485BPOS 1 vaipvanew485b2019filingbody.htm 485BPOS VA-IPVA New-485B-2019 Combined Document


Registration No. 333-188293
811-02091
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-4
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Pre-Effective Amendment No.
Post-Effective Amendment No. 15
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 260
(Check appropriate box or boxes)
Principal Life Insurance Company Separate Account B
--------------------------------------------------------------------------------
(Exact Name of Registrant)
Principal Life Insurance Company
--------------------------------------------------------------------------------
(Name of Depositor)
The Principal Financial Group, Des Moines, Iowa 50392
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(Address of Depositor's Principal Executive Offices) (Zip Code)
(515) 362-1784
-------------------------------------------------------------------------------
Depositor's Telephone Number, including Area Code

Steve Gallaher

The Principal Financial Group, Des Moines, Iowa 50392
--------------------------------------------------------------------------------
(Name and Address of Agent for Service)
Title of Securities Being Registered: PRINCIPAL® INVESTMENT PLUS VARIABLE ANNUITY
(for applications signed on or after August 1, 2013)

It is proposed that this filing will become effective (check appropriate box)
____    immediately upon filing pursuant to paragraph (b) of Rule 485
_X__    on May 1, 2019 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
____    75 days after filing pursuant to paragraph (a)(2) of Rule 485
____    on (date) pursuant to paragraph (a)(2) of Rule 485
If appropriate, check the following box:
____    This post-effective amendment designates a new effective date for a previously filed post-effective amendment.





 

PRINCIPAL ® INVESTMENT PLUS VARIABLE ANNUITY
(FOR APPLICATIONS SIGNED ON OR AFTER AUGUST 1, 2013)
Prospectus dated May 1, 2019
The Company no longer offers or issues the Contract. This Prospectus is only for the use of the current Contract owners.
This prospectus describes Principal ® Investment Plus Variable Annuity, an individual, flexible premium, deferred variable annuity (the “Contract”), issued by Principal Life Insurance Company (“the Company”, “ we ”, “ our ” or “ us ”) through Principal Life Insurance Company Separate Account B (“Separate Account”).
This prospectus provides information about the Contract and the Separate Account that you , as owner , should know before investing. The prospectus should be read and retained for future reference. Additional information about the Contract and the Separate Account is included in the Statement of Additional Information (“SAI”), dated May 1, 2019, which has been filed with the Securities and Exchange Commission (the “SEC”) and is considered a part of this prospectus. The table of contents of the SAI is at the end of this prospectus. You may obtain a free copy of the SAI and all additional information by writing or calling: Principal ® Investment Plus Variable Annuity, Principal Financial Group, P.O. Box 9382, Des Moines, Iowa 50306-9382, Telephone: 1-800-852-4450. You can also visit the SEC’s website at www.sec.gov, which contains the SAI, material incorporated into this prospectus by reference, and other information about registrants that file electronically with the SEC.
These securities have not been approved or disapproved by the SEC or any state securities commission nor has the SEC or any state securities commission passed upon the accuracy or adequacy of this prospectus. Any representation to the contrary is a criminal offense.
You generally may allocate your investment in the Contract among the following investment options: dollar cost averaging fixed accounts (“DCA Plus accounts”), a Fixed Account and the Separate Account divisions. The DCA Plus accounts and the Fixed Account are a part of our General Account. Obligations of the General Account are subject to the rights of the Company’s other creditors and the Company's overall claims paying ability. Each division of the Separate Account invests in shares of a corresponding mutual fund (the “underlying mutual funds”). A list of the underlying mutual funds available under the Contract is shown below.
Your accumulated value will vary according to the investment performance of the underlying mutual funds in which your selected division(s) are invested. We do not guarantee the investment performance of the underlying mutual funds.
For any administrative questions, you may contact us by writing or calling: Principal ® Investment Plus Variable Annuity, Principal Financial Group, P.O. Box 9382, Des Moines, Iowa 50306-9382, Telephone: 1-800-852-4450.

Beginning on January 1, 2021, as permitted by regulations adopted by the Securities and Exchange Commission, paper copies of the annual and semi-annual shareholder reports for underlying mutual funds available as investment options under your life insurance policy or annuity contract will no longer be sent by mail, unless you specifically request paper copies of the reports from the Company or from your financial intermediary. Instead, the reports will be made available on a website, and you will be notified by mail each time a report is posted and provided with a website link to access the report.

If you already elected to receive such reports electronically, you will not be affected by this change, and you do not need to take any action. If you have not previously elected electronic delivery, you may elect to receive reports and other communications from the Company electronically by following the instructions provided by the Company.

You may elect to receive all future reports in paper free of charge. If you wish to continue receiving paper copies of the reports, you can inform the Company by calling 1-800-247-9988 if you have a life insurance policy or 1-800-852-4450 if you have an annuity contract. Your election to receive reports in paper will apply to all underlying mutual funds available as investment options under your life insurance policy or annuity contract.








The Contract is available with or without the Premium Payment Credit Rider. This rider applies credits to the accumulated value for premium payments made in contract year one. The amount of the credit may be more than offset by the additional charges associated with it (higher surrender charges, a longer surrender charge period and increased annual expenses). A Contract with the Premium Payment Credit Rider will cost more than a Contract without the Premium Payment Credit Rider. You should review your own circumstances to determine whether this rider is suitable for you. To assist you in making that determination, we have highlighted in grey boxes those portions of this prospectus pertaining to the rider.
NOTE:
We recapture the premium payment credit if you return the Contract during the examination offer period or request full annuitization of the Contract prior to the third Contract anniversary. You take the risk that the recaptured amount may exceed the then current value of the credit(s). This risk occurs when your investment options have experienced negative investment performance (i.e., have lost value) since the credit was applied. In that situation, you would be worse off than if you had not purchased the Premium Payment Credit Rider.
The Contract is available with or without a Guaranteed Minimum Withdrawal Benefit rider (GMWB). The GMWB riders currently available are Principal Income Builder 3 (“PIB 3”) and Principal Income Builder 10 (“PIB 10”). You may only elect one GMWB rider. There is a charge for the rider that is deducted quarterly.
If you purchase a GMWB rider with your Contract, your investment options are limited to the following Principal Variable Contracts Funds: Diversified Balanced Managed Volatility Account; Diversified Growth Managed Volatility Account; Diversified Balanced Account; Diversified Growth Account; and Diversified Income Account.
This prospectus describes all material features of the Contract and any material differences due to state variations. All italicized words within this Prospectus are defined terms that can be found in the Glossary.


2


SEPARATE ACCOUNT INVESTMENT OPTIONS

The underlying mutual funds available under the Contract are listed below(1). However, if you purchase a GMWB rider with your Contract, your investment options are limited to the following Principal Variable Contracts Funds: Diversified Balanced Managed Volatility Account; Diversified Growth Managed Volatility Account; Diversified Balanced Account; Diversified Growth Account; and Diversified Income Account.
AllianceBernstein Variable Products Series Fund — Class A
Janus Henderson Series — Service Shares
• AllianceBernstein Small/Mid Cap Value Portfolio
• Flexible Bond Portfolio
American Century Variable Portfolios, Inc.
MFS — Service Class
• Inflation Protection Fund — Class II
• International Value Portfolio(12)
• Mid Cap Value Fund — Class II
• New Discovery Series
• Ultra Fund — Class II
• Utilities Series
American Funds Insurance Series — Class 2
• Value Series
• Asset Allocation Fund
Neuberger Berman Advisers Management Trust
• Blue Chip Income and Growth Fund
• Sustainable Equity Portfolio — I Class
• Global Small Capitalization Fund
PIMCO Variable Insurance Trust
• New World Fund
• All Asset Portfolio — Administrative Class
BlackRock Variable Insurance Funds — Class III
• High Yield Portfolio — Administrative Class
•
Global Allocation V.I. Fund
•
Low Duration Portfolio — Advisor Class
•
iShares Dynamic Allocation V.I. Fund(10)
• Total Return Portfolio — Administrative Class
Columbia VP — Class 2
Principal Variable Contracts Funds — Class 1
•
Limited Duration Credit Fund
• Core Plus Bond Account
Delaware Variable Insurance Products — Service Class
• Diversified International Account
•
Limited Term Diversified Income Series
• Equity Income Account
• Small Cap Value
• Government & High Quality Bond Account
Dreyfus Investment Portfolios — Service Shares
•
Income Account(7)
• Technology Growth Portfolio(11)
• International Emerging Markets Account
DWS Variable Insurance Portfolio — Class B
• LargeCap Growth Account(8)
• Small Mid Cap Value VIP
• LargeCap Growth Account I
EQ Advisors Trust(SM) - Class IB(6)
• LargeCap S&P 500 Index Account
• 1290 VT Convertible Securities Portfolio
• MidCap Account(3)
• 1290 VT GAMCO Small Company Value Portfolio
• Multi-Asset Income Account(4)(9)
• 1290 VT Micro Cap Portfolio
• Principal Capital Appreciation Division
• 1290 VT SmartBeta Equity Portfolio
• Principal LifeTime 2010 Account(4)
• 1290 VT Socially Responsible Portfolio
• Principal LifeTime 2020 Account(4)
Fidelity Variable Insurance Products
• Principal LifeTime 2030 Account(4)
• Contrafund® Portfolio — Service Class 2
• Principal LifeTime 2040 Account(4)
• Equity-Income Portfolio — Service Class 2
• Principal LifeTime 2050 Account(4)
• Government Money Market Portfolio — Initial Class(2)
• Principal LifeTime Strategic Income Account(4)
• Growth Portfolio — Service Class 2
• Real Estate Securities Account
• Mid Cap Portfolio — Service Class 2
• Short-Term Income Account
• Overseas Portfolio — Service Class 2
• SmallCap Account
Franklin Templeton Variable Insurance Products Trust
• Strategic Asset Management Balanced Account Portfolio(4)
• Franklin Global Real Estate VIP Fund — Class 2
• Strategic Asset Management Conservative Balanced Portfolio(4)
• Small Cap Value VIP Fund — Class 2
• Strategic Asset Management Conservative Growth Portfolio(4)
• Templeton Global Bond VIP Fund — Class 4
• Strategic Asset Management Flexible Income Portfolio(4)
Goldman Sachs Variable Insurance Trust — Institutional Shares
• Strategic Asset Management Strategic Growth Portfolio(4)
• MidCap Value Fund
Principal Variable Contracts Funds — Class 2
• Small Cap Equity Insights Fund
• Diversified Balanced Account(4)
Guggenheim Investments Variable Insurance Funds
• Diversified Balanced Managed Volatility Account(4)
• Series F (Guggenheim Floating Rate Strategies Series)
• Diversified Growth Account(4)
• Global Managed Futures Strategy Fund
• Diversified Growth Managed Volatility Account(4)
• Long Short Equity Fund
• Diversified Income Account(4)
• Multi-Hedge Strategies Fund
Rydex Variable Insurance
Invesco Variable Insurance Funds — Series I
• Commodities Strategy Fund
• Health Care Fund
T. Rowe Price Equity Series, Inc. — II
• International Growth Fund
• T. Rowe Price Blue Chip Growth Portfolio
• Small Cap Equity Fund
• T. Rowe Price Health Sciences Portfolio(5)
• Value Opportunities Fund
 

3


Underlying mutual funds available under the Contract (1) (cont.)
 
 
TOPS® — Investor Class Shares(4)
VanEck VIP Global Insurance Trust — Class S Shares
•
TOPS® Aggressive Growth ETF Portfolio
• Global Hard Assets Fund
•
TOPS® Balanced ETF Portfolio
 
•
TOPS® Conservative ETF Portfolio
 
•
TOPS® Growth ETF Portfolio
 
•
TOPS® Moderate Growth ETF Portfolio
 
(1) 
If you elect a GMWB rider, your investment options for premium payments and accumulated value will be restricted to the following Principal Variable Contracts Funds: Diversified Balanced Managed Volatility Account; Diversified Growth Managed Volatility Account; Diversified Balanced Account; Diversified Growth Account; and Diversified Income Account.
(2) 
All references to the Money Market Division in this prospectus will mean the Fidelity VIP Government Money Market Division.
(3) 
Effective August 16, 2013, the MidCap Account is no longer available to customers with an application signature date on or after August 16, 2013.
(4)
This underlying mutual fund is a fund of funds. The fund of funds expenses may be higher than other fund types because the expenses of the selected fund include the expenses of the funds it holds.
(5) 
Effective June 1, 2015, the T. Rowe Price Health Sciences Portfolio is no longer available to customers with an application signature date on or after June 1, 2015.
(6) 
Investment option will be available on June 8, 2019.
(7) 
Effective June 8, 2019, the Principal VCF Income Account will merge into the Principal VCF Core Plus Bond Account.
(8) 
Effective June 8, 2019, the Principal VCF LargeCap Growth Account will merge into the Principal VCF LargeCap Growth Account I.
(9) 
Effective June 8, 2019, the Principal VCF Multi-Asset Income Account will merge into the Principal VCF Strategic Asset Management Flexible Income Portfolio.
(10) 
Effective June 8, 2019, the BlackRock VIF iShares Dynamic Allocation V.I. Fund will be known as the BlackRock VIF 60/40 Target Allocation ETF V.I. Fund.
(11) 
Effective June 3, 2019, the Dreyfus IP Technology Growth Portfolio will be known as BNY Mellon IP Technology Growth Portfolio.
(12) 
Effective June 8, 2019, the MFS International Value Portfolio will be known as MFS International Intrinsic Value Portfolio.
An investment in the Contract is not a deposit or obligation of any bank and is not insured or guaranteed by any bank, the Federal Deposit Insurance Corporation or any other government agency.

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

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


4


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

5


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

6


9. ADDITIONAL INFORMATION ABOUT THE CONTRACT
The Contract
Delay of Payments
Misstatement of Age or Gender
Assignment
Change of Owner or Annuitant
Beneficiary
Contract Termination
Reinstatement
Reports
Important Information About Customer Identification Procedures
Frequent Trading and Market-Timing (Abusive Trading Practices)
Distribution of the Contract
Performance Calculation
 
 
10. FEDERAL TAX MATTERS
Taxation of Non-Qualified Contracts
Taxation of Qualified Contracts
Withholding
 
 
11. GENERAL INFORMATION ABOUT THE COMPANY
Corporate Organization and Operation
Legal Opinions
Legal Proceedings
Other Variable Annuity Contracts
Payments to Financial Intermediaries
Service Arrangements and Compensation
Mutual Fund Diversification
State Regulation
Independent Registered Public Accounting Firm
Financial Statements
 
 
12. TABLE OF SEPARATE ACCOUNT DIVISIONS
13. REGISTRATION STATEMENT
14. TABLE OF CONTENTS OF THE SAI
APPENDIX A — PRINCIPAL® VARIABLE ANNUITY EXCHANGE OFFER
APPENDIX B — INVESTMENT PLUS VARIABLE ANNUITY GMWB EXCHANGE OFFER
APPENDIX C — PIB 3 EXAMPLES (applications signed on or after August 1, 2013)
APPENDIX D — PIB 10 EXAMPLES (applications signed on or after June 1, 2015)
APPENDIX E — GMWB DEATH BENEFIT EXAMPLES (Contracts with a GMWB rider and application was signed on or after August 1, 2013)
APPENDIX F — PIB 10 (applications signed before June 1, 2015)
APPENDIX G — PIB 3 (applications signed before November 2, 2015)
APPENDIX H — PIB 10 (applications signed June 1, 2015 through November 1, 2015)
APPENDIX I — NEW YORK REG 60 – DETERMINING GMWB PERCENTAGES AND SUBMISSION GUIDELINES (for applications signed on or after November 2, 2015)
APPENDIX J — HISTORICAL GMWB PERCENTAGES (applications signed on or after November 2, 2015 and before May 1, 2019)
APPENDIX K — CONDENSED FINANCIAL INFORMATION

7


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

8


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


9


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

10


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

11


(3) 
At the end of each calendar quarter, one-fourth of the annual charge is multiplied by the average quarterly Investment Back withdrawal benefit base. The Investment Back withdrawal benefit base is used to calculate the maximum annual withdrawal benefit payment available to you until you at least receive your premium payments. We calculate the withdrawal benefit base on the rider effective date and each Contract anniversary. The average quarterly Investment Back withdrawal benefit base is equal to (1) the Investment Back withdrawal benefit base at the beginning of the calendar quarter plus (2) the Investment Back withdrawal benefit base at the end of the calendar quarter, and this sum is divided by two. There may be times when the sum of the four quarterly fee amounts is higher than the fee amount if we calculated it annually. For example, if your withdrawal benefit base is changed on your Contract anniversary, the fee for that calendar quarter will vary from the other quarters. See 2. CHARGES AND DEDUCTIONS for more information on how the rider charge is calculated. If your rider charge will increase, it will not exceed the maximum rider charge allowed. If you opt out of the GMWB Step-Up feature, your rider charge will not increase.
(4)  
This amount assumes the Principal Income Builder 3 rider was elected (in addition to the 1.25% Mortality and Expense Risks Charge and the 0.15% Administration Charge). This assumes the withdrawal benefit base is equal to the initial premium payment. If the withdrawal benefit base changes, the charge for your optional GMWB rider and your Total Separate Account Annual Expense would be higher or lower.
(5)  
This amount assumes the Principal Income Builder 10 rider was elected (in addition to the 1.25% Mortality and Expense Risks Charge and the 0.15% Administration Charge). This assumes the withdrawal benefit base is equal to the initial premium payment. If the withdrawal benefit base changes, the charge for your optional GMWB rider and your Total Separate Account Annual Expense would be higher or lower.
This table shows the minimum and maximum total operating expenses charged by the underlying mutual funds that you may pay periodically during the time that you own the Contract. More detail concerning the fees and expenses of each underlying mutual fund is contained in its prospectus.
Minimum and Maximum Annual Underlying Mutual Fund Operating Expenses
as of December 31, 2018
 
Minimum
Maximum
Total annual underlying mutual fund operating expenses (expenses that are deducted from underlying mutual fund assets, including management fees, distribution and/or service (12b-1) fees and other expenses)*
0.25%
1.86%
*
Some of the funds available are structured as a “fund of funds”. A fund of funds is a mutual fund that invests primarily in a portfolio of other mutual funds. The expenses shown include all the fees and expenses of the funds that a fund of funds holds in its portfolio. The underlying fund with the highest operating expenses is a fund of funds.
EXAMPLES
These examples are intended to help you compare the cost of investing in the Contract with the cost of investing in other variable annuity contracts. These costs include Contract owner transaction expenses, Contract fees, Separate Account annual expenses, and underlying mutual fund fees and expenses.
Example 1 (with GMWB rider)
The example figures are based on a Contract with the most expensive combination of optional features available under the Contract. This example reflects the maximum charges imposed if you were to purchase the Contract with the Principal Income Builder 10 rider (2.00%), as well as the Premium Payment Credit Rider (0.60%). The amounts below are calculated using the maximum rider fees and not the current rider fees. The example assumes(1):
•
a $10,000 premium payment to issue the Contract;
•
a 5% return each year;
•
an annual Contract fee of $30 (expressed as a percentage of the average accumulated value);
•
the minimum and maximum annual underlying mutual fund operating expenses as of December 31, 2018, for the underlying mutual funds that are available when purchasing a GMWB rider (without voluntary waivers of fees by the underlying funds, if any);
•
Mortality and Expense Risks Charge of 1.25%
•
Administration Charge of 0.15%
•
no premium taxes are deducted;
•
the Principal Income Builder 10 rider was added to the Contract at issue(2) and the withdrawal benefit base is equal to the initial premium payment; and
•
the Premium Payment Credit Rider is added to the Contract at issue and the Premium Payment Credit Rider surrender charge schedule is applied. Because the premium payment credit is not added to the accumulated value in the examples, the actual costs would be higher.

12


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 (0.60%)
$1,177
$2,027
$2,824
$4,869
$454
$1,391
$2,369
$4,869
$454
$1,391
$2,369
$4,869
Minimum Total Underlying Mutual Fund Operating Expenses (0.48%)
$1,166
$1,995
$2,772
$4,764
$442
$1,356
$2,313
$4,764
$442
$1,356
$2,313
$4,764
(1) 
If the withdrawal benefit base changes, the charge for your optional GMWB rider and your Total Separate Account Annual Expense would be higher or lower.
(2)  
For applications signed on or after June 1, 2015, the For Life withdrawal benefit base is used to calculate the Principal Income Builder 10 rider charge. For applications signed before June 1, 2015, the Investment Back withdrawal benefit base is used to calculate the Principal Income Builder 10 rider charge. The withdrawal benefit base is equal to your premiums and increased for any applicable GMWB Bonus and any applicable GMWB Step-Up and decreased for any excess withdrawals. At the end of each calendar quarter, one-fourth of the annual Principal Income Builder 10 rider charge is multiplied by the applicable average quarterly withdrawal benefit base. The applicable average quarterly withdrawal benefit base is equal to the applicable withdrawal benefit base at the beginning of the calendar quarter plus the applicable withdrawal benefit base at the end of the calendar quarter and the sum is divided by two.
Example 2 (without GMWB rider)
The example figures are based on a Contract with the most expensive combination of optional features available under the Contract except that no GMWB rider was elected. This example reflects the maximum charges imposed if you were to purchase the Contract with the Premium Payment Credit Rider (0.60%) but without a GMWB rider. The amounts below are calculated using the maximum rider fees and not the current rider fees. The example assumes:
•
a $10,000 premium payment to issue the Contract;
•
a 5% return each year;
•
an annual Contract fee of $30 (expressed as a percentage of the average accumulated value);
•
the minimum and maximum annual underlying mutual fund operating expenses as of December 31, 2018 (without voluntary waivers of fees by the underlying funds, if any);
•
Mortality and Expense Risks Charge of 1.25%;
•
Administration Charge of 0.15%;
•
no premium taxes are deducted; and
•
the Premium Payment Credit Rider is added to the Contract at issue and the Premium Payment Credit Rider surrender charge schedule is applied. Because the premium payment credit is not added to the accumulated value in the examples, the actual costs would be higher.
Although your actual costs may be higher or lower, based on these assumptions, your costs would be as shown below:
 
If you surrender your
Contract at the end of the
applicable time period
If you do not
surrender your Contract
If you fully annuitize your
Contract at the end of the
applicable time period
 
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
1 Yr.
3 Yrs.
5 Yrs.
10 Yrs.
Maximum Total Underlying Mutual Fund Operating Expenses (1.86%)
$1,109
$1,805
$2,418
$3,863
$379
$1,150
$1,939
$3,863
$379
$1,150
$1,939
$3,863
Minimum Total Underlying Mutual Fund Operating Expenses (0.25%)
$963
$1,371
$1,668
$2,357
$221
$682
$1,168
$2,357
$221
$682
$1,168
$2,357
For Condensed Financial Information, see Appendix K.

13


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

14


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

15


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

16


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

17


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

18


Allocating Premium Payments
•
On your application, you direct how your premium payments will be allocated to the investment options.
•
If you elect a GMWB rider, your investment options for premium payments and accumulated value will be restricted (for restrictions see 4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) - GMWB Investment Options).
•
Allocations must be in percentages.
•
Percentages must be in whole numbers and total 100%.
•
Subsequent premium payments are allocated according to your then current allocation instructions.
•
Changes to the allocation instructions are made without charge.
•
A change is effective on the next valuation period after we receive your new instructions in good order.
•
You can change the current allocations and future allocation instructions by:
•
mailing your instructions to us;
•
calling us at 1-800-852-4450 (if telephone privileges apply);
•
faxing your instructions to us at 1-866-894-2093; or
•
visiting www.principal.com.
•
Changes to premium payment allocations do not result in the transfer of any existing investment option accumulated values. You must provide specific instructions to transfer existing accumulated values. We currently do not charge a transaction fee for these transfers but reserve the right to charge such a fee in the future.
•
Premium payments are credited on the basis of the unit value next determined after we receive a premium payment.
Principal ® Variable Annuity Exchange Offer (“exchange offer”)
As of May 1, 2017, there is no longer an exchange offer that allows you to exchange the Principal ® Variable Annuity (Flexible Variable Annuity) with the Principal ® Investment Plus Variable Annuity.
Investment Plus Variable Annuity GMWB Exchange Offer
IPVA GMWB exchange offer ("GMWB exchange offer")
This GMWB exchange offer was made available effective January 20, 2014. Original o wners of an eligible Principal ® Investment Plus Variable Annuity contract (“old contract”) may elect to exchange their old contract for a new Principal ® Lifetime Income Solutions II Variable Annuity contract ("new contract") subject to the GMWB exchange offer terms and conditions below. To determine if it is in your best interest to participate in the GMWB exchange offer, we recommend that you consult with your tax advisor and financial professional before electing to participate in the GMWB exchange offer.
You are eligible to participate in the GMWB exchange offer when:
•
The old contract doesn't have a GMWB rider; or
•
The old contract has a GMWB 1 rider; and
•
Your old contract is not subject to any surrender charges; and
•
Available in your state.
Currently, there is no closing date for the GMWB exchange offer. We reserve the right, however, to modify the GMWB exchange offer commencement date and to modify or terminate the GMWB exchange offer upon reasonable written notice to you.
See APPENDIX B for further details about the GMWB exchange offer.

19


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

20


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

21


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

22


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

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


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

24


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

25


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

26


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

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

27


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

28


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

29


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

30


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

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

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

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

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

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

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

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If the contract date and the rider effective date are different (if we previously have allowed contract owners to add a rider after issue), the GMWB Bonus is equal to the Contract accumulated value on the rider effective date plus premium payments made between the rider effective date and the Contract anniversary, multiplied by the applicable GMWB Bonus Percentage.
For PIB 3, the GMWB Bonus is no longer available after the earlier of:
•
The 3rd Contract anniversary following the rider effective date; or
•
The date you take a withdrawal following the rider effective date.
For PIB 10, the GMWB Bonus is no longer available after the earlier of:
•
The 10th Contract anniversary following the rider effective date; or
•
The date you take a withdrawal following the rider effective date.
NOTE:
The GMWB Bonus is used only for the purposes of calculating the withdrawal benefit base. The GMWB Bonus is not added to your Contract accumulated value.
GMWB Step-Up
The GMWB Step-Up is automatic and applies annually.
If you satisfy the eligibility requirements on a Contract anniversary and your Contract accumulated value is greater than the withdrawal benefit base, we will Step-Up the withdrawal benefit base to your Contract accumulated value on that Contract anniversary. We will not reduce your withdrawal benefit base if your Contract accumulated value on a Contract anniversary is less than the withdrawal benefit base.
NOTE:
All scheduled withdrawals (scheduled partial surrenders) occurring on the Contract anniversary are reflected in the values for the prior contract year and prior to determining if the withdrawal benefit base will Step-Up.
If we increase the rider charge for existing contracts and you are eligible for a GMWB Step-Up of the withdrawal benefit base, you will be charged the then current rider charge. You may choose to opt out of the GMWB Step-Up feature if the charge for your rider will increase. We will send you advance notice if the charge for your rider will increase in order to give you the opportunity to opt out of the GMWB Step-Up feature. Once you opt out, you will no longer be eligible for future GMWB Step-Ups. For more information on the rider charge see SUMMARY OF EXPENSE INFORMATION section.
On each Contract anniversary following the rider effective date, you are eligible for a GMWB Step-Up of the withdrawal benefit base if you satisfy all of the following requirements:
1.
The Contract anniversary occurs before the later of:
a.
the Contract anniversary following the date the oldest owner (oldest annuitant if the owner is not a natural person) attains age 80; or
b.
10 years after the rider effective date;
2.
You have not declined any increases in the rider charge; and
3.
You have not fully annuitized the Contract.
GMWB Percentages (for applications signed on or after November 2, 2015)
This provision applies when the Contract includes a PIB 3 or PIB 10 rider.
The withdrawal benefit payment percentages and GMWB Bonus percentages (collectively, "GMWB Percentages") that apply to your Contract are determined as described in the applicable GMWB Percentages Prospectus Supplement. All GMWB Percentages Prospectus Supplements are available on the EDGAR system at www.sec.gov (type file number 333-188293). If your application was signed between November 2, 2015 and April 30, 2016, your GMWB Percentages are included in Appendix J.
Refer to Determining GMWB Percentages in the prospectus for rules to determine which GMWB Percentages will apply to your Contract. For more information regarding the GMWB Bonus and the For Life withdrawal benefit payment percentages, see GMWB Bonus and Withdrawal Benefit Payment sections of the prospectus.

36


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

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

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

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

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

41


Effect of 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.
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.


42


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

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



43


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

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


44


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

45


The following tables demonstrate hypothetical surrender values for Contracts with and without this rider but do not show the impact of partial surrenders or partial annuitizations. The table reflects surrender charges, when applicable. The tables are based on:
•
a $25,000 initial premium payment and no additional premium payments;
•
the deduction of maximum Separate Account annual expenses:
•
Contracts with the Premium Payment Credit Rider:
•
2.00% annually for the first eight contract years
•
1.40% annually after the first eight contract years
•
Contracts without the Premium Payment Credit Rider:
•
1.40% annually for all contract years.
•
the deduction of the arithmetic average of the underlying mutual fund expenses as of December 31, 2018;
•
0%, 5% and 10% annual rates of return before charges; and
•
payment of the $30 annual Contract fee (while the Contract’s value is less than $30,000).
 
0% Annual Return
5% Annual Return
10% Annual Return
Contract
Year
Surrender Value
Without
Premium Payment
Credit Rider
Surrender Value
With
Premium Payment
Credit Rider
Surrender Value
Without
Premium Payment
Credit Rider
Surrender Value
With
Premium Payment
Credit Rider
Surrender Value
Without
Premium Payment
Credit Rider
Surrender Value
With
Premium Payment
Credit Rider
1
$23,074.77
$23,615.34
$24,249.77
$24,822.84
$25,424.77
$26,076.46
2
$22,512.93
$22,902.19
$24,865.57
$25,305.48
$27,420.96
$28,062.08
3
$21,964.17
$22,424.16
$25,497.82
$26,074.04
$29,639.84
$30,438.14
4
$21,629.55
$21,951.78
$26,406.35
$26,870.62
$32,278.96
$32,964.55
5
$21,296.26
$21,485.12
$27,365.39
$27,678.52
$35,101.37
$35,651.96
6
$20,964.41
$21,024.20
$28,343.37
$28,497.98
$38,121.15
$38,511.75
7
$20,634.10
$20,569.06
$29,340.81
$29,359.24
$41,353.43
$41,556.10
8
$20,485.25
$20,119.73
$30,638.22
$30,233.17
$45,064.51
$44,798.08
9
$19,978.39
$19,797.88
$31,456.94
$31,304.42
$48,521.96
$48,523.45
10
$19,483.34
$19,477.69
$32,297.54
$32,397.63
$52,244.67
$52,515.46
15
$17,175.66
$17,170.63
$36,849.71
$36,963.91
$75,606.69
$75,998.56
20
$15,124.34
$15,119.88
$42,043.49
$42,173.78
$109,415.41
$109,982.51

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

46


Unscheduled Transfers
You may make unscheduled division transfers from one division to another division or to the Fixed Account.
•
Transfers are not permitted into DCA Plus accounts.
•
Transfer values are calculated using the price next determined after we receive your request.
•
We reserve the right to impose a fee of the lesser of $25 or 2% of the amount transferred on each unscheduled transfer after the first unscheduled transfer in a contract year. If we elect to begin charging for the transaction fee, we will provide you with written notice at least 30 days in advance.
Limitations on Unscheduled Transfers. We reserve the right to reject excessive exchanges or purchases if the trade would disrupt the management of the Separate Account, any division of the Separate Account or any underlying mutual fund. In addition, we may suspend or modify transfer privileges in our sole discretion at any time to prevent market timing efforts that could disadvantage other owners. These modifications could include, but not be limited to:
•
requiring a minimum time period between each transfer;
•
imposing the transaction fee;
•
limiting the dollar amount that an owner may transfer at any one time; or
•
not accepting transfer requests from someone providing requests for multiple Contracts for which he or she is not the owner.
Scheduled Transfers (Dollar Cost Averaging)
•
You may elect to have transfers made on a scheduled basis.
•
There is no charge for scheduled transfers and no charge for participating in the scheduled transfer program.
•
You must specify the dollar amount of the transfer.
•
You select the transfer date (other than the 29th, 30th or 31st) and the transfer period (monthly, quarterly, semi-annually or annually).
•
If the selected date is not a valuation date, the transfer is completed on the next valuation date.
•
Transfers are not permitted into DCA Plus accounts.
•
If you want to stop a scheduled transfer, you must provide us notice prior to the date of the scheduled transfer.
•
Transfers continue until your value in the division is zero or we receive notice to stop the transfers.
•
The number of divisions available for simultaneous transfers will never be less than two. When we have more than two divisions available, we reserve the right to limit the number of divisions from which simultaneous transfers are made.
Scheduled transfers are designed to reduce the risks that result from market fluctuations. They do this by spreading out the allocation of your money to investment options over a longer period of time. This allows you to reduce the risk of investing most of your money at a time when market prices are high. The results of this strategy depend on market trends and are not guaranteed.
Example:
Month
Amount Invested
Share Price
Shares Purchased
January
$100
$25.00
4
February
$100
$20.00
5
March
$100
$20.00
5
April
$100
$10.00
10
May
$100
$25.00
4
June
$100
$20.00
5
Total
$600
$120.00
33

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

47


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

48


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

49


7.
THE ANNUITIZATION PERIOD
Annuitization Date
You may specify an annuitization date in your application. You may change the annuitization date with our prior approval. The request must be in writing. You may not select an annuitization date prior to the first Contract anniversary or after the maximum annuitization date (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 10. FEDERAL TAX MATTERS). You should consider this carefully when you select or change the annuity benefit payment commencement date.
Partial Annuitization
You have the right to partially annuitize a portion of your accumulated value. After the first contract year and prior to the annuitization date, you may annuitize a portion of your accumulated value by sending us a notice.
If you have elected the Premium Payment Credit Rider, the amount of the partial annuitization during each of contract years two and three is limited to no more than 10% of the accumulated value as of the most recent Contract anniversary.
The minimum partial annuitization amount is $2,000. Any partial annuitization request that reduces the accumulated value to less than $5,000 will be treated as a request for full annuitization.
You may select one of the annuity benefit payment options listed below. Once payments begin under the option you selected, the option may not be changed. In addition, once payments begin you may not surrender or otherwise liquidate or commute any portion of your accumulated value that has been annuitized.
Annuity Benefit Payment Options
We offer fixed annuity benefit payments only. No surrender charge is imposed on any portion of your accumulated value that has been annuitized.
You may choose from several fixed annuity benefit payment options. Payments will be made on the frequency you choose. You may elect to have your annuity benefit payments made on a monthly, quarterly, semiannual or annual basis. The dollar amount of the payments is specified for the entire payment period according to the option selected. There is no right to take any total or partial surrenders after the annuitization date. The fixed annuity benefit payment must begin within one year of the annuity benefit election.
The amount of the fixed annuity benefit payment depends on the:
•
amount of accumulated value applied to the annuity benefit payment option;
•
annuity benefit payment option selected;
•
age and gender of the annuitant (unless fixed period income option is selected);
•
frequency of the annuity benefit payments; and
•
duration of the annuity benefit payments.

50


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

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

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8.
DEATH BENEFIT
This Contract provides a death benefit upon the death of the owner. The Contract will not provide death benefits upon the death of an annuitant unless the annuitant is also an owner or the owner is not a natural person.
The following tables illustrate the various situations and the resulting death benefit payment if death occurs before the annuitization date and while the accumulated value is greater than zero.

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If you die and...
And...
Then...
You are the sole owner
Your spouse is not named as a primary beneficiary
The beneficiary(ies) receives the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
If a beneficiary dies before you, upon your death we will make equal payments to the surviving beneficiaries unless you provided us with other written instructions. If no beneficiary(ies) survives you, the death benefit is paid to your estate in a single payment.
Upon your death, only your beneficiary’s(ies’) right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.
You are the sole owner
Your spouse is named as a primary beneficiary
Your spouse may either
a. continue the Contract; or
b. receive the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
All other beneficiaries receive the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
If a beneficiary dies before you, upon your death we will make equal payments to the surviving beneficiaries unless you provided us with other written instructions. If no beneficiary(ies) survives you, the death benefit is paid to your estate in a single payment.
Unless your spouse elects to continue the Contract, only your spouse’s and any other beneficiary’s(ies’) right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.
You are a joint owner
The surviving joint owner is not your spouse
The surviving owner receives the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
Upon your death, only the surviving owner’s right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the Contract will terminate.
You are a joint owner
The surviving joint owner is your spouse
Your spouse may either
a. continue the Contract; or
b. receive the death benefit under the Contract or the GMWB Death Benefit, whichever is applicable.
Unless your surviving spouse owner elects to continue the Contract, upon your death, only your spouse’s right to the death benefit or the GMWB Death Benefit will continue; all other rights and benefits under the rider and the Contract will terminate.


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

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

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

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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 at your death.
If you die and...
And...
Then...
You are the sole owner
Your spouse is not named as a primary beneficiary
The primary beneficiary(ies) will receive the GMWB Death Benefit.

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

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

All other primary beneficiaries will receive the GMWB Death Benefit.

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

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

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

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


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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 at your death.
If you die and…
And…
Then…
You are the sole owner
You elected the “Single Life” For Life withdrawal benefit payments*
All payments stop and all rights and benefits under the Contract terminate.
You are the sole owner
You elected the “Joint Life” For Life withdrawal benefit payments*
We will continue payments to the surviving covered life according to the schedule established when you made your election until the date of the surviving covered life’s death.
Upon the surviving covered life’s death, all payments stop and all rights and benefits under the Contract terminate.
You are a joint owner
You elected the “Single Life” For Life withdrawal benefit payments*
All payments stop and all rights and benefits under the Contract terminate.
You are a joint owner
You elected the “Joint Life” For Life withdrawal benefit payments*
We will continue payments to the surviving covered life according to the schedule established when you made your election until the date of the surviving covered life’s death.

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

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

Your spouse meets the minimum issue age requirement

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

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

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

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

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

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

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

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

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

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


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

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

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

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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 receives 12b-1 fees in connection with purchases and sales of certain 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.
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 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.

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The yield and total return figures described below vary depending upon market conditions, composition of the underlying mutual fund’s portfolios and operating expenses. These factors and possible differences in the methods used in calculating yield and total return should be considered when comparing the Separate Account performance figures to performance figures published for other investment vehicles. The Separate Account may also quote rankings, yields or returns as published by independent statistical services or publishers and information regarding performance of certain market indices. Any performance data quoted for the Separate Account represents only historical performance and is not intended to indicate future performance. For further information on how the Separate Account calculates yield and total return figures, see the SAI.
From time to time the Separate Account advertises its Money Market division’s “yield” and “effective yield” for these Contracts. Both yield figures are based on historical earnings and are not intended to indicate future performance. The “yield” of the division refers to the income generated by an investment in the division over a 7-day period (which period is stated in the advertisement). This income is then “annualized.” That is, the amount of income generated by the investment during that week is assumed to be generated each week over a 52-week period and is shown as a percentage of the investment. The “effective yield” is calculated similarly but, when annualized, the income earned by an investment in the division is assumed to be reinvested. The “effective yield” is slightly higher than the “yield” because of the compounding effect of the assumed reinvestment.
The Separate Account also advertises the average annual total return of its various divisions. The average annual total return for any of the divisions is computed by calculating the average annual compounded rate of return over the stated period that would equate an initial $1,000 investment to the ending redeemable accumulated value.
10.
FEDERAL TAX MATTERS
The following description is a general summary of the tax rules, primarily related to federal income taxes, which in our opinion are currently in effect. These rules are based on laws, regulations and interpretations which are subject to change at any time. This summary is not comprehensive and is not intended as tax advice. Federal estate and gift tax considerations, as well as state and local taxes, may also be material. You should consult a tax advisor about the tax implications of taking action under a Contract or related retirement plan.
Taxation of Non-Qualified Contracts
Non-Qualified Contracts
Section 72 of the Internal Revenue Code (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 less any tax-free return of premiums.
•
After the investment in the Contract is paid out, the full amount of any annuity benefit payment is taxable.

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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 . For owners who are non-natural persons changing the annuitant may have tax consequences to the owner . Please consult with your tax advisor before changing the owner or annuitant on 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 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 (or similar periodic 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.
Generally, unless the beneficiary elects otherwise, the above requirements are satisfied prior to the annuitization date by paying the death benefit in a single payment, subject to proof of your death. The beneficiary may elect, by written request, to receive an annuity benefit payment option instead of a single payment.
If your designated beneficiary is your surviving spouse, the Contract may be continued with your spouse deemed to be the new owner for purposes of the 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.
Early Distribution Penalty
•
If you take a premature distribution from the Contract, you may incur a 10% 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 as defined in the Internal Revenue Code;
•
part of a series of substantially equal periodic payments for the life or life expectancy of you or you and your designated beneficiary;
•
made under an immediate annuity contract; or
•
allocable to contributions made prior to August 14, 1982.
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 may reportable to the IRS.
Net Investment Income Tax
The Net Investment Income Tax is imposed at a rate of 3.8% on net investment income for higher tax bracket individuals.
This tax may apply to an individual's net investment income if the individual's modified Adjustable Gross Income exceeds $200,000 for a single filer or $250,000 for a married filing jointly filer. 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.

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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.
Premature Distributions : There is a 10% additional penalty tax under the 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 in the SIMPLE IRA. Generally, an amount is a “premature distribution” unless the distribution is:
•
made on or after you reach age 59½;
•
made to a beneficiary on or after your death;
•
made upon your disability as defined in the Internal Revenue Code;
•
part of a series of substantially equal periodic payments for the life or life expectancy of you or you and your designated beneficiary;
•
made to pay certain deductible 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 taxable portion of the distribution. This amount is sent to the IRS as income tax withholding to be credited against your taxes. Amounts received prior to age 59½ and not rolled over may be subject to an additional 10% penalty 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 consult your tax advisor.

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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 consult 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 via this annuity. For details, see 4. LIVING BENEFIT – GUARANTEED MINIMUM WITHDRAWAL BENEFIT (GMWB) - Required Minimum Distribution (RMD) Program for GMWB Riders.
Failure to comply with the RMD rules can result in 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 withholding rules may require us to disregard the recipient’s election if the recipient fails to supply us with a taxpayer identification number (social security number for individuals), or if the Internal Revenue Service notifies us that the taxpayer identification number provided by the recipient is incorrect.
11.
GENERAL INFORMATION ABOUT THE COMPANY
Corporate Organization and Operation
Principal Life Insurance Company
Principal Life Insurance Company is a stock life insurance company with authority to transact life and annuity business in all states of the United States and the District of Columbia. Our home office is located at: Principal Financial Group, Des Moines, Iowa 50392. We are a wholly owned subsidiary of Principal Financial Services, Inc., which in turn, is a wholly owned direct subsidiary of Principal Financial Group, Inc., a publicly-traded company.
On June 24, 1879, we were incorporated under Iowa law as a mutual assessment life insurance company named Bankers Life Association. We became a legal reserve life insurance company and changed our name to Bankers Life Company in 1911. In 1986, we changed our name to Principal Mutual Life Insurance Company. In 1998, we became Principal Life Insurance Company, a subsidiary stock life insurance company of Principal Mutual Holding Company, as part of a reorganization into a mutual insurance holding company structure. In 2001, Principal Mutual Holding Company converted to a stock company through a process called demutualization, resulting in our current organizational structure.

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Principal Life Insurance Company Separate Account B
The Separate Account was established under Iowa law on January 12, 1970 and was registered as a unit investment trust with the SEC on July 17, 1970. This registration does not involve SEC supervision of the investments or investment policies of the Separate Account. We do not guarantee the investment results of the Separate Account. There is no assurance that the value of your Contract will equal the total of the payments you make to us.
The Separate Account is not affected by the rate of return of our General Account or by the investment performance of any of our other assets. Any income, gain, or loss (whether or not realized) from the assets of the Separate Account are credited to or charged against the Separate Account without regard to our other income, gains, or losses. Assets of the Separate Account attributed to the reserves and other liabilities under the Contract may not be charged with liabilities arising from any of our other businesses.
Any Contract obligations in excess of the Separate Account value (for example, annuity benefit payments, death benefit payment(s) and guaranteed minimum withdrawal benefit payments) become obligations of the General Account and will be subject to the rights of the Company’s other creditors and its overall claims paying ability.
The Separate Account is divided into divisions. The assets of each division invest in a corresponding underlying mutual fund. New divisions may be added and made available. Divisions may also be eliminated. These changes will be made in a manner that is consistent with applicable laws and regulations.

The Underlying Mutual Funds
The underlying mutual funds are registered under the Investment Company Act of 1940 as open-end investment management companies. The underlying mutual funds provide the investment vehicles for the Separate Account. A full description of the underlying mutual funds, the investment objectives, policies and restrictions, charges and expenses and other operational information are contained in the accompanying prospectuses (which should be read carefully before investing) and the Statement of Additional Information (“SAI”). You may request additional copies of these documents without charge from your registered representative or by calling us at 1-800-852-4450.
We purchase and sell shares of the underlying mutual fund for the Separate Account at their net asset value. Shares represent interests in the underlying mutual fund available for investment by the Separate Account. Each underlying mutual fund corresponds to one of the divisions. The assets of each division are separate from the others. A division’s performance has no effect on the investment performance of any other division.
The underlying mutual funds are NOT available to the general public directly. The underlying mutual funds are available only as investment options in variable life insurance policies or variable annuity contracts issued by life insurance companies and qualified plans. Some of the underlying mutual funds have been established by investment advisers that manage publicly traded mutual funds having similar names and investment objectives. While some of the underlying mutual funds may be similar to, and may in fact be modeled after publicly traded mutual funds, you should understand that the underlying mutual funds are not otherwise directly related to any publicly traded mutual fund. Consequently, the investment performance of any underlying mutual fund may differ substantially from the investment performance of a publicly traded mutual fund.
The Table of Separate Account Divisions included later in this prospectus contains a brief summary of the investment objectives and a listing of the advisor and, if applicable, sub-advisor for each division.
Deletion or Substitution of Separate Account Divisions
We reserve the right, within the law, to make additions, deletions and substitutions for the divisions. We will make no such substitution or deletion without first notifying you and obtaining approval of the appropriate insurance regulatory authorities and the SEC (to the extent required by 1940 Act).
If the shares of a division are no longer available for investment or if, in the judgment of our management, investment in a division becomes inappropriate for the purposes of our contract, we may eliminate the shares of a division and substitute shares of another division of the Trust or another open-end registered investment company. Substitution may be made with respect to both existing investments and the investment of future premium payments.
If we eliminate divisions, you may change allocation percentages and transfer any value in an affected division to another division(s) without charge. You may exercise this exchange privilege until the later of 60 days after a) the effective date of the additions, deletions and/or substitutions of the change, or b) the date you receive notice of the options available. You may only exercise this right if you have any value in the affected division(s).

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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.
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.

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

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Independent Registered Public Accounting Firm
The financial statements of Principal Life Insurance Company Separate Account B and the consolidated financial statements of Principal Life Insurance Company are included in the SAI. Those statements have been audited by Ernst & Young LLP, independent registered public accounting firm, 801 Grand Avenue, Des Moines, Iowa 50309, for the periods indicated in their reports which also appear in the SAI.
Financial Statements
The consolidated financial statements of Principal Life Insurance Company which are included in the SAI should be considered only as they relate to our ability to meet our obligations under the Contract. They do not relate to investment performance of the assets held in the Separate Account.

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12.
TABLE OF SEPARATE ACCOUNT DIVISIONS

AllianceBernstein Small/Mid Cap Value Division

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

American Century VP Inflation Protection Division

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

American Century VP Mid Cap Value Division

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

American Century VP Ultra Division

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

American Funds Insurance Series Asset Allocation Fund Division

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


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American Funds Insurance Series Blue Chip Income and Growth Division

Invests in:
American Funds Insurance Series Blue Chip Income and Growth Fund – Class 2
Investment Advisor:
Capital Research and Management Company
Investment Objective:
seeks to produce income exceeding the average yield on U.S. stocks generally and to provide an opportunity for growth of principal consistent with sound common stock investing.

American Funds Insurance Series Global Small Capitalization Fund Division

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

American Funds Insurance Series New World Fund Division

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

BlackRock Global Allocation Division

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

BlackRock iShares Dynamic Allocation Division (Effective June 8, 2019, the BlackRock VIF iShares Dynamic Allocation V.I. Fund will be known at the BlackRock VIF 60/40 Target Allocation ETF V.I. Fund)
Invests in:
BlackRock iShares Dynamic Allocation V.I. Fund – Class III
Investment Advisor:
BlackRock Advisors, LLC
Investment Objective:
seeks to provide total return.

   

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Columbia Limited Duration Credit Division

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

Delaware Limited Term Diversified Income Division

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

Delaware Small Cap Value Division

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

Dreyfus Investment Portfolio Technology Growth Division (Effective June 3, 2019, the Dreyfus IP Technology Growth Portfolio will be known as BNY Mellon IP Technology Growth Portfolio)

Invests in:
Dreyfus Investment Portfolio Technology Growth Portfolio – Service Shares
Investment Advisor:
BNY Mellon Investment Advisor, Inc.
Investment Objective:
seeks capital appreciation.
DWS Small Mid Cap Value Division

Invests in:
DWS Small Mid Cap Value VIP – Class B
Investment Advisor:
DWS Investment Management Americas Inc.
Investment Objective:
seeks long-term capital appreciation.
EQ Advisors Trust 1290 VT Convertible Securities Division (Investment option will be available on June 8, 2019)

Invests in:
EQ Advisors Trust 1290 VT Convertible Securities Portfolio - Class IB
Investment Advisor:
FMG LLC
Investment Objective:
seeks a high level of total return


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EQ Advisors Trust 1290 VT GAMCO Small Company Value Division (Investment option will be available on June 8, 2019)

Invests in:
EQ Advisors Trust 1290 VT GAMCO Small Company Value Portfolio - Class IB
Investment Advisor:
FMG LLC
Investment Objective:
seeks to achieve long-term growth of capital
EQ Advisors Trust 1290 VT Micro Cap Division (Investment option will be available on June 8, 2019)

Invests in:
EQ Advisors Trust 1290 VT Micro Cap Portfolio - Class IB
Investment Advisor:
FMG LLC
Investment Objective:
seeks to achieve long-term growth of capital
EQ Advisors Trust 1290 VT SmartBeta Equity Division (Investment option will be available on June 8, 2019)

Invests in:
EQ Advisors Trust 1290 VT SmartBeta Equity Portfolio - Class IB
Investment Advisor:
FMG LLC
Investment Objective:
sees to achieve long-term capital appreciation
EQ Advisors Trust 1290 VT Socially Responsible Division (Investment option will be available on June 8, 2019)

Invests in:
EQ Advisors Trust 1290 VT Socially Responsible Portfolio - Class IB
Investment Advisor:
FMG LLC
Investment Objective:
sees to achieve long-term appreciation

Fidelity VIP Contrafund® Division

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

Fidelity VIP Equity-Income Division

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


75


Fidelity VIP Government Money Market Division

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

Fidelity VIP Growth Division

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

Fidelity VIP Mid Cap Division

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

Fidelity VIP Overseas Division

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

Franklin Global Real Estate VIP Division

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

Franklin Small Cap Value VIP Division

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


76


Franklin Templeton Global Bond VIP Division

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

Goldman Sachs VIT Mid Cap Value Division

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

Goldman Sachs VIT Small Cap Equity Insights Division

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

Guggenheim Floating Rate Strategies Division

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

Guggenheim Investments Global Managed Futures Strategy Division

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


77


Guggenheim Investments Long Short Equity Division

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

Guggenheim Investments Multi-Hedge Strategies Division

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

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

Invesco International Growth Division

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

Invesco Small Cap Equity Division

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

Invesco Value Opportunities Division

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


78


Janus Henderson Flexible Bond Division

Invests in:
Janus Henderson Series Flexible Bond Portfolio – Service Shares
Investment Advisor:
Janus Capital Management LLC
Investment Objective:
seeks to obtain maximum total return, consistent with preservation of capital.

MFS International Value Division (Effective June 8, 2019, change name to MFS International Intrinsic Value Division)

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

MFS New Discovery Division

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

MFS Utilities Division

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

MFS Value Division

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

Neuberger Berman AMT Sustainable Equity Division

Invests in:
Neuberger Berman AMT Sustainable Equity Portfolio – Class I
Investment Advisor:
Neuberger Berman Investment Advisors LLC
Investment Objective:
seeks to invest primarily in common stock of mid- to large-capitalization companies that meet the Funds' quality oriented financial and ESG criteria.


79


PIMCO All Asset Division

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

PIMCO High Yield Division

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

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

PIMCO Total Return Division

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

Core Plus Bond Division

Invests in:
Principal Variable Contracts Funds Core Plus Bond Account – Class 1
Investment Advisor:
Principal Global Investors, LLC
Investment Objective:
seeks to provide current income and, as a secondary objective, capital appreciation.

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

Invests in:
Principal Variable Contracts Funds Diversified Balanced Account – Class 2
Investment Advisor:
Principal Global Investors, LLC
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.

80



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 Global Investors, LLC
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.)

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

Diversified International Division

Invests in:
Principal Variable Contracts Funds Diversified International Account – Class 1
Investment Advisor:
Principal Global Investors, LLC
Investment Objective:
seeks long-term growth of capital.


81


Equity Income Division

Invests in:
Principal Variable Contracts Funds Equity Income Account – Class 1
Investment Advisor:
Principal Global Investors, LLC
Investment Objective:
seeks to provide a relatively high level of current income and long-term growth of income and capital.

Government & High Quality Bond Division

Invests in:
Principal Variable Contracts Funds Government & High Quality Bond Account – Class 1
Investment Advisor:
Principal Global Investors, LLC
Investment Objective:
seeks a high level of current income consistent with safety and liquidity.

Income Division (Effective June 8, 2019, the Principal VCF Income Division will merge into the Principal VCF Core Plus Bond Account)

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

International Emerging Markets Division

Invests in:
Principal Variable Contracts Funds International Emerging Markets Account –
Class 1
Investment Advisor:
Principal Global Investors, LLC
Investment Objective:
seeks long-term growth of capital.
LargeCap Growth Division (Effective June 8, 2019, the Principal VCF LargeCap Growth Account will merge into the Principal VCF LargeCap Growth Account I)

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


82


LargeCap Growth I Division

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

LargeCap S&P 500 Index Division

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

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

Invests in:
Principal Variable Contracts Funds MidCap Account – Class 1
Investment Advisor:
Principal Global Investors, LLC
Investment Objective:
seeks long-term growth of capital.

Multi-Asset Income Division (This underlying mutual fund is a fund of funds.) (Effective June 8, 2019, the Principal VCF Multi-Asset Income Account will merge into the Principal VCF Strategic Asset Management Flexible Income Portfolio.)

Invests in:
Principal Variable Contracts Funds Multi-Asset Income Account – Class 1
Investment Advisor:
Principal Global Investors, LLC
Investment Objective:
seeks current income.

Principal Capital Appreciation Division

Invests in:
Principal Variable Contracts Funds Principal Capital Appreciation Account – Class 1
Investment Advisor:
Principal Global Investors, LLC
Investment Objective:
seeks to provide long-term growth capital.
Principal LifeTime 2010 Division (This underlying mutual fund is a fund of funds.)

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


83


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

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

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

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

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

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

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

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

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

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

Real Estate Securities Division

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


84


Short-Term Income Division

Invests in:
Principal Variable Contracts Funds Short-Term Income Account – Class 1
Investment Advisor:
Principal Global Investors, LLC
Investment Objective:
seeks to provide as high a level of current income as is consistent with prudent investment management and stability of principal.

SmallCap Division

Invests in:
Principal Variable Contracts Funds SmallCap Account – Class 1
Investment Advisor:
Principal Global Investors, LLC
Investment Objective:
seeks long-term growth of capital.

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

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

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

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


85


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

Invests in:
Principal Variable Contracts Funds Strategic Asset Management Conservative Growth Portfolio – Class 1
Investment Advisor:
Principal Global Investors, LLC
Investment Objective:
seeks to provide long-term capital appreciation. In general, relative to the other Portfolios, the Conservative Growth Portfolio should offer investors the potential for a low to medium level of income and a medium to high level of capital growth, while exposing them to a medium to high level of principal risk.
SAM Flexible Income Division (This underlying mutual fund is a fund of funds.)

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

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

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

Rydex Commodities Strategy Division

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

T. Rowe Price Blue Chip Growth Division

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

86



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

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

TOPS ® Aggressive Growth ETF Division (This underlying mutual fund is a fund of funds)

Invests in:
TOPS® Aggressive Growth ETF Portfolio – Investor Class Shares
Investment Advisor:
Milliman Financial Risk Management, LLC through a sub-advisory agreement with ValMark Advisors, Inc.
Investment Objective:
seeks capital appreciation.
TOPS ® Balanced ETF Division (This underlying mutual fund is a fund of funds)

Invests in:
TOPS® Balanced ETF Portfolio – Investor Class Shares
Investment Advisor:
Milliman Financial Risk Management, LLC through a sub-advisory agreement with ValMark Advisors, Inc.
Investment Objective:
seeks income and capital appreciation.

TOPS ® Conservative ETF Division (This underlying mutual fund is a fund of funds)

Invests in:
TOPS® Conservative ETF Portfolio – Investor Class Shares
Investment Advisor:
Milliman Financial Risk Management, LLC through a sub-advisory agreement with ValMark Advisors, Inc.
Investment Objective:
seeks to preserve capital and provide moderate income and moderate capital appreciation.
TOPS ® Growth ETF Division (This underlying mutual fund is a fund of funds)

Invests in:
TOPS® Growth ETF Portfolio – Investor Class Shares
Investment Advisor:
Milliman Financial Risk Management, LLC through a sub-advisory agreement with ValMark Advisors, Inc.
Investment Objective:
seeks capital appreciation.


87


TOPS ® Moderate Growth ETF Division (This underlying mutual fund is a fund of funds)

Invests in:
TOPS® Moderate Growth ETF Portfolio – Investor Class Shares
Investment Advisor:
Milliman Financial Risk Management, LLC through a sub-advisory agreement with ValMark Advisors, Inc.
Investment Objective:
seeks capital appreciation.

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


88


13.
REGISTRATION STATEMENT
This prospectus (Part A of the registration statement) omits some information contained in the Statement of Additional Information (Part B of the registration statement) and Part C of the registration statement which the Company has filed with the SEC. The SAI is hereby incorporated by reference into this prospectus. You may request a free copy of the SAI by contacting your registered representative or calling us at 1-800-852-4450.
Information about the Contract (including the Statement of Additional Information and Part C of the registration statement) can be reviewed and copied at the Securities and Exchange Commission’s Public Reference Room in Washington, D.C. Information on the operation of the public reference room may be obtained by calling the Commission at 202-551-8090. Reports and other information about the Contract are available on the Commission’s internet site at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the Commission, 100 F Street NE, Washington, D.C. 20549-0102.
The registration numbers for the Contract are 333-188293 and 811-02091.
14.
TABLE OF CONTENTS OF THE SAI
TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY
3
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
3
PRINCIPAL UNDERWRITER
3
CALCULATION OF PERFORMANCE DATA
3
TAXATION UNDER CERTAIN RETIREMENT PLANS
12
FINANCIAL STATEMENTS
 
APPENDIX A - Principal Life Insurance Company Separate Account B
 
APPENDIX B - Principal Life Insurance Company
 

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

89


APPENDIX A – PRINCIPAL ® VARIABLE ANNUITY EXCHANGE OFFER

There is no longer an exchange offer that allows you to exchange the Principal ® Variable Annuity (Flexible Variable Annuity) with the Principal ® Investment Plus Variable Annuity.


Appendix A – Principal Variable Annuity     90
Exchange Offer

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

If you currently have the GMWB 1 rider with your old contract, this GMWB Exchange Offer may be appropriate if you:
•
Want to benefit from potential annual increases to your rider values instead of every 5 years with the GMWB 1 rider.
•
Want the ability to elect the Joint Life benefit instead of only Single Life with the GMWB 1 rider.
•
Want to protect against the risk that your Contract accumulated value could fall below your investment due to market decline.


Appendix B – Investment Plus Variable Annuity     91
GMWB Exchange Offer

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

GMWB 1 (when applicable)

Target Income Protector

Flexible Income Protector

Flexible Income Protector Plus
Guaranteed Minimum Withdrawal Benefits
• Investment Back
• For Life (“Single Life”)
Target Income Protector:
• For Life (“Single Life” or
   “Joint Life”)

Flexible Income Protector:
• For Life (“Single Life” or
   “Joint Life”)

Flexible Income Protector Plus:
• For Life (“Single Life” or
   “Joint Life”)

Appendix B – Investment Plus Variable Annuity     92
GMWB Exchange Offer

A. GMWB Rider Features
Old Investment Plus Variable Annuity
New Principal® Lifetime Income Solutions II Variable Annuity
Annual Withdrawal Limits
• Investment Back - 7.00% of the
   the Investment Back
   withdrawal benefit base
• For Life - 5.00% of the For
   Life withdrawal benefit base
Target Income Protector, Flexible Income Protector, and Flexible Income Protector Plus:
•    “Single Life” — tiered percentages based on age at first withdrawal, calculated as a percentage of the For Life withdrawal benefit base
•    “Joint Life” — tiered percentages based on age at first withdrawal, calculated as a percentage of the For Life withdrawal benefit base

NOTE: Refer to GMWB Percentages section of this prospectus or the applicable GMWB Charges and Percentages Supplement.
GMWB investment options

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

NOTE: If GMWB was not elected, there are no investment restrictions.
Target Income Protector:
• Diversified Income Account
• Diversified Balanced
Volatility Control Account
• Diversified Growth
Volatility Control Account
• Fidelity VIP Government Money Market Portfolio

Flexible Income Protector:
• Diversified Balanced Account
• Diversified Growth Account
• Diversified Income Account
• Diversified Balanced Managed
   Volatility Account
• Diversified Growth Managed
   Volatility Account
• Fidelity VIP Government Money Market Portfolio

Flexible Income Protector Plus:
• Diversified Balanced Account
• Diversified Growth Account
• Diversified Income Account
• Diversified Balanced Managed
   Volatility Account
• Diversified Growth Managed
   Volatility Account
• Fidelity VIP Government Money Market Portfolio
Fixed Rate Options (including 2 dollar-cost averaging options)

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

Appendix B – Investment Plus Variable Annuity     93
GMWB Exchange Offer

A. GMWB Rider Features
Old Investment Plus Variable Annuity
New Principal® Lifetime Income Solutions II Variable Annuity
GMWB Bonus

If no withdrawals are taken, a GMWB Bonus is applied to the benefit bases each year on the Contract anniversary as shown below:
• Years 1-5 - 5.00% of
    premium payments
• Years 6+ - 0.00% of
    premium payments
Target Income Protector:
If no withdrawals are taken, a GMWB bonus is applied to the benefit base on each Contract anniversary as shown below:
• Years 1-15 - 5.50% of
    premium payments
• Years 16+ - 0.00% of
    premium payments

Flexible Income Protector:
GMWB Bonus does not apply for this rider.

Flexible Income Protector Plus:
If no withdrawals are taken, a GMWB bonus is applied to the benefit base on each Contract anniversary as shown below:
• Years 1-10 - 5.50% of
    premium payments
• Years 11+ - 0.00% of
    premium payments

NOTE: The percentages above apply for applications signed from May 1, 2019 through May 31, 2019. The GMWB Bonus Percentages may be different than those listed above for applications signed after May 31, 2019.
GMWB Step-Up

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

Automatic Portfolio Rebalancing
Calendar Quarterly (required with GMWB 1 rider)
Calendar Quarterly (required with in force GMWB rider)

Appendix B – Investment Plus Variable Annuity     94
GMWB Exchange Offer

A. GMWB Rider Features
Old Investment Plus Variable Annuity
New Principal® Lifetime Income Solutions II Variable Annuity
No. of Free Division Transfers/contract year
1
1
B. Annuitization
Old Investment Plus
Variable Annuity
New Principal® Lifetime Income Solutions II Variable Annuity
Annuity Benefit Payments First Available
Any time on/after the first Contract anniversary
Same
Annuity Benefit Payments
Fixed annuity benefit payments
Same
Annuity Mortality Table
Annuity 2000 Mortality Table
2012 Individual Annuity Mortality Period Life Table Mortality Table
Annuity Benefit Payment Options
Fixed period; life income; life income with fixed period; custom options
Life income; life income with guaranteed period; custom options
C. Death Benefit
Old Investment Plus
Variable Annuity
New Principal® Lifetime Income Solutions II Variable Annuity
Death Benefit
An amount equal to the greatest of
(i) total premium payments less surrenders, or
(ii) Contract value, or
(iii) 7 year Step-Up
For partial surrenders, the death benefit is reduced proportionately for each withdrawal.
See the Death Benefit section in this appendix for more details.

