawal, as shown below.
All withdrawals prior to the Contract anniversary following the oldest owner’s (oldest annuitant’s, if applicable) age 59½ are treated as excess withdrawals when calculating the For Life withdrawal benefit. Therefore, if you receive 72t distributions and have not reached the Contract anniversary after the oldest owner’s (oldest annuitant’s, if applicable) age 59½, these 72t distributions will be treated as excess withdrawals.
Effect on withdrawal benefit base. Excess withdrawals will reduce the withdrawal benefit base in an amount equal to the greater of:
•
the excess withdrawal, or
•
the result of (a divided by b) multiplied by c, where:
a =
the amount withdrawn that exceeds the available withdrawal benefit payment prior to the withdrawal;
b =
the Contract accumulated value after the withdrawal benefit payment is deducted, but prior to deducting the amount of the excess withdrawal; and
c =
the withdrawal benefit base prior to the adjustment for the excess withdrawal.
NOTE:    Withdrawals prior to age 59½ may be subject to a 10% IRS penalty tax.
Required Minimum Distribution (RMD) Program for GMWB Riders
Tax-qualified Contracts are subject to certain federal tax rules requiring that RMD be taken on a calendar year basis (i.e., compared to a contract year basis), usually beginning after age 70½.
If you are eligible for and enroll in our RMD Program for GMWB Riders, as discussed below, a withdrawal taken to satisfy RMD for the Contract (an “RMD amount”) that exceeds a withdrawal benefit payment for that contract year will not be deemed an excess withdrawal.
Eligibility in the RMD Program for GMWB Riders is determined by satisfaction of the following requirements:
•
the amount required to be distributed each calendar year for purposes of satisfying the RMD rules of the Internal Revenue Code is based only on this Contract (the “RMD amount”); and
•
you have elected scheduled withdrawal payments.
NOTE:
Although enrollment in the RMD Program for GMWB Riders does not prevent you from taking an unscheduled withdrawal, an unscheduled withdrawal will cause you to lose the RMD Program protections for the remainder of the contract year. This means that any withdrawals (scheduled or unscheduled) during the remainder of the contract year that exceed applicable withdrawal benefit payments will be treated as excess withdrawals, even if the purpose is to take the RMD amount. You will automatically be re-enrolled in the RMD Program for GMWB Riders on your next Contract anniversary.
We reserve the right to modify or eliminate the RMD Program for GMWB Riders; for example, if there is a change to the Internal Revenue Code or Internal Revenue Service rules or interpretations relating to RMD, including the issuance of relevant IRS guidance. We will send you at least 30 days advance notice of any change in or elimination of the RMD Program for GMWB Riders. Any modifications or elimination of the RMD Program for GMWB Riders will take effect after notice. If we exercise our right to modify or eliminate the RMD Program for GMWB Riders, then any scheduled or unscheduled withdrawal in excess of a withdrawal benefit payment after the effective date of the program’s modification or elimination will be deemed an excess withdrawal.
You may obtain more information regarding our RMD Program for GMWB Riders by contacting your registered representative or by calling us at 1-800-852-4450.


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GMWB Bonus
Under the GMWB Bonus, on each of the first two Contract anniversaries following the rider effective date, we will credit a bonus (“GMWB Bonus”) to the withdrawal benefit base, provided you have not taken any withdrawals since the rider effective date.
The GMWB Bonus is equal to the total of all premium payments made prior to the applicable Contract anniversary multiplied by the applicable percentage shown in the chart below.
Contract Anniversary
(following the rider effective date)
GMWB Bonus Percentage
1
5.00%
2
5.00%
The GMWB Bonus is no longer available after the earlier of
•the 2nd Contract anniversary following the rider effective date; or
•the date you take a withdrawal following the rider effective date.
NOTE:
The GMWB Bonus is used only for the purposes of calculating the withdrawal benefit base. The GMWB Bonus is not added to your Contract accumulated value.
GMWB Step-Up
The GMWB Step-Up is automatic and applies annually. Under this rider, unless an owner opts out of the automatic GMWB Step-Up, the rider charge will increase if our then current rider charge is higher than when the rider was purchased. The rider charge will never be greater than the maximum GMWB rider charge (See SUMMARY OF EXPENSE INFORMATION).
If you satisfy the eligibility requirements on a Contract anniversary and your Contract accumulated value is greater than the withdrawal benefit base, we will Step-Up the withdrawal benefit base to your Contract accumulated value on that Contract anniversary. We will not reduce your withdrawal benefit base if your Contract accumulated value on a Contract anniversary is less than the withdrawal benefit base.
If you are eligible for a GMWB Step-Up of the withdrawal benefit base, you will be charged the then current rider charge. You may choose to opt out of the GMWB Step-Up feature if the charge for your rider will increase. We will send you advance notice if the charge for your rider will increase in order to give you the opportunity to opt out of the GMWB Step-Up feature. Once you opt out, you will no longer be eligible for future GMWB Step-Ups.
The GMWB Step-Up operates as follows:
On each Contract anniversary following the rider effective date, you are eligible for a GMWB Step-Up of the withdrawal benefit base if you satisfy all of the following requirements:
1.
the Contract anniversary occurs before the later of
a.
the Contract anniversary following the date the oldest owner (oldest annuitant if the owner is not a natural person) attains age 80; or
b.
ten years after the rider effective date;
2.
you have not declined any increases in the rider charge; and
3.
you have not fully annuitized the Contract.


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


32

Termination and Reinstatement of the Rider
You may not terminate this rider prior to the 5th Contract anniversary following the rider effective date.
At any point in time, we will terminate this rider upon the earliest to occur:
•
The date you send us notice to terminate the rider (after the 5th Contract anniversary following the rider effective date). This will terminate the rider, not the Contract.
•
The date you fully annuitize, fully surrender or otherwise terminate the Contract.
•
The For Life withdrawal benefit base is zero.
•
The date the Contract owner is changed (annuitant is changed if the owner is not a natural person), except a change in owner due to a spousal continuation of the rider as described in 7. DEATH BENEFIT below or the removal/addition of a joint life as described in Covered Life Change earlier in this section.
•
The date your surviving spouse elects to continue the Contract without this rider (even if prior to the fifth Contract anniversary following the Contract/rider effective date).
•
The date you make an impermissible change in a covered life.
If this rider terminates for any reason other than full surrender of the Contract, this rider may not be reinstated. Upon termination of the GMWB Rider, any and all benefits and guarantees under the rider will no longer be available to you.
If you surrender the Contract with this rider attached and the Contract is later reinstated, this rider also must be reinstated. At the time this rider is reinstated, we will deduct rider charges scheduled during the period of termination and make any other adjustments necessary to reflect any changes in the amount reinstated and the Contract accumulated value as of the date of termination.
NOTE:
If your Contract is issued in California, after an ownership change, the rider will not terminate and the benefits will continue based on the original owner.
GMWB Upon Divorce
The following table illustrates divorce situations and the resulting outcomes.
If…
And…
Then…
You are the sole owner of the contract
You direct us to take a withdrawal to satisfy a court order to pay a portion of the Contract to your former spouse
If no withdrawals have been taken, the withdrawal will be taken based on the “Single Life” or “Joint Life” For Life withdrawal benefit payment election on file unless you direct otherwise.
If withdrawals have been taken, the withdrawal will be based on the For Life withdrawal benefit election on file.
Any portion of such withdrawal that exceeds the available withdrawal benefit payment will be deemed an excess withdrawal.
You will retain all rights and benefits of the rider.
Note: If the excess withdrawal causes the For Life withdrawal benefit base to go to zero, the rider will terminate at the next Contract anniversary unless you make additional premium payments or a GMWB Step-Up is applied. For further information, see Excess Withdrawals.
You are the sole owner of the contract
You direct us to change ownership of the Contract to your former spouse to satisfy a court order
The GMWB rider will terminate.
Your former spouse will become the new owner of the Contract and will retain all rights and benefits of the Contract.


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If…
And…
Then…
Contract is jointly owned
You direct us to take a withdrawal to satisfy a court order to pay a portion of the Contract to your former spouse
If no withdrawals have been taken, the withdrawal will be taken based on the “Single Life” or “Joint Life” For Life withdrawal benefit payment election on file unless you direct otherwise. If withdrawals have been taken, the withdrawal will be based on the For Life withdrawal benefit election on file.
Any portion of such withdrawal that exceeds the available withdrawal benefit payment will be deemed an excess withdrawal.
If you direct us to remove one of the joint owners, the spouse who retains ownership of the Contract will continue to be entitled to all rights and benefits of the rider while the former spouse will no longer have any such rights or be entitled to any benefits under the rider.
Note: If the excess withdrawal causes the For Life withdrawal benefit base to go to zero, the rider will terminate at the next Contract anniversary unless you make additional premium payments or a GMWB Step-Up is applied. For further information, see Excess Withdrawals.
Contract is jointly owned
You direct us to remove one of the joint owners to satisfy a court order
If withdrawals have been taken, “Single Life” or “Joint Life” For Life withdrawal benefit payment election on file will remain in effect.
If withdrawals have not been taken, For Life withdrawal benefits will be calculated “Single Life”.
The spouse who retains ownership of the Contract will continue to be entitled to all rights and benefits of the rider while the former spouse will no longer have any such rights or be entitled to any benefits under the rider.
Note: If the excess withdrawal causes the For Life withdrawal benefit base to go to zero, the rider will terminate at the next Contract anniversary unless you make additional premium payments or a GMWB Step-Up is applied. For further information, see Excess Withdrawals.
GMWB Summary
Effective Period
Applications Signed Before August 1, 2013 (August 15, 2013 for Illinois and Montana)
Applications Signed August 1, 2013 (August 15, 2013 for Illinois and Montana) through July 31, 2015
Applications Signed on or after August 1, 2015
Issue Age
55-80

NOTE: Prior to January 21, 2013 the minimum issue age was 60.
55-80
55-80
Rider Charge

0.73% of average quarterly For Life withdrawal benefit base
0.95% of average quarterly For Life withdrawal benefit base
1.05% of average quarterly For Life withdrawal benefit base


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Effective Period
Applications Signed Before August 1, 2013 (August 15, 2013 for Illinois and Montana)
Applications Signed August 1, 2013 (August 15, 2013 for Illinois and Montana) through July 31, 2015
Applications Signed on or after August 1, 2015
Annual Withdrawal Limits

•    “Single Life” — tiered percentages based on age at first withdrawal, beginning at 4.50% and capping at a maximum of 6.50% of the For Life withdrawal benefit base
•    “Joint Life” — tiered percentages based on age at first withdrawal, beginning at 4.00% and capping at a maximum of 6.00% of the For Life withdrawal benefit base
•    “Single Life” — tiered percentages based on age at first withdrawal, beginning at 4.00% and capping at a maximum of 5.25% of the For Life withdrawal benefit base
•    “Joint Life” — tiered percentages based on age at first withdrawal, beginning at 3.50% and capping at a maximum of 4.75% of the For Life withdrawal benefit base
•    “Single Life” — tiered percentages based on age at first withdrawal, beginning at 3.75% and capping at a maximum of 5.00% of the For Life withdrawal benefit base
•    “Joint Life” — tiered percentages based on age at first withdrawal, beginning at 3.25% and capping at a maximum of 4.50% of the For Life withdrawal benefit base
For Life Withdrawal Benefit Payments

•    “Single Life” or “Joint Life” (your life and the lifetime of your eligible spouse)
•    For Life withdrawal benefit payments default to “Single Life” unless “Joint Life” is elected
•    Available the Contract anniversary following the date the oldest owner turns 59½ — all withdrawals prior to that Contract anniversary are excess withdrawals under the For Life withdrawal option
•    “Single Life” or “Joint Life” (your life and the lifetime of your eligible spouse)
•    For Life withdrawal benefit payments default to “Single Life” unless “Joint Life” is elected
•    Available the Contract anniversary following the date the oldest owner turns 59½ — all withdrawals prior to that Contract anniversary are excess withdrawals under the For Life withdrawal option
•    “Single Life” or “Joint Life” (your life and the lifetime of your eligible spouse)
•    For Life withdrawal benefit payments default to “Single Life” unless “Joint Life” is elected
•    Available the Contract anniversary following the date the oldest owner turns 59½ — all withdrawals prior to that Contract anniversary are excess withdrawals under the For Life withdrawal option


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Effective Period
Applications Signed Before August 1, 2013 (August 15, 2013 for Illinois and Montana)
Applications Signed August 1, 2013 (August 15, 2013 for Illinois and Montana) through July 31, 2015
Applications Signed on or after August 1, 2015
Termination

•    You may terminate this rider anytime after the 5th Contract anniversary following the rider effective date
•    You may terminate this rider anytime after the 5th Contract anniversary following the rider effective date
•    You may terminate this rider anytime after the 5th Contract anniversary following the rider effective date
GMWB Step-Up

•    Automatic annual GMWB Step-Up available until the later of (a) the Contract anniversary prior to age 80 or (b) 10 years after the rider effective date.
•    Automatic annual GMWB Step-Up available until the later of (a) the Contract anniversary prior to age 80 or (b) 10 years after the rider effective date.
•    Automatic annual GMWB Step-Up available until the later of (a) the Contract anniversary prior to age 80 or (b) 10 years after the rider effective date.
GMWB Bonus

•    If no withdrawals are taken, a GMWB Bonus is applied to the withdrawal benefit base on each Contract anniversary as shown below.
•    Year 1 — 5.00% of premium payments
•    Year 2 — 5.00% of premium payments
•    If no withdrawals are taken, a GMWB Bonus is applied to the withdrawal benefit base on each Contract anniversary as shown below.
•    Year 1 — 5.00% of premium payments
•    Year 2 — 5.00% of premium payments
•    If no withdrawals are taken, a GMWB Bonus is applied to the withdrawal benefit base on each Contract anniversary as shown below.
•    Year 1 — 5.00% of premium payments
•    Year 2 — 5.00% of premium payments
Investment Restrictions

You must select either*:
•    Diversified Balanced Managed Volatility;
•    Diversified Growth Managed Volatility; or
•    Diversified Income.
There are no additional restrictions on allocations to the Fixed Account.
You must select either*:
•    Diversified Balanced Managed Volatility;
•    Diversified Growth Managed Volatility; or
•    Diversified Income.
There are no additional restrictions on allocations to the Fixed Account.
You must select either:
•    Diversified Balanced Managed Volatility;
•    Diversified Growth Managed Volatility; or
•    Diversified Income.
There are no additional restrictions on allocations to the Fixed Account.
Spousal Continuation

•    At the death of the first owner to die, a spouse who is a joint owner or primary beneficiary may have the option to continue the Contract with this rider.
•    At the death of the first owner to die, a spouse who is a joint owner or primary beneficiary may have the option to continue the Contract with this rider.
•    At the death of the first owner to die, a spouse who is a joint owner or primary beneficiary may have the option to continue the Contract with this rider.
* For Applications signed prior to December 1, 2013, the following Principal Variable Contracts Accounts (Class 2) were the only underlying funds available:  Diversified Balanced Account; Diversified Growth Account; and Diversified Income Account.  For applications signed on or after December 1, 2013, Diversified Balanced Account and Diversified Growth Account are no longer available. 