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

Appendix B – Investment Plus Variable Annuity     95
GMWB Exchange Offer

D. Fees and Charges
Old Investment Plus
Variable Annuity
New Principal® Lifetime Income Solutions II Variable Annuity
Annual Fee (waived for Contracts with accumulated value of $30,000 or more)
Lesser of $30 or 2% of Contract accumulated value
Same
Mortality and Expense Risks Charge***
1.25%
Maximum: 1.50%

Current: 1.25%
Administration Charge*** (on an annual basis)
Maximum: 0.15%

Current: 0.15%
Maximum: 0.50%

Current: 0.15%
Available Underlying Mutual Fund Expenses****
Maximum Annual: 1.86%

Minimum Annual: 0.25%
Maximum Annual: 0.60%

Minimum Annual: 0.48%
GMWB 1 Rider Charge – Taken as % of average quarterly Investment Back remaining withdrawal benefit base.
Maximum Annual: 0.85%
Current Annual: 0.80%
A 0.60% annual charge is assessed if the rider application was signed before February 16, 2009 and no GMWB Step-Up has occurred. A 0.80% annual charge is assessed if the rider application was signed before February 16, 2009 and a GMWB Step-Up has occurred. If the rider application was signed after February 16, 2009, the annual fee is 0.80%.
Not applicable
Target Income Protector Rider Charge – Taken as % of average quarterly For Life withdrawal benefit base.
-OR-
Flexible Income Protector Rider Charge – Taken as % of average quarterly For Life withdrawal benefit base.
-OR-
Flexible Income Protector Plus Rider Charge – Taken as % of average quarterly For Life withdrawal benefit base.

Not applicable





Not applicable




Not applicable
Maximum Annual: 2.00%
Current Annual: 1.25%




Maximum Annual: 2.00%
Current Annual: 0.85%



Maximum Annual: 2.00%
Current Annual: 1.25%

NOTE: The charges above apply for applications signed from May 1, 2019 through May 31, 2019. The GMWB charges may be different than those listed above for applications signed after May 31, 2019.

Appendix B – Investment Plus Variable Annuity     96
GMWB Exchange Offer

E. Transaction Charges
Old Investment Plus
Variable Annuity
New Principal® Lifetime Income Solutions II Variable Annuity
Surrender Charge Period and % of amount surrendered (applies only to new premium payments)
7 years (6,6,6,5,4,3,2)
9 years (8,8,7,6,5,4,3,2,1) if you elected the Premium Payment Credit Rider
7 years (6,6,6,5,4,3,2)
Premium Payment Credit Rider not available
Unscheduled Partial Surrender
Maximum: lesser of $25 or 2% of each unscheduled partial surrender after the 12th in a contract year.
Current $0/0%
Same
Unscheduled Transfers
Maximum: lesser of $25 or 2% of each unscheduled transfer after the 1st in a contract year.
Current: $0/0%
Same
*    Does not reflect state variations.
**
Only available for new premium payments. The DCA Plus Accounts are not available for the amount being exchanged.
***
Charges taken daily as a percentage of the average daily Separate Account division value.
****
For the new contract, only maximum and minimum charges for the GMWB investment options are reflected. For the old contract, maximum and minimum charges for all investment options are reflected.
Charges and Expenses
The new contract and your old contract have different annual expenses, different transaction charges, and different investment options that may result in different underlying mutual fund expenses.
Surrender Charges
Under the GMWB Exchange Offer, surrender charges will not apply on any amounts transferred from the old contract to the new contract. Surrender charges under the new contract will only apply to new contract premium payments.
GMWB Death Benefit
The GMWB death benefit in the new contract will be calculated as specified in the prospectus for the new contract. At the time of the exchange, the death benefit from the old contract will be transferred to the new contract and will be adjusted for new premium payments made and withdrawals taken under the new contract.
Upon your death, we will pay the greater of the new contract GMWB death benefit (standard death benefit if GMWB rider is not in force) or the old contract death benefit adjusted as described above.
GMWB Rider
The new contract offers GMWB riders (Target Income Protector, Flexible Income Protector, or Flexible Income Protector Plus) that were not available when you purchased your old contract. A GMWB rider allows you to take certain guaranteed annual withdrawals, regardless of your Contract accumulated value.
Your Contract can only have one GMWB rider. You must qualify for and select either the Target Income Protector, Flexible Income Protector, or Flexible Income Protector Plus rider when you purchase the new contract.
Once elected, the Target Income Protector, Flexible Income Protector, or Flexible Income Protector Plus rider may not be terminated for 5 contract years following the rider effective date.

Appendix B – Investment Plus Variable Annuity     97
GMWB Exchange Offer

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

Appendix B – Investment Plus Variable Annuity     98
GMWB Exchange Offer


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

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


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

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


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

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


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


Appendix C – PIB 3 Examples    102
(for applications signed on or after August 1, 2013)


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

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


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

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


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

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


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

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



Appendix D – PIB 10 Examples    106
(for applications signed on or after June 1, 2015)


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

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

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


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

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


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

Appendix E – GMWB Death Benefit Examples    109
(for Contracts with a GMWB rider and application was signed on or after August 1, 2013)


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

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


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

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


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

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


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

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

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

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


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

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


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

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


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

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


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

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


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

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


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

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


Principal Income Builder 10 - Effect of 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 both the For Life withdrawal benefit base and Investment Back remaining withdrawal benefit base to go to zero, the rider will terminate at the next Contract anniversary unless you make additional premium payments or a GMWB Step-Up is applied. For further information, see Principal Income Builder 10 - Excess Withdrawals.
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.
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 both the For Life withdrawal benefit base and Investment Back remaining withdrawal benefit base to go to zero, the rider will terminate at the next Contract anniversary unless you make additional premium payments or a GMWB Step-Up is applied. For further information, see Principal Income Builder 10 - Excess Withdrawals.

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


If…
And…
Then…
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 both the For Life withdrawal benefit base and Investment Back remaining withdrawal benefit base to go to zero, the rider will terminate at the next Contract anniversary unless you make additional premium payments or a GMWB Step-Up is applied. For further information, see Principal Income Builder 10 - Excess Withdrawals.



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


Principal Income Builder 10 Rider Summary
Name of Rider
PIB 10
Marketing Name
Principal Income Builder 10
Rider Issue Age
45 – 80
Rider Charge
PIB 10 Rider Charges (as a percentage of average quarterly Investment Back withdrawal benefit base)
•    Maximum annual charge is 2.00%.
•    Current annual charge is 1.20%.
Guaranteed Minimum Withdrawal Benefits
•    Investment Back
•    For Life
Annual Withdrawal Limits
•    Investment Back — 7.00% of the Investment Back withdrawal benefit base.
•    “Single Life” — tiered percentages based on age at first withdrawal, beginning at 3.00% and capping at a maximum of 5.25% of the For Life withdrawal benefit base
•    “Joint Life” — tiered percentages based on age at first withdrawal, beginning at 2.50% and capping at a maximum of 4.75% of the For Life withdrawal benefit base
For Life Withdrawal Benefit Payments
•    “Single Life” or “Joint Life” (your life and the lifetime of your eligible spouse)
•    For Life withdrawal benefit payments default to “Single Life” unless “Joint Life” is elected
•    Available the Contract anniversary following the date the oldest owner turns 59½ — all withdrawals prior to that Contract anniversary are excess withdrawals under the For Life withdrawal option
Termination
•    You may terminate this rider anytime after the 5th Contract anniversary following the rider effective date
GMWB Step-Up
•    Automatic annual GMWB Step-Up available until the later of (a) the Contract anniversary prior to age 80 or (b) 10 years after the rider effective date.
•    A remaining withdrawal benefit base under a withdrawal option is not eligible for a GMWB Step-Up after the remaining withdrawal benefit base reduces to zero, even if additional premium payments are made.
GMWB Bonus
•    If no withdrawals are taken, a GMWB Bonus is applied to the benefit bases on each applicable Contract anniversary.
Investment Restrictions
•    You must select one or more of the available GMWB investment options; there are no additional restrictions on allocations to the Fixed Account or DCA Plus accounts.
Spousal Continuation
•    At the death of the first owner to die, a spouse who is a joint owner or primary beneficiary may continue the Contract with or without this rider.
•    The Investment Back withdrawal option continues; the For Life withdrawal option continues only for eligible spouses.
GMWB Death Benefit - Principal Income Builder 10
While a GMWB rider is active, the GMWB Death Benefit replaces any other death benefit under the Contract. The GMWB Death Benefit is similar to the Standard Death Benefit with the exception of how withdrawals reduce the death benefit amount. The GMWB Death Benefit terminates when the GMWB rider terminates.
1.     If you are the only owner, upon your death, your primary beneficiary may elect one of the following:
a.
receive the GMWB Death Benefit as set forth below;
b.
receive the Investment Back Remaining Withdrawal Benefit Base as a series of payments in an amount and frequency acceptable to us; or
c.
if the primary beneficiary is your spouse, your spouse may continue the Contract with or without this rider as set forth later in this section.

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


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

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


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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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


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

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

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


The owner elected the Investment Back withdrawal option*

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

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

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

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

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


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

Your spouse meets the minimum issue age requirement

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

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

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

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

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


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

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

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

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

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

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

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


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

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

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

Examples Without Excess Withdrawals

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

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

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

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


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


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

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

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

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

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

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

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


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

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

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

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


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

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

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


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

Examples With Excess Withdrawals

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

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

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

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

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

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

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

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

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


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


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

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

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

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

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

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

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

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

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


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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

Appendix F – PIB 10    135
(for applications signed before June 1, 2015)    


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

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

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

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

Appendix F – PIB 10    136
(for applications signed before June 1, 2015)    


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

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

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


Appendix F – PIB 10    137
(for applications signed before June 1, 2015)    


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

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



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

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



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

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

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

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



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

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



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

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



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

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



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

Appendix G – PIB 3    144
(for applications signed before November 2, 2015)    



Principal Income Builder 3 - Termination and Reinstatement
You may not terminate this rider prior to the 5th Contract anniversary following the rider effective date.
At any point in time, we will terminate this rider upon the earliest to occur:
•
The date you send us notice to terminate the rider (after the 5th Contract anniversary following the rider effective date). This will terminate the rider, not the Contract.
•
The date you fully annuitize, fully surrender or otherwise terminate the Contract.
•
The For Life withdrawal benefit base is zero.
•
The date the Contract owner is changed (annuitant is changed if the owner is not a natural person), except a change in owner due to a spousal continuation of the rider as described in 8. DEATH BENEFIT or the removal/ addition of a joint life as described in Principal Income Builder 3 - Covered Life Change.
•
The date your surviving spouse elects to continue the Contract without this rider (even if prior to the 5th Contract anniversary following the rider effective date).
•
The date you make an impermissible change in a covered life.
If this rider terminates for any reason other than full surrender of the Contract, this rider may not be reinstated.
If you surrender the Contract with this rider attached and the Contract is later reinstated, this rider also must be reinstated. At the time this rider is reinstated, we will deduct rider charges scheduled during the period of termination and make any other adjustments necessary to reflect any changes in the amount reinstated and the Contract accumulated value as of the date of termination.
Principal Income Builder 3 - Effect of Divorce
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 Principal Income Builder 3 - 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.

Appendix G – PIB 3    145
(for applications signed before November 2, 2015)    



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 Principal Income Builder 3 - 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 Principal Income Builder 3 - Excess Withdrawals.



Appendix G – PIB 3    146
(for applications signed before November 2, 2015)    



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


Appendix G – PIB 3    147
(for applications signed before November 2, 2015)    



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

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



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

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



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

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

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

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

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



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

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



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

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



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

Appendix H – PIB 10    153
(for applications signed June 1, 2015 through November 1, 2015)    



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

Appendix H – PIB 10    154
(for applications signed June 1, 2015 through November 1, 2015)    



Principal Income Builder 10 - Termination and Reinstatement
You may not terminate this rider prior to the 5th Contract anniversary following the rider effective date.
At any point in time, we will terminate this rider upon the earliest to occur:
•
The date you send us notice to terminate the rider (after the 5th Contract anniversary following the rider effective date). This will terminate the rider, not the Contract.
•
The date you fully annuitize, fully surrender or otherwise terminate the Contract.
•
The For Life withdrawal benefit base is zero.
•
The date the Contract owner is changed (annuitant is changed if the owner is not a natural person), except a change in owner due to a spousal continuation of the rider as described in 8. DEATH BENEFIT or the removal/ addition of a joint life as described in Principal Income Builder 10 - Covered Life Change.
•
The date your surviving spouse elects to continue the Contract without this rider (even if prior to the 5th Contract anniversary following the rider effective date).
•
The date you make an impermissible change in a covered life.
If this rider terminates for any reason other than full surrender of the Contract, this rider may not be reinstated.
If you surrender the Contract with this rider attached and the Contract is later reinstated, this rider also must be reinstated. At the time this rider is reinstated, we will deduct rider charges scheduled during the period of termination and make any other adjustments necessary to reflect any changes in the amount reinstated and the Contract accumulated value as of the date of termination.
Principal Income Builder 10 - Effect of Divorce
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 Principal Income Builder 10 - 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.

Appendix H – PIB 10    155
(for applications signed June 1, 2015 through November 1, 2015)    



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 Principal Income Builder 10 - 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 Principal Income Builder 10 - Excess Withdrawals.


Appendix H – PIB 10    156
(for applications signed June 1, 2015 through November 1, 2015)    



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


Appendix H – PIB 10    157
(for applications signed June 1, 2015 through November 1, 2015)    



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

APPENDIX I – NEW YORK REG 60 –     158
DETERMINING GMWB PERCENTAGES AND SUBMISSION
GUIDELINES (for applications signed on or after November 2, 2015)


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

APPENDIX I – NEW YORK REG 60 –     159
DETERMINING GMWB PERCENTAGES AND SUBMISSION
GUIDELINES (for applications signed on or after November 2, 2015)


APPENDIX J – Historical GMWB Percentages (for applications signed on or after November 2, 2015 and before May 1, 2019)
The tables below include GMWB Percentages for the periods listed.
Principal Income Builder 3 (PIB 3):
Application Signature Date
Contract Anniversary (following the rider effective date)
GMWB Bonus Percentage
Age of Covered Life at First Withdrawal*
For Life Withdrawal Benefit Payment Percentage
Single Life
Joint Life*
November 2, 2015 through and including February 29, 2016
1
7.00%
45-54
3.00%
2.50%
2
6.00%
55-59
3.80%
3.30%
3
5.00%
60-64
3.80%
3.30%
4+
0.00%
65-74
4.80%
4.30%
75+
5.05%
4.55%
March 1, 2016 through and including August 31, 2016
1
7.00%
45-54
3.00%
2.50%
2
6.00%
55-64
3.55%
3.05%
3
5.00%
65-74
4.55%
4.05%
4+
0.00%
75+
5.05%
4.55%
September 1, 2016 through and including December 31, 2016
1
7.00%
45-54
3.00%
2.50%
2
6.00%
55-64
3.55%
3.05%
3
5.00%
65-74
4.80%
4.30%
4+
0.00%
75+
5.05%
4.55%
January 1, 2017 through and including April 30, 2019
1
7.00%
45-54
3.00%
2.50%
2
6.00%
55-59
3.55%
3.05%
3
5.00%
60-64
3.80%
3.30%
4+
0.00%
65-74
4.80%
4.30%
75+
5.05%
4.55%
* Joint Life is based on age of younger covered life at first withdrawal.

Appendix J – Historical GMWB Percentages    160
(for applications signed on or after November 2, 2015 and before May 1, 2018)


Principal Income Builder (PIB 10):
Application Signature Date
Contract Anniversary (following the rider effective date)
GMWB Bonus Percentage
Age of Covered Life at First Withdrawal*
For Life Withdrawal Benefit Payment Percentage
Single Life
Joint Life*
November 2, 2015 through and including February 29, 2016
1-10
5.00%
45-54
3.00%
2.50%
55-64
4.00%
3.50%
11+
0.00%
65-74
5.00%
4.50%
75+
5.25%
4.75%
March 1, 2016 through and including August 31, 2016
1-10
5.00%
45-54
3.00%
2.50%
55-64
3.75%
3.25%
11+
0.00%
65-74
4.75%
4.25%
75+
5.25%
4.75%
September 1, 2016 through and including December 31, 2016
1-10
5.00%
45-54
3.00%
2.50%
55-64
3.75%
3.25%
11+
0.00%
65-74
5.00%
4.50%
75+
5.25%
4.75%
January 1, 2017 through and including April 30, 2018
1-10
5.00%
45-54
3.00%
2.50%
55-59
3.75%
3.25%
11+
0.00%
60-64
4.00%
3.50%
65-74
5.00%
4.50%
75+
5.25%
4.75%
* Joint Life is based on age of younger covered life at first withdrawal.



Appendix J – Historical GMWB Percentages    161
(for applications signed on or after November 2, 2015 and before May 1, 2018)


APPENDIX K – CONDENSED FINANCIAL INFORMATION
Financial statements are included in the Statement of Additional Information.
The following table contains the unit values for the Contract without the Premium Payment Credit Rider for the periods ended December 31. With the exception of the 2013 End of Period unit values, all of the unit values shown below have been updated to factor in the 0.15% administrative fee that was added to this product effective August 1, 2013. The 2013 End of Period values are the actual unit values, which also factor in the administrative fee.
For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
AllianceBernstein Small Cap Growth
 
 
 
 
2018
$34.855
$34.061
-2.28%
120
2017
26.352
34.855
32.27
123
2016
25.102
26.352
4.98
139
2015
25.778
25.102
-2.62
153
2014
26.624
25.778
-3.18
158
2013
18.535
26.624
43.64
174
2012
16.343
18.535
13.41
164
2011
15.865
16.343
3.01
170
2010
11.752
15.865
35.00
168
2009
8.407
11.752
39.79
122
AllianceBernstein Small/Mid Cap Value
 
 
 
 
2018
15.701
13.155
-16.22
254
2017
14.072
15.701
11.58
252
2016
11.408
14.072
23.35
203
2015
12.240
11.408
-6.80
183
2014
11.367
12.240
7.68
131
2013(1)
10.003
11.367
13.64
57
American Century VP Capital Appreciation
 
 
 
 
2018
13.268
12.403
-6.52
147
2017
11.047
13.268
20.11
156
2016
10.853
11.047
1.79
193
2015
10.797
10.853
0.52
211
2014(2)
10.000
10.797
7.97
199
American Century VP Inflation Protection
 
 
 
 
2018
13.269
12.715
-4.18
2,643
2017
12.979
13.269
2.23
3,147
2016
12.609
12.979
2.93
3,410
2015
13.110
12.609
-3.82
3,887
2014
12.870
13.110
1.86
4,504
2013
14.261
12.870
-9.75
5,079
2012
13.468
14.261
5.89
4,968
2011
12.222
13.468
10.19
4,861
2010
11.793
12.222
3.64
5,503
2009
10.847
11.793
8.72
5,350
American Century VP Mid Cap Value
 
 
 
 
2018
24.689
21.189
-14.18
296
2017
22.461
24.689
9.92
312
2016
18.561
22.461
21.01
309
2015
19.125
18.561
-2.95
243
2014
16.685
19.125
14.62
168
2013
13.025
16.685
28.10
120
2012
11.366
13.025
14.60
111
2011
11.624
11.366
-2.22
57
2010(3)
10.048
11.624
15.68
17
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    162



For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
American Century VP Ultra
 
 
 
 
2018
$25.844
$25.635
-0.81%
994
2017
19.854
25.844
30.17
1,248
2016
19.294
19.854
2.90
1,583
2015
18.450
19.294
4.57
1,765
2014
17.035
18.450
8.31
2,159
2013
12.617
17.035
35.02
2,594
2012
11.246
12.617
12.19
3,367
2011
11.307
11.246
-0.54
3,824
2010
9.900
11.307
14.21
3,933
2009
7.463
9.900
32.65
4,281
American Funds Asset Allocation
 
 
 
 
2018
12.201
11.476
-5.94
116
2017
10.644
12.201
14.62
94
2016(4)
10.000
10.644
6.44
41
American Funds Blue Chip Income and Growth
 
 
 
 
2018
12.902
11.621
-9.93
137
2017
11.179
12.902
15.42
146
2016(4)
10.000
11.179
11.79
95
American Funds Global Small Capitalization
 
 
 
 
2018
10.923
9.634
-11.80
85
2017
8.798
10.923
24.15
62
2016
8.739
8.798
0.68
67
2015(5)
10.000
8.739
-12.61
54
American Funds New World
 
 
 
 
2018
11.827
10.025
-15.24
83
2017
9.266
11.827
27.64
86
2016
8.927
9.266
3.80
74
2015(5)
10.000
8.927
-10.73
23
BlackRock Global Allocation VI
 
 
 
 
2018
10.661
9.716
-8.87
93
2017
9.508
10.661
12.13
88
2016
9.289
9.508
2.36
85
2015(5)
10.000
9.289
-7.11
43
BlackRock iShares Dynamic Allocation VI
 
 
 
 
2018
10.817
10.113
-6.50
7
2017
9.562
10.817
13.13
7
2016
9.134
9.562
4.69
5
2015(5)
10.000
9.134
-8.66
3
Columbia Limited Duration Credit
 
 
 
 
2018
9.965
9.824
-1.41
10
2017
9.926
9.965
0.39
9
2016
9.561
9.926
3.82
12
2015(5)
10.000
9.561
-4.39
7
Delaware VIP Limited Term Diversified Income
 
 
 
 
2018
9.943
9.808
-1.36
11
2017
9.893
9.943
0.51
6
2016
9.862
9.893
0.31
49
2015(5)
10.000
9.862
-1.38
14
Delaware VIP Small Cap Value
 
 
 
 
2018
15.592
12.769
-18.11
122
2017
14.147
15.592
10.21
121
2016
10.945
14.147
29.26
110
2015
11.866
10.945
-7.76
68
2014
11.393
11.866
4.15
48
2013(1)
10.003
11.393
13.90
14

Appendix K – Condensed Financial Information    163



For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Dreyfus IP Technology Growth
 
 
 
 
2018
$34.027
$33.126
-2.65%
232
2017
24.238
34.027
40.39
253
2016
23.548
24.238
2.93
215
2015
22.546
23.548
4.44
223
2014
21.453
22.546
5.09
178
2013
16.420
21.453
30.65
170
2012
14.437
16.420
13.74
159
2011
15.920
14.437
-9.32
146
2010
12.452
15.920
27.85
202
2009
8.039
12.452
54.89
153
DWS Small Mid Cap Value (f.k.a. Deutsche Small Mid Cap Value)
 
 
2018
14.189
11.706
-17.50
55
2017
13.064
14.189
8.61
57
2016
11.375
13.064
14.85
65
2015
11.797
11.375
-3.58
60
2014
11.383
11.797
3.64
39
2013(1)
10.003
11.383
13.80
8
Fidelity VIP Contrafund®
 
 
 
 
2018
28.853
26.561
-7.94
1,445
2017
24.064
28.853
19.90
1,636
2016
22.652
24.064
6.23
1,834
2015
22.877
22.652
-0.98
2,022
2014
20.778
22.877
10.10
2,136
2013
16.090
20.778
29.14
2,258
2012
14.050
16.090
14.52
2,514
2011
14.656
14.050
-4.13
2,728
2010
12.711
14.656
15.30
2,671
2009
9.515
12.711
33.59
2,635
Fidelity VIP Equity-Income
 
 
 
 
2018
21.659
19.533
-9.82
438
2017
19.497
21.659
11.09
479
2016
16.797
19.497
16.07
489
2015
17.788
16.797
-5.57
547
2014
16.629
17.788
6.97
553
2013
13.192
16.629
26.05
549
2012
11.430
13.192
15.42
547
2011
11.515
11.430
-0.74
558
2010
10.162
11.515
13.31
558
2009
7.934
10.162
28.08
557
Fidelity VIP Government Money Market
 
 
 
 
2018
9.824
9.846
0.22
1,674
2017
9.894
9.824
-0.71
1,523
2016(6)
10.000
9.894
-1.06
2,223
Fidelity VIP Growth
 
 
 
 
2018
27.607
27.103
-1.83
344
2017
20.765
27.607
32.95
381
2016
20.943
20.765
-0.85
389
2015
19.866
20.943
5.42
425
2014
18.148
19.866
9.47
384
2013
13.532
18.148
34.11
336
2012
11.996
13.532
12.80
340
2011
12.169
11.996
-1.42
379
2010
9.963
12.169
22.14
467
2009
7.895
9.963
26.19
426
 
 
 
 
 

Appendix K – Condensed Financial Information    164



For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Fidelity VIP Mid Cap
 
 
 
 
2018
$33.004
$27.736
-15.96%
580
2017
27.766
33.004
18.87
637
2016
25.158
27.766
10.37
663
2015
25.935
25.158
-3.00
654
2014
24.805
25.935
4.56
604
2013
18.513
24.805
33.99
525
2012
16.389
18.513
12.96
484
2011
18.643
16.389
-12.09
507
2010
14.704
18.643
26.79
558
2009
10.670
14.704
37.81
396
Fidelity VIP Overseas
 
 
 
 
2018
19.618
16.431
-16.24
1,292
2017
15.304
19.618
28.19
1,369
2016
16.383
15.304
-6.59
1,662
2015
16.084
16.383
1.86
1,780
2014
17.787
16.084
-9.57
2,020
2013
13.848
17.787
28.44
2,015
2012
11.655
13.848
18.82
2,387
2011
14.288
11.655
-18.43
2,626
2010
12.830
14.288
11.36
2,507
2009
10.308
12.830
24.47
2,659
Franklin Global Real Estate VIP
 
 
 
 
2018
10.340
9.504
-8.08
25
2017
9.491
10.340
8.94
21
2016
9.573
9.491
-0.86
19
2015(5)
10.000
9.573
-4.27
6
Franklin Small Cap Value VIP
 
 
 
 
2018
24.005
20.621
-14.10
144
2017
21.999
24.005
9.12
160
2016
17.136
21.999
28.38
192
2015
18.764
17.136
-8.68
151
2014
18.920
18.764
-0.82
160
2013
14.083
18.920
34.35
153
2012
12.064
14.083
16.74
121
2011
12.712
12.064
-5.10
123
2010(7)
10.289
12.712
23.55
27
Franklin Templeton Global Bond VIP
 
 
 
 
2018
9.543
9.588
0.47
82
2017
9.510
9.543
0.35
76
2016
9.375
9.510
1.44
47
2015(5)
10.000
9.375
-6.25
25
Goldman Sachs VIT Mid Cap Value
 
 
 
 
2018
26.654
23.533
-11.71
426
2017
24.335
26.654
9.53
478
2016
21.737
24.335
11.95
551
2015
24.289
21.737
-10.51
634
2014
21.688
24.289
11.99
659
2013
16.550
21.688
31.05
625
2012
14.168
16.550
16.81
686
2011
15.346
14.168
-7.68
788
2010
12.449
15.346
23.27
812
2009
9.482
12.449
31.29
911
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    165



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)
Goldman Sachs VIT Small Cap Equity Insights
 
 
 
 
2018
$23.675
$21.331
-9.90%
244
2017
21.519
23.675
10.02
267
2016
17.713
21.519
21.49
299
2015
18.353
17.713
-3.49
325
2014
17.405
18.353
5.45
342
2013
13.014
17.405
33.74
315
2012
11.698
13.014
11.25
346
2011
11.783
11.698
-0.72
418
2010
9.183
11.783
28.31
395
2009
7.294
9.183
25.90
360
Guggenheim Floating Rate Strategies Series F
 
 
 
 
2018
10.610
10.378
-2.19
213
2017
10.399
10.610
2.03
112
2016
9.714
10.399
7.05
116
2015(5)
10.000
9.714
-2.86
51
Guggenheim Global Managed Futures Strategy
 
 
 
 
2018
8.697
7.801
-10.30
7
2017
8.113
8.697
7.20
6
2016
9.652
8.113
-15.94
7
2015(5)
10.000
9.652
-3.48
-
Guggenheim Long Short Equity Fund
 
 
 
 
2018
11.107
9.535
-14.16
5
2017
9.806
11.107
13.26
2
2016
9.880
9.806
-0.75
2
2015(5)
10.000
9.880
-1.20
2
Guggenheim Multi-Hedge Strategies
 
 
 
 
2018
10.027
9.386
-6.40
33
2017
9.808
10.027
2.24
40
2016
9.995
9.808
-1.87
35
2015(5)
10.000
9.995
-0.05
2
Invesco Global Health Care
 
 
 
 
2018
11.146
11.09
-0.50
52
2017
9.759
11.146
14.22
50
2016(4)
10.000
9.759
-2.41
28
Invesco V.I. International Growth
 
 
 
 
2018
12.729
10.671
-16.17
571
2017
10.494
12.729
21.30
693
2016
10.690
10.494
-1.83
832
2015
11.101
10.690
-3.70
870
2014
11.220
11.101
-1.06
853
2013
9.551
11.220
17.47
720
2012
8.373
9.551
14.07
661
2011
9.081
8.373
-7.80
621
2010
8.159
9.081
11.30
446
2009
6.118
8.159
33.36
359
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    166



For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Invesco V.I. SmallCap Equity
 
 
 
 
2018
$26.626
$22.295
-16.27%
165
2017
23.673
26.626
12.47
193
2016
21.422
23.673
10.51
209
2015
22.993
21.422
-6.83
235
2014
22.780
22.993
0.94
244
2013
16.805
22.780
35.55
242
2012
14.964
16.805
12.30
252
2011
15.285
14.964
-2.10
273
2010
12.059
15.285
26.75
219
2009
10.083
12.059
19.60
188
Invesco V.I. Value Opportunities
 
 
 
 
2018
17.905
14.269
-20.31
195
2017
15.460
17.905
15.81
224
2016
13.249
15.460
16.69
269
2015
14.996
13.249
-11.65
300
2014
14.264
14.996
5.13
305
2013
10.814
14.264
31.90
325
2012
9.318
10.814
16.05
352
2011
9.746
9.318
-4.39
389
2010
9.207
9.746
5.85
363
2009
6.308
9.207
45.96
310
Janus Flexible Bond
 
 
 
 
2018
10.082
9.814
-2.66
43
2017
9.892
10.082
1.92
84
2016(4)
10.000
9.892
-1.08
81
MFS International Value
 
 
 
 
2018
12.142
10.808
-10.99
292
2017
9.709
12.142
25.06
366
2016
9.482
9.709
2.39
216
2015(5)
10.000
9.482
-5.18
60
MFS New Discovery
 
 
 
 
2018
13.923
13.493
-3.09
75
2017
11.176
13.923
24.58
60
2016
10.417
11.176
7.29
60
2015
10.796
10.417
-3.51
65
2014
11.835
10.796
-8.78
56
2013(1)
10.003
11.835
18.31
21
MFS Utilities
 
 
 
 
2018
23.525
23.384
-0.60
408
2017
20.836
23.525
12.91
464
2016
18.995
20.836
9.69
480
2015
22.598
18.995
-15.94
483
2014
20.377
22.598
10.90
456
2013
17.189
20.377
18.55
358
2012
15.398
17.189
11.63
259
2011
14.661
15.398
5.03
178
2010
13.098
14.661
11.93
84
2009(8)
10.063
13.098
30.16
30
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    167



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)
MFS Value
 
 
 
 
2018
$27.684
$24.470
-11.61%
177
2017
23.923
27.684
15.72
207
2016
21.323
23.923
12.19
211
2015
21.827
21.323
-2.31
209
2014
20.086
21.827
8.67
200
2013
15.022
20.086
33.71
184
2012
13.146
15.022
14.27
102
2011
13.394
13.146
-1.85
97
2010
12.213
13.394
9.67
100
2009(8)
10.063
12.213
21.37
32
Neuberger Berman AMT Large Cap Value
 
 
 
 
2018
23.362
22.796
-2.42
156
2017
20.899
23.362
11.79
182
2016
16.639
20.899
25.60
224
2015
19.133
16.639
-13.04
230
2014
17.662
19.133
8.33
247
2013
13.659
17.662
29.31
247
2012
13.591
13.659
0.50
305
2011
13.591
11.880
-12.59
291
2010
11.916
13.591
14.06
288
2009
7.742
11.916
53.91
344
Neuberger Berman AMT Mid Cap Growth
 
 
 
 
2018
12.102
11.151
-7.86
167
2017
9.852
12.102
22.84
190
2016
9.592
9.852
2.71
233
2015(5)
10.000
9.592
-4.08
260
Neuberger Berman AMT Sustainable Equity (f.k.a. Neuberger Berman AMT Socially Responsive)
 
2018
26.244
24.395
-7.05
129
2017
22.471
26.244
16.79
157
2016
20.742
22.471
8.34
189
2015
21.133
20.742
-1.85
221
2014
19.415
21.133
8.85
246
2013
14.308
19.415
35.69
315
2012
13.075
14.308
9.43
374
2011
13.681
13.075
-4.43
401
2010
11.293
13.681
21.15
373
2009
8.714
11.293
29.60
384
PIMCO VIT All Asset
 
 
 
 
2018
16.092
15.009
-6.73
170
2017
14.372
16.092
11.97
210
2016
12.906
14.372
11.36
246
2015
14.380
12.906
-10.25
297
2014
14.514
14.380
-0.92
328
2013
14.679
14.514
-1.12
292
2012
12.951
14.679
13.34
263
2011
12.882
12.951
0.54
170
2010
11.551
12.882
11.52
153
2009(8)
10.063
11.551
14.79
35
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    168



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)
PIMCO VIT High Yield Portfolio
 
 
 
 
2018
$15.678
$15.047
-4.03%
995
2017
14.911
15.678
5.15
1,219
2016
13.445
14.911
10.90
1,255
2015
13.862
13.445
-3.01
1,044
2014
13.602
13.862
1.91
1,050
2013
13.044
13.602
4.28
932
2012
11.571
13.044
12.73
852
2011
11.352
11.571
1.93
986
2010(7)
10.096
11.352
12.44
488
PIMCO VIT Low Duration
 
 
 
 
2018
9.849
9.734
-1.17
74
2017
9.864
9.849
-0.15
21
2016
9.875
9.864
-0.11
28
2015(5)
10.000
9.875
-1.25
34
PIMCO VIT Total Return
 
 
 
 
2018
13.020
12.769
-1.93
1,460
2017
12.584
13.020
3.47
1,777
2016
12.429
12.584
1.25
1,906
2015
12.552
12.429
-0.98
2,023
2014
12.206
12.552
2.83
2,159
2013
12.626
12.206
-3.33
2,345
2012
11.683
12.626
8.07
3,113
2011
11.434
11.683
2.18
2,029
2010
10.725
11.434
6.61
1,309
2009(8)
10.063
10.725
6.58
353
Rydex Commodities Strategy
 
 
 
 
2018
7.206
6.030
-16.31
13
2017
6.997
7.206
2.98
8
2016
6.427
6.997
8.87
15
2015(5)
10.000
6.427
-35.73
6
T. Rowe Price Blue Chip Growth
 
 
 
 
2018
31.814
31.886
0.23
580
2017
23.751
31.814
33.95
615
2016
23.958
23.751
-0.86
616
2015
21.928
23.958
9.26
625
2014
20.431
21.928
7.33
488
2013
14.710
20.431
38.89
478
2012
12.653
14.710
16.26
487
2011
12.658
12.653
-0.04
486
2010
11.066
12.658
14.39
453
2009
7.914
11.066
39.83
383
T. Rowe Price Health Sciences
 
 
 
 
2018
54.374
54.073
-0.55
430
2017
43.311
54.374
25.54
479
2016
49.193
43.311
-11.96
518
2015
44.356
49.193
10.90
640
2014
34.278
44.356
29.40
571
2013
23.095
34.278
48.42
497
2012
17.880
23.095
29.17
395
2011
16.425
17.880
8.86
328
2010
14.446
16.425
13.70
303
2009
11.153
14.446
29.53
257
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    169



For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Van Eck Global Hard Assets
 
 
 
 
2018
$10.864
$7.667
-29.42%
359
2017
11.238
10.864
-3.33
382
2016
7.947
11.238
41.41
473
2015
12.142
7.947
-34.55
421
2014
15.267
12.142
-20.47
382
2013
14.037
15.267
8.76
362
2012
13.806
14.037
1.67
311
2011
16.806
13.806
-17.85
319
2010
13.245
16.806
26.89
190
2009(8)
10.063
13.245
31.62
60
Core Plus Bond
 
 
 
 
2018
24.730
24.040
-2.79
2,210
2017
23.928
24.730
3.35
2,617
2016
23.312
23.928
2.64
2,856
2015
23.756
23.312
-1.87
3,144
2014
22.892
23.756
3.77
3,611
2013
23.416
22.892
-2.24
3,962
2012
22.082
23.416
6.04
4,098
2011
20.913
22.082
5.59
4,013
2010
18.994
20.913
10.10
4,398
2009
15.930
18.994
19.23
4,388
Diversified Balanced
 
 
 
 
2018
16.299
15.525
-4.75
55,941
2017
14.833
16.299
9.89
61,941
2016
14.072
14.833
5.41
66,153
2015
14.248
14.072
-1.24
65,359
2014
13.452
14.248
5.92
63,235
2013
12.076
13.452
11.39
56,392
2012
11.163
12.076
8.18
43,622
2011
10.925
11.163
2.18
27,478
2010(7)
10.133
10.925
7.82
14,593
Diversified Balanced Managed Volatility
 
 
 
 
2018
12.016
11.469
-4.56
10,584
2017
10.987
12.016
9.36
11,553
2016
10.470
10.987
4.94
11,817
2015
10.616
10.470
-1.38
10,272
2014
10.071
10.616
5.41
6,137
2013(9)
9.917
10.071
1.55
64
Diversified Growth
 
 
 
 
2018
18.038
16.984
-5.84
190,741
2017
16.017
18.038
12.62
203,679
2016
15.019
16.017
6.64
208,330
2015
15.205
15.019
-1.22
197,094
2014
14.299
15.205
6.34
173,923
2013
12.292
14.299
16.33
140,583
2012
11.167
12.292
10.07
91,780
2011
11.074
11.167
0.84
62,385
2010(7)
10.163
11.074
8.96
27,443
Diversified Growth Managed Volatility
 
 
 
 
2018
12.497
11.821
-5.41
22,485
2017
11.181
12.497
11.77
23,527
2016
10.542
11.181
6.06
23,324
2015
10.684
10.542
-1.33
19,518
2014
10.120
10.684
5.57
11,309
2013(9)
9.877
10.120
2.46
309

Appendix K – Condensed Financial Information    170



For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Diversified Income
 
 
 
 
2018
$13.019
$12.532
-3.74%
16,123
2017
12.133
13.019
7.30
18,612
2016
11.656
12.133
4.09
19,429
2015
11.801
11.656
-1.23
15,737
2014
11.196
11.801
5.40
12,955
2013
24.265
11.196
-53.86
8,875
2012(10)
10.049
10.499
4.48
4,725
Diversified International
 
 
 
 
2018
33.571
27.297
-18.69
1,075
2017
26.377
33.571
27.28
1,159
2016
26.654
26.377
-1.04
1,357
2015
27.126
26.654
-1.74
1,578
2014
28.421
27.126
-4.56
1,638
2013
24.265
28.421
17.13
1,643
2012
20.777
24.265
16.79
1,796
2011
23.644
20.777
-12.13
1,998
2010
21.087
23.644
12.13
2,035
2009
16.594
21.087
27.08
1,498
Equity Income
 
 
 
 
2018
19.298
18.075
-6.34
6,833
2017
16.163
19.298
19.40
7,537
2016
14.164
16.163
14.11
9,196
2015
14.951
14.164
-5.26
10,682
2014
13.442
14.951
11.23
12,022
2013
10.708
13.442
25.53
14,254
2012
9.609
10.708
11.44
16,532
2011
9.242
9.609
3.97
18,577
2010
8.067
9.242
14.57
12,283
2009
6.817
8.067
18.34
13,024
Government & High Quality Bond
 
 
 
 
2018
12.119
12.059
-0.50
2,641
2017
12.063
12.119
0.46
3,125
2016
12.016
12.063
0.39
3,531
2015
12.090
12.016
-0.61
3,740
2014
11.668
12.090
3.62
4,302
2013
11.955
11.668
-2.40
4,762
2012
11.668
11.955
2.46
5,088
2011
11.138
11.668
4.76
4,636
2010
10.671
11.138
4.38
5,005
2009
10.164
10.671
4.99
694
Income
 
 
 
 
2018
10.489
10.423
-0.62
273
2017
10.119
10.489
3.66
315
2016
9.707
10.119
4.24
337
2015(5)
10.000
9.707
-2.93
51
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    171



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)
International Emerging Markets
 
 
 
 
2018
$40.467
$31.513
-22.13%
738
2017
29.137
40.467
38.89
822
2016
27.010
29.137
7.87
957
2015
31.779
27.010
-15.01
1,022
2014
33.482
31.779
-5.09
1,005
2013
35.611
33.482
-5.98
982
2012
29.896
35.611
19.12
945
2011
36.746
29.896
-18.64
952
2010
31.244
36.746
17.61
894
2009
18.682
31.244
67.24
878
LargeCap Growth
 
 
 
 
2018
37.641
34.405
-8.60
263
2017
28.297
37.641
33.02
299
2016
30.249
28.297
-6.45
327
2015
29.219
30.249
3.53
351
2014
26.666
29.219
9.57
387
2013
20.195
26.666
32.04
429
2012
17.528
20.195
15.22
474
2011
18.560
17.528
-5.56
528
2010
15.899
18.560
16.74
549
2009
12.694
15.899
25.25
576
LargeCap Growth I
 
 
 
 
2018
76.630
78.278
2.15
234
2017
58.115
76.630
31.86
262
2016
58.199
58.115
-0.14
293
2015
54.763
58.199
6.27
301
2014
51.131
54.763
7.10
295
2013
38.087
51.131
34.25
273
2012
33.191
38.087
14.75
255
2011
33.769
33.191
-1.71
252
2010
28.631
33.769
17.95
246
2009
19.013
28.631
50.59
273
LargeCap S&P 500 Index
 
 
 
 
2018
21.133
19.884
-5.91
1,933
2017
17.640
21.133
19.80
2,185
2016
16.031
17.640
10.04
2,223
2015
16.073
16.031
-0.26
2,337
2014
14.388
16.073
11.71
2,376
2013
11.050
14.388
30.21
2,290
2012
9.702
11.050
13.89
2,277
2011
9.671
9.702
0.32
2,574
2010
8.553
9.671
13.07
2,467
2009
6.867
8.553
24.55
2,416
MidCap
 
 
 
 
2018
110.054
101.411
-7.85
896
2017
88.914
110.054
23.78
1,048
2016
81.697
88.914
8.83
1,213
2015
81.509
81.697
0.23
1,363
2014
73.158
81.509
11.42
1,558
2013
55.395
73.158
32.07
1,774
2012
47.033
55.395
17.78
1,963
2011
44.045
47.033
6.78
2,172
2010
35.990
44.045
22.38
2,193
2009
27.285
35.990
31.90
1,398
 
 
 
 
 

Appendix K – Condensed Financial Information    172



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)
Multi-Asset Income
 
 
 
 
2018
$11.478
$10.681
-6.95%
10
2017
10.393
11.478
10.44
7
2016(4)
10.000
10.393
3.93
9
Principal Capital Appreciation
 
 
 
 
2018
20.750
19.762
-4.76
2,978
2017
17.425
20.750
19.08
3,542
2016
16.196
17.425
7.59
4,164
2015
16.074
16.196
0.76
4,591
2014
14.495
16.074
10.89
935
2013
11.081
14.495
30.81
935
2012
9.873
11.081
12.24
842
2011
9.999
9.873
-1.26
733
2010
8.787
9.999
13.79
558
2009
6.864
8.787
28.02
385
Principal LifeTime 2010
 
 
 
 
2018
17.015
16.127
-5.22
917
2017
15.485
17.015
9.88
1,234
2016
14.920
15.485
3.79
1,510
2015
15.310
14.920
-2.55
1,667
2014
14.814
15.310
3.35
1,880
2013
13.553
14.814
9.30
1,993
2012
12.296
13.553
10.22
2,148
2011
12.291
12.296
0.04
2,309
2010
10.940
12.291
12.35
2,473
2009
8.870
10.940
23.34
2,598
Principal LifeTime 2020
 
 
 
 
2018
19.401
18.097
-6.72
4,097
2017
17.106
19.401
13.41
4,823
2016
16.403
17.106
4.29
5,598
2015
16.825
16.403
-2.51
6,191
2014
16.135
16.825
4.28
6,965
2013
14.103
16.135
14.41
8,239
2012
12.463
14.103
13.16
8,852
2011
12.776
12.463
-2.45
9,541
2010
11.261
12.776
13.45
10,091
2009
8.957
11.261
25.72
10,584
Principal LifeTime 2030
 
 
 
 
2018
20.082
18.402
-8.36
2,726
2017
17.220
20.082
16.62
3,143
2016
16.495
17.220
4.40
3,078
2015
16.906
16.495
-2.43
3,327
2014
16.165
16.906
4.58
3,371
2013
13.773
16.165
17.37
3,454
2012
12.085
13.773
13.97
3,594
2011
12.534
12.085
-3.58
3,660
2010
11.014
12.534
13.80
3,740
2009
8.711
11.014
26.44
3,369
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    173



For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Principal LifeTime 2040
 
 
 
 
2018
$21.281
$19.337
-9.14%
601
2017
17.883
21.281
19.00
636
2016
17.197
17.883
3.99
683
2015
17.589
17.197
-2.23
686
2014
16.795
17.589
4.73
706
2013
13.904
16.795
20.79
630
2012
12.082
13.904
15.08
676
2011
12.655
12.082
-4.53
689
2010
11.081
12.655
14.20
672
2009
8.674
11.081
27.75
557
Principal LifeTime 2050
 
 
 
 
2018
21.703
19.550
-9.92
465
2017
18.019
21.703
20.44
467
2016
17.308
18.019
4.11
466
2015
17.674
17.308
-2.07
462
2014
16.876
17.674
4.73
406
2013
13.823
16.876
22.09
373
2012
11.975
13.823
15.43
360
2011
12.642
11.975
-5.28
323
2010
11.032
12.642
14.59
327
2009
8.603
11.032
28.23
319
Principal LifeTime Strategic Income
 
 
 
 
2018
15.175
14.513
-4.36
627
2017
14.149
15.175
7.25
796
2016
13.694
14.149
3.32
859
2015
14.021
13.694
-2.33
954
2014
13.597
14.021
3.12
1,100
2013
13.116
13.597
3.67
1,263
2012
12.131
13.116
8.12
1,405
2011
11.883
12.131
2.09
1,475
2010
10.834
11.883
9.68
1,505
2009
9.236
10.834
17.30
1,556
Real Estate Securities
 
 
 
 
2018
59.952
56.622
-5.55
498
2017
55.676
59.952
7.68
568
2016
53.342
55.676
4.38
608
2015
51.911
53.342
2.76
629
2014
39.634
51.911
30.98
618
2013
38.611
39.634
2.65
590
2012
33.419
38.611
15.54
518
2011
31.110
33.419
7.42
480
2010
25.097
31.110
23.96
431
2009
19.741
25.097
27.13
454
SAM Balanced
 
 
 
 
2018
16.412
15.367
-6.37
24,322
2017
14.446
16.412
13.61
28,051
2016
13.714
14.446
5.34
31,221
2015
14.021
13.714
-2.19
35,357
2014
13.311
14.021
5.33
39,321
2013
11.467
13.311
16.08
46,819
2012
10.314
11.467
11.18
50,915
2011
10.357
10.314
-0.42
53,610
2010
9.245
10.357
12.03
55,182
2009
7.570
9.245
22.13
51,928
 
 
 
 
 

Appendix K – Condensed Financial Information    174



For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
SAM Conservative Balanced
 
 
 
 
2018
$15.646
$14.889
-4.84%
5,865
2017
14.235
15.646
9.91
6,855
2016
13.571
14.235
4.89
8,005
2015
13.871
13.571
-2.16
8,556
2014
13.243
13.871
4.74
9,316
2013
12.040
13.243
9.99
10,333
2012
10.981
12.040
9.64
10,099
2011
10.886
10.981
0.87
10,213
2010
9.871
10.886
10.28
10,654
2009
8.263
9.871
19.46
10,128
SAM Conservative Growth
 
 
 
 
2018
16.692
15.369
-7.93
4,300
2017
14.131
16.692
18.12
4,866
2016
13.393
14.131
5.51
5,237
2015
13.732
13.393
-2.47
5,287
2014
12.963
13.732
5.93
4,956
2013
10.677
12.963
21.41
4,368
2012
9.483
10.677
12.59
3,903
2011
9.661
9.483
-1.84
3,570
2010
8.503
9.661
13.62
3,116
2009
6.860
8.503
23.95
2,317
SAM Flexible Income
 
 
 
 
2018
15.334
14.822
-3.34
6,252
2017
14.344
15.334
6.90
7,644
2016
13.589
14.344
5.56
8,127
2015
13.963
13.589
-2.68
8,843
2014
13.355
13.963
4.55
9,081
2013
12.567
13.355
6.27
9,299
2012
11.520
12.567
9.09
9,859
2011
11.300
11.520
1.95
9,389
2010
10.369
11.300
8.98
9,408
2009
8.766
10.369
18.29
8,280
SAM Strategic Growth
 
 
 
 
2018
16.810
15.149
-9.88
2,406
2017
13.947
16.810
20.53
2,754
2016
13.324
13.947
4.68
3,160
2015
13.735
13.324
-2.99
3,257
2014
12.816
13.735
7.17
2,955
2013
10.197
12.816
25.68
2,552
2012
8.952
10.197
13.91
2,361
2011
9.253
8.952
-3.25
2,460
2010
8.062
9.253
14.77
2,231
2009
6.414
8.062
25.69
1,781
Short-Term Income
 
 
 
 
2018
11.712
11.666
-0.39
5,167
2017
11.600
11.712
0.97
5,958
2016
11.518
11.600
0.71
6,744
2015
11.598
11.518
-0.69
7,371
2014
11.561
11.598
0.32
8,558
2013
11.592
11.561
-0.27
9,294
2012
11.197
11.592
3.53
9,441
2011
11.201
11.197
-0.04
8,893
2010
10.901
11.201
2.75
8,687
2009
10.055
10.901
8.41
1,322
 
 
 
 
 

Appendix K – Condensed Financial Information    175



For Contracts Without the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior
Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
SmallCap
 
 
 
 
2018
$26.272
$23.083
-12.14%
1,488
2017
23.604
26.272
11.30
1,671
2016
20.391
23.604
15.76
1,919
2015
20.699
20.391
-1.49
2,210
2014
20.012
20.699
3.43
165
2013(1)
16.342
20.012
22.46
40
TOPS Aggressive Growth ETF
 
 
 
 
2018(11)
10.000
8.621
-13.79
-
TOPS Balanced ETF
 
 
 
 
2018(11)
10.000
9.287
-7.13
-
TOPS Conservative ETF
 
 
 
 
2018(11)
10.000
9.617
-3.83
-
TOPS Growth ETF
 
 
 
 
2018(11)
10.000
8.811
-11.89
-
TOPS Moderate Growth ETF
 
 
 
 
2018(11)
10.000
9.124
-8.76
-
(1)
Commenced Operations on May 18, 2013
(2)
Commenced Operations on April 25, 2014
(3)
Commenced Operations on May 22, 2010
(4)
Commenced Operations on May 21, 2016
(5)
Commenced Operations on May 16, 2015
(6)
Commenced Operations on April 8, 2016
(7)
Commenced Operations on January 4, 2010
(8)
Commenced Operations on May 16, 2009
(9)
Commenced Operations on October 31, 2013
(10)
Commenced Operations on May 15, 2012
(11)
Commenced Operations on June 11, 2018


Appendix K – Condensed Financial Information    176



The following table contains the unit values for the Contract with the Premium Payment Credit Rider for the periods ended December 31. With the exception of the 2013 End of Period unit values, all of the unit values shown below have been updated to factor in the 0.15% administrative fee that was added to this product effective August 1, 2013. The 2013 End of Period values are the actual unit values, which also factor in the administrative fee.
For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
AllianceBernstein Small Cap Growth
 
 
 
 
2018
$32.168
$31.246
-2.87%
13
2017
24.467
32.168
31.48
15
2016
23.446
24.467
4.35
17
2015
24.222
23.446
-3.20
22
2014
25.169
24.222
-3.76
36
2013
17.627
25.169
42.79
61
2012
15.636
17.627
12.73
63
2011
15.270
15.636
2.40
90
2010
11.379
15.270
34.19
66
2009
8.189
11.379
38.95
42
AllianceBernstein Small/Mid Cap Value
 
 
 
 
2018
15.272
12.718
-16.72
47
2017
13.769
15.272
10.92
64
2016
11.230
13.769
22.61
66
2015
12.122
11.230
-7.36
38
2014
11.325
12.122
7.04
37
2013(1)
10.003
11.325
13.22
20
American Century VP Capital Appreciation
 
 
 
 
2018
12.978
12.059
-7.08
2
2017
10.871
12.978
19.38
21
2016
10.743
10.871
1.19
20
2015
10.753
10.743
-0.09
19
2014(2)
10.000
10.753
7.53
42
American Century VP Inflation Protection
 
 
 
 
2018
12.246
11.664
-4.75
13
2017
12.051
12.246
1.62
23
2016
11.777
12.051
2.33
54
2015
12.319
11.777
-4.40
191
2014
12.167
12.319
1.25
498
2013
13.563
12.167
-10.29
1,108
2012
12.886
13.563
5.25
1,356
2011
11.764
12.886
9.54
1,358
2010
11.419
11.764
3.02
1,634
2009
10.567
11.419
8.06
1,625
American Century VP Mid Cap Value
 
 
 
 
2018
23.587
20.121
-14.70
38
2017
21.587
23.587
9.27
52
2016
17.946
21.587
20.29
55
2015
18.602
17.946
-3.53
47
2014
16.327
18.602
13.93
36
2013
12.816
16.327
27.40
32
2012
11.250
12.816
13.92
18
2011
11.575
11.250
-2.81
16
2010(3)
10.043
11.575
15.25
7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    177



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
American Century VP Ultra
 
 
 
 
2018
$23.853
$23.518
-1.41%
24
2017
18.434
23.853
29.40
38
2016
18.022
18.434
2.29
37
2015
17.337
18.022
3.95
116
2014
16.104
17.337
7.66
290
2013
11.999
16.104
34.21
634
2012
10.760
11.999
11.51
1,078
2011
10.883
10.760
-1.13
1,252
2010
9.586
10.883
13.53
1,324
2009
7.270
9.586
31.86
1,459
American Funds Asset Allocation
 
 
 
 
2018
12.083
11.297
-6.50
71
2017
10.605
12.083
13.94
35
2016(4)
10.000
10.605
6.05
27
American Funds Blue Chip Income and Growth
 
 
 
 
2018
12.778
11.440
-10.47
62
2017
11.138
12.778
14.73
52
2016(4)
10.000
11.138
11.38
30
American Funds Global Small Capitalization
 
 
 
 
2018
10.752
9.426
-12.33
11
2017
8.712
10.752
23.41
8
2016
8.706
8.712
0.07
8
2015(5)
10.000
8.706
-12.94
-
American Funds New World
 
 
 
 
2018
11.643
9.809
-15.75
7
2017
9.175
11.643
26.89
18
2016
8.893
9.175
3.17
13
2015(5)
10.000
8.893
-11.07
-
BlackRock Global Allocation VI
 
 
 
 
2018
10.495
9.506
-9.42
24
2017
9.415
10.495
11.47
5
2016
9.253
9.415
1.75
4
2015(5)
10.000
9.253
-7.47
1
BlackRock iShares Dynamic Allocation VI
 
 
 
 
2018
10.648
9.895
-7.07
5
2017
9.469
10.648
12.45
6
2016
9.099
9.469
4.07
6
2015(5)
10.000
9.099
-9.01
4
Columbia Limited Duration Credit
 
 
 
 
2018
9.809
9.612
-2.00
1
2017
9.829
9.809
-0.20
1
2016
9.525
9.829
3.19
1
2015(5)
10.000
9.525
-4.75
1
Delaware VIP Limited Term Diversified Income
 
 
 
 
2018
9.788
9.597
-1.96
2
2017
9.797
9.788
-0.09
1
2016
9.825
9.797
-0.28
1
2015(5)
10.000
9.825
-1.75
1
Delaware VIP Small Cap Value
 
 
 
 
2018
15.165
12.345
-18.60
24
2017
13.843
15.165
9.55
40
2016
10.774
13.843
28.49
31
2015
11.751
10.774
-8.31
23
2014
11.350
11.751
3.53
12
2013(1)
10.003
11.350
13.47
7
 
 
 
 
 

Appendix K – Condensed Financial Information    178



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Dreyfus IP Technology Growth
 
 
 
 
2018
$31.405
$30.389
-3.24%
29
2017
22.504
31.405
39.55
52
2016
21.995
22.504
2.31
56
2015
21.186
21.995
3.82
43
2014
20.280
21.186
4.47
48
2013
15.616
20.280
29.87
48
2012
13.812
15.616
13.06
45
2011
15.324
13.812
-9.87
46
2010
12.057
15.324
27.10
41
2009
7.831
12.057
53.97
44
DWS Small Mid Cap Value (f.k.a. Deutsche Small Mid Cap Value)
 
 
2018
13.801
11.318
-17.99
9
2017
12.783
13.801
7.96
9
2016
11.197
12.783
14.16
9
2015
11.682
11.197
-4.15
11
2014
11.341
11.682
3.01
10
2013(1)
10.003
11.341
13.38
4
Fidelity VIP Contrafund®
 
 
 
 
2018
26.630
24.366
-8.50
58
2017
22.343
26.630
19.19
92
2016
21.158
22.343
5.60
116
2015
21.497
21.158
-1.58
176
2014
19.642
21.497
9.44
286
2013
15.302
19.642
28.36
454
2012
13.443
15.302
13.83
573
2011
14.107
13.443
-4.71
637
2010
12.308
14.107
14.62
646
2009
9.269
12.308
32.79
658
Fidelity VIP Equity-Income
 
 
 
 
2018
19.720
17.677
-10.36
44
2017
17.858
19.720
10.43
52
2016
15.478
17.858
15.38
64
2015
16.489
15.478
-6.13
82
2014
15.508
16.489
6.33
114
2013
12.377
15.508
25.30
150
2012
10.788
12.377
14.73
178
2011
10.934
10.788
-1.34
184
2010
9.707
10.934
12.64
170
2009
7.624
9.707
27.32
169
Fidelity VIP Government Money Market
 
 
 
 
2018
9.713
9.676
-0.38
604
2017
9.840
9.713
-1.29
82
2016(6)
10.000
9.840
-1.60
157
Fidelity VIP Growth
 
 
 
 
2018
25.479
24.864
-2.42
39
2017
19.280
25.479
32.15
41
2016
19.561
19.280
-1.44
41
2015
18.668
19.561
4.78
56
2014
17.155
18.668
8.82
97
2013
12.869
17.155
33.30
131
2012
11.477
12.869
12.13
161
2011
11.712
11.477
-2.01
181
2010
9.647
11.712
21.41
200
2009
7.691
9.647
25.43
231
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    179



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Fidelity VIP Mid Cap
 
 
 
 
2018
$30.461
$25.444
-16.47%
80
2017
25.780
30.461
18.16
88
2016
23.499
25.780
9.71
75
2015
24.371
23.499
-3.58
80
2014
23.449
24.371
3.93
88
2013
17.607
23.449
33.18
98
2012
15.681
17.607
12.28
108
2011
17.944
15.681
-12.61
137
2010
14.238
17.944
26.03
135
2009
10.394
14.238
36.98
125
Fidelity VIP Overseas
 
 
 
 
2018
18.106
15.073
-16.75
25
2017
14.209
18.106
27.43
39
2016
15.303
14.209
-7.15
50
2015
15.114
15.303
1.25
138
2014
16.814
15.114
-10.11
347
2013
13.169
16.814
27.68
590
2012
11.151
13.169
18.10
838
2011
13.752
11.151
-18.91
954
2010
12.423
13.752
10.70
918
2009
10.041
12.423
23.72
992
Franklin Global Real Estate VIP
 
 
 
 
2018
10.178
9.299
-8.63
-
2017
9.398
10.178
8.30
2
2016
9.537
9.398
-1.46
3
2015(5)
10.000
9.537
-4.63
1
Franklin Small Cap Value VIP
 
 
 
 
2018
22.880
19.537
-14.61
23
2017
21.094
22.880
8.47
33
2016
16.530
21.094
27.61
34
2015
18.209
16.530
-9.22
28
2014
18.471
18.209
-1.42
21
2013
13.832
18.471
33.54
24
2012
11.921
13.832
16.03
21
2011
12.636
11.921
-5.66
20
2010(7)
10.288
12.636
22.82
8
Franklin Templeton Global Bond VIP
 
 
 
 
2018
9.394
9.381
-0.13
1
2017
9.417
9.394
-0.25
1
2016
9.340
9.417
0.82
1
2015(5)
10.000
9.340
-6.60
1
Goldman Sachs VIT Mid Cap Value
 
 
 
 
2018
24.600
21.589
-12.24
24
2017
22.595
24.600
8.87
26
2016
20.304
22.595
11.28
28
2015
22.824
20.304
-11.04
46
2014
20.502
22.824
11.33
104
2013
15.739
20.502
30.26
214
2012
13.555
15.739
16.11
279
2011
14.771
13.555
-8.23
319
2010
12.055
14.771
22.53
338
2009
9.236
12.055
30.52
385
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    180



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Goldman Sachs VIT Small Cap Equity Insights
 
 
 
 
2018
$21.850
$19.568
-10.44%
16
2017
19.979
21.850
9.36
16
2016
16.544
19.979
20.76
18
2015
17.245
16.544
-4.06
21
2014
16.454
17.245
4.81
35
2013
12.377
16.454
32.94
96
2012
11.192
12.377
10.59
111
2011
11.341
11.192
-1.31
117
2010
8.892
11.341
27.54
121
2009
7.105
8.892
25.15
127
Guggenheim Floating Rate Strategies Series F
 
 
 
 
2018
10.444
10.154
-2.78
18
2017
10.298
10.444
1.42
2
2016
9.677
10.298
6.42
5
2015(5)
10.000
9.677
-3.23
2
Guggenheim Global Managed Futures Strategy
 
 
 
 
2018
8.561
7.633
-10.84
1
2017
8.034
8.561
6.56
1
2016
9.616
8.034
-16.45
1
2015(5)
10.000
9.616
-3.84
-
Guggenheim Long Short Equity Fund
 
 
 
 
2018
10.933
9.329
-14.67
-
2017
9.711
10.933
12.58
-
2016
9.843
9.711
-1.34
-
2015(5)
10.000
9.843
-1.57
-
Guggenheim Multi-Hedge Strategies
 
 
 
 
2018
9.871
9.183
-6.97
2
2017
9.713
9.871
1.62
2
2016
9.957
9.713
-2.45
2
2015(5)
10.000
9.957
-0.43
-
Invesco Global Health Care
 
 
 
 
2018
11.039
10.917
-1.10
4
2017
9.723
11.039
13.54
4
2016(4)
10.000
9.723
-2.77
3
Invesco V.I. International Growth
 
 
 
 
2018
12.014
10.012
-16.67
50
2017
9.964
12.014
20.58
59
2016
10.212
9.964
-2.43
75
2015
10.668
10.212
-4.27
84
2014
10.848
10.668
-1.66
90
2013
9.290
10.848
16.77
71
2012
8.193
9.290
13.39
74
2011
8.939
8.193
-8.35
78
2010
8.080
8.939
10.63
57
2009
6.095
8.080
32.57
41
Invesco V.I. SmallCap Equity
 
 
 
 
2018
24.574
20.452
-16.77
25
2017
21.979
24.574
11.81
30
2016
20.009
21.979
9.85
31
2015
21.606
20.009
-7.39
31
2014
21.534
21.606
0.33
41
2013
15.981
21.534
34.75
52
2012
14.317
15.981
11.62
53
2011
14.712
14.317
-2.68
57
2010
11.677
14.712
25.99
48
2009
9.822
11.677
18.89
50