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5. TRANSFERS AND SURRENDERS
Division Transfers
•
You may request an unscheduled transfer or set up a scheduled transfer by
•
mailing your instructions to us;
•
calling us at 1-800-852-4450 (if telephone privileges apply);
•
faxing your instructions to us at 1-866-894-2093; or
•
visiting www.principal.com.
•
You must specify the dollar amount or percentage to transfer from each division.
•
The minimum transfer amount is the lesser of $100 or the value of your division.
•
In states where allowed, we reserve the right to reject transfer instructions from someone providing them for multiple contracts for which he or she is not the owner.
You may not make a transfer to the Fixed Account if:
•
a transfer has been made from the Fixed Account to a division within six months; or
•
following the transfer, the Fixed Account value would be greater than $1,000,000.
Unscheduled Transfers
You may make unscheduled division transfers from one division to another division or to the Fixed Account.
•
Transfer values are calculated using the price next determined after we receive your request.
•
We reserve the right to impose a fee of the lesser of $30 or 2% of the amount transferred on each unscheduled transfer after the first unscheduled transfer in a contract year.
Limitations on Unscheduled Transfers. We reserve the right to reject excessive exchanges or purchases if the trade would disrupt the management of the Separate Account, any division of the Separate Account or any underlying mutual fund. In addition, we may suspend or modify transfer privileges in our sole discretion at any time to prevent market timing efforts that could disadvantage other owners. These modifications could include, but not be limited to:
•
requiring a minimum time period between each transfer;
•
imposing the transaction fee;
•
limiting the dollar amount that an owner may transfer at any one time; or
•
not accepting transfer requests from someone providing requests for multiple Contracts for which he or she is not the owner.
Scheduled Transfers (Dollar Cost Averaging) – only applies after the GMWB rider is terminated
•
You may elect to have transfers made on a scheduled basis.
•
There is no charge for scheduled transfers and no charge for participating in the scheduled transfer program.
•
You must specify the dollar amount of the transfer.
•
You select the transfer date (other than the 29th, 30th or 31st) and the transfer period (monthly, quarterly, semi-annually or annually).
•
If the selected date is not a valuation date, the transfer is completed on the next valuation date.
•
If you want to stop a scheduled transfer, you must provide us notice prior to the date of the scheduled transfer.
•
Transfers continue until your value in the division is zero or we receive notice to stop the transfers.
•
The number of divisions available for simultaneous transfers will never be less than two. When we have more than two divisions available, we reserve the right to limit the number of divisions from which simultaneous transfers are made.
Scheduled transfers are designed to reduce the risks that result from market fluctuations. They do this by spreading out the allocation of your money to investment options over a longer period of time. This allows you to reduce the risk of investing most of your money at a time when market prices are high. The results of this strategy depend on market trends and are not guaranteed.


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Example:
Month
Amount Invested
Share Price
Shares Purchased
January
$100
$25.00
4
February
$100
$20.00
5
March
$100
$20.00
5
April
$100
$10.00
10
May
$100
$25.00
4
June
$100
$20.00
5
Total
$600
$120.00
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In the example above, the average share price is $20.00 [total of share prices ($120.00) divided by number of purchases (6)]. The average share cost is $18.18 [amount invested ($600.00) divided by number of shares purchased (33)].
Fixed Account Transfers, Total and Partial Surrenders
Transfers and surrenders from the Fixed Account are subject to certain limitations. In addition, surrenders from the Fixed Account may be subject to a surrender charge.
You may transfer amounts from the Fixed Account to one of the Separate Account divisions before the annuitization date and as provided below. The transfer is effective on the valuation date following our receipt of your instructions. You may transfer amounts on either a scheduled or unscheduled basis. You may not make both scheduled and unscheduled Fixed Account transfers in the same contract year.
Unscheduled Fixed Account Transfers. The minimum transfer amount is $100 (or entire Fixed Account accumulated value if less than $100). Once per contract year, within the 30 days following the Contract anniversary date, you can:
•transfer an amount not to exceed 25% of your Fixed Account value; or
•
transfer up to 100% of your Fixed Account value if:
•
your Fixed Account value is less than $1,000; or
•
a minus b is greater than 1% where:
•
a = the weighted average of your Fixed Account interest rates for the preceding contract year; and
•
b = the renewal interest rate for the Fixed Account.
Scheduled Fixed Account Transfers (Fixed Account Dollar Cost Averaging). You may make scheduled transfers on a monthly basis from the Fixed Account to one of the Separate Accounts as follows:
•
You may establish scheduled transfers by sending a written request or by telephoning the home office at 1-800-852-4450.
•
Transfers occur on a date you specify (other than the 29th, 30th or 31st of any month).
•
If the selected date is not a valuation date, the transfer is completed on the next valuation date.
•
Scheduled transfers are only available if the Fixed Account value is $5,000 or more at the time the scheduled transfers begin.
•
Scheduled monthly transfers of a specified dollar amount will continue until the Fixed Account accumulated value is zero or until you notify us to discontinue the transfers. This specified dollar amount cannot exceed 2% of your Fixed Account value.
•
The minimum transfer amount is $100.
•
If the Fixed Account value is less than $100 at the time of transfer, the entire Fixed Account value will be transferred.
•
If you stop the transfers, you may not start transfers again without our prior approval.
Automatic Portfolio Rebalancing (APR)
APR allows you to maintain a specific percentage of your Separate Account division accumulated value in specified divisions over time. APR is available only if you have the option to invest in more than one Separate Account division; therefore, APR is currently not available with the GMWB rider. At any time, if the GMWB rider is terminated, APR is available. See 4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) - Termination and Reinstatement of the Rider. APR is not available for values in the Fixed Account.


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Surrenders
You may surrender your Contract by providing us notice. Surrender requests may be sent to us at:
Principal Life Insurance Company
P.O. Box 9382
Des Moines, Iowa 50306-9382
Surrenders result in the redemption of units and your receipt of the value of the redeemed units minus any applicable surrender charge and fees. Surrender values are calculated using the price next determined after we receive your request. Surrenders from the Separate Account are generally paid within seven days of the effective date of the request for surrender (or earlier if required by law). However, certain delays in payment are permitted (see 8. ADDITIONAL INFORMATION ABOUT THE CONTRACT – Delay of Payments). Surrenders before age 59½ may involve an income tax penalty (see 9. FEDERAL TAX MATTERS).
You may specify surrender allocation percentages with each partial surrender request. If you do not provide us with specific percentages, we will use your premium payment allocation percentages for the partial surrender. Surrenders may be subject to a surrender charge (see 2. CHARGES AND DEDUCTIONS — Surrender Charge).
Total Surrender
•
You may surrender the Contract at any time before the annuitization date.
•
Surrender values are calculated using the price next determined after we receive your request.
•
The cash surrender value is your accumulated value minus any applicable fees and surrender charges.
•
We reserve the right to require you to return the Contract.
•
The written consent of all collateral assignees and irrevocable beneficiaries must be obtained prior to surrender.
Unscheduled Partial Surrender
•
You may surrender a part of your accumulated value at any time before the annuitization date.
•
You must specify the dollar amount of the surrender (which must be at least $100).
•
The surrender is effective at the end of the valuation period during which we receive your written request for surrender.
•
The surrender is deducted from your investment options according to your surrender allocation percentages.
•
If surrender allocation percentages are not specified, we use your premium payment allocation percentages.
•
We surrender units from your investment options to equal the dollar amount of the surrender request plus any applicable surrender charge and transaction fee, if any.
•
Your accumulated value after the unscheduled partial surrender must be equal to or greater than $5,000; we reserve the right to increase this amount up to and including $10,000.
•
The written consent of all collateral assignees and irrevocable beneficiaries must be obtained prior to surrender.
Scheduled Partial Surrender
•
You may elect partial surrenders from any of your investment options on a scheduled basis.
•
Your accumulated value must be at least $5,000 when the scheduled partial surrenders begin.
•
You may specify monthly, quarterly, semi-annually or annually and choose a surrender date (other than the 29th, 30th or 31st).
•
If the selected date is not a valuation date, the partial surrender is completed on the next valuation date.
•
All scheduled withdrawals (scheduled partial surrenders) occurring on the Contract anniversary are reflected in the values for the prior contract year.
•
We surrender units from your investment options to equal the dollar amount of the partial surrender request plus any applicable partial surrender charge.
•
The partial surrenders continue until your value in the investment option is zero or we receive written notice to stop the partial surrenders.
•
The written consent of all collateral assignees and irrevocable beneficiaries must be obtained prior to partial surrender.


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6. THE ANNUITIZATION PERIOD
Annuitization Date
You may specify an annuitization date in your application. You may change the annuitization date with our prior approval. The request must be in writing. You may not select an annuitization date prior to the first Contract anniversary or after the maximum annuitization date (age 95; state variations may apply) found on the data page . If you do not specify an annuitization date , the annuitization date is the maximum annuitization date shown on the data page .
Full Annuitization
Any time after the first contract year, you may annuitize your Contract by electing to receive payments under an annuity benefit payment option. If the accumulated value on the annuitization date is less than $2,000 or if the amount applied under an annuity benefit payment option is less than the minimum requirement, we may pay out the entire amount in a single payment. The Contract would then be canceled. You may select when you want the payments to begin (within the period that begins the business day following our receipt of your instruction and ends one year after our receipt of your instructions).
Once payments begin under the annuity benefit payment option you choose, the option may not be changed. In addition, once payments begin, you may not surrender or otherwise liquidate or commute any of the portion of your accumulated value that has been annuitized.
Depending on the type of annuity benefit payment option selected, payments that are initiated either before or after the annuitization date may be subject to penalty taxes (see 9. FEDERAL TAX MATTERS). You should consider this carefully when you select or change the annuity benefit payment commencement date.
Partial Annuitization
After the first contract year and prior to the annuitization date, you may annuitize a portion of your accumulated value by sending us a notice.
The minimum partial annuitization amount is $2,000. Any partial annuitization request that reduces the accumulated value to less than $5,000 will be treated as a request for full annuitization.
You may select one of the annuity benefit payment options listed below. Once payments begin under the option you selected, the option may not be changed. In addition, once payments begin you may not surrender or otherwise liquidate or commute any portion of your accumulated value that has been annuitized.
Annuity Benefit Payment Options
We offer fixed annuity benefit payments only. No surrender charge is imposed on any portion of your accumulated value that has been annuitized.
You may choose from several fixed annuity benefit payment options. Payments will be made on the frequency you choose. You may elect to have your annuity benefit payments made on a monthly, quarterly, semiannual or annual basis. The dollar amount of the payments is specified for the entire payment period according to the option selected. There is no right to take any total or partial surrenders after the annuitization date. The fixed annuity benefit payment must be made within one year of the annuity benefit election.
The amount of the fixed annuity benefit payment depends on the:
•
amount of accumulated value applied to the annuity benefit payment option;
•
annuity benefit payment option selected; and
•
age and gender of the annuitant (unless fixed income option is selected).
The amount of the initial payment is determined by applying all or a portion of the accumulated value as of the date of the application to the annuity table for the annuitant’s annuity benefit payment option, gender, and age. The annuity benefit payment tables contained in the Contract are based on the Annuity 2000 Mortality Table. These tables are guaranteed for the life of the Contract.


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Annuity benefit payments generally are higher for male annuitants than for female annuitants with an otherwise identical Contract. This is because statistically females have longer life expectancies than males. In certain states, this difference may not be taken into consideration in determining the payment amount. Additionally, Contracts with no gender distinctions are made available for certain employer-sponsored plans because, under most such plans, gender discrimination is prohibited by law.
You may select an annuity benefit payment option by written request only. Your selection of an annuity benefit payment option for a partial annuitization must be in writing and may not be changed after payments begin. Your selection of an annuity benefit payment option for any portion not previously annuitized may be changed by written request prior to the annuitization date.
If an annuity benefit payment option is not selected, we will automatically apply:
•
for Contracts with one annuitant — Life Income with payments guaranteed for a period of 10 years.
•
for Contracts with joint annuitants — Joint and Full Survivor Life Income with payments guaranteed for a period of 10 years.
The available annuity benefit payment options for both full and partial annuitizations include:
•
Fixed Period Income – Level payments continue for a fixed period. You may select a range from 5 to 30 years (state variations may apply). If the annuitant dies before the selected period expires, payments continue to you or the person(s) you designate until the end of the fixed period. Payments stop after all guaranteed payments are received.
•
Life Income – Level payments continue for the annuitant’s lifetime. If you defer the first payment date, it is possible that you would receive no payments if the annuitant dies before the first payment date. NOTE: There is no death benefit value remaining and there are no further payments when the annuitant dies.
•
Life Income with Period Certain – Level payments continue during the annuitant’s lifetime with a guaranteed payment period of 5 to 30 years. If the annuitant dies before all of the guaranteed payments have been made, the guaranteed payments continue to you or the person(s) you designate until the end of the guaranteed payment period.
•
Joint and Survivor – Payments continue as long as either the annuitant or the joint annuitant is alive. You may also choose an option that lowers the amount of income after the death of a joint annuitant. It is possible that you would only receive one payment under this option if both annuitants die before the second payment is due. If you defer the first payment date, it is possible that you would receive no payments if both the annuitants die before the first payment date. NOTE: There is no death benefit value remaining and there are no further payments after both annuitants die.
•
Joint and Survivor with Period Certain – Payments continue as long as either the annuitant or the joint annuitant is alive with a guaranteed payment period of 5 to 30 years. You may choose an option that lowers the amount of income after the death of a joint annuitant. If both annuitants die before all guaranteed payments have been made, the guaranteed payments continue to you or the person(s) you designate until the end of the guaranteed payment period.
Other annuity benefit payment options may be available.
Tax Considerations Regarding Annuity Benefit Payment Options
If you own one or more tax qualified annuity contracts, you may avoid tax penalties if payments from at least one of your tax qualified contracts begin no later than April 1 following the calendar year in which you turn age 70½. The required minimum distribution payment must be in equal (or substantially equal) amounts over your life or over the joint lives of you and your designated beneficiary. These required minimum distribution payments must be made at least once a year. Tax penalties may apply at your death on certain excess accumulations. You should confer with your tax advisor about any potential tax penalties before you select an annuity benefit payment option or take other distributions from the Contract.
Additional rules apply to distributions under non-qualified contracts.
See 9. FEDERAL TAX MATTERS for more information.


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Death of Annuitant (During the Annuitization Period)
If the annuitant dies during the annuity benefit payment period, remaining payments are made to the owner throughout the guaranteed payment period, if any, or for the life of any joint annuitant, if any. If the owner is the annuitant, remaining payments are made to the contingent owner. In all cases the person entitled to receive payments also receives any rights and privileges under the annuity benefit payment option.
7. DEATH BENEFIT
This Contract provides a death benefit upon the death of the owner. The Contract will not provide death benefits upon the death of an annuitant unless the annuitant is also an owner or the owner is not a natural person.
The following tables illustrate the various situations and the resulting death benefit payment if death occurs before the annuitization date. If death occurs after the annuitization date, See 6. The Annuitization Period.
If you die and...
And...
Then...
You are the sole owner
Your spouse is not named as a primary beneficiary
The beneficiary(ies) receives the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
If a beneficiary dies before you, on your death we will make equal payments to the surviving beneficiaries unless you provided us with other written instructions. If no beneficiary(ies) survives you, the death benefit is paid to your estate in a single payment.
Upon your death, only your beneficiary’s(ies’) right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.
You are the sole owner
Your spouse is named as a primary beneficiary
Your spouse may either
a. continue the Contract; or
b. receive the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
All other beneficiaries receive the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
If a beneficiary dies before you, on your death we will make equal payments to the surviving beneficiaries unless you provided us with other written instructions. If no beneficiary(ies) survives you, the death benefit is paid to your estate in a single payment.
Unless your spouse elects to continue the Contract, only your spouse’s and any other beneficiary’s(ies’) right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.
You are a joint owner
The surviving joint owner is not your spouse
The surviving owner receives the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
Upon your death, only the surviving owner’s right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.
You are a joint owner
The surviving joint owner is your spouse
Your spouse may either
a. continue the Contract; or
b. receive the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
Unless your surviving spouse owner elects to continue the Contract, upon your death, only your spouse’s right to the death benefit or GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.


42

If you die and...
And...
Then...
The annuitant dies
The owner is not a natural person
The beneficiary(ies) receives the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
If a beneficiary dies before the annuitant, on the annuitant’s death we will make equal payments to the surviving beneficiaries unless the owner provided us with other written instructions.
Upon the annuitant’s death, only the beneficiary’s(ies’) right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.
Before the annuitization date, you may give us written instructions for payment under a death benefit option. If we do not receive your instructions, the death benefit is paid according to instructions from the beneficiary(ies). The beneficiary(ies) may elect to apply the death benefit under an annuity benefit payment option or receive the death benefit as a single payment. Generally, unless the beneficiary(ies) elects otherwise, we pay the death benefit in a single payment, subject to proof of your death.
No surrender charge applies when a death benefit is paid.
Payment of Death Benefit
The death benefit is usually paid within five business days of our receiving all required documents (including proof of death) to process the claim. Payment is made according to benefit instructions provided by you. Some states require this payment to be made in less than five business days. Under certain circumstances, this payment may be delayed (see 8. ADDITIONAL INFORMATION ABOUT THE CONTRACT).
Note:
Proof of death includes: a certified copy of a death certificate; a certified copy of a court order; a written statement by a medical doctor; or other proof satisfactory to us.
The accumulated value remains invested in the divisions until the valuation period during which we receive the required documents. If more than one beneficiary is named, each beneficiary’s portion of the death benefit remains invested in the divisions until the valuation period during which we receive the required documents for that beneficiary. Unless otherwise required by law, We pay interest on the death benefit from the first day the accumulated value is no longer invested in the divisions until payment is made. After payment of all of the death benefit (including any applicable interest), the Contract is terminated.
Standard Death Benefit Formula
The amount of the standard death benefit is the greatest of a, b or c, where:
a =
the accumulated value on the date we receive proof of death and all required documents;
b =
the total of premium payments minus an adjustment for each partial surrender (and any applicable surrender charges and fees) and minus an adjustment for each partial annuitization made prior to the date we receive proof of death and all required documents; and
c =
the highest accumulated value on any Contract anniversary that is wholly divisible by seven (for example, Contract anniversaries 7, 14, 21, 28, etc.) plus any premium payments since that contract anniversary and minus an adjustment for each partial surrender (and any applicable surrender charges and fees) and minus an adjustment for each partial annuitization made after that Contract anniversary.


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The adjustment for each partial surrender (and any applicable surrender charges and fees) and for each partial annuitization made prior to the date we receive proof of death and all required documents is equal to (x divided by y) multiplied by z, where:
x =
the amount of the partial surrender (and any applicable surrender charges and fees) or the amount of the partial annuitization; and
y =
the accumulated value immediately prior to the partial surrender or partial annuitization; and
z =
the amounts determined in b or c above immediately prior to the partial surrender or partial annuitization.
Example:
Your accumulated value is $10,000 and you take a partial surrender of $2,000 (20% of your accumulated value). For purposes of calculating the death benefit, we reduce the amounts determined in b or c above by 20%.
GMWB Death Benefit
NOTE:
The GMWB Death Benefit is available for applications signed on or after August 1, 2013 (August 15, 2013 for Illinois and Montana).
While the GMWB rider is active, the GMWB Death Benefit replaces any other death benefit under the Contract. The GMWB Death Benefit terminates when the GMWB rider terminates.
1.
If you are the only owner, upon your death, your primary beneficiary may elect one of the following:
a.
receive the GMWB Death Benefit as set forth below; or
b.
if the primary beneficiary is your spouse, your spouse may continue the Contract with or without this rider as set forth later in this section.
2.
If there are joint owners, upon the death of the first joint owner to die, the surviving joint owner may elect one of the following:
a.
receive the GMWB Death Benefit as set forth below; or
b.
if the surviving joint owner is your spouse, your spouse may continue the Contract with or without this rider as set forth later in this section.
The GMWB Death Benefit is equal to the greatest of:
1.
the Contract accumulated value as of the valuation date on which we receive the proof of death and all required documents;
2.
the total premium payments minus each withdrawal taken on or before the valuation date on which we receive the proof of death and all required documents;
3.
the Contract accumulated value that was in effect on any prior Contract anniversary that is divisible equally by 7, plus any premium payments made after that Contract anniversary minus each withdrawal taken after that Contract anniversary.
NOTE:
For 2. and 3. above, a withdrawal that is not a "For Life" Excess Withdrawal will reduce the GMWB Death Benefit by the amount of the withdrawal. Then, each "For Life" Excess Withdrawal will proportionately reduce the GMWB Death Benefit by the ratio of the "For Life" Excess Withdrawal taken to the Contract accumulated value immediately prior to the "For Life" Excess Withdrawal.
NOTE:
For 2. and 3. above, withdrawals up to the RMD amount under the RMD Program for GMWB Riders are not considered excess withdrawals and reduce the GMWB Death Benefit by the amount of the withdrawal.
For details of the GMWB Death Benefit calculations, see APPENDIX C.


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If the Contract Accumulated Value is Greater than Zero. The following table illustrates the various situations and the resulting outcomes if your Contract accumulated value is greater than zero upon your death.
If you die and...
And...
Then...
You are the sole owner
Your spouse is not named as a primary beneficiary
The primary beneficiary(ies) will receive the GMWB Death benefit under the Contract.
All other rights and benefits under the rider and Contract will terminate.
You are the sole owner
Your spouse is named as a primary beneficiary
Your spouse may
a. continue the Contract with or without this rider as set forth later in this section; or
b. receive the GMWB death benefit under the Contract.
All other primary beneficiaries will receive the GMWB Death Benefit under the Contract.
Unless your spouse elects to continue the Contract with this rider, only your spouse’s and beneficiary(ies)’s right to the above-selected payments will continue; all other rights and benefits under the rider and Contract will terminate.
You are a joint owner
The surviving joint owner is not your spouse
Your surviving owner will receive the GMWB death benefit under the Contract.
All other rights and benefits under the rider and Contract will terminate.
If you die and...
And...
Then...
You are a joint owner
The surviving joint owner is your spouse
Your spouse may
a. continue the Contract with or without this rider as set forth later in this section; or
b. receive the GMWB Death Benefit under the Contract.
Unless the surviving spouse owner elects to continue the Contract with this rider, upon your death, only your spouse’s right to the above-selected payments will continue; all other rights and benefits under the rider and Contract will terminate.
If...
And...
Then...
The annuitant dies
The owner is not a natural person
The beneficiary(ies) receive the GMWB Death Benefit under the Contract.
If a beneficiary dies before the annuitant, on the annuitant’s death we will make equal payments to the surviving beneficiaries unless the owner provided us with other written instructions. If no beneficiary(ies) survive the annuitant, the GMWB Death Benefit is paid to the owner.
Upon the annuitant’s death, only the beneficiary(ies) right to the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.
NOTE: The “Joint Life” withdrawal option is not available if the owner is not a natural person.


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If the Contract Accumulated Value is Zero. The following table illustrates the various situations and the resulting outcomes if the Contract accumulated value is zero upon your death.
If you die and...
And...
Then...
You are the sole owner
You elected the “Single Life” withdrawal option*
All payments stop and all rights and benefits under the Contract terminate.
You are the sole owner
You elected the “Joint Life” withdrawal option*
We will continue payments to the surviving covered life according to the schedule established when you made your election until the date of the surviving covered life’s death.
Upon the surviving covered life’s death, all payments stop and all rights and benefits under the Contract terminate.
You are a joint owner
You elected the “Single Life” withdrawal option*
All payments stop and all rights and benefits under the Contract terminate.
You are a joint owner
You elected the “Joint Life” withdrawal option*
We will continue payments to the surviving covered life according to the schedule established when you made your election until the date of the surviving covered life’s death.
Upon the surviving joint owner’s death, all payments stop and all rights and benefits under the Contract terminate.
*
See Effect of the Contract Accumulated Value Reaching Zero Under the Rider in section 4 for details regarding election of the For Life withdrawal option.
If...
And...
Then...
The annuitant dies
The owner is not a natural person
The owner elected the "Single Life" Withdrawal option
The beneficiary(ies) receive the death benefit under the Contract.
All payments stop and all rights and benefits under the Contract terminate.
NOTE:
The “Joint Life” withdrawal option is not available if the owner is not a natural person.
GMWB Spousal Continuation
This rider provides that the For Life withdrawal benefit payment may be available in certain situations to an eligible spouse who continues the Contract with the rider.
If you die while this rider is in effect and if your surviving spouse elects to continue the Contract in accordance with its terms, the surviving spouse may also elect to continue this rider if
1.
the Contract accumulated value is greater than zero;
2.
there has not been a previous spousal continuation of the Contract and this rider; and
3.
your spouse is either
a.
your primary beneficiary, if you were the sole owner; or
b.
the surviving joint owner, if there were joint owners.
If your spouse elects to continue the Contract without this rider, this rider and all rights, benefits and charges under this rider will terminate and cannot be reinstated.
NOTE:
Although spousal continuation may be available under federal tax laws for a subsequent spouse, this rider may be continued one time only.


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The following table illustrates the various changes and the resulting outcomes associated with continuation of this rider by an eligible surviving spouse.
If you die and ...
And...
Then...
No withdrawals have been taken since the rider effective date
Your spouse meets the minimum issue age requirement
Your spouse may continue the rider and take withdrawals until the earlier of your spouse's death or the For Life withdrawal benefit base reduces to zero.
For Life withdrawal benefits will automatically be calculated as “Single Life” and your spouse will be the sole covered life. Your spouse may not add a new covered life or elect “Joint Life”.
The For Life withdrawal benefit percentage will be based on your spouse’s age and will lock in at the “Single Life” percentage applicable on the date of your spouse’s first withdrawal.
All other provisions of this rider will continue as in effect on the date of your death.
No withdrawals have been taken since the rider effective date
Your spouse does not meet the minimum issue age requirement
The GMWB rider terminates upon your death.
All other provisions of the Contract will continue as in effect on the date of your death.
If you die and ...
And...
And...
Then...
Withdrawals have been taken since the rider effective date
You have locked in “Single Life” withdrawal benefits
----
The GMWB rider terminates upon your death.
All other provisions of the Contract will continue as in effect on the date of your death.
Withdrawals have been taken since the rider effective date
You have locked in “Joint Life” withdrawal benefits
Your spouse is the surviving covered life
Your spouse may continue the rider and take For Life withdrawal benefit payments until the earlier of your spouse's death or the For Life withdrawal benefit base reduces to zero.
For Life withdrawal benefits will continue to be calculated as “Joint Life”.
The For Life withdrawal benefit percentage will remain locked in at the “Joint Life” percentage applicable on the date of your first withdrawal and will not be reset to reflect your death.
All other provisions of this rider will continue as in effect on the date of your death.
Withdrawals have been taken since the rider effective date
You have locked in “Joint Life” withdrawal benefits
There is no surviving covered life
The GMWB rider terminates upon your death.
All other provisions of the Contract will continue as in effect on the date of your death.
8. ADDITIONAL INFORMATION ABOUT THE CONTRACT
The Contract
The entire Contract is made up of the Contract, amendments, riders and endorsements and data page. Only our corporate officers can agree to change or waive any provisions of a Contract. Any change or waiver must be in writing and signed by an officer of the Company.


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


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Beneficiary
While this Contract is in force, you have the right to name or change a beneficiary. This may be done as part of the application process or by sending us a written request. Unless you have named an irrevocable beneficiary, you may change your beneficiary designation by sending us notice.
Any beneficiary change before the annuitization date which would cause a change in the covered life will result in termination of the GMWB rider except in certain circumstances. See 4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB).
Contract Termination
We reserve the right to terminate the Contract and make a single payment (without imposing any charges) to you if your accumulated value at the end of the accumulation period is less than $2,000, unless you have the GMWB rider. Before the Contract is terminated, we will send you a notice to increase the accumulated value to $2,000 within 60 days. Termination of the Contracts will not unfairly discriminate against any owner.
Reinstatement
Reinstatement is only available if you have surrendered your Contract for your full accumulated value. Any premium payments you make after a partial surrender or partial annuitization will be deemed new premium payments.
If you have requested to replace this Contract with an annuity contract from another company and want to reinstate this Contract, the following apply:
•
we reinstate the Contract effective on the original surrender date;
•
we apply the amount received from the other company (“reinstatement amount”) and the amount of the surrender charge you paid when you surrendered the Contract;
•
these amounts are priced on the valuation date the money from the other company is received by us;
•
commissions are not paid on the reinstatement amounts; and
•
new data page is sent to your address of record.
If you have the GMWB rider, rider fees will apply for the period between the date you requested termination and the date your Contract was reinstated. Rider benefits will be adjusted when the amount originally surrendered differs from the reinstatement amount.
Reports
We will mail to you a statement, along with any reports required by state law, of your current accumulated value at least once per year prior to the annuitization date. After the annuitization date, any reports will be mailed to the person receiving the annuity benefit payments.
Quarterly statements reflect purchases and redemptions occurring during the quarter as well as the balance of units owned and accumulated values.
Important Information About Customer Identification Procedures
To help the government fight the funding of terrorism and money laundering activities, Federal law requires financial institutions to obtain, verify, and record information that identifies each person who applies for a Contract. When you apply for a Contract, we will ask for your name, address, date of birth, and other information that will allow us to verify your identity. We may also ask to see your driver’s license or other identifying documents.
If concerns arise with verification of your identification, no transactions will be permitted while we attempt to reconcile the concerns. If we are unable to verify your identity within 30 days of our receipt of your original premium payment, the Contract will be terminated and any value surrendered in accordance with normal redemption procedures. We will not suspend your right of full redemption, or postponed the date of payment upon redemption except as permitted by Section 22(e) of the Investment Act of 1940 or as amended.
We do not knowingly sell annuities that are for the benefit of a business/organization that is illegal under Federal and/or State law (such as a marijuana clinic), or a person who owns or receives income from such an entity or whose source of funds is illegal.