Appendix K – Condensed Financial Information    181



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Invesco V.I. Value Opportunities
 
 
 
 
2018
$16.524
$13.089
-20.79%
9
2017
14.354
16.524
15.12
23
2016
12.375
14.354
15.99
28
2015
14.091
12.375
-12.18
39
2014
13.484
14.091
4.50
55
2013
10.284
13.484
31.12
77
2012
8.915
10.284
15.36
76
2011
9.381
8.915
-4.97
87
2010
8.915
9.381
5.23
82
2009
6.145
8.915
45.08
78
Janus Flexible Bond
 
 
 
 
2018
9.985
9.661
-3.25
13
2017
9.856
9.985
1.31
1
2016(4)
10.000
9.856
-1.44
-
MFS International Value
 
 
 
 
2018
11.952
10.575
-11.52
9
2017
9.614
11.952
24.32
8
2016
9.446
9.614
1.78
7
2015(5)
10.000
9.446
-5.54
4
MFS New Discovery
 
 
 
 
2018
13.543
13.045
-3.68
13
2017
10.936
13.543
23.84
12
2016
10.254
10.936
6.65
9
2015
10.691
10.254
-4.09
11
2014
11.791
10.691
-9.33
10
2013(1)
10.003
11.791
17.87
10
MFS Utilities
 
 
 
 
2018
22.338
22.071
-1.20
46
2017
19.903
22.338
12.24
43
2016
18.254
19.903
9.03
47
2015
21.848
18.254
-16.45
54
2014
19.818
21.848
10.24
79
2013
16.819
19.818
17.83
68
2012
15.157
16.819
10.97
52
2011
14.518
15.157
4.40
34
2010
13.049
14.518
11.26
27
2009(8)
10.063
13.049
29.67
15
MFS Value
 
 
 
 
2018
26.287
23.096
-12.14
15
2017
22.852
26.287
15.03
19
2016
20.491
22.852
11.52
32
2015
21.102
20.491
-2.90
35
2014
19.535
21.102
8.02
38
2013
14.698
19.535
32.91
39
2012
12.941
14.698
13.58
31
2011
13.264
12.941
-2.44
17
2010
12.167
13.264
9.02
10
2009(8)
10.063
12.167
20.91
7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    182



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Neuberger Berman AMT Large Cap Value
 
 
 
 
2018
$21.562
$20.912
-3.01%
13
2017
19.403
21.562
11.12
14
2016
15.542
19.403
24.84
16
2015
17.978
15.542
-13.55
14
2014
16.697
17.978
7.67
29
2013
12.989
16.697
28.55
64
2012
11.366
12.989
14.28
89
2011
13.081
11.366
-13.11
106
2010
11.538
13.081
13.37
107
2009
7.542
11.538
52.98
113
Neuberger Berman AMT Mid Cap Growth
 
 
 
 
2018
11.947
10.941
-8.42
3
2017
9.784
11.947
22.11
6
2016
9.583
9.784
2.10
10
2015(5)
10.000
9.583
-4.17
22
Neuberger Berman AMT Sustainable Equity (f.k.a. Neuberger Berman AMT Socially Responsive)
 
2018
24.221
22.379
-7.60
2
2017
20.864
24.221
16.09
10
2016
19.374
20.864
7.69
15
2015
19.858
19.374
-2.44
25
2014
18.354
19.858
8.19
44
2013
13.607
18.354
34.89
72
2012
12.510
13.607
8.77
86
2011
13.168
12.510
-5.00
94
2010
10.935
13.168
20.42
97
2009
8.488
10.935
28.83
93
PIMCO VIT All Asset
 
 
 
 
2018
15.280
14.166
-7.29
13
2017
13.729
15.280
11.30
20
2016
12.403
13.729
10.69
22
2015
13.903
12.403
-10.79
25
2014
14.117
13.903
-1.52
38
2013
14.363
14.117
-1.71
54
2012
12.749
14.363
12.66
59
2011
12.756
12.749
-0.05
31
2010
11.507
12.756
10.85
81
2009(8)
10.063
11.507
14.35
10
PIMCO VIT High Yield Portfolio
 
 
 
 
2018
14.943
14.255
-4.60
50
2017
14.297
14.943
4.52
62
2016
12.969
14.297
10.24
130
2015
13.452
12.969
-3.59
67
2014
13.279
13.452
1.30
108
2013
12.812
13.279
3.65
116
2012
11.433
12.812
12.06
274
2011
11.284
11.433
1.32
353
2010(7)
10.095
11.284
11.78
226
PIMCO VIT Low Duration
 
 
 
 
2018
9.695
9.524
-1.76
-
2017
9.768
9.695
-0.75
-
2016
9.838
9.768
-0.71
-
2015(5)
10.000
9.838
-1.62
-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    183



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
PIMCO VIT Total Return
 
 
 
 
2018
$12.363
$12.052
-2.52%
68
2017
12.021
12.363
2.85
145
2016
11.944
12.021
0.64
123
2015
12.135
11.944
-1.57
116
2014
11.871
12.135
2.22
168
2013
12.354
11.871
-3.91
211
2012
11.500
12.354
7.43
505
2011
11.323
11.500
1.56
263
2010
10.684
11.323
5.98
151
2009(8)
10.063
10.684
6.17
48
Rydex Commodities Strategy
 
 
 
 
2018
7.093
5.900
-16.82
10
2017
6.929
7.093
2.36
12
2016
6.403
6.929
8.21
2
2015(5)
10.000
6.403
-35.97
-
T. Rowe Price Blue Chip Growth
 
 
 
 
2018
29.362
29.252
-0.37
84
2017
22.052
29.362
33.15
70
2016
22.378
22.052
-1.46
85
2015
20.605
22.378
8.60
90
2014
19.314
20.605
6.68
93
2013
13.989
19.314
38.07
88
2012
12.105
13.989
15.56
80
2011
12.184
12.105
-0.65
76
2010
10.715
12.184
13.71
82
2009
7.710
10.715
38.98
74
T. Rowe Price Health Sciences
 
 
 
 
2018
50.184
49.606
-1.15
36
2017
40.214
50.184
24.79
45
2016
45.950
40.214
-12.48
62
2015
41.681
45.950
10.24
86
2014
32.404
41.681
28.63
114
2013
21.964
32.404
47.53
135
2012
17.107
21.964
28.39
120
2011
15.810
17.107
8.20
110
2010
13.988
15.810
13.03
93
2009
10.864
13.988
28.76
84
Van Eck Global Hard Assets
 
 
 
 
2018
10.315
7.236
-29.85
46
2017
10.735
10.315
-3.91
62
2016
7.636
10.735
40.58
66
2015
11.738
7.636
-34.95
80
2014
14.848
11.738
-20.95
71
2013
13.734
14.848
8.11
70
2012
13.590
13.734
1.06
65
2011
16.643
13.590
-18.34
62
2010
13.195
16.643
26.13
50
2009(8)
10.063
13.195
31.12
23
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    184



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Core Plus Bond
 
 
 
 
2018
$22.318
$21.564
-3.38%
155
2017
21.724
22.318
2.74
195
2016
21.292
21.724
2.03
200
2015
21.828
21.292
-2.46
307
2014
21.161
21.828
3.15
502
2013
21.775
21.161
-2.82
934
2012
20.659
21.775
5.40
1,225
2011
19.682
20.659
4.96
1,242
2010
17.984
19.682
9.44
1,340
2009
15.174
17.984
18.52
1,384
Diversified Balanced
 
 
 
 
2018
15.536
14.709
-5.32
4,518
2017
14.223
15.536
9.23
5,732
2016
13.574
14.223
4.78
6,172
2015
13.827
13.574
-1.83
5,932
2014
13.133
13.827
5.28
5,558
2013
11.861
13.133
10.72
4,998
2012
11.030
11.861
7.53
3,694
2011
10.860
11.030
1.57
2,245
2010(7)
10.132
10.860
7.19
1,008
Diversified Balanced Managed Volatility
 
 
 
 
2018
11.722
11.121
-5.13
925
2017
10.783
11.722
8.71
961
2016
10.337
10.783
4.31
977
2015
10.545
10.337
-1.97
633
2014
10.064
10.545
4.78
392
2013(9)
9.919
10.064
1.46
‑
Diversified Growth
 
 
 
 
2018
17.193
16.091
-6.41
10,719
2017
15.358
17.193
11.95
13,126
2016
14.488
15.358
6.00
14,084
2015
14.755
14.488
-1.81
14,229
2014
13.960
14.755
5.69
13,505
2013
12.072
13.960
15.64
11,106
2012
11.034
12.072
9.41
7,150
2011
11.008
11.034
0.24
4,756
2010(7)
10.162
11.008
8.33
1,931
Diversified Growth Managed Volatility
 
 
 
 
2018
12.192
11.463
-5.98
1,954
2017
10.974
12.192
11.10
2,036
2016
10.408
10.974
5.44
2,187
2015
10.612
10.408
-1.92
1,831
2014
10.113
10.612
4.93
1,003
2013(9)
9.880
10.113
2.36
26
Diversified Income
 
 
 
 
2018
12.587
12.044
-4.32
918
2017
11.801
12.587
6.66
853
2016
11.405
11.801
3.47
918
2015
11.617
11.405
-1.82
745
2014
11.088
11.617
4.77
744
2013
10.460
11.088
6.00
668
2012(10)
10.050
10.460
4.08
406
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    185



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Diversified International
 
 
 
 
2018
$30.296
$24.485
-19.18%
27
2017
23.947
30.296
26.51
55
2016
24.343
23.947
-1.63
88
2015
24.923
24.343
-2.33
134
2014
26.271
24.923
-5.13
264
2013
22.564
26.271
16.43
446
2012
19.437
22.564
16.09
561
2011
22.252
19.437
-12.65
626
2010
15.806
22.252
40.78
655
2009
15.806
19.966
26.32
400
Equity Income
 
 
 
 
2018
18.067
16.819
-6.91
177
2017
15.222
18.067
18.69
163
2016
13.420
15.222
13.43
221
2015
14.251
13.420
-5.83
614
2014
12.889
14.251
10.57
1,481
2013
10.329
12.889
24.78
3,117
2012
9.326
10.329
10.75
4,601
2011
9.023
9.326
3.36
5,277
2010
7.923
9.023
13.88
3,426
2009
6.736
7.923
17.62
3,702
Government & High Quality Bond
 
 
 
 
2018
11.474
11.349
-1.09
265
2017
11.490
11.474
-0.14
323
2016
11.515
11.490
-0.22
370
2015
11.655
11.515
-1.20
445
2014
11.315
11.655
3.00
646
2013
11.664
11.315
-2.99
1,048
2012
11.453
11.664
1.84
1,418
2011
10.998
11.453
4.14
1,176
2010
10.601
10.998
3.74
1,182
2009
10.157
10.601
4.37
98
Income
 
 
 
 
2018
10.325
10.199
-1.22
117
2017
10.020
10.325
3.04
60
2016
9.670
10.020
3.62
59
2015(5)
10.000
9.670
-3.30
2
International Emerging Markets
 
 
 
 
2018
36.520
28.267
-22.60
24
2017
26.452
36.520
38.06
40
2016
24.668
26.452
7.23
52
2015
29.199
24.668
-15.52
88
2014
30.949
29.199
-5.65
167
2013
33.115
30.949
-6.54
254
2012
27.969
33.115
18.40
279
2011
34.584
27.969
-19.13
305
2010
29.583
34.584
16.90
316
2009
17.794
29.583
66.25
345
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    186



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
LargeCap Growth
 
 
 
 
2018
$33.968
$30.861
-9.15%
12
2017
25.689
33.968
32.23
25
2016
27.627
25.689
-7.01
45
2015
26.847
27.627
2.91
67
2014
24.649
26.847
8.92
94
2013
18.779
24.649
31.26
126
2012
16.397
18.779
14.53
143
2011
17.467
16.397
-6.13
149
2010
15.053
17.467
16.04
153
2009
12.091
15.053
24.50
146
LargeCap Growth I
 
 
 
 
2018
69.154
70.216
1.54
18
2017
52.759
69.154
31.07
20
2016
53.154
52.759
-0.74
21
2015
50.316
53.154
5.64
26
2014
47.262
50.316
6.46
38
2013
35.417
47.262
33.44
63
2012
31.051
35.417
14.06
76
2011
31.781
31.051
-2.30
84
2010
27.108
31.781
17.24
88
2009
18.110
27.108
49.69
99
LargeCap S&P 500 Index
 
 
 
 
2018
19.072
17.836
-6.48
170
2017
16.015
19.072
19.09
193
2016
14.641
16.015
9.38
211
2015
14.769
14.641
-0.87
224
2014
13.300
14.769
11.05
341
2013
10.275
13.300
29.44
508
2012
9.077
10.275
13.20
620
2011
9.102
9.077
-0.27
680
2010
8.098
9.102
12.40
651
2009
6.540
8.098
23.82
665
MidCap
 
 
 
 
2018
99.319
90.968
-8.41
33
2017
80.722
99.319
23.04
48
2016
74.616
80.722
8.18
65
2015
74.893
74.616
-0.37
117
2014
67.624
74.893
10.75
220
2013
51.513
67.624
31.28
391
2012
44.000
51.513
17.08
535
2011
41.453
44.000
6.14
617
2010
34.076
41.453
21.65
685
2009
25.989
34.076
31.12
453
Multi-Asset Income
 
 
 
 
2018
11.368
10.514
-7.51
1
2017
10.355
11.368
9.78
-
2016(4)
10.000
10.355
3.55
1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    187



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Principal Capital Appreciation
 
 
 
 
2018
$19.462
$18.424
-5.33%
153
2017
16.442
19.462
18.37
191
2016
15.374
16.442
6.95
232
2015
15.350
15.374
0.16
424
2014
13.926
15.350
10.23
223
2013
10.710
13.926
30.03
231
2012
9.600
10.710
11.56
191
2011
9.781
9.600
-1.85
195
2010
8.647
9.781
13.11
188
2009
6.795
8.647
27.26
145
Principal LifeTime 2010
 
 
 
 
2018
15.706
14.797
-5.79
32
2017
14.380
15.706
9.22
52
2016
13.938
14.380
3.17
56
2015
14.389
13.938
-3.13
66
2014
14.006
14.389
2.73
104
2013
12.892
14.006
8.64
231
2012
11.766
12.892
9.57
415
2011
11.832
11.766
-0.56
463
2010
10.595
11.832
11.68
485
2009
8.642
10.595
22.60
469
Principal LifeTime 2020
 
 
 
 
2018
17.908
16.605
-7.28
95
2017
15.885
17.908
12.74
157
2016
15.324
15.885
3.66
201
2015
15.813
15.324
-3.09
474
2014
15.255
15.813
3.66
1,048
2013
13.414
15.255
13.72
2,104
2012
11.927
13.414
12.47
2,788
2011
12.299
11.927
-3.02
2,986
2010
10.906
12.299
12.77
3,134
2009
8.727
10.906
24.97
3,168
Principal LifeTime 2030
 
 
 
 
2018
18.538
16.885
-8.92
62
2017
15.991
18.538
15.92
94
2016
15.410
15.991
3.77
511
2015
15.889
15.410
-3.01
614
2014
15.284
15.889
3.96
707
2013
13.101
15.284
16.66
739
2012
11.565
13.101
13.28
781
2011
12.066
11.565
-4.15
911
2010
10.667
12.066
13.12
999
2009
8.487
10.667
25.69
992
Principal LifeTime 2040
 
 
 
 
2018
19.645
17.742
-9.69
27
2017
16.606
19.645
18.30
34
2016
16.066
16.606
3.36
35
2015
16.531
16.066
-2.81
51
2014
15.879
16.531
4.11
70
2013
13.225
15.879
20.07
106
2012
11.561
13.225
14.39
132
2011
12.182
11.561
-5.10
145
2010
10.732
12.182
13.51
156
2009
8.451
10.732
26.99
161
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    188



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
Principal LifeTime 2050
 
 
 
 
2018
$20.033
$17.937
-10.46%
14
2017
16.733
20.033
19.72
23
2016
16.169
16.733
3.49
26
2015
16.611
16.169
-2.66
34
2014
15.956
16.611
4.11
55
2013
13.148
15.956
21.36
76
2012
11.459
13.148
14.74
92
2011
12.170
11.459
-5.84
113
2010
10.684
12.170
13.91
108
2009
8.382
10.684
27.46
113
Principal LifeTime Strategic Income
 
 
 
 
2018
14.007
13.316
-4.93
29
2017
13.139
14.007
6.61
45
2016
12.793
13.139
2.70
95
2015
13.177
12.793
-2.91
104
2014
12.856
13.177
2.50
150
2013
12.476
12.856
3.05
217
2012
11.609
12.476
7.47
237
2011
11.440
11.609
1.48
240
2010
10.492
11.440
9.04
255
2009
8.999
10.492
16.59
211
Real Estate Securities
 
 
 
 
2018
54.104
50.792
-6.12
65
2017
50.547
54.104
7.04
83
2016
48.719
50.547
3.75
94
2015
47.697
48.719
2.14
105
2014
36.636
47.697
30.19
137
2013
35.905
36.636
2.04
160
2012
31.265
35.905
14.84
167
2011
29.279
31.265
6.78
161
2010
23.762
29.279
23.22
156
2009
18.804
23.762
26.37
165
SAM Balanced
 
 
 
 
2018
15.394
14.327
-6.93
656
2017
13.631
15.394
12.93
1,124
2016
13.018
13.631
4.71
2,440
2015
13.390
13.018
-2.78
4,062
2014
12.788
13.390
4.71
5,099
2013
11.083
12.788
15.38
6,348
2012
10.029
11.083
10.51
6,676
2011
10.131
10.029
-1.01
6,895
2010
9.097
10.131
11.37
7,259
2009
7.495
9.097
21.37
6,724
SAM Conservative Balanced
 
 
 
 
2018
14.676
13.881
-5.42
363
2017
13.432
14.676
14.61
456
2016
12.883
13.432
4.26
659
2015
13.247
12.883
-2.75
1,288
2014
12.723
13.247
4.12
1,509
2013
11.636
12.723
9.34
1,630
2012
10.678
11.636
8.97
1,768
2011
10.649
10.678
0.27
1,853
2010
9.714
10.649
9.63
1,835
2009
8.180
9.714
18.75
2,061
 
 
 
 
 
 
 
 
 
 

Appendix K – Condensed Financial Information    189



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
SAM Conservative Growth
 
 
 
 
2018
$15.656
$14.328
-8.48%
488
2017
13.334
15.656
17.41
670
2016
12.714
13.334
4.88
847
2015
13.114
12.714
-3.05
1,128
2014
12.454
13.114
5.30
1,278
2013
10.319
12.454
20.69
1,250
2012
9.221
10.319
11.91
1,149
2011
9.450
9.221
-2.42
1,055
2010
8.367
9.450
12.94
966
2009
6.791
8.367
23.21
952
SAM Flexible Income
 
 
 
 
2018
14.383
13.819
-3.92
598
2017
13.535
14.383
6.27
797
2016
12.899
13.535
4.93
1,234
2015
13.334
12.899
-3.26
1,445
2014
12.830
13.334
3.93
1,665
2013
12.147
12.830
5.62
1,967
2012
11.202
12.147
8.44
1,917
2011
11.053
11.202
1.35
1,716
2010
10.204
11.053
8.32
1,763
2009
8.678
10.204
17.58
1,647
SAM Strategic Growth
 
 
 
 
2018
15.767
14.124
-10.42
480
2017
13.160
15.767
19.81
694
2016
12.648
13.160
4.05
798
2015
13.116
12.648
-3.57
1,108
2014
12.313
13.116
6.52
1,123
2013
9.855
12.313
24.94
1,064
2012
8.704
9.855
13.22
901
2011
9.051
8.704
-3.83
861
2010
7.933
9.051
14.09
810
2009
6.350
7.933
24.93
841
Short-Term Income
 
 
 
 
2018
11.089
10.979
-0.99
43
2017
11.049
11.089
0.37
103
2016
11.036
11.049
0.12
201
2015
11.180
11.036
-1.29
410
2014
11.212
11.180
-0.29
937
2013
11.310
11.212
-0.87
1,776
2012
10.990
11.310
2.91
2,178
2011
11.060
10.990
-0.63
2,051
2010
10.829
11.060
2.13
2,302
2009
10.049
10.829
7.76
166
SmallCap
 
 
 
 
2018
23.708
20.706
-12.66
97
2017
21.428
23.708
10.64
121
2016
18.623
21.428
15.06
132
2015
19.018
18.623
-2.08
209
2014
18.497
19.018
2.82
35
2013(1)
15.162
18.497
22.00
26
TOPS Aggressive Growth ETF
 
 
 
 
2018(11)
10.000
8.592
-14.08
-
TOPS Balanced ETF
 
 
 
 
2018(11)
10.000
9.256
-7.44
-
TOPS Conservative ETF
 
 
 
 
2018(11)
10.000
9.585
-4.15
-

Appendix K – Condensed Financial Information    190



For Contracts With the Premium Payment Credit Rider
Accumulation Unit Value 
Division
Beginning
of Period
End of
Period
Percentage Change
from Prior Period
Number of
Accumulation
Units
Outstanding
End of Period
(in thousands)
TOPS Growth ETF
 
 
 
 
2018(11)
$10.000
$8.781
-12.19%
-
TOPS Moderate Growth ETF
 
 
 
 
2018(11)
10.000
9.093
-9.07
-
(1)
Commenced Operations on May 18, 2013
(2)
Commenced Operations on April 25, 2014
(3)
Commenced Operations on May 22, 2010
(4)
Commenced Operations on May 21, 2016
(5)
Commenced Operations on May 16, 2015
(6)
Commenced Operations on April 8, 2016
(7)
Commenced Operations on January 4, 2010
(8)
Commenced Operations on May 16, 2009
(9)
Commenced Operations on October 31, 2013
(10)
Commenced Operations on May 15, 2012
(11)
Commenced Operations on June 11, 2018


Appendix K – Condensed Financial Information    191

 


PART B

PRINCIPAL LIFE INSURANCE COMPANY
(the “Depositor”)

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

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

Statement of Additional Information

dated May 1, 2019

This Statement of Additional Information provides information about the Principal ® Investment Plus Variable Annuity (the “Contract”) in addition to the information that is contained in the Contract’s Prospectus dated May 1, 2019.

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

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



TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY
3
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
3
PRINCIPAL UNDERWRITER
3
CALCULATION OF PERFORMANCE DATA
3
TAXATION UNDER CERTAIN RETIREMENT PLANS
12
FINANCIAL STATEMENTS
 
APPENDIX A - Principal Life Insurance Company Separate Account B
 
APPENDIX B - Principal Life Insurance Company
 




GENERAL INFORMATION AND HISTORY
Principal Life Insurance Company (the “Company”) is the issuer of the Principal ® Investment Plus Variable Annuity (the “Contract”) and serves as custodian of its assets. The Company is a stock life insurance company with authority to transact life and annuity business in all states of the United States and the District of Columbia. The Company’s home office is located at: Principal Financial Group, Des Moines, Iowa 50392. The Company is a wholly owned subsidiary of Principal Financial Services, Inc., which in turn, is a wholly owned direct subsidiary of Principal Financial Group, Inc., a publicly-traded company.
On June 24, 1879, the Company was incorporated under Iowa law as a mutual assessment life insurance company named Bankers Life Association. The Company became a legal reserve life insurance company and changed its name to Bankers Life Company in 1911. In 1986, the Company changed its name to Principal Mutual Life Insurance Company. In 1998, the Company became Principal Life Insurance Company, a subsidiary stock life insurance company of Principal Mutual Holding Company, as part of a reorganization into a mutual insurance holding company structure. In 2001, Principal Mutual Holding Company converted to a stock company through a process called demutualization, resulting in the current organizational structure.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Ernst & Young LLP, 801 Grand Avenue, Suite 3000, Des Moines, Iowa 50309, serves as the independent registered public accounting firm for Principal Life Insurance Company Separate Account B and the Principal Life Insurance Company.
PRINCIPAL UNDERWRITER
The principal underwriter of the Contract is 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 two fiscal years PSI has received and retained the following commissions:
2018
received/retained
2017
received/retained
2016
received/retained
$10,443,907/$0
$17,241,084/$0
$25,029,442/$0
CALCULATION OF PERFORMANCE DATA
The Separate Account may publish advertisements containing information (including graphs, charts, tables and examples) about the performance of one or more of its divisions. Separate performance figures will be shown for the Contract without the premium payment credit rider and for the Contract with the premium payment credit rider.
The Contract was not offered prior to August 1, 2013. However, the certain divisions invest in underlying mutual funds which were offered prior to the date the Contract was available. Thus, the Separate Account may publish advertisements containing information about the hypothetical performance of one or more of its divisions for this Contract as the Contract was issued on or after the date the underlying mutual fund was first offered. The hypothetical performance from the date of inception of the underlying mutual fund in which the division invests is derived by reducing the actual performance of the underlying mutual fund by the highest level of fees and charges of the Contract as if it had been in existence.
In addition, as certain of the underlying mutual funds have added classes since the inception of the fund, performance may be shown for periods prior to the inception date of the new class which represents the historical results of initial class shares adjusted to reflect the fees and expenses of the new class.
The yield and total return figures described below will vary depending upon market conditions, the composition of the underlying mutual fund’s portfolios and operating expenses. These factors and possible differences in the methods used in calculating yield and total return should be considered when comparing the Separate Account performance figures to performance figures published for other investment vehicles.

3

The Separate Account may also quote rankings, yields or returns as published by independent statistical services or publishers and information regarding performance of certain market indices. Any performance data quoted for the Separate Account represents only historical performance and is not intended to indicate future performance.
From time to time the Separate Account advertises its 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, 2018
For Contracts:
7-Day Annualized Yield
7-Day Effective Yield
without a surrender charge or a Purchase Payment Credit Rider
0.77%
0.78%
with a surrender charge but without a Purchase Payment Credit Rider
-5.23%
-5.22%
without a surrender charge but with a Purchase Payment Credit Rider
0.17%
0.18%
Also, from time to time, the Separate Account will advertise the average annual total return of its various divisions. The average annual total return for any of the divisions is computed by calculating the average annual compounded rate of return over the stated period that would equate an initial $1,000 investment to the ending redeemable Contract value. In this calculation for the Contract without the Premium Payment Credit Rider, the ending value is reduced by a surrender charge that decreases from 6% to 0% over a period of 7 years. For the calculations relating to the Contract with the Premium Payment Credit Rider, the ending value is reduced by a surrender charge that decreases from 8% to 0% over a period of 9 years. The Separate Account may also advertise total return figures for its divisions for a specified period that does not take into account the surrender charge in order to illustrate the change in the division’s unit value over time. See “Charges and Deductions” in the Prospectus for a discussion of surrender charges.
Following are the hypothetical average annual total returns for the period ending December 31, 2018 assuming the Contract had been offered as of the effective dates of the underlying mutual funds in which the divisions invest (the performance calculations with Surrender Charge are in accordance with the SEC standard, while the performance calculations without the Surrender Charge are not in accordance with the SEC standard):
 
For Contracts without the Premium Payment
Credit Rider and with Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
AllianceBernstein Small Cap Growth
08/05/1996
-8.30%
4.53%
15.08%
 
AllianceBernstein Small/Mid Cap Value
05/02/2001
-22.24%
2.40%
11.44%
 
American Asset Allocation
08/01/1989
-11.96%
3.32%
8.61%
 
American Blue Chip Income and Growth
07/05/2001
-15.95%
5.29%
10.28%
 
American Century VP Capital Appreciation
11/20/1987
-12.54%
3.61%
11.29%
 
American Century VP Inflation Protection
12/31/2002
-10.20%
-0.88%
1.65%
 
American Century VP Mid Cap Value
10/29/2004
-20.20%
4.38%
10.65%
 
American Century VP Ultra
05/01/2001
-6.83%
8.06%
13.20%
 
American Funds Global Small Capitalization
04/30/1998
-17.82%
1.30%
9.48%
 
American New World
06/17/1999
-21.26%
-1.16%
6.09%
 
BlackRock Global Allocation VI
02/28/1992
-14.89%
-0.09%
4.39%
 
BlackRock iShares Dynamic Allocation VI
04/30/2014
-12.53%
 
 
0.40%
Columbia Limited Duration Credit
05/07/2010
-7.43%
-1.10%
 
0.46%
Core Plus Bond
12/18/1987
-8.81%
0.38%
4.25%
 
Delaware VIP Limited Term Diversified Income
05/01/2000
-7.38%
-0.91%
1.12%
 
Delaware VIP Small Cap Value
05/01/2000
-24.13%
1.73%
10.51%
 

4

 
For Contracts without the Premium Payment
Credit Rider and with Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
Deutsche Small Mid Cap Value
05/01/1996
-23.52%
-0.05%
8.14%
 
Diversified Balanced
12/30/2009
-10.77%
2.35%
 
4.99%
Diversified Balanced Managed Volatility
10/31/2013
-10.57%
2.06%
 
2.48%
Diversified Growth
12/30/2009
-11.86%
2.95%
 
6.04%
Diversified Growth Managed Volatility
10/31/2013
-11.43%
2.60%
 
3.18%
Diversified Income
05/15/2012
-9.76%
1.70%
 
3.39%
Diversified International
05/02/1994
-24.71%
-1.46%
5.16%
 
Dreyfus IP Technology Growth
08/31/1999
-8.67%
8.63%
15.28%
 
Equity Income
04/28/1998
-12.36%
5.60%
10.30%
 
Fidelity VIP Contrafund
01/03/1995
-13.97%
4.52%
10.87%
 
Fidelity VIP Equity-Income
10/09/1986
-15.84%
2.72%
9.49%
 
Fidelity VIP Government Money Market
04/01/1982
-5.79%
-1.54%
-1.05%
 
Fidelity VIP Growth
10/09/1986
-7.84%
7.89%
13.19%
 
Fidelity VIP Mid Cap
12/28/1998
-21.98%
1.68%
10.08%
 
Fidelity VIP Overseas
01/28/1987
-22.27%
-2.24%
4.83%
 
Franklin Global Real Estate VIP
01/24/1989
-14.10%
1.66%
6.30%
 
Franklin Small Cap Value VIP
04/30/1998
-20.12%
1.15%
10.14%
 
Goldman Sachs VIT Mid Cap Value
05/01/1998
-17.73%
1.06%
9.58%
 
Goldman Sachs VIT Small Cap Equity Insights
02/13/1998
-15.92%
3.62%
11.39%
 
Government & High Quality Bond
05/06/1993
-6.52%
0.05%
1.77%
 
Guggenheim Floating Rate Strategies
04/22/2013
-8.21%
0.79%
 
1.13%
Guggenheim Global Managed Futures Strategy
11/07/2008
-16.32%
-3.51%
-4.65%
 
Guggenheim Long Short Equity Fund
05/01/2002
-20.17%
-1.11%
3.96%
 
Guggenheim Multi-Hedge Strategies
11/29/2005
-12.42%
-1.18%
-0.02%
 
Guggenheim Rydex Commodities Strategy
09/30/2005
-22.33%
-18.14%
-8.81%
 
Income
05/07/1993
-6.65%
1.23%
4.35%
 
International Emerging Markets
10/24/2000
-28.15%
-1.87%
5.42%
 
Invesco Global Health Care
05/21/1997
-6.53%
3.01%
10.16%
 
Invesco VI International Growth
05/05/1993
-22.19%
-1.65%
5.78%
 
Invesco VI Small Cap Equity
08/29/2003
-22.29%
-1.07%
8.32%
 
Invesco VI Value Opportunities
09/10/2001
-26.33%
-0.62%
8.56%
 
Janus Henderson Flexible Bond
09/13/1993
-8.69%
-0.28%
2.82%
 
LargeCap Growth
05/02/1994
-14.62%
4.71%
10.54%
 
LargeCap Growth I
06/01/1994
-3.87%
8.44%
15.27%
 
LargeCap S&P 500 Index
05/03/1999
-11.93%
6.20%
11.28%
 
MFS New Discovery
05/01/1998
-9.11%
2.09%
13.72%
 
MFS Utilities
01/03/1995
-6.62%
2.23%
8.93%
 
MFS Value
01/02/2002
-17.63%
3.49%
9.29%
 
MFS VIT International Value
08/23/2001
-17.01%
3.02%
8.18%
 
MidCap
12/18/1987
-13.87%
6.26%
14.09%
 
Multi-Asset Income
07/28/2015
-12.97%
 
 
0.47%
Neuberger Berman AMT Large Cap Value
03/22/1994
-8.44%
4.72%
11.47%
 
Neuberger Berman AMT Mid Cap Growth
11/03/1997
-13.89%
3.61%
11.11%
 
Neuberger Berman AMT Socially Responsive
02/18/1999
-13.06%
4.15%
10.90%
 
Northern Lights TOPS Aggressive Growth ETF
07/22/2015
-20.43%
 
 
-0.11%
Northern Lights TOPS Balanced ETF
07/22/2015
-13.05%
 
 
-0.21%
Northern Lights TOPS Conservative ETF
07/22/2015
-9.87%
 
 
-0.45%
Northern Lights TOPS Growth ETF
07/22/2015
-16.12%
 
 
0.62%

5

 
For Contracts without the Premium Payment
Credit Rider and with Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
Northern Lights TOPS Moderate Growth ETF
07/22/2015
-13.72%
 
 
0.32%
PIMCO VIT All Asset
04/30/2003
-12.75%
0.06%
4.58%
 
PIMCO VIT High Yield Portfolio
04/30/1998
-10.05%
1.46%
7.60%
 
PIMCO VIT Low Duration
03/31/2006
-7.19%
-1.31%
1.33%
 
PIMCO VIT Total Return
12/31/1997
-7.95%
0.30%
3.01%
 
Principal Capital Appreciation
04/28/1998
-10.78%
5.90%
11.21%
 
Principal LifeTime 2010
08/30/2004
-11.24%
1.12%
6.21%
 
Principal LifeTime 2020
08/30/2004
-12.74%
1.75%
7.34%
 
Principal LifeTime 2030
08/30/2004
-14.38%
2.06%
7.82%
 
Principal LifeTime 2040
08/30/2004
-15.16%
2.30%
8.40%
 
Principal LifeTime 2050
08/30/2004
-15.94%
2.42%
8.61%
 
Principal LifeTime Strategic Income
08/30/2004
-10.38%
0.71%
4.67%
 
Real Estate Securities
05/01/1998
-11.57%
6.92%
11.17%
 
SAM Balanced
06/03/1997
-12.39%
2.35%
7.39%
 
SAM Conservative Balanced
04/23/1998
-10.86%
1.80%
6.12%
 
SAM Conservative Growth
06/03/1997
-13.95%
2.91%
8.46%
 
SAM Flexible Income
09/09/1997
-9.36%
1.53%
5.45%
 
SAM Strategic Growth
06/03/1997
-15.90%
2.85%
9.03%
 
Short-Term Income
01/12/1994
-6.41%
-0.45%
1.54%
 
SmallCap
05/01/1998
-18.16%
2.34%
10.61%
 
T. Rowe Price Blue Chip Growth
12/29/2000
-5.79%
8.87%
15.02%
 
T. Rowe Price Health Sciences
12/29/2000
-6.57%
9.11%
17.17%
 
Templeton Global Bond VIP
01/24/1989
-5.55%
-1.32%
3.49%
 
VanEck VIP Global Hard Assets
05/01/2006
-35.44%
-13.97%
-1.05%
 
 
For Contracts without the Premium Payment
Credit Rider and without Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
AllianceBernstein Small Cap Growth
08/05/1996
-2.30%
5.03%
15.08%
 
AllianceBernstein Small/Mid Cap Value
05/02/2001
-16.24%
2.94%
11.44%
 
American Asset Allocation
08/01/1989
-5.96%
3.84%
8.61%
 
American Blue Chip Income and Growth
07/05/2001
-9.95%
5.77%
10.28%
 
American Century VP Capital Appreciation
11/20/1987
-6.54%
4.12%
11.29%
 
American Century VP Inflation Protection
12/31/2002
-4.20%
-0.27%
1.65%
 
American Century VP Mid Cap Value
10/29/2004
-14.20%
4.88%
10.65%
 
American Century VP Ultra
05/01/2001
-0.83%
8.50%
13.20%
 
American Funds Global Small Capitalization
04/30/1998
-11.82%
1.86%
9.48%
 
American New World
06/17/1999
-15.26%
-0.54%
6.09%
 
BlackRock Global Allocation VI
02/28/1992
-8.89%
0.50%
4.39%
 
BlackRock iShares Dynamic Allocation VI
04/30/2014
-6.53%
 
 
1.02%
Columbia Limited Duration Credit
05/07/2010
-1.43%
-0.48%
 
0.46%
Core Plus Bond
12/18/1987
-2.81%
0.96%
4.25%
 
Delaware VIP Limited Term Diversified Income
05/01/2000
-1.38%
-0.29%
1.12%
 
Delaware VIP Small Cap Value
05/01/2000
-18.13%
2.29%
10.51%
 
Deutsche Small Mid Cap Value
05/01/1996
-17.52%
0.54%
8.14%
 
Diversified Balanced
12/30/2009
-4.77%
2.89%
 
4.99%
Diversified Balanced Managed Volatility
10/31/2013
-4.57%
2.61%
 
2.83%

6

 
For Contracts without the Premium Payment
Credit Rider and without Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
Diversified Growth
12/30/2009
-5.86%
3.48%
 
6.04%
Diversified Growth Managed Volatility
10/31/2013
-5.43%
3.13%
 
3.51%
Diversified Income
05/15/2012
-3.76%
2.26%
 
3.39%
Diversified International
05/02/1994
-18.71%
-0.83%
5.16%
 
Dreyfus IP Technology Growth
08/31/1999
-2.67%
9.06%
15.28%
 
Equity Income
04/28/1998
-6.36%
6.08%
10.30%
 
Fidelity VIP Contrafund
01/03/1995
-7.97%
5.01%
10.87%
 
Fidelity VIP Equity-Income
10/09/1986
-9.84%
3.25%
9.49%
 
Fidelity VIP Government Money Market
04/01/1982
0.21%
-0.91%
-1.05%
 
Fidelity VIP Growth
10/09/1986
-1.84%
8.33%
13.19%
 
Fidelity VIP Mid Cap
12/28/1998
-15.98%
2.24%
10.08%
 
Fidelity VIP Overseas
01/28/1987
-16.27%
-1.60%
4.83%
 
Franklin Global Real Estate VIP
01/24/1989
-8.10%
2.21%
6.30%
 
Franklin Small Cap Value VIP
04/30/1998
-14.12%
1.72%
10.14%
 
Goldman Sachs VIT Mid Cap Value
05/01/1998
-11.73%
1.63%
9.58%
 
Goldman Sachs VIT Small Cap Equity Insights
02/13/1998
-9.92%
4.13%
11.39%
 
Government & High Quality Bond
05/06/1993
-0.52%
0.64%
1.77%
 
Guggenheim Floating Rate Strategies
04/22/2013
-2.21%
1.37%
 
1.46%
Guggenheim Global Managed Futures Strategy
11/07/2008
-10.32%
-2.83%
-4.65%
 
Guggenheim Long Short Equity Fund
05/01/2002
-14.17%
-0.49%
3.96%
 
Guggenheim Multi-Hedge Strategies
11/29/2005
-6.42%
-0.56%
-0.02%
 
Guggenheim Rydex Commodities Strategy
09/30/2005
-16.33%
-16.84%
-8.81%
 
Income
05/07/1993
-0.65%
1.80%
4.35%
 
International Emerging Markets
10/24/2000
-22.15%
-1.23%
5.42%
 
Invesco Global Health Care
05/21/1997
-0.53%
3.54%
10.16%
 
Invesco VI International Growth
05/05/1993
-16.19%
-1.02%
5.78%
 
Invesco VI Small Cap Equity
08/29/2003
-16.29%
-0.45%
8.32%
 
Invesco VI Value Opportunities
09/10/2001
-20.33%
-0.01%
8.56%
 
Janus Henderson Flexible Bond
09/13/1993
-2.69%
0.32%
2.82%
 
LargeCap Growth
05/02/1994
-8.62%
5.21%
10.54%
 
LargeCap Growth I
06/01/1994
2.13%
8.87%
15.27%
 
LargeCap S&P 500 Index
05/03/1999
-5.93%
6.66%
11.28%
 
MFS New Discovery
05/01/1998
-3.11%
2.63%
13.72%
 
MFS Utilities
01/03/1995
-0.62%
2.77%
8.93%
 
MFS Value
01/02/2002
-11.63%
4.01%
9.29%
 
MFS VIT International Value
08/23/2001
-11.01%
3.55%
8.18%
 
MidCap
12/18/1987
-7.87%
6.73%
14.09%
 
Multi-Asset Income
07/28/2015
-6.97%
 
 
1.61%
Neuberger Berman AMT Large Cap Value
03/22/1994
-2.44%
5.21%
11.47%
 
Neuberger Berman AMT Mid Cap Growth
11/03/1997
-7.89%
4.12%
11.11%
 
Neuberger Berman AMT Socially Responsive
02/18/1999
-7.06%
4.65%
10.90%
 
Northern Lights TOPS Aggressive Growth ETF
07/22/2015
-14.43%
 
 
1.04%
Northern Lights TOPS Balanced ETF
07/22/2015
-7.05%
 
 
0.95%
Northern Lights TOPS Conservative ETF
07/22/2015
-3.87%
 
 
0.71%
Northern Lights TOPS Growth ETF
07/22/2015
-10.12%
 
 
1.75%
Northern Lights TOPS Moderate Growth ETF
07/22/2015
-7.72%
 
 
1.45%
PIMCO VIT All Asset
04/30/2003
-6.75%
0.65%
4.58%
 
PIMCO VIT High Yield Portfolio
04/30/1998
-4.05%
2.02%
7.60%
 

7

 
For Contracts without the Premium Payment
Credit Rider and without Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
PIMCO VIT Low Duration
03/31/2006
-1.19%
-0.69%
1.33%
 
PIMCO VIT Total Return
12/31/1997
-1.95%
0.88%
3.01%
 
Principal Capital Appreciation
04/28/1998
-4.78%
6.37%
11.21%
 
Principal LifeTime 2010
08/30/2004
-5.24%
1.69%
6.21%
 
Principal LifeTime 2020
08/30/2004
-6.74%
2.30%
7.34%
 
Principal LifeTime 2030
08/30/2004
-8.38%
2.61%
7.82%
 
Principal LifeTime 2040
08/30/2004
-9.16%
2.84%
8.40%
 
Principal LifeTime 2050
08/30/2004
-9.94%
2.96%
8.61%
 
Principal LifeTime Strategic Income
08/30/2004
-4.38%
1.29%
4.67%
 
Real Estate Securities
05/01/1998
-5.57%
7.38%
11.17%
 
SAM Balanced
06/03/1997
-6.39%
2.89%
7.39%
 
SAM Conservative Balanced
04/23/1998
-4.86%
2.35%
6.12%
 
SAM Conservative Growth
06/03/1997
-7.95%
3.44%
8.46%
 
SAM Flexible Income
09/09/1997
-3.36%
2.09%
5.45%
 
SAM Strategic Growth
06/03/1997
-9.90%
3.38%
9.03%
 
Short-Term Income
01/12/1994
-0.41%
0.16%
1.54%
 
SmallCap
05/01/1998
-12.16%
2.88%
10.61%
 
T. Rowe Price Blue Chip Growth
12/29/2000
0.21%
9.29%
15.02%
 
T. Rowe Price Health Sciences
12/29/2000
-0.57%
9.53%
17.17%
 
Templeton Global Bond VIP
01/24/1989
0.45%
-0.69%
3.49%
 
VanEck VIP Global Hard Assets
05/01/2006
-29.44%
-12.90%
-1.05%
 
 
For Contracts with the Premium Payment
Credit Rider and with Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
AllianceBernstein Small Cap Growth
08/05/1996
-10.89%
3.72%
14.39%
 
AllianceBernstein Small/Mid Cap Value
05/02/2001
-24.74%
1.59%
10.77%
 
American Asset Allocation
08/01/1989
-14.52%
2.51%
7.96%
 
American Blue Chip Income and Growth
07/05/2001
-18.50%
4.47%
9.62%
 
American Century VP Capital Appreciation
11/20/1987
-15.11%
2.79%
10.62%
 
American Century VP Inflation Protection
12/31/2002
-12.77%
-1.71%
1.04%
 
American Century VP Mid Cap Value
10/29/2004
-22.72%
3.56%
9.99%
 
American Century VP Ultra
05/01/2001
-9.43%
7.25%
12.52%
 
American Funds Global Small Capitalization
04/30/1998
-20.35%
0.48%
8.82%
 
American New World
06/17/1999
-23.77%
-1.99%
5.46%
 
BlackRock Global Allocation VI
02/28/1992
-17.44%
-0.91%
3.77%
 
BlackRock iShares Dynamic Allocation VI
04/30/2014
-15.09%
 
 
-0.44%
Columbia Limited Duration Credit
05/07/2010
-10.03%
-1.93%
 
-0.14%
Core Plus Bond
12/18/1987
-11.40%
-0.44%
3.63%
 
Delaware VIP Limited Term Diversified Income
05/01/2000
-9.98%
-1.73%
0.52%
 
Delaware VIP Small Cap Value
05/01/2000
-26.62%
0.91%
9.84%
 
Deutsche Small Mid Cap Value
05/01/1996
-26.01%
-0.88%
7.49%
 
Diversified Balanced
12/30/2009
-13.34%
1.53%
 
4.36%
Diversified Balanced Managed Volatility
10/31/2013
-13.15%
1.25%
 
1.68%
Diversified Growth
12/30/2009
-14.43%
2.14%
 
5.40%
Diversified Growth Managed Volatility
10/31/2013
-14.00%
1.78%
 
2.37%
Diversified Income
05/15/2012
-12.34%
0.89%
 
2.51%

8

 
For Contracts with the Premium Payment
Credit Rider and with Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
Diversified International
05/02/1994
-27.20%
-2.28%
4.53%
 
Dreyfus IP Technology Growth
08/31/1999
-11.25%
7.82%
14.59%
 
Equity Income
04/28/1998
-14.92%
4.79%
9.64%
 
Fidelity VIP Contrafund
01/03/1995
-16.52%
3.70%
10.21%
 
Fidelity VIP Equity-Income
10/09/1986
-18.38%
1.90%
8.83%
 
Fidelity VIP Government Money Market
04/01/1982
-8.40%
-2.37%
-1.64%
 
Fidelity VIP Growth
10/09/1986
-10.44%
7.08%
12.51%
 
Fidelity VIP Mid Cap
12/28/1998
-24.49%
0.86%
9.42%
 
Fidelity VIP Overseas
01/28/1987
-24.77%
-3.08%
4.20%
 
Franklin Global Real Estate VIP
01/24/1989
-16.65%
0.84%
5.66%
 
Franklin Small Cap Value VIP
04/30/1998
-22.63%
0.33%
9.48%
 
Goldman Sachs VIT Mid Cap Value
05/01/1998
-20.26%
0.24%
8.92%
 
Goldman Sachs VIT Small Cap Equity Insights
02/13/1998
-18.46%
2.80%
10.72%
 
Government & High Quality Bond
05/06/1993
-9.12%
-0.78%
1.16%
 
Guggenheim Floating Rate Strategies
04/22/2013
-10.80%
-0.03%
 
0.34%
Guggenheim Global Managed Futures Strategy
11/07/2008
-18.86%
-4.35%
-5.23%
 
Guggenheim Long Short Equity Fund
05/01/2002
-22.69%
-1.94%
3.34%
 
Guggenheim Multi-Hedge Strategies
11/29/2005
-14.99%
-2.01%
-0.61%
 
Guggenheim Rydex Commodities Strategy
09/30/2005
-24.84%
-19.13%
-9.36%
 
Income
05/07/1993
-9.24%
0.41%
3.72%
 
International Emerging Markets
10/24/2000
-30.62%
-2.70%
4.79%
 
Invesco Global Health Care
05/21/1997
-9.13%
2.20%
9.50%
 
Invesco VI International Growth
05/05/1993
-24.69%
-2.48%
5.14%
 
Invesco VI Small Cap Equity
08/29/2003
-24.79%
-1.90%
7.67%
 
Invesco VI Value Opportunities
09/10/2001
-28.81%
-1.45%
7.91%
 
Janus Henderson Flexible Bond
09/13/1993
-11.27%
-1.10%
2.20%
 
LargeCap Growth
05/02/1994
-17.17%
3.90%
9.88%
 
LargeCap Growth I
06/01/1994
-6.48%
7.63%
14.58%
 
LargeCap S&P 500 Index
05/03/1999
-14.50%
5.39%
10.61%
 
MFS New Discovery
05/01/1998
-11.70%
1.27%
13.04%
 
MFS Utilities
01/03/1995
-9.22%
1.41%
8.28%
 
MFS Value
01/02/2002
-20.16%
2.67%
8.64%
 
MFS VIT International Value
08/23/2001
-19.54%
2.21%
7.53%
 
MidCap
12/18/1987
-16.43%
5.45%
13.41%
 
Multi-Asset Income
07/28/2015
-15.53%
 
 
-0.45%
Neuberger Berman AMT Large Cap Value
03/22/1994
-11.03%
3.91%
10.80%
 
Neuberger Berman AMT Mid Cap Growth
11/03/1997
-16.44%
2.79%
10.44%
 
Neuberger Berman AMT Socially Responsive
02/18/1999
-15.62%
3.33%
10.24%
 
Northern Lights TOPS Aggressive Growth ETF
07/22/2015
-20.03%
 
 
-0.19%
Northern Lights TOPS Balanced ETF
07/22/2015
-15.71%
 
 
-1.34%
Northern Lights TOPS Conservative ETF
07/22/2015
-12.55%
 
 
-1.59%
Northern Lights TOPS Growth ETF
07/22/2015
-18.76%
 
 
-0.52%
Northern Lights TOPS Moderate Growth ETF
07/22/2015
-16.38%
 
 
-0.82%
PIMCO VIT All Asset
04/30/2003
-15.31%
-0.76%
3.96%
 
PIMCO VIT High Yield Portfolio
04/30/1998
-12.63%
0.64%
6.96%
 
PIMCO VIT Low Duration
03/31/2006
-9.78%
-2.14%
0.73%
 
PIMCO VIT Total Return
12/31/1997
-10.54%
-0.52%
2.40%
 
Principal Capital Appreciation
04/28/1998
-13.35%
5.09%
10.55%
 

9

 
For Contracts with the Premium Payment
Credit Rider and with Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
Principal LifeTime 2010
08/30/2004
-13.81%
0.30%
5.58%
 
Principal LifeTime 2020
08/30/2004
-15.30%
0.93%
6.70%
 
Principal LifeTime 2030
08/30/2004
-16.94%
1.24%
7.18%
 
Principal LifeTime 2040
08/30/2004
-17.71%
1.48%
7.75%
 
Principal LifeTime 2050
08/30/2004
-18.48%
1.61%
7.96%
 
Principal LifeTime Strategic Income
08/30/2004
-12.95%
-0.11%
4.05%
 
Real Estate Securities
05/01/1998
-14.14%
6.11%
10.51%
 
SAM Balanced
06/03/1997
-14.95%
1.54%
6.75%
 
SAM Conservative Balanced
04/23/1998
-13.43%
0.98%
5.48%
 
SAM Conservative Growth
06/03/1997
-16.50%
2.10%
7.81%
 
SAM Flexible Income
09/09/1997
-11.94%
0.71%
4.81%
 
SAM Strategic Growth
06/03/1997
-18.44%
2.03%
8.38%
 
Short-Term Income
01/12/1994
-9.01%
-1.27%
0.93%
 
SmallCap
05/01/1998
-20.69%
1.52%
9.95%
 
T. Rowe Price Blue Chip Growth
12/29/2000
-8.39%
8.06%
14.33%
 
T. Rowe Price Health Sciences
12/29/2000
-9.17%
8.30%
16.47%
 
Templeton Global Bond VIP
01/24/1989
-8.15%
-2.15%
2.87%
 
VanEck VIP Global Hard Assets
05/01/2006
-37.87%
-14.89%
-1.65%
 
 
For Contracts with the Premium Payment
Credit Rider and without Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
AllianceBernstein Small Cap Growth
08/05/1996
-2.89%
4.40%
14.39%
 
AllianceBernstein Small/Mid Cap Value
05/02/2001
-16.74%
2.33%
10.77%
 
American Asset Allocation
08/01/1989
-6.52%
3.22%
7.96%
 
American Blue Chip Income and Growth
07/05/2001
-10.50%
5.14%
9.62%
 
American Century VP Capital Appreciation
11/20/1987
-7.11%
3.50%
10.62%
 
American Century VP Inflation Protection
12/31/2002
-4.77%
-0.86%
1.04%
 
American Century VP Mid Cap Value
10/29/2004
-14.72%
4.25%
9.99%
 
American Century VP Ultra
05/01/2001
-1.43%
7.85%
12.52%
 
American Funds Global Small Capitalization
04/30/1998
-12.35%
1.25%
8.82%
 
American New World
06/17/1999
-15.77%
-1.14%
5.46%
 
BlackRock Global Allocation VI
02/28/1992
-9.44%
-0.10%
3.77%
 
BlackRock iShares Dynamic Allocation VI
04/30/2014
-7.09%
 
 
0.42%
Columbia Limited Duration Credit
05/07/2010
-2.03%
-1.08%
 
-0.14%
Core Plus Bond
12/18/1987
-3.40%
0.36%
3.63%
 
Delaware VIP Limited Term Diversified Income
05/01/2000
-1.98%
-0.89%
0.52%
 
Delaware VIP Small Cap Value
05/01/2000
-18.62%
1.67%
9.84%
 
Deutsche Small Mid Cap Value
05/01/1996
-18.01%
-0.06%
7.49%
 
Diversified Balanced
12/30/2009
-5.34%
2.27%
 
4.36%
Diversified Balanced Managed Volatility
10/31/2013
-5.15%
2.00%
 
2.21%
Diversified Growth
12/30/2009
-6.43%
2.86%
 
5.40%
Diversified Growth Managed Volatility
10/31/2013
-6.00%
2.52%
 
2.89%
Diversified Income
05/15/2012
-4.34%
1.65%
 
2.77%
Diversified International
05/02/1994
-19.20%
-1.42%
4.53%
 
Dreyfus IP Technology Growth
08/31/1999
-3.25%
8.40%
14.59%
 
Equity Income
04/28/1998
-6.92%
5.45%
9.64%
 
Fidelity VIP Contrafund
01/03/1995
-8.52%
4.38%
10.21%
 

10

 
For Contracts with the Premium Payment
Credit Rider and without Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
Fidelity VIP Equity-Income
10/09/1986
-10.38%
2.63%
8.83%
 
Fidelity VIP Government Money Market
04/01/1982
-0.40%
-1.50%
-1.64%
 
Fidelity VIP Growth
10/09/1986
-2.44%
7.68%
12.51%
 
Fidelity VIP Mid Cap
12/28/1998
-16.49%
1.63%
9.42%
 
Fidelity VIP Overseas
01/28/1987
-16.77%
-2.19%
4.20%
 
Franklin Global Real Estate VIP
01/24/1989
-8.65%
1.60%
5.66%
 
Franklin Small Cap Value VIP
04/30/1998
-14.63%
1.11%
9.48%
 
Goldman Sachs VIT Mid Cap Value
05/01/1998
-12.26%
1.02%
8.92%
 
Goldman Sachs VIT Small Cap Equity Insights
02/13/1998
-10.46%
3.51%
10.72%
 
Government & High Quality Bond
05/06/1993
-1.12%
0.04%
1.16%
 
Guggenheim Floating Rate Strategies
04/22/2013
-2.80%
0.76%
 
0.85%
Guggenheim Global Managed Futures Strategy
11/07/2008
-10.86%
-3.41%
-5.23%
 
Guggenheim Long Short Equity Fund
05/01/2002
-14.69%
-1.09%
3.34%
 
Guggenheim Multi-Hedge Strategies
11/29/2005
-6.99%
-1.16%
-0.61%
 
Guggenheim Rydex Commodities Strategy
09/30/2005
-16.84%
-17.34%
-9.36%
 
Income
05/07/1993
-1.24%
1.19%
3.72%
 
International Emerging Markets
10/24/2000
-22.62%
-1.82%
4.79%
 
Invesco Global Health Care
05/21/1997
-1.13%
2.92%
9.50%
 
Invesco VI International Growth
05/05/1993
-16.69%
-1.61%
5.14%
 
Invesco VI Small Cap Equity
08/29/2003
-16.79%
-1.05%
7.67%
 
Invesco VI Value Opportunities
09/10/2001
-20.81%
-0.61%
7.91%
 
Janus Henderson Flexible Bond
09/13/1993
-3.27%
-0.28%
2.20%
 
LargeCap Growth
05/02/1994
-9.17%
4.58%
9.88%
 
LargeCap Growth I
06/01/1994
1.52%
8.22%
14.58%
 
LargeCap S&P 500 Index
05/03/1999
-6.50%
6.03%
10.61%
 
MFS New Discovery
05/01/1998
-3.70%
2.02%
13.04%
 
MFS Utilities
01/03/1995
-1.22%
2.15%
8.28%
 
MFS Value
01/02/2002
-12.16%
3.38%
8.64%
 
MFS VIT International Value
08/23/2001
-11.54%
2.93%
7.53%
 
MidCap
12/18/1987
-8.43%
6.09%
13.41%
 
Multi-Asset Income
07/28/2015
-7.53%
 
 
1.00%
Neuberger Berman AMT Large Cap Value
03/22/1994
-3.03%
4.58%
10.80%
 
Neuberger Berman AMT Mid Cap Growth
11/03/1997
-8.44%
3.50%
10.44%
 
Neuberger Berman AMT Socially Responsive
02/18/1999
-7.62%
4.03%
10.24%
 
Northern Lights TOPS Aggressive Growth ETF
07/22/2015
-12.03%
 
 
1.24%
Northern Lights TOPS Balanced ETF
07/22/2015
-7.71%
 
 
0.13%
Northern Lights TOPS Conservative ETF
07/22/2015
-4.55%
 
 
-0.11%
Northern Lights TOPS Growth ETF
07/22/2015
-10.76%
 
 
0.93%
Northern Lights TOPS Moderate Growth ETF
07/22/2015
-8.38%
 
 
0.64%
PIMCO VIT All Asset
04/30/2003
-7.31%
0.05%
3.96%
 
PIMCO VIT High Yield Portfolio
04/30/1998
-4.63%
1.41%
6.96%
 
PIMCO VIT Low Duration
03/31/2006
-1.78%
-1.28%
0.73%
 
PIMCO VIT Total Return
12/31/1997
-2.54%
0.28%
2.40%
 
Principal Capital Appreciation
04/28/1998
-5.35%
5.74%
10.55%
 
Principal LifeTime 2010
08/30/2004
-5.81%
1.08%
5.58%
 
Principal LifeTime 2020
08/30/2004
-7.30%
1.69%
6.70%
 
Principal LifeTime 2030
08/30/2004
-8.94%
1.99%
7.18%
 
Principal LifeTime 2040
08/30/2004
-9.71%
2.22%
7.75%
 

11

 
For Contracts with the Premium Payment
Credit Rider and without Surrender Charge
Division
Effective
Date
One Year
Five Years
Ten Years
Since Inception
Principal LifeTime 2050
08/30/2004
-10.48%
2.35%
7.96%
 
Principal LifeTime Strategic Income
08/30/2004
-4.95%
0.68%
4.05%
 
Real Estate Securities
05/01/1998
-6.14%
6.73%
10.51%
 
SAM Balanced
06/03/1997
-6.95%
2.28%
6.75%
 
SAM Conservative Balanced
04/23/1998
-5.43%
1.74%
5.48%
 
SAM Conservative Growth
06/03/1997
-8.50%
2.82%
7.81%
 
SAM Flexible Income
09/09/1997
-3.94%
1.47%
4.81%
 
SAM Strategic Growth
06/03/1997
-10.44%
2.76%
8.38%
 
Short-Term Income
01/12/1994
-1.01%
-0.44%
0.93%
 
SmallCap
05/01/1998
-12.69%
2.26%
9.95%
 
T. Rowe Price Blue Chip Growth
12/29/2000
-0.39%
8.64%
14.33%
 
T. Rowe Price Health Sciences
12/29/2000
-1.17%
8.87%
16.47%
 
Templeton Global Bond VIP
01/24/1989
-0.15%
-1.29%
2.87%
 
VanEck VIP Global Hard Assets
05/01/2006
-29.87%
-13.42%
-1.65%
 
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.
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.
Traditional IRA - Maximum Annual Contribution
Year
Individual IRA
Individual IRA + Spousal IRA
2018
$5,500
$11,000
2019
$6,000
$12,000
For succeeding years, limits are indexed for cost of living.
Individuals age 50 or over are also permitted to make additional “catch-up” contributions. The additional contribution is $1,000 in 2018 and 2019. These additional catch-up contributions can be applied for Spousal IRA purposes.
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 plan participants but whose spouses are, deductibility of traditional IRA contributions is phased out if the couple files a joint return and the Modified Adjusted Gross Income is between $193,000 and $203,000 in 2019.
Deductibility of Traditional IRA Contributions for Active Plan Participants
Married Individuals (Filing Jointly)
Single/Head of Household Individual
Year
Limited
Deduction
No
Deduction
Year
Limited
Deduction
No
Deduction
2018
$101,000
$121,000
2018
$63,000
$73,000
2019
$103,000
$123,000
2019
$64,000
$74,000
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.

12


A person whose filing status is "married, filing separately" may not make a full traditional IRA deduction contribution, unless the couple is separated and have been living apart for the entire year. Only a partial deductible contribution is allowed if your 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 59 ½ are subject to a 10% penalty tax in addition to regular income tax. Exempted from this 10% tax penalty are the following types of distributions: distributions due to death; distributions due to 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 deductible medical expenses; distributions for unemployed health insurance premiums; distributions for first-time home purchases (up to $10,000); distributions for higher education expenses; made on account of certain levies on income and payments; qualified reservist distributions; and distributions for certain natural disaster victims.
Required Distributions. Generally, distributions from IRA Contracts must commence not later than April 1 of the calendar year following the calendar year in which the owner attains age 70 ½, and such distributions must be made over a period that does not exceed the uniform lifetime 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 distributions from the IRA contract, 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 Plan Participant has commenced receiving 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 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. 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 indirect rollover of assets is completed within 60 days after the distribution from the qualified plan is received by the plan participant. 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 and the 60-day rollover rules. 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 employee compensation or $56,000 (plus if applicable the $6,000 catch-up contribution) for 2019.
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”.

13

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.
Salary Reduction Simplified Employee Pension Plan (SAR/SEP)
Year
Elective Deferral
Catch-up Contribution
2018
$18,500
$6,000
2019
$19,000
$6,000
Taxation of Distributions. Generally, distribution payments from SEPs and SAR/SEPs are subject to the same distribution rules described above for traditional IRAs.
Required Distributions. SEPs and SAR/SEPs are subject to the same minimum required distribution rules described above for traditional 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 traditional IRAs, subject to the same conditions and limitations.
SAVINGS INCENTIVE MATCH PLANS FOR EMPLOYEES (SIMPLE IRA)
Contributions. Under Section 408(p) of the Code, employers may establish a type of IRA plan known as a SIMPLE IRA. Employees may have contributions made to the SIMPLE IRA on a salary reduction basis. The amount that an employee chooses to defer and contribute to the SIMPLE IRA is referred to as an elective deferral.
These elective deferrals cannot exceed the amounts shown in the chart. In addition to the elective deferrals, SIMPLE IRA may permit additional elective deferrals by individuals age 50 or over, referred to as “catch-up contributions” in an amount equal to $3,000 for 2019.
Elective contribution amounts made under the salary reduction portions (i.e., those subject to the $13,000 limit in 2019) of a SIMPLE IRA plan are counted in the overall limit on elective deferrals by any individual. For example, if in 2019, an individual under age 50 defers the maximum of $13,000 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 $6,000 ($19,000 – $13,000) to the 401(k) plan for 2019.
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
2018
$12,500
$3,000
$18,500
2019
$13,000
$3,000
$19,000
Taxation of Distributions. Generally, distribution payments from SIMPLE IRAs are subject to the same distribution rules described above for traditional 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 traditional 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 IRA.
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.