49

Frequent Trading and Market-Timing (Abusive Trading Practices)
This Contract is not designed for frequent trading or market timing activity of the investment options. If you intend to trade frequently and/or use market timing investment strategies, you should not purchase this Contract. The Company does not accommodate market timing.
We consider frequent trading and market timing activities to be abusive trading practices because they:
•
Disrupt the management of the underlying mutual funds by:
•
forcing the fund to hold short-term (liquid) assets rather than investing for long term growth, which results in lost investment opportunities for the fund; and
•
causing unplanned portfolio turnover;
•
Hurt the portfolio performance of the underlying mutual funds; and
•
Increase expenses of the underlying mutual fund and separate account due to:
•
increased broker-dealer commissions; and
•
increased record keeping and related costs.
If we are not able to identify such abusive trading practices, the abuses described above will negatively impact the Contract and cause investors to suffer the harms described.
We have adopted policies and procedures to help us identify and prevent abusive trading practices. In addition, the underlying mutual funds monitor trading activity to identify and take action against abuses. While our policies and procedures are designed to identify and protect against abusive trading practices, there can be no certainty that we will identify and prevent abusive trading in all instances. When we do identify abusive trading, we will apply our policies and procedures in a fair and uniform manner.
If we, or an underlying mutual fund that is an investment option with the Contract, deem abusive trading practices to be occurring, we will take action that may include, but is not limited to:
•
Rejecting transfer instructions from a Contract owner or other person authorized by the owner to direct transfers;
•
Restricting submission of transfer requests by, for example, allowing transfer requests to be submitted by 1st class U.S. mail only and disallowing requests made via the internet, by facsimile, by overnight courier or by telephone;
•
Limiting the number of unscheduled transfers during a contract year to no more than 12;
•
Prohibiting you from requesting a transfer among the divisions for a minimum of thirty days where there is evidence of at least one round-trip transaction (exchange or redemption of shares that were purchased within 30 days of the exchange/redemption) by you; and
•
Taking such other action as directed by the underlying mutual fund.
We support the underlying mutual funds right to accept, reject or restrict, without prior written notice, any transfer requests into a fund.
In some instances, a transfer may be completed prior to a determination of abusive trading. In those instances, we will reverse the transfer (within two business days of the transfer) and return the Contract to the investment option holdings it had prior to the transfer. We will give you notice in writing in this instance.
Distribution of the Contract
The Company has appointed Principal Securities, Inc. ("PSI") formerly Princor Financial Services Corporation (Des Moines, Iowa 50392-0200), a broker-dealer registered under the Securities Exchange Act of 1934, a member of the Financial Industry Regulatory Authority and affiliate of the Company, as the distributor and principal underwriter of the Contract. PSI is paid 6.50% of premium payments by the Company for the distribution of the Contract. PSI also may receive 12b-1 fees in connection with purchases and sales of mutual funds underlying the Contracts. PSI currently receives 12b-1 fees for the Diversified Balanced Managed Volatility Account, Diversified Growth Managed Volatility Account, Diversified Balanced Account, Diversified Growth Account, and Diversified Income Account.
PSI is an affiliate of the Company. Both PSI and the Company are subsidiaries of Principal Financial Services, Inc.


50

Applications for the Contracts are solicited by registered representatives of PSI or such other broker-dealers as have entered into selling agreements with PSI. Such registered representatives act as appointed agents of the Company under applicable state insurance law and must be licensed to sell variable insurance products. The Company intends to offer the Contract in all jurisdictions where it is licensed to do business and where the Contract is approved.
The distributor and/or its affiliates provide services to and/or funding vehicles for retirement plans and employer sponsored benefit programs. The distributor and its affiliates may pay a bonus or other consideration or incentive to intermediaries if a participant in such a retirement plan establishes a rollover individual retirement account with the assistance of a registered representative of an affiliate of distributor, if the intermediary sold the funding vehicle the retirement plan utilizes or if the intermediary subsequently became the broker of record with regard to the retirement plan. The distributor and its affiliates may pay a bonus or other consideration or incentive to intermediaries if an employee covered under an employer sponsored benefit program purchases a product from an affiliate of distributor with the assistance of a registered representative of an affiliate of distributor, if the intermediary sold the funding vehicle the employer sponsored benefit program utilizes or if the intermediary subsequently became the broker of record with regard to the employer sponsored benefit program.
The intermediary may pay to its financial professionals some or all of the amounts the distributor and its affiliates pay to the intermediary.
Performance Calculation
The Separate Account may publish advertisements containing information (including graphs, charts, tables and examples) about the hypothetical performance of its divisions for this Contract as if the Contract had been issued on or after the date the underlying mutual fund in which the division invests was first offered. The hypothetical performance from the date of the inception of the underlying mutual fund in which the division invests is calculated by reducing the actual performance of the underlying mutual fund by the fees and charges of this Contract as if it had been in existence.
The yield and total return figures described below vary depending upon market conditions, composition of the underlying mutual fund’s portfolios and operating expenses. These factors and possible differences in the methods used in calculating yield and total return should be considered when comparing the Separate Account performance figures to performance figures published for other investment vehicles. The Separate Account may also quote rankings, yields or returns as published by independent statistical services or publishers and information regarding performance of certain market indices. Any performance data quoted for the Separate Account represents only historical performance and is not intended to indicate future performance. For further information on how the Separate Account calculates yield and total return figures, see the SAI.
From time to time the Separate Account advertises its Money Market Division’s “yield” and “effective yield” for these Contracts. Both yield figures are based on historical earnings and are not intended to indicate future performance. The “yield” of the division refers to the income generated by an investment in the division over a 7-day period (which period is stated in the advertisement). This income is then “annualized.” That is, the amount of income generated by the investment during that week is assumed to be generated each week over a 52-week period and is shown as a percentage of the investment. The “effective yield” is calculated similarly but, when annualized, the income earned by an investment in the division is assumed to be reinvested. The “effective yield” is slightly higher than the “yield” because of the compounding effect of the assumed reinvestment.
The Separate Account also advertises the average annual total return of its various divisions. The average annual total return for any of the divisions is computed by calculating the average annual compounded rate of return over the stated period that would equate an initial $1,000 investment to the ending redeemable accumulated value.
9. FEDERAL TAX MATTERS
The following description is a general summary of the tax rules, primarily related to federal income taxes, which in our opinion are currently in effect. These rules are based on laws, regulations and interpretations which are subject to change at any time. This summary is not comprehensive and is not intended as tax advice. Federal estate and gift tax considerations, as well as state and local taxes, may also be material. You should consult a tax advisor about the tax implications of taking action under a Contract or related retirement plan.


51

Taxation of Non-Qualified Contracts
Non-Qualified Contracts
Section 72 of the Internal Revenue Code governs the income taxation of annuities in general.
•
Premium payments made under non-qualified contracts are not excludable or deductible from your gross income or any other person’s gross income.
•
An increase in the accumulated value of a non-qualified contract owned by a natural person resulting from the investment performance of the Separate Account or interest credited to the DCA Plus Accounts and the Fixed Account is generally not taxable until paid out as surrender proceeds, death benefit proceeds, or otherwise.
•
Generally, owners who are non-natural persons are immediately taxed on any increase in the accumulated value unless the non-natural person is acting as an agent for a natural person.
The following discussion applies generally to Contracts owned by natural persons.
•
Surrenders or partial surrenders are taxed as ordinary income to the extent of the accumulated income or gain under the Contract.
•
The value of the Contract pledged or assigned is taxed as ordinary income to the same extent as a partial surrender.
Annuity benefit payments:
•
The basic rule for taxing annuity benefit payments is that part of each annuity benefit payment is considered a nontaxable return of the investment in the Contract and part is considered taxable income. An “exclusion ratio” is applied to each annuity benefit payment to determine how much of the payment is excludable from gross income. The remainder of the annuity benefit payment is includable in gross income for the year received.
•
The “investment in the Contract” is generally the total of the premium payments made made less any tax-free return of premiums.
•
After the premium payment(s) in the Contract is paid out, the full amount of any annuity benefit payment is taxable.
For purposes of determining the amount of taxable income resulting from distributions, all Contracts and other annuity contracts issued by us or our affiliates to the same owner within the same calendar year are treated as if they are a single contract.
Transfer of ownership may have tax consequences to the owner. Please consult with your tax advisor before changing ownership of your Contract.
Required Distributions for Non-Qualified Contracts
In order for a non-qualified contract to be treated as an annuity contract for federal income tax purposes, the Internal Revenue Code requires:
•
If the person receiving payments dies on or after the annuitization date but prior to the time the entire interest in the Contract has been distributed, the remaining portion of the interest is distributed at least as rapidly as under the method of distribution being used as of the date of that person’s death.
•
If you die prior to the annuitization date, the entire interest in the Contract will be distributed:
•
within five years after the date of your death; or
•
as annuity benefit payments which begin within one year of your death and which are made over the life of your designated beneficiary or over a period not extending beyond the life expectancy of that beneficiary.
•
If you take a premature distribution from the Contract, you may incur an income tax penalty, unless the distribution is:
•
made on or after you reach age 59½;
•
made to a beneficiary on or after your death;
•
made upon your disability;
•
part of a series of substantially equal periodic payments for the life or life expectancy of you or you and your beneficiary;
•
made under an immediate annuity contract; or
•
allocable to contributions made prior to August 14, 1982.
Generally, unless the beneficiary elects otherwise, the above requirements are satisfied prior to the annuitization date by paying the death benefit in a single payment, subject to proof of your death. The beneficiary may elect, by written request, to receive an annuity benefit payment option instead of a single payment.


52

If your designated beneficiary is your surviving spouse, the Contract may be continued with your spouse deemed to be the new owner for purposes of the Internal Revenue Code. Where the owner or other person receiving payments is not a natural person, the required distributions provided for in the Internal Revenue Code apply upon the death of the annuitant.
Tax-Free Exchanges
Under Section 1035 of the Code, the exchange of one annuity contract for another is not a taxable transaction if the same owner is on each contract in the exchange, but is reportable to the IRS.
Net Investment Income Tax Change for 2013
The Net Investment Income tax is imposed at a rate of 3.8% on net investment income for higher tax bracket individuals.
As part of the Health Care and Reconciliation Act of 2010, this tax increase may apply to individuals' net investment income with an Adjustable Gross Income over $200,000 (single filers) or $250,000 for married couples filing jointly. The tax applies to income from interest, dividends, annuities, royalties and rents not obtained in a normal trade of business. The tax may also apply to certain trusts and estates with net investment income.
Income from annuities that are part of a qualified retirement plan (as described in the following section) are not treated as investment income for the purpose of this new tax and thus are not subject to the new 3.8% rate but may be includible for purposes of determining whether the applicable Net Investment Income Tax income limits are exceeded.
Taxation of Qualified Contracts
Tax-Qualified Contracts: IRA, SEP, and SIMPLE-IRA
The Contract may be used to fund IRAs, SEPs, and SIMPLE-IRAs.
•
IRA – An Individual Retirement Annuity (IRA) is a retirement savings annuity. Contributions grow tax deferred.
•
SEP-IRA – SEP stands for Simplified Employee Pension and is a form of IRA. A SEP allows you, as an employer, to provide retirement benefits for your employees by contributing to their IRAs.
•
SIMPLE-IRA – SIMPLE stands for Savings Incentive Match Plan for Employees. A SIMPLE-IRA allows employees to save for retirement by deferring salary on a pre-tax basis and receiving predetermined company contributions.
The tax rules applicable to owners , annuitants and other payees vary according to the type of plan and the terms and conditions of the plan itself. In general, premium payments made under a retirement program recognized under the Code are excluded from the participant’s gross income for tax purposes prior to the annuity benefit payment date (subject to applicable state law). The portion, if any, of any premium payment made that is not excluded from their gross income is their investment in the Contract. Aggregate deferrals under all plans at the employee’s option may be subject to limitations.
Tax-qualified retirement arrangements, such as IRAs, SEPs, and SIMPLE-IRAs, are tax-deferred. You derive no additional benefit from the tax deferral feature of the annuity. Consequently, an annuity should be used to fund an IRA, or other tax qualified retirement arrangement to benefit from the annuity’s features other than tax deferral. These features may include guaranteed lifetime income, death benefits without surrender charges, guaranteed caps on fees, and the ability to transfer among investment options without sales or withdrawal charges.
The tax implications of these plans are further discussed in the SAI under the heading Taxation Under Certain Retirement Plans. Check with your tax advisor for the rules which apply to your specific situation.


53

Premature Distributions: There is a 10% excise tax under the Internal Revenue Code on the taxable portion of a “premature distribution” from IRAs, IRA rollovers, SEP-IRAs and SIMPLE-IRAs. The tax penalty is increased to 25% in the case of distributions from SIMPLE-IRAs during the first two years of participation. Generally, an amount is a “premature distribution” unless the distribution is:
•
made on or after you reach age 59 ½;
•
made to a beneficiary on or after your death;
•
made upon your disability;
•
part of a series of substantially equal periodic payments for the life or life expectancy of you or you and your beneficiary;
•
made to pay certain medical expenses;
•
for health insurance premiums while unemployed;
•
for first home purchases (up to $10,000);
•
for qualified higher education expenses;
•
for qualified disaster tax relief distributions;
•
for qualified reservist distributions; or
•
for amounts levied by the IRS directly against your IRA.
For more information regarding premature distributions, please reference IRS Publication 590-B and consult your tax advisor.
Rollover IRAs
If you receive a lump-sum distribution from a qualified retirement plan, tax-sheltered annuity or governmental 457(b) plan, you may maintain the tax-deferred status of the distribution by rolling it over into an eligible retirement plan or IRA. You can accomplish this by electing a direct rollover from the plan, or you can receive the distribution and roll it over into an eligible retirement plan or IRA within 60 days. However, if you do not elect a direct rollover from the plan, the plan is required to withhold 20% of the distribution. This amount is sent to the IRS as income tax withholding to be credited against your taxes. Amounts received prior to age 59 ½ and not rolled over may be subject to an additional 10% excise tax. You may roll over amounts from a qualified plan directly to a Roth IRA. As part of this rollover, previously taxed deferred funds from the qualified plan are converted to after-tax funds under a Roth IRA. Generally, the entire rollover is taxable (unless it includes after-tax dollars) and is included in gross income in the year of the rollover/conversion. For more information, please see your tax advisor.
In addition, not more frequently than once every twelve months, an owner may execute one tax-free indirect rollover from one IRA to another, subject to the 60-day limitation. The once-per-year limitation on rollovers does not apply to direct transfers of funds between IRA providers or to Roth IRA conversions. For more information, please see your tax advisor.
Roth IRAs
The Contract may be purchased to fund a Roth IRA. Contributions to a Roth IRA are not deductible from taxable income. Subject to certain limitations, a traditional IRA, SIMPLE-IRA or SEP-IRA may be converted into a Roth IRA or a distribution from such an arrangement may be rolled over to a Roth IRA. However, a conversion or a rollover to a Roth IRA is not excludable from gross income. If certain conditions are met, qualified distributions from a Roth IRA are tax-free. For more information, please contact your tax advisor.
Required Minimum Distributions for IRAs
The Required Minimum Distribution (RMD) regulations dictate when individuals must start taking payments from their IRA. Generally speaking, RMDs for IRAs must begin no later than April 1 following the close of the calendar year in which you turn 70½. Thereafter, the RMD is required no later than December 31 of each calendar year.
The RMD rules apply to traditional IRAs, as well as SEP-IRAs and SIMPLE-IRAs, during the lifetime and after the death of IRA owners. They do not, however, apply to Roth IRAs during the lifetime of the Roth IRA owner. If an individual owns more than one IRA, the RMD amount must be determined for each, but the actual distribution can be satisfied from a combination of one or more of the owner's IRAs. Roth IRAs may not be aggregated with other IRAs, but may be aggregated with other Roth IRAs.
NOTE: Contractual limitations exist that may limit the ability to satisfy an individual's multiple RMD obligations with this annuity. Please see 4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) - Required Minimum Distribution (RMD) Program for GMWB Riders for details.


54

Failure to comply with the RMD rules can result in excise tax penalty of 50% on the amount by which the RMD in any year exceeds the amount actually distributed in that year.
Withholding
Annuity benefit payments and other amounts received under the Contract are subject to income tax withholding unless the recipient elects not to have taxes withheld. The amounts withheld vary among recipients depending on the tax status of the individual and the type of payments from which taxes are withheld.
Notwithstanding the recipient’s election, withholding may be required on payments delivered outside the United States. Moreover, special “backup withholding” rules may require us to disregard the recipient’s election if the recipient fails to supply us with a “TIN” or taxpayer identification number (social security number for individuals), or if the Internal Revenue Service notifies us that the TIN provided by the recipient is incorrect.
10. GENERAL INFORMATION ABOUT THE COMPANY
Corporate Organization and Operation
Principal Life Insurance Company
Principal Life Insurance Company is a stock life insurance company with authority to transact life and annuity business in all states of the United States and the District of Columbia. Our home office is located at: Principal Financial Group, Des Moines, Iowa 50392-1770. We are a wholly owned subsidiary of Principal Financial Services, Inc., which in turn, is a wholly owned direct subsidiary of Principal Financial Group, Inc., a publicly-traded company. 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.
On June 24, 1879, we were incorporated under Iowa law as a mutual assessment life insurance company named Bankers Life Association. We became a legal reserve life insurance company and changed our name to Bankers Life Company in 1911. In 1986, we changed our name to Principal Mutual Life Insurance Company. In 1998, we became Principal Life Insurance Company, a subsidiary stock life insurance company of Principal Mutual Holding Company, as part of a reorganization into a mutual insurance holding company structure. In 2001, Principal Mutual Holding Company converted to a stock company through a process called demutualization, resulting in our current organizational structure.
Principal Life Insurance Company Separate Account B
The Separate Account was established under Iowa law on January 12, 1970 and was registered as a Unit investment trust with the SEC on July 17, 1970. This registration does not involve SEC supervision of the investments or investment policies of the Separate Account. We do not guarantee the investment results of the Separate Account. There is no assurance that the value of your Contract will equal the total of the payments you make to us.
The Separate Account is not affected by the rate of return of our General Account or by the investment performance of any of our other assets. Any income, gain, or loss (whether or not realized) from the assets of the Separate Account are credited to or charged against the Separate Account without regard to our other income, gains, or losses. Assets of the Separate Account attributed to the reserves and other liabilities under the Contract may not be charged with liabilities arising from any of our other businesses.
If the Separate Account is not able to meet its benefit payment obligations (for example, annuity benefit payments, death benefit payment(s) and guaranteed minimum withdrawal benefit payments), they will become obligations of the General Account and will be subject to the rights of the Company’s other creditors and its overall claims paying ability.
The Separate Account is divided into divisions. The assets of each division invest in a corresponding underlying mutual fund. New divisions may be added and made available. Divisions may also be eliminated. These changes will be made in a manner that is consistent with applicable laws and regulations.


55

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


56

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


57

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


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11. TABLE OF SEPARATE ACCOUNT DIVISIONS
Diversified Balanced Division (This underlying mutual fund is a fund of funds.) (No longer available to new investors with an application date on or after 12/01/2013)
Invests in:
Principal Variable Contracts Funds Diversified Balanced Account – Class 2
Investment Advisor:
Principal Management Corporation
Investment Objective:
seeks to provide as high a level of total return (consisting of reinvested income and capital appreciation) as is consistent with reasonable risk.
Diversified Balanced Managed Volatility Division (This underlying mutual fund is a fund of funds.)
Invests in:
Principal Variable Contracts Funds Diversified Balanced Managed Volatility Account – Class 2
Investment Advisor:
Principal Management Corporation
Investment Objective:
seeks to provide as high a level of total return (consisting of reinvested income and capital appreciation) as is consistent with reasonable risk, with an emphasis on managing volatility.
Diversified Growth Division (This underlying mutual fund is a fund of funds.) (No longer available to new investors with an application date on or after 12/01/2013)
Invests in:
Principal Variable Contracts Funds Diversified Growth Account – Class 2
Investment Advisor:
Principal Management Corporation
Investment Objective:
seeks to provide long-term capital appreciation.
Diversified Growth Managed Volatility Division (This underlying mutual fund is a fund of funds.)
Invests in:
Principal Variable Contracts Funds Diversified Growth Managed Volatility Account – Class 2
Investment Advisor:
Principal Management Corporation
Investment Objective:
seeks to provide long-term capital appreciation, with an emphasis on managing volatility.
Diversified Income Division (This underlying mutual fund is a fund of funds.)
Invests in:
Principal Variable Contracts Funds Diversified Income Account – Class 2
Investment Advisor:
Principal Management Corporation
Investment Objective:
seeks to provide as high a level of total return (consisting of reinvested income and capital appreciation).
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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12. REGISTRATION STATEMENT
This prospectus (Part A of the registration statement) omits some information contained in the Statement of Additional Information (Part B of the registration statement) and Part C of the registration statement which the Company has filed with the SEC. The SAI is hereby incorporated by reference into this prospectus. You may request a free copy of the SAI by contacting your registered representative or calling us at 1-800-852-4450.
Information about the Contract (including the Statement of Additional Information and Part C of the registration statement) can be reviewed and copied at the Securities and Exchange Commission’s Public Reference Room in Washington, D.C. Information on the operation of the public reference room may be obtained by calling the Commission at 202-551-8090. Reports and other information about the Contract are available on the Commission’s internet site at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the Commission, 100 F Street NE, Washington, D.C. 20549-0102.
The registration numbers for the Contract are 333-171650 and 811-02091.
13. TABLE OF CONTENTS OF THE SAI
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY
3
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
3
PRINCIPAL UNDERWRITER
3
CALCULATION OF PERFORMANCE DATA
3
TAXATION UNDER CERTAIN RETIREMENT PLANS
5
 
 
Principal Life Insurance Company Separate Account B
 
Report of Independent Registered Public Accounting Firm
9
Financial Statements
10
 
 
Principal Life Insurance Company
 
Report of Independent Auditors
233
Consolidated Financial Statements
234
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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APPENDIX A — GMWB EXAMPLES (for applications signed on or after August 1, 2015)
For applications signed before August 1, 2015, refer to Appendix B for GMWB examples.
These examples have been provided to assist you in understanding the various features of the GMWB rider and to demonstrate how premium payments received and withdrawals taken from the Contract affect the values and benefits under the GMWB rider. These examples are based on certain hypothetical assumptions and are for illustrative purposes only. These examples are not intended to serve as projections of future investment returns.
NOTE:
The owner’s actions determine the benefits received.
NOTE:
For the purpose of the following examples, a partial annuitization has the same effect as a partial surrender and both are referred to as a withdrawal in the following examples.
Examples Without Excess Withdrawals (Examples 1-5)
The examples without excess withdrawals assume the following:
•
the client is age 62 and the client’s spouse is age 60 on the rider effective date.
•
initial premium payment = $100,000.
•
the withdrawal benefit base prior to partial surrender = $100,000.
•
“Single Life” For Life (4.50%) withdrawal benefit payment = $4,500.
•
“Joint Life” For Life (4.00%) withdrawal benefit payment = $4,000.
Example 1
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the client has not made a For Life withdrawal benefit payment election, we automatically calculate the For Life withdrawal benefit payment as “Single Life”.
On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit base. The credit is $100,000 x 0.05 = $5,000.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new withdrawal benefit base is $100,000 + 5,000 = $105,000;
•
the new withdrawal benefit payment is $105,000 x 0.0450 = $4,725.
Example 2
In contract year one:
•
no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the client has not made a For Life withdrawal benefit payment election, we automatically calculate the For Life withdrawal benefit payment as “Single Life”.
•
the client makes a premium payment of $50,000.
On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit base. The credit is ($100,000 + $50,000) x 0.05 = $7,500.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new withdrawal benefit base is $100,000 + $50,000 + $7,500 = $157,500;
•
the new withdrawal benefit payment is $157,500 x 0.0450 = $7,087.50.
Example 3
In contract year one, the client elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $4,000. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 4.00%.
On the first Contract anniversary:
•
Since a withdrawal was taken in contract year one, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the withdrawal benefit base remains the same ($100,000);
•
the withdrawal benefit payment for the next contract year remains the same ($100,000 x 0.0400 = $4,000).


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Example 4
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the client has not made a For Life withdrawal benefit payment election, we automatically calculate the For Life withdrawal benefit payment as “Single Life”.
On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit base. The credit is $100,000 x 0.05 = $5,000.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new withdrawal benefit base is $100,000 + 5,000 = $105,000;
•
the new withdrawal benefit payment is $105,000 x 0.0450 = $4,725.
In contract year two, the client elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $4,200. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 4.00%.
On the second Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the withdrawal benefit base remains the same ($105,000);
•
the withdrawal benefit payment for the next contract year is $105,000 x 0.0400 = $4,200.
In contract year three, no withdrawals are taken. The “Joint Life” For Life withdrawal benefit payment percentage remains locked-in at 4.00%.
On the third Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the withdrawal benefit base remains the same ($105,000);
•
the withdrawal benefit payment for the next contract year remains the same ($105,000 x 0.0400 = $4,200).
Example 5
The client elects the “Single Life” For Life withdrawal benefit payment, and in each of the first two contract years, takes a withdrawal of $4,500. Assume there is no GMWB Step-Up on the first Contract anniversary. On the 2nd Contract anniversary, the client will receive a GMWB Step-Up if the Contract’s accumulated value is greater than the withdrawal benefit base.
If the accumulated value on the second
contract anniversary is:
$95,000
$110,000
For Life (“Single Life”)
 
 
   Prior to step-up
 
 
      Withdrawal benefit base
$100,000
$100,000
      Withdrawal benefit payment
$100,000 x 0.0450 = $4,500
$100,000 x 0.0450 = $4,500
After step-up
 
 
      Withdrawal benefit base
$100,000
$110,000
      Withdrawal benefit payment
$100,000 x 0.0450 = $4,500
$110,000 x 0.0450 = $4,950
Examples With Excess Withdrawals (Examples 6-7)
The excess withdrawal examples assume the following:
•
the client is age 62 and elected “Single Life” For Life withdrawal benefit payments at the first withdrawal and therefore, locks-in the “Single Life” For Life withdrawal benefit payment percentage at 4.50%.
•
the initial premium payment is $100,000
•
the withdrawal benefit base prior to partial surrender = $100,000
•
“Single Life” For Life (4.50%) withdrawal benefit payment = $4,500
•
Withdrawal taken = $8,000
•
excess amount is $3,500


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Example 6
In this example, assume the accumulated value prior to the withdrawal is $90,000.
Withdrawal Benefit Base Calculation
On the Contract anniversary following the withdrawal, the withdrawal benefit base is adjusted for any excess withdrawals.
The amount of the adjustment* is $4,093.57. The new For Life withdrawal benefit base is $100,000 - $4,093.57 = $95,906.43.
*
The amount of the adjustment for the excess withdrawal is the greater of a or b where:
a    =    $3,500 (the amount of the excess withdrawal); and
b    =    $4,093.57 (the result of (1 divided by 2) multiplied by 3) where:
1
=    the amount of the withdrawal greater than the “Single Life” For Life withdrawal benefit payment remaining prior to the withdrawal ($3,500);
2
=    the accumulated value after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($90,000 - $4,500); and
3
=    the For Life withdrawal benefit base prior to the adjustment for the excess amount ($100,000).
Withdrawal Benefit Payment Calculation (for the next Contract year)
The withdrawal benefit payment is the new withdrawal benefit base (calculated on the Contract anniversary) multiplied by the associated percentage. The “Single Life” For Life withdrawal benefit payment percentage is locked-in at 4.50%.
The new “Single Life” For Life withdrawal benefit payment is $95,906.43 x 0.0450 = $4,315.79.
Example 7
In this example, assume the accumulated value prior to the withdrawal is $110,000.
Withdrawal Benefit Base Calculation
On the Contract anniversary following the withdrawal, the withdrawal benefit base is adjusted for any excess withdrawals.
The amount of the adjustment* is $3,500 (the amount of the excess withdrawal). The new For Life withdrawal benefit base is $100,000 - $3,500 = $96,500.
*
The amount of the adjustment for the excess withdrawal is the greater of a or b where:
a    =    $3,500 (the amount of the excess withdrawal); and
b    =    $3,317.54 (the result of (1 divided by 2) multiplied by 3) where:
1
=    the amount of the withdrawal greater than the “Single Life” For Life withdrawal benefit payment available prior to the withdrawal ($3,500);
2
=    the accumulated value after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($110,000 minus $4,500); and
3
=    the For Life withdrawal benefit base prior to the adjustment for the excess amount ($100,000).
Withdrawal Benefit Payment Calculation (for the next Contract year)
The withdrawal benefit payment is the new withdrawal benefit base (calculated on the Contract anniversary) multiplied by the associated percentage. The “Single Life” For Life withdrawal benefit payment percentage is locked-in at 4.50%.
The new “Single Life” For Life withdrawal benefit payment is $96,500 x 0.0450 = $4,342.50.