14

Roth IRA - Maximum Annual Contribution
Year
Individual Roth IRA
Catch-up Contribution
2018
$5,500
$1,000
2019
$6,000
$1,000
For succeeding years, individual Roth IRA limits are indexed for cost-of-living.
Individuals age 50 or over are also permitted to make additional “catch-up” contributions. The additional contribution is $1,000 for 2018 and 2019.
For 2019, the maximum contribution is phased out for single taxpayers with adjusted gross income between $122,000 and $137,000 and for joint filers with adjusted gross income between $193,000 and $203,000 (see chart below).
Modified Adjusted Gross Income Limits - 2019
Single/Head of Household
Married Filing Joint
ROTH IRA Contribution
$122,000 or less
$193,000 or less
Full Contribution
$122,000 – $137,000
$193,000 – $203,000
Partial Contribution*
$137,000 & over
$203,000 & over
No Contribution
*
Those entitled to only a partial contribution should check with a tax advisor to determine the allowable contribution amount.
A person whose filing status is “married, filing separately” may not make a full Roth IRA contribution, unless the couple is separated and have been living apart for the entire year. Only a partial contribution is allowed if your 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 purchase 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 for the purposes of the 10% penalty tax.
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.



15

FINANCIAL STATEMENTS

APPENDIX A - Principal Life Insurance Company Separate Account B Financials


16
 
Report of Independent Registered Public Accounting Firm

To the Board of Directors of Principal Life Insurance Company and Contract Owners of Principal Life Insurance Company Separate Account B

Opinion on the Financial Statements
We have audited the accompanying statements of assets and liabilities of each of the subaccounts listed in the Appendix that comprise Principal Life Insurance Company Separate Account B (the Separate Account), as of December 31, 2018, the related statements of operations and the statements of changes in net assets for each of the periods indicated in the Appendix, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each subaccount as of December 31, 2018, the results of its operations and the changes in its net assets for each of the periods indicated in the Appendix, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Separate Account’s management. Our responsibility is to express an opinion on each of the subaccounts’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Separate Accounts in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2018, by correspondence with the fund companies or their transfer agents, as applicable. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
/s/ Ernst & Young LLP
We have served as the Separate Account’s auditor since 1970.
Des Moines, Iowa
April 29, 2019



Appendix:
Subaccounts comprising Principal Life Insurance Company Separate Account B
 
Statement of operations
Statements of changes in net assets
AllianceBernstein Small Cap Growth Class A Division
AllianceBernstein Small/Mid Cap Value Class A Division
Alps/Red Rocks Listed Private Equity Class III Division
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
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 Class 2 Division
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
American Funds Insurance Series New World Fund Class 2 Division
American Funds Insurance Series New World Fund Class 4 Division
BlackRock Advantage U.S. Total Market Class III Division
BlackRock Global Allocation Class III Division
BlackRock iShares Dynamic Allocation Class III Division
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
ClearBridge Small Cap Growth Class II Division
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
Diversified Balanced Class 2 Division
Diversified Balanced Managed Volatility Class 2 Division
Diversified Growth Class 2 Division
Diversified Growth Managed Volatility Class 2 Division
Diversified Income Class 2 Division
Diversified International Class 1 Division
Diversified International Class 2 Division
Dreyfus IP MidCap Stock Service Shares Division
Dreyfus IP Technology Growth Service Shares Division
DWS Alternative Asset Allocation Class B Division (1)
DWS Equity 500 Index Class B2 Division (2)
DWS Small Mid Cap Value Class B Division (3)
Equity Income Class 1 Division
Equity Income Class 2 Division
Fidelity VIP Contrafund Service Class Division
Fidelity VIP Contrafund Service Class 2 Division
Fidelity VIP Equity-Income Service Class 2 Division
Fidelity VIP Government Money Market Initial Class Division
Fidelity VIP Government Money Market Service Class 2 Division
Fidelity VIP Growth Service Class Division
Fidelity VIP Growth Service Class 2 Division
Fidelity VIP Mid Cap Service Class Division
Fidelity VIP Mid Cap Service Class 2 Division
Fidelity VIP Overseas Service Class 2 Division


For the year ended December 31, 2018
For each of the two years in the period ended December 31, 2018


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
Goldman Sachs VIT Small Cap Equity Insights Service Shares Division
Government & High Quality Bond Class 1 Division
Government & High Quality Bond Class 2 Division
Guggenheim Floating Rate Strategies Series F Division
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
International Emerging Markets Class 2 Division
Invesco American Franchise Series I Division
Invesco Balanced-Risk Allocation Series II Division
Invesco Core Equity Series I Division
Invesco Health Care Series I Division (4)
Invesco Health Care Series II Division (5)
Invesco International Growth Series I Division
Invesco International Growth Series II Division
Invesco Mid Cap Growth Series I Division
Invesco Small Cap Equity Series I Division
Invesco Technology Series I Division
Invesco Value Opportunities Series I Division
Janus Henderson Enterprise Service Shares Division
Janus Henderson 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
MFS International Value Service Class Division
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
Neuberger Berman AMT Mid Cap Growth Portfolio Class S Division
Neuberger Berman AMT Sustainable Equity Class I Division (6)
Oppenheimer Main Street Small Cap Service Shares Division
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
Principal Capital Appreciation Class 2 Division
Principal LifeTime 2010 Class 1 Division
Principal LifeTime 2020 Class 1 Division
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
Principal LifeTime Strategic Income Class 1 Division


 
 


Real Estate Securities Class 1 Division
Real Estate Securities 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
SAM Conservative Balanced Portfolio Class 1 Division
SAM Conservative Balanced Portfolio Class 2 Division
SAM Conservative Growth Portfolio Class 1 Division
SAM Conservative Growth Portfolio Class 2 Division
SAM Flexible Income Portfolio Class 1 Division
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
T. Rowe Price Blue Chip Growth Portfolio II Division
T. Rowe Price Health Sciences Portfolio II Division
Templeton Global Bond VIP Class 4 Division
Templeton Growth VIP Class 2 Division
The Merger Fund Division
VanEck Global Hard Assets Class S Division

 
 
Diversified Balanced Class 1 Division
For the year ended December 31, 2018
For the year ended December 31, 2018 and the period from May 26, 2017 (commencement of operations) through December 31, 2017
Diversified Balanced Volatility Control Class 2 Division
Diversified Growth Volatility Control Class 2 Division
For the year ended December 31, 2018
For the year ended December 31, 2018 and the period from April 6, 2017 (commencement of operations) through December 31, 2017
Calvert Investment Grade Bond Portfolio Class F Division
Franklin Income VIP Class 4 Division
Neuberger Berman AMT Sustainable Equity Class S Division
TOPS Aggressive Growth ETF Portfolio Investor Class Division
TOPS Balanced ETF Portfolio Investor Class Division
TOPS Conservative ETF Portfolio Investor Class Division
TOPS Growth ETF Portfolio Investor Class Division
TOPS Moderate Growth ETF Portfolio Investor Class Division
For the period from June 11, 2018 (commencement of operations) through December 31, 2018
(1) Represented the operations of Deutsche Alternative Asset Allocation Class B Division until October 13, 2018.
 
(2) Represented the operations of Deutsche Equity 500 Index Class B2 Division until October 13, 2018.
 
(3) Represented the operations of Deutsche Small Mid Cap Value Class B Division until October 13, 2018.
 
(4) Represented the operations of Invesco Global Health Care Series I Division until June 9, 2018.
 
(5) Represented the operations of Invesco Global Health Care Series II Division until June 9, 2018.
(6) Represented the operations of Neuberger Berman AMT Socially Responsive Class I Division until June 9, 2018.
 



Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
AllianceBernstein Small Cap Growth Class A Division
 
AllianceBernstein Small/Mid Cap Value Class A Division
 
Alps/Red Rocks Listed Private Equity Class III Division
 
American Century VP Capital Appreciation
Class I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
4,470,552

 
$
4,134,456

 
$
224,810

 
$
1,846,370

Total assets
 
4,470,552

 
 
4,134,456

 
 
224,810

 
 
1,846,370

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
4,470,552

 
$
4,134,456

 
$
224,810

 
$
1,846,370

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
4,470,552

 
$
4,134,456

 
$
224,810

 
$
1,846,370

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
4,470,552

 
$
4,134,456

 
$
224,810

 
$
1,846,370

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
4,556,450

 
$
4,782,126

 
$
259,658

 
$
1,896,806

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
269,635

 
 
244,209

 
 
20,308

 
 
130,302

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
132,323

 
 
315,786

 
 
24,056

 
 
148,908

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
132,323

 
 
315,786

 
 
24,056

 
 
148,908

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
AllianceBernstein Small Cap Growth Class A Division
 
AllianceBernstein Small/Mid Cap Value Class A Division
 
Alps/Red Rocks Listed Private Equity Class III Division
 
American Century VP Capital Appreciation
Class I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
—

 
$
24,675

 
$
12,312

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
66,205

 
 
64,855

 
 
1,357

 
 
29,227

 
Administrative charges
 
7,946

 
 
7,512

 
 
233

 
 
3,508

 
Separate account rider charges
 
3,293

 
 
5,691

 
 
—

 
 
1,455

Net investment income (loss)
 
(77,444)

 
 
(53,383)

 
 
10,722

 
 
(34,190)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(63,472)

 
 
(54,434)

 
 
856

 
 
30,768

Capital gains distributions
 
256,308

 
 
411,630

 
 
622

 
 
12,876

Total realized gains (losses) on investments
 
192,836

 
 
357,196

 
 
1,478

 
 
43,644

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(215,621)

 
 
(1,153,428)

 
 
(40,514)

 
 
(139,577)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(100,229)

 
 
(849,615)

 
 
(28,314)

 
 
(130,123)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(100,229)

 
$
(849,615)

 
$
(28,314)

 
$
(130,123)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
9,022,836

 
$
34,370,212

 
$
7,713,524

 
$
3,466,960

Total assets
 
9,022,836

 
 
34,370,212

 
 
7,713,524

 
 
3,466,960

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
9,022,836

 
$
34,370,212

 
$
7,713,524

 
$
3,466,960

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
9,022,836

 
$
34,370,212

 
$
7,713,524

 
$
3,466,960

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
9,022,836

 
$
34,370,212

 
$
7,713,524

 
$
3,466,960

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
7,915,690

 
$
36,975,258

 
$
8,353,909

 
$
2,898,996

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
1,000,315

 
 
3,565,375

 
 
421,044

 
 
199,250

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
443,100

 
 
2,719,107

 
 
365,786

 
 
157,328

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
443,100

 
 
2,719,107

 
 
365,786

 
 
157,328

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
201,625

 
$
1,103,366

 
$
118,515

 
$
9,955

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
121,364

 
 
494,624

 
 
118,553

 
 
49,312

 
Administrative charges
 
3,848

 
 
59,279

 
 
13,278

 
 
1,973

 
Separate account rider charges
 
—

 
 
1,124

 
 
6,887

 
 
—

Net investment income (loss)
 
76,413

 
 
548,339

 
 
(20,203)

 
 
(41,330)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
841,103

 
 
(1,924,563)

 
 
218,713

 
 
351,229

Capital gains distributions
 
813,356

 
 
—

 
 
591,310

 
 
383,697

Total realized gains (losses) on investments
 
1,654,459

 
 
(1,924,563)

 
 
810,023

 
 
734,926

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(2,472,593)

 
 
(338,271)

 
 
(2,086,089)

 
 
(679,662)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(741,721)

 
 
(1,714,495)

 
 
(1,296,269)

 
 
13,934

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(741,721)

 
$
(1,714,495)

 
$
(1,296,269)

 
$
13,934

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
American Century VP Ultra Class II Division
 
American Century VP Value Class II Division
 
American Funds Insurance Series Asset Allocation Fund Class 2 Division
 
American Funds Insurance Series Asset Allocation Fund Class 4 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
26,046,341

 
$
12,705,246

 
$
2,447,294

 
$
3,674,175

Total assets
 
26,046,341

 
 
12,705,246

 
 
2,447,294

 
 
3,674,175

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
26,046,341

 
$
12,705,246

 
$
2,447,294

 
$
3,674,175

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
26,046,341

 
$
12,705,246

 
$
2,447,294

 
$
3,674,175

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
26,046,341

 
$
12,705,246

 
$
2,447,294

 
$
3,674,175

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
21,544,397

 
$
8,386,711

 
$
2,617,857

 
$
3,972,045

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
1,524,962

 
 
1,267,989

 
 
116,095

 
 
175,044

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
1,017,950

 
 
607,893

 
 
214,289

 
 
353,457

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
1,017,950

 
 
607,893

 
 
214,289

 
 
353,457

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
American Century VP Ultra Class II Division
 
American Century VP Value Class II Division
 
American Funds Insurance Series Asset Allocation Fund Class 2 Division
 
American Funds Insurance Series Asset Allocation Fund Class 4 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
37,209

 
$
229,369

 
$
43,902

 
$
55,276

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
386,445

 
 
190,380

 
 
26,644

 
 
28,960

 
Administrative charges
 
46,379

 
 
8,728

 
 
2,824

 
 
4,634

 
Separate account rider charges
 
5,508

 
 
—

 
 
2,664

 
 
—

Net investment income (loss)
 
(401,123)

 
 
30,261

 
 
11,770

 
 
21,682

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
5,721,037

 
 
811,328

 
 
13,256

 
 
2,993

Capital gains distributions
 
3,321,386

 
 
975

 
 
82,257

 
 
145,383

Total realized gains (losses) on investments
 
9,042,423

 
 
812,303

 
 
95,513

 
 
148,376

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(8,103,195)

 
 
(2,347,999)

 
 
(284,645)

 
 
(399,237)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
538,105

 
 
(1,505,435)

 
 
(177,362)

 
 
(229,179)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
538,105

 
$
(1,505,435)

 
$
(177,362)

 
$
(229,179)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
American Funds Insurance Series Blue Chip Income and Growth
Class 2 Division
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
2,859,842

 
$
3,492,761

 
$
1,321,452

 
$
701,221

Total assets
 
2,859,842

 
 
3,492,761

 
 
1,321,452

 
 
701,221

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
2,859,842

 
$
3,492,761

 
$
1,321,452

 
$
701,221

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
2,859,842

 
$
3,492,761

 
$
1,321,452

 
$
701,221

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
2,859,842

 
$
3,492,761

 
$
1,321,452

 
$
701,221

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
3,262,876

 
$
3,950,893

 
$
1,424,055

 
$
777,941

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
233,647

 
 
286,527

 
 
62,450

 
 
32,952

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
246,957

 
 
342,094

 
 
131,702

 
 
71,947

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
246,957

 
 
342,094

 
 
131,702

 
 
71,947

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
American Funds Insurance Series Blue Chip Income and Growth
Class 2 Division
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
61,324

 
$
68,176

 
$
1,159

 
$
141

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
38,710

 
 
27,625

 
 
17,181

 
 
5,583

 
Administrative charges
 
4,022

 
 
4,450

 
 
1,599

 
 
942

 
Separate account rider charges
 
3,805

 
 
—

 
 
568

 
 
—

Net investment income (loss)
 
14,787

 
 
36,101

 
 
(18,189)

 
 
(6,384)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
73,437

 
 
6,646

 
 
(5,018)

 
 
(7,618)

Capital gains distributions
 
234,521

 
 
225,418

 
 
59,203

 
 
28,292

Total realized gains (losses) on investments
 
307,958

 
 
232,064

 
 
54,185

 
 
20,674

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(652,359)

 
 
(645,000)

 
 
(216,726)

 
 
(120,290)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(329,614)

 
 
(376,835)

 
 
(180,730)

 
 
(106,000)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(329,614)

 
$
(376,835)

 
$
(180,730)

 
$
(106,000)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
1,195,125

 
$
1,091,724

 
$
1,520,335

 
$
135,334

Total assets
 
1,195,125

 
 
1,091,724

 
 
1,520,335

 
 
135,334

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
1,195,125

 
$
1,091,724

 
$
1,520,335

 
$
135,334

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
1,195,125

 
$
1,091,724

 
$
1,520,335

 
$
135,334

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
1,195,125

 
$
1,091,724

 
$
1,520,335

 
$
135,334

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
1,328,642

 
$
1,159,427

 
$
1,590,437

 
$
145,368

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
130,046

 
 
89,339

 
 
124,515

 
 
13,866

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
114,094

 
 
106,523

 
 
140,284

 
 
13,417

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
114,094

 
 
106,523

 
 
140,284

 
 
13,417

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
78,415

 
$
13,803

 
$
5,029

 
$
2,234

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
17,009

 
 
9,085

 
 
9,616

 
 
1,249

 
Administrative charges
 
680

 
 
1,466

 
 
1,651

 
 
199

 
Separate account rider charges
 
—

 
 
—

 
 
—

 
 
—

Net investment income (loss)
 
60,726

 
 
3,252

 
 
(6,238)

 
 
786

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(6,343)

 
 
5,941

 
 
6,145

 
 
846

Capital gains distributions
 
—

 
 
38,875

 
 
73,429

 
 
561

Total realized gains (losses) on investments
 
(6,343)

 
 
44,816

 
 
79,574

 
 
1,407

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(98,561)

 
 
(115,554)

 
 
(119,881)

 
 
(19,439)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(44,178)

 
 
(67,486)

 
 
(46,545)

 
 
(17,246)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(44,178)

 
$
(67,486)

 
$
(46,545)

 
$
(17,246)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
American Funds Insurance Series New World Fund Class 2 Division
 
American Funds Insurance Series New World Fund Class 4 Division
 
BlackRock Advantage U.S. Total Market Class III Division
 
BlackRock Global Allocation
Class III Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
1,331,841

 
$
1,090,735

 
$
813,838

 
$
1,617,720

Total assets
 
1,331,841

 
 
1,090,735

 
 
813,838

 
 
1,617,720

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
1,331,841

 
$
1,090,735

 
$
813,838

 
$
1,617,720

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
1,331,841

 
$
1,090,735

 
$
813,838

 
$
1,617,720

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
1,331,841

 
$
1,090,735

 
$
813,838

 
$
1,617,720

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
1,446,293

 
$
1,188,717

 
$
1,047,433

 
$
1,720,152

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
64,062

 
 
52,667

 
 
55,514

 
 
124,921

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
134,025

 
 
116,525

 
 
78,506

 
 
167,009

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
134,025

 
 
116,525

 
 
78,506

 
 
167,009

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
American Funds Insurance Series New World Fund Class 2 Division
 
American Funds Insurance Series New World Fund Class 4 Division
 
BlackRock Advantage U.S. Total Market Class III Division
 
BlackRock Global Allocation
Class III Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
13,282

 
$
7,589

 
$
14,000

 
$
14,988

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
21,736

 
 
8,509

 
 
4,745

 
 
17,706

 
Administrative charges
 
2,070

 
 
1,390

 
 
848

 
 
2,191

 
Separate account rider charges
 
639

 
 
—

 
 
—

 
 
540

Net investment income (loss)
 
(11,163)

 
 
(2,310)

 
 
8,407

 
 
(5,449)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
138,653

 
 
9,233

 
 
(3,268)

 
 
2,889

Capital gains distributions
 
46,154

 
 
24,340

 
 
114,602

 
 
75,038

Total realized gains (losses) on investments
 
184,807

 
 
33,573

 
 
111,334

 
 
77,927

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(453,843)

 
 
(200,737)

 
 
(209,290)

 
 
(222,601)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(280,199)

 
 
(169,474)

 
 
(89,549)

 
 
(150,123)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(280,199)

 
$
(169,474)

 
$
(89,549)

 
$
(150,123)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
BlackRock iShares Dynamic Allocation
Class III Division
 
Calvert EAFE International Index Class F Division
 
Calvert Investment Grade Bond Portfolio Class F Division (1)
 
Calvert Russell 2000 Small Cap Index Class F Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
552,540

 
$
565,223

 
$
163,993

 
$
1,479,169

Total assets
 
552,540

 
 
565,223

 
 
163,993

 
 
1,479,169

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
552,540

 
$
565,223

 
$
163,993

 
$
1,479,169

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
552,540

 
$
565,223

 
$
163,993

 
$
1,479,169

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
552,540

 
$
565,223

 
$
163,993

 
$
1,479,169

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
576,344

 
$
648,084

 
$
166,416

 
$
1,761,943

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
53,749

 
 
7,389

 
 
3,125

 
 
20,816

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
54,840

 
 
64,734

 
 
16,196

 
 
154,689

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
54,840

 
 
64,734

 
 
16,196

 
 
154,689

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
BlackRock iShares Dynamic Allocation
Class III Division
 
Calvert EAFE International Index Class F Division
 
Calvert Investment Grade Bond Portfolio Class F Division (1)
 
Calvert Russell 2000 Small Cap Index Class F Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
4,480

 
$
18,967

 
$
4,613

 
$
14,811

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
4,232

 
 
1,981

 
 
282

 
 
10,055

 
Administrative charges
 
663

 
 
406

 
 
71

 
 
1,758

 
Separate account rider charges
 
347

 
 
—

 
 
—

 
 
—

Net investment income (loss)
 
(762)

 
 
16,580

 
 
4,260

 
 
2,998

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
1,795

 
 
1,758

 
 
(31)

 
 
(1,922)

Capital gains distributions
 
7,882

 
 
—

 
 
—

 
 
67,497

Total realized gains (losses) on investments
 
9,677

 
 
1,758

 
 
(31)

 
 
65,575

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(45,856)

 
 
(88,008)

 
 
(2,423)

 
 
(310,205)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(36,941)

 
 
(69,670)

 
 
1,806

 
 
(241,632)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(36,941)

 
$
(69,670)

 
$
1,806

 
$
(241,632)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations June 11, 2018.
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Calvert S&P MidCap 400 Index Class F Division
 
ClearBridge Small Cap Growth
Class II Division
 
Columbia Limited Duration Credit Class 2 Division
 
Columbia Small Cap Value Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
2,436,335

 
$
1,114,756

 
$
190,865

 
$
565,766

Total assets
 
2,436,335

 
 
1,114,756

 
 
190,865

 
 
565,766

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
2,436,335

 
$
1,114,756

 
$
190,865

 
$
565,766

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
2,436,335

 
$
1,114,756

 
$
190,865

 
$
565,766

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
2,436,335

 
$
1,114,756

 
$
190,865

 
$
565,766

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
2,822,791

 
$
1,299,298

 
$
193,573

 
$
736,103

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
24,937

 
 
48,871

 
 
20,656

 
 
40,068

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
243,334

 
 
101,966

 
 
19,366

 
 
59,100

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
243,334

 
 
101,966

 
 
19,366

 
 
59,100

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Calvert S&P MidCap 400 Index Class F Division
 
ClearBridge Small Cap Growth
Class II Division
 
Columbia Limited Duration Credit Class 2 Division
 
Columbia Small Cap Value Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
29,801

 
$
—

 
$
2,852

 
$
1,012

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
21,446

 
 
6,604

 
 
2,074

 
 
5,717

 
Administrative charges
 
3,503

 
 
1,183

 
 
234

 
 
897

 
Separate account rider charges
 
—

 
 
—

 
 
54

 
 
—

Net investment income (loss)
 
4,852

 
 
(7,787)

 
 
490

 
 
(5,602)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
10,324

 
 
12,119

 
 
(1,084)

 
 
6,848

Capital gains distributions
 
154,415

 
 
124,321

 
 
—

 
 
86,568

Total realized gains (losses) on investments
 
164,739

 
 
136,440

 
 
(1,084)

 
 
93,416

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(539,742)

 
 
(217,942)

 
 
(1,942)

 
 
(222,161)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(370,151)

 
 
(89,289)

 
 
(2,536)

 
 
(134,347)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(370,151)

 
$
(89,289)

 
$
(2,536)

 
$
(134,347)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
109,851,868

 
$
760,711

 
$
374,481

 
$
2,167,255

Total assets
 
109,851,868

 
 
760,711

 
 
374,481

 
 
2,167,255

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
109,851,868

 
$
760,711

 
$
374,481

 
$
2,167,255
 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
109,851,868

 
$
760,711

 
$
374,481

 
$
2,167,255

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
109,851,868

 
$
760,711

 
$
374,481

 
$
2,167,255

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
112,166,638

 
$
782,045

 
$
381,845

 
$
2,573,066

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
10,162,060

 
 
70,896

 
 
39,295

 
 
66,521

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
5,240,284

 
 
76,221

 
 
37,996

 
 
170,419

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
5,240,284

 
 
76,221

 
 
37,996

 
 
170,419

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
3,984,020

 
$
27,571

 
$
7,443

 
$
15,659

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
1,481,245

 
 
7,187

 
 
3,686

 
 
33,748

 
Administrative charges
 
121,014

 
 
1,145

 
 
337

 
 
3,641

 
Separate account rider charges
 
23,150

 
 
—

 
 
85

 
 
2,739

Net investment income (loss)
 
2,358,611

 
 
19,239

 
 
3,335

 
 
(24,469)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
552,964

 
 
(14,834)

 
 
(698)

 
 
57,047

Capital gains distributions
 
—

 
 
—

 
 
—

 
 
187,282

Total realized gains (losses) on investments
 
552,964

 
 
(14,834)

 
 
(698)

 
 
244,329

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(6,486,857)

 
 
(23,134)

 
 
(6,433)

 
 
(725,239)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(3,575,282)

 
 
(18,729)

 
 
(3,796)

 
 
(505,379)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(3,575,282)

 
$
(18,729)

 
$
(3,796)

 
$
(505,379)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Diversified Balanced Class 1 Division
 
Diversified Balanced Class 2 Division
 
Diversified Balanced Managed Volatility Class 2 Division
 
Diversified Balanced Volatility Control Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
22,897,633

 
$
968,136,022

 
$
162,127,276

 
$
66,955,631

Total assets
 
22,897,633

 
 
968,136,022

 
 
162,127,276

 
 
66,955,631

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
22,897,633

 
$
968,136,022

 
$
162,127,276

 
$
66,955,631

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
22,897,633

 
$
968,136,022

 
$
162,127,276

 
$
66,955,631

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
22,897,633

 
$
968,136,022

 
$
162,127,276

 
$
66,955,631

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
23,893,087

 
$
862,137,630

 
$
157,979,039

 
$
68,787,611

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
1,539,855

 
 
65,062,904

 
 
14,296,938

 
 
6,494,241

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
2,269,134

 
 
62,816,801

 
 
14,216,969

 
 
6,571,695

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
2,269,134

 
 
62,816,801

 
 
14,216,969

 
 
6,571,695

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Diversified Balanced Class 1 Division
 
Diversified Balanced Class 2 Division
 
Diversified Balanced Managed Volatility Class 2 Division
 
Diversified Balanced Volatility Control Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
671,858

 
$
25,411,935

 
$
6,426,819

 
$
422,818

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
299,947

 
 
13,455,265

 
 
2,194,639

 
 
667,791

 
Administrative charges
 
11,516

 
 
1,614,820

 
 
263,806

 
 
80,144

 
Separate account rider charges
 
—

 
 
485,786

 
 
66,047

 
 
—

Net investment income (loss)
 
360,395

 
 
9,856,064

 
 
3,902,327

 
 
(325,117)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
86,021

 
 
41,017,117

 
 
2,582,319

 
 
214,298

Capital gains distributions
 
331,038

 
 
13,898,985

 
 
1,311,308

 
 
159,533

Total realized gains (losses) on investments
 
417,059

 
 
54,916,102

 
 
3,893,627

 
 
373,831

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(1,819,831)

 
 
(114,144,647)

 
 
(15,661,168)

 
 
(3,177,655)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(1,042,377)

 
 
(49,372,481)

 
 
(7,865,214)

 
 
(3,128,941)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(1,042,377)

 
$
(49,372,481)

 
$
(7,865,214)

 
$
(3,128,941)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Diversified Growth Class 2 Division
 
Diversified Growth Managed Volatility Class 2 Division
 
Diversified Growth Volatility Control Class 2 Division
 
Diversified Income Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
3,487,376,164

 
$
325,257,138

 
$
384,856,712

 
$
241,402,310

Total assets
 
3,487,376,164

 
 
325,257,138

 
 
384,856,712

 
 
241,402,310

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
3,487,376,164

 
$
325,257,138

 
$
384,856,712

 
$
241,402,310

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
3,487,376,164

 
$
325,257,138

 
$
384,856,712

 
$
241,402,310

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
3,487,376,164

 
$
325,257,138

 
$
384,856,712

 
$
241,402,310

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
3,019,972,862

 
$
313,288,671

 
$
399,090,825

 
$
239,109,371

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
214,080,796

 
 
28,015,258

 
 
37,112,508

 
 
19,374,182

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
207,515,420

 
 
27,700,756

 
 
37,493,040

 
 
19,716,390

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
207,515,420

 
 
27,700,756

 
 
37,493,040

 
 
19,716,390

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Diversified Growth Class 2 Division
 
Diversified Growth Managed Volatility Class 2 Division
 
Diversified Growth Volatility Control Class 2 Division
 
Diversified Income Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
95,734,989

 
$
14,575,905

 
$
2,233,691

 
$
5,251,404

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
48,322,062

 
 
4,378,489

 
 
3,614,830

 
 
3,198,071

 
Administrative charges
 
5,799,325

 
 
527,251

 
 
433,830

 
 
383,813

 
Separate account rider charges
 
1,236,504

 
 
147,024

 
 
—

 
 
68,753

Net investment income (loss)
 
40,377,098

 
 
9,523,141

 
 
(1,814,969)

 
 
1,600,767

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
122,040,880

 
 
5,314,775

 
 
615,301

 
 
5,678,308

Capital gains distributions
 
39,759,958

 
 
2,720,332

 
 
878,384

 
 
1,657,034

Total realized gains (losses) on investments
 
161,800,838

 
 
8,035,107

 
 
1,493,685

 
 
7,335,342

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(420,217,284)

 
 
(36,214,974)

 
 
(22,030,674)

 
 
(18,427,084)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(218,039,348)

 
 
(18,656,726)

 
 
(22,351,958)

 
 
(9,490,975)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(218,039,348)

 
$
(18,656,726)

 
$
(22,351,958)

 
$
(9,490,975)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Diversified International
Class 1 Division
 
Diversified International
Class 2 Division
 
Dreyfus IP MidCap Stock Service Shares Division
 
Dreyfus IP Technology Growth Service Shares Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
95,801,314

 
$
1,092,259

 
$
428,518

 
$
8,555,429

Total assets
 
95,801,314

 
 
1,092,259

 
 
428,518

 
 
8,555,429

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
95,801,314

 
$
1,092,259

 
$
428,518

 
$
8,555,429

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
95,801,314

 
$
1,092,259

 
$
428,518

 
$
8,555,429

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
95,801,314

 
$
1,092,259

 
$
428,518

 
$
8,555,429

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
83,624,306

 
$
1,297,377

 
$
513,626

 
$
7,590,675

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
6,982,604

 
 
79,092

 
 
25,644

 
 
401,475

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
4,205,778

 
 
116,292

 
 
45,796

 
 
260,684

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
4,205,778

 
 
116,292

 
 
45,796

 
 
260,684

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Diversified International
Class 1 Division
 
Diversified International
Class 2 Division
 
Dreyfus IP MidCap Stock Service Shares Division
 
Dreyfus IP Technology Growth Service Shares Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
2,476,917

 
$
23,580

 
$
998

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
1,452,000

 
 
9,160

 
 
3,460

 
 
138,708

 
Administrative charges
 
93,603

 
 
1,565

 
 
583

 
 
16,647

 
Separate account rider charges
 
6,675

 
 
—

 
 
—

 
 
9,901

Net investment income (loss)
 
924,639

 
 
12,855

 
 
(3,045)

 
 
(165,256)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
6,180,082

 
 
(1,022)

 
 
72

 
 
678,771

Capital gains distributions
 
—

 
 
—

 
 
34,565

 
 
588,969

Total realized gains (losses) on investments
 
6,180,082

 
 
(1,022)

 
 
34,637

 
 
1,267,740

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(29,351,372)

 
 
(253,234)

 
 
(107,221)

 
 
(1,286,839)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
$
(22,246,651)

 
$
(241,401)

 
$
(75,629)

 
$
(184,355)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
DWS Alternative Asset Allocation Class B
Division (1)
 
DWS Equity 500 Index Class B2 Division (2)
 
DWS Small Mid Cap Value Class B Division (3)
 
Equity Income Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
37,421

 
$
1,690,713

 
$
1,084,214

 
$
215,812,201

Total assets
 
37,421

 
 
1,690,713

 
 
1,084,214

 
 
215,812,201

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
37,421

 
$
1,690,713

 
$
1,084,214

 
$
215,812,201

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
37,421

 
$
1,690,713

 
$
1,084,214

 
$
215,789,632

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
22,569

Total net assets
$
37,421

 
$
1,690,713

 
$
1,084,214

 
$
215,812,201

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
40,171

 
$
1,805,674

 
$
1,396,949

 
$
197,230,983

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
3,095

 
 
89,456

 
 
88,870

 
 
9,440,604

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
4,224

 
 
149,217

 
 
99,874

 
 
13,698,663

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
2,417

Total units outstanding
 
4,224

 
 
149,217

 
 
99,874

 
 
13,701,080

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
DWS Alternative Asset Allocation Class B
Division (1)
 
DWS Equity 500 Index Class B2 Division (2)
 
DWS Small Mid Cap Value Class B Division (3)
 
Equity Income Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
666

 
$
20,136

 
$
12,821

 
$
3,432,525

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
474

 
 
16,332

 
 
15,324

 
 
2,426,166

 
Administrative charges
 
58

 
 
2,431

 
 
1,912

 
 
233,770

 
Separate account rider charges
 
—

 
 
—

 
 
730

 
 
16,544

Net investment income (loss)
 
134

 
 
1,373

 
 
(5,145)

 
 
756,045

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(207)

 
 
6,840

 
 
(37,756)

 
 
15,956,360

Capital gains distributions
 
—

 
 
134,466

 
 
226,571

 
 
10,616,056

Total realized gains (losses) on investments
 
(207)

 
 
141,306

 
 
188,815

 
 
26,572,416

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(4,324)

 
 
(269,733)

 
 
(416,978)

 
 
(41,670,303)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(4,397)

 
 
(127,054)

 
 
(233,308)

 
 
(14,341,842)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(4,397)

 
$
(127,054)

 
$
(233,308)

 
$
(14,341,842)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of Deutsche Alternative Asset Allocation Class B Division until October 13, 2018.
(2) Represented the operations of Deutsche Equity 500 Index Class B2 Division until October 13, 2018.
(3) Represented the operations of Deutsche Small Mid Cap Value Class B Division until October 13, 2018.
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Equity Income Class 2 Division
 
Fidelity VIP Contrafund Service Class Division
 
Fidelity VIP Contrafund Service Class 2 Division
 
Fidelity VIP Equity-Income Service Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
4,292,349

 
$
32,951,781

 
$
43,924,413

 
$
25,518,195

Total assets
 
4,292,349

 
 
32,951,781

 
 
43,924,413

 
 
25,518,195

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
4,292,349

 
$
32,951,781

 
$
43,924,413

 
$
25,518,195

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
4,292,349

 
$
32,951,781

 
$
43,924,413

 
$
25,518,195

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
4,292,349

 
$
32,951,781

 
$
43,924,413

 
$
25,518,195

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
4,630,157

 
$
29,516,406

 
$
41,285,461

 
$
26,777,976

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
189,424

 
 
1,030,709

 
 
1,402,888

 
 
1,285,551

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
395,602

 
 
1,180,886

 
 
1,896,715

 
 
1,306,136

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
395,602

 
 
1,180,886

 
 
1,896,715

 
 
1,306,136

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Equity Income Class 2 Division
 
Fidelity VIP Contrafund Service Class Division
 
Fidelity VIP Contrafund Service Class 2 Division
 
Fidelity VIP Equity-Income Service Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
58,290

 
$
232,180

 
$
218,896

 
$
600,112

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
31,583

 
 
496,552

 
 
630,198

 
 
375,188

 
Administrative charges
 
4,890

 
 
19,864

 
 
76,984

 
 
25,774

 
Separate account rider charges
 
—

 
 
—

 
 
12,813

 
 
5,388

Net investment income (loss)
 
21,817

 
 
(284,236)

 
 
(501,099)

 
 
193,762

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
7,227

 
 
2,121,222

 
 
3,661,878

 
 
941,182

Capital gains distributions
 
204,791

 
 
3,574,542

 
 
4,559,185

 
 
1,448,086

Total realized gains (losses) on investments
 
212,018

 
 
5,695,764

 
 
8,221,063

 
 
2,389,268

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(543,962)

 
 
(7,947,435)

 
 
(11,302,296)

 
 
(5,446,945)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(310,127)

 
 
(2,535,907)

 
 
(3,582,332)

 
 
(2,863,915)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(310,127)

 
$
(2,535,907)

 
$
(3,582,332)

 
$
(2,863,915)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Fidelity VIP Government Money Market Initial Class Division
 
Fidelity VIP Government Money Market Service Class 2 Division
 
Fidelity VIP Growth Service Class Division
 
Fidelity VIP Growth Service Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
41,119,227

 
$
7,639,080

 
$
12,987,148

 
$
10,302,386

Total assets
 
41,119,227

 
 
7,639,080

 
 
12,987,148

 
 
10,302,386

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
41,119,227

 
$
7,639,080

 
$
12,987,148

 
$
10,302,386

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
41,119,227

 
$
7,639,080

 
$
12,987,148

 
$
10,302,386

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
41,119,227

 
$
7,639,080

 
$
12,987,148

 
$
10,302,386

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
41,119,224

 
$
7,639,080

 
$
10,478,211

 
$
9,834,380

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
41,119,226

 
 
7,639,080

 
 
206,703

 
 
166,409

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
8,644,462

 
 
767,785

 
 
643,559

 
 
383,343

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
8,644,462

 
 
767,785

 
 
643,559

 
 
383,343

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Fidelity VIP Government Money Market Initial Class Division
 
Fidelity VIP Government Money Market Service Class 2 Division
 
Fidelity VIP Growth Service Class Division
 
Fidelity VIP Growth Service Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
574,774

 
$
70,271

 
$
22,140

 
$
4,881

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
406,173

 
 
50,096

 
 
191,067

 
 
149,760

 
Administrative charges
 
32,634

 
 
7,413

 
 
7,644

 
 
17,973

 
Separate account rider charges
 
10,978

 
 
—

 
 
—

 
 
6,466

Net investment income (loss)
 
124,989

 
 
12,762

 
 
(176,571)

 
 
(169,318)

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

 
 
—

 
 
1,031,070

 
 
733,214

Capital gains distributions
 
—

 
 
—

 
 
2,138,300

 
 
1,687,293

Total realized gains (losses) on investments
 
—

 
 
—

 
 
3,169,370

 
 
2,420,507

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
54

 
 
—

 
 
(3,076,834)

 
 
(2,366,458)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
125,043

 
 
12,762

 
 
(84,035)

 
 
(115,269)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
125,043

 
$
12,762

 
$
(84,035)

 
$
(115,269)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Fidelity VIP Mid Cap Service Class Division
 
Fidelity VIP Mid Cap Service
Class 2 Division
 
Fidelity VIP Overseas Service Class 2 Division
 
Franklin Global Real Estate VIP Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
77,958

 
$
21,792,487

 
$
22,376,768

 
$
790,450

Total assets
 
77,958

 
 
21,792,487

 
 
22,376,768

 
 
790,450

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
77,958

 
$
21,792,487

 
$
22,376,768

 
$
790,450

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
77,958

 
$
21,792,487

 
$
22,376,768

 
$
790,450

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
77,958

 
$
21,792,487

 
$
22,376,768

 
$
790,450

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
90,029

 
$
24,853,614

 
$
20,206,296

 
$
842,157

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
2,607

 
 
745,807

 
 
1,180,832

 
 
52,697

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
6,676

 
 
1,047,000

 
 
1,398,121

 
 
79,497

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
6,676

 
 
1,047,000

 
 
1,398,121

 
 
79,497

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Fidelity VIP Mid Cap Service Class Division
 
Fidelity VIP Mid Cap Service
Class 2 Division
 
Fidelity VIP Overseas Service Class 2 Division
 
Franklin Global Real Estate VIP Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
1,346

 
$
105,518

 
$
333,391

 
$
22,011

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
3,447

 
 
317,566

 
 
325,103

 
 
8,917

 
Administrative charges
 
—

 
 
39,442

 
 
39,034

 
 
1,170

 
Separate account rider charges
 
—

 
 
16,118

 
 
3,250

 
 
12

Net investment income (loss)
 
(2,101)

 
 
(267,608)

 
 
(33,996)

 
 
11,912

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
113,494

 
 
399,672

 
 
1,504,811

 
 
32

Capital gains distributions
 
57,013

 
 
2,238,833

 
 
—

 
 
—

Total realized gains (losses) on investments
 
170,507

 
 
2,638,505

 
 
1,504,811

 
 
32

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(151,615)

 
 
(6,524,536)

 
 
(5,715,975)

 
 
(72,281)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
16,791

 
 
(4,153,639)

 
 
(4,245,160)

 
 
(60,337)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
16,791

 
$
(4,153,639)

 
$
(4,245,160)

 
$
(60,337)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Franklin Income VIP Class 4 Division (1)
 
Franklin Rising Dividends VIP Class 4 Division
 
Franklin Small Cap Value VIP Class 2 Division
 
Goldman Sachs VIT Mid Cap Value Institutional Shares Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
86,521

 
$
1,479,523

 
$
3,646,965

 
$
10,677,930

Total assets
 
86,521

 
 
1,479,523

 
 
3,646,965

 
 
10,677,930

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
86,521

 
$
1,479,523

 
$
3,646,965

 
$
10,677,930

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
86,521

 
$
1,479,523

 
$
3,646,965

 
$
10,677,930

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
86,521

 
$
1,479,523

 
$
3,646,965

 
$
10,677,930

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
88,705

 
$
1,541,359

 
$
4,510,405

 
$
13,428,737

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
5,737

 
 
58,922

 
 
249,792

 
 
828,389

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
9,204

 
 
130,811

 
 
177,991

 
 
455,659

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
9,204

 
 
130,811

 
 
177,991

 
 
455,659

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Franklin Income VIP Class 4 Division (1)
 
Franklin Rising Dividends VIP Class 4 Division
 
Franklin Small Cap Value VIP Class 2 Division
 
Goldman Sachs VIT Mid Cap Value Institutional Shares Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
—

 
$
18,861

 
$
39,051

 
$
161,537

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
79

 
 
15,627

 
 
56,121

 
 
159,329

 
Administrative charges
 
19

 
 
2,326

 
 
6,446

 
 
18,973

 
Separate account rider charges
 
—

 
 
—

 
 
3,507

 
 
3,697

Net investment income (loss)
 
(98)

 
 
908

 
 
(27,023)

 
 
(20,462)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(536)

 
 
(11,584)

 
 
(143,972)

 
 
234,145

Capital gains distributions
 
—

 
 
96,522

 
 
665,056

 
 
1,464,966

Total realized gains (losses) on investments
 
(536)

 
 
84,938

 
 
521,084

 
 
1,699,111

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(2,184)

 
 
(192,704)

 
 
(1,092,891)

 
 
(3,099,240)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(2,818)

 
 
(106,858)

 
 
(598,830)

 
 
(1,420,591)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(2,818)

 
$
(106,858)

 
$
(598,830)

 
$
(1,420,591)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations June 11, 2018.
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Goldman Sachs VIT Mid Cap Value Service Shares Division
 
Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division
 
Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division
 
Goldman Sachs VIT Small Cap Equity Insights Service Shares Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
658,026

 
$
46,407

 
$
5,727,684

 
$
337,000

Total assets
 
658,026

 
 
46,407

 
 
5,727,684

 
 
337,000

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
658,026

 
$
46,407

 
$
5,727,684

 
$
337,000

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
658,026

 
$
46,407

 
$
5,727,684

 
$
337,000

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
658,026

 
$
46,407

 
$
5,727,684

 
$
337,000

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
797,403

 
$
49,978

 
$
7,227,821

 
$
427,745

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
50,578

 
 
5,447

 
 
552,332

 
 
32,782

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
68,519

 
 
4,929

 
 
269,802

 
 
32,921

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
68,519

 
 
4,929

 
 
269,802

 
 
32,921

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Goldman Sachs VIT Mid Cap Value Service Shares Division
 
Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division
 
Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division
 
Goldman Sachs VIT Small Cap Equity Insights Service Shares Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
4,005

 
$
1,259

 
$
31,800

 
$
810

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
6,745

 
 
198

 
 
86,671

 
 
2,711

 
Administrative charges
 
952

 
 
37

 
 
10,192

 
 
445

 
Separate account rider charges
 
—

 
 
—

 
 
2,135

 
 
—

Net investment income (loss)
 
(3,692)

 
 
1,024

 
 
(67,198)

 
 
(2,346)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(5,928)

 
 
(52)

 
 
183,407

 
 
2,532

Capital gains distributions
 
90,288

 
 
—

 
 
952,913

 
 
54,142

Total realized gains (losses) on investments
 
84,360

 
 
(52)

 
 
1,136,320

 
 
56,674

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(168,196)

 
 
(3,570)

 
 
(1,681,780)

 
 
(97,355)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(87,528)

 
 
(2,598)

 
 
(612,658)

 
 
(43,027)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(87,528)

 
$
(2,598)

 
$
(612,658)

 
$
(43,027)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Government & High Quality Bond Class 1 Division
 
Government & High Quality Bond Class 2 Division
 
Guggenheim Floating Rate Strategies Series F Division
 
Guggenheim Investments Global Managed Futures Strategy Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
83,790,376

 
$
1,824,089

 
$
3,430,574

 
$
181,839

Total assets
 
83,790,376

 
 
1,824,089

 
 
3,430,574

 
 
181,839

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
83,790,376

 
$
1,824,089

 
$
3,430,574

 
$
181,839

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
83,790,376

 
$
1,824,089

 
$
3,430,574

 
$
181,839

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
83,790,376

 
$
1,824,089

 
$
3,430,574

 
$
181,839

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
91,425,759

 
$
1,926,359

 
$
3,556,805

 
$
201,878

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
8,847,981

 
 
192,821

 
 
135,542

 
 
11,716

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
7,616,315

 
 
181,707

 
 
332,996

 
 
21,177

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
7,616,315

 
 
181,707

 
 
332,996

 
 
21,177

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Government & High Quality Bond Class 1 Division
 
Government & High Quality Bond Class 2 Division
 
Guggenheim Floating Rate Strategies Series F Division
 
Guggenheim Investments Global Managed Futures Strategy Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
3,383,552

 
$
64,549

 
$
68,990

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
1,100,426

 
 
15,873

 
 
30,488

 
 
1,865

 
Administrative charges
 
81,213

 
 
2,475

 
 
3,401

 
 
254

 
Separate account rider charges
 
19,208

 
 
—

 
 
367

 
 
43

Net investment income (loss)
 
2,182,705

 
 
46,201

 
 
34,734

 
 
(2,162)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(2,325,561)

 
 
(16,789)

 
 
1,498

 
 
(2,189)

Capital gains distributions
 
—

 
 
—

 
 
—

 
 
—

Total realized gains (losses) on investments
 
(2,325,561)

 
 
(16,789)

 
 
1,498

 
 
(2,189)

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(438,402)

 
 
(31,113)

 
 
(140,794)

 
 
(16,291)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(581,258)

 
 
(1,701)

 
 
(104,562)

 
 
(20,642)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(581,258)

 
$
(1,701)

 
$
(104,562)

 
$
(20,642)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Guggenheim Investments Long Short Equity Division
 
Guggenheim Investments Multi-Hedge Strategies Division
 
Income Class 1 Division
 
Income Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
202,939

 
$
538,657

 
$
5,073,193

 
$
1,403,489

Total assets
 
202,939

 
 
538,657

 
 
5,073,193

 
 
1,403,489

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
202,939

 
$
538,657

 
$
5,073,193

 
$
1,403,489

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
202,939

 
$
538,657

 
$
5,073,193

 
$
1,403,489

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
202,939

 
$
538,657

 
$
5,073,193

 
$
1,403,489

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
231,176

 
$
549,820

 
$
5,233,848

 
$
1,444,354

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
15,386

 
 
22,853

 
 
506,813

 
 
140,913

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
21,125

 
 
56,797

 
 
488,889

 
 
137,781

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
21,125

 
 
56,797

 
 
488,889

 
 
137,781

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Guggenheim Investments Long Short Equity Division
 
Guggenheim Investments Multi-Hedge Strategies Division
 
Income Class 1 Division
 
Income Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
—

 
$
—

 
$
219,541

 
$
59,375

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
1,856

 
 
6,769

 
 
62,285

 
 
11,080

 
Administrative charges
 
225

 
 
857

 
 
6,416

 
 
1,821

 
Separate account rider charges
 
22

 
 
122

 
 
6,250

 
 
—

Net investment income (loss)
 
(2,103)

 
 
(7,748)

 
 
144,590

 
 
46,474

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
1,298

 
 
(520)

 
 
(66,296)

 
 
(17,236)

Capital gains distributions
 
21,195

 
 
—

 
 
—

 
 
—

Total realized gains (losses) on investments
 
22,493

 
 
(520)

 
 
(66,296)

 
 
(17,236)

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(46,659)

 
 
(28,353)

 
 
(117,773)

 
 
(31,234)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(26,269)

 
 
(36,621)

 
 
(39,479)

 
 
(1,996)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(26,269)

 
$
(36,621)

 
$
(39,479)

 
$
(1,996)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
International Emerging Markets Class 1 Division
 
International Emerging Markets Class 2 Division
 
Invesco American Franchise Series I Division
 
Invesco Balanced-Risk Allocation Series II Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
40,998,831

 
$
1,531,678

 
$
3,825,520

 
$
310,080

Total assets
 
40,998,831

 
 
1,531,678

 
 
3,825,520

 
 
310,080

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
40,998,831

 
$
1,531,678

 
$
3,825,520

 
$
310,080

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
40,998,831

 
$
1,531,678

 
$
3,825,520

 
$
310,080

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
40,998,831

 
$
1,531,678

 
$
3,825,520

 
$
310,080

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
41,880,474

 
$
1,857,825

 
$
3,194,815

 
$
373,684

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
2,711,563

 
 
102,180

 
 
66,938

 
 
33,199

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
1,413,713

 
 
169,257

 
 
213,251

 
 
30,395

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
1,413,713

 
 
169,257

 
 
213,251

 
 
30,395

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
International Emerging Markets Class 1 Division
 
International Emerging Markets Class 2 Division
 
Invesco American Franchise Series I Division
 
Invesco Balanced-Risk Allocation Series II Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
606,185

 
$
19,266

 
$
—

 
$
4,246

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
650,135

 
 
12,809

 
 
56,786

 
 
3,454

 
Administrative charges
 
56,423

 
 
2,195

 
 
2,272

 
 
478

 
Separate account rider charges
 
5,993

 
 
—

 
 
—

 
 
—

Net investment income (loss)
 
(106,366)

 
 
4,262

 
 
(59,058)

 
 
314

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
2,311,424

 
 
4,163

 
 
270,109

 
 
(912)

Capital gains distributions
 
—

 
 
—

 
 
281,469

 
 
29,438

Total realized gains (losses) on investments
 
2,311,424

 
 
4,163

 
 
551,578

 
 
28,526

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(14,162,851)

 
 
(425,756)

 
 
(664,227)

 
 
(55,192)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(11,957,793)

 
 
(417,331)

 
 
(171,707)

 
 
(26,352)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(11,957,793)

 
$
(417,331)

 
$
(171,707)

 
$
(26,352)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Invesco Core Equity Series I Division
 
Invesco Health Care Series I Division (1)
 
Invesco Health Care Series II Division (2)
 
Invesco International Growth Series I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
12,517,650

 
$
6,469,297

 
$
1,313,206

 
$
6,592,203

Total assets
 
12,517,650

 
 
6,469,297

 
 
1,313,206

 
 
6,592,203

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
12,517,650

 
$
6,469,297

 
$
1,313,206

 
$
6,592,203

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
12,517,650

 
$
6,469,297

 
$
1,313,206

 
$
6,592,203

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
12,517,650

 
$
6,469,297

 
$
1,313,206

 
$
6,592,203
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
12,216,747

 
$
8,144,118

 
$
1,500,896

 
$
7,035,815

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
404,578

 
 
276,348

 
 
59,314

 
 
199,885

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
788,319

 
 
312,290

 
 
126,541

 
 
620,874

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
788,319

 
 
312,290

 
 
126,541

 
 
620,874

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Invesco Core Equity Series I Division
 
Invesco Health Care Series I Division (1)
 
Invesco Health Care Series II Division (2)
 
Invesco International Growth Series I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
134,001

 
$
—

 
$
—

 
$
168,522

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
192,904

 
 
90,009

 
 
11,496

 
 
104,520

 
Administrative charges
 
7,717

 
 
4,226

 
 
1,667

 
 
12,544

 
Separate account rider charges
 
—

 
 
247

 
 
—

 
 
3,668

Net investment income (loss)
 
(66,620)

 
 
(94,482)

 
 
(13,163)

 
 
47,790

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
868,947

 
 
113,250

 
 
(26,391)

 
 
443,151

Capital gains distributions
 
959,725

 
 
917,940

 
 
151,725

 
 
57,071

Total realized gains (losses) on investments
 
1,828,672

 
 
1,031,190

 
 
125,334

 
 
500,222

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(3,263,203)

 
 
(931,133)

 
 
(141,599)

 
 
(1,906,439)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(1,501,151)

 
 
5,575

 
 
(29,428)

 
 
(1,358,427)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(1,501,151)

 
$
5,575

 
$
(29,428)

 
$
(1,358,427)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of Invesco Global Health Care Series I Division until June 9, 2018.
(2) Represented the operations of Invesco Global Health Care Series II Division until June 9, 2018.
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Invesco International Growth Series II Division
 
Invesco Mid Cap Growth Series I Division
 
Invesco Small Cap Equity Series I Division
 
Invesco Technology
Series I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
860,949

 
$
1,041,771

 
$
5,591,478

 
$
3,046,570

Total assets
 
860,949

 
 
1,041,771

 
 
5,591,478

 
 
3,046,570

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
860,949

 
$
1,041,771

 
$
5,591,478

 
$
3,046,570

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
860,949

 
$
1,041,771

 
$
5,591,478

 
$
3,046,570

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
860,949

 
$
1,041,771

 
$
5,591,478

 
$
3,046,570

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
957,401

 
$
1,202,544

 
$
6,966,458

 
$
2,865,730

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
26,483

 
 
218,401

 
 
351,003

 
 
138,986

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
93,729

 
 
65,850

 
 
252,544

 
 
245,159

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
93,729

 
 
65,850

 
 
252,544

 
 
245,159

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Invesco International Growth Series II Division
 
Invesco Mid Cap Growth Series I Division
 
Invesco Small Cap Equity Series I Division
 
Invesco Technology
Series I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
15,583

 
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
7,739

 
 
15,589

 
 
89,296

 
 
46,001

 
Administrative charges
 
1,179

 
 
624

 
 
8,898

 
 
1,840

 
Separate account rider charges
 
—

 
 
—

 
 
4,318

 
 
—

Net investment income (loss)
 
6,665

 
 
(16,213)

 
 
(102,512)

 
 
(47,841)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
1,082

 
 
21,176

 
 
103,773

 
 
254,044

Capital gains distributions
 
6,113

 
 
135,248

 
 
453,481

 
 
154,186

Total realized gains (losses) on investments
 
7,195

 
 
156,424

 
 
557,254

 
 
408,230

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(158,987)

 
 
(207,235)

 
 
(1,481,969)

 
 
(351,387)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(145,127)

 
 
(67,024)

 
 
(1,027,227)

 
 
9,002

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(145,127)

 
$
(67,024)

 
$
(1,027,227)

 
$
9,002

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Invesco Value Opportunities Series I Division
 
Janus Henderson Enterprise Service Shares Division
 
Janus Henderson Flexible Bond Service Shares Division
 
LargeCap Growth Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
2,905,478

 
$
8,592,280

 
$
1,857,956

 
$
39,308,454

Total assets
 
2,905,478

 
 
8,592,280

 
 
1,857,956

 
 
39,308,454

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
2,905,478

 
$
8,592,280

 
$
1,857,956

 
$
39,308,454

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
2,905,478

 
$
8,592,280

 
$
1,857,956

 
$
39,308,454

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
2,905,478

 
$
8,592,280

 
$
1,857,956

 
$
39,308,454

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
3,572,524

 
$
6,864,019

 
$
1,940,109

 
$
27,346,755

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
528,269

 
 
136,407

 
 
151,918

 
 
1,391,449

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
204,389

 
 
416,584

 
 
187,875

 
 
2,218,594

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
204,389

 
 
416,584

 
 
187,875

 
 
2,218,594

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Invesco Value Opportunities Series I Division
 
Janus Henderson Enterprise Service Shares Division
 
Janus Henderson Flexible Bond Service Shares Division
 
LargeCap Growth Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
11,769

 
$
12,771

 
$
49,043

 
$
103,490

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
48,152

 
 
121,918

 
 
21,116

 
 
566,018

 
Administrative charges
 
5,779

 
 
4,877

 
 
2,700

 
 
33,339

 
Separate account rider charges
 
1,376

 
 
—

 
 
203

 
 
4,207

Net investment income (loss)
 
(43,538)

 
 
(114,024)

 
 
25,024

 
 
(500,074)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(155,304)

 
 
1,049,412

 
 
(33,900)

 
 
4,409,587

Capital gains distributions
 
377,587

 
 
469,864

 
 
—

 
 
3,470,487

Total realized gains (losses) on investments
 
222,283

 
 
1,519,276

 
 
(33,900)

 
 
7,880,074

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(911,597)

 
 
(1,513,581)

 
 
(42,489)

 
 
(10,619,371)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
$
(732,852)

 
$
(108,329)

 
$
(51,365)

 
$
(3,239,371)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
1,525,604

 
$
102,802,630

 
$
3,159,387

 
$
88,546,808

Total assets
 
1,525,604

 
 
102,802,630

 
 
3,159,387

 
 
88,546,808

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
1,525,604

 
$
102,802,630

 
$
3,159,387

 
$
88,546,808

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
1,525,604

 
$
102,802,630

 
$
3,159,387

 
$
88,546,808

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
1,525,604

 
$
102,802,630

 
$
3,159,387

 
$
88,546,808

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
1,788,924

 
$
87,894,151

 
$
3,482,603

 
$
66,614,695

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
54,369

 
 
3,415,370

 
 
105,878

 
 
5,402,490

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
153,152

 
 
1,581,960

 
 
287,735

 
 
5,075,303

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
153,152

 
 
1,581,960

 
 
287,735

 
 
5,075,303

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
1,512

 
$
40,913

 
$
63

 
$
1,714,800

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
10,104

 
 
1,450,835

 
 
17,262

 
 
1,233,950

 
Administrative charges
 
1,748

 
 
79,279

 
 
3,114

 
 
94,361

 
Separate account rider charges
 
—

 
 
9,304

 
 
—

 
 
21,391

Net investment income (loss)
 
(10,340)

 
 
(1,498,505)

 
 
(20,313)

 
 
365,098

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
32,069

 
 
7,437,191

 
 
1,202

 
 
8,911,993

Capital gains distributions
 
115,023

 
 
8,346,205

 
 
197,012

 
 
3,471,465

Total realized gains (losses) on investments
 
147,092

 
 
15,783,396

 
 
198,214

 
 
12,383,458

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(369,940)

 
 
(10,937,857)

 
 
(383,342)

 
 
(18,120,279)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(233,188)

 
 
3,347,034

 
 
(205,441)

 
 
(5,371,723)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(233,188)

 
$
3,347,034

 
$
(205,441)

 
$
(5,371,723)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
LargeCap S&P 500 Index Class 2 Division
 
MFS International Value Service Class Division
 
MFS New Discovery Service Class Division
 
MFS Utilities Service Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
7,079,947

 
$
5,717,283

 
$
2,463,304

 
$
12,388,418

Total assets
 
7,079,947

 
 
5,717,283

 
 
2,463,304

 
 
12,388,418

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
7,079,947

 
$
5,717,283

 
$
2,463,304

 
$
12,388,418

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
7,079,947

 
$
5,717,283

 
$
2,463,304

 
$
12,388,418

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
7,079,947

 
$
5,717,283

 
$
2,463,304

 
$
12,388,418

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
7,665,097

 
$
5,940,970

 
$
2,807,155

 
$
12,895,481

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
435,957

 
 
232,410

 
 
154,827

 
 
429,259

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
678,065

 
 
530,727

 
 
196,955

 
 
633,405

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
678,065

 
 
530,727

 
 
196,955

 
 
633,405

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
LargeCap S&P 500 Index Class 2 Division
 
MFS International Value Service Class Division
 
MFS New Discovery Service Class Division
 
MFS Utilities Service Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
103,142

 
$
62,968

 
$
—

 
$
104,912

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
49,539

 
 
78,488

 
 
24,909

 
 
155,318

 
Administrative charges
 
8,445

 
 
9,272

 
 
2,740

 
 
19,038

 
Separate account rider charges
 
—

 
 
614

 
 
1,279

 
 
5,570

Net investment income (loss)
 
45,158

 
 
(25,406)

 
 
(28,928)

 
 
(75,014)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
32,400

 
 
254,029

 
 
46,293

 
 
(241,135)

Capital gains distributions
 
218,371

 
 
78,286

 
 
344,108

 
 
47,962

Total realized gains (losses) on investments
 
250,771

 
 
332,315

 
 
390,401

 
 
(193,173)

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(859,123)

 
 
(1,068,216)

 
 
(584,728)

 
 
163,854

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(563,194)

 
 
(761,307)

 
 
(223,255)

 
 
(104,333)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(563,194)

 
$
(761,307)

 
$
(223,255)

 
$
(104,333)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
MFS Value Service Class Division
 
MidCap Class 1 Division
 
Multi-Asset Income Class 1 Division
 
Multi-Asset Income Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
4,680,953

 
$
283,507,349

 
$
182,928

 
$
43,239

Total assets
 
4,680,953

 
 
283,507,349

 
 
182,928

 
 
43,239

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
4,680,953

 
$
283,507,349

 
$
182,928

 
$
43,239

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
4,680,953

 
$
283,507,349

 
$
182,928

 
$
43,239

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
4,680,953

 
$
283,507,349

 
$
182,928

 
$
43,239

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
5,138,831

 
$
291,942,096

 
$
185,515

 
$
46,888

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
276,000

 
 
5,841,899

 
 
17,760

 
 
4,235

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
192,172

 
 
3,361,002

 
 
17,129

 
 
4,430

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
192,172

 
 
3,361,002

 
 
17,129

 
 
4,430

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
MFS Value Service Class Division
 
MidCap Class 1 Division
 
Multi-Asset Income Class 1 Division
 
Multi-Asset Income Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
69,807

 
$
911,911

 
$
5,043

 
$
1,137

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
69,275

 
 
4,086,898

 
 
2,235

 
 
230

 
Administrative charges
 
8,314

 
 
270,933

 
 
193

 
 
43

 
Separate account rider charges
 
2,685

 
 
24,369

 
 
67

 
 
—

Net investment income (loss)
 
(10,467)

 
 
(3,470,289)

 
 
2,548

 
 
864

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
141,979

 
 
21,957,062

 
 
497

 
 
(57)

Capital gains distributions
 
363,510

 
 
42,441,174

 
 
582

 
 
131

Total realized gains (losses) on investments
 
505,489

 
 
64,398,236

 
 
1,079

 
 
74

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(1,119,990)

 
 
(84,185,785)

 
 
(16,908)

 
 
(3,699)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(624,968)

 
 
(23,257,838)

 
 
(13,281)

 
 
(2,761)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(624,968)

 
$
(23,257,838)

 
$
(13,281)

 
$
(2,761)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Neuberger Berman AMT Large Cap Value Class I Division
 
Neuberger Berman AMT Mid Cap Growth Portfolio Class S Division
 
Neuberger Berman AMT Sustainable Equity Class I Division (1)
 
Neuberger Berman AMT Sustainable Equity Class S Division (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
3,817,962

 
$
2,453,269

 
$
3,204,743

 
$
1,506

Total assets
 
3,817,962

 
 
2,453,269

 
 
3,204,743

 
 
1,506

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
3,817,962

 
$
2,453,269

 
$
3,204,743

 
$
1,506

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
3,817,962

 
$
2,453,269

 
$
3,204,743

 
$
1,506

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
3,817,962

 
$
2,453,269

 
$
3,204,743

 
$
1,506

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
3,738,887

 
$
2,613,268

 
$
2,894,810

 
$
1,632

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
261,863

 
 
110,707

 
 
141,178

 
 
66

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
168,541

 
 
223,059

 
 
131,545

 
 
170

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
168,541

 
 
223,059

 
 
131,545

 
 