63

APPENDIX B — GMWB EXAMPLES (for applications signed before August 1, 2015)
These examples have been provided to assist you in understanding the various features of the GMWB rider and to demonstrate how premium payments received and withdrawals taken from the Contract affect the values and benefits under the GMWB rider. These examples are based on certain hypothetical assumptions and are for illustrative purposes only. These examples are not intended to serve as projections of future investment returns.
NOTE:
The owner’s actions determine the benefits received.
NOTE:
For the purpose of the following examples, a partial annuitization has the same effect as a partial surrender and both are referred to as a withdrawal in the following examples.
Examples Without Excess Withdrawals (Examples 1-5)
The examples without excess withdrawals assume the following:
•
the client is age 62 and the client’s spouse is age 60 on the rider effective date.
•
initial premium payment = $100,000.
•
the withdrawal benefit base prior to partial surrender = $100,000.
•
“Single Life” For Life (5.00%) withdrawal benefit payment = $5,000.
•
“Joint Life” For Life (4.50%) withdrawal benefit payment = $4,500.
Example 1
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the client has not made a For Life withdrawal benefit payment election, we automatically calculate the For Life withdrawal benefit payment as “Single Life”.
On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit base. The credit is $100,000 x 0.05 = $5,000.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new withdrawal benefit base is $100,000 + 5,000 = $105,000;
•
the new withdrawal benefit payment is $105,000 x 0.05 = $5,250.
Example 2
In contract year one:
•
no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the client has not made a For Life withdrawal benefit payment election, we automatically calculate the For Life withdrawal benefit payment as “Single Life”.
•
the client makes a premium payment of $50,000.
On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit base. The credit is ($100,000 + $50,000) x 0.05 = $7,500.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new withdrawal benefit base is $100,000 + $50,000 + $7,500 = $157,500;
•
the new withdrawal benefit payment is $157,500 x 0.05 = $7,875.
Example 3
In contract year one, the client elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $4,500. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 4.50%.
On the first Contract anniversary:
•
Since a withdrawal was taken in contract year one, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the withdrawal benefit base remains the same ($100,000);
•
the withdrawal benefit payment for the next contract year remains the same ($100,000 x 0.0450 = $4,500).


64

Example 4
In contract year one, no withdrawals are taken and no For Life withdrawal benefit payment election has been designated. Because the client has not made a For Life withdrawal benefit payment election, we automatically calculate the For Life withdrawal benefit payment as “Single Life”.
On the first Contract anniversary:
•
a 5% GMWB bonus is credited to the withdrawal benefit base. The credit is $100,000 x 0.05 = $5,000.
•
there is no GMWB Step-Up because the withdrawal benefit base after the bonus is credited is larger than the Contract’s accumulated value.
•
the new withdrawal benefit base is $100,000 + 5,000 = $105,000;
•
the new withdrawal benefit payment is $105,000 x 0.05 = $5,250.
In contract year two, the client elects the “Joint Life” For Life withdrawal benefit payment and takes a withdrawal of $4,500. The “Joint Life” For Life withdrawal benefit payment percentage is locked-in at 4.50%.
On the second Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the withdrawal benefit base remains the same ($105,000);
•
the withdrawal benefit payment for the next contract year is $105,000 x 0.0450 = $4,725.
In contract year three, no withdrawals are taken. The “Joint Life” For Life withdrawal benefit payment percentage remains locked-in at 4.50%.
On the third Contract anniversary:
•
Since a withdrawal was taken in contract year two, no GMWB bonus is credited.
•
there is no GMWB Step-Up because the withdrawal benefit base is larger than the Contract’s accumulated value.
•
the withdrawal benefit base remains the same ($105,000);
•
the withdrawal benefit payment for the next contract year remains the same ($105,000 x 0.0450 = $4,725).
Example 5
The client elects the “Single Life” For Life withdrawal benefit payment, and in each of the first two contract years, takes a withdrawal of $5,000. Assume there is no GMWB Step-Up on the first Contract anniversary. On the 2nd Contract anniversary, the client will receive a GMWB Step-Up if the Contract’s accumulated value is greater than the withdrawal benefit base.
If the accumulated value on the second
contract anniversary is:
$95,000
$110,000
For Life (“Single Life”)
 
 
   Prior to step-up
 
 
      Withdrawal benefit base
$100,000
$100,000
      Withdrawal benefit payment
$100,000 x 0.05 = $5,000
$100,000 x 0.05 = $5,000
After step-up
 
 
      Withdrawal benefit base
$100,000
$110,000
      Withdrawal benefit payment
$100,000 x 0.05 = $5,000
$110,000 x 0.05 = $5,500
Examples With Excess Withdrawals (Examples 6-7)
The excess withdrawal examples assume the following:
•
the client is age 62 and elected “Single Life” For Life withdrawal benefit payments at the first withdrawal and therefore, locks-in the “Single Life” For Life withdrawal benefit payment percentage at 5.00%.
•
the initial premium payment is $100,000
•
the withdrawal benefit base prior to partial surrender = $100,000
•
“Single Life” For Life (5.00%) withdrawal benefit payment = $5,000
•
Withdrawal taken = $8,000
•
excess amount is $3,000


65

Example 6
In this example, assume the accumulated value prior to the withdrawal is $90,000.
Withdrawal Benefit Base Calculation
On the Contract anniversary following the withdrawal, the withdrawal benefit base is adjusted for any excess withdrawals.
The amount of the adjustment* is $3,529.41. The new For Life withdrawal benefit base is $100,000 - $3,529.41 = $96,470.59.
*
The amount of the adjustment for the excess withdrawal is the greater of a or b where:
a    =    $3,000 (the amount of the excess withdrawal); and
b    =    $3,529.41 (the result of (1 divided by 2) multiplied by 3) where:
1
=    the amount of the withdrawal greater than the “Single Life” For Life withdrawal benefit payment remaining prior to the withdrawal ($3,000);
2
=    the accumulated value after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($90,000 - $5,000); and
3
=    the For Life withdrawal benefit base prior to the adjustment for the excess amount ($100,000).
Withdrawal Benefit Payment Calculation (for the next Contract year)
The withdrawal benefit payment is the new withdrawal benefit base (calculated on the Contract anniversary) multiplied by the associated percentage. The “Single Life” For Life withdrawal benefit payment percentage is locked-in at 5%.
The new “Single Life” For Life withdrawal benefit payment is $96,470.59 x 0.05 = $4,823.53.
Example 7
In this example, assume the accumulated value prior to the withdrawal is $110,000.
Withdrawal Benefit Base Calculation
On the Contract anniversary following the withdrawal, the withdrawal benefit base is adjusted for any excess withdrawals.
The amount of the adjustment* is $3,000 (the amount of the excess withdrawal). The new For Life withdrawal benefit base is $100,000 - $3,000 = $97,000.
*
The amount of the adjustment for the excess withdrawal is the greater of a or b where:
a    =    $3,000 (the amount of the excess withdrawal); and
b    =    $2,857.14 (the result of (1 divided by 2) multiplied by 3) where:
1
=    the amount of the withdrawal greater than the “Single Life” For Life withdrawal benefit payment available prior to the withdrawal ($3,000);
2
=    the accumulated value after the “Single Life” For Life withdrawal benefit payment is deducted but prior to the withdrawal of the excess amount ($110,000 minus $5,000); and
3
=    the For Life withdrawal benefit base prior to the adjustment for the excess amount ($100,000).
Withdrawal Benefit Payment Calculation (for the next Contract year)
The withdrawal benefit payment is the new withdrawal benefit base (calculated on the Contract anniversary) multiplied by the associated percentage. The “Single Life” For Life withdrawal benefit payment percentage is locked-in at 5.00%.
The new “Single Life” For Life withdrawal benefit payment is $97,000 x 0.05 = $4,850.


66

APPENDIX C — GMWB DEATH BENEFIT EXAMPLES
These examples have been provided to assist you in understanding the GMWB Death Benefit and to demonstrate how premium payments received and withdrawals taken from the Contract affect the GMWB Death Benefit. These examples are based on certain hypothetical assumptions and are for illustrative purposes only. These examples are not intended to serve as projections of future investment returns.
NOTE:
The owner’s actions determine the benefits received.
NOTE:
For the purpose of the following examples, a partial annuitization has the same effect as a partial surrender and both are referred to as a withdrawal in the following examples.
Withdrawals impact the GMWB Death Benefit as follows:
•
A withdrawal that is not a "For Life" Excess Withdrawal will reduce the GMWB Death Benefit by the amount of the withdrawal. Then, each "For Life" Excess Withdrawal will proportionately reduce the GMWB Death Benefit.
•
A withdrawal up to the RMD amount under the RMD Program for GMWB Riders is not considered an excess withdrawal and will reduce the GMWB Death Benefit by the amount of the withdrawal.
Example 1
Contract issue date = September 1
Initial premium payment = $100,000
Available For Life withdrawal benefit payment = $4,000
Additional premium payments = $0
Withdrawals = $0
On the contract anniversary in the following calendar year, assume the Contract accumulated value is $90,000.
The GMWB Death Benefit is the greatest of 1, 2, and 3 below.
1.
$90,000 = accumulated value
2.
$100,000 = $100,000 - $0 = total premium payments minus each withdrawal taken
3.
N/A – Contract has not reached 7th Contract anniversary
The GMWB Death Benefit on the first contract anniversary is $100,000.
Example 2
Contract issue date = August 15
Initial premium payment = $50,000
Available For Life withdrawal benefit payment = $4,000
Additional premium payment received on October 3 of the same calendar year = $25,000
Withdrawals = $0
On the contract anniversary in the following calendar year, assume the Contract accumulated value is $110,000.
The GMWB Death Benefit is the greatest of 1, 2, and 3 below.
1.
$110,000 = accumulated value
2.
$75,000 = $50,000 + $25,000 - $0 = total premium payments minus each withdrawal taken
3.
N/A – Contract has not reached 7th Contract anniversary
The GMWB Death Benefit on the first contract anniversary is $110,000.


67

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


68

Example 4
Contract issue date = October 25
Initial premium payment = $75,000
Available For Life withdrawal benefit payment = $4,000
Additional premium payment = $0
Withdrawal on November 3 of same calendar year = $2,500
Withdrawal on January 15 of following calendar year = $8,000
On November 3, assume the accumulated value prior to the withdrawal is $62,500.
The GMWB Death Benefit on November 3 is the greatest of 1, 2, and 3 below.
1.
$62,500 = accumulated value
2.
$72,500 = $75,000 - $2,500 = total premium payments minus each withdrawal taken
3.
N/A – Contract has not reached 7th Contract anniversary
On November 3, the GMWB Death Benefit is $72,500. The available For Life withdrawal benefit payment is reduced to $1,500 ($4,000 - $2,500).
On January 15, assume the accumulated value prior to the withdrawal is $58,000. Since the available For Life withdrawal benefit payment is $1,500, an excess withdrawal of $6,500 is taken.
Accumulated Value after $1,500 withdrawal = $56,500
Excess withdrawal death benefit proportion = ($6,500 / $56,500) = 0.1150
The GMWB Death Benefit after the withdrawal on January 15 is the greatest of 1, 2, and 3 below.
1.
$50,000 = accumulated value ($58,000 - $8,000)
2.
$62,835.00 = $75,000 – $2,500 – $1,500 - [($75,000 - $2,500 - $1,500) * 0.1150)] = total premium payments minus each withdrawal taken
3.
N/A – Contract has not reached 7th Contract anniversary
On January 15, the GMWB death benefit is $62,835.00.
Example 5
Contract issue date = November 3
Initial premium payment = $75,000
Available For Life withdrawal benefit payment = $3,000
Additional premium payment = $0
Withdrawal on December 30 of same calendar year = $5,000
Accumulated Value on Contract anniversary divisible equally by 7 = $53,750
On December 30, assume the accumulated value prior to the withdrawal is $65,000. Since the available For Life withdrawal benefit payment is $3,000, an excess withdrawal of $2,000 is taken.
Accumulated value after $3,000 withdrawal = $62,000
Excess withdrawal death benefit proportion = ($2,000 / $62,000) = 0.0323
The GMWB Death Benefit on December 30 is the greatest of 1, 2, and 3 below.
1.
$62,000 = accumulated value
2.
$69,674.40 = $75,000 - $3,000 – [($75,000 - $3,000) * 0.0323] = total premium payments minus each withdrawal taken
$49,110.77 = $53,750 + $0 - $3,000 - [($53,750 - $3,000) * 0.0323] = the Contract accumulated value that was in effect on any prior Contract anniversary that is divisible equally by 7, plus any premium payments made after that Contract anniversary minus each withdrawal taken after that Contract anniversary.


69

APPENDIX D — CONDENSED FINANCIAL INFORMATION
Financial statements are included in the Statement of Additional Information.
The following table contains the unit values for the Contract for the periods ended December 31.
For Contracts Without the Premium Payment Credit Rider
 
Accumulation Unit Value
 
 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Diversified Balanced
 
 
 
 
2016
$14.072
$14.833
5.41%
2,072
2015
14.248
14.072
-1.24
2,186
2014
13.452
14.248
5.92
2,341
2013
12.066
13.452
11.49
2,402
2012
11.137
12.066
8.34
964
2011(1)
10.883
11.137
2.33
99
Diversified Balanced Managed Volatility
 
 
 
 
2016
10.470
10.987
4.94
2,397
2015
10.616
10.470
-1.38
2,280
2014
10.071
10.616
5.41
1,437
2013(2)
9.917
10.071
1.55
23
Diversified Growth
 
 
 
 
2016
15.019
16.017
6.64
2,263
2015
15.205
15.019
-1.22
2,394
2014
14.299
15.205
6.34
2,496
2013
12.281
14.299
16.43
2,594
2012
11.141
12.281
10.23
427
2011(1)
11.031
11.141
1.00
9
Diversified Growth Managed Volatility
 
 
 
 
2016
10.542
11.181
6.06
2,525
2015
10.684
10.542
-1.33
2,609
2014
10.120
10.684
5.57
1,884
2013(2)
9.877
10.120
2.46
59
Diversified Income
 
 
 
 
2016
11.656
12.133
4.09
615
2015
11.801
11.656
-1.23
589
2014
11.196
11.801
5.40
593
2013
10.490
11.196
6.73
474
2012(3)
10.031
10.490
4.57
94
Fidelity VIP Government Money Market
 
 
 
 
2016(4)
10.000
9.894
-1.06
-
(1) Operations commenced May 24, 2011.
(2) Operations commenced October 31, 2013.
(3) Operations commenced May 15, 2012.
(4) Operations commenced April 8, 2016.




70
 


PART B

PRINCIPAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT B

PRINCIPAL LIFETIME INCOME SOLUTIONSSM 

Statement of Additional Information

dated May 1, 2017

This Statement of Additional Information provides information about the Principal Lifetime Income Solutions (the “Contract”) 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 calling:

Principal Lifetime Income Solutions
The Principal Financial Group
P.O. Box 9382
Des Moines, Iowa 50306-9382
Telephone: 1-800-852-4450




TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PRINCIPAL UNDERWRITER
CALCULATION OF PERFORMANCE DATA
TAXATION UNDER CERTAIN RETIREMENT PLANS
 
 
Principal Life Insurance Company Separate Account B
 
Report of Independent Registered Public Accounting Firm
9
Financial Statements
10
 
 
Principal Life Insurance Company
 
Report of Independent Auditors
233
Consolidated Financial Statements
234


2


GENERAL INFORMATION AND HISTORY
Principal Life Insurance Company (the “Company”) is the issuer of the Principal Lifetime Income Solutions (the “Contract”) and serves as custodian of its assets. The Company is a stock life insurance company with authority to transact life and annuity business in all states of the United States and the District of Columbia. The Company’s home office is located at: Principal Financial Group, Des Moines, Iowa 50392. The Company is a wholly owned subsidiary of Principal Financial Services, Inc., which in turn, is a wholly owned direct subsidiary of Principal Financial Group, Inc., a publicly-traded company.
On June 24, 1879, the Company was incorporated under Iowa law as a mutual assessment life insurance company named Bankers Life Association. The Company became a legal reserve life insurance company and changed its name to Bankers Life Company in 1911. In 1986, the Company changed its name to Principal Mutual Life Insurance Company. In 1998, the Company became Principal Life Insurance Company, a subsidiary stock life insurance company of Principal Mutual Holding Company, as part of a reorganization into a mutual insurance holding company structure. In 2001, Principal Mutual Holding Company converted to a stock company through a process called demutualization, resulting in the current organizational structure.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP, 801 Grand Avenue, Suite 3000, Des Moines, Iowa 50309, serves as the independent registered public accounting firm for Principal Life Insurance Company Separate Account B and the Principal Life Insurance Company.
PRINCIPAL UNDERWRITER
The principal underwriter of the Contract is Principal Securities, Inc. ("PSI") formerly Princor Financial Services Corporation which is a wholly owned subsidiary of Principal Financial Services, Inc. and an affiliate of the Company. The address of PSI is the Principal Financial Group, 655 9th Street, Des Moines, Iowa 50392. PSI was incorporated in Iowa in 1968 and is a securities broker-dealer registered with the Securities Exchange Commission as well as a member of the FINRA. The Contracts may also be sold through other broker-dealers authorized by PSI and applicable law to do so. Registered representatives of such broker-dealers may be paid on a different basis than described below.
The Contract’s offering to the public is continuous. As the principal underwriter, PSI is paid for the distribution of the Contract. For the last three fiscal years PSI has received and retained the following commissions:
2016
received/retained
2015
received/retained
2014
received/retained
$340,914/$0
$1,164,825/$0
$2,174,987/$0
CALCULATION OF PERFORMANCE DATA
The Separate Account may publish advertisements containing information (including graphs, charts, tables and examples) about the performance of one or more of its divisions.
The Contract was not offered prior to May 2, 2011. However, the certain divisions invest in underlying mutual funds which were offered prior to the date the Contract was available. Thus, the Separate Account may publish advertisements containing information about the hypothetical performance of one or more of its divisions for this Contract as the Contract was issued on or after the date the underlying mutual fund was first offered. The hypothetical performance from the date of inception of the underlying mutual fund in which the division invests is derived by reducing the actual performance of the underlying mutual fund by the highest level of fees and charges of the Contract as if it had been in existence.
In addition, as certain of the underlying mutual funds have added classes since the inception of the fund, performance may be shown for periods prior to the inception date of the new class which represents the historical results of initial class shares adjusted to reflect the fees and expenses of the new class.
The yield and total return figures described below will vary depending upon market conditions, the composition of the underlying mutual fund’s portfolios and operating expenses. These factors and possible differences in the methods used in calculating yield and total return should be considered when comparing the Separate Account performance figures to performance figures published for other investment vehicles.

3


The Separate Account may also quote rankings, yields or returns as published by independent statistical services or publishers and information regarding performance of certain market indices. Any performance data quoted for the Separate Account represents only historical performance and is not intended to indicate future performance.
From time to time the Separate Account advertises its Fidelity VIP Government Money Market Division’s “yield” and “effective yield” for the Contract. Both yield figures are based on historical earnings and are not intended to indicate future performance. The “yield” of the division refers to the income generated by an investment under the Contract in the division over a 7-day period (which period will be stated in the advertisement). This income is then “annualized.” That is, the amount of income generated by the investment during that week is assumed to be generated each week over a 52-week period and is shown as a percentage of the investment. The “effective yield” is calculated similarly but, when annualized, the income earned by an investment in the division is assumed to be reinvested. The “effective yield” will be slightly higher than the “yield” because of the compounding effect of this assumed reinvestment. Neither yield quotation reflects a sales load deducted from purchase payments which, if included, would reduce the “yield” and “effective yield.”
   Yield For the Period Ended December 31, 2016
For Contracts:
7-Day Annualized Yield
7-Day Effective Yield
without a surrender charge
-1.08%
-1.08%
with a surrender charge
-7.08%
-7.08%
Also, from time to time, the Separate Account will advertise the average annual total return of its various divisions. The average annual total return for any of the divisions is computed by calculating the average annual compounded rate of return over the stated period that would equate an initial $1,000 investment to the ending redeemable Contract value. The Separate Account may also advertise total return figures for its divisions for a specified period that does not take into account the surrender charge in order to illustrate the change in the division’s unit value over time. See “Charges and Deductions” in the Prospectus for a discussion of surrender charges.
Following are the hypothetical average annual total returns for the period ending December 31, 2016 assuming the Contract had been offered as of the effective dates of the underlying mutual funds in which the divisions invest (the performance calculations with Surrender Charge are in accordance with the SEC standard, while the performance calculations without the Surrender Charge are not in accordance with the SEC standard):
 
 
For Contracts with Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
Diversified Balanced
12/30/2009
-0.61%
5.40%
 
5.77%
Diversified Balanced Managed Volatility
10/31/2013
-1.09%
 
 
2.07%
Diversified Growth
12/30/2009
0.62%
7.06%
 
6.94%
Diversified Growth Managed Volatility
10/31/2013
0.04%
 
 
2.79%
Diversified Income
05/15/2012
-1.93%
 
 
3.61%
Fidelity VIP Government Money Market
04/01/1982
-7.21%
-1.98%
-0.48%
 
 
 
For Contracts without Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
Diversified Balanced
12/30/2009
5.39%
5.88%
 
5.77%
Diversified Balanced Managed Volatility
10/31/2013
4.91%
 
 
3.26%
Diversified Growth
12/30/2009
6.62%
7.51%
 
6.94%
Diversified Growth Managed Volatility
10/31/2013
6.04%
 
 
3.96%
Diversified Income
05/15/2012
4.07%
 
 
4.17%
Fidelity VIP Government Money Market
04/01/1982
-1.21%
-1.34%
-0.48%
 

4


TAXATION UNDER CERTAIN RETIREMENT PLANS
INDIVIDUAL RETIREMENT ANNUITIES
Contributions. Individuals may make contributions for individual retirement annuity (IRA) contracts. Individuals may make deductible contributions (for any year) up to the lesser of the amount shown in the chart or 100% of compensation.
Individuals age 50 or over are also permitted to make additional “catch-up” contributions. The additional contribution is $1,000 in 2016 and 2017.
Such individuals may establish a traditional IRA for a non-working spouse (if they file a joint return). The annual contribution for both spouses’ contracts cannot exceed the lesser of the amount shown in the chart or 100% of the working spouse’s compensation. No more than the individual IRA limit may be contributed to either spouse’s IRA for any year.
IRA- Maximum Annual Contribution
Year
Individual IRA
Individual IRA + Spousal IRA
2016
$5,500
$11,000
2017
$5,500
$11,000
For succeeding years, limits are indexed for cost of living.
Contributions may be tax deductible. If an individual and his/her spouse do not participate in a qualified retirement plan, the contributions to an IRA are fully tax deductible regardless of income. If an individual is an active participant in a qualified retirement plan, his/her ability to deduct the contributions depends upon his/her income level and tax filing status.
For individuals who are not active participants but whose spouses are, deductibility of traditional IRA contributions is phased out if the couple files a joint return and the Adjusted Gross Income is between $186,000 and $196,000 in 2017.
Deductibility of Traditional IRA Contributions for Active Participants
Married Individuals (Filing Jointly)
Single Individual
Year
Limited
Deduction
No
Deduction
Year
Limited
Deduction
No
Deduction
2016
$98,000
$118,000
2016
$61,000
$71,000
2017
$99,000
$119,000
2017
$62,000
$72,000
An individual may make non-deductible IRA contributions to the extent of the excess of:
(1) The lesser of maximum annual contribution or 100% of compensation, over
(2) The IRA deductible contributions made with respect to the individual.
A person whose filing status is "married, filing separately" may not make a full Traditional IRA deductible contribution, unless the couple are separated and have been living apart for the entire year. Only a partial deductible contribution is allowed if the Modified Adjusted Gross Income is less than $10,000.
An individual may not make any contribution to his/her own Traditional IRA for the year in which he/she reaches age 70 ½ or for any year thereafter.
Taxation of Distributions. Distributions from IRA Contracts are taxed as ordinary income to the recipient, although special rules exist for the tax-free return of non-deductible contributions. In addition, taxable distributions received under an IRA Contract prior to age 59½ are subject to a 10% penalty tax in addition to regular income tax. Exempted from this 10% tax penalty are the following distributions: death; disability; if the distribution is paid as part of a series of substantially equal periodic payments made for the life (or life expectancy) of the Owner or the joint lives (or joint life expectancies) of the Owner and the Owner's designated Beneficiary; distributions to pay medical expenses; distributions for unemployed medical insurance premiums; distributions for first-time home purchases (up to $10,000); distributions for higher education expenses; made on account of certain levies on income and payments; qualified reservist distributions; and distributions for certain natural disaster victims.

5


Required Distributions . Generally, distributions from IRA Contracts must commence not later than April 1 of the calendar year following the calendar year in which the owner attains age 70½, and such distributions must be made over a period that does not exceed the uniform life distribution period or in certain instances under the joint life and last survivor period established by the IRS. In addition, upon the death of the owner prior to the commencement of annuity payments, the amount accumulated under the contract must be distributed by December 31 of the calendar year that contains fifth anniversary of the owner’s death or, if distributions to a beneficiary designated under the contract commence by December 31 of the calendar year following the Plan Participant’s death, distributions are permitted over the life of the beneficiary or over a period not extending beyond the beneficiary’s life expectancy. If the surviving spouse is the beneficiary of the IRA Contract, the surviving spouse may have additional distribution options. If the Plan Participant has commenced receiving annuity distributions prior to the Plan Participant’s death, distributions must continue at least as rapidly as under the method in effect at the date of death. In certain instances the distributions may be payable over the remaining life expectancy of the deceased owner. A penalty tax of 50% may be imposed on any amount by which the minimum required distribution in any year exceeded the amount actually distributed in that year.
Tax-Free Rollovers. The Internal Revenue Code (the “Code”) permits the taxable portion of funds to be transferred in a tax-free rollover from a qualified retirement plan, tax-deferred annuity plan or governmental 457(b) plan to an IRA Contract if certain conditions are met, and if the rollover of assets is completed within 60 days after the distribution from the qualified plan is received. A direct rollover of funds may avoid a 20% federal tax withholding generally applicable to qualified plans, tax-deferred annuity plan, or governmental 457(b) plan distributions. In addition, not more frequently than once every twelve months, an individual may execute one tax-free indirect rollover from one IRA to another, subject to the 60-day limitation and other requirements. The once-per-year limitation on rollovers does not apply to direct transfers of funds between IRA custodians or trustees or to Roth IRA conversions.
SIMPLIFIED EMPLOYEE PENSION (SEP) PLANS AND SALARY REDUCTION SIMPLIFIED EMPLOYEE PENSION (SAR/SEP) PLANS
Contributions . Under Section 408(k) of the Code, employers may establish a type of IRA plan referred to as a simplified employee pension plan (SEP). Employer contributions to a SEP cannot exceed the lesser of 25% of compensation or $54,000 (plus if applicable the $6,000 catch-up contribution) for 2017.
Employees of certain small employers may have contributions made to the salary reduction simplified employee pension plan (SAR/SEP) on their behalf on a salary reduction basis. The amount that an employee chooses to defer and contribute to the SAR/SEP is referred to as an elective deferral.
These elective deferrals are subject to the same cap as elective deferrals to IRC Section 401(k) plans, see table below. In addition to the elective deferrals, SAR/SEP may permit additional elective deferrals by individuals age 50 or over, referred to as “catch-up contributions”.
No new SAR/SEP are permitted after 1996 for any employer, but those in effect prior to 1997 may continue to operate, receive contributions, and add new employees.
Employees of tax-exempt organizations and state and local government agencies are not eligible for SAR/SEPs.
Salary Reduction Simplified Employee Pension Plan (SAR/SEP)
Year
Elective Deferral
Catch-up Contribution
2016
$18,000
$6,000
2017
$18,000
$6,000
Taxation of Distributions. Generally, distribution payments from SEPs and SAR/SEPs are subject to the same distribution rules described above for IRAs.
Required Distributions. SEPs and SAR/SEPs are subject to the same minimum required distribution rules described above for IRAs.
Tax-Free Rollovers. Generally, rollovers and direct transfers may be made to and from SEPs and SAR/SEPs in the same manner as described above for IRAs, subject to the same conditions and limitations.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE IRA)
Contributions. Under Section 408(p) of the Code, employers may establish a type of IRA plan known as a SIMPLE IRA. Employees may have contributions made to the SIMPLE IRA on a salary reduction basis. The amount that an employee chooses to defer and contribute to the SIMPLE IRA is referred to as an elective deferral.