170

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Neuberger Berman AMT Large Cap Value Class I Division
 
Neuberger Berman AMT Mid Cap Growth Portfolio Class S Division
 
Neuberger Berman AMT Sustainable Equity Class I Division (1)
 
Neuberger Berman AMT Sustainable Equity Class S Division (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
49,173

 
$
—

 
$
17,320

 
$
7

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
53,394

 
 
33,581

 
 
47,902

 
 
4

 
Administrative charges
 
6,408

 
 
4,247

 
 
5,749

 
 
1

 
Separate account rider charges
 
1,590

 
 
271

 
 
799

 
 
—

Net investment income (loss)
 
(12,219)

 
 
(38,099)

 
 
(37,130)

 
 
2

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
283,648

 
 
87,774

 
 
536,361

 
 
(477)

Capital gains distributions
 
437,534

 
 
230,730

 
 
193,784

 
 
191

Total realized gains (losses) on investments
 
721,182

 
 
318,504

 
 
730,145

 
 
(286)

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(803,614)

 
 
(507,941)

 
 
(893,064)

 
 
(126)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(94,651)

 
 
(227,536)

 
 
(200,049)

 
 
(410)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(94,651)

 
$
(227,536)

 
$
(200,049)

 
$
(410)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of Neuberger Berman AMT Socially Responsive Class I Division until June 9, 2018.
(2) Commenced operations June 11, 2018.
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Oppenheimer Main Street Small Cap Service Shares Division
 
PIMCO All Asset Administrative Class Division
 
PIMCO All Asset Advisor Class Division
 
PIMCO Commodity Real Return Strategy M Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
401,715

 
$
2,747,439

 
$
100,446

 
$
43,808

Total assets
 
401,715

 
 
2,747,439

 
 
100,446

 
 
43,808

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
401,715

 
$
2,747,439

 
$
100,446

 
$
43,808

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
401,715

 
$
2,747,439

 
$
100,446

 
$
43,808

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
401,715

 
$
2,747,439

 
$
100,446

 
$
43,808

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
461,364

 
$
2,927,225

 
$
104,607

 
$
48,527

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
20,056

 
 
276,681

 
 
9,995

 
 
7,313

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
29,563

 
 
183,813

 
 
10,036

 
 
5,449

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
29,563

 
 
183,813

 
 
10,036

 
 
5,449

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Oppenheimer Main Street Small Cap Service Shares Division
 
PIMCO All Asset Administrative Class Division
 
PIMCO All Asset Advisor Class Division
 
PIMCO Commodity Real Return Strategy M Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
289

 
$
99,233

 
$
3,097

 
$
242

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
6,373

 
 
40,216

 
 
1,087

 
 
161

 
Administrative charges
 
255

 
 
4,827

 
 
151

 
 
24

 
Separate account rider charges
 
—

 
 
1,547

 
 
—

 
 
—

Net investment income (loss)
 
(6,339)

 
 
52,643

 
 
1,859

 
 
57

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
4,626

 
 
(30,509)

 
 
1,167

 
 
(176)

Capital gains distributions
 
63,159

 
 
—

 
 
—

 
 
—

Total realized gains (losses) on investments
 
67,785

 
 
(30,509)

 
 
1,167

 
 
(176)

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(112,224)

 
 
(237,187)

 
 
(9,885)

 
 
(3,877)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(50,778)

 
 
(215,053)

 
 
(6,859)

 
 
(3,996)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(50,778)

 
$
(215,053)

 
$
(6,859)

 
$
(3,996)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
PIMCO High Yield Administrative Class Division
 
PIMCO Low Duration Advisor Class Division
 
PIMCO Total Return Administrative Class Division
 
Principal Capital Appreciation
Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
17,923,374

 
$
1,028,500

 
$
21,623,124

 
$
91,428,734

Total assets
 
17,923,374

 
 
1,028,500

 
 
21,623,124

 
 
91,428,734

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
17,923,374

 
$
1,028,500

 
$
21,623,124

 
$
91,428,734

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
17,923,374

 
$
1,028,500

 
$
21,623,124

 
$
91,428,734

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
17,923,374

 
$
1,028,500

 
$
21,623,124

 
$
91,428,734

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
19,105,792

 
$
1,032,905

 
$
22,894,371

 
$
82,757,925

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
2,462,002

 
 
102,034

 
 
2,063,275

 
 
3,535,527

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
1,263,930

 
 
105,159

 
 
1,740,545

 
 
5,615,687

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
1,263,930

 
 
105,159

 
 
1,740,545

 
 
5,615,687

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
PIMCO High Yield Administrative Class Division
 
PIMCO Low Duration Advisor Class Division
 
PIMCO Total Return Administrative Class Division
 
Principal Capital Appreciation
Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
1,000,936

 
$
10,591

 
$
587,419

 
$
1,191,725

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
241,523

 
 
6,182

 
 
286,740

 
 
1,333,145

 
Administrative charges
 
29,708

 
 
762

 
 
35,047

 
 
125,587

 
Separate account rider charges
 
4,987

 
 
—

 
 
7,876

 
 
19,511

Net investment income (loss)
 
724,718

 
 
3,647

 
 
257,756

 
 
(286,518)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(240,898)

 
 
(4,692)

 
 
(586,357)

 
 
4,363,000

Capital gains distributions
 
—

 
 
—

 
 
263,693

 
 
5,522,087

Total realized gains (losses) on investments
 
(240,898)

 
 
(4,692)

 
 
(322,664)

 
 
9,885,087

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(1,268,626)

 
 
(3,712)

 
 
(446,136)

 
 
(13,540,449)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(784,806)

 
 
(4,757)

 
 
(511,044)

 
 
(3,941,880)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(784,806)

 
$
(4,757)

 
$
(511,044)

 
$
(3,941,880)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Principal Capital Appreciation
Class 2 Division
 
Principal LifeTime 2010 Class 1 Division
 
Principal LifeTime 2020 Class 1 Division
 
Principal LifeTime 2020 Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
2,144,462

 
$
17,559,360

 
$
83,003,590

 
$
1,312,393

Total assets
 
2,144,462

 
 
17,559,360

 
 
83,003,590

 
 
1,312,393

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
2,144,462

 
$
17,559,360

 
$
83,003,590

 
$
1,312,393

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
2,144,462

 
$
17,559,360

 
$
83,003,590

 
$
1,312,393

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
2,144,462

 
$
17,559,360

 
$
83,003,590

 
$
1,312,393

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
2,280,194

 
$
17,107,667

 
$
77,440,830

 
$
1,454,804

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
83,834

 
 
1,441,655

 
 
6,587,586

 
 
105,075

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
201,022

 
 
1,096,083

 
 
4,619,458

 
 
130,619

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
201,022

 
 
1,096,083

 
 
4,619,458

 
 
130,619

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Principal Capital Appreciation
Class 2 Division
 
Principal LifeTime 2010 Class 1 Division
 
Principal LifeTime 2020 Class 1 Division
 
Principal LifeTime 2020 Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
17,944

 
$
608,276

 
$
2,501,686

 
$
36,392

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
14,787

 
 
264,147

 
 
1,186,331

 
 
9,875

 
Administrative charges
 
2,529

 
 
29,147

 
 
133,830

 
 
1,780

 
Separate account rider charges
 
—

 
 
3,871

 
 
13,130

 
 
—

Net investment income (loss)
 
628

 
 
311,111

 
 
1,168,395

 
 
24,737

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
15,714

 
 
1,757,475

 
 
7,283,159

 
 
(6,060)

Capital gains distributions
 
101,883

 
 
500,101

 
 
2,759,828

 
 
40,711

Total realized gains (losses) on investments
 
117,597

 
 
2,257,576

 
 
10,042,987

 
 
34,651

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(269,776)

 
 
(3,578,113)

 
 
(17,238,827)

 
 
(157,680)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(151,551)

 
 
(1,009,426)

 
 
(6,027,445)

 
 
(98,292)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(151,551)

 
$
(1,009,426)

 
$
(6,027,445)

 
$
(98,292)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Principal LifeTime 2030 Class 1 Division
 
Principal LifeTime 2030 Class 2 Division
 
Principal LifeTime 2040 Class 1 Division
 
Principal LifeTime 2040 Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
54,595,170

 
$
1,797,786

 
$
12,970,073

 
$
656,833

Total assets
 
54,595,170

 
 
1,797,786

 
 
12,970,073

 
 
656,833

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
54,595,170

 
$
1,797,786

 
$
12,970,073

 
$
656,833

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
54,595,170

 
$
1,797,786

 
$
12,970,073

 
$
656,833

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
54,595,170

 
$
1,797,786

 
$
12,970,073

 
$
656,833

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
55,729,598

 
$
1,987,464

 
$
12,560,380

 
$
747,732

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
4,714,609

 
 
156,738

 
 
930,421

 
 
47,493

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
2,984,921

 
 
182,393

 
 
675,639

 
 
65,218

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
2,984,921

 
 
182,393

 
 
675,639

 
 
65,218

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Principal LifeTime 2030 Class 1 Division
 
Principal LifeTime 2030 Class 2 Division
 
Principal LifeTime 2040 Class 1 Division
 
Principal LifeTime 2040 Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
1,482,332

 
$
36,608

 
$
302,574

 
$
13,035

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
803,839

 
 
11,279

 
 
184,651

 
 
4,916

 
Administrative charges
 
92,492

 
 
1,962

 
 
21,101

 
 
856

 
Separate account rider charges
 
8,180

 
 
—

 
 
3,570

 
 
—

Net investment income (loss)
 
577,821

 
 
23,367

 
 
93,252

 
 
7,263

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
3,048,842

 
 
7,528

 
 
465,722

 
 
23,986

Capital gains distributions
 
1,925,533

 
 
48,930

 
 
494,019

 
 
22,353

Total realized gains (losses) on investments
 
4,974,375

 
 
56,458

 
 
959,741

 
 
46,339

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(10,456,268)

 
 
(236,837)

 
 
(2,363,896)

 
 
(129,154)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(4,904,072)

 
 
(157,012)

 
 
(1,310,903)

 
 
(75,552)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(4,904,072)

 
$
(157,012)

 
$
(1,310,903)

 
$
(75,552)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Principal LifeTime 2050 Class 1 Division
 
Principal LifeTime 2050 Class 2 Division
 
Principal LifeTime Strategic Income Class 1 Division
 
Real Estate Securities Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
9,719,860

 
$
926,625

 
$
11,401,149

 
$
61,500,401

Total assets
 
9,719,860

 
 
926,625

 
 
11,401,149

 
 
61,500,401

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
9,719,860

 
$
926,625

 
$
11,401,149

 
$
61,500,401

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
9,719,860

 
$
926,625

 
$
11,401,149

 
$
61,500,401

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
9,719,860

 
$
926,625

 
$
11,401,149

 
$
61,500,401

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
9,781,311

 
$
1,050,619

 
$
11,344,201

 
$
62,644,251

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
726,990

 
 
69,829

 
 
1,008,951

 
 
3,443,471

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
499,979

 
 
92,578

 
 
787,602

 
 
1,137,867

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
499,979

 
 
92,578

 
 
787,602

 
 
1,137,867

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Principal LifeTime 2050 Class 1 Division
 
Principal LifeTime 2050 Class 2 Division
 
Principal LifeTime Strategic Income Class 1 Division
 
Real Estate Securities Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
229,152

 
$
15,002

 
$
339,982

 
$
1,235,879

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
139,161

 
 
7,194

 
 
166,815

 
 
863,367

 
Administrative charges
 
16,049

 
 
1,273

 
 
17,759

 
 
69,815

 
Separate account rider charges
 
1,990

 
 
—

 
 
2,535

 
 
23,650

Net investment income (loss)
 
71,952

 
 
6,535

 
 
152,873

 
 
279,047

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
312,817

 
 
32,869

 
 
507,851

 
 
3,002,226

Capital gains distributions
 
492,639

 
 
34,284

 
 
132,227

 
 
5,545,552

Total realized gains (losses) on investments
 
805,456

 
 
67,153

 
 
640,078

 
 
8,547,778

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(1,948,794)

 
 
(182,805)

 
 
(1,344,295)

 
 
(12,652,684)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(1,071,386)

 
 
(109,117)

 
 
(551,344)

 
 
(3,825,859)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(1,071,386)

 
$
(109,117)

 
$
(551,344)

 
$
(3,825,859)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Real Estate Securities Class 2 Division
 
Rydex Basic Materials Division
 
Rydex Commodities Strategy Division
 
Rydex NASDAQ 100 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
3,270,539

 
$
490,443

 
$
423,580

 
$
1,824,883

Total assets
 
3,270,539

 
 
490,443

 
 
423,580

 
 
1,824,883

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
3,270,539

 
$
490,443

 
$
423,580

 
$
1,824,883

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
3,270,539

 
$
490,443

 
$
423,580

 
$
1,824,883

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
3,270,539

 
$
490,443

 
$
423,580

 
$
1,824,883

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
3,771,581

 
$
525,743

 
$
511,171

 
$
1,894,771

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
182,508

 
 
7,497

 
 
5,908

 
 
49,915

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
295,095

 
 
51,723

 
 
65,918

 
 
153,190

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
295,095

 
 
51,723

 
 
65,918

 
 
153,190

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Real Estate Securities Class 2 Division
 
Rydex Basic Materials Division
 
Rydex Commodities Strategy Division
 
Rydex NASDAQ 100 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
52,670

 
$
2,848

 
$
15,712

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
30,153

 
 
5,636

 
 
4,734

 
 
18,123

 
Administrative charges
 
4,561

 
 
767

 
 
630

 
 
2,787

 
Separate account rider charges
 
—

 
 
—

 
 
460

 
 
—

Net investment income (loss)
 
17,956

 
 
(3,555)

 
 
9,888

 
 
(20,910)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(36,484)

 
 
1,478

 
 
10,247

 
 
24,686

Capital gains distributions
 
263,699

 
 
10,668

 
 
—

 
 
76,322

Total realized gains (losses) on investments
 
227,215

 
 
12,146

 
 
10,247

 
 
101,008

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(402,912)

 
 
(113,786)

 
 
(108,846)

 
 
(186,449)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(157,741)

 
 
(105,195)

 
 
(88,711)

 
 
(106,351)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(157,741)

 
$
(105,195)

 
$
(88,711)

 
$
(106,351)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
432,208,696

 
$
13,096,767

 
$
102,967,862

 
$
6,003,981

Total assets
 
432,208,696

 
 
13,096,767

 
 
102,967,862

 
 
6,003,981

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
432,208,696

 
$
13,096,767

 
$
102,967,862

 
$
6,003,981

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
432,208,696

 
$
13,096,767

 
$
102,967,862

 
$
6,003,981

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
432,208,696

 
$
13,096,767

 
$
102,967,862

 
$
6,003,981

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
481,494,491

 
$
14,514,568

 
$
114,103,074

 
$
6,536,872

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
31,094,151

 
 
953,185

 
 
9,318,359

 
 
550,319

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
28,288,956

 
 
1,265,612

 
 
6,934,074

 
 
583,658

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
28,288,956

 
 
1,265,612

 
 
6,934,074

 
 
583,658

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
15,072,358

 
$
390,387

 
$
3,838,782

 
$
191,136

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
6,233,097

 
 
117,671

 
 
1,468,157

 
 
56,633

 
Administrative charges
 
692,342

 
 
18,760

 
 
163,737

 
 
8,935

 
Separate account rider charges
 
73,020

 
 
—

 
 
36,252

 
 
—

Net investment income (loss)
 
8,073,899

 
 
253,956

 
 
2,170,636

 
 
125,568

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
7,175,978

 
 
9,675

 
 
555,306

 
 
(22,121)

Capital gains distributions
 
23,733,136

 
 
663,768

 
 
4,292,117

 
 
228,791

Total realized gains (losses) on investments
 
30,909,114

 
 
673,443

 
 
4,847,423

 
 
206,670

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(68,888,685)

 
 
(1,809,015)

 
 
(12,400,624)

 
 
(621,650)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(29,905,672)

 
 
(881,616)

 
 
(5,382,565)

 
 
(289,412)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(29,905,672)

 
$
(881,616)

 
$
(5,382,565)

 
$
(289,412)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
SAM Conservative Growth Portfolio Class 1 Division
 
SAM Conservative Growth Portfolio Class 2 Division
 
SAM Flexible Income Portfolio Class 1 Division
 
SAM Flexible Income Portfolio Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
85,786,472

 
$
10,748,886

 
$
126,846,709

 
$
12,512,154

Total assets
 
85,786,472

 
 
10,748,886

 
 
126,846,709

 
 
12,512,154

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
85,786,472

 
$
10,748,886

 
$
126,846,709

 
$
12,512,154

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
85,786,472

 
$
10,748,886

 
$
126,846,709

 
$
12,512,154

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
85,786,472

 
$
10,748,886

 
$
126,846,709

 
$
12,512,154

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
92,662,773

 
$
11,801,945

 
$
139,171,037

 
$
13,341,314

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
4,999,212

 
 
635,277

 
 
10,695,338

 
 
1,065,771

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
5,606,988

 
 
1,015,178

 
 
8,583,767

 
 
1,231,038

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
5,606,988

 
 
1,015,178

 
 
8,583,767

 
 
1,231,038

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
SAM Conservative Growth Portfolio Class 1 Division
 
SAM Conservative Growth Portfolio Class 2 Division
 
SAM Flexible Income Portfolio Class 1 Division
 
SAM Flexible Income Portfolio Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
2,685,032

 
$
272,280

 
$
5,701,444

 
$
437,582

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
1,248,096

 
 
94,527

 
 
1,819,186

 
 
97,706

 
Administrative charges
 
135,705

 
 
14,728

 
 
188,916

 
 
16,099

 
Separate account rider charges
 
55,890

 
 
—

 
 
57,685

 
 
—

Net investment income (loss)
 
1,245,341

 
 
163,025

 
 
3,635,657

 
 
323,777

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gaisn (losses) on sale of fund shares
 
3,666,864

 
 
2,577

 
 
(175,680)

 
 
(36,885)

Capital gains distributions
 
4,708,093

 
 
519,841

 
 
3,477,507

 
 
280,957

Total realized gains (losses) on investments
 
8,374,957

 
 
522,418

 
 
3,301,827

 
 
244,072

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(17,095,687)

 
 
(1,585,855)

 
 
(11,650,339)

 
 
(952,659)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(7,475,389)

 
 
(900,412)

 
 
(4,712,855)

 
 
(384,810)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(7,475,389)

 
$
(900,412)

 
$
(4,712,855)

 
$
(384,810)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
50,948,524

 
$
6,018,609

 
$
73,768,489

 
$
3,470,557

Total assets
 
50,948,524

 
 
6,018,609

 
 
73,768,489

 
 
3,470,557

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
50,948,524

 
$
6,018,609

 
$
73,768,489

 
$
3,470,557

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
50,948,524

 
$
6,018,609

 
$
73,768,489

 
$
3,470,557

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
50,948,524

 
$
6,018,609

 
$
73,768,489

 
$
3,470,557

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
56,235,962

 
$
6,615,249

 
$
75,297,693

 
$
3,491,019

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
2,774,974

 
 
332,336

 
 
29,273,209

 
 
1,382,691

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
3,390,761

 
 
572,553

 
 
6,315,338

 
 
345,147

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
3,390,761

 
 
572,553

 
 
6,315,338

 
 
345,147

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
1,405,545

 
$
138,600

 
$
1,691,948

 
$
58,675

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
766,853

 
 
58,646

 
 
1,008,581

 
 
22,471

 
Administrative charges
 
83,153

 
 
8,966

 
 
106,334

 
 
3,763

 
Separate account rider charges
 
55,991

 
 
—

 
 
4,024

 
 
—

Net investment income (loss)
 
499,548

 
 
70,988

 
 
573,009

 
 
32,441

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
1,202,949

 
 
25,654

 
 
(603,743)

 
 
(8,905)

Capital gains distributions
 
3,135,905

 
 
341,277

 
 
—

 
 
—

Total realized gains (losses) on investments
 
4,338,854

 
 
366,931

 
 
(603,743)

 
 
(8,905)

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(10,566,310)

 
 
(1,091,961)

 
 
(333,574)

 
 
(11,559)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(5,727,908)

 
 
(654,042)

 
 
(364,308)

 
 
11,977

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(5,727,908)

 
$
(654,042)

 
$
(364,308)

 
$
11,977

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
SmallCap Class 1 Division
 
SmallCap Class 2 Division
 
T. Rowe Price Blue Chip Growth Portfolio II Division
 
T. Rowe Price Health Sciences Portfolio II Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
86,880,566

 
$
1,292,379

 
$
20,946,458

 
$
25,079,375

Total assets
 
86,880,566

 
 
1,292,379

 
 
20,946,458

 
 
25,079,375

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
86,880,566

 
$
1,292,379

 
$
20,946,458

 
$
25,079,375

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
86,880,566

 
$
1,292,379

 
$
20,946,458

 
$
25,079,375

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
86,880,566

 
$
1,292,379

 
$
20,946,458

 
$
25,079,375

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
90,867,366

 
$
1,432,847

 
$
16,009,814

 
$
24,552,511

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
6,075,564

 
 
90,757

 
 
706,219

 
 
649,388

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
3,887,531

 
 
133,188

 
 
663,865

 
 
466,800

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
3,887,531

 
 
133,188

 
 
663,865

 
 
466,800

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
SmallCap Class 1 Division
 
SmallCap Class 2 Division
 
T. Rowe Price Blue Chip Growth Portfolio II Division
 
T. Rowe Price Health Sciences Portfolio II Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
322,673

 
$
1,161

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
1,349,858

 
 
11,892

 
 
291,530

 
 
357,670

 
Administrative charges
 
97,795

 
 
1,844

 
 
34,988

 
 
42,925

 
Separate account rider charges
 
15,643

 
 
—

 
 
15,076

 
 
13,201

Net investment income (loss)
 
(1,140,623)

 
 
(12,575)

 
 
(341,594)

 
 
(413,796)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
3,028,845

 
 
25,323

 
 
2,488,368

 
 
1,701,199

Capital gains distributions
 
6,716,502

 
 
85,507

 
 
714,009

 
 
1,524,339

Total realized gains (losses) on investments
 
9,745,347

 
 
110,830

 
 
3,202,377

 
 
3,225,538

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(19,692,302)

 
 
(307,735)

 
 
(2,838,061)

 
 
(2,779,049)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(11,087,578)

 
 
(209,480)

 
 
22,722

 
 
32,693

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(11,087,578)

 
$
(209,480)

 
$
22,722

 
$
32,693

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
Templeton Global Bond VIP Class 4 Division
 
Templeton Growth VIP Class 2 Division
 
The Merger Fund Division
 
TOPS Aggressive Growth ETF Portfolio Investor Class Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
4,505,354

 
$
736,624

 
$
179,539

 
$
19,701

Total assets
 
4,505,354

 
 
736,624

 
 
179,539

 
 
19,701

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
4,505,354

 
$
736,624

 
$
179,539

 
$
19,701

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
4,505,354

 
$
736,624

 
$
179,539

 
$
19,701

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
4,505,354

 
$
736,624

 
$
179,539

 
$
19,701

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
4,462,569

 
$
722,635

 
$
176,287

 
$
22,126

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
262,092

 
 
60,329

 
 
15,804

 
 
1,433

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
467,670

 
 
34,850

 
 
16,975

 
 
2,277

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
467,670

 
 
34,850

 
 
16,975

 
 
2,277

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
Templeton Global Bond VIP Class 4 Division
 
Templeton Growth VIP Class 2 Division
 
The Merger Fund Division
 
TOPS Aggressive Growth ETF Portfolio Investor Class Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
—

 
$
17,153

 
$
1,223

 
$
84

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
25,433

 
 
7,370

 
 
830

 
 
24

 
Administrative charges
 
3,254

 
 
—

 
 
155

 
 
6

 
Separate account rider charges
 
37

 
 
—

 
 
—

 
 
—

Net investment income (loss)
 
(28,724)

 
 
9,783

 
 
238

 
 
54

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
2,201

 
 
3,814

 
 
67

 
 
(7)

Capital gains distributions
 
—

 
 
72,646

 
 
1,959

 
 
318

Total realized gains (losses) on investments
 
2,201

 
 
76,460

 
 
2,026

 
 
311

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
35,555

 
 
(222,995)

 
 
3,223

 
 
(2,425)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
9,032

 
 
(136,752)

 
 
5,487

 
 
(2,060)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
9,032

 
$
(136,752)

 
$
5,487

 
$
(2,060)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations June 11, 2018.
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
TOPS Balanced ETF Portfolio Investor Class Division (1)
 
TOPS Conservative ETF Portfolio Investor Class Division (1)
 
TOPS Growth ETF Portfolio Investor Class Division (1)
 
TOPS Moderate Growth ETF Portfolio Investor Class Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
26,257

 
$
—

 
$
33,799

 
$
11,140

Total assets
 
26,257

 
 
—

 
 
33,799

 
 
11,140

Total liabilities
 
—

 
 
—

 
 
—

 
 
—

Net assets
$
26,257

 
$
—

 
$
33,799

 
$
11,140

 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
26,257

 
$
—

 
$
33,799

 
$
11,140

Applicable to contracts in annuitization period
 
—

 
 
—

 
 
—

 
 
—

Total net assets
$
26,257

 
$
—

 
$
33,799

 
$
11,140

 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
28,898

 
$
—

 
$
33,920

 
$
11,403

 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
2,212

 
 
—

 
 
2,375

 
 
939

 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
2,818

 
 
—

 
 
3,822

 
 
1,216

Annuitized units outstanding
 
—

 
 
—

 
 
—

 
 
—

Total units outstanding
 
2,818

 
 
—

 
 
3,822

 
 
1,216

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
TOPS Balanced ETF Portfolio Investor Class Division (1)
 
TOPS Conservative ETF Portfolio Investor Class Division (1)
 
TOPS Growth ETF Portfolio Investor Class Division (1)
 
TOPS Moderate Growth ETF Portfolio Investor Class Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
316

 
$
—

 
$
40

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
59

 
 
—

 
 
7

 
 
12

 
Administrative charges
 
12

 
 
—

 
 
2

 
 
3

 
Separate account rider charges
 
—

 
 
—

 
 
—

 
 
—

Net investment income (loss)
 
245

 
 
—

 
 
31

 
 
(15)

 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(13)

 
 
—

 
 
(378)

 
 
—

Capital gains distributions
 
484

 
 
—

 
 
132

 
 
—

Total realized gains (losses) on investments
 
471

 
 
—

 
 
(246)

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(2,641)

 
 
—

 
 
(121)

 
 
(263)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(1,925)

 
 
—

 
 
(336)

 
 
(278)

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(1,925)

 
$
—

 
$
(336)

 
$
(278)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations June 11, 2018.
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Assets and Liabilities
December 31, 2018
 
 
VanEck Global Hard Assets
Class S Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at fair value
$
3,895,872

 
 
 
 
 
 
 
 
 
Total assets
 
3,895,872

 
 
 
 
 
 
 
 
 
Total liabilities
 
—

 
 
 
 
 
 
 
 
 
Net assets
$
3,895,872

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
 
 
 
 
 
 
Applicable to accumulation units
$
3,895,872

 
 
 
 
 
 
 
 
 
Applicable to contracts in annuitization period
 
—

 
 
 
 
 
 
 
 
 
Total net assets
$
3,895,872

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
5,136,554

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Shares of mutual funds owned
 
237,988

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulation units outstanding
 
522,675

 
 
 
 
 
 
 
 
 
Annuitized units outstanding
 
—

 
 
 
 
 
 
 
 
 
Total units outstanding
 
522,675

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Operations
Year ended December 31, 2018
 
 
VanEck Global Hard Assets
Class S Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
 
 
 
 
 
 
 
 
 
Investment income:
 
 
 
 
 
 
 
 
 
 
 
 
Dividends
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
Mortality and expense risks
 
65,015

 
 
 
 
 
 
 
 
 
 
Administrative charges
 
7,159

 
 
 
 
 
 
 
 
 
 
Separate account rider charges
 
2,774

 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(74,948)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
 
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
(314,443)

 
 
 
 
 
 
 
 
 
Capital gains distributions
 
—

 
 
 
 
 
 
 
 
 
Total realized gains (losses) on investments
 
(314,443)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(1,227,029)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(1,616,420)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
(1,616,420)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 



Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein Small Cap Growth Class A Division
 
AllianceBernstein Small/Mid Cap Value Class A Division
 
Alps/Red Rocks Listed Private Equity Class III Division
 
American Century VP Capital Appreciation
Class I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
4,082,326

 
$
4,054,972

 
$
30,052

 
$
2,356,936

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(63,380)

 
 
(48,832)

 
 
984

 
 
(32,924)

 
Total realized gains (losses) on investments
 
(241,926)

 
 
166,209

 
 
1,679

 
 
300,486

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
1,518,899

 
 
417,321

 
 
4,530

 
 
150,004

 
Net gains (losses) on investments
 
1,213,593

 
 
534,698

 
 
7,193

 
 
417,566

Net increase (decrease) in net assets resulting from operations
 
1,213,593

 
 
534,698

 
 
7,193

 
 
417,566

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
246,404

 
 
1,848,500

 
 
91,537

 
 
343,798

 
Administration charges
 
(294)

 
 
(60)

 
 
(92)

 
 
(1,315)

 
Contingent sales charges
 
(3,222)

 
 
(1,268)

 
 
(24)

 
 
(3,159)

 
Contract terminations
 
(407,756)

 
 
(205,706)

 
 
(13,043)

 
 
(399,800)

 
Death benefit payments
 
(14,261)

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(21,246)

 
 
(31,718)

 
 
—

 
 
(31,589)

 
Transfers to other contracts
 
(320,363)

 
 
(1,015,846)

 
 
(2,101)

 
 
(343,200)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(520,738)

 
 
593,902

 
 
76,277

 
 
(435,265)

Total increase (decrease)
 
692,855

 
 
1,128,600

 
 
83,470

 
 
(17,699)

Net assets as of December 31, 2017
 
4,775,181

 
 
5,183,572

 
 
113,522

 
 
2,339,237

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(77,444)

 
 
(53,383)

 
 
10,722

 
 
(34,190)

 
Total realized gains (losses) on investments
 
192,836

 
 
357,196

 
 
1,478

 
 
43,644

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(215,621)

 
 
(1,153,428)

 
 
(40,514)

 
 
(139,577)

 
Net gains (losses) on investments
 
(100,229)

 
 
(849,615)

 
 
(28,314)

 
 
(130,123)

Net increase (decrease) in net assets resulting from operations
 
(100,229)

 
 
(849,615)

 
 
(28,314)

 
 
(130,123)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
1,049,822

 
 
601,050

 
 
156,413

 
 
118,799

 
Administration charges
 
(280)

 
 
(64)

 
 
(319)

 
 
(1,341)

 
Contingent sales charges
 
(3,376)

 
 
(1,343)

 
 
(19)

 
 
(965)

 
Contract terminations
 
(486,642)

 
 
(211,976)

 
 
(2,601)

 
 
(139,087)

 
Death benefit payments
 
(35,629)

 
 
(8,689)

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(26,934)

 
 
(30,310)

 
 
(634)

 
 
(24,593)

 
Transfers to other contracts
 
(701,361)

 
 
(548,169)

 
 
(13,238)

 
 
(315,557)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(204,400)

 
 
(199,501)

 
 
139,602

 
 
(362,744)

Total increase (decrease)
 
(304,629)

 
 
(1,049,116)

 
 
111,288

 
 
(492,867)

Net assets as of December 31, 2018
$
4,470,552

 
$
4,134,456

 
$
224,810

 
$
1,846,370

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
10,858,788

 
$
45,284,552

 
$
9,556,157

 
$
3,071,867

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
125,464

 
 
511,203

 
 
(6,010)

 
 
(32,500)

 
Total realized gains (losses) on investments
 
1,072,594

 
 
(1,255,874)

 
 
471,658

 
 
412,426

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
692,572

 
 
1,713,525

 
 
456,913

 
 
535,692

 
Net gains (losses) on investments
 
1,890,630

 
 
968,854

 
 
922,561

 
 
915,618

Net increase (decrease) in net assets resulting from operations
 
1,890,630

 
 
968,854

 
 
922,561

 
 
915,618

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
314,558

 
 
6,088,241

 
 
1,561,979

 
 
250,499

 
Administration charges
 
(889)

 
 
(216,539)

 
 
(721)

 
 
(597)

 
Contingent sales charges
 
(1,038)

 
 
(38,823)

 
 
(3,711)

 
 
(189)

 
Contract terminations
 
(1,255,954)

 
 
(4,913,672)

 
 
(561,584)

 
 
(240,376)

 
Death benefit payments
 
(125,699)

 
 
(479,374)

 
 
—

 
 
(30,123)

 
Flexible withdrawal option payments
 
(132,190)

 
 
(1,588,061)

 
 
(73,603)

 
 
(67,690)

 
Transfers to other contracts
 
(503,722)

 
 
(2,566,353)

 
 
(1,413,429)

 
 
(117,296)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(1,704,934)

 
 
(3,714,581)

 
 
(491,069)

 
 
(205,772)

Total increase (decrease)
 
185,696

 
 
(2,745,727)

 
 
431,492

 
 
709,846

Net assets as of December 31, 2017
 
11,044,484

 
 
42,538,825

 
 
9,987,649

 
 
3,781,713

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
76,413

 
 
548,339

 
 
(20,203)

 
 
(41,330)

 
Total realized gains (losses) on investments
 
1,654,459

 
 
(1,924,563)

 
 
810,023

 
 
734,926

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(2,472,593)

 
 
(338,271)

 
 
(2,086,089)

 
 
(679,662)

 
Net gains (losses) on investments
 
(741,721)

 
 
(1,714,495)

 
 
(1,296,269)

 
 
13,934

Net increase (decrease) in net assets resulting from operations
 
(741,721)

 
 
(1,714,495)

 
 
(1,296,269)

 
 
13,934

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
157,498

 
 
4,555,757

 
 
1,030,633

 
 
346,648

 
Administration charges
 
(897)

 
 
(233,395)

 
 
(379)

 
 
(610)

 
Contingent sales charges
 
(521)

 
 
(24,641)

 
 
(4,335)

 
 
(303)

 
Contract terminations
 
(831,709)

 
 
(3,599,512)

 
 
(709,198)

 
 
(434,333)

 
Death benefit payments
 
(25,442)

 
 
(433,000)

 
 
(12,247)

 
 
(10,362)

 
Flexible withdrawal option payments
 
(134,915)

 
 
(1,488,008)

 
 
(65,179)

 
 
(66,563)

 
Transfers to other contracts
 
(443,941)

 
 
(5,231,319)

 
 
(1,217,151)

 
 
(163,164)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(1,279,927)

 
 
(6,454,118)

 
 
(977,856)

 
 
(328,687)

Total increase (decrease)
 
(2,021,648)

 
 
(8,168,613)

 
 
(2,274,125)

 
 
(314,753)

Net assets as of December 31, 2018
$
9,022,836

 
$
34,370,212

 
$
7,713,524

 
$
3,466,960

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Ultra Class II Division
 
American Century VP Value Class II Division
 
American Funds Insurance Series Asset Allocation Fund Class 2 Division
 
American Funds Insurance Series Asset Allocation Fund Class 4 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
32,114,194

 
$
16,312,064

 
$
878,377

 
$
597,778

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(386,657)

 
 
31,770

 
 
3,628

 
 
7,533

 
Total realized gains (losses) on investments
 
6,440,918

 
 
608,499

 
 
68,281

 
 
45,516

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
2,686,989

 
 
456,883

 
 
110,198

 
 
81,957

 
Net gains (losses) on investments
 
8,741,250

 
 
1,097,152

 
 
182,107

 
 
135,006

Net increase (decrease) in net assets resulting from operations
 
8,741,250

 
 
1,097,152

 
 
182,107

 
 
135,006

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
1,193,232

 
 
863,375

 
 
897,335

 
 
1,482,971

 
Administration charges
 
(161,048)

 
 
(3,275)

 
 
(194)

 
 
(1,402)

 
Contingent sales charges
 
(23,672)

 
 
(1,333)

 
 
(58)

 
 
(75)

 
Contract terminations
 
(2,995,634)

 
 
(1,411,928)

 
 
(9,068)

 
 
(40,300)

 
Death benefit payments
 
(271,480)

 
 
(54,636)

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(1,247,363)

 
 
(151,196)

 
 
(7,064)

 
 
(4,642)

 
Transfers to other contracts
 
(4,196,951)

 
 
(643,569)

 
 
(114,773)

 
 
(317,802)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(7,702,916)

 
 
(1,402,562)

 
 
766,178

 
 
1,118,750

Total increase (decrease)
 
1,038,334

 
 
(305,410)

 
 
948,285

 
 
1,253,756

Net assets as of December 31, 2017
 
33,152,528

 
 
16,006,654

 
 
1,826,662

 
 
1,851,534

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(401,123)

 
 
30,261

 
 
11,770

 
 
21,682

 
Total realized gains (losses) on investments
 
9,042,423

 
 
812,303

 
 
95,513

 
 
148,376

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(8,103,195)

 
 
(2,347,999)

 
 
(284,645)

 
 
(399,237)

 
Net gains (losses) on investments
 
538,105

 
 
(1,505,435)

 
 
(177,362)

 
 
(229,179)

Net increase (decrease) in net assets resulting from operations
 
538,105

 
 
(1,505,435)

 
 
(177,362)

 
 
(229,179)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
3,232,144

 
 
750,264

 
 
1,210,766

 
 
2,115,344

 
Administration charges
 
(168,199)

 
 
(5,344)

 
 
(385)

 
 
(8,391)

 
Contingent sales charges
 
(18,670)

 
 
(1,737)

 
 
(255)

 
 
(218)

 
Contract terminations
 
(2,691,088)

 
 
(1,489,647)

 
 
(152,849)

 
 
(25,772)

 
Death benefit payments
 
(539,721)

 
 
(33,456)

 
 
(42,035)

 
 
—

 
Flexible withdrawal option payments
 
(1,180,672)

 
 
(144,380)

 
 
(23,885)

 
 
(9,896)

 
Transfers to other contracts
 
(6,278,086)

 
 
(871,673)

 
 
(193,363)

 
 
(19,247)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(7,644,292)

 
 
(1,795,973)

 
 
797,994

 
 
2,051,820

Total increase (decrease)
 
(7,106,187)

 
 
(3,301,408)

 
 
620,632

 
 
1,822,641

Net assets as of December 31, 2018
$
26,046,341

 
$
12,705,246

 
$
2,447,294

 
$
3,674,175

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
American Funds Insurance Series Blue Chip Income and Growth
Class 2 Division
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
1,695,523

 
$
1,061,398

 
$
975,952

 
$
146,625

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
14,980

 
 
15,743

 
 
(10,424)

 
 
(1,651)

 
Total realized gains (losses) on investments
 
140,615

 
 
62,348

 
 
(37,996)

 
 
(1,596)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
204,905

 
 
144,607

 
 
276,676

 
 
44,415

 
Net gains (losses) on investments
 
360,500

 
 
222,698

 
 
228,256

 
 
41,168

Net increase (decrease) in net assets resulting from operations
 
360,500

 
 
222,698

 
 
228,256

 
 
41,168

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
1,784,774

 
 
904,784

 
 
188,256

 
 
223,200

 
Administration charges
 
(16)

 
 
(1,726)

 
 
—

 
 
(379)

 
Contingent sales charges
 
(713)

 
 
(143)

 
 
(219)

 
 
(41)

 
Contract terminations
 
(244,151)

 
 
(76,443)

 
 
(39,409)

 
 
(21,805)

 
Death benefit payments
 
(581)

 
 
(3,171)

 
 
—

 
 
(963)

 
Flexible withdrawal option payments
 
(13,620)

 
 
(10,375)

 
 
(4,979)

 
 
(819)

 
Transfers to other contracts
 
(564,787)

 
 
(20,879)

 
 
(137,217)

 
 
(13,207)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
960,906

 
 
792,047

 
 
6,432

 
 
185,986

Total increase (decrease)
 
1,321,406

 
 
1,014,745

 
 
234,688

 
 
227,154

Net assets as of December 31, 2017
 
3,016,929

 
 
2,076,143

 
 
1,210,640

 
 
373,779

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
14,787

 
 
36,101

 
 
(18,189)

 
 
(6,384)

 
Total realized gains (losses) on investments
 
307,958

 
 
232,064

 
 
54,185

 
 
20,674

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(652,359)

 
 
(645,000)

 
 
(216,726)

 
 
(120,290)

 
Net gains (losses) on investments
 
(329,614)

 
 
(376,835)

 
 
(180,730)

 
 
(106,000)

Net increase (decrease) in net assets resulting from operations
 
(329,614)

 
 
(376,835)

 
 
(180,730)

 
 
(106,000)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
971,798

 
 
2,271,679

 
 
550,691

 
 
677,927

 
Administration charges
 
(110)

 
 
(7,110)

 
 
(121)

 
 
(1,654)

 
Contingent sales charges
 
(2,512)

 
 
(989)

 
 
(439)

 
 
(233)

 
Contract terminations
 
(381,170)

 
 
(107,646)

 
 
(87,103)

 
 
(14,283)

 
Death benefit payments
 
(40,777)

 
 
(1,032)

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(14,059)

 
 
(18,586)

 
 
(7,193)

 
 
(2,516)

 
Transfers to other contracts
 
(360,643)

 
 
(342,863)

 
 
(164,293)

 
 
(225,799)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
172,527

 
 
1,793,453

 
 
291,542

 
 
433,442

Total increase (decrease)
 
(157,087)

 
 
1,416,618

 
 
110,812

 
 
327,442

Net assets as of December 31, 2018
$
2,859,842

 
$
3,492,761

 
$
1,321,452

 
$
701,221

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
1,320,044

 
$
275,553

 
$
164,525

 
$
41,473

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
80,769

 
 
(2,073)

 
 
(2,918)

 
 
(445)

 
Total realized gains (losses) on investments
 
40,888

 
 
6,908

 
 
7,434

 
 
595

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(40,504)

 
 
43,816

 
 
61,663

 
 
14,468

 
Net gains (losses) on investments
 
81,153

 
 
48,651

 
 
66,179

 
 
14,618

Net increase (decrease) in net assets resulting from operations
 
81,153

 
 
48,651

 
 
66,179

 
 
14,618

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
656,318

 
 
506,516

 
 
439,843

 
 
67,724

 
Administration charges
 
(6)

 
 
(191)

 
 
(518)

 
 
(52)

 
Contingent sales charges
 
(87)

 
 
(11)

 
 
(11)

 
 
(3)

 
Contract terminations
 
(110,750)

 
 
(5,794)

 
 
(6,135)

 
 
(1,748)

 
Death benefit payments
 
—

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(16,592)

 
 
(4,046)

 
 
(200)

 
 
(100)

 
Transfers to other contracts
 
(491,042)

 
 
(27,172)

 
 
(5,753)

 
 
(2,162)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
37,841

 
 
469,302

 
 
427,226

 
 
63,659

Total increase (decrease)
 
118,994

 
 
517,953

 
 
493,405

 
 
78,277

Net assets as of December 31, 2017
 
1,439,038

 
 
793,506

 
 
657,930

 
 
119,750

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
60,726

 
 
3,252

 
 
(6,238)

 
 
786

 
Total realized gains (losses) on investments
 
(6,343)

 
 
44,816

 
 
79,574

 
 
1,407

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(98,561)

 
 
(115,554)

 
 
(119,881)

 
 
(19,439)

 
Net gains (losses) on investments
 
(44,178)

 
 
(67,486)

 
 
(46,545)

 
 
(17,246)

Net increase (decrease) in net assets resulting from operations
 
(44,178)

 
 
(67,486)

 
 
(46,545)

 
 
(17,246)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
135,253

 
 
438,941

 
 
982,051

 
 
47,405

 
Administration charges
 
(4)

 
 
(2,633)

 
 
(2,627)

 
 
(440)

 
Contingent sales charges
 
(83)

 
 
(18)

 
 
(174)

 
 
(9)

 
Contract terminations
 
(119,381)

 
 
(5,157)

 
 
(36,400)

 
 
(2,491)

 
Death benefit payments
 
(26,699)

 
 
(6,234)

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(18,488)

 
 
(8,168)

 
 
(3,380)

 
 
(486)

 
Transfers to other contracts
 
(170,333)

 
 
(51,027)

 
 
(30,520)

 
 
(11,149)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(199,735)

 
 
365,704

 
 
908,950

 
 
32,830

Total increase (decrease)
 
(243,913)

 
 
298,218

 
 
862,405

 
 
15,584

Net assets as of December 31, 2018
$
1,195,125

 
$
1,091,724

 
$
1,520,335

 
$
135,334

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series New World Fund Class 2 Division
 
American Funds Insurance Series New World Fund Class 4 Division
 
BlackRock Advantage U.S. Total Market Class III Division
 
BlackRock Global Allocation
Class III Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
1,195,154

 
$
328,755

 
$
30,842

 
$
996,211

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(7,003)

 
 
(750)

 
 
780

 
 
(626)

 
Total realized gains (losses) on investments
 
30,404

 
 
721

 
 
32,313

 
 
15,891

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
343,973

 
 
109,294

 
 
(23,241)

 
 
114,634

 
Net gains (losses) on investments
 
367,374

 
 
109,265

 
 
9,852

 
 
129,899

Net increase (decrease) in net assets resulting from operations
 
367,374

 
 
109,265

 
 
9,852

 
 
129,899

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
494,496

 
 
323,558

 
 
138,016

 
 
216,746

 
Administration charges
 
(33)

 
 
(690)

 
 
(79)

 
 
(130)

 
Contingent sales charges
 
(437)

 
 
(48)

 
 
(2)

 
 
(322)

 
Contract terminations
 
(85,993)

 
 
(25,880)

 
 
(931)

 
 
(51,770)

 
Death benefit payments
 
(5,372)

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(6,515)

 
 
(580)

 
 
(1,003)

 
 
(12,377)

 
Transfers to other contracts
 
(220,859)

 
 
(31,311)

 
 
(26,264)

 
 
(10,019)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
175,287

 
 
265,049

 
 
109,737

 
 
142,128

Total increase (decrease)
 
542,661

 
 
374,314

 
 
119,589

 
 
272,027

Net assets as of December 31, 2017
 
1,737,815

 
 
703,069

 
 
150,431

 
 
1,268,238

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(11,163)

 
 
(2,310)

 
 
8,407

 
 
(5,449)

 
Total realized gains (losses) on investments
 
184,807

 
 
33,573

 
 
111,334

 
 
77,927

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(453,843)

 
 
(200,737)

 
 
(209,290)

 
 
(222,601)

 
Net gains (losses) on investments
 
(280,199)

 
 
(169,474)

 
 
(89,549)

 
 
(150,123)

Net increase (decrease) in net assets resulting from operations
 
(280,199)

 
 
(169,474)

 
 
(89,549)

 
 
(150,123)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
788,003

 
 
632,738

 
 
770,857

 
 
678,056

 
Administration charges
 
(64)

 
 
(2,439)

 
 
(1,003)

 
 
(679)

 
Contingent sales charges
 
(557)

 
 
(104)

 
 
—

 
 
(132)

 
Contract terminations
 
(138,227)

 
 
(27,234)

 
 
—

 
 
(19,855)

 
Death benefit payments
 
—

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(11,144)

 
 
(4,256)

 
 
(7,132)

 
 
(16,363)

 
Transfers to other contracts
 
(763,786)

 
 
(41,565)

 
 
(9,766)

 
 
(141,422)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(125,775)

 
 
557,140

 
 
752,956

 
 
499,605

Total increase (decrease)
 
(405,974)

 
 
387,666

 
 
663,407

 
 
349,482

Net assets as of December 31, 2018
$
1,331,841

 
$
1,090,735

 
$
813,838

 
$
1,617,720

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BlackRock iShares Dynamic Allocation
Class III Division
 
Calvert EAFE International Index Class F Division
 
Calvert Investment Grade Bond Portfolio Class F Division (1)
 
Calvert Russell 2000 Small Cap Index Class F Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
106,657

 
$
18,533

 
$
—

 
$
155,220

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
1,655

 
 
336

 
 
—

 
 
311

 
Total realized gains (losses) on investments
 
143

 
 
(6)

 
 
—

 
 
28,379

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
20,972

 
 
6,090

 
 
—

 
 
29,385

 
Net gains (losses) on investments
 
22,770

 
 
6,420

 
 
—

 
 
58,075

Net increase (decrease) in net assets resulting from operations
 
22,770

 
 
6,420

 
 
—

 
 
58,075

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
137,714

 
 
87,597

 
 
—

 
 
613,532

 
Administration charges
 
(10)

 
 
(43)

 
 
—

 
 
(600)

 
Contingent sales charges
 
—

 
 
—

 
 
—

 
 
(496)

 
Contract terminations
 
(30)

 
 
—

 
 
—

 
 
(32,904)

 
Death benefit payments
 
—

 
 
—

 
 
—

 
 
(942)

 
Flexible withdrawal option payments
 
—

 
 
—

 
 
—

 
 
(5,994)

 
Transfers to other contracts
 
(604)

 
 
(1,278)

 
 
—

 
 
(12,478)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
137,070

 
 
86,276

 
 
—

 
 
560,118

Total increase (decrease)
 
159,840

 
 
92,696

 
 
—

 
 
618,193

Net assets as of December 31, 2017
 
266,497

 
 
111,229

 
 
—

 
 
773,413

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(762)

 
 
16,580

 
 
4,260

 
 
2,998

 
Total realized gains (losses) on investments
 
9,677

 
 
1,758

 
 
(31)

 
 
65,575

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(45,856)

 
 
(88,008)

 
 
(2,423)

 
 
(310,205)

 
Net gains (losses) on investments
 
(36,941)

 
 
(69,670)

 
 
1,806

 
 
(241,632)

Net increase (decrease) in net assets resulting from operations
 
(36,941)

 
 
(69,670)

 
 
1,806

 
 
(241,632)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
336,831

 
 
595,203

 
 
162,975

 
 
1,238,335

 
Administration charges
 
(327)

 
 
(1,017)

 
 
(197)

 
 
(2,525)

 
Contingent sales charges
 
(46)

 
 
(22)

 
 
(2)

 
 
(1,531)

 
Contract terminations
 
(6,224)

 
 
(6,360)

 
 
(589)

 
 
(63,209)

 
Death benefit payments
 
—

 
 
—

 
 
—

 
 
(3,997)

 
Flexible withdrawal option payments
 
(417)

 
 
(470)

 
 
—

 
 
(5,753)

 
Transfers to other contracts
 
(6,833)

 
 
(63,670)

 
 
—

 
 
(213,932)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
322,984

 
 
523,664

 
 
162,187

 
 
947,388

Total increase (decrease)
 
286,043

 
 
453,994

 
 
163,993

 
 
705,756

Net assets as of December 31, 2018
$
552,540

 
$
565,223

 
$
163,993

 
$
1,479,169

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations June 11, 2018.
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert S&P MidCap 400 Index Class F Division
 
ClearBridge Small Cap Growth
Class II Division
 
Columbia Limited Duration Credit Class 2 Division
 
Columbia Small Cap Value Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
750,689

 
$
12,593

 
$
185,401

 
$
243,839

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(2,886)

 
 
(2,059)

 
 
1,391

 
 
(2,906)

 
Total realized gains (losses) on investments
 
76,556

 
 
8,157

 
 
(94)

 
 
28,244

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
109,198

 
 
33,268

 
 
(363)

 
 
24,143

 
Net gains (losses) on investments
 
182,868

 
 
39,366

 
 
934

 
 
49,481

Net increase (decrease) in net assets resulting from operations
 
182,868

 
 
39,366

 
 
934

 
 
49,481

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
1,178,605

 
 
323,943

 
 
126,242

 
 
236,237

 
Administration charges
 
(1,179)

 
 
(191)

 
 
(31)

 
 
(179)

 
Contingent sales charges
 
(1,046)

 
 
—

 
 
(7)

 
 
(96)

 
Contract terminations
 
(103,038)

 
 
—

 
 
(856)

 
 
(18,924)

 
Death benefit payments
 
(944)

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(5,266)

 
 
(1,338)

 
 
—

 
 
(551)

 
Transfers to other contracts
 
(46,980)

 
 
(1,119)

 
 
(103,255)

 
 
(30,007)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
1,020,152

 
 
321,295

 
 
22,093

 
 
186,480

Total increase (decrease)
 
1,203,020

 
 
360,661

 
 
23,027

 
 
235,961

Net assets as of December 31, 2017
 
1,953,709

 
 
373,254

 
 
208,428

 
 
479,800

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
4,852

 
 
(7,787)

 
 
490

 
 
(5,602)

 
Total realized gains (losses) on investments
 
164,739

 
 
136,440

 
 
(1,084)

 
 
93,416

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(539,742)

 
 
(217,942)

 
 
(1,942)

 
 
(222,161)

 
Net gains (losses) on investments
 
(370,151)

 
 
(89,289)

 
 
(2,536)

 
 
(134,347)

Net increase (decrease) in net assets resulting from operations
 
(370,151)

 
 
(89,289)

 
 
(2,536)

 
 
(134,347)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
1,098,671

 
 
903,008

 
 
52,477

 
 
261,646

 
Administration charges
 
(4,334)

 
 
(2,046)

 
 
(69)

 
 
(844)

 
Contingent sales charges
 
(1,594)

 
 
(41)

 
 
(54)

 
 
(547)

 
Contract terminations
 
(101,550)

 
 
(3,329)

 
 
(40,464)

 
 
(26,534)

 
Death benefit payments
 
—

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(14,861)

 
 
(8,147)

 
 
(999)

 
 
(1,684)

 
Transfers to other contracts
 
(123,555)

 
 
(58,654)

 
 
(25,918)

 
 
(11,724)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
852,777

 
 
830,791

 
 
(15,027)

 
 
220,313

Total increase (decrease)
 
482,626

 
 
741,502

 
 
(17,563)

 
 
85,966

Net assets as of December 31, 2018
$
2,436,335

 
$
1,114,756

 
$
190,865

 
$
565,766

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
138,244,287

 
$
221,427

 
$
931,015

 
$
2,248,175

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
2,060,813

 
 
6,677

 
 
2,988

 
 
(22,546)

 
Total realized gains (losses) on investments
 
458,682

 
 
70

 
 
(2,102)

 
 
119,378

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
2,059,673

 
 
5,187

 
 
5,145

 
 
149,982

 
Net gains (losses) on investments
 
4,579,168

 
 
11,934

 
 
6,031

 
 
246,814

Net increase (decrease) in net assets resulting from operations
 
4,579,168

 
 
11,934

 
 
6,031

 
 
246,814

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
13,456,822

 
 
430,017

 
 
175,988

 
 
1,108,866

 
Administration charges
 
(266,113)

 
 
(163)

 
 
(33)

 
 
(314)

 
Contingent sales charges
 
(63,100)

 
 
(148)

 
 
(3)

 
 
(328)

 
Contract terminations
 
(13,756,596)

 
 
(20,365)

 
 
(1,077)

 
 
(46,560)

 
Death benefit payments
 
(1,420,473)

 
 
—

 
 
—

 
 
(272)

 
Flexible withdrawal option payments
 
(3,293,498)

 
 
(704)

 
 
(462)

 
 
(23,536)

 
Transfers to other contracts
 
(5,746,055)

 
 
(49,873)

 
 
(809,226)

 
 
(806,943)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(11,089,013)

 
 
358,764

 
 
(634,813)

 
 
230,913

Total increase (decrease)
 
(6,509,845)

 
 
370,698

 
 
(628,782)

 
 
477,727

Net assets as of December 31, 2017
 
131,734,442

 
 
592,125

 
 
302,233

 
 
2,725,902

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
2,358,611

 
 
19,239

 
 
3,335

 
 
(24,469)

 
Total realized gains (losses) on investments
 
552,964

 
 
(14,834)

 
 
(698)

 
 
244,329

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(6,486,857)

 
 
(23,134)

 
 
(6,433)

 
 
(725,239)

 
Net gains (losses) on investments
 
(3,575,282)

 
 
(18,729)

 
 
(3,796)

 
 
(505,379)

Net increase (decrease) in net assets resulting from operations
 
(3,575,282)

 
 
(18,729)

 
 
(3,796)

 
 
(505,379)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
10,253,071

 
 
456,252

 
 
122,452

 
 
581,237

 
Administration charges
 
(285,535)

 
 
(1,356)

 
 
(197)

 
 
(190)

 
Contingent sales charges
 
(45,895)

 
 
(30)

 
 
(8)

 
 
(845)

 
Contract terminations
 
(11,993,079)

 
 
(8,762)

 
 
(1,716)

 
 
(161,658)

 
Death benefit payments
 
(1,399,374)

 
 
(99,509)

 
 
—

 
 
(2,589)

 
Flexible withdrawal option payments
 
(3,111,179)

 
 
(7,220)

 
 
(872)

 
 
(23,184)

 
Transfers to other contracts
 
(11,725,301)

 
 
(152,060)

 
 
(43,615)

 
 
(446,039)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(18,307,292)

 
 
187,315

 
 
76,044

 
 
(53,268)

Total increase (decrease)
 
(21,882,574)

 
 
168,586

 
 
72,248

 
 
(558,647)

Net assets as of December 31, 2018
$
109,851,868

 
$
760,711

 
$
374,481

 
$
2,167,255

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Balanced Class 1 Division (1)
 
Diversified Balanced Class 2 Division
 
Diversified Balanced Managed Volatility Class 2 Division
 
Diversified Balanced Volatility Control Class 2 Division (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
—

 
$
1,099,761,901

 
$
168,723,353

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
243,513

 
 
(712,679)

 
 
(250,949)

 
 
(174,597)

 
Total realized gains (losses) on investments
 
400,980

 
 
46,807,023

 
 
3,032,898

 
 
29,841

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
824,378

 
 
58,826,703

 
 
12,868,839

 
 
1,345,675

 
Net gains (losses) on investments
 
1,468,871

 
 
104,921,047

 
 
15,650,788

 
 
1,200,919

Net increase (decrease) in net assets resulting from operations
 
1,468,871

 
 
104,921,047

 
 
15,650,788

 
 
1,200,919

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
28,019,830

 
 
66,283,201

 
 
17,124,060

 
 
35,716,554

 
Administration charges
 
(6,118)

 
 
(11,326,797)

 
 
(1,979,909)

 
 
(72,452)

 
Contingent sales charges
 
(735)

 
 
(484,481)

 
 
(56,088)

 
 
(385)

 
Contract terminations
 
(1,480,623)

 
 
(59,112,264)

 
 
(5,596,522)

 
 
(43,991)

 
Death benefit payments
 
(115,635)

 
 
(4,056,921)

 
 
(1,021,758)

 
 
—

 
Flexible withdrawal option payments
 
(296,164)

 
 
(22,153,297)

 
 
(3,252,207)

 
 
(37,062)

 
Transfers to other contracts
 
(392,488)

 
 
(42,740,288)

 
 
(8,514,858)

 
 
(224,476)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
25,728,067

 
 
(73,590,847)

 
 
(3,297,282)

 
 
35,338,188

Total increase (decrease)
 
27,196,938

 
 
31,330,200

 
 
12,353,506

 
 
36,539,107

Net assets as of December 31, 2017
 
27,196,938

 
 
1,131,092,101

 
 
181,076,859

 
 
36,539,107

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
360,395

 
 
9,856,064

 
 
3,902,327

 
 
(325,117)

 
Total realized gains (losses) on investments
 
417,059

 
 
54,916,102

 
 
3,893,627

 
 
373,831

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(1,819,831)

 
 
(114,144,647)

 
 
(15,661,168)

 
 
(3,177,655)

 
Net gains (losses) on investments
 
(1,042,377)

 
 
(49,372,481)

 
 
(7,865,214)

 
 
(3,128,941)

Net increase (decrease) in net assets resulting from operations
 
(1,042,377)

 
 
(49,372,481)

 
 
(7,865,214)

 
 
(3,128,941)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
775,948

 
 
62,945,998

 
 
12,540,376

 
 
37,551,545

 
Administration charges
 
(9,750)

 
 
(13,862,278)

 
 
(2,528,722)

 
 
(791,968)

 
Contingent sales charges
 
(1,265)

 
 
(498,133)

 
 
(60,821)

 
 
(15,925)

 
Contract terminations
 
(2,618,551)

 
 
(70,241,010)

 
 
(8,432,162)

 
 
(492,627)

 
Death benefit payments
 
(326,084)

 
 
(6,364,296)

 
 
(534,125)

 
 
(397,229)

 
Flexible withdrawal option payments
 
(472,393)

 
 
(24,208,989)

 
 
(3,894,633)

 
 
(256,219)

 
Transfers to other contracts
 
(604,833)

 
 
(61,354,890)

 
 
(8,174,282)

 
 
(2,052,112)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(3,256,928)

 
 
(113,583,598)

 
 
(11,084,369)

 
 
33,545,465

Total increase (decrease)
 
(4,299,305)

 
 
(162,956,079)

 
 
(18,949,583)

 
 
30,416,524

Net assets as of December 31, 2018
$
22,897,633

 
$
968,136,022

 
$
162,127,276

 
$
66,955,631

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations May 26, 2017.
(2) Commenced operations April 6, 2017.
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Growth Class 2 Division
 
Diversified Growth Managed Volatility Class 2 Division
 
Diversified Growth Volatility Control Class 2 Division (1)
 
Diversified Income Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
3,589,241,933

 
$
313,613,080

 
$
—

 
$
254,023,076

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(2,614,472)

 
 
(661,789)

 
 
(814,945)

 
 
(85,782)

 
Total realized gains (losses) on investments
 
141,113,779

 
 
6,401,403

 
 
20,891

 
 
8,254,930

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
310,919,366

 
 
31,745,758

 
 
7,796,559

 
 
9,741,974

 
Net gains (losses) on investments
 
449,418,673

 
 
37,485,372

 
 
7,002,505

 
 
17,911,122

Net increase (decrease) in net assets resulting from operations
 
449,418,673

 
 
37,485,372

 
 
7,002,505

 
 
17,911,122

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
229,577,810

 
 
36,070,872

 
 
167,237,045

 
 
62,591,445

 
Administration charges
 
(38,648,111)

 
 
(3,524,313)

 
 
(346,003)

 
 
(2,637,115)

 
Contingent sales charges
 
(1,188,333)

 
 
(101,161)

 
 
(2,452)

 
 
(153,159)

 
Contract terminations
 
(148,435,318)

 
 
(11,719,785)

 
 
(279,952)

 
 
(18,567,485)

 
Death benefit payments
 
(9,731,353)

 
 
(402,009)

 
 
—

 
 
(1,178,863)

 
Flexible withdrawal option payments
 
(53,166,873)

 
 
(3,806,172)

 
 
(249,903)

 
 
(4,589,326)

 
Transfers to other contracts
 
(70,177,985)

 
 
(12,661,407)

 
 
(1,662,470)

 
 
(39,222,833)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(91,770,163)

 
 
3,856,025

 
 
164,696,265

 
 
(3,757,336)

Total increase (decrease)
 
357,648,510

 
 
41,341,397

 
 
171,698,770

 
 
14,153,786

Net assets as of December 31, 2017
 
3,946,890,443

 
 
354,954,477

 
 
171,698,770

 
 
268,176,862

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
40,377,098

 
 
9,523,141

 
 
(1,814,969)

 
 
1,600,767

 
Total realized gains (losses) on investments
 
161,800,838

 
 
8,035,107

 
 
1,493,685

 
 
7,335,342

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(420,217,284)

 
 
(36,214,974)

 
 
(22,030,674)

 
 
(18,427,084)

 
Net gains (losses) on investments
 
(218,039,348)

 
 
(18,656,726)

 
 
(22,351,958)

 
 
(9,490,975)

Net increase (decrease) in net assets resulting from operations
 
(218,039,348)

 
 
(18,656,726)

 
 
(22,351,958)

 
 
(9,490,975)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
203,263,067

 
 
28,017,728

 
 
249,692,004

 
 
58,634,758

 
Administration charges
 
(50,091,951)

 
 
(4,670,847)

 
 
(4,178,100)

 
 
(3,427,378)

 
Contingent sales charges
 
(1,376,847)

 
 
(108,184)

 
 
(97,789)

 
 
(133,148)

 
Contract terminations
 
(197,003,425)

 
 
(14,477,632)

 
 
(3,024,936)

 
 
(17,326,851)

 
Death benefit payments
 
(11,642,103)

 
 
(817,859)

 
 
(75,164)

 
 
(811,018)

 
Flexible withdrawal option payments
 
(62,366,081)

 
 
(4,710,254)

 
 
(1,496,426)