6


These elective deferrals cannot exceed the amounts shown in the chart. In addition to the elective deferrals, SIMPLE IRA may permit additional elective deferrals by individuals age 50 or over, referred to as “catch-up contributions” in an amount equal to $3,000 for 2017.
Elective contribution amounts made under the salary reduction portions (i.e., those subject to the $12,500 limit in 2017) of a SIMPLE IRA plan are counted in the overall limit on elective deferrals by any individual. For example, if in 2017, an individual under age 50 defers the maximum of $12,500 to a SIMPLE IRA of one employer and also participates in a 401(k) plan of another employer, they would be limited to an elective deferral of $5,500 ($18,000 – $12,500) to the 401(k) plan for 2017.
The employer generally must match either 100% of the employee’s elective deferral, up to 3% of the employee’s compensation (subject to certain exceptions) or fixed nonelective contributions of 2% of compensation of all eligible employees.
Savings Incentive Match Plan for Employees (SIMPLE IRA)
Year
Elective Deferral
Catch-up Contribution
401(k) Elective
Deferral
2016
$12,500
$3,000
$18,000
2017
$12,500
$3,000
$18,000
Taxation of Distributions. Generally, distribution payments from SIMPLE IRAs are subject to the same distribution rules described above for IRAs, except that distributions made within two years of the date of an employee’s first participation in a SIMPLE IRA of an employer are subject to a 25% penalty tax instead of the 10% penalty tax discussed previously.
Required Distributions. SIMPLE IRAs are subject to the same minimum required distribution rules described above for IRAs.
Tax-Free Rollovers. Direct transfers may be made among SIMPLE IRAs in the same manner as described above for IRAs, subject to the same conditions and limitations. Rollovers from SIMPLE IRAs to other types of IRAs and certain qualified plans are permitted after two years have elapsed from the date of an employee’s first participation in a SIMPLE IRA of the employer. Rollovers to SIMPLE IRAs from other plans are permitted after two years of participation in the SIMPLE plan, however, such rollovers are currently not permitted into our SIMPLE IRA contract.
ROTH INDIVIDUAL RETIREMENT ANNUITIES (ROTH IRA)
Contribution. Under Section 408A of the Code, individuals may contribute to a Roth IRA on his/her own behalf up to the lesser of maximum annual contribution limit as shown in the chart or 100% of compensation. In addition, the contribution must be reduced by the amount of any contributions made to other IRAs for the benefit of the same individual.
Individuals age 50 or over are also permitted to make additional “catch-up” contributions. The additional contribution is $1,000 for 2016 and 2017.
Roth IRA - Maximum Annual Contribution
Year
Individual Roth IRA
Catch-up Contribution
2016
$5,500
$1,000
2017
$5,500
$1,000
For succeeding years, individual Roth IRA limits are indexed for cost-of-living.
For 2017, the maximum contribution is phased out for single taxpayers with adjusted gross income between $118,000 and $133,000 and for joint filers with adjusted gross income between $186,000 and $196,000 (see chart below).
Modified Adjusted Gross Income Limits - 2017
Single
Married Filing Joint
ROTH IRA Contribution
$118,000 or less
$186,000 or less
Full Contribution
$118,000 – $133,000
$186,000 – $196,000
Partial Contribution*
$133,000 & over
$196,000 & over
No Contribution
* 
Those entitled to only a partial contribution should check with a tax advisor to determine the allowable contribution.

7


A person whose filing status is “married, filing separately” may not make a full Roth IRA contribution, unless the couple are separated and have been living apart for the entire year. Only a partial contribution is allowed if the Modified Adjusted Gross Income is less than $10,000.
Taxation of Distribution. Qualified distributions are received income-tax free by the Roth IRA owner, or beneficiary in case of the Roth IRA owner’s death. A qualified distribution is any distribution made after five years if the IRA owner is over age 59½, dies, becomes disabled, or uses the funds for first-time home buyer expenses at the time of distribution. The five-year period for owner contributions begins January 1 of the year the first contribution is made to any Roth IRA. The five-year period for converted amounts begins from January 1 of the year of the conversion.
Required Distributions. Roth IRAs are not subject to lifetime minimum required distributions. Roth IRAs are subject to the same post-death minimum required distribution rules described above for IRAs.


8

 
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


9


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.
 
 
 
 
 
 
 
 

10


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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


11


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.
 
 
 
 
 
 
 
 

12


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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


13


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.
 
 
 
 
 
 
 
 

14


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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


15


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.
 
 
 
 
 
 
 
 

16


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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


17


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.
 
 
 
 
 
 
 
 

18


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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


19


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.
 
 
 
 
 
 
 
 

20


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

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


21


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.
 
 
 
 
 
 
 
 

22


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

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


23


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.
 
 
 
 
 
 
 
 

24


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

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


25


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.
 
 
 
 
 
 
 
 

26


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

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


27


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.
 
 
 
 
 
 
 
 

28


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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


29


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.
 
 
 
 
 
 
 
 

30


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

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


31


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.
 
 
 
 
 
 
 
 

32


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

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


33


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.
 
 
 
 
 
 
 
 

34


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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


35


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.
 
 
 
 
 
 
 
 

36


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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


37


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.
 
 
 
 
 
 
 
 

38


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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—


39


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.
 
 
 
 
 
 
 
 

40


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

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
—

 
 
—

 
 
—

 
 
 
 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
—

 
$
—

 
$
—

 
 
 
 
 
—

 
 
—

 
 
—

 
 
 
 

41


 
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.
 
 
 
 
 

42


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


43


 
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.
 
 
 
 
 

44


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)



45


 
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.
 
 
 
 
 

46


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)


47


 
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.
 
 
 
 
 

48


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


49


 
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.
 
 
 
 
 

50


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


51


 
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.
 
 
 
 
 

52


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)


53


 
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.
 
 
 
 
 

54


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


55


 
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.
 
 
 
 
 

56


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


57


 
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.
 
 
 
 
 

58


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


59


 
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.
 
 
 
 
 

60


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


61


 
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.
 
 
 
 
 

62


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


63


 
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.
 
 
 
 
 

64


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


65


 
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.
 
 
 
 
 

66


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


67


 
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.
 
 
 
 
 

68


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


69


 
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.
 
 
 
 
 

70


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


71


 
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.
 
 
 
 
 

72


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

 
 


73


 
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.
 
 
 
 

74


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


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 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.
 
 
 
 

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 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


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 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.
 
 
 
 

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 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

 

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 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.
 
 
 
 
 

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 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


81


 
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.
 
 
 
 

82


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


83


 
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.
 
 
 
 

84


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


85


 
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.
 
 
 
 

86


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


87


 
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.
 
 
 
 

88


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


89


 
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.
 
 
 
 

90


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


91


 
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.
 
 
 
 

92


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


93


 
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.
 
 
 
 

94


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


95


 
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.
 
 
 
 

96


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


97


 
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.
 
 
 
 

98


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


99


 
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.
 
 
 
 

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 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


101


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.
 
 
 
 
 

102


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

 

103


 
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.
 
 
 
 

104


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


105


 
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.
 
 
 
 

106


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


107


 
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.
 
 
 
 

108


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


109


 
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.
 
 
 
 

110


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


111


 
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.
 
 
 
 

112


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


113


 
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.
 
 
 
 

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 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


115


 
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.
 
 
 
 

116


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


117


 
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.
 
 
 
 

118


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


119


 
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.
 
 
 
 

120


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


121


 
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.
 
 
 
 

122


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


123


 
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.
 
 
 
 

124


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


125


 
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.
 
 
 
 

126


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

 

127


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.
 
 
 
 
 

128


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


129


 
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.
 
 
 
 

130


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


131


 
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.
 
 
 
 

132


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


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 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.
 
 
 
 

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 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


135


 
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.
 
 
 
 

136


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


137


 
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.
 
 
 
 

138


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


139


 
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.
 
 
 
 

140


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


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 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.
 
 
 
 

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 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


143


 
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.
 
 
 
 

144


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


145


 
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.
 
 
 
 

146


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


147


 
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.
 
 
 
 

148


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


149


 
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.
 
 
 
 

150


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



151


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


152


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

153


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

154


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

155


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.

156


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.


157


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.

158


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 SolutionsSM – 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.

159


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



160


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.

161


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.


162


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

 
 
 
 
 
 
 

163


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

 
 
 
 
 
 
 

164


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

 
 
 
 
 
 
 

165


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


166


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
 
 
—

 
 
—


167


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
 
 
—

 
 
—

 
 
 
 
 
 
 


168


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


169


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


170


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


171


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

 
 
 
 
 
 
 


172


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

 
 
 
 
 
 
 

173


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


174


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


175


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


176


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

 
 
 
 
 
 
 


177


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

 
 
 
 
 
 
 

178


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
 
 
—

 
 
—

 
 
 
 
 
 
 

179


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



180


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

 
 
 
 
 
 
 
 
 

181


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


182


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

 
 
 
 
 
 
 
 
 

183


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


184


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
 
—

 
—

 
—

 
—


185


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

 
 
 
 
 
 
 
 
 


186


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


187


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


188


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


189


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

 
 
 
 
 
 
 
 
 


190


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

 
 
 
 
 
 
 
 
 

191


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


192


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


193


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


194


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

 
 
 
 
 
 
 
 
 


195


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

 
 
 
 
 
 
 
 
 

196


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
 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 

197


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


198


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%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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%

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
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)%



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
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)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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

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%


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
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%

 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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

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%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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)%

 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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%
 
 
 
 
 
 
 
 
 
 
 
 
 
 


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
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%

 
 
 
 
 
 
 
 
 
 
 
 
 
 



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
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)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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
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%


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
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)%

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
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
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 


221


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
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

222


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
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 

223


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
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 

224


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%


225


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.

226


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

227


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

228


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

229


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)

230


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


231


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.

232
 


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
 



 

233


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.
 
 
 
 
 
 

234


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.
 
 
 
 
 
 
 
 

235


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.
 
 
 
 
 
 
 
 

236


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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

237


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.
 
 
 
 
 
 
 
 


238


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.

239


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.


240


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.

241


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.

242


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.


243


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.
 

244


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.


245


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.

246


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.

247


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.

    

248


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.


249


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. 


250


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.

251


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.


252


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.

253


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.
 

254


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.


255


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.


256


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.


257


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.



258


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.



259


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 determine whether an other-than-temporary decline in value exists and whether losses should be recognized. We consider relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other than temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events; (4) for structured securities, the adequacy of the expected cash flows; (5) for fixed maturities, our intent to sell a security or whether it is more likely than not we will be required to sell the security before the recovery of its amortized cost which, in some cases, may extend to maturity and (6) for equity securities, our ability and intent to hold the security for a period of time that allows for the recovery in value. To the extent we determine 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”).


260


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.


261


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.


262


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.


263


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


264


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.


265


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


266


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.


267


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.

    

268


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.


269


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


270


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


271


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.


272


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.


273


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.


274


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.


275


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 the agreed-upon strike rate if the market rates for liabilities are higher, with the flexibility to enter into the current market rate swap if the market rates for liabilities are lower. Swaptions not only hedge against the downside risk, but also allow us to take advantage of any upside benefits.

In exchange‑traded futures transactions, we agree to purchase or sell a specified number of contracts, the values of which are determined by the values of designated classes of securities, and to post variation margin on a daily basis in an amount equal to the difference in the daily market values of those contracts. We enter into exchange‑traded futures with regulated futures commissions merchants who are members of a trading exchange. We have used exchange‑traded futures to reduce market risks from changes in interest rates and to alter mismatches between the assets in a portfolio and the liabilities supported by those assets.


276


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.


277


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.

278


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



279


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.


280


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

281


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.

282


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.


283


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.


284


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.


285


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.

286


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

    

287


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.


288


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.


289


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.

290


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.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


291


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.
 
 
 
 
 
 
 
 
 
 


292


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.
 
 
 
 
 
 
 
 
 
 



293


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.
 
 
 
 
 
 
 
 
 



294


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.


295


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



296


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.


297


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)



298


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.


299


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.


300


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.


301


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)



302


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 the 2017 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.

303


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 for 2016 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.


304


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.


305


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.

306


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.

 

307


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.


308


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.


309


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



310


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





















311


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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

312


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.


313


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.”


314


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.


315


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 to our valuation processes during 2016.

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.


316


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.


317


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.


318


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.


319


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




320


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.

321


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)



322


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)



323


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:

324


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


325


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

326


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.


327


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


328


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)

 
 


329


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
%

330


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.


331


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.


332


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.


333


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.

334


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.


335


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.


336


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



337


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.


338


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:

339


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


340


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
 


341


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.


342


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.


343
 


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 4 years ended December 31, 2016 and the period ended December 31, 2011
(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 as EX-99.b(1) on 01/11/11(Accession No. 0000898745-11-000017)
(3a)
Distribution Agreement – Filed as EX-99 b.(3a) on 03/30/11 (Accession No. 0000898745-11-000175)
(3b)
Selling Agreement – Filed as EX-99.b(3b) on 03/30/11 (Accession No. 0000898745-11-000175)
(4a)
Form of Variable Annuity Contract – Filed as EX-99.b(3a) on 01/11/11(Accession No. 0000898745-11-000017)
(4b)
Amendment to Fixed Account Endorsement – Filed as EX-99.b.(3c) on 01/11/11(Accession No. 0000898745-11-000017)
(4c)
Amendment to GMWB Rider – Filed as EX-99.b(4e) on 03/30/11 (Accession No. 0000898745-11-000175)
(4d)
Amendment to Contract Data Page – Filed as EX-99.b(4f) on 03/30/11 (Accession No. 0000898745-11-000175)
(4e)
Amendment to Partial Annuitization Endorsement – Filed as EX-99.b(3g) on 01/11/11(Accession No. 0000898745-11-000017)
(5a)
Form of Variable Annuity Application – Filed as EX-99.b(5a) on 03/30/11 (Accession No. 0000898745-11-000175)
(5b)
Form of Variable Annuity Application with Principal Connection – Filed as EX-99.b(5b) on 03/30/11 (Accession No. 0000898745-11-000175)
(6a)
Articles of Incorporation of the Depositor – Filed as EX-99.b(5a) on 01/11/11(Accession No. 0000898745-11-000017)
(6b)
Bylaws of Depositor – Filed as EX-99.b(3c) on 01/11/11(Accession No. 0000898745-11-000017)

    




(8)
Participation Agreements
 
 
a. Principal Variable Contracts Funds, Inc.
 
 
(1)
Principal Variable Contracts Funds, Inc. Participation Agreement dated 01/05/2007 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(2)
Principal Variable Contracts Funds, Inc. Participation Agreement Amendment No. 1 dated 06/01/2007 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(3)
Principal Variable Contracts Funds, Inc. Participation Agreement Amendment No. 2 dated 01/01/2010 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(4)
Principal Variable Contracts Funds, Inc. Participation Agreement Amendment No. 3 (letter) dated 06/17/2010 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(5)
Principal Variable Contracts Funds, Inc. 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)
Principal Variable Contracts Fund, Inc. Participation Agreement Amendment No. 5 dated 02/09/2015 (filed with the Commission on 04/30/2015 Accession No. 0000009713-15-000053)
 
(7)
Principal Variable Contracts Fund, Inc. Participation Agreement Amendment No. 6 dated 08/10/2016 *
 
(8)
Principal Variable Contracts Fund, Inc. Rule 12b-1 Compensation Letter dated 12/30/2009 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(9)
Principal Variable Contracts Fund, Inc. 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)
Principal Variable Contracts Funds, Inc. Rule 22c-2 Agreement dated 04/16/2007 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(11)
Principal Variable Contracts Funds, Inc. 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 as EX-99.b(9) on 03/30/11 (Accession No. 0000898745-11-000175)
(10a)
Consent of Ernst & Young LLP *
(10b)
Powers of Attorney *
(10c)
Consent of Counsel *
(11)
Financial Statement Schedules *

* Filed herewith
** 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
 
 
*
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