 
 
(5,120,142)

 
Transfers to other contracts
 
(122,257,591)

 
 
(14,273,565)

 
 
(5,309,689)

 
 
(49,099,798)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(241,474,931)

 
 
(11,040,613)

 
 
235,509,900

 
 
(17,283,577)

Total increase (decrease)
 
(459,514,279)

 
 
(29,697,339)

 
 
213,157,942

 
 
(26,774,552)

Net assets as of December 31, 2018
$
3,487,376,164

 
$
325,257,138

 
$
384,856,712

 
$
241,402,310

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations April 6, 2017.
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified International
Class 1 Division
 
Diversified International
Class 2 Division
 
Dreyfus IP MidCap Stock Service Shares Division
 
Dreyfus IP Technology Growth Service Shares Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
117,980,668

 
$
197,448

 
$
105,114

 
$
6,464,383

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
647,629

 
 
2,858

 
 
(566)

 
 
(125,726)

 
Total realized gains (losses) on investments
 
6,370,866

 
 
2,560

 
 
3,451

 
 
587,093

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
23,491,720

 
 
67,665

 
 
14,996

 
 
2,230,415

 
Net gains (losses) on investments
 
30,510,215

 
 
73,083

 
 
17,881

 
 
2,691,782

Net increase (decrease) in net assets resulting from operations
 
30,510,215

 
 
73,083

 
 
17,881

 
 
2,691,782

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
5,122,434

 
 
546,024

 
 
52,734

 
 
3,058,657

 
Administration charges
 
(84,072)

 
 
(444)

 
 
(157)

 
 
(932)

 
Contingent sales charges
 
(45,853)

 
 
(114)

 
 
(20)

 
 
(2,025)

 
Contract terminations
 
(13,041,299)

 
 
(61,122)

 
 
(10,731)

 
 
(256,281)

 
Death benefit payments
 
(1,098,673)

 
 
(20,504)

 
 
—

 
 
(24,342)

 
Flexible withdrawal option payments
 
(1,472,503)

 
 
(817)

 
 
(2,094)

 
 
(73,471)

 
Transfers to other contracts
 
(6,684,864)

 
 
(49,355)

 
 
(929)

 
 
(1,603,544)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(17,304,830)

 
 
413,668

 
 
38,803

 
 
1,098,062

Total increase (decrease)
 
13,205,385

 
 
486,751

 
 
56,684

 
 
3,789,844

Net assets as of December 31, 2017
 
131,186,053

 
 
684,199

 
 
161,798

 
 
10,254,227

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
924,639

 
 
12,855

 
 
(3,045)

 
 
(165,256)

 
Total realized gains (losses) on investments
 
6,180,082

 
 
(1,022)

 
 
34,637

 
 
1,267,740

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(29,351,372)

 
 
(253,234)

 
 
(107,221)

 
 
(1,286,839)

 
Net gains (losses) on investments
 
(22,246,651)

 
 
(241,401)

 
 
(75,629)

 
 
(184,355)

Net increase (decrease) in net assets resulting from operations
 
(22,246,651)

 
 
(241,401)

 
 
(75,629)

 
 
(184,355)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
7,903,818

 
 
684,828

 
 
352,224

 
 
1,865,072

 
Administration charges
 
(85,152)

 
 
(1,674)

 
 
(999)

 
 
(1,152)

 
Contingent sales charges
 
(36,154)

 
 
(19)

 
 
(10)

 
 
(6,429)

 
Contract terminations
 
(13,091,919)

 
 
(5,552)

 
 
(271)

 
 
(926,678)

 
Death benefit payments
 
(637,061)

 
 
—

 
 
—

 
 
(49,654)

 
Flexible withdrawal option payments
 
(1,375,919)

 
 
(6,092)

 
 
(5,409)

 
 
(74,208)

 
Transfers to other contracts
 
(5,815,701)

 
 
(22,030)

 
 
(3,186)

 
 
(2,321,394)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(13,138,088)

 
 
649,461

 
 
342,349

 
 
(1,514,443)

Total increase (decrease)
 
(35,384,739)

 
 
408,060

 
 
266,720

 
 
(1,698,798)

Net assets as of December 31, 2018
$
95,801,314

 
$
1,092,259

 
$
428,518

 
$
8,555,429

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
DWS Alternative Asset Allocation Class B
Division (1)
 
DWS Equity 500 Index Class B2 Division (2)
 
DWS Small Mid Cap Value Class B Division (3)
 
Equity Income Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
42,455

 
$
919,332

 
$
1,156,870

 
$
198,800,850

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
285

 
 
286

 
 
(13,042)

 
 
1,613,686

 
Total realized gains (losses) on investments
 
(146)

 
 
47,815

 
 
20,094

 
 
22,556,426

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
2,045

 
 
151,289

 
 
91,694

 
 
10,408,628

 
Net gains (losses) on investments
 
2,184

 
 
199,390

 
 
98,746

 
 
34,578,740

Net increase (decrease) in net assets resulting from operations
 
2,184

 
 
199,390

 
 
98,746

 
 
34,578,740

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
2,230

 
 
383,565

 
 
161,986

 
 
5,804,400

 
Administration charges
 
(67)

 
 
(1,307)

 
 
(366)

 
 
(578,167)

 
Contingent sales charges
 
—

 
 
(96)

 
 
(210)

 
 
(128,009)

 
Contract terminations
 
—

 
 
(48,571)

 
 
(28,048)

 
 
(19,922,685)

 
Death benefit payments
 
—

 
 
(14,722)

 
 
—

 
 
(1,655,525)

 
Flexible withdrawal option payments
 
(1,440)

 
 
(3,131)

 
 
(5,921)

 
 
(5,239,438)

 
Transfers to other contracts
 
(4,936)

 
 
(110,926)

 
 
(141,171)

 
 
(14,106,158)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(4,213)

 
 
204,812

 
 
(13,730)

 
 
(35,825,582)

Total increase (decrease)
 
(2,029)

 
 
404,202

 
 
85,016

 
 
(1,246,842)

Net assets as of December 31, 2017
 
40,426

 
 
1,323,534

 
 
1,241,886

 
 
197,554,008

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
134

 
 
1,373

 
 
(5,145)

 
 
756,045

 
Total realized gains (losses) on investments
 
(207)

 
 
141,306

 
 
188,815

 
 
26,572,416

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(4,324)

 
 
(269,733)

 
 
(416,978)

 
 
(41,670,303)

 
Net gains (losses) on investments
 
(4,397)

 
 
(127,054)

 
 
(233,308)

 
 
(14,341,842)

Net increase (decrease) in net assets resulting from operations
 
(4,397)

 
 
(127,054)

 
 
(233,308)

 
 
(14,341,842)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
9,273

 
 
719,978

 
 
241,345

 
 
78,641,574

 
Administration charges
 
(82)

 
 
(3,028)

 
 
(692)

 
 
(619,088)

 
Contingent sales charges
 
(10)

 
 
(861)

 
 
(852)

 
 
(111,624)

 
Contract terminations
 
(2,990)

 
 
(101,759)

 
 
(43,636)

 
 
(21,056,190)

 
Death benefit payments
 
—

 
 
(3,110)

 
 
(28,430)

 
 
(2,343,986)

 
Flexible withdrawal option payments
 
(1,440)

 
 
(12,494)

 
 
(6,263)

 
 
(5,311,417)

 
Transfers to other contracts
 
(3,359)

 
 
(104,493)

 
 
(85,836)

 
 
(16,599,234)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
1,392

 
 
494,233

 
 
75,636

 
 
32,600,035

Total increase (decrease)
 
(3,005)

 
 
367,179

 
 
(157,672)

 
 
18,258,193

Net assets as of December 31, 2018
$
37,421

 
$
1,690,713

 
$
1,084,214

 
$
215,812,201

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of Deutsche Alternative Asset Allocation Class B Division until October 13, 2018.
(2) Represented the operations of Deutsche Equity 500 Index Class B2 Division until October 13, 2018.
(3) Represented the operations of Deutsche Small Mid Cap Value Class B Division until October 13, 2018.
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Income Class 2 Division
 
Fidelity VIP Contrafund Service Class Division
 
Fidelity VIP Contrafund Service Class 2 Division
 
Fidelity VIP Equity-Income Service Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
1,262,942

 
$
39,392,398

 
$
48,208,479

 
$
31,629,785

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
17,129

 
 
(163,922)

 
 
(327,204)

 
 
44,249

 
Total realized gains (losses) on investments
 
101,396

 
 
3,860,581

 
 
6,255,278

 
 
858,992

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
201,731

 
 
3,803,807

 
 
3,172,919

 
 
2,418,651

 
Net gains (losses) on investments
 
320,256

 
 
7,500,466

 
 
9,100,993

 
 
3,321,892

Net increase (decrease) in net assets resulting from operations
 
320,256

 
 
7,500,466

 
 
9,100,993

 
 
3,321,892

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
1,073,757

 
 
974,749

 
 
4,172,898

 
 
1,497,158

 
Administration charges
 
(1,826)

 
 
(7,046)

 
 
(85,156)

 
 
(5,448)

 
Contingent sales charges
 
(120)

 
 
(3,039)

 
 
(38,594)

 
 
(9,180)

 
Contract terminations
 
(57,629)

 
 
(3,858,513)

 
 
(4,964,472)

 
 
(2,815,374)

 
Death benefit payments
 
—

 
 
(274,416)

 
 
(133,079)

 
 
(128,976)

 
Flexible withdrawal option payments
 
(16,670)

 
 
(455,139)

 
 
(704,486)

 
 
(349,434)

 
Transfers to other contracts
 
(72,696)

 
 
(1,320,502)

 
 
(2,993,924)

 
 
(1,262,752)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
924,816

 
 
(4,943,906)

 
 
(4,746,813)

 
 
(3,074,006)

Total increase (decrease)
 
1,245,072

 
 
2,556,560

 
 
4,354,180

 
 
247,886

Net assets as of December 31, 2017
 
2,508,014

 
 
41,948,958

 
 
52,562,659

 
 
31,877,671

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
21,817

 
 
(284,236)

 
 
(501,099)

 
 
193,762

 
Total realized gains (losses) on investments
 
212,018

 
 
5,695,764

 
 
8,221,063

 
 
2,389,268

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(543,962)

 
 
(7,947,435)

 
 
(11,302,296)

 
 
(5,446,945)

 
Net gains (losses) on investments
 
(310,127)

 
 
(2,535,907)

 
 
(3,582,332)

 
 
(2,863,915)

Net increase (decrease) in net assets resulting from operations
 
(310,127)

 
 
(2,535,907)

 
 
(3,582,332)

 
 
(2,863,915)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
2,464,180

 
 
786,614

 
 
5,583,081

 
 
1,061,271

 
Administration charges
 
(7,241)

 
 
(6,862)

 
 
(98,717)

 
 
(5,888)

 
Contingent sales charges
 
(509)

 
 
(3,409)

 
 
(38,129)

 
 
(7,060)

 
Contract terminations
 
(101,575)

 
 
(4,883,153)

 
 
(5,463,241)

 
 
(2,611,169)

 
Death benefit payments
 
—

 
 
(388,448)

 
 
(271,994)

 
 
(166,011)

 
Flexible withdrawal option payments
 
(23,324)

 
 
(417,666)

 
 
(741,536)

 
 
(340,129)

 
Transfers to other contracts
 
(237,069)

 
 
(1,548,346)

 
 
(4,025,378)

 
 
(1,426,575)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
2,094,462

 
 
(6,461,270)

 
 
(5,055,914)

 
 
(3,495,561)

Total increase (decrease)
 
1,784,335

 
 
(8,997,177)

 
 
(8,638,246)

 
 
(6,359,476)

Net assets as of December 31, 2018
$
4,292,349

 
$
32,951,781

 
$
43,924,413

 
$
25,518,195

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Government Money Market Initial Class Division
 
Fidelity VIP Government Money Market Service Class 2 Division
 
Fidelity VIP Growth Service Class Division
 
Fidelity VIP Growth Service Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
47,449,987

 
$
3,864,755

 
$
11,979,106

 
$
8,860,631

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(237,803)

 
 
(29,050)

 
 
(161,798)

 
 
(145,418)

 
Total realized gains (losses) on investments
 
—

 
 
—

 
 
1,589,025

 
 
1,310,806

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(54)

 
 
—

 
 
2,440,232

 
 
1,755,162

 
Net gains (losses) on investments
 
(237,857)

 
 
(29,050)

 
 
3,867,459

 
 
2,920,550

Net increase (decrease) in net assets resulting from operations
 
(237,857)

 
 
(29,050)

 
 
3,867,459

 
 
2,920,550

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
18,297,216

 
 
7,553,914

 
 
830,295

 
 
1,377,786

 
Administration charges
 
(35,966)

 
 
(2,782)

 
 
(3,331)

 
 
(1,409)

 
Contingent sales charges
 
(51,350)

 
 
(11,310)

 
 
(827)

 
 
(7,672)

 
Contract terminations
 
(12,205,023)

 
 
(3,838,092)

 
 
(1,050,374)

 
 
(970,868)

 
Death benefit payments
 
(378,959)

 
 
—

 
 
(84,213)

 
 
(33,930)

 
Flexible withdrawal option payments
 
(852,006)

 
 
(121)

 
 
(126,715)

 
 
(67,908)

 
Transfers to other contracts
 
(17,466,559)

 
 
(4,453,311)

 
 
(453,055)

 
 
(528,942)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(12,692,647)

 
 
(751,702)

 
 
(888,220)

 
 
(232,943)

Total increase (decrease)
 
(12,930,504)

 
 
(780,752)

 
 
2,979,239

 
 
2,687,607

Net assets as of December 31, 2017
 
34,519,483

 
 
3,084,003

 
 
14,958,345

 
 
11,548,238

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
124,989

 
 
12,762

 
 
(176,571)

 
 
(169,318)

 
Total realized gains (losses) on investments
 
—

 
 
—

 
 
3,169,370

 
 
2,420,507

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
54

 
 
—

 
 
(3,076,834)

 
 
(2,366,458)

 
Net gains (losses) on investments
 
125,043

 
 
12,762

 
 
(84,035)

 
 
(115,269)

Net increase (decrease) in net assets resulting from operations
 
125,043

 
 
12,762

 
 
(84,035)

 
 
(115,269)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
22,074,734

 
 
15,428,018

 
 
835,366

 
 
831,167

 
Administration charges
 
(33,590)

 
 
(32,635)

 
 
(3,917)

 
 
(1,603)

 
Contingent sales charges
 
(19,797)

 
 
(6,963)

 
 
(928)

 
 
(7,151)

 
Contract terminations
 
(7,322,997)

 
 
(247,160)

 
 
(1,329,959)

 
 
(1,030,734)

 
Death benefit payments
 
(75,163)

 
 
—

 
 
(102,219)

 
 
(19,460)

 
Flexible withdrawal option payments
 
(657,076)

 
 
(16,514)

 
 
(141,700)

 
 
(100,754)

 
Transfers to other contracts
 
(7,491,410)

 
 
(10,582,431)

 
 
(1,143,805)

 
 
(802,048)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
6,474,701

 
 
4,542,315

 
 
(1,887,162)

 
 
(1,130,583)

Total increase (decrease)
 
6,599,744

 
 
4,555,077

 
 
(1,971,197)

 
 
(1,245,852)

Net assets as of December 31, 2018
$
41,119,227

 
$
7,639,080

 
$
12,987,148

 
$
10,302,386

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class Division
 
Fidelity VIP Mid Cap Service
Class 2 Division
 
Fidelity VIP Overseas Service Class 2 Division
 
Franklin Global Real Estate VIP Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
563,472

 
$
21,339,251

 
$
26,312,655

 
$
612,511

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(1,959)

 
 
(222,476)

 
 
(74,667)

 
 
11,192

 
Total realized gains (losses) on investments
 
27,096

 
 
1,207,601

 
 
2,060,633

 
 
556

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
85,105

 
 
3,105,502

 
 
4,987,065

 
 
43,611

 
Net gains (losses) on investments
 
110,242

 
 
4,090,627

 
 
6,973,031

 
 
55,359

Net increase (decrease) in net assets resulting from operations
 
110,242

 
 
4,090,627

 
 
6,973,031

 
 
55,359

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

 
 
3,665,387

 
 
2,756,586

 
 
114,302

 
Administration charges
 
—

 
 
(3,428)

 
 
(94,845)

 
 
(586)

 
Contingent sales charges
 
—

 
 
(13,739)

 
 
(25,112)

 
 
(156)

 
Contract terminations
 
—

 
 
(1,749,080)

 
 
(3,200,078)

 
 
(26,514)

 
Death benefit payments
 
—

 
 
(23,514)

 
 
(232,520)

 
 
—

 
Flexible withdrawal option payments
 
—

 
 
(141,431)

 
 
(707,261)

 
 
(391)

 
Transfers to other contracts
 
—

 
 
(1,166,435)

 
 
(3,334,268)

 
 
(39,297)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

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

 
 
567,760

 
 
(4,837,498)

 
 
47,358

Total increase (decrease)
 
110,242

 
 
4,658,387

 
 
2,135,533

 
 
102,717

Net assets as of December 31, 2017
 
673,714

 
 
25,997,638

 
 
28,448,188

 
 
715,228

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(2,101)

 
 
(267,608)

 
 
(33,996)

 
 
11,912

 
Total realized gains (losses) on investments
 
170,507

 
 
2,638,505

 
 
1,504,811

 
 
32

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(151,615)

 
 
(6,524,536)

 
 
(5,715,975)

 
 
(72,281)

 
Net gains (losses) on investments
 
16,791

 
 
(4,153,639)

 
 
(4,245,160)

 
 
(60,337)

Net increase (decrease) in net assets resulting from operations
 
16,791

 
 
(4,153,639)

 
 
(4,245,160)

 
 
(60,337)

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

 
 
3,931,897

 
 
3,071,886

 
 
222,863

 
Administration charges
 
—

 
 
(9,728)

 
 
(99,723)

 
 
(946)

 
Contingent sales charges
 
—

 
 
(14,078)

 
 
(14,207)

 
 
(111)

 
Contract terminations
 
—

 
 
(1,972,255)

 
 
(2,066,656)

 
 
(34,916)

 
Death benefit payments
 
—

 
 
(107,394)

 
 
(302,768)

 
 
—

 
Flexible withdrawal option payments
 
—

 
 
(155,346)

 
 
(682,284)

 
 
(749)

 
Transfers to other contracts
 
(612,547)

 
 
(1,724,608)

 
 
(1,732,508)

 
 
(50,582)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(612,547)

 
 
(51,512)

 
 
(1,826,260)

 
 
135,559

Total increase (decrease)
 
(595,756)

 
 
(4,205,151)

 
 
(6,071,420)

 
 
75,222

Net assets as of December 31, 2018
$
77,958

 
$
21,792,487

 
$
22,376,768

 
$
790,450

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Income VIP Class 4 Division (1)
 
Franklin Rising Dividends VIP Class 4 Division
 
Franklin Small Cap Value VIP Class 2 Division
 
Goldman Sachs VIT Mid Cap Value Institutional Shares Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
—

 
$
807,587

 
$
5,529,437

 
$
14,216,405

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
—

 
 
1,911

 
 
(46,516)

 
 
(96,697)

 
Total realized gains (losses) on investments
 
—

 
 
26,214

 
 
113,984

 
 
1,503,920

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
—

 
 
148,110

 
 
348,953

 
 
(171,231)

 
Net gains (losses) on investments
 
—

 
 
176,235

 
 
416,421

 
 
1,235,992

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

 
 
176,235

 
 
416,421

 
 
1,235,992

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

 
 
484,132

 
 
828,455

 
 
978,196

 
Administration charges
 
—

 
 
(1,254)

 
 
(148)

 
 
(604)

 
Contingent sales charges
 
—

 
 
(176)

 
 
(3,087)

 
 
(15,912)

 
Contract terminations
 
—

 
 
(56,004)

 
 
(410,557)

 
 
(2,020,242)

 
Death benefit payments
 
—

 
 
(28,884)

 
 
(6,517)

 
 
(62,059)

 
Flexible withdrawal option payments
 
—

 
 
(903)

 
 
(24,001)

 
 
(101,929)

 
Transfers to other contracts
 
—

 
 
(42,098)

 
 
(1,432,819)

 
 
(715,903)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

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

 
 
354,813

 
 
(1,048,674)

 
 
(1,938,453)

Total increase (decrease)
 
—

 
 
531,048

 
 
(632,253)

 
 
(702,461)

Net assets as of December 31, 2017
 
—

 
 
1,338,635

 
 
4,897,184

 
 
13,513,944

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(98)

 
 
908

 
 
(27,023)

 
 
(20,462)

 
Total realized gains (losses) on investments
 
(536)

 
 
84,938

 
 
521,084

 
 
1,699,111

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(2,184)

 
 
(192,704)

 
 
(1,092,891)

 
 
(3,099,240)

 
Net gains (losses) on investments
 
(2,818)

 
 
(106,858)

 
 
(598,830)

 
 
(1,420,591)

Net increase (decrease) in net assets resulting from operations
 
(2,818)

 
 
(106,858)

 
 
(598,830)

 
 
(1,420,591)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
89,411

 
 
516,561

 
 
302,662

 
 
329,950

 
Administration charges
 
(72)

 
 
(3,301)

 
 
(45)

 
 
(634)

 
Contingent sales charges
 
—

 
 
(350)

 
 
(3,165)

 
 
(8,628)

 
Contract terminations
 
—

 
 
(48,312)

 
 
(467,562)

 
 
(1,243,662)

 
Death benefit payments
 
—

 
 
(5,362)

 
 
(47,022)

 
 
(54,862)

 
Flexible withdrawal option payments
 
—

 
 
(2,472)

 
 
(24,560)

 
 
(99,587)

 
Transfers to other contracts
 
—

 
 
(209,018)

 
 
(411,697)

 
 
(338,000)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
89,339

 
 
247,746

 
 
(651,389)

 
 
(1,415,423)

Total increase (decrease)
 
86,521

 
 
140,888

 
 
(1,250,219)

 
 
(2,836,014)

Net assets as of December 31, 2018
$
86,521

 
$
1,479,523

 
$
3,646,965

 
$
10,677,930

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations June 11, 2018.
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
Goldman Sachs VIT Mid Cap Value Service Shares Division
 
Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division
 
Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division
 
Goldman Sachs VIT Small Cap Equity Insights Service Shares Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
458,622

 
$
—

 
$
6,917,960

 
$
98,986

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(3,873)

 
 
22

 
 
(59,931)

 
 
(1,029)

 
Total realized gains (losses) on investments
 
24,465

 
 
—

 
 
896,498

 
 
23,032

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
25,721

 
 
(1)

 
 
(199,509)

 
 
(4,729)

 
Net gains (losses) on investments
 
46,313

 
 
21

 
 
637,058

 
 
17,274

Net increase (decrease) in net assets resulting from operations
 
46,313

 
 
21

 
 
637,058

 
 
17,274

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
101,775

 
 
1,519

 
 
423,828

 
 
83,591

 
Administration charges
 
(422)

 
 
—

 
 
(100)

 
 
(132)

 
Contingent sales charges
 
(111)

 
 
—

 
 
(3,567)

 
 
(3)

 
Contract terminations
 
(29,362)

 
 
—

 
 
(453,567)

 
 
(1,373)

 
Death benefit payments
 
—

 
 
—

 
 
(14,966)

 
 
—

 
Flexible withdrawal option payments
 
(500)

 
 
—

 
 
(52,226)

 
 
—

 
Transfers to other contracts
 
(18,151)

 
 
—

 
 
(602,459)

 
 
(11,582)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
53,229

 
 
1,519

 
 
(703,057)

 
 
70,501

Total increase (decrease)
 
99,542

 
 
1,540

 
 
(65,999)

 
 
87,775

Net assets as of December 31, 2017
 
558,164

 
 
1,540

 
 
6,851,961

 
 
186,761

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(3,692)

 
 
1,024

 
 
(67,198)

 
 
(2,346)

 
Total realized gains (losses) on investments
 
84,360

 
 
(52)

 
 
1,136,320

 
 
56,674

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(168,196)

 
 
(3,570)

 
 
(1,681,780)

 
 
(97,355)

 
Net gains (losses) on investments
 
(87,528)

 
 
(2,598)

 
 
(612,658)

 
 
(43,027)

Net increase (decrease) in net assets resulting from operations
 
(87,528)

 
 
(2,598)

 
 
(612,658)

 
 
(43,027)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
246,884

 
 
48,320

 
 
586,100

 
 
206,003

 
Administration charges
 
(1,037)

 
 
(87)

 
 
(98)

 
 
(736)

 
Contingent sales charges
 
(151)

 
 
—

 
 
(3,435)

 
 
(26)

 
Contract terminations
 
(43,638)

 
 
—

 
 
(501,065)

 
 
(3,792)

 
Death benefit payments
 
(1,743)

 
 
—

 
 
(35,317)

 
 
—

 
Flexible withdrawal option payments
 
(2,689)

 
 
—

 
 
(45,167)

 
 
(800)

 
Transfers to other contracts
 
(10,236)

 
 
(768)

 
 
(512,637)

 
 
(7,383)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
187,390

 
 
47,465

 
 
(511,619)

 
 
193,266

Total increase (decrease)
 
99,862

 
 
44,867

 
 
(1,124,277)

 
 
150,239

Net assets as of December 31, 2018
$
658,026

 
$
46,407

 
$
5,727,684

 
$
337,000

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government & High Quality Bond Class 1 Division
 
Government & High Quality Bond Class 2 Division
 
Guggenheim Floating Rate Strategies Series F Division
 
Guggenheim Investments Global Managed Futures Strategy Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
110,034,001

 
$
1,342,308

 
$
1,597,901

 
$
143,412

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
2,717,386

 
 
38,666

 
 
29,872

 
 
246

 
Total realized gains (losses) on investments
 
(1,074,041)

 
 
(20,989)

 
 
4,226

 
 
(12,371)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(1,046,629)

 
 
(14,676)

 
 
4,375

 
 
20,325

 
Net gains (losses) on investments
 
596,716

 
 
3,001

 
 
38,473

 
 
8,200

Net increase (decrease) in net assets resulting from operations
 
596,716

 
 
3,001

 
 
38,473

 
 
8,200

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
9,824,226

 
 
379,704

 
 
1,270,254

 
 
6,003

 
Administration charges
 
(139,581)

 
 
(1,708)

 
 
(276)

 
 
(97)

 
Contingent sales charges
 
(40,299)

 
 
(414)

 
 
(455)

 
 
(49)

 
Contract terminations
 
(11,143,845)

 
 
(163,498)

 
 
(72,228)

 
 
(9,739)

 
Death benefit payments
 
(1,580,573)

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(2,424,802)

 
 
(30,284)

 
 
(12,296)

 
 
(216)

 
Transfers to other contracts
 
(6,877,916)

 
 
(114,641)

 
 
(996,053)

 
 
(29,612)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(12,382,790)

 
 
69,159

 
 
188,946

 
 
(33,710)

Total increase (decrease)
 
(11,786,074)

 
 
72,160

 
 
227,419

 
 
(25,510)

Net assets as of December 31, 2017
 
98,247,927

 
 
1,414,468

 
 
1,825,320

 
 
117,902

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
2,182,705

 
 
46,201

 
 
34,734

 
 
(2,162)

 
Total realized gains (losses) on investments
 
(2,325,561)

 
 
(16,789)

 
 
1,498

 
 
(2,189)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(438,402)

 
 
(31,113)

 
 
(140,794)

 
 
(16,291)

 
Net gains (losses) on investments
 
(581,258)

 
 
(1,701)

 
 
(104,562)

 
 
(20,642)

Net increase (decrease) in net assets resulting from operations
 
(581,258)

 
 
(1,701)

 
 
(104,562)

 
 
(20,642)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
6,925,763

 
 
593,462

 
 
2,485,752

 
 
96,900

 
Administration charges
 
(148,018)

 
 
(2,913)

 
 
(751)

 
 
(138)

 
Contingent sales charges
 
(28,120)

 
 
(77)

 
 
(516)

 
 
(54)

 
Contract terminations
 
(9,132,301)

 
 
(22,242)

 
 
(103,607)

 
 
(8,918)

 
Death benefit payments
 
(898,838)

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(2,307,371)

 
 
(40,766)

 
 
(21,158)

 
 
—

 
Transfers to other contracts
 
(8,287,408)

 
 
(116,142)

 
 
(649,904)

 
 
(3,211)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(13,876,293)

 
 
411,322

 
 
1,709,816

 
 
84,579

Total increase (decrease)
 
(14,457,551)

 
 
409,621

 
 
1,605,254

 
 
63,937

Net assets as of December 31, 2018
$
83,790,376

 
$
1,824,089

 
$
3,430,574

 
$
181,839

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Investments Long Short Equity Division
 
Guggenheim Investments Multi-Hedge Strategies Division
 
Income Class 1 Division
 
Income Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
126,955

 
$
438,123

 
$
4,669,342

 
$
445,729

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(1,219)

 
 
(6,627)

 
 
142,155

 
 
23,642

 
Total realized gains (losses) on investments
 
1,033

 
 
(54)

 
 
11,340

 
 
(7,434)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
16,581

 
 
17,859

 
 
12,096

 
 
3,443

 
Net gains (losses) on investments
 
16,395

 
 
11,178

 
 
165,591

 
 
19,651

Net increase (decrease) in net assets resulting from operations
 
16,395

 
 
11,178

 
 
165,591

 
 
19,651

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
20,793

 
 
109,466

 
 
1,457,057

 
 
615,281

 
Administration charges
 
(113)

 
 
(99)

 
 
(60)

 
 
(367)

 
Contingent sales charges
 
(13)

 
 
(15)

 
 
(992)

 
 
(84)

 
Contract terminations
 
(6,712)

 
 
(6,963)

 
 
(206,965)

 
 
(44,804)

 
Death benefit payments
 
—

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(218)

 
 
(550)

 
 
(29,313)

 
 
(882)

 
Transfers to other contracts
 
(16,158)

 
 
(14,507)

 
 
(962,977)

 
 
(174,519)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(2,421)

 
 
87,332

 
 
256,750

 
 
394,625

Total increase (decrease)
 
13,974

 
 
98,510

 
 
422,341

 
 
414,276

Net assets as of December 31, 2017
 
140,929

 
 
536,633

 
 
5,091,683

 
 
860,005

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(2,103)

 
 
(7,748)

 
 
144,590

 
 
46,474

 
Total realized gains (losses) on investments
 
22,493

 
 
(520)

 
 
(66,296)

 
 
(17,236)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(46,659)

 
 
(28,353)

 
 
(117,773)

 
 
(31,234)

 
Net gains (losses) on investments
 
(26,269)

 
 
(36,621)

 
 
(39,479)

 
 
(1,996)

Net increase (decrease) in net assets resulting from operations
 
(26,269)

 
 
(36,621)

 
 
(39,479)

 
 
(1,996)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
108,360

 
 
131,013

 
 
1,649,347

 
 
917,876

 
Administration charges
 
(162)

 
 
(388)

 
 
(30)

 
 
(2,974)

 
Contingent sales charges
 
(53)

 
 
(48)

 
 
(847)

 
 
(17)

 
Contract terminations
 
(14,879)

 
 
(15,525)

 
 
(208,031)

 
 
(478)

 
Death benefit payments
 
—

 
 
—

 
 
(58,591)

 
 
—

 
Flexible withdrawal option payments
 
(228)

 
 
(410)

 
 
(43,167)

 
 
(5,778)

 
Transfers to other contracts
 
(4,759)

 
 
(75,997)

 
 
(1,317,692)

 
 
(363,149)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
88,279

 
 
38,645

 
 
20,989

 
 
545,480

Total increase (decrease)
 
62,010

 
 
2,024

 
 
(18,490)

 
 
543,484

Net assets as of December 31, 2018
$
202,939

 
$
538,657

 
$
5,073,193

 
$
1,403,489

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Emerging Markets Class 1 Division
 
International Emerging Markets Class 2 Division
 
Invesco American Franchise Series I Division
 
Invesco Balanced-Risk Allocation Series II Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
49,426,074

 
$
115,252

 
$
3,877,605

 
$
202,940

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(61,290)

 
 
1,596

 
 
(52,793)

 
 
6,438

 
Total realized gains (losses) on investments
 
2,120,938

 
 
7,837

 
 
590,152

 
 
11,638

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
16,092,740

 
 
97,757

 
 
429,012

 
 
1,436

 
Net gains (losses) on investments
 
18,152,388

 
 
107,190

 
 
966,371

 
 
19,512

Net increase (decrease) in net assets resulting from operations
 
18,152,388

 
 
107,190

 
 
966,371

 
 
19,512

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
5,360,398

 
 
796,825

 
 
186,130

 
 
50,641

 
Administration charges
 
(8,077)

 
 
(269)

 
 
(911)

 
 
(263)

 
Contingent sales charges
 
(29,711)

 
 
(16)

 
 
(251)

 
 
(9)

 
Contract terminations
 
(5,602,342)

 
 
(1,929)

 
 
(319,284)

 
 
(4,991)

 
Death benefit payments
 
(413,958)

 
 
—

 
 
(96,495)

 
 
—

 
Flexible withdrawal option payments
 
(410,480)

 
 
(407)

 
 
(62,613)

 
 
—

 
Transfers to other contracts
 
(6,721,549)

 
 
(81,904)

 
 
(82,718)

 
 
(1,558)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(7,825,719)

 
 
712,300

 
 
(376,142)

 
 
43,820

Total increase (decrease)
 
10,326,669

 
 
819,490

 
 
590,229

 
 
63,332

Net assets as of December 31, 2017
 
59,752,743

 
 
934,742

 
 
4,467,834

 
 
266,272

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(106,366)

 
 
4,262

 
 
(59,058)

 
 
314

 
Total realized gains (losses) on investments
 
2,311,424

 
 
4,163

 
 
551,578

 
 
28,526

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(14,162,851)

 
 
(425,756)

 
 
(664,227)

 
 
(55,192)

 
Net gains (losses) on investments
 
(11,957,793)

 
 
(417,331)

 
 
(171,707)

 
 
(26,352)

Net increase (decrease) in net assets resulting from operations
 
(11,957,793)

 
 
(417,331)

 
 
(171,707)

 
 
(26,352)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
6,804,940

 
 
1,292,658

 
 
130,090

 
 
72,148

 
Administration charges
 
(8,244)

 
 
(4,053)

 
 
(1,089)

 
 
(690)

 
Contingent sales charges
 
(32,870)

 
 
(1,501)

 
 
(198)

 
 
(19)

 
Contract terminations
 
(7,126,409)

 
 
(48,048)

 
 
(283,858)

 
 
(531)

 
Death benefit payments
 
(173,259)

 
 
(470)

 
 
(49,495)

 
 
—

 
Flexible withdrawal option payments
 
(375,517)

 
 
(5,259)

 
 
(62,821)

 
 
—

 
Transfers to other contracts
 
(5,884,760)

 
 
(219,060)

 
 
(203,236)

 
 
(748)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(6,796,119)

 
 
1,014,267

 
 
(470,607)

 
 
70,160

Total increase (decrease)
 
(18,753,912)

 
 
596,936

 
 
(642,314)

 
 
43,808

Net assets as of December 31, 2018
$
40,998,831

 
$
1,531,678

 
$
3,825,520

 
$
310,080

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Core Equity Series I Division
 
Invesco Health Care Series I Division (1)
 
Invesco Health Care Series II Division (2)
 
Invesco International Growth Series I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
16,899,690

 
$
7,476,525

 
$
762,081

 
$
9,472,356

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(46,444)

 
 
(72,280)

 
 
(10,905)

 
 
(3,595)

 
Total realized gains (losses) on investments
 
1,561,035

 
 
722,137

 
 
29,261

 
 
625,792

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
345,440

 
 
365,545

 
 
89,315

 
 
1,265,162

 
Net gains (losses) on investments
 
1,860,031

 
 
1,015,402

 
 
107,671

 
 
1,887,359

Net increase (decrease) in net assets resulting from operations
 
1,860,031

 
 
1,015,402

 
 
107,671

 
 
1,887,359

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
445,239

 
 
583,929

 
 
271,202

 
 
763,895

 
Administration charges
 
(2,404)

 
 
(1,255)

 
 
(1,838)

 
 
(15,793)

 
Contingent sales charges
 
(1,327)

 
 
(676)

 
 
(113)

 
 
(8,974)

 
Contract terminations
 
(1,684,725)

 
 
(779,136)

 
 
(55,964)

 
 
(1,135,706)

 
Death benefit payments
 
(135,720)

 
 
(50,348)

 
 
—

 
 
(22,127)

 
Flexible withdrawal option payments
 
(227,731)

 
 
(106,354)

 
 
(1,749)

 
 
(94,815)

 
Transfers to other contracts
 
(389,060)

 
 
(680,299)

 
 
(53,377)

 
 
(1,318,589)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(1,995,728)

 
 
(1,034,139)

 
 
158,161

 
 
(1,832,109)

Total increase (decrease)
 
(135,697)

 
 
(18,737)

 
 
265,832

 
 
55,250

Net assets as of December 31, 2017
 
16,763,993

 
 
7,457,788

 
 
1,027,913

 
 
9,527,606

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(66,620)

 
 
(94,482)

 
 
(13,163)

 
 
47,790

 
Total realized gains (losses) on investments
 
1,828,672

 
 
1,031,190

 
 
125,334

 
 
500,222

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(3,263,203)

 
 
(931,133)

 
 
(141,599)

 
 
(1,906,439)

 
Net gains (losses) on investments
 
(1,501,151)

 
 
5,575

 
 
(29,428)

 
 
(1,358,427)

Net increase (decrease) in net assets resulting from operations
 
(1,501,151)

 
 
5,575

 
 
(29,428)

 
 
(1,358,427)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
324,506

 
 
468,655

 
 
635,227

 
 
706,679

 
Administration charges
 
(2,503)

 
 
(1,351)

 
 
(3,156)

 
 
(15,630)

 
Contingent sales charges
 
(1,028)

 
 
(887)

 
 
(578)

 
 
(8,169)

 
Contract terminations
 
(1,472,340)

 
 
(815,208)

 
 
(139,662)

 
 
(1,177,492)

 
Death benefit payments
 
(93,410)

 
 
(57,045)

 
 
(3,536)

 
 
(76,052)

 
Flexible withdrawal option payments
 
(231,471)

 
 
(100,526)

 
 
(3,913)

 
 
(88,231)

 
Transfers to other contracts
 
(1,268,946)

 
 
(487,704)

 
 
(169,661)

 
 
(918,081)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(2,745,192)

 
 
(994,066)

 
 
314,721

 
 
(1,576,976)

Total increase (decrease)
 
(4,246,343)

 
 
(988,491)

 
 
285,293

 
 
(2,935,403)

Net assets as of December 31, 2018
$
12,517,650

 
$
6,469,297

 
$
1,313,206

 
$
6,592,203

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of Invesco Global Health Care Series I Division until June 9, 2018.
(2) Represented the operations of Invesco Global Health Care Series II Division until June 9, 2018.
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco International Growth Series II Division
 
Invesco Mid Cap Growth Series I Division
 
Invesco Small Cap Equity Series I Division
 
Invesco Technology
Series I Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
417,949

 
$
1,101,948

 
$
7,699,966

 
$
2,689,778

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
1,019

 
 
(15,353)

 
 
(110,489)

 
 
(43,440)

 
Total realized gains (losses) on investments
 
2,425

 
 
182,604

 
 
543,883

 
 
318,145

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
96,580

 
 
54,010

 
 
478,000

 
 
625,794

 
Net gains (losses) on investments
 
100,024

 
 
221,261

 
 
911,394

 
 
900,499

Net increase (decrease) in net assets resulting from operations
 
100,024

 
 
221,261

 
 
911,394

 
 
900,499

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
193,118

 
 
181,711

 
 
553,725

 
 
794,665

 
Administration charges
 
(484)

 
 
(206)

 
 
(8,981)

 
 
(282)

 
Contingent sales charges
 
(134)

 
 
(149)

 
 
(3,804)

 
 
(277)

 
Contract terminations
 
(11,629)

 
 
(188,862)

 
 
(671,080)

 
 
(351,498)

 
Death benefit payments
 
—

 
 
—

 
 
(1,309)

 
 
(29,135)

 
Flexible withdrawal option payments
 
(7,154)

 
 
(17,099)

 
 
(102,338)

 
 
(45,325)

 
Transfers to other contracts
 
(26,474)

 
 
(89,720)

 
 
(523,029)

 
 
(266,170)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
147,243

 
 
(114,325)

 
 
(756,816)

 
 
101,978

Total increase (decrease)
 
247,267

 
 
106,936

 
 
154,578

 
 
1,002,477

Net assets as of December 31, 2017
 
665,216

 
 
1,208,884

 
 
7,854,544

 
 
3,692,255

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
6,665

 
 
(16,213)

 
 
(102,512)

 
 
(47,841)

 
Total realized gains (losses) on investments
 
7,195

 
 
156,424

 
 
557,254

 
 
408,230

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(158,987)

 
 
(207,235)

 
 
(1,481,969)

 
 
(351,387)

 
Net gains (losses) on investments
 
(145,127)

 
 
(67,024)

 
 
(1,027,227)

 
 
9,002

Net increase (decrease) in net assets resulting from operations
 
(145,127)

 
 
(67,024)

 
 
(1,027,227)

 
 
9,002

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
377,429

 
 
191,886

 
 
472,452

 
 
475,208

 
Administration charges
 
(1,282)

 
 
(238)

 
 
(10,396)

 
 
(324)

 
Contingent sales charges
 
(113)

 
 
(118)

 
 
(4,757)

 
 
(285)

 
Contract terminations
 
(15,431)

 
 
(168,998)

 
 
(838,885)

 
 
(407,825)

 
Death benefit payments
 
—

 
 
—

 
 
(140,436)

 
 
(95,803)

 
Flexible withdrawal option payments
 
(9,766)

 
 
(19,171)

 
 
(90,627)

 
 
(44,855)

 
Transfers to other contracts
 
(9,977)

 
 
(103,450)

 
 
(623,190)

 
 
(580,803)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
340,860

 
 
(100,089)

 
 
(1,235,839)

 
 
(654,687)

Total increase (decrease)
 
195,733

 
 
(167,113)

 
 
(2,263,066)

 
 
(645,685)

Net assets as of December 31, 2018
$
860,949

 
$
1,041,771

 
$
5,591,478

 
$
3,046,570

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Value Opportunities Series I Division
 
Janus Henderson Enterprise Service Shares Division
 
Janus Henderson Flexible Bond Service Shares Division
 
LargeCap Growth Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
4,558,350

 
$
8,696,456

 
$
1,933,140

 
$
40,321,888

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(46,386)

 
 
(71,517)

 
 
26,446

 
 
(396,229)

 
Total realized gains (losses) on investments
 
82,415

 
 
1,545,432

 
 
(9,552)

 
 
2,946,872

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
605,470

 
 
615,286

 
 
21,710

 
 
10,242,408

 
Net gains (losses) on investments
 
641,499

 
 
2,089,201

 
 
38,604

 
 
12,793,051

Net increase (decrease) in net assets resulting from operations
 
641,499

 
 
2,089,201

 
 
38,604

 
 
12,793,051

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
246,797

 
 
459,960

 
 
600,924

 
 
2,112,519

 
Administration charges
 
(13,604)

 
 
(2,435)

 
 
(919)

 
 
(32,062)

 
Contingent sales charges
 
(3,230)

 
 
(767)

 
 
(280)

 
 
(9,197)

 
Contract terminations
 
(408,710)

 
 
(973,844)

 
 
(97,126)

 
 
(3,783,753)

 
Death benefit payments
 
(19,482)

 
 
(18,522)

 
 
—

 
 
(382,142)

 
Flexible withdrawal option payments
 
(66,970)

 
 
(61,674)

 
 
(14,781)

 
 
(575,641)

 
Transfers to other contracts
 
(549,771)

 
 
(413,079)

 
 
(294,919)

 
 
(2,073,598)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(814,970)

 
 
(1,010,361)

 
 
192,899

 
 
(4,743,874)

Total increase (decrease)
 
(173,471)

 
 
1,078,840

 
 
231,503

 
 
8,049,177

Net assets as of December 31, 2017
 
4,384,879

 
 
9,775,296

 
 
2,164,643

 
 
48,371,065

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(43,538)

 
 
(114,024)

 
 
25,024

 
 
(500,074)

 
Total realized gains (losses) on investments
 
222,283

 
 
1,519,276

 
 
(33,900)

 
 
7,880,074

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(911,597)

 
 
(1,513,581)

 
 
(42,489)

 
 
(10,619,371)

 
Net gains (losses) on investments
 
(732,852)

 
 
(108,329)

 
 
(51,365)

 
 
(3,239,371)

Net increase (decrease) in net assets resulting from operations
 
(732,852)

 
 
(108,329)

 
 
(51,365)

 
 
(3,239,371)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
325,699

 
 
557,824

 
 
535,559

 
 
3,292,902

 
Administration charges
 
(14,723)

 
 
(2,220)

 
 
(2,108)

 
 
(37,987)

 
Contingent sales charges
 
(3,429)

 
 
(668)

 
 
(403)

 
 
(14,566)

 
Contract terminations
 
(494,217)

 
 
(956,326)

 
 
(74,459)

 
 
(5,571,323)

 
Death benefit payments
 
(8,717)

 
 
(35,632)

 
 
(3,417)

 
 
(450,794)

 
Flexible withdrawal option payments
 
(67,899)

 
 
(63,139)

 
 
(25,228)

 
 
(610,593)

 
Transfers to other contracts
 
(483,263)

 
 
(574,526)

 
 
(685,266)

 
 
(2,430,879)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(746,549)

 
 
(1,074,687)

 
 
(255,322)

 
 
(5,823,240)

Total increase (decrease)
 
(1,479,401)

 
 
(1,183,016)

 
 
(306,687)

 
 
(9,062,611)

Net assets as of December 31, 2018
$
2,905,478

 
$
8,592,280

 
$
1,857,956

 
$
39,308,454

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
307,355

 
$
94,520,745

 
$
127,126

 
$
92,870,342

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(4,483)

 
 
(1,343,021)

 
 
(4,266)

 
 
333,061

 
Total realized gains (losses) on investments
 
9,579

 
 
10,107,471

 
 
26,229

 
 
8,176,820

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
111,167

 
 
20,061,177

 
 
65,761

 
 
9,376,808

 
Net gains (losses) on investments
 
116,263

 
 
28,825,627

 
 
87,724

 
 
17,886,689

Net increase (decrease) in net assets resulting from operations
 
116,263

 
 
28,825,627

 
 
87,724

 
 
17,886,689

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
314,906

 
 
3,325,404

 
 
518,780

 
 
8,528,674

 
Administration charges
 
(674)

 
 
(28,376)

 
 
(453)

 
 
(51,674)

 
Contingent sales charges
 
(59)

 
 
(22,554)

 
 
(30)

 
 
(32,551)

 
Contract terminations
 
(31,436)

 
 
(8,760,176)

 
 
(15,889)

 
 
(8,327,175)

 
Death benefit payments
 
—

 
 
(567,145)

 
 
—

 
 
(286,337)

 
Flexible withdrawal option payments
 
(3,816)

 
 
(1,033,184)

 
 
(970)

 
 
(1,269,966)

 
Transfers to other contracts
 
(21,027)

 
 
(4,096,406)

 
 
(13,827)

 
 
(4,927,180)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
257,894

 
 
(11,182,437)

 
 
487,611

 
 
(6,366,209)

Total increase (decrease)
 
374,157

 
 
17,643,190

 
 
575,335

 
 
11,520,480

Net assets as of December 31, 2017
 
681,512

 
 
112,163,935

 
 
702,461

 
 
104,390,822

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(10,340)

 
 
(1,498,505)

 
 
(20,313)

 
 
365,098

 
Total realized gains (losses) on investments
 
147,092

 
 
15,783,396

 
 
198,214

 
 
12,383,458

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(369,940)

 
 
(10,937,857)

 
 
(383,342)

 
 
(18,120,279)

 
Net gains (losses) on investments
 
(233,188)

 
 
3,347,034

 
 
(205,441)

 
 
(5,371,723)

Net increase (decrease) in net assets resulting from operations
 
(233,188)

 
 
3,347,034

 
 
(205,441)

 
 
(5,371,723)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
1,226,636

 
 
6,084,659

 
 
2,904,466

 
 
8,724,026

 
Administration charges
 
(3,499)

 
 
(33,196)

 
 
(5,882)

 
 
(57,937)

 
Contingent sales charges
 
(763)

 
 
(22,493)

 
 
(631)

 
 
(33,286)

 
Contract terminations
 
(95,078)

 
 
(10,253,450)

 
 
(33,279)

 
 
(9,612,324)

 
Death benefit payments
 
—

 
 
(822,050)

 
 
—

 
 
(641,672)

 
Flexible withdrawal option payments
 
(5,514)

 
 
(1,131,561)

 
 
(8,577)

 
 
(1,358,328)

 
Transfers to other contracts
 
(44,502)

 
 
(6,530,248)

 
 
(193,730)

 
 
(7,492,770)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
1,077,280

 
 
(12,708,339)

 
 
2,662,367

 
 
(10,472,291)

Total increase (decrease)
 
844,092

 
 
(9,361,305)

 
 
2,456,926

 
 
(15,844,014)

Net assets as of December 31, 2018
$
1,525,604

 
$
102,802,630

 
$
3,159,387

 
$
88,546,808

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap S&P 500 Index Class 2 Division
 
MFS International Value Service Class Division
 
MFS New Discovery Service Class Division
 
MFS Utilities Service Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
765,977

 
$
3,307,744

 
$
1,031,307

 
$
11,829,449

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
17,881

 
 
7,433

 
 
(17,026)

 
 
351,510

 
Total realized gains (losses) on investments
 
71,064

 
 
221,878

 
 
16,349

 
 
(113,320)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
252,908

 
 
865,803

 
 
263,843

 
 
1,283,547

 
Net gains (losses) on investments
 
341,853

 
 
1,095,114

 
 
263,166

 
 
1,521,737

Net increase (decrease) in net assets resulting from operations
 
341,853

 
 
1,095,114

 
 
263,166

 
 
1,521,737

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
2,320,602

 
 
3,850,283

 
 
303,618

 
 
1,769,494

 
Administration charges
 
(1,452)

 
 
(1,250)

 
 
(127)

 
 
(1,790)

 
Contingent sales charges
 
(2,698)

 
 
(1,094)

 
 
(314)

 
 
(8,035)

 
Contract terminations
 
(132,036)

 
 
(288,046)

 
 
(39,867)

 
 
(1,034,106)

 
Death benefit payments
 
(6,415)

 
 
—

 
 
—

 
 
(6,057)

 
Flexible withdrawal option payments
 
(4,440)

 
 
(35,757)

 
 
(21,395)

 
 
(105,114)

 
Transfers to other contracts
 
(46,348)

 
 
(1,229,260)

 
 
(39,340)

 
 
(689,574)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
2,127,213

 
 
2,294,876

 
 
202,575

 
 
(75,182)

Total increase (decrease)
 
2,469,066

 
 
3,389,990

 
 
465,741

 
 
1,446,555

Net assets as of December 31, 2017
 
3,235,043

 
 
6,697,734

 
 
1,497,048

 
 
13,276,004

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
45,158

 
 
(25,406)

 
 
(28,928)

 
 
(75,014)

 
Total realized gains (losses) on investments
 
250,771

 
 
332,315

 
 
390,401

 
 
(193,173)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(859,123)

 
 
(1,068,216)

 
 
(584,728)

 
 
163,854

 
Net gains (losses) on investments
 
(563,194)

 
 
(761,307)

 
 
(223,255)

 
 
(104,333)

Net increase (decrease) in net assets resulting from operations
 
(563,194)

 
 
(761,307)

 
 
(223,255)

 
 
(104,333)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
4,730,271

 
 
2,015,034

 
 
1,759,138

 
 
1,532,777

 
Administration charges
 
(10,660)

 
 
(4,371)

 
 
(1,419)

 
 
(3,926)

 
Contingent sales charges
 
(2,648)

 
 
(3,080)

 
 
(733)

 
 
(7,205)

 
Contract terminations
 
(108,386)

 
 
(501,821)

 
 
(52,778)

 
 
(1,072,991)

 
Death benefit payments
 
—

 
 
(4,312)

 
 
(33,614)

 
 
(77,647)

 
Flexible withdrawal option payments
 
(28,844)

 
 
(42,866)

 
 
(30,782)

 
 
(104,941)

 
Transfers to other contracts
 
(171,635)

 
 
(1,677,728)

 
 
(450,301)

 
 
(1,049,320)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
4,408,098

 
 
(219,144)

 
 
1,189,511

 
 
(783,253)

Total increase (decrease)
 
3,844,904

 
 
(980,451)

 
 
966,256

 
 
(887,586)

Net assets as of December 31, 2018
$
7,079,947

 
$
5,717,283

 
$
2,463,304

 
$
12,388,418

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS Value Service Class Division
 
MidCap Class 1 Division
 
Multi-Asset Income Class 1 Division
 
Multi-Asset Income Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
5,780,196

 
$
324,262,727

 
$
170,427

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
15,082

 
 
(2,607,109)

 
 
530

 
 
(1)

 
Total realized gains (losses) on investments
 
369,630

 
 
44,640,452

 
 
1,617

 
 
—

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
489,048

 
 
30,724,255

 
 
13,675

 
 
49

 
Net gains (losses) on investments
 
873,760

 
 
72,757,598

 
 
15,822

 
 
48

Net increase (decrease) in net assets resulting from operations
 
873,760

 
 
72,757,598

 
 
15,822

 
 
48

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
1,075,241

 
 
11,283,093

 
 
7,429

 
 
13,763

 
Administration charges
 
(335)

 
 
(295,954)

 
 
(30)

 
 
—

 
Contingent sales charges
 
(4,924)

 
 
(110,634)

 
 
(2)

 
 
—

 
Contract terminations
 
(623,142)

 
 
(31,046,790)

 
 
(260)

 
 
—

 
Death benefit payments
 
—

 
 
(2,400,922)

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(68,910)

 
 
(4,723,769)

 
 
(3,482)

 
 
—

 
Transfers to other contracts
 
(792,978)

 
 
(17,878,139)

 
 
(29,067)

 
 
—

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(415,048)

 
 
(45,173,115)

 
 
(25,412)

 
 
13,763

Total increase (decrease)
 
458,712

 
 
27,584,483

 
 
(9,590)

 
 
13,811

Net assets as of December 31, 2017
 
6,238,908

 
 
351,847,210

 
 
160,837

 
 
13,811

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(10,467)

 
 
(3,470,289)

 
 
2,548

 
 
864

 
Total realized gains (losses) on investments
 
505,489

 
 
64,398,236

 
 
1,079

 
 
74

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(1,119,990)

 
 
(84,185,785)

 
 
(16,908)

 
 
(3,699)

 
Net gains (losses) on investments
 
(624,968)

 
 
(23,257,838)

 
 
(13,281)

 
 
(2,761)

Net increase (decrease) in net assets resulting from operations
 
(624,968)

 
 
(23,257,838)

 
 
(13,281)

 
 
(2,761)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
573,815

 
 
11,081,798

 
 
40,734

 
 
33,164

 
Administration charges
 
(277)

 
 
(304,557)

 
 
(30)

 
 
(62)

 
Contingent sales charges
 
(5,560)

 
 
(100,029)

 
 
(10)

 
 
—

 
Contract terminations
 
(801,478)

 
 
(33,444,054)

 
 
(1,392)

 
 
—

 
Death benefit payments
 
(724)

 
 
(2,413,752)

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(53,233)

 
 
(4,551,400)

 
 
(3,482)

 
 
—

 
Transfers to other contracts
 
(645,530)

 
 
(15,350,029)

 
 
(448)

 
 
(913)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(932,987)

 
 
(45,082,023)

 
 
35,372

 
 
32,189

Total increase (decrease)
 
(1,557,955)

 
 
(68,339,861)

 
 
22,091

 
 
29,428

Net assets as of December 31, 2018
$
4,680,953

 
$
283,507,349

 
$
182,928

 
$
43,239

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Large Cap Value Class I Division
 
Neuberger Berman AMT Mid Cap Growth Portfolio Class S Division
 
Neuberger Berman AMT Sustainable Equity Class I Division (1)
 
Neuberger Berman AMT Sustainable Equity Class S Division (2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
4,992,582

 
$
2,447,553

 
$
4,563,370

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(40,734)

 
 
(35,262)

 
 
(41,108)

 
 
—

 
Total realized gains (losses) on investments
 
428,225

 
 
84,268

 
 
502,769

 
 
—

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
124,352

 
 
461,386

 
 
224,431

 
 
—

 
Net gains (losses) on investments
 
511,843

 
 
510,392

 
 
686,092

 
 
—

Net increase (decrease) in net assets resulting from operations
 
511,843

 
 
510,392

 
 
686,092

 
 
—

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
231,916

 
 
360,076

 
 
212,616

 
 
—

 
Administration charges
 
(853)

 
 
(2,469)

 
 
(17,542)

 
 
—

 
Contingent sales charges
 
(3,936)

 
 
(4,181)

 
 
(4,049)

 
 
—

 
Contract terminations
 
(498,069)

 
 
(541,181)

 
 
(512,387)

 
 
—

 
Death benefit payments
 
(39,092)

 
 
(27,665)

 
 
(17,222)

 
 
—

 
Flexible withdrawal option payments
 
(20,802)

 
 
(17,781)

 
 
(113,367)

 
 
—

 
Transfers to other contracts
 
(611,659)

 
 
(126,238)

 
 
(442,376)

 
 
—

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(942,495)

 
 
(359,439)

 
 
(894,327)

 
 
—

Total increase (decrease)
 
(430,652)

 
 
150,953

 
 
(208,235)

 
 
—

Net assets as of December 31, 2017
 
4,561,930

 
 
2,598,506

 
 
4,355,135

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(12,219)

 
 
(38,099)

 
 
(37,130)

 
 
2

 
Total realized gains (losses) on investments
 
721,182

 
 
318,504

 
 
730,145

 
 
(286)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(803,614)

 
 
(507,941)

 
 
(893,064)

 
 
(126)

 
Net gains (losses) on investments
 
(94,651)

 
 
(227,536)

 
 
(200,049)

 
 
(410)

Net increase (decrease) in net assets resulting from operations
 
(94,651)

 
 
(227,536)

 
 
(200,049)

 
 
(410)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
167,831

 
 
750,610

 
 
321,603

 
 
10,781

 
Administration charges
 
(736)

 
 
(4,337)

 
 
(19,485)

 
 
(1)

 
Contingent sales charges
 
(3,665)

 
 
(1,648)

 
 
(3,865)

 
 
(1)

 
Contract terminations
 
(528,238)

 
 
(233,406)

 
 
(557,164)

 
 
(181)

 
Death benefit payments
 
(40,039)

 
 
(4,809)

 
 
(16,195)

 
 
—

 
Flexible withdrawal option payments
 
(19,625)

 
 
(22,313)

 
 
(88,288)

 
 
—

 
Transfers to other contracts
 
(224,845)

 
 
(401,798)

 
 
(586,949)

 
 
(8,682)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(649,317)

 
 
82,299

 
 
(950,343)

 
 
1,916

Total increase (decrease)
 
(743,968)

 
 
(145,237)

 
 
(1,150,392)

 
 
1,506

Net assets as of December 31, 2018
$
3,817,962

 
$
2,453,269

 
$
3,204,743

 
$
1,506

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of Neuberger Berman AMT Socially Responsive Class I Division until June 9, 2018.
(2) Commenced operations June 11, 2018.
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oppenheimer Main Street Small Cap Service Shares Division
 
PIMCO All Asset Administrative Class Division
 
PIMCO All Asset Advisor Class Division
 
PIMCO Commodity Real Return Strategy M Class Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
555,279

 
$
3,837,833

 
$
52,673

 
$
11,729

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(3,797)

 
 
116,507

 
 
2,593

 
 
1,017

 
Total realized gains (losses) on investments
 
32,263

 
 
(72,746)

 
 
280

 
 
(140)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
39,996

 
 
382,628

 
 
4,509

 
 
(865)

 
Net gains (losses) on investments
 
68,462

 
 
426,389

 
 
7,382

 
 
12

Net increase (decrease) in net assets resulting from operations
 
68,462

 
 
426,389

 
 
7,382

 
 
12

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
83,556

 
 
255,465

 
 
38,497

 
 
490

 
Administration charges
 
(108)

 
 
(86)

 
 
(29)

 
 
—

 
Contingent sales charges
 
(36)

 
 
(1,959)

 
 
—

 
 
—

 
Contract terminations
 
(46,045)

 
 
(247,953)

 
 
—

 
 
—

 
Death benefit payments
 
—

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(1,202)

 
 
(61,170)

 
 
—

 
 
—

 
Transfers to other contracts
 
(57,779)

 
 
(520,218)

 
 
(711)

 
 
(1,604)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(21,614)

 
 
(575,921)

 
 
37,757

 
 
(1,114)

Total increase (decrease)
 
46,848

 
 
(149,532)

 
 
45,139

 
 
(1,102)

Net assets as of December 31, 2017
 
602,127

 
 
3,688,301

 
 
97,812

 
 
10,627

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(6,339)

 
 
52,643

 
 
1,859

 
 
57

 
Total realized gains (losses) on investments
 
67,785

 
 
(30,509)

 
 
1,167

 
 
(176)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(112,224)

 
 
(237,187)

 
 
(9,885)

 
 
(3,877)

 
Net gains (losses) on investments
 
(50,778)

 
 
(215,053)

 
 
(6,859)

 
 
(3,996)

Net increase (decrease) in net assets resulting from operations
 
(50,778)

 
 
(215,053)

 
 
(6,859)

 
 
(3,996)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
92,167

 
 
352,284

 
 
16,377

 
 
38,424

 
Administration charges
 
(66)

 
 
(42)

 
 
(193)

 
 
(20)

 
Contingent sales charges
 
(16)

 
 
(3,428)

 
 
—

 
 
(5)

 
Contract terminations
 
(22,637)

 
 
(494,108)

 
 
—

 
 
(153)

 
Death benefit payments
 
(600)

 
 
(22,093)

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(1,196)

 
 
(61,090)

 
 
—

 
 
—

 
Transfers to other contracts
 
(217,286)

 
 
(497,332)

 
 
(6,691)

 
 
(1,069)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(149,634)

 
 
(725,809)

 
 
9,493

 
 
37,177

Total increase (decrease)
 
(200,412)

 
 
(940,862)

 
 
2,634

 
 
33,181

Net assets as of December 31, 2018
$
401,715

 
$
2,747,439

 
$
100,446

 
$
43,808

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO High Yield Administrative Class Division
 
PIMCO Low Duration Advisor Class Division
 
PIMCO Total Return Administrative Class Division
 
Principal Capital Appreciation
Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
21,316,043

 
$
315,289

 
$
25,990,162

 
$
109,609,383

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
767,047

 
 
(342)

 
 
154,001

 
 
(152,418)

 
Total realized gains (losses) on investments
 
(83,616)

 
 
(758)

 
 
(297,195)

 
 
2,313,452

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
422,031

 
 
374

 
 
1,015,550

 
 
17,218,286

 
Net gains (losses) on investments
 
1,105,462

 
 
(726)

 
 
872,356

 
 
19,379,320

Net increase (decrease) in net assets resulting from operations
 
1,105,462

 
 
(726)

 
 
872,356

 
 
19,379,320

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
3,311,815

 
 
226,717

 
 
4,188,866

 
 
4,658,041

 
Administration charges
 
(2,115)

 
 
(40)

 
 
(2,127)

 
 
(212,626)

 
Contingent sales charges
 
(10,907)

 
 
(188)

 
 
(21,823)

 
 
(67,213)

 
Contract terminations
 
(1,411,094)

 
 
(32,384)

 
 
(2,722,149)

 
 
(11,215,730)

 
Death benefit payments
 
(51,266)

 
 
(267)

 
 
(33,930)

 
 
(764,030)

 
Flexible withdrawal option payments
 
(313,950)

 
 
(623)

 
 
(428,581)

 
 
(2,259,867)

 
Transfers to other contracts
 
(2,212,594)

 
 
(115,308)

 
 
(1,826,638)

 
 
(6,572,963)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(690,111)

 
 
77,907

 
 
(846,382)

 
 
(16,434,388)

Total increase (decrease)
 
415,351

 
 
77,181

 
 
25,974

 
 
2,944,932

Net assets as of December 31, 2017
 
21,731,394

 
 
392,470

 
 
26,016,136

 
 
112,554,315

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
724,718

 
 
3,647

 
 
257,756

 
 
(286,518)

 
Total realized gains (losses) on investments
 
(240,898)

 
 
(4,692)

 
 
(322,664)

 
 
9,885,087

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(1,268,626)

 
 
(3,712)

 
 
(446,136)

 
 
(13,540,449)

 
Net gains (losses) on investments
 
(784,806)

 
 
(4,757)

 
 
(511,044)

 
 
(3,941,880)

Net increase (decrease) in net assets resulting from operations
 
(784,806)

 
 
(4,757)

 
 
(511,044)

 
 
(3,941,880)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
2,435,213

 
 
1,182,756

 
 
2,922,114

 
 
4,553,932

 
Administration charges
 
(5,316)

 
 
(365)

 
 
(4,057)

 
 
(223,855)

 
Contingent sales charges
 
(16,128)

 
 
(178)

 
 
(26,132)

 
 
(51,549)

 
Contract terminations
 
(2,043,898)

 
 
(33,689)

 
 
(3,785,673)

 
 
(10,083,321)

 
Death benefit payments
 
(204,632)

 
 
—

 
 
(102,824)

 
 
(903,342)

 
Flexible withdrawal option payments
 
(255,623)

 
 
(3,732)

 
 
(400,204)

 
 
(2,187,907)

 
Transfers to other contracts
 
(2,932,830)

 
 
(504,005)

 
 
(2,485,192)

 
 
(8,287,659)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(3,023,214)

 
 
640,787

 
 
(3,881,968)

 
 
(17,183,701)

Total increase (decrease)
 
(3,808,020)

 
 
636,030

 
 
(4,393,012)

 
 
(21,125,581)

Net assets as of December 31, 2018
$
17,923,374

 
$
1,028,500

 
$
21,623,124

 
$
91,428,734

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal Capital Appreciation
Class 2 Division
 
Principal LifeTime 2010 Class 1 Division
 
Principal LifeTime 2020 Class 1 Division
 
Principal LifeTime 2020 Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
431,660

 
$
26,897,585

 
$
107,765,196

 
$
16,129

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
765

 
 
201,320

 
 
575,752

 
 
3,052

 
Total realized gains (losses) on investments
 
16,032

 
 
2,333,106

 
 
4,660,759

 
 
3,080

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
100,831

 
 
(94,688)

 
 
8,148,882

 
 
16,952

 
Net gains (losses) on investments
 
117,628

 
 
2,439,738

 
 
13,385,393

 
 
23,084

Net increase (decrease) in net assets resulting from operations
 
117,628

 
 
2,439,738

 
 
13,385,393

 
 
23,084

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
544,638

 
 
655,192

 
 
2,896,540

 
 
635,984

 
Administration charges
 
(1,117)

 
 
(81,924)

 
 
(493,486)

 
 
(120)

 
Contingent sales charges
 
(127)

 
 
(22,565)

 
 
(66,066)

 
 
(31)

 
Contract terminations
 
(51,854)

 
 
(3,261,629)

 
 
(9,307,127)

 
 
(1,441)

 
Death benefit payments
 
(957)

 
 
(158,043)

 
 
(88,096)

 
 
—

 
Flexible withdrawal option payments
 
(4,589)

 
 
(994,928)

 
 
(3,310,281)

 
 
—

 
Transfers to other contracts
 
(36,111)

 
 
(1,175,993)

 
 
(5,887,743)

 
 
(197)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
449,883

 
 
(5,039,890)

 
 
(16,256,259)

 
 
634,195

Total increase (decrease)
 
567,511

 
 
(2,600,152)

 
 
(2,870,866)

 
 
657,279

Net assets as of December 31, 2017
 
999,171

 
 
24,297,433

 
 
104,894,330

 
 
673,408

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
628

 
 
311,111

 
 
1,168,395

 
 
24,737

 
Total realized gains (losses) on investments
 
117,597

 
 
2,257,576

 
 
10,042,987

 
 
34,651

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(269,776)

 
 
(3,578,113)

 
 
(17,238,827)

 
 
(157,680)

 
Net gains (losses) on investments
 
(151,551)

 
 
(1,009,426)

 
 
(6,027,445)

 
 
(98,292)

Net increase (decrease) in net assets resulting from operations
 
(151,551)

 
 
(1,009,426)

 
 
(6,027,445)

 
 
(98,292)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
1,558,678

 
 
628,286

 
 
2,887,583

 
 
852,721

 
Administration charges
 
(4,908)

 
 
(82,130)

 
 
(532,118)

 
 
(4,599)

 
Contingent sales charges
 
(1,517)

 
 
(18,046)

 
 
(61,413)

 
 
(114)

 
Contract terminations
 
(65,659)

 
 
(2,668,055)

 
 
(9,516,705)

 
 
(3,217)

 
Death benefit payments
 
(5,425)

 
 
(1,253,029)

 
 
(671,767)

 
 
—

 
Flexible withdrawal option payments
 
(9,347)

 
 
(954,790)

 
 
(3,248,295)

 
 
(23,753)

 
Transfers to other contracts
 
(174,980)

 
 
(1,380,883)

 
 
(4,720,580)

 
 
(83,761)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
1,296,842

 
 
(5,728,647)

 
 
(15,863,295)

 
 
737,277

Total increase (decrease)
 
1,145,291

 
 
(6,738,073)

 
 
(21,890,740)

 
 
638,985

Net assets as of December 31, 2018
$
2,144,462

 
$
17,559,360

 
$
83,003,590

 
$
1,312,393

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2030 Class 1 Division
 
Principal LifeTime 2030 Class 2 Division
 
Principal LifeTime 2040 Class 1 Division
 
Principal LifeTime 2040 Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
64,964,505

 
$
82,097

 
$
13,886,121

 
$
120,683

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
88,547

 
 
3,694

 
 
(11,133)

 
 
1,070

 
Total realized gains (losses) on investments
 
2,618,624

 
 
8,745

 
 
536,684

 
 
6,100

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
7,533,535

 
 
46,998

 
 
1,979,817

 
 
36,412

 
Net gains (losses) on investments
 
10,240,706

 
 
59,437

 
 
2,505,368

 
 
43,582

Net increase (decrease) in net assets resulting from operations
 
10,240,706

 
 
59,437

 
 
2,505,368

 
 
43,582

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
8,530,112

 
 
772,926

 
 
514,288

 
 
233,457

 
Administration charges
 
(332,634)

 
 
(623)

 
 
(4,905)

 
 
(558)

 
Contingent sales charges
 
(38,075)

 
 
(38)

 
 
(7,905)

 
 
(37)

 
Contract terminations
 
(5,281,538)

 
 
(5,280)

 
 
(1,081,633)

 
 
(19,963)

 
Death benefit payments
 
(254,056)

 
 
—

 
 
(154,297)

 
 
—

 
Flexible withdrawal option payments
 
(1,178,078)

 
 
(10,545)

 
 
(29,642)

 
 
—

 
Transfers to other contracts
 
(8,186,305)

 
 
(46,221)

 
 
(463,308)

 
 
(308)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(6,740,574)

 
 
710,219

 
 
(1,227,402)

 
 
212,591

Total increase (decrease)
 
3,500,132

 
 
769,656

 
 
1,277,966

 
 
256,173

Net assets as of December 31, 2017
 
68,464,637

 
 
851,753

 
 
15,164,087

 
 
376,856

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
577,821

 
 
23,367

 
 
93,252

 
 
7,263

 
Total realized gains (losses) on investments
 
4,974,375

 
 
56,458

 
 
959,741

 
 
46,339

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(10,456,268)

 
 
(236,837)

 
 
(2,363,896)

 
 
(129,154)

 
Net gains (losses) on investments
 
(4,904,072)

 
 
(157,012)

 
 
(1,310,903)

 
 
(75,552)

Net increase (decrease) in net assets resulting from operations
 
(4,904,072)

 
 
(157,012)

 
 
(1,310,903)

 
 
(75,552)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
3,200,586

 
 
1,231,715

 
 
510,792

 
 
574,001

 
Administration charges
 
(384,195)

 
 
(4,051)

 
 
(5,043)

 
 
(2,587)

 
Contingent sales charges
 
(65,150)

 
 
(405)

 
 
(5,660)

 
 
(1,157)

 
Contract terminations
 
(9,566,699)

 
 
(13,439)

 
 
(860,788)

 
 
(126,888)

 
Death benefit payments
 
—

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(1,332,083)

 
 
(13,796)

 
 
(29,193)

 
 
(3,447)

 
Transfers to other contracts
 
(817,854)

 
 
(96,979)

 
 
(493,219)

 
 
(84,393)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(8,965,395)

 
 
1,103,045

 
 
(883,111)

 
 
355,529

Total increase (decrease)
 
(13,869,467)

 
 
946,033

 
 
(2,194,014)

 
 
279,977

Net assets as of December 31, 2018
$
54,595,170

 
$
1,797,786

 
$
12,970,073

 
$
656,833

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2050 Class 1 Division
 
Principal LifeTime 2050 Class 2 Division
 
Principal LifeTime Strategic Income Class 1 Division
 
Real Estate Securities Class 1 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
9,241,996

 
$
84,066

 
$
16,091,601

 
$
77,553,935

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(13,252)

 
 
3,611

 
 
139,438

 
 
274,282

 
Total realized gains (losses) on investments
 
252,747

 
 
4,202

 
 
475,645

 
 
10,816,801

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
1,665,168

 
 
61,882

 
 
461,286

 
 
(5,487,924)

 
Net gains (losses) on investments
 
1,904,663

 
 
69,695

 
 
1,076,369

 
 
5,603,159

Net increase (decrease) in net assets resulting from operations
 
1,904,663

 
 
69,695

 
 
1,076,369

 
 
5,603,159

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
796,107

 
 
642,804

 
 
1,110,256

 
 
5,625,419

 
Administration charges
 
(4,214)

 
 
(618)

 
 
(40,351)

 
 
(15,384)

 
Contingent sales charges
 
(3,614)

 
 
(22)

 
 
(6,669)

 
 
(31,841)

 
Contract terminations
 
(501,336)

 
 
(11,753)

 
 
(1,164,080)

 
 
(7,500,315)

 
Death benefit payments
 
—

 
 
—

 
 
(90,435)

 
 
(463,650)

 
Flexible withdrawal option payments
 
(37,286)

 
 
—

 
 
(606,580)

 
 
(788,294)

 
Transfers to other contracts
 
(109,338)

 
 
(6,549)

 
 
(1,186,346)

 
 
(4,665,404)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
140,319

 
 
623,862

 
 
(1,984,205)

 
 
(7,839,469)

Total increase (decrease)
 
2,044,982

 
 
693,557

 
 
(907,836)

 
 
(2,236,310)

Net assets as of December 31, 2017
 
11,286,978

 
 
777,623

 
 
15,183,765

 
 
75,317,625

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
71,952

 
 
6,535

 
 
152,873

 
 
279,047

 
Total realized gains (losses) on investments
 
805,456

 
 
67,153

 
 
640,078

 
 
8,547,778

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(1,948,794)

 
 
(182,805)

 
 
(1,344,295)

 
 
(12,652,684)

 
Net gains (losses) on investments
 
(1,071,386)

 
 
(109,117)

 
 
(551,344)

 
 
(3,825,859)

Net increase (decrease) in net assets resulting from operations
 
(1,071,386)

 
 
(109,117)

 
 
(551,344)

 
 
(3,825,859)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
759,700

 
 
295,317

 
 
585,659

 
 
3,833,843

 
Administration charges
 
(4,077)

 
 
(4,219)

 
 
(43,259)

 
 
(15,931)

 
Contingent sales charges
 
(3,669)

 
 
(102)

 
 
(9,056)

 
 
(24,380)

 
Contract terminations
 
(548,824)

 
 
(2,882)

 
 
(1,630,543)

 
 
(6,488,601)

 
Death benefit payments
 
(4,024)

 
 
—

 
 
(290,478)

 
 
(403,096)

 
Flexible withdrawal option payments
 
(40,799)

 
 
(153)

 
 
(595,137)

 
 
(780,979)

 
Transfers to other contracts
 
(654,039)

 
 
(29,842)

 
 
(1,248,458)

 
 
(6,112,221)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(495,732)

 
 
258,119

 
 
(3,231,272)

 
 
(9,991,365)

Total increase (decrease)
 
(1,567,118)

 
 
149,002

 
 
(3,782,616)

 
 
(13,817,224)

Net assets as of December 31, 2018
$
9,719,860

 
$
926,625

 
$
11,401,149

 
$
61,500,401

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate Securities Class 2 Division
 
Rydex Basic Materials Division
 
Rydex Commodities Strategy Division
 
Rydex NASDAQ 100 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
3,951,070

 
$
339,859

 
$
269,630

 
$
581,092

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
2,145

 
 
(2,478)

 
 
(4,211)

 
 
(10,804)

 
Total realized gains (losses) on investments
 
82,729

 
 
5,093

 
 
(3,731)

 
 
65,436

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
62,286

 
 
69,026

 
 
12,981

 
 
146,284

 
Net gains (losses) on investments
 
147,160

 
 
71,641

 
 
5,039

 
 
200,916

Net increase (decrease) in net assets resulting from operations
 
147,160

 
 
71,641

 
 
5,039

 
 
200,916

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
820,956

 
 
48,152

 
 
106,384

 
 
662,863

 
Administration charges
 
(2,262)

 
 
(115)

 
 
(9)

 
 
(1,420)

 
Contingent sales charges
 
(475)

 
 
(6)

 
 
(186)

 
 
(75)

 
Contract terminations
 
(253,463)

 
 
(2,959)

 
 
(29,946)

 
 
(37,422)

 
Death benefit payments
 
—

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(15,181)

 
 
—

 
 
(2,088)

 
 
(960)

 
Transfers to other contracts
 
(2,111,029)

 
 
(16,771)

 
 
(77,512)

 
 
(46,390)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(1,561,454)

 
 
28,301

 
 
(3,357)

 
 
576,596

Total increase (decrease)
 
(1,414,294)

 
 
99,942

 
 
1,682

 
 
777,512

Net assets as of December 31, 2017
 
2,536,776

 
 
439,801

 
 
271,312

 
 
1,358,604

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
17,956

 
 
(3,555)

 
 
9,888

 
 
(20,910)

 
Total realized gains (losses) on investments
 
227,215

 
 
12,146

 
 
10,247

 
 
101,008

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(402,912)

 
 
(113,786)

 
 
(108,846)

 
 
(186,449)

 
Net gains (losses) on investments
 
(157,741)

 
 
(105,195)

 
 
(88,711)

 
 
(106,351)

Net increase (decrease) in net assets resulting from operations
 
(157,741)

 
 
(105,195)

 
 
(88,711)

 
 
(106,351)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
1,216,004

 
 
161,093

 
 
309,624

 
 
954,303

 
Administration charges
 
(5,729)

 
 
(434)

 
 
(253)

 
 
(5,637)

 
Contingent sales charges
 
(490)

 
 
(79)

 
 
(117)

 
 
(1,331)

 
Contract terminations
 
(107,735)

 
 
(2,670)

 
 
(23,285)

 
 
(103,095)

 
Death benefit payments
 
—

 
 
—

 
 
(1,198)

 
 
(2,542)

 
Flexible withdrawal option payments
 
(19,717)

 
 
(365)

 
 
(2,362)

 
 
(3,704)

 
Transfers to other contracts
 
(190,829)

 
 
(1,708)

 
 
(41,430)

 
 
(265,364)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
891,504

 
 
155,837

 
 
240,979

 
 
572,630

Total increase (decrease)
 
733,763

 
 
50,642

 
 
152,268

 
 
466,279

Net assets as of December 31, 2018
$
3,270,539

 
$
490,443

 
$
423,580

 
$
1,824,883

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
541,175,217

 
$
3,651,180

 
$
137,719,871

 
$
3,073,745

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
3,740,916

 
 
50,979

 
 
1,707,546

 
 
64,928

 
Total realized gains (losses) on investments
 
21,998,441

 
 
127,530

 
 
3,300,675

 
 
(16,261)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
43,013,767

 
 
538,177

 
 
7,632,647

 
 
290,776

 
Net gains (losses) on investments
 
68,753,124

 
 
716,686

 
 
12,640,868

 
 
339,443

Net increase (decrease) in net assets resulting from operations
 
68,753,124

 
 
716,686

 
 
12,640,868

 
 
339,443

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
33,722,654

 
 
5,563,270

 
 
7,340,485

 
 
2,622,098

 
Administration charges
 
(3,001,980)

 
 
(8,873)

 
 
(439,968)

 
 
(7,125)

 
Contingent sales charges
 
(393,293)

 
 
(1,379)

 
 
(128,937)

 
 
(567)

 
Contract terminations
 
(54,236,599)

 
 
(249,009)

 
 
(18,577,945)

 
 
(217,385)

 
Death benefit payments
 
(4,342,468)

 
 
(32,880)

 
 
(1,420,103)

 
 
(57,864)

 
Flexible withdrawal option payments
 
(13,534,018)

 
 
(111,544)

 
 
(3,359,004)

 
 
(14,059)

 
Transfers to other contracts
 
(32,119,214)

 
 
(380,178)

 
 
(5,426,108)

 
 
(534,573)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(73,904,918)

 
 
4,779,407

 
 
(22,011,580)

 
 
1,790,525

Total increase (decrease)
 
(5,151,794)

 
 
5,496,093

 
 
(9,370,712)

 
 
2,129,968

Net assets as of December 31, 2017
 
536,023,423

 
 
9,147,273

 
 
128,349,159

 
 
5,203,713

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
8,073,899

 
 
253,956

 
 
2,170,636

 
 
125,568

 
Total realized gains (losses) on investments
 
30,909,114

 
 
673,443

 
 
4,847,423

 
 
206,670

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(68,888,685)

 
 
(1,809,015)

 
 
(12,400,624)

 
 
(621,650)

 
Net gains (losses) on investments
 
(29,905,672)

 
 
(881,616)

 
 
(5,382,565)

 
 
(289,412)

Net increase (decrease) in net assets resulting from operations
 
(29,905,672)

 
 
(881,616)

 
 
(5,382,565)

 
 
(289,412)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
19,032,622

 
 
5,858,093

 
 
5,631,596

 
 
2,147,675

 
Administration charges
 
(3,360,590)

 
 
(28,936)

 
 
(452,025)

 
 
(18,351)

 
Contingent sales charges
 
(314,852)

 
 
(6,747)

 
 
(89,809)

 
 
(1,853)

 
Contract terminations
 
(51,825,702)

 
 
(636,550)

 
 
(15,336,465)

 
 
(300,532)

 
Death benefit payments
 
(4,527,129)

 
 
—

 
 
(999,078)

 
 
(13,800)

 
Flexible withdrawal option payments
 
(13,334,965)

 
 
(226,862)

 
 
(3,390,344)

 
 
(50,317)

 
Transfers to other contracts
 
(19,578,439)

 
 
(127,888)

 
 
(5,362,607)

 
 
(673,142)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(73,909,055)

 
 
4,831,110

 
 
(19,998,732)

 
 
1,089,680

Total increase (decrease)
 
(103,814,727)

 
 
3,949,494

 
 
(25,381,297)

 
 
800,268

Net assets as of December 31, 2018
$
432,208,696

 
$
13,096,767

 
$
102,967,862

 
$
6,003,981

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 1 Division
 
SAM Conservative Growth Portfolio Class 2 Division
 
SAM Flexible Income Portfolio Class 1 Division
 
SAM Flexible Income Portfolio Class 2 Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
98,935,581

 
$
5,812,996

 
$
164,165,581

 
$
4,297,229

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
103,204

 
 
20,611

 
 
3,034,291

 
 
128,544

 
Total realized gains (losses) on investments
 
4,990,397

 
 
121,643

 
 
2,455,649

 
 
(34,136)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
12,066,901

 
 
1,015,640

 
 
5,304,303

 
 
252,324

 
Net gains (losses) on investments
 
17,160,502

 
 
1,157,894

 
 
10,794,243

 
 
346,732

Net increase (decrease) in net assets resulting from operations
 
17,160,502

 
 
1,157,894

 
 
10,794,243

 
 
346,732

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
6,733,464

 
 
2,386,466

 
 
20,050,954

 
 
5,069,721

 
Administration charges
 
(11,967)

 
 
(19,978)

 
 
(253,764)

 
 
(7,661)

 
Contingent sales charges
 
(55,044)

 
 
(651)

 
 
(108,619)

 
 
(1,870)

 
Contract terminations
 
(8,568,406)

 
 
(271,826)

 
 
(16,213,458)

 
 
(776,356)

 
Death benefit payments
 
(1,584,806)

 
 
(42,270)

 
 
(2,132,400)

 
 
(497,285)

 
Flexible withdrawal option payments
 
(893,682)

 
 
(65,476)

 
 
(3,877,179)

 
 
(93,195)

 
Transfers to other contracts
 
(4,995,346)

 
 
(478,617)

 
 
(12,720,115)

 
 
(241,125)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(9,375,787)

 
 
1,507,648

 
 
(15,254,581)

 
 
3,452,229

Total increase (decrease)
 
7,784,715

 
 
2,665,542

 
 
(4,460,338)

 
 
3,798,961

Net assets as of December 31, 2017
 
106,720,296

 
 
8,478,538

 
 
159,705,243

 
 
8,096,190

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
1,245,341

 
 
163,025

 
 
3,635,657

 
 
323,777

 
Total realized gains (losses) on investments
 
8,374,957

 
 
522,418

 
 
3,301,827

 
 
244,072

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(17,095,687)

 
 
(1,585,855)

 
 
(11,650,339)

 
 
(952,659)

 
Net gains (losses) on investments
 
(7,475,389)

 
 
(900,412)

 
 
(4,712,855)

 
 
(384,810)

Net increase (decrease) in net assets resulting from operations
 
(7,475,389)

 
 
(900,412)

 
 
(4,712,855)

 
 
(384,810)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
10,713,365

 
 
3,712,822

 
 
7,441,334

 
 
7,557,241

 
Administration charges
 
(10,820)

 
 
(39,418)

 
 
(268,839)

 
 
(30,683)

 
Contingent sales charges
 
(117,897)

 
 
(1,423)

 
 
(89,915)

 
 
(3,465)

 
Contract terminations
 
(18,239,752)

 
 
(368,326)

 
 
(15,598,980)

 
 
(332,473)

 
Death benefit payments
 
(604,715)

 
 
—

 
 
(1,753,851)

 
 
(4,891)

 
Flexible withdrawal option payments
 
(988,809)

 
 
(70,330)

 
 
(3,888,060)

 
 
(194,691)

 
Transfers to other contracts
 
(4,209,807)

 
 
(62,565)

 
 
(13,987,368)

 
 
(2,190,264)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(13,458,435)

 
 
3,170,760

 
 
(28,145,679)

 
 
4,800,774

Total increase (decrease)
 
(20,933,824)

 
 
2,270,348

 
 
(32,858,534)

 
 
4,415,964

Net assets as of December 31, 2018
$
85,786,472

 
$
10,748,886

 
$
126,846,709

 
$
12,512,154

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
62,692,692

 
$
2,708,237

 
$
99,558,356

 
$
1,062,896

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(40,639)

 
 
5,280

 
 
498,076

 
 
213

 
Total realized gains (losses) on investments
 
4,140,609

 
 
78,527

 
 
102,246

 
 
9,738

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
7,946,279

 
 
589,608

 
 
354,440

 
 
(1,086)

 
Net gains (losses) on investments
 
12,046,249

 
 
673,415

 
 
954,762

 
 
8,865

Net increase (decrease) in net assets resulting from operations
 
12,046,249

 
 
673,415

 
 
954,762

 
 
8,865

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
4,747,721

 
 
2,065,697

 
 
12,313,866

 
 
2,685,702

 
Administration charges
 
(10,048)

 
 
(4,323)

 
 
(328,473)

 
 
(2,126)

 
Contingent sales charges
 
(58,530)

 
 
(556)

 
 
(68,965)

 
 
(3,669)

 
Contract terminations
 
(7,851,714)

 
 
(221,015)

 
 
(10,300,109)

 
 
(1,939,474)

 
Death benefit payments
 
(115,748)

 
 
—

 
 
(1,074,986)

 
 
—

 
Flexible withdrawal option payments
 
(424,124)

 
 
(26,399)

 
 
(3,240,521)

 
 
(22,962)

 
Transfers to other contracts
 
(4,643,457)

 
 
(117,141)

 
 
(10,447,820)

 
 
(316,538)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(8,355,900)

 
 
1,696,263

 
 
(13,147,008)

 
 
400,933

Total increase (decrease)
 
3,690,349

 
 
2,369,678

 
 
(12,192,246)

 
 
409,798

Net assets as of December 31, 2017
 
66,383,041

 
 
5,077,915

 
 
87,366,110

 
 
1,472,694

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
499,548

 
 
70,988

 
 
573,009

 
 
32,441

 
Total realized gains (losses) on investments
 
4,338,854

 
 
366,931

 
 
(603,743)

 
 
(8,905)

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(10,566,310)

 
 
(1,091,961)

 
 
(333,574)

 
 
(11,559)

 
Net gains (losses) on investments
 
(5,727,908)

 
 
(654,042)

 
 
(364,308)

 
 
11,977

Net increase (decrease) in net assets resulting from operations
 
(5,727,908)

 
 
(654,042)

 
 
(364,308)

 
 
11,977

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
3,485,914

 
 
1,916,670

 
 
11,769,693

 
 
2,745,507

 
Administration charges
 
(9,084)

 
 
(17,772)

 
 
(351,958)

 
 
(7,925)

 
Contingent sales charges
 
(57,502)

 
 
(1,161)

 
 
(46,233)

 
 
(543)

 
Contract terminations
 
(8,698,002)

 
 
(205,718)

 
 
(8,040,179)

 
 
(110,742)

 
Death benefit payments
 
(238,987)

 
 
(3,917)

 
 
(930,051)

 
 
(808)

 
Flexible withdrawal option payments
 
(460,126)

 
 
(31,603)

 
 
(3,064,803)

 
 
(44,428)

 
Transfers to other contracts
 
(3,728,822)

 
 
(61,763)

 
 
(12,569,782)

 
 
(595,175)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(9,706,609)

 
 
1,594,736

 
 
(13,233,313)

 
 
1,985,886

Total increase (decrease)
 
(15,434,517)

 
 
940,694

 
 
(13,597,621)

 
 
1,997,863

Net assets as of December 31, 2018
$
50,948,524

 
$
6,018,609

 
$
73,768,489

 
$
3,470,557

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Class 1 Division
 
SmallCap Class 2 Division
 
T. Rowe Price Blue Chip Growth Portfolio II Division
 
T. Rowe Price Health Sciences Portfolio II Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
116,092,220

 
$
870,672

 
$
16,507,067

 
$
24,917,812

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(1,062,459)

 
 
(8,827)

 
 
(286,678)

 
 
(398,096)

 
Total realized gains (losses) on investments
 
4,737,378

 
 
6,025

 
 
1,414,233

 
 
2,947,066

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
8,206,537

 
 
101,266

 
 
4,462,163

 
 
3,529,025

 
Net gains (losses) on investments
 
11,881,456

 
 
98,464

 
 
5,589,718

 
 
6,077,995

Net increase (decrease) in net assets resulting from operations
 
11,881,456

 
 
98,464

 
 
5,589,718

 
 
6,077,995

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
5,510,921

 
 
366,153

 
 
3,027,969

 
 
3,556,516

 
Administration charges
 
(106,470)

 
 
(1,266)

 
 
(18,793)

 
 
(11,638)

 
Contingent sales charges
 
(42,393)

 
 
(163)

 
 
(9,702)

 
 
(18,918)

 
Contract terminations
 
(12,189,630)

 
 
(55,799)

 
 
(1,227,767)

 
 
(2,394,010)

 
Death benefit payments
 
(616,602)

 
 
—

 
 
(38,345)

 
 
(65,568)

 
Flexible withdrawal option payments
 
(1,512,201)

 
 
(17,484)

 
 
(202,518)

 
 
(271,615)

 
Transfers to other contracts
 
(6,932,169)

 
 
(246,915)

 
 
(1,999,392)

 
 
(3,483,627)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(15,888,544)

 
 
44,526

 
 
(468,548)

 
 
(2,688,860)

Total increase (decrease)
 
(4,007,088)

 
 
142,990

 
 
5,121,170

 
 
3,389,135

Net assets as of December 31, 2017
 
112,085,132

 
 
1,013,662

 
 
21,628,237

 
 
28,306,947

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(1,140,623)

 
 
(12,575)

 
 
(341,594)

 
 
(413,796)

 
Total realized gains (losses) on investments
 
9,745,347

 
 
110,830

 
 
3,202,377

 
 
3,225,538

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(19,692,302)

 
 
(307,735)

 
 
(2,838,061)

 
 
(2,779,049)

 
Net gains (losses) on investments
 
(11,087,578)

 
 
(209,480)

 
 
22,722

 
 
32,693

Net increase (decrease) in net assets resulting from operations
 
(11,087,578)

 
 
(209,480)

 
 
22,722

 
 
32,693

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
5,763,689

 
 
757,553

 
 
4,530,216

 
 
3,041,982

 
Administration charges
 
(112,344)

 
 
(2,935)

 
 
(21,089)

 
 
(12,909)

 
Contingent sales charges
 
(31,560)

 
 
(147)

 
 
(13,108)

 
 
(19,150)

 
Contract terminations
 
(10,348,221)

 
 
(38,676)

 
 
(1,889,447)

 
 
(2,760,346)

 
Death benefit payments
 
(734,469)

 
 
—

 
 
(153,394)

 
 
(128,291)

 
Flexible withdrawal option payments
 
(1,517,808)

 
 
(18,943)

 
 
(228,100)

 
 
(279,887)

 
Transfers to other contracts
 
(7,136,275)

 
 
(208,655)

 
 
(2,929,579)

 
 
(3,101,664)

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
(14,116,988)

 
 
488,197

 
 
(704,501)

 
 
(3,260,265)

Total increase (decrease)
 
(25,204,566)

 
 
278,717

 
 
(681,779)

 
 
(3,227,572)

Net assets as of December 31, 2018
$
86,880,566

 
$
1,292,379

 
$
20,946,458

 
$
25,079,375

 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Templeton Global Bond VIP Class 4 Division
 
Templeton Growth VIP Class 2 Division
 
The Merger Fund Division
 
TOPS Aggressive Growth ETF Portfolio Investor Class Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
1,185,140

 
$
853,557

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(20,464)

 
 
6,783

 
 
(29)

 
 
—

 
Total realized gains (losses) on investments
 
(3,741)

 
 
17,515

 
 
—

 
 
—

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
16,653

 
 
117,643

 
 
28

 
 
—

 
Net gains (losses) on investments
 
(7,552)

 
 
141,941

 
 
(1)

 
 
—

Net increase (decrease) in net assets resulting from operations
 
(7,552)

 
 
141,941

 
 
(1)

 
 
—

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
1,018,206

 
 
6,737

 
 
6,000

 
 
—

 
Administration charges
 
(885)

 
 
—

 
 
—

 
 
—

 
Contingent sales charges
 
(168)

 
 
(97)

 
 
—

 
 
—

 
Contract terminations
 
(42,932)

 
 
(96,379)

 
 
—

 
 
—

 
Death benefit payments
 
—

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(10,804)

 
 
(8,038)

 
 
—

 
 
—

 
Transfers to other contracts
 
(114,625)

 
 
(7,081)

 
 
—

 
 
—

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
848,792

 
 
(104,858)

 
 
6,000

 
 
—

Total increase (decrease)
 
841,240

 
 
37,083

 
 
5,999

 
 
—

Net assets as of December 31, 2017
 
2,026,380

 
 
890,640

 
 
5,999

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(28,724)

 
 
9,783

 
 
238

 
 
54

 
Total realized gains (losses) on investments
 
2,201

 
 
76,460

 
 
2,026

 
 
311

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
35,555

 
 
(222,995)

 
 
3,223

 
 
(2,425)

 
Net gains (losses) on investments
 
9,032

 
 
(136,752)

 
 
5,487

 
 
(2,060)

Net increase (decrease) in net assets resulting from operations
 
9,032

 
 
(136,752)

 
 
5,487

 
 
(2,060)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
2,819,252

 
 
12,661

 
 
168,653

 
 
21,774

 
Administration charges
 
(2,746)

 
 
—

 
 
(305)

 
 
(13)

 
Contingent sales charges
 
(517)

 
 
(1)

 
 
—

 
 
—

 
Contract terminations
 
(124,566)

 
 
(15,060)

 
 
—

 
 
—

 
Death benefit payments
 
—

 
 
(4,504)

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
(23,698)

 
 
(9,138)

 
 
(160)

 
 
—

 
Transfers to other contracts
 
(197,783)

 
 
(1,222)

 
 
(135)

 
 
—

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
2,469,942

 
 
(17,264)

 
 
168,053

 
 
21,761

Total increase (decrease)
 
2,478,974

 
 
(154,016)

 
 
173,540

 
 
19,701

Net assets as of December 31, 2018
$
4,505,354

 
$
736,624

 
$
179,539

 
$
19,701

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations June 11, 2018.
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOPS Balanced ETF Portfolio Investor Class Division (1)
 
TOPS Conservative ETF Portfolio Investor Class Division (1)
 
TOPS Growth ETF Portfolio Investor Class Division (1)
 
TOPS Moderate Growth ETF Portfolio Investor Class Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
—

 
$
—

 
$
—

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
—

 
 
—

 
 
—

 
 
—

 
Total realized gains (losses) on investments
 
—

 
 
—

 
 
—

 
 
—

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
—

 
 
—

 
 
—

 
 
—

 
Net gains (losses) on investments
 
—

 
 
—

 
 
—

 
 
—

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 as of December 31, 2017
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
245

 
 
—

 
 
31

 
 
(15)

 
Total realized gains (losses) on investments
 
471

 
 
—

 
 
(246)

 
 
—

 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(2,641)

 
 
—

 
 
(121)

 
 
(263)

 
Net gains (losses) on investments
 
(1,925)

 
 
—

 
 
(336)

 
 
(278)

Net increase (decrease) in net assets resulting from operations
 
(1,925)

 
 
—

 
 
(336)

 
 
(278)

Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
28,260

 
 
—

 
 
42,867

 
 
11,418

 
Administration charges
 
—

 
 
—

 
 
(4)

 
 
—

 
Contingent sales charges
 
—

 
 
—

 
 
—

 
 
—

 
Contract terminations
 
—

 
 
—

 
 
—

 
 
—

 
Death benefit payments
 
—

 
 
—

 
 
—

 
 
—

 
Flexible withdrawal option payments
 
—

 
 
—

 
 
—

 
 
—

 
Transfers to other contracts
 
(78)

 
 
—

 
 
(8,728)

 
 
—

 
Annuity payments
 
—

 
 
—

 
 
—

 
 
—

Increase (decrease) in net assets from policy related transactions
 
28,182

 
 
—

 
 
34,135

 
 
11,418

Total increase (decrease)
 
26,257

 
 
—

 
 
33,799

 
 
11,140

Net assets as of December 31, 2018
$
26,257

 
$
—

 
$
33,799

 
$
11,140

 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations June 11, 2018.
See accompanying notes.


Principal Life Insurance Company
Separate Account B
 
 
 
 
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
Years ended December 31, 2018 and 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VanEck Global Hard Assets
Class S Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets as of January 1, 2017
$
8,016,516

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(89,672)

 
 
 
 
 
 
 
 
 
 
Total realized gains (losses) on investments
 
(676,405)

 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
441,557

 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(324,520)

 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(324,520)

 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
1,072,954

 
 
 
 
 
 
 
 
 
 
Administration charges
 
(684)

 
 
 
 
 
 
 
 
 
 
Contingent sales charges
 
(3,339)

 
 
 
 
 
 
 
 
 
 
Contract terminations
 
(483,605)

 
 
 
 
 
 
 
 
 
 
Death benefit payments
 
(8,205)

 
 
 
 
 
 
 
 
 
 
Flexible withdrawal option payments
 
(43,897)

 
 
 
 
 
 
 
 
 
 
Transfers to other contracts
 
(2,387,285)

 
 
 
 
 
 
 
 
 
 
Annuity payments
 
—

 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets from policy related transactions
 
(1,854,061)

 
 
 
 
 
 
 
 
 
Total increase (decrease)
 
(2,178,581)

 
 
 
 
 
 
 
 
 
Net assets as of December 31, 2017
 
5,837,935

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
(74,948)

 
 
 
 
 
 
 
 
 
 
Total realized gains (losses) on investments
 
(314,443)

 
 
 
 
 
 
 
 
 
 
Change in net unrealized appreciation (depreciation)
 
 
 
 
 
 
 
 
 
 
 
 
of investments
 
(1,227,029)

 
 
 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
(1,616,420)

 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
(1,616,420)

 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Purchase payments, less sales charges, per payment fees and
 
 
 
 
 
 
 
 
 
 
 
 
applicable premium taxes
 
822,000

 
 
 
 
 
 
 
 
 
 
Administration charges
 
(865)

 
 
 
 
 
 
 
 
 
 
Contingent sales charges
 
(2,973)

 
 
 
 
 
 
 
 
 
 
Contract terminations
 
(485,054)

 
 
 
 
 
 
 
 
 
 
Death benefit payments
 
(76,148)

 
 
 
 
 
 
 
 
 
 
Flexible withdrawal option payments
 
(37,430)

 
 
 
 
 
 
 
 
 
 
Transfers to other contracts
 
(545,173)

 
 
 
 
 
 
 
 
 
 
Annuity payments
 
—

 
 
 
 
 
 
 
 
 
Increase (decrease) in net assets from policy related transactions
 
(325,643)

 
 
 
 
 
 
 
 
 
Total increase (decrease)
 
(1,942,063)

 
 
 
 
 
 
 
 
 
Net assets as of December 31, 2018
$
3,895,872

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


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, 2018, contractholder investment options included the following diversified open–end management investment companies:

Principal Variable Contracts Funds, Inc. – Class 1: (1)
Core Plus Bond Account
Diversified Balanced Account (10)
Diversified International Account
Equity Income Account
Government & High Quality Bond Account
Income Account (6)
International Emerging Markets Account
LargeCap Growth Account
LargeCap Growth Account I
LargeCap S&P 500 Index Account
MidCap Account
Multi-Asset Income Account (8)
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
Strategic Asset Management (“SAM”) Portfolios:
Balanced Portfolio
Conservative Balanced Portfolio
Conservative Growth Portfolio
Flexible Income Portfolio
Strategic Growth Portfolio
Principal Variable Contracts Funds, Inc. – Class 2: (1)
Core Plus Bond Account (6)
Diversified Balanced Account
Diversified Balanced Managed Volatility Account
Diversified Balanced Volatility Control Account (9)
Diversified Growth Account
Diversified Growth Managed Volatility Account
Diversified Growth Volatility Control Account (9)
Diversified Income Account
Diversified International Account (4)
Equity Income Account (4)
Government & High Quality Bond Account (4)
Income Account (6)
International Emerging Markets Account (6)


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


LargeCap Growth Account (4)
LargeCap Growth Account I (6)
LargeCap S&P 500 Index Account (6)
Multi-Asset Income Account (8)
Principal Capital Appreciation Account (4)
Principal LifeTime 2020 Account (6)
Principal LifeTime 2030 Account (6)
Principal LifeTime 2040 Account (6)
Principal LifeTime 2050 Account (6)
Real Estate Securities Account (4)
Short-Term Income Account (4)
SmallCap Account (5)
SAM Portfolios:
Balanced Portfolio (4)
Conservative Balanced Portfolio (4)
Conservative Growth Portfolio (4)
Flexible Income Portfolio (4)
Strategic Growth Portfolio (4)
AllianceBernstein Variable Product Series Fund, Inc.:
Small Cap Growth Portfolio – Class A
Small/Mid Cap Value Portfolio – Class A
Alps/Red Rocks Listed Private Equity – Class III (6)
American Century Investments®:
VP Capital Appreciation Fund – Class I (2)
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
American Funds Insurance Series:
Asset Allocation Fund – Class 2 (8)
Asset Allocation Fund – Class 4 (6)
Blue Chip Income and Growth Fund – Class 2 (8)
Blue Chip Income and Growth Fund – Class 4 (4)
Global Small Capitalization Fund – Class 2 (3)
Global Small Capitalization Fund – Class 4 (4)
High-Income Bond Fund – Class 2 (3)
Managed Risk Asset Allocation Fund – Class P2 (4)
Managed Risk Growth Fund – Class P2 (4)
Managed Risk International Fund – Class P2 (4)
New World Fund – Class 2 (3)
New World Fund – Class 4 (4)
BlackRock Variable Insurance Funds:
Advantage U.S Total Market V.I. Fund – Class III (6)
Global Allocation V.I. Fund – Class III (6)
iShares Dynamic Allocation V.I. – Class III (6)


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017



Calvert VP Portfolio:
EAFE International Index – Class F (4)
Investment Grade Bond – Class F (11)
Russell 2000 Small Cap Index – Class F (4)
S&P MidCap 400 Index – Class F (4)
ClearBridge Variable Small Cap Growth Portfolio – Class II (6)
Columbia Variable Portfolio:
Limited Duration Credit – Class 2 (6)
Small Cap Value – Class 2 (6)
Delaware VIP® Trust Series:
Limited Term Diversified Income – Service Class (6)
Small Cap Value – Service Class
Dreyfus Investment Portfolios:
MidCap Stock Portfolio – Service Shares (6)
Technology Growth Portfolio – Service Shares
DWS Variable Series II:
Alternative Asset Allocation VIP – Class B (4) (12)
Equity 500 Index VIP – Class B2 (4) (13)
Small Mid Cap Value VIP – Class B (14)
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 (7)
Government Money Market Portfolio – Service Class 2 (7)
Growth Portfolio – Service Class
Growth Portfolio – Service Class 2
Mid Cap Portfolio – Service Class (3)
Mid Cap Portfolio – Service Class 2
Overseas Portfolio – Service Class 2
Franklin Templeton Variable Insurance Products Trust:
Franklin Global Real Estate VIP Fund – Class 2 (4)
Franklin Income VIP – Class 4 (11)
Franklin Rising Dividends VIP Fund – Class 4 (4)
Franklin Small Cap Value VIP Fund – Class 2
Templeton Global Bond VIP Fund – Class 4 (4)
Templeton Growth VIP Fund – Class 2
Goldman Sachs Variable Insurance Trust:
Mid Cap Value Fund – Institutional Shares
Mid Cap Value Fund – Service Shares (4)
Multi-Strategy Alternatives Portfolio – Service Shares (6)
Small Cap Equity Insights Fund – Institutional Shares
Small Cap Equity Insights Fund – Service Shares (4)
Guggenheim Investments Variable Insurance Funds:
Floating Rate Strategies – Series F (4)
Global Managed Futures Strategy Fund (4)
Long Short Equity Fund (4)
Multi-Hedge Strategies Fund (4)


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017



Invesco V.I. Fund:
American Franchise Fund – Series I Shares
Balanced-Risk Allocation Fund – Series II Shares (4)
Core Equity Fund – Series I Shares
Health Care Fund – Series I Shares (15)
Health Care Fund – Series II Shares (4) (16)
International Growth Fund – Series I Shares
International Growth Fund – Series II Shares (4)
Mid Cap Growth Fund – Series I Shares
Small Cap Equity Fund – Series I Shares
Technology Fund – Series I Shares
Value Opportunities Fund – Series I Shares
Janus Henderson Series:
Enterprise Portfolio – Service Shares
Flexible Bond Portfolio – Service Shares (4)
MFS®:
International Value Portfolio – Service Class (4)
New Discovery Portfolio – Service Class
Utilities Series – Service Class
Value Series – Service Class
Neuberger Berman Advisors Management Trust:
Large Cap Value Portfolio – Class I
Mid Cap Growth Portfolio – Class S (6)
Sustainable Equity Portfolio – Class I (17)
Sustainable Equity Portfolio – Class S (11)
Oppenheimer Main Street Small Cap Fund®/VA – Service Shares
PIMCO Variable Insurance Trust:
All Asset Portfolio – Administrative Class
All Asset Portfolio – Advisor Class (6)
Commodity Real Return Strategy Portfolio – Class M (6)
High Yield Portfolio – Administrative Class
Low Duration Portfolio – Advisor Class (6)
Total Return Portfolio – Administrative Class
Rydex V.I. Fund:
Basic Materials Fund (6)
Commodities Strategy Fund (4)
NASDAQ 100 Fund (4)
T. Rowe Price Equity Series, Inc.:
Blue Chip Growth Portfolio – II
Health Sciences Portfolio – II
The Merger Fund VL (6)
TOPS Managed Risk Series:
Aggressive Growth ETF Portfolio Investor Class (11)
Balanced ETF Portfolio Investor Class (11)
Conservative ETF Portfolio Investor Class (11)
Growth ETF Portfolio Investor Class (11)
Moderate Growth ETF Portfolio Investor Class (11)
VanEck VIP Global Hard Assets Fund – Class S Shares

(1)    Organized by Principal Life.
(2)
Commencement of operations, April 24, 2014.
(3)
Commencement of operations, May 17, 2014.
(4)
Commencement of operations, November 10, 2014.


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


(5)
Commencement of operations, April 17, 2015.
(6)
Commencement of operations, May 18, 2015.
(7)
Commencement of operations, February 8, 2016.
(8)
Commencement of operations, May 23, 2016.
(9)
Commencement of operations, April 6, 2017.
(10)
Commencement of operations, May 26, 2017.
(11)
Commencement of operations, June 11, 2018.
(12) Represented the operations of Deutsche Alternative Asset Allocation Class B Division until October 13, 2018.
(13) Represented the operations of Deutsche Equity 500 Index Class B2 Division until October 13, 2018.
(14) Represented the operations of Deutsche Small Mid Cap Value Class B Division until October 13, 2018.
(15) Represented the operations of Invesco Global Health Care Series I Division until June 9, 2018.
(16) Represented the operations of Invesco Global Health Care Series II Division until June 9, 2018.
(17) Represented the operations of Neuberger Berman AMT Socially Responsive Class I Division until June 9, 2018.

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

During 2018, the following divisions were liquidated and subsequently reinvested:

Date
 
Liquidation Division
 
Reinvested Division
Transferred Assets
August 18, 2018
 
BlackRock iShares Alternative Strategies
    Class III
 
Fidelity VIP Government Money Market Initial
    Class
$
619,125
August 18, 2018
 
BlackRock iShares Alternative Strategies
    Class III
 
Fidelity VIP Government Money Market Service
    Class 2
 
212,414
March 16, 2018
 
BlackRock iShares Dynamic Fixed Income
    Class III
 
Fidelity VIP Government Money Market Initial
    Class
 
654,649
March 16, 2018
 
BlackRock iShares Dynamic Fixed Income
    Class III
 
Fidelity VIP Government Money Market Service
    Class 2
 
71,068
March 16, 2018
 
BlackRock iShares Equity Appreciation
    Class III
 
Fidelity VIP Government Money Market Initial
    Class
 
817,330
March 16, 2018
 
BlackRock iShares Equity Appreciation
    Class III
 
Fidelity VIP Government Money Market Service
    Class 2
 
60,237
October 13, 2018
 
LargeCap Value Class 1
 
Equity Income Class 1
 
69,620,117
October 13, 2018
 
LargeCap Value Class 2
 
Equity Income Class 2
 
728,141

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;
•
Principal® Investment Plus Variable Annuity;
•
Principal® Investment Plus Variable Annuity with Premium Payment Credit Rider;
•
Principal® Lifetime Income Solutions;
•
Principal® Lifetime Income Solutions II;
•
Principal® Pivot Series Variable Annuity;
•
Principal® Pivot Series Variable Annuity with Liquidity Max Rider;
•
Principal® Pivot Series Variable Annuity v2;
•
Principal® Pivot Series Variable Annuity v3;


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


•
The Principal® Variable Annuity and
•
The Principal® Variable Annuity with Purchase Payment Credit 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 at any time. 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, 2018. Net realized capital gains and losses on sales of investments are determined on the basis of specific identification under the first-in, first-out 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.

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. 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.

•
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.



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


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.

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.

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


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


administrative fee of up to 0.15% of the asset value of each division. Currently, Principal Life is charging an annual rate of 0.15% of the asset value of each contract. This charge is deducted from the daily unit value. The product also contains an optional premium payment credit rider, which charges an annual rate of 0.60%. For electing participants, the rider is deducted from the daily unit value. For contracts with the premium payment credit rider, the maximum surrender charge is 8.00% from withdrawals made during the first eight years.

Principal® Lifetime Income Solutions – 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.

Principal® Lifetime Income Solutions II – 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.

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.

Principal® Pivot Series Variable Annuity v2 – 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. 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.

Principal® Pivot Series Variable Annuity v3 – 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 0.60% 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 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


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


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.

During the year ended December 31, 2018, investment advisory and management fees were paid indirectly to Principal Global Investors, LLC (“Manager”) (wholly owned by Principal Financial Services, Inc.) in its capacity as advisor to Principal Variable Contracts Funds, Inc. 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. 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 Principal LifeTime Accounts do not pay investment advisory and management fees.

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
 
Thereafter
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
 
Thereafter
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Assets of Accounts
 
First $500 million
 
Next $500 million
 
Next $1 billion
 
Next $1 billion
 
Over $3 billion
LargeCap Growth Account
 
0.68%
 
 
0.63%
 
 
0.61%
 
 
0.56%
 
 
0.51%


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
Net Assets of Accounts
 
(in millions)
 
First $200
 
Next $300
 
Over $500
Short-Term Income Account
0.50%
 
0.45%
 
0.40%
 
 
 
 
 
 
 
Net Assets of Accounts
 
 
 
(in millions)
 
 
 
First $500
 
Over $500
 
 
Principal Capital Appreciation Account
0.625%
 
0.500%
 
 
 
 
 
 
 
 
 
Net Assets of Accounts
 
 
 
(in millions)
 
 
 
First $2,000
 
Over $2,000
 
 
Government & High Quality Bond Account
0.50%
 
0.45%
 
 
Income Account
0.50
 
0.45
 
 

 
All Net Assets
Diversified Balanced Account
0.05%
Diversified Balanced Managed Volatility Account
0.05
Diversified Balanced Volatility Control Account
0.12
Diversified Growth Account
0.05
Diversified Growth Managed Volatility Account
0.05
Diversified Growth Volatility Control Account
0.12
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 expenses (including acquired fund fees and expenses, but excluding interest expense, expenses related to fund investments, 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, 2018 through December 31, 2018
 
Class 1
 
Class 2
 
Expiration
SAM Balanced Portfolio
0.86%
 
1.11%
 
April 30, 2019
SAM Conservative Balanced Portfolio
0.84
 
1.09
 
April 30, 2019
SAM Conservative Growth Portfolio
0.99
 
1.24
 
April 30, 2019
SAM Strategic Growth Portfolio
0.99
 
1.24
 
April 30, 2019

The Manager has contractually agreed to limit certain of the Separate Account’s management and investment advisory fees. The expense limit will reduce the Separate Account’s management and investment advisory fees by the following amounts:
 
All Classes
Expiration
LargeCap Growth Account I
0.016%
April 30, 2019



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


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, 2018 through December 31, 2018
 
Class 1
 
Class 2
 
Expiration
Diversified Balanced Managed Volatility Account
N/A
 
0.31%
 
April 30, 2019
Diversified Balanced Volatility Control Account
N/A
 
0.39
 
April 30, 2019
Diversified Growth Managed Volatility Account
N/A
 
0.31
 
April 30, 2019
Diversified Growth Volatility Control Account
N/A
 
0.39
 
April 30, 2019
International Emerging Markets Account
1.35%
 
1.60
 
April 30, 2019
Multi-Asset Income Account
0.08
 
0.33
 
April 30, 2019

The Manager has contractually agreed to reduce the Short-Term Income Account’s expenses by 0.01% through the period ended April 30, 2019.

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
 
Class 2
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.


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


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, 2018:
 
 
2018
Division
 
Purchases
 
Sales
 
 
 
 
 
 
 
AllianceBernstein Small Cap Growth Class A
 
$
1,306,130

 
$
1,331,667

 
 
 
 
 
 
 
AllianceBernstein Small/Mid Cap Value Class A
 
$
1,037,355

 
$
878,608

 
 
 
 
 
 
 
Alps/Red Rocks Listed Private Equity Class III
 
$
169,347

 
$
18,401

 
 
 
 
 
 
 
American Century VP Capital Appreciation Class I
 
$
131,675

 
$
515,732

 
 
 
 
 
 
 
American Century VP Income & Growth Class I
 
$
1,172,479

 
$
1,562,638

 
 
 
 
 
 
 
American Century VP Inflation Protection Class II
 
$
5,659,122

 
$
11,564,901

 
 
 
 
 
 
 
American Century VP Mid Cap Value Class II
 
$
1,740,458

 
$
2,147,206

 
 
 
 
 
 
 
American Century VP Ultra Class I
 
$
740,300

 
$
726,620

 
 
 
 
 
 
 
American Century VP Ultra Class II
 
$
6,590,738

 
$
11,314,767

 
 
 
 
 
 
 
American Century VP Value Class II
 
$
980,608

 
$
2,745,345

 
 
 
 
 
 
 
American Funds Insurance Series Asset Allocation Fund Class 2
 
$
1,336,925

 
$
444,904

 
 
 
 
 
 
 
American Funds Insurance Series Asset Allocation Fund Class 4
 
$
2,316,003

 
$
97,117

 
 
 
 
 
 
 
American Funds Insurance Series Blue Chip Income and Growth Class 2
 
$
1,267,643

 
$
845,808

 
 
 
 
 
 
 
American Funds Insurance Series Blue Chip Income and Growth Class 4
 
$
2,565,273

 
$
510,302

 
 
 
 
 
 
 
American Funds Insurance Series Global Small Capitalization Fund Class 2
 
$
611,053

 
$
278,498

 
 
 
 
 
 
 
American Funds Insurance Series Global Small Capitalization Fund Class 4
 
$
706,359

 
$
251,010

 
 
 
 
 
 
 
American Funds Insurance Series High-Income Bond Class 2
 
$
213,668

 
$
352,676

 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk Asset Allocation Fund Class P2
 
$
491,618

 
$
83,787

 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk Growth Fund Class P2
 
$
1,060,507

 
$
84,367

 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk International Fund Class P2
 
$
50,200

 
$
16,023

 
 
 
 
 
 
 
American Funds Insurance Series New World Fund Class 2
 
$
847,438

 
$
938,222

 
 
 
 
 
 
 
American Funds Insurance Series New World Fund Class 4
 
$
664,667

 
$
85,497

 
 
 
 
 
 
 
BlackRock Advantage U.S. Total Market Class III
 
$
899,459

 
$
23,493

 
 
 
 
 
 
 
BlackRock Global Allocation Class III
 
$
768,081

 
$
198,888

 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
2018
Division
 
Purchases
 
Sales
 
 
 
 
 
 
 
BlackRock iShares Dynamic Allocation Class III
 
$
349,194

 
$
19,089

 
 
 
 
 
 
 
Calvert EAFE International Index Class F
 
$
614,169

 
$
73,926

 
 
 
 
 
 
 
Calvert Investment Grade Bond Portfolio Class F
 
$
167,588

 
$
1,141

 
 
 
 
 
 
 
Calvert Russell 2000 Small Cap Index Class F
 
$
1,320,643

 
$
302,760

 
 
 
 
 
 
 
Calvert S&P MidCap 400 Index Class F
 
$
1,282,888

 
$
270,843

 
 
 
 
 
 
 
ClearBridge Small Cap Growth Class II
 
$
1,027,329

 
$
80,004

 
 
 
 
 
 
 
Columbia Limited Duration Credit Class 2
 
$
55,329

 
$
69,866

 
 
 
 
 
 
 
Columbia Small Cap Value Class 2
 
$
349,225

 
$
47,946

 
 
 
 
 
 
 
Core Plus Bond Class 1
 
$
14,237,092

 
$
30,185,773

 
 
 
 
 
 
 
Core Plus Bond Class 2
 
$
483,822

 
$
277,270

 
 
 
 
 
 
 
Delaware Limited Term Diversified Income Service Class
 
$
129,895

 
$
50,516

 
 
 
 
 
 
 
Delaware Small Cap Value Service Class
 
$
784,177

 
$
674,632

 
 
 
 
 
 
 
Diversified Balanced Class 1
 
$
1,778,845

 
$
4,344,338

 
 
 
 
 
 
 
Diversified Balanced Class 2
 
$
102,256,918

 
$
192,085,467

 
 
 
 
 
 
 
Diversified Balanced Managed Volatility Class 2
 
$
20,278,502

 
$
26,149,237

 
 
 
 
 
 
 
Diversified Balanced Volatility Control Class 2
 
$
38,133,895

 
$
4,754,015

 
 
 
 
 
 
 
Diversified Growth Class 2
 
$
338,758,014

 
$
500,095,889

 
 
 
 
 
 
 
Diversified Growth Managed Volatility Class 2
 
$
45,313,965

 
$
44,111,105

 
 
 
 
 
 
 
Diversified Growth Volatility Control Class 2
 
$
252,804,079

 
$
18,230,765

 
 
 
 
 
 
 
Diversified Income Class 2
 
$
65,543,195

 
$
79,568,972

 
 
 
 
 
 
 
Diversified International Class 1
 
$
10,380,735

 
$
22,594,182

 
 
 
 
 
 
 
Diversified International Class 2
 
$
708,408

 
$
46,092

 
 
 
 
 
 
 
Dreyfus IP MidCap Stock Service Shares
 
$
387,786

 
$
13,917

 
 
 
 
 
 
 
Dreyfus IP Technology Growth Service Shares
 
$
2,454,040

 
$
3,544,771

 
 
 
 
 
 
 
DWS Alternative Asset Allocation Class B
 
$
9,939

 
$
8,412

 
 
 
 
 
 
 
DWS Equity 500 Index Class B2
 
$
874,580

 
$
244,507

 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
2018
Division
 
Purchases
 
Sales
DWS Small Mid Cap Value Class B
 
$
480,737

 
$
183,676

 
 
 
 
 
 
 
Equity Income Class 1
 
$
92,690,155

 
$
48,718,019

 
 
 
 
 
 
 
Equity Income Class 2
 
$
2,727,260

 
$
406,190

 
 
 
 
 
 
 
Fidelity VIP Contrafund Service Class
 
$
4,593,337

 
$
7,764,300

 
 
 
 
 
 
 
Fidelity VIP Contrafund Service Class 2
 
$
10,361,161

 
$
11,358,990

 
 
 
 
 
 
 
Fidelity VIP Equity-Income Service Class 2
 
$
3,109,469

 
$
4,963,182

 
 
 
 
 
 
 
Fidelity VIP Government Money Market Initial Class
 
$
22,649,506

 
$
16,049,817

 
 
 
 
 
 
 
Fidelity VIP Government Money Market Service Class 2
 
$
15,498,289

 
$
10,943,212

 
 
 
 
 
 
 
Fidelity VIP Growth Service Class
 
$
2,995,805

 
$
2,921,239

 
 
 
 
 
 
 
Fidelity VIP Growth Service Class 2
 
$
2,523,341

 
$
2,135,950

 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class
 
$
58,358

 
$
615,994

 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class 2
 
$
6,276,247

 
$
4,356,535

 
 
 
 
 
 
 
Fidelity VIP Overseas Service Class 2
 
$
3,405,277

 
$
5,265,533

 
 
 
 
 
 
 
Franklin Global Real Estate VIP Class 2
 
$
244,874

 
$
97,403

 
 
 
 
 
 
 
Franklin Income VIP Class 4
 
$
89,411

 
$
170

 
 
 
 
 
 
 
Franklin Rising Dividends VIP Class 4
 
$
631,944

 
$
286,767

 
 
 
 
 
 
 
Franklin Small Cap Value VIP Class 2
 
$
1,006,768

 
$
1,020,124

 
 
 
 
 
 
 
Goldman Sachs VIT Mid Cap Value Institutional Shares
 
$
1,956,451

 
$
1,927,371

 
 
 
 
 
 
 
Goldman Sachs VIT Mid Cap Value Service Shares
 
$
341,177

 
$
67,190

 
 
 
 
 
 
 
Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares
 
$
49,579

 
$
1,089

 
 
 
 
 
 
 
Goldman Sachs VIT Small Cap Equity Insights Institutional Shares
 
$
1,570,814

 
$
1,196,717

 
 
 
 
 
 
 
Goldman Sachs VIT Small Cap Equity Insights Service Shares
 
$
260,955

 
$
15,893

 
 
 
 
 
 
 
Government & High Quality Bond Class 1
 
$
10,309,314

 
$
22,002,910

 
 
 
 
 
 
 
Government & High Quality Bond Class 2
 
$
658,010

 
$
200,488

 
 
 
 
 
 
 
Guggenheim Floating Rate Strategies Series F
 
$
2,554,741

 
$
810,191

 
 
 
 
 
 
 
Guggenheim Investments Global Managed Futures Strategy
 
$
96,900

 
$
14,483

 
 
 
 
 
 
 
Guggenheim Investments Long Short Equity
 
$
129,554

 
$
22,184



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
2018
Division
 
Purchases
 
Sales
 
 
 
 
 
 
 
Guggenheim Investments Multi-Hedge Strategies
 
$
131,013

 
$
100,116

 
 
 
 
 
 
 
Income Class 1
 
$
1,868,887

 
$
1,703,308

 
 
 
 
 
 
 
Income Class 2
 
$
977,251

 
$
385,298

 
 
 
 
 
 
 
International Emerging Markets Class 1
 
$
7,411,123

 
$
14,313,610

 
 
 
 
 
 
 
International Emerging Markets Class 2
 
$
1,311,924

 
$
293,395

 
 
 
 
 
 
 
Invesco American Franchise Series I
 
$
411,559

 
$
659,754

 
 
 
 
 
 
 
Invesco Balanced-Risk Allocation Series II
 
$
105,832

 
$
5,921

 
 
 
 
 
 
 
Invesco Core Equity Series I
 
$
1,418,231

 
$
3,270,319

 
 
 
 
 
 
 
Invesco Health Care Series I
 
$
1,386,595

 
$
1,557,203

 
 
 
 
 
 
 
Invesco Health Care Series II
 
$
786,952

 
$
333,669

 
 
 
 
 
 
 
Invesco International Growth Series I
 
$
932,271

 
$
2,404,387

 
 
 
 
 
 
 
Invesco International Growth Series II
 
$
399,125

 
$
45,487

 
 
 
 
 
 
 
Invesco Mid Cap Growth Series I
 
$
327,134

 
$
308,188

 
 
 
 
 
 
 
Invesco Small Cap Equity Series I
 
$
925,933

 
$
1,810,804

 
 
 
 
 
 
 
Invesco Technology Series I
 
$
629,393

 
$
1,177,736

 
 
 
 
 
 
 
Invesco Value Opportunities Series I
 
$
715,055

 
$
1,127,554

 
 
 
 
 
 
 
Janus Henderson Enterprise Service Shares
 
$
1,040,458

 
$
1,759,306

 
 
 
 
 
 
 
Janus Henderson Flexible Bond Service Shares
 
$
584,602

 
$
814,899

 
 
 
 
 
 
 
LargeCap Growth Class 1
 
$
6,866,879

 
$
9,719,700

 
 
 
 
 
 
 
LargeCap Growth Class 2
 
$
1,343,170

 
$
161,207

 
 
 
 
 
 
 
LargeCap Growth I Class 1
 
$
14,471,776

 
$
20,332,414

 
 
 
 
 
 
 
LargeCap Growth I Class 2
 
$
3,101,541

 
$
262,475

 
 
 
 
 
 
 
LargeCap S&P 500 Index Class 1
 
$
13,910,291

 
$
20,546,018

 
 
 
 
 
 
 
LargeCap S&P 500 Index Class 2
 
$
5,051,784

 
$
380,157

 
 
 
 
 
 
 
MFS International Value Service Class
 
$
2,156,288

 
$
2,322,553

 
 
 
 
 
 
 
MFS New Discovery Service Class
 
$
2,103,246

 
$
598,555

 
 
 
 
 
 
 
MFS Utilities Service Class
 
$
1,685,651

 
$
2,495,957



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
2018
Division
 
Purchases
 
Sales
 
 
 
 
 
 
 
MFS Value Service Class
 
$
1,007,132

 
$
1,587,076

 
 
 
 
 
 
 
MidCap Class 1
 
$
54,434,881

 
$
60,546,019

 
 
 
 
 
 
 
Multi-Asset Income Class 1
 
$
46,359

 
$
7,857

 
 
 
 
 
 
 
Multi-Asset Income Class 2
 
$
34,432

 
$
1,249

 
 
 
 
 
 
 
Neuberger Berman AMT Large Cap Value Class I
 
$
654,538

 
$
878,540

 
 
 
 
 
 
 
Neuberger Berman AMT Mid Cap Growth Portfolio Class S
 
$
981,340

 
$
706,410

 
 
 
 
 
 
 
Neuberger Berman AMT Sustainable Equity Class I
 
$
532,707

 
$
1,326,395

 
 
 
 
 
 
 
Neuberger Berman AMT Sustainable Equity Class S
 
$
10,979

 
$
8,870

 
 
 
 
 
 
 
Oppenheimer Main Street Small Cap Service Shares
 
$
155,616

 
$
248,429

 
 
 
 
 
 
 
PIMCO All Asset Administrative Class
 
$
451,516

 
$
1,124,683

 
 
 
 
 
 
 
PIMCO All Asset Advisor Class
 
$
19,474

 
$
8,121

 
 
 
 
 
 
 
PIMCO Commodity Real Return Strategy M Class
 
$
38,666

 
$
1,432

 
 
 
 
 
 
 
PIMCO High Yield Administrative Class
 
$
3,436,149

 
$
5,734,645

 
 
 
 
 
 
 
PIMCO Low Duration Advisor Class
 
$
1,193,346

 
$
548,913

 
 
 
 
 
 
 
PIMCO Total Return Administrative Class
 
$
3,773,226

 
$
7,133,745

 
 
 
 
 
 
 
Principal Capital Appreciation Class 1
 
$
11,267,743

 
$
23,215,875

 
 
 
 
 
 
 
Principal Capital Appreciation Class 2
 
$
1,678,506

 
$
279,152

 
 
 
 
 
 
 
Principal LifeTime 2010 Class 1
 
$
1,736,663

 
$
6,654,099

 
 
 
 
 
 
 
Principal LifeTime 2020 Class 1
 
$
8,149,097

 
$
20,084,169

 
 
 
 
 
 
 
Principal LifeTime 2020 Class 2
 
$
929,824

 
$
127,099

 
 
 
 
 
 
 
Principal LifeTime 2030 Class 1
 
$
6,608,451

 
$
13,070,492

 
 
 
 
 
 
 
Principal LifeTime 2030 Class 2
 
$
1,317,254

 
$
141,911

 
 
 
 
 
 
 
Principal LifeTime 2040 Class 1
 
$
1,307,385

 
$
1,603,225

 
 
 
 
 
 
 
Principal LifeTime 2040 Class 2
 
$
609,389

 
$
224,244

 
 
 
 
 
 
 
Principal LifeTime 2050 Class 1
 
$
1,481,491

 
$
1,412,632

 
 
 
 
 
 
 
Principal LifeTime 2050 Class 2
 
$
344,604

 
$
45,665

 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
2018
Division
 
Purchases
 
Sales
Principal LifeTime Strategic Income Class 1
 
$
1,057,868

 
$
4,004,040

 
 
 
 
 
 
 
Real Estate Securities Class 1
 
$
10,615,273

 
$
14,782,042

 
 
 
 
 
 
 
Real Estate Securities Class 2
 
$
1,532,373

 
$
359,215

 
 
 
 
 
 
 
Rydex Basic Materials
 
$
174,609

 
$
11,659

 
 
 
 
 
 
 
Rydex Commodities Strategy
 
$
325,335

 
$
74,469

 
 
 
 
 
 
 
Rydex NASDAQ 100
 
$
1,030,625

 
$
402,584

 
 
 
 
 
 
 
SAM Balanced Portfolio Class 1
 
$
57,838,116

 
$
99,940,137

 
 
 
 
 
 
 
SAM Balanced Portfolio Class 2
 
$
6,912,246

 
$
1,163,413

 
 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 1
 
$
13,762,495

 
$
27,298,474

 
 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 2
 
$
2,567,602

 
$
1,123,563

 
 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 1
 
$
18,106,490

 
$
25,611,491

 
 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 2
 
$
4,504,942

 
$
651,317

 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 1
 
$
16,620,285

 
$
37,652,800

 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 2
 
$
8,275,779

 
$
2,870,271

 
 
 
 
 
 
 
SAM Strategic Growth Portfolio Class 1
 
$
8,027,364

 
$
14,098,521

 
 
 
 
 
 
 
SAM Strategic Growth Portfolio Class 2
 
$
2,396,547

 
$
389,546

 
 
 
 
 
 
 
Short-Term Income Class 1
 
$
13,461,641

 
$
26,121,945

 
 
 
 
 
 
 
Short-Term Income Class 2
 
$
2,804,182

 
$
785,855

 
 
 
 
 
 
 
SmallCap Class 1
 
$
12,802,863

 
$
21,343,972

 
 
 
 
 
 
 
SmallCap Class 2
 
$
844,221

 
$
283,092

 
 
 
 
 
 
 
T. Rowe Price Blue Chip Growth Portfolio II
 
$
5,244,225

 
$
5,576,311

 
 
 
 
 
 
 
T. Rowe Price Health Sciences Portfolio II
 
$
4,566,321

 
$
6,716,043

 
 
 
 
 
 
 
Templeton Global Bond VIP Class 4
 
$
2,819,252

 
$
378,033

 
 
 
 
 
 
 
Templeton Growth VIP Class 2
 
$
102,459

 
$
37,295

 
 
 
 
 
 
 
The Merger Fund
 
$
171,835

 
$
1,585

 
 
 
 
 
 
 
TOPS Aggressive Growth ETF Portfolio Investor Class
 
$
22,176

 
$
44

 
 
 
 
 
 
 
TOPS Balanced ETF Portfolio Investor Class
 
$
29,060

 
$
149

 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
2018
Division
 
Purchases
 
Sales
TOPS Conservative ETF Portfolio Investor Class
 
$
—

 
$
—

 
 
 
 
 
 
 
TOPS Growth ETF Portfolio Investor Class
 
$
43,039

 
$
8,741

 
 
 
 
 
 
 
TOPS Moderate Growth ETF Portfolio Investor Class
 
$
11,418

 
$
15

 
 
 
 
 
 
 
VanEck Global Hard Assets Class S
 
$
822,000

 
$
1,222,592


5. Changes in Units Outstanding

Transactions in units were as follows for each of the years ended December 31:
 
 
2018
 
2017
 
 
 
 
 
 
Net increase
 
 
 
 
 
Net increase
Division
 
Purchases
 
Redemptions
 
(decrease)
 
Purchases
 
Redemptions
 
(decrease)
 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein Small Cap Growth Class A
 
27,727

 
33,601

 
(5,874)

 
8,090

 
26,022

 
(17,932)

 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein Small/Mid Cap Value Class A
 
38,534

 
54,586

 
(16,052)

 
130,258

 
87,939

 
42,319

 
 
 
 
 
 
 
 
 
 
 
 
 
Alps/Red Rocks Listed Private Equity Class III
 
15,965

 
1,634

 
14,331

 
8,038

 
1,461

 
6,577

 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Capital Appreciation Class I
 
9,115

 
36,957

 
(27,842)

 
29,308

 
66,232

 
(36,924)

 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Income & Growth Class I
 
7,302

 
63,857

 
(56,555)

 
15,496

 
101,153

 
(85,657)

 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Inflation Protection Class II
 
354,281

 
854,691

 
(500,410)

 
470,731

 
753,224

 
(282,493)

 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Mid Cap Value Class II
 
43,799

 
84,707

 
(40,908)

 
67,793

 
88,495

 
(20,702)

 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Ultra Class I
 
14,618

 
27,962

 
(13,344)

 
12,818

 
23,101

 
(10,283)

 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Ultra Class II
 
121,904

 
389,622

 
(267,718)

 
54,487

 
388,942

 
(334,455)

 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Value Class II
 
49,790

 
104,982

 
(55,192)

 
53,733

 
97,731

 
(43,998)

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Asset Allocation
   Fund Class 2
 
99,215

 
34,950

 
64,265

 
78,815

 
11,403

 
67,412

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Asset Allocation
   Fund Class 4
 
196,917

 
5,781

 
191,136

 
140,157

 
35,014

 
105,143

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Blue Chip Income
   and Growth Class 2
 
75,243

 
62,571

 
12,672

 
152,791

 
70,280

 
82,511

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Blue Chip Income
   and Growth Class 4
 
214,908

 
41,342

 
173,566

 
85,087

 
9,433

 
75,654

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Global Small
   Capitalization Fund Class 2
 
48,592

 
22,228

 
26,364

 
17,391

 
18,125

 
(734)

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Global Small
   Capitalization Fund Class 4
 
63,800

 
23,377

 
40,423

 
19,831

 
3,301

 
16,530

 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
2018
 
2017
 
 
 
 
 
 
Net increase
 
 
 
 
 
Net increase
Division
 
Purchases
 
Redemptions
 
(decrease)
 
Purchases
 
Redemptions
 
(decrease)
American Funds Insurance Series High-Income Bond
   Class 2
 
12,414

 
30,738

 
(18,324)

 
61,936

 
57,682

 
4,254

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk Asset
   Allocation Fund Class P2
 
41,912

 
6,413

 
35,499

 
47,546

 
3,419

 
44,127

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk
   Growth Fund Class P2
 
90,324

 
6,006

 
84,318

 
40,380

 
1,132

 
39,248

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk
   International Fund Class P2
 
4,164

 
1,426

 
2,738

 
6,123

 
418

 
5,705

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series New World Fund
   Class 2
 
69,274

 
83,542

 
(14,268)

 
48,098

 
30,010

 
18,088

 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series New World Fund
   Class 4
 
62,016

 
6,812

 
55,204

 
30,253

 
5,815

 
24,438

 
 
 
 
 
 
 
 
 
 
 
 
 
BlackRock Advantage U.S. Total Market Class III
 
67,249

 
1,522

 
65,727

 
12,516

 
2,557

 
9,959

 
 
 
 
 
 
 
 
 
 
 
 
 
BlackRock Global Allocation Class III
 
65,907

 
17,748

 
48,159

 
21,262

 
7,222

 
14,040

 
 
 
 
 
 
 
 
 
 
 
 
 
BlackRock iShares Dynamic Allocation Class III
 
31,619

 
1,314

 
30,305

 
13,385

 
62

 
13,323

 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert EAFE International Index Class F
 
61,633

 
6,657

 
54,976

 
7,803

 
134

 
7,669

 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert Investment Grade Bond Portfolio Class F
 
16,274

 
78

 
16,196

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert Russell 2000 Small Cap Index Class F
 
114,434

 
25,804

 
88,630

 
57,242

 
4,512

 
52,730

 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert S&P MidCap 400 Index Class F
 
102,055

 
21,207

 
80,848

 
111,676

 
13,824

 
97,852

 
 
 
 
 
 
 
 
 
 
 
 
 
ClearBridge Small Cap Growth Class II
 
76,198

 
5,479

 
70,719

 
30,202

 
233

 
29,969

 
 
 
 
 
 
 
 
 
 
 
 
 
Columbia Limited Duration Credit Class 2
 
5,312

 
6,833

 
(1,521)

 
12,628

 
10,418

 
2,210

 
 
 
 
 
 
 
 
 
 
 
 
 
Columbia Small Cap Value Class 2
 
23,883

 
3,234

 
20,649

 
22,072

 
4,085

 
17,987

 
 
 
 
 
 
 
 
 
 
 
 
 
Core Plus Bond Class 1
 
539,428

 
1,495,185

 
(955,757)

 
782,095

 
1,115,469

 
(333,374)

 
 
 
 
 
 
 
 
 
 
 
 
 
Core Plus Bond Class 2
 
45,350

 
26,800

 
18,550

 
42,452

 
6,973

 
35,479

 
 
 
 
 
 
 
 
 
 
 
 
 
Delaware Limited Term Diversified Income Service
   Class
 
12,357

 
4,706

 
7,651

 
17,689

 
81,438

 
(63,749)

 
 
 
 
 
 
 
 
 
 
 
 
 
Delaware Small Cap Value Service Class
 
37,484

 
42,928

 
(5,444)

 
76,924

 
60,580

 
16,344

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Balanced Class 1
 
73,569

 
382,976

 
(309,407)

 
2,786,389

 
207,848

 
2,578,541

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Balanced Class 2
 
4,073,739

 
10,983,563

 
(6,909,824)

 
4,386,328

 
9,056,102

 
(4,669,774)

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Balanced Managed Volatility Class 2
 
1,082,294

 
1,983,481

 
(901,187)

 
1,525,101

 
1,790,536

 
(265,435)

 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
2018
 
2017
 
 
 
 
 
 
Net increase
 
 
 
 
 
Net increase
Division
 
Purchases
 
Redemptions
 
(decrease)
 
Purchases
 
Redemptions
 
(decrease)
Diversified Balanced Volatility Control Class 2
 
3,547,673

 
380,896

 
3,166,777

 
3,440,732

 
35,814

 
3,404,918

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Growth Class 2
 
12,603,978

 
24,837,993

 
(12,234,015)

 
14,052,113

 
18,979,407

 
(4,927,294)

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Growth Managed Volatility Class 2
 
2,336,979

 
3,146,509

 
(809,530)

 
3,157,350

 
2,738,562

 
418,788

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Growth Volatility Control Class 2
 
23,077,047

 
1,318,867

 
21,758,180

 
15,973,893

 
239,033

 
15,734,860

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Income Class 2
 
4,880,487

 
5,938,035

 
(1,057,548)

 
5,119,824

 
5,307,869

 
(188,045)

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified International Class 1
 
332,062

 
846,623

 
(514,561)

 
257,039

 
828,721

 
(571,682)

 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified International Class 2
 
61,522

 
3,363

 
58,159

 
48,821

 
12,390

 
36,431

 
 
 
 
 
 
 
 
 
 
 
 
 
Dreyfus IP MidCap Stock Service Shares
 
32,872

 
884

 
31,988

 
5,087

 
1,248

 
3,839

 
 
 
 
 
 
 
 
 
 
 
 
 
Dreyfus IP Technology Growth Service Shares
 
50,212

 
94,945

 
(44,733)

 
102,477

 
67,755

 
34,722

 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Alternative Asset Allocation Class B
 
966

 
831

 
135

 
230

 
673

 
(443)

 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Equity 500 Index Class B2
 
64,322

 
17,668

 
46,654

 
35,570

 
15,164

 
20,406

 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Small Mid Cap Value Class B
 
22,800

 
14,586

 
8,214

 
14,201

 
13,435

 
766

 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Income Class 1
 
5,847,245

 
2,440,747

 
3,406,498

 
361,630

 
2,407,337

 
(2,045,707)

 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Income Class 2
 
224,975

 
30,836

 
194,139

 
99,843

 
12,968

 
86,875

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Contrafund Service Class
 
26,038

 
232,700

 
(206,662)

 
39,724

 
218,292

 
(178,568)

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Contrafund Service Class 2
 
316,744

 
387,259

 
(70,515)

 
227,096

 
348,457

 
(121,361)

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Equity-Income Service Class 2
 
49,384

 
215,536

 
(166,152)

 
74,239

 
225,999

 
(151,760)

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Government Money Market Initial Class
 
3,772,185

 
2,410,438

 
1,361,747

 
2,425,452

 
3,969,390

 
(1,543,938)

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Government Money Market Service
   Class 2
 
1,551,368

 
1,093,890

 
457,478

 
846,823

 
927,807

 
(80,984)

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Growth Service Class
 
37,928

 
123,971

 
(86,043)

 
44,750

 
93,791

 
(49,041)

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Growth Service Class 2
 
28,077

 
66,183

 
(38,106)

 
57,747

 
65,923

 
(8,176)

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class
 
—

 
42,102

 
(42,102)

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class 2
 
277,856

 
145,348

 
132,508

 
195,028

 
110,340

 
84,688

 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Overseas Service Class 2
 
189,310

 
277,867

 
(88,557)

 
189,211

 
433,308

 
(244,097)

 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Global Real Estate VIP Class 2
 
22,078

 
8,326

 
13,752

 
11,222

 
6,593

 
4,629

 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Income VIP Class 4
 
9,212

 
8

 
9,204

 
—

 
—

 
—



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
2018
 
2017
 
 
 
 
 
 
Net increase
 
 
 
 
 
Net increase
Division
 
Purchases
 
Redemptions
 
(decrease)
 
Purchases
 
Redemptions
 
(decrease)
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Rising Dividends VIP Class 4
 
48,428

 
21,970

 
26,458

 
43,431

 
10,889

 
32,542

 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Small Cap Value VIP Class 2
 
12,826

 
40,346

 
(27,520)

 
37,888

 
85,046

 
(47,158)

 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Mid Cap Value Institutional
   Shares
 
12,642

 
65,974

 
(53,332)

 
38,957

 
116,098

 
(77,141)

 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Mid Cap Value Service Shares
 
23,800

 
5,482

 
18,318

 
9,962

 
4,618

 
5,344

 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Multi-Strategy Alternatives
   Portfolio Service Shares
 
4,867

 
89

 
4,778

 
151

 
—

 
151

 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Small Cap Equity Insights
   Institutional Shares
 
23,594

 
44,388

 
(20,794)

 
19,333

 
51,458

 
(32,125)

 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Small Cap Equity Insights
   Service Shares
 
18,834

 
914

 
17,920

 
8,065

 
1,035

 
7,030

 
 
 
 
 
 
 
 
 
 
 
 
 
Government & High Quality Bond Class 1
 
688,459

 
2,143,548

 
(1,455,089)

 
1,090,569

 
1,938,374

 
(847,805)

 
 
 
 
 
 
 
 
 
 
 
 
 
Government & High Quality Bond Class 2
 
60,046

 
18,355

 
41,691

 
37,767

 
30,673

 
7,094

 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Floating Rate Strategies Series F
 
235,390

 
74,547

 
160,843

 
123,324

 
104,690

 
18,634

 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Investments Global Managed Futures
   Strategy
 
9,416

 
1,411

 
8,005

 
694

 
4,522

 
(3,828)

 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Investments Long Short Equity
 
10,725

 
1,857

 
8,868

 
1,995

 
2,220

 
(225)

 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Investments Multi-Hedge Strategies
 
13,159

 
9,654

 
3,505

 
10,999

 
2,213

 
8,786

 
 
 
 
 
 
 
 
 
 
 
 
 
Income Class 1
 
159,694

 
156,900

 
2,794

 
140,915

 
116,754

 
24,161

 
 
 
 
 
 
 
 
 
 
 
 
 
Income Class 2
 
90,914

 
36,483

 
54,431

 
60,422

 
21,258

 
39,164

 
 
 
 
 
 
 
 
 
 
 
 
 
International Emerging Markets Class 1
 
193,750

 
389,267

 
(195,517)

 
170,363

 
380,913

 
(210,550)

 
 
 
 
 
 
 
 
 
 
 
 
 
International Emerging Markets Class 2
 
118,192

 
25,847

 
92,345

 
70,689

 
7,528

 
63,161

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco American Franchise Series I
 
6,403

 
30,078

 
(23,675)

 
10,748

 
32,433

 
(21,685)

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Balanced-Risk Allocation Series II
 
6,827

 
187

 
6,640

 
4,998

 
653

 
4,345

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Core Equity Series I
 
17,905

 
173,727

 
(155,822)

 
26,157

 
145,327

 
(119,170)

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Health Care Series I
 
26,228

 
67,263

 
(41,035)

 
40,163

 
75,605

 
(35,442)

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Health Care Series II
 
58,767

 
30,504

 
28,263

 
26,037

 
11,115

 
14,922

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco International Growth Series I
 
58,874

 
189,868

 
(130,994)

 
66,347

 
220,947

 
(154,600)

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco International Growth Series II
 
36,985

 
3,445

 
33,540

 
18,659

 
4,566

 
14,093

 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
2018
 
2017
 
 
 
 
 
 
Net increase
 
 
 
 
 
Net increase
Division
 
Purchases
 
Redemptions
 
(decrease)
 
Purchases
 
Redemptions
 
(decrease)
Invesco Mid Cap Growth Series I
 
10,583

 
15,944

 
(5,361)

 
11,363

 
18,641

 
(7,278)

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Small Cap Equity Series I
 
18,517

 
62,959

 
(44,442)

 
22,635

 
52,815

 
(30,180)

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Technology Series I
 
33,902

 
80,684

 
(46,782)

 
69,109

 
60,860

 
8,249

 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Value Opportunities Series I
 
20,579

 
62,889

 
(42,310)

 
15,154

 
65,321

 
(50,167)

 
 
 
 
 
 
 
 
 
 
 
 
 
Janus Henderson Enterprise Service Shares
 
24,937

 
73,028

 
(48,091)

 
36,338

 
90,263

 
(53,925)

 
 
 
 
 
 
 
 
 
 
 
 
 
Janus Henderson Flexible Bond Service Shares
 
54,395

 
80,005

 
(25,610)

 
59,596

 
40,526

 
19,070

 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth Class 1
 
254,184

 
373,150

 
(118,966)

 
202,409

 
366,442

 
(164,033)

 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth Class 2
 
110,603

 
11,489

 
99,114

 
27,554

 
4,956

 
22,598

 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth I Class 1
 
157,788

 
353,828

 
(196,040)

 
73,242

 
250,520

 
(177,278)

 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth I Class 2
 
252,287

 
21,063

 
231,224

 
46,493

 
2,764

 
43,729

 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap S&P 500 Index Class 1
 
849,027

 
934,111

 
(85,084)

 
484,735

 
810,072

 
(325,337)

 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap S&P 500 Index Class 2
 
430,978

 
27,790

 
403,188

 
219,461

 
16,928

 
202,533

 
 
 
 
 
 
 
 
 
 
 
 
 
MFS International Value Service Class
 
174,797

 
191,861

 
(17,064)

 
347,657

 
135,563

 
212,094

 
 
 
 
 
 
 
 
 
 
 
 
 
MFS New Discovery Service Class
 
126,143

 
39,654

 
86,489

 
25,206

 
8,194

 
17,012

 
 
 
 
 
 
 
 
 
 
 
 
 
MFS Utilities Service Class
 
102,473

 
112,232

 
(9,759)

 
104,652

 
86,993

 
17,659

 
 
 
 
 
 
 
 
 
 
 
 
 
MFS Value Service Class
 
21,131

 
55,313

 
(34,182)

 
42,239

 
58,950

 
(16,711)

 
 
 
 
 
 
 
 
 
 
 
 
 
MidCap Class 1
 
153,342

 
662,883

 
(509,541)

 
156,879

 
644,956

 
(488,077)

 
 
 
 
 
 
 
 
 
 
 
 
 
Multi-Asset Income Class 1
 
3,601

 
477

 
3,124

 
666

 
3,058

 
(2,392)

 
 
 
 
 
 
 
 
 
 
 
 
 
Multi-Asset Income Class 2
 
3,233

 
96

 
3,137

 
1,293

 
—

 
1,293

 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Large Cap Value Class I
 
7,400

 
35,199

 
(27,799)

 
10,840

 
54,522

 
(43,682)

 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Mid Cap Growth Portfolio
   Class S
 
61,572

 
53,913

 
7,659

 
32,547

 
65,866

 
(33,319)

 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Sustainable Equity Class I
 
12,391

 
47,569

 
(35,178)

 
8,641

 
46,059

 
(37,418)

 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Sustainable Equity Class S
 
1,057

 
887

 
170

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Oppenheimer Main Street Small Cap Service Shares
 
5,649

 
15,213

 
(9,564)

 
5,703

 
7,148

 
(1,445)

 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO All Asset Administrative Class
 
22,339

 
68,731

 
(46,392)

 
16,906

 
54,734

 
(37,828)

 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO All Asset Advisor Class
 
1,662

 
657

 
1,005

 
3,696

 
71

 
3,625

 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
2018
 
2017
 
 
 
 
 
 
Net increase
 
 
 
 
 
Net increase
Division
 
Purchases
 
Redemptions
 
(decrease)
 
Purchases
 
Redemptions
 
(decrease)
PIMCO Commodity Real Return Strategy M Class
 
4,309

 
151

 
4,158

 
61

 
204

 
(143)

 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO High Yield Administrative Class
 
191,642

 
368,314

 
(176,672)

 
248,859

 
264,839

 
(15,980)

 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO Low Duration Advisor Class
 
120,614

 
55,072

 
65,542

 
22,717

 
15,055

 
7,662

 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO Total Return Administrative Class
 
255,816

 
541,916

 
(286,100)

 
340,650

 
394,680

 
(54,030)

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal Capital Appreciation Class 1
 
244,002

 
1,174,693

 
(930,691)

 
278,742

 
1,283,807

 
(1,005,065)

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal Capital Appreciation Class 2
 
141,881

 
23,117

 
118,764

 
51,702

 
8,125

 
43,577

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2010 Class 1
 
37,289

 
378,230

 
(340,941)

 
40,546

 
352,643

 
(312,097)

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2020 Class 1
 
150,861

 
976,643

 
(825,782)

 
161,311

 
1,064,100

 
(902,789)

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2020 Class 2
 
80,395

 
11,190

 
69,205

 
59,929

 
167

 
59,762

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2030 Class 1
 
160,056

 
605,549

 
(445,493)

 
459,285

 
859,247

 
(399,962)

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2030 Class 2
 
118,106

 
11,431

 
106,675

 
73,243

 
5,974

 
67,269

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 1
 
23,920

 
66,369

 
(42,449)

 
26,615

 
90,672

 
(64,057)

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 2
 
51,770

 
19,590

 
32,180

 
22,362

 
1,829

 
20,533

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2050 Class 1
 
34,681

 
58,155

 
(23,474)

 
40,406

 
33,401

 
7,005

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2050 Class 2
 
28,209

 
3,290

 
24,919

 
60,727

 
1,756

 
58,971

 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime Strategic Income Class 1
 
38,804

 
254,996

 
(216,192)

 
75,190

 
215,833

 
(140,643)

 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate Securities Class 1
 
70,739

 
245,004

 
(174,265)

 
101,184

 
245,028

 
(143,844)

 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate Securities Class 2
 
118,003

 
28,457

 
89,546

 
77,418

 
196,741

 
(119,323)

 
 
 
 
 
 
 
 
 
 
 
 
 
Rydex Basic Materials
 
15,080

 
476

 
14,604

 
4,761

 
1,810

 
2,951

 
 
 
 
 
 
 
 
 
 
 
 
 
Rydex Commodities Strategy
 
32,299

 
9,919

 
22,380

 
15,953

 
18,417

 
(2,464)

 
 
 
 
 
 
 
 
 
 
 
 
 
Rydex NASDAQ 100
 
79,782

 
29,095

 
50,687

 
58,580

 
6,671

 
51,909

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Balanced Portfolio Class 1
 
1,586,219

 
6,221,863

 
(4,635,644)

 
2,214,772

 
7,060,953

 
(4,846,181)

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Balanced Portfolio Class 2
 
550,386

 
91,386

 
459,000

 
525,095

 
72,220

 
452,875

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 1
 
363,421

 
1,653,935

 
(1,290,514)

 
493,623

 
1,974,838

 
(1,481,215)

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 2
 
207,828

 
97,407

 
110,421

 
251,948

 
77,568

 
174,380

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 1
 
651,760

 
1,474,455

 
(822,695)

 
442,151

 
1,054,762

 
(612,611)

 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
2018
 
2017
 
 
 
 
 
 
Net increase
 
 
 
 
 
Net increase
Division
 
Purchases
 
Redemptions
 
(decrease)
 
Purchases
 
Redemptions
 
(decrease)
SAM Conservative Growth Portfolio Class 2
 
353,151

 
44,772

 
308,379

 
223,616

 
79,279

 
144,337

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 1
 
490,080

 
2,356,674

 
(1,866,594)

 
1,358,784

 
2,411,551

 
(1,052,767)

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 2
 
739,877

 
266,235

 
473,642

 
491,145

 
152,680

 
338,465

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Strategic Growth Portfolio Class 1
 
204,128

 
801,230

 
(597,102)

 
320,250

 
868,588

 
(548,338)

 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Strategic Growth Portfolio Class 2
 
174,763

 
26,720

 
148,043

 
192,987

 
33,503

 
159,484

 
 
 
 
 
 
 
 
 
 
 
 
 
Short-Term Income Class 1
 
1,010,594

 
2,149,598

 
(1,139,004)

 
1,053,629

 
2,181,704

 
(1,128,075)

 
 
 
 
 
 
 
 
 
 
 
 
 
Short-Term Income Class 2
 
274,376

 
75,915

 
198,461

 
268,088

 
227,683

 
40,405

 
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Class 1
 
294,167

 
800,961

 
(506,794)

 
240,963

 
926,398

 
(685,435)

 
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Class 2
 
69,957

 
24,281

 
45,676

 
35,213

 
30,073

 
5,140

 
 
 
 
 
 
 
 
 
 
 
 
 
T. Rowe Price Blue Chip Growth Portfolio II
 
132,082

 
153,472

 
(21,390)

 
110,273

 
126,092

 
(15,819)

 
 
 
 
 
 
 
 
 
 
 
 
 
T. Rowe Price Health Sciences Portfolio II
 
52,753

 
110,039

 
(57,286)

 
72,873

 
128,500

 
(55,627)

 
 
 
 
 
 
 
 
 
 
 
 
 
Templeton Global Bond VIP Class 4
 
291,506

 
36,514

 
254,992

 
104,439

 
17,639

 
86,800

 
 
 
 
 
 
 
 
 
 
 
 
 
Templeton Growth VIP Class 2
 
526

 
1,250

 
(724)

 
298

 
4,784

 
(4,486)

 
 
 
 
 
 
 
 
 
 
 
 
 
The Merger Fund
 
16,436

 
57

 
16,379

 
596

 
—

 
596

 
 
 
 
 
 
 
 
 
 
 
 
 
TOPS Aggressive Growth ETF Portfolio Investor
   Class
 
2,279

 
2

 
2,277

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
TOPS Balanced ETF Portfolio Investor Class
 
2,827

 
9

 
2,818

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
TOPS Conservative ETF Portfolio Investor Class
 
—

 
—

 
—

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
TOPS Growth ETF Portfolio Investor Class
 
4,715

 
893

 
3,822

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
TOPS Moderate Growth ETF Portfolio Investor Class
 
1,216

 
—

 
1,216

 
—

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
VanEck Global Hard Assets Class S
 
86,085

 
113,585

 
(27,500)

 
106,307

 
286,482

 
(180,175)



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


7. 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 2018, 2017, 2016, 2015 and 2014 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.


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017



 
 
 
December 31,
 
For the year ended 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:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
132
 
$
34.06
to
$
31.25
 
$
4,471
 
—%

 
1.40% to 2.00%
 
(2.29)
%
to
(2.86)
%
 
2017
 
138
 
$
34.86
to
$
32.17
 
$
4,775
 
—%

 
1.40% to 2.00%
 
32.30
%
to
31.47
%
 
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)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein Small/Mid Cap Value Class A:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
316
 
$
13.23
to
$
12.72
 
$
4,134
 
0.48
%
 
1.30% to 2.00%
 
(16.11)
%
to
(16.70)
%
 
2017
 
332
 
$
15.77
to
$
15.27
 
$
5,184
 
0.45
%
 
1.30% to 2.00%
 
11.69
%
to
10.89
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alps/Red Rocks Listed Private Equity Class III:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
24
 
$
8.62
to
$
10.15
 
$
225
 
8.17
%
 
0.75% to 1.40%
 
(12.75)
%
to
(13.76)
%
 
2017
 
10
 
$
11.65
to
$
11.77
 
$
114
 
3.34
%
 
1.00% to 1.40%
 
16.50
%
to
23.25
%
 
2016
 
3
 
$
9.59
to
$
9.55
 
$
30
 
0.83
%
 
1.15% to 1.40%
 
6.79
%
to
6.47
%
 
2015 (8)
 
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:
 
 
 
 
 
 
 
 
 
 
 
2018
 
149
 
$
12.40
to
$
12.06
 
$
1,846
 
—%

 
1.40% to 2.00%
 
(6.56)
%
to
(7.09)
%
 
2017
 
177
 
$
13.27
to
$
12.98
 
$
2,339
 
—%

 
1.40% to 2.00%
 
20.09
%
to
19.41
%
 
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 (4)
 
241
 
$
10.80
to
$
10.75
 
$
2,604
 
—%

 
1.40% to 2.00%
 
9.87
%
to
9.36
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017



 
 
 
December 31,
For the year ended 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:
 
 
 
 
 
 
 
 
 
2018
 
443
$
21.40
to
$
17.97
 
$
9,023
1.92
%
 
0.85% to 1.90%
 
(7.68)
%
to
(8.64)

%
 
2017
 
500
$
23.18
to
$
19.67
 
$
11,044
2.34
%
 
0.85% to 1.90%
 
19.48
%
to
18.21

%
 
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

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Inflation Protection Class II:
 
 
 
 
 
 
 
 
 
2018
 
2,719
$
9.83
to
$
11.66
 
$
34,370
2.83
%
 
0.75% to 2.00%
 
(1.50)
%
to
(4.82)

%
 
2017
 
3,220
$
10.13
to
$
12.25
 
$
42,539
2.56
%
 
1.00% to 2.00%
 
1.40
%
to
1.66

%
 
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)

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Mid Cap Value Class II:
 
 
 
 
 
 
 
 
 
2018
 
366
$
21.30
to
$
20.12
 
$
7,714
1.27
%
 
1.30% to 2.00%
 
(14.11)
%
to
(14.71)

%
 
2017
 
407
$
24.80
to
$
23.59
 
$
9,988
1.39
%
 
1.30% to 2.00%
 
10.03
%
to
9.26

%
 
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

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Ultra Class I:
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
157
$
22.03
to
$
19.82
 
$
3,467
0.25
%
 
1.30% to 1.90%
 
(0.54)
%
to
(1.15)

%
 
2017
 
171
$
22.15
to
$
20.05
 
$
3,782
0.36
%
 
1.30% to 1.90%
 
30.52
%
to
29.77

%
 
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

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Ultra Class II:
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
1,018
$
25.64
to
$
23.52
 
$
26,046
0.12
%
 
1.40% to 2.00%
 
(0.77)
%
to
(1.38)

%
 
2017
 
1,286
$
25.84
to
$
23.85
 
$
33,153
0.25
%
 
1.40% to 2.00%
 
30.18
%
to
29.41

%
 
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

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Value Class II:
 
 
 
 
 
 
 
 
 
 
 
 
 
2018
 
608
$
9.16
to
$
20.76
 
$
12,705
1.51
%
 
0.75% to 1.90%
 
(8.22)
%
to
(11.02)

%
 
2017
 
663
$
10.63
to
$
23.33
 
$
16,007
1.50
%
 
1.00% to 1.90%
 
5.88
%
to
6.53

%
 
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

%


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
For the year ended December 31, except as noted
 
 
 
 
Unit fair value
 
 
 
 
 
 
 
Total return (3)
 
 
 
 
corresponding
 
 
 
 
 
Expense
 
corresponding
 
 
 
 
to lowest
 
Net
Investment
 
ratio (2)
 
to lowest
 
 
 
Units
to highest
 
assets
income
 
lowest to
 
to highest
Division
 
(000's)
expense ratio
 
(000's)
ratio (1)
 
highest
 
expense ratio
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Asset Allocation Fund Class 2:
 
 
 
 
 
 
 
 
 
 
2018
 
214
$
11.51
to
$
11.30
 
$
2,447
2.06
%
 
1.30% to 2.00%
 
(5.81)
%
to
(6.46)

%
 
2017
 
150
$
12.22
to
$
12.08
 
$
1,827
1.75
%
 
1.30% to 2.00%
 
14.74
%
to
13.85

%
 
2016 (1)
 
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:
 
 
 
 
 
 
 
 
 
 
2018
 
353
$
9.54
to
$
11.19
 
$
3,674
1.81
%
 
0.75% to 1.40%
 
(4.70)
%
to
(6.20)

%
 
2017
 
162
$
10.93
to
$
11.93
 
$
1,852
1.91
%
 
1.00% to 1.40%
 
9.19
%
to
14.38

%
 
2016
 
57
$
10.48
to
$
10.43
 
$
598
1.31
%
 
1.15% to 1.40%
 
7.93
%
to
7.64

%
 
2015 (8)
 
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:
 
 
 
 
 
 
 
 
 
2018
 
247
$
11.65
to
$
11.44
 
$
2,860
1.99
%
 
1.30% to 2.00%
 
(9.83)
%
to
(10.49)

%
 
2017
 
234
$
12.92
to
$
12.78
 
$
3,017
2.04
%
 
1.30% to 2.00%
 
15.46
%
to
14.72

%
 
2016 (10)
 
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:
 
 
 
 
 
 
 
 
 
2018
 
342
$
9.35
to
$
11.78
 
$
3,493
2.36
%
 
0.75% to 1.40%
 
(6.97)
%
to
(10.21)

%
 
2017
 
169
$
11.15
to
$
13.12
 
$
2,076
2.33
%
 
1.00% to 1.40%
 
11.39
%
to
15.09

%
 
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 (6)
 
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:
 
 
 
 
 
 
 
 
 
2018
 
132
$
11.20
to
$
9.43
 
$
1,321
0.08
%
 
1.30% to 2.00%
 
(11.74)
%
to
(12.28)

%
 
2017
 
105
$
12.69
to
$
10.75
 
$
1,211
0.42
%
 
1.30% to 2.00%
 
24.29
%
to
23.42

%
 
2016
 
106
$
10.21
to
$
8.71
 
$
976
0.27
%
 
1.30% to 2.00%
 
0.79
%
to
—

%
 
2015
 
91
$
10.13
to
$
8.71
 
$
844
—%

 
1.30% to 2.00%
 
(0.98)
%
to
(13.42)

%
 
2014 (5)
 
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:
 
 
 
 
 
 
 
 
 
2018
 
72
$
8.74
to
$
10.63
 
$
701
0.02
%
 
0.75% to 1.40%
 
(12.95)
%
to
(12.08)

%
 
2017
 
32
$
11.67
to
$
12.09
 
$
374
0.35
%
 
1.00% to 1.40%
 
16.35
%
to
23.87

%
 
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 (6)
 
1
$
9.86
to
$
9.85
 
$
8
0.15
%
 
1.15% to 1.40%
 
0.20
%
to
0.10

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017



 
 
 
December 31,
 
For the year ended 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 2:
 
 
 
 
 
 
 
 
 
2018
 
114
 
$
10.48
to
$
10.19
 
$
1,195

 
5.82
%
 
1.30% to 1.90%
 
(3.59)
%
to
(4.23)
%
 
2017
 
132
 
$
10.87
to
$
10.64
 
$
1,439

 
6.53
%
 
1.30% to 1.90%
 
5.53
%
to
4.93
%
 
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 (5)
 
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:
 
 
 
 
 
 
 
2018
 
107
 
$
9.64
to
$
10.85
 
$
1,092

 
1.42
%
 
0.75% to 1.40%
 
(3.70)
%
to
(6.22)
%
 
2017
 
71
 
$
10.86
to
$
11.57
 
$
794

 
0.64
%
 
1.00% to 1.40%
 
8.38
%
to
13.21
%
 
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 (6)
 
—
 
$
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:
 
 
 
 
 
 
 
 
 
2018
 
140
 
$
9.75
to
$
11.98
 
$
1,520

 
0.44
%
 
0.75% to 1.40%
 
(2.79)
%
to
(1.72)
%
 
2017
 
56
 
$
11.53
to
$
12.19
 
$
658

 
0.29
%
 
1.00% to 1.40%
 
14.96
%
to
24.26
%
 
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 (6)
 
3
 
 
 
 
$
9.78
 
$
30

 
—%

 
1.15% to 1.40%
 
(1.61)
%
to
(1.51)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series Managed Risk International Fund Class P2:
 
 
 
 
 
 
 
2018
 
13
 
$
8.85
to
$
9.30
 
$
135

 
1.67
%
 
0.75% to 1.40%
 
(11.32)
%
to
(11.76)
%
 
2017
 
11
 
$
11.78
to
$
10.54
 
$
120

 
0.44
%
 
1.00% to 1.40%
 
17.80
%
to
26.84
%
 
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 (6)
 
2
 
 
 
 
$
9.43
 
$
18

 
—%

 
1.15% to 1.40%
 
 
 
 
(3.87)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Funds Insurance Series New World Fund Class 2:
 
 
 
 
 
 
 
 
 
2018
 
134
 
$
9.79
to
$
9.81
 
$
1,332

 
0.77
%
 
1.30% to 2.00%
 
(15.16)
%
to
(15.72)
%
 
2017
 
148
 
$
11.54
to
$
11.64
 
$
1,738

 
0.97
%
 
1.30% to 2.00%
 
27.80
%
to
26.80
%
 
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 (5)
 
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:
 
 
 
 
 
 
 
 
 
 
 
2018
 
117
 
$
8.52
to
$
9.56
 
$
1,091

 
0.84
%
 
0.75% to 1.40%
 
(14.63)
%
to
(15.40)
%
 
2017
 
61
 
$
11.65
to
$
11.30
 
$
703

 
1.02
%
 
1.00% to 1.40%
 
16.62
%
to
27.25
%
 
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 (6)
 
6
 
 
 
 
$
9.00
 
$
52

 
7.63
%
 
1.15% to 1.40%
 
(7.22)
%
to
(7.12)
%


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended December 31, except as noted
 
 
 
 
 
Unit fair value
 
 
 
 
 
 
 
 
Total return (3)
 
 
 
 
 
corresponding
 
 
 
 
 
 
Expense
 
corresponding
 
 
 
 
 
to lowest
 
Net
 
Investment
 
ratio (2)
 
to lowest
 
 
 
Units
 
to highest
 
assets
 
income
 
lowest to
 
to highest
Division
 
(000's)
 
expense ratio
 
(000's)
 
ratio (1)
 
highest
 
expense ratio
BlackRock Advantage U.S. Total Market Class III:
 
 
 
 
 
 
 
 
 
 
 
2018
 
79
 
$
9.38
to
$
11.30
 
$
814

 
2.49
%
 
0.75% to 1.40%
 
(6.76)
%
to
(7.98)
%
 
2017
 
13
 
$
11.64
to
$
12.28
 
$
150

 
—%

 
1.00% to 1.40%
 
15.02
%
to
12.25
%
 
2016
 
3
 
$
10.98
to
$
10.94
 
$
31

 
0.94
%
 
1.15% to 1.40%
 
22.00
%
to
21.69
%
 
2015 (8)
 
—
 
$
9.00
to
$
8.99
 
$
1

 
0.94
%
 
1.15% to 1.40%
 
(10.89)
%
to
(10.99)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BlackRock Global Allocation Class III:
 
 
 
 
 
 
 
 
 
 
 
2018
 
167
 
$
9.28
to
$
9.51
 
$
1,618

 
0.99
%
 
0.75% to 2.00%
 
(7.11)
%
to
(9.34)
%
 
2017
 
119
 
$
10.83
to
$
10.49
 
$
1,268

 
1.34
%
 
1.00% to 2.00%
 
8.19
%
to
11.36
%
 
2016
 
105
 
$
9.55
to
$
9.42
 
$
996

 
1.36
%
 
1.15% to 2.00%
 
2.69
%
to
1.84
%
 
2015 (8)
 
56
 
$
9.30
to
$
9.25
 
$
522

 
1.85
%
 
1.15% to 2.00%
 
(7.00)
%
to
(7.50)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
BlackRock iShares Dynamic Allocation Class III:
 
 
 
 
 
 
 
 
 
 
 
2018
 
55
 
$
9.53
to
$
9.90
 
$
553

 
1.02
%
 
0.75% to 2.00%
 
(4.70)
%
to
(7.04)
%
 
2017
 
25
 
$
11.00
to
$
10.65
 
$
266

 
2.33
%
 
1.00% to 2.00%
 
9.67
%
to
12.46
%
 
2016
 
11
 
$
9.60
to
$
9.47
 
$
107

 
2.28
%
 
1.15% to 2.00%
 
4.92
%
to
4.07
%
 
2015 (8)
 
7
 
$
9.15
to
$
9.10
 
$
60

 
6.90
%
 
1.15% to 2.00%
 
(8.32)
%
to
(8.82)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert EAFE International Index Class F:
 
 
 
 
 
 
 
 
 
 
 
2018
 
65
 
$
8.52
to
$
9.23
 
$
565

 
7.15
%
 
0.75% to 1.40%
 
(14.54)
%
to
(15.01)
%
 
2017
 
10
 
$
11.56
to
$
10.86
 
$
111

 
1.76
%
 
1.00% to 1.40%
 
15.60
%
to
22.71
%
 
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 (6)
 
1
 
 
 
 
$
9.25
 
$
5

 
26.28
%
 
1.15% to 1.40%
 
(4.05)
%
to
(3.95)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert Investment Grade Bond Portfolio Class F:
 
 
 
 
 
 
 
 
 
 
 
2018 (13)
 
16
 
$
10.13
to
$
10.09
 
$
164

 
8.71
%
 
0.75% to 1.40%
 
1.40
%
to
1.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert Russell 2000 Small Cap Index Class F:
 
 
 
 
 
 
 
 
 
 
 
2018
 
155
 
$
8.76
to
$
11.41
 
$
1,479

 
1.27
%
 
0.75% to 1.40%
 
(12.84)
%
to
(12.70)
%
 
2017
 
66
 
$
11.34
to
$
13.07
 
$
773

 
1.15
%
 
1.00% to 1.40%
 
12.39
%
to
12.48
%
 
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 (6)
 
2
 
$
10.48
to
$
10.47
 
$
21

 
2.65
%
 
1.15% to 1.40%
 
1.45
%
to
1.36
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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 S&P MidCap 400 Index Class F:
 
 
 
 
 
 
 
 
 
2018
 
243
 
$
8.91
to
$
11.51
 
$
2,436
 
1.31
%
 
0.75% to 1.40%
 
(11.25)
%
to
(12.80)
%
 
2017
 
162
 
$
11.22
to
$
13.20
 
$
1,954
 
0.93
%
 
1.00% to 1.40%
 
11.31
%
to
13.99
%
 
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 (6)
 
3
 
$
10.23
to
$
10.22
 
$
36
 
5.13
%
 
1.15% to 1.40%
 
 
 
 
(0.10)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
ClearBridge Small Cap Growth Class II:
 
 
 
 
 
 
 
 
 
2018
 
102
 
$
9.57
to
$
12.25
 
$
1,115
 
—%

 
0.75% to 1.40%
 
(4.78)
%
to
1.74
%
 
2017
 
31
 
$
11.93
to
$
12.04
 
$
373
 
—%

 
1.00% to 1.40%
 
18.24
%
to
22.23
%
 
2016
 
1
 
$
9.89
to
$
9.85
 
$
13
 
—%

 
1.15% to 1.40%
 
4.32
%
to
4.01
%
 
2015 (8)
 
1
 
$
9.48
to
$
9.47
 
$
9
 
—%

 
1.15% to 1.40%
 
(6.51)
%
to
(6.61)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Columbia Limited Duration Credit Class 2:
 
 
 
 
 
 
 
 
 
2018
 
19
 
$
10.04
to
$
9.61
 
$
191
 
1.55
%
 
0.75% to 2.00%
 
0.50
%
to
(2.04)
%
 
2017
 
21
 
$
10.03
to
$
9.81
 
$
208
 
2.04
%
 
1.00% to 2.00%
 
0.30
%
to
(0.20)
%
 
2016
 
19
 
$
9.97
to
$
9.83
 
$
185
 
2.33
%
 
1.15% to 2.00%
 
4.07
%
to
3.26
%
 
2015 (8)
 
15
 
$
9.58
to
$
9.52
 
$
140
 
—%

 
1.15% to 2.00%
 
(4.20)
%
to
(4.80)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Columbia Small Cap Value Class 2:
 
 
 
 
 
 
 
 
 
2018
 
59
 
$
8.37
to
$
10.79
 
$
566
 
0.17
%
 
0.75% to 1.40%
 
(16.88)
%
to
(19.30)
%
 
2017
 
38
 
$
11.53
to
$
13.37
 
$
480
 
0.33
%
 
1.00% to 1.40%
 
14.05
%
to
12.35
%
 
2016
 
20
 
$
11.94
to
$
11.90
 
$
244
 
0.26
%
 
1.15% to 1.40%
 
31.21
%
to
30.91
%
 
2015 (8)
 
8
 
$
9.10
to
$
9.09
 
$
75
 
0.73
%
 
1.15% to 1.40%
 
(9.90)
%
to
(9.91)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core Plus Bond Class 1:
 
 
 
 
 
 
 
 
 
2018
 
5,240
 
$
2.98
to
$
21.56
 
$
109,852
 
3.32
%
 
0.46% to 2.00%
 
(1.83)
%
to
(3.41)
%
 
2017
 
6,196
 
$
3.04
to
$
22.32
 
$
131,734
 
2.86
%
 
0.42% to 2.00%
 
4.37
%
to
2.76
%
 
2016
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Core Plus Bond Class 2:
 
 
 
 
 
 
 
 
 
2018
 
76
 
$
10.02
to
$
9.95
 
$
761
 
3.60
%
 
0.75% to 1.40%
 
0.50
%
to
(2.93)
%
 
2017
 
58
 
$
10.24
to
$
10.25
 
$
592
 
2.77
%
 
1.00% to 1.40%
 
2.30
%
to
3.02
%
 
2016
 
22
 
$
9.99
to
$
9.95
 
$
221
 
0.90
%
 
1.15% to 1.40%
 
2.67
%
to
2.37
%
 
2015 (8)
 
2
 
$
9.73
to
$
9.72
 
$
19
 
6.38
%
 
1.15% to 1.40%
 
(2.31)
%
to
(2.41)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017



 
 
 
December 31,
 
For the year ended 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
Delaware Limited Term Diversified Income Service Class:
 
 
 
 
 
 
 
 
 
2018
 
38
 
$
10.05
to
$
9.60
 
$
374
 
2.34
%
 
0.75% to 2.00%

 
0.50

%
to
(1.94)
%
 
2017
 
30
 
$
10.03
to
$
9.79
 
$
302
 
1.90
%
 
1.00% to 2.00%

 
0.30

%
to
(0.10)
%
 
2016
 
94
 
$
9.93
to
$
9.80
 
$
931
 
1.35
%
 
1.15% to 2.00%

 
0.51

%
to
(0.20)
%
 
2015 (8)
 
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:
 
 
 
 
 
 
 
 
 
2018
 
170
 
$
12.84
to
$
12.34
 
$
2,167
 
0.59
%
 
1.30% to 2.00%

 
(18.01)

%
to
(18.66)
%
 
2017
 
176
 
$
15.66
to
$
15.17
 
$
2,726
 
0.66
%
 
1.30% to 2.00%

 
10.28

%
to
9.61
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Balanced Class 1:
 
 
 
 
 
 
 
 
 
2018
 
2,269
 
$
10.23
to
$
9.98
 
$
22,898
 
2.73
%
 
0.59% to 1.90%

 
(3.55)

%
to
(4.95)
%
 
2017 (12)
 
2,579
 
$
10.60
to
$
10.50
 
$
27,197
 
2.43
%
 
0.53% to 1.90%

 
—

%
to
5.00
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Balanced Class 2:
 
 
 
 
 
 
 
 
 
2018
 
62,817
 
$
10.21
to
$
14.71
 
$
968,136
 
2.39
%
 
1.40% to 2.00%

 
(4.72)

%
to
(5.34)
%
 
2017
 
69,727
 
$
10.72
to
$
15.54
 
$
1,131,092
 
—%

 
1.40% to 2.00%

 
6.99

%
to
9.28
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Balanced Managed Volatility Class 2:
 
 
 
 
 
 
 
 
 
2018
 
14,217
 
$
9.75
to
$
11.12
 
$
162,127
 
3.68
%
 
0.75% to 2.00%

 
(2.50)

%
to
(5.12)
%
 
2017
 
15,118
 
$
10.71
to
$
11.72
 
$
181,077
 
1.29
%
 
1.00% to 2.00%

 
6.89

%
to
8.72
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Balanced Volatility Control Class 2:
 
 
 
 
 
 
 
 
 
2018
 
6,572
 
 
 
 
$
10.19
 
$
66,956
 
0.77
%
 
1.40
%
 
 
 
 
(5.03)
%
 
2017 (11)
 
3,405
 
 
 
 
$
10.73
 
$
36,539
 
—%

 
1.40
%
 
 
 
 
7.09
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Growth Class 2:
 
 
 
 
 
 
 
 
 
2018
 
207,515
 
$
10.29
to
$
16.09
 
$
3,487,376
 
2.50
%
 
1.40% to 2.00%

 
(5.88)

%
to
(6.40)
%
 
2017
 
219,749
 
$
10.93
to
$
17.19
 
$
3,946,890
 
1.36
%
 
1.40% to 2.00%

 
9.08

%
to
11.91
%
 
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
%


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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 Growth Managed Volatility Class 2:
 
 
 
 
 
 
 
 
 
2018
 
27,701
 
$
9.62
to
$
11.46
 
$
325,257
 
4.18
%
 
0.75% to 2.00%

 
(3.90)

%
to
(5.99)
%
 
2017
 
28,510
 
$
10.89
to
$
12.19
 
$
354,954
 
1.24
%
 
1.00% to 2.00%

 
8.68

%
to
11.12
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Growth Volatility Control Class 2:
 
 
 
 
 
 
 
 
 
2018
 
37,493
 
 
 
 
$
10.27
 
$
384,857
 
0.75
%
 
1.40
%
 
 
 
 
(5.87)
%
 
2017 (11)
 
15,735
 
 
 
 
$
10.91
 
$
171,699
 
—%

 
1.40
%
 
 
 
 
8.77
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified Income Class 2:
 
 
 
 
 
 
 
 
 
2018
 
19,716
 
$
10.15
to
$
12.04
 
$
241,402
 
2.07
%
 
1.40% to 2.00%

 
(3.76)

%
to
(4.37)
%
 
2017
 
20,774
 
$
10.54
to
$
12.59
 
$
268,177
 
1.38
%
 
1.40% to 2.00%

 
5.19

%
to
6.69
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified International Class 1:
 
 
 
 
 
 
 
 
 
2018
 
4,206
 
$
3.35
to
$
24.49
 
$
95,801
 
2.12
%
 
0.46% to 2.00%

 
(17.88)

%
to
(19.17)
%
 
2017
 
4,720
 
$
4.08
to
$
30.30
 
$
131,186
 
1.81
%
 
0.43% to 2.00%

 
28.52

%
to
26.51
%
 
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)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diversified International Class 2:
 
 
 
 
 
 
 
 
 
2018
 
116
 
$
8.16
to
$
9.33
 
$
1,092
 
2.23
%
 
0.75% to 1.40%

 
(18.32)

%
to
(18.94)
%
 
2017
 
58
 
$
11.83
to
$
11.51
 
$
684
 
1.86
%
 
1.00% to 1.40%

 
18.18

%
to
27.04
%
 
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 (6)
 
3
 
$
9.38
to
$
9.37
 
$
26
 
—%

 
1.15% to 1.40%

 
(3.89)

%
to
(4.00)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dreyfus IP MidCap Stock Service Shares:
 
 
 
 
 
 
 
 
 
2018
 
46
 
$
8.68
to
$
9.92
 
$
429
 
0.24
%
 
0.75% to 1.40%

 
(3.90)

%
to
(6.56)
%
 
2017
 
14
 
$
11.23
to
$
11.93
 
$
162
 
0.69
%
 
1.00% to 1.40%

 
11.41

%
to
13.40
%
 
2016
 
10
 
$
10.56
to
$
10.52
 
$
105
 
0.75
%
 
1.15% to 1.40%

 
13.92

%
to
13.61
%
 
2015 (8)
 
5
 
$
9.27
to
$
9.26
 
$
44
 
—%

 
1.15% to 1.40%

 
(8.13)

%
to
(8.23)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended December 31, except as noted
 
 
 
 
 
Unit fair value
 
 
 
 
 
 
 
 
Total return (3)
 
 
 
 
 
corresponding
 
 
 
 
 
 
Expense
 
corresponding
 
 
 
 
 
to lowest
 
Net
 
Investment
 
ratio (2)
 
to lowest
 
 
 
Units
 
to highest
 
assets
 
income
 
lowest to
 
to highest
Division
 
(000's)
 
expense ratio
 
(000's)
 
ratio (1)
 
highest
 
expense ratio
Dreyfus IP Technology Growth Service Shares:
 
 
 
 
 
 
 
 
 
2018
 
261
 
$
33.13
to
$
30.39
 
$
8,555

 
—%

 
1.40% to 2.00%
 
(2.64)

%
to
(3.22)

%
 
2017
 
305
 
$
34.03
to
$
31.40
 
$
10,254

 
—%

 
1.40% to 2.00%
 
40.39

%
to
39.56

%
 
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

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Alternative Asset Allocation Class B:
 
 
 
 
 
 
 
 
 
2018 (14)
 
4
 
$
9.44
to
$
8.84
 
$
37

 
1.75
%
 
0.75% to 1.40%
 
(5.51)

%
to
(10.62)

%
 
2017
 
4
 
$
10.41
to
$
9.89
 
$
40

 
2.10
%
 
1.00% to 1.40%
 
4.00

%
to
5.55

%
 
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 (6)
 
—
 
$
9.83
to
$
9.82
 
$
—

 
—%

 
1.15% to 1.40%
 
(1.60)

%
to
(1.70)

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Equity 500 Index Class B2:
 
 
 
 
 
 
 
 
 
2018 (15)
 
149
 
$
9.51
to
$
12.48
 
$
1,691

 
1.21
%
 
0.75% to 1.40%
 
(5.18)

%
to
(6.31)

%
 
2017
 
103
 
$
11.39
to
$
13.32
 
$
1,324

 
1.21
%
 
1.00% to 1.40%
 
13.67

%
to
19.35

%
 
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 (6)
 
6
 
$
10.25
to
$
10.24
 
$
59

 
—%

 
1.15% to 1.40%
 
 
 
 
(0.49)

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Small Mid Cap Value Class B:
 
 
 
 
 
 
 
 
 
2018 (16)
 
100
 
$
8.52
to
$
11.32
 
$
1,084

 
0.99
%
 
0.75% to 2.00%
 
(15.22)

%
to
(17.97)

%
 
2017
 
92
 
$
10.81
to
$
13.80
 
$
1,242

 
0.36
%
 
1.00% to 2.00%
 
7.24

%
to
7.98

%
 
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

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Income Class 1:
 
 
 
 
 
 
 
 
 
2018
 
13,699
 
$
69.72
to
$
16.82
 
$
215,812

 
1.73
%
 
0.09% to 2.00%
 
—

%
to
(6.92)

%
 
2017
 
10,292
 
$
2.61
to
$
18.07
 
$
197,554

 
2.21
%
 
0.44% to 2.00%
 
20.57

%
to
18.73

%
 
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

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Income Class 2:
 
 
 
 
 
 
 
 
 
2018
 
396
 
$
9.61
to
$
12.24
 
$
4,292

 
1.76
%
 
0.75% to 1.40%
 
(3.90)

%
to
(6.56)

%
 
2017
 
201
 
$
11.50
to
$
13.10
 
$
2,508

 
2.21
%
 
1.00% to 1.40%
 
14.66

%
to
19.09

%
 
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 (6)
 
8
 
$
10.23
to
$
10.22
 
$
81

 
—%

 
1.15% to 1.40%
 
 
 
 
(0.97)

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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:
 
 
 
 
 
 
 
 
 
2018
 
1,181
 
$
27.90
to
$
25.03
 
$
32,952

 
0.59
%
 
1.30% to 1.90%
 
(7.71)

%
to
(8.25)

%
 
2017
 
1,388
 
$
30.23
to
$
27.28
 
$
41,949

 
0.89
%
 
1.30% to 1.90%
 
20.20

%
to
19.44

%
 
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

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Contrafund Service Class 2:
 
 
 
 
 
 
 
 
 
2018
 
1,897
 
$
9.21
to
$
24.37
 
$
43,924

 
0.43
%
 
0.75% to 2.00%
 
(8.08)

%
to
(8.49)

%
 
2017
 
1,967
 
$
11.28
to
$
26.63
 
$
52,563

 
0.77
%
 
1.00% to 2.00%
 
12.35

%
to
19.20

%
 
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

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Equity-Income Service Class 2:
 
 
 
 
 
 
 
 
 
2018
 
1,306
 
$
19.64
to
$
17.68
 
$
25,518

 
2.03
%
 
1.30% to 2.00%
 
(9.70)

%
to
(10.34)

%
 
2017
 
1,472
 
$
21.75
to
$
19.72
 
$
31,878

 
1.49
%
 
1.30% to 2.00%
 
11.20

%
to
10.41

%
 
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

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Government Money Market Initial Class:
 
 
 
 
 
 
 
 
 
2018
 
8,644
 
$
1.01
to
$
9.68
 
$
41,119

 
1.59
%
 
0.37% to 2.00%
 
1.21

%
to
(0.31)

%
 
2017
 
7,283
 
$
1.00
to
$
9.71
 
$
34,519

 
0.66
%
 
0.42% to 2.00%
 
0.21

%
to
(1.32)

%
 
2016 (9)
 
8,827
 
$
1.00
to
$
0.99
 
$
47,450

 
0.22
%
 
0.59% to 2.19%
 
—

%
to
—

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Government Money Market Service Class 2:
 
 
 
 
 
 
 
 
 
2018
 
768
 
$
10.05
to
$
9.93
 
$
7,639

 
1.33
%
 
0.75% to 1.40%
 
0.50

%
to
(0.10)

%
 
2017
 
310
 
$
9.96
to
$
9.94
 
$
3,084

 
0.42
%
 
1.00% to 1.40%
 
(0.40)

%
to
(0.60)

%
 
2016 (9)
 
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:
 
 
 
 
 
 
 
 
 
2018
 
644
 
$
20.18
to
$
18.10
 
$
12,987

 
0.15
%
 
1.30% to 1.90%
 
(1.56)

%
to
(2.16)

%
 
2017
 
730
 
$
20.50
to
$
18.50
 
$
14,958

 
0.12
%
 
1.30% to 1.90%
 
33.29

%
to
32.43

%
 
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

%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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:
 
 
 
 
 
 
 
 
 
2018
 
383
 
$
27.10
to
$
24.86
 
$
10,302
 
0.04
%
 
1.40% to 2.00%

 
(1.85)
%
to
(2.43)
%
 
2017
 
421
 
$
27.61
to
$
25.48
 
$
11,548
 
0.08
%
 
1.40% to 2.00%

 
33.00
%
to
32.16
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class:
 
 
 
 
 
 
 
 
 
2018
 
7
 
 
 
 
$
11.68
 
$
78
 
0.40
%
 
0.95
%
 
 
 
 
(15.42)
%
 
2017
 
49
 
 
 
 
$
13.81
 
$
674
 
0.62
%
 
0.95
%
 
 
 
 
19.57
%
 
2016
 
49
 
 
 
 
$
11.55
 
$
563
 
0.53
%
 
0.95
%
 
 
 
 
11.06
%
 
2015
 
7
 
 
 
 
$
10.40
 
$
69
 
0.41
%
 
0.95
%
 
 
 
 
(2.44)
%
 
2014 (5)
 
7
 
 
 
 
$
10.66
 
$
71
 
0.32
%
 
0.95
%
 
 
 
 
5.75
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class 2:
 
 
 
 
 
 
 
 
 
2018
 
1,047
 
$
8.42
to
$
25.44
 
$
21,792
 
0.41
%
 
0.75% to 2.00%

 
(15.88)
%
to
(16.48)
%
 
2017
 
914
 
$
11.55
to
$
30.46
 
$
25,998
 
0.49
%
 
1.00% to 2.00%

 
14.58
%
to
18.15
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Overseas Service Class 2:
 
 
 
 
 
 
 
 
 
2018
 
1,398
 
$
8.47
to
$
15.07
 
$
22,377
 
1.29
%
 
0.75% to 2.00%

 
(14.79)
%
to
(16.79)
%
 
2017
 
1,487
 
$
11.88
to
$
18.11
 
$
28,448
 
1.15
%
 
1.00% to 2.00%

 
18.92
%
to
27.45
%
 
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)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Global Real Estate VIP Class 2:
 
 
 
 
 
 
 
 
 
2018
 
79
 
$
9.49
to
$
9.30
 
$
790
 
2.72
%
 
0.75% to 2.00%

 
(5.38)
%
to
(8.64)
%
 
2017
 
66
 
$
10.70
to
$
10.18
 
$
715
 
3.04
%
 
1.00% to 2.00%

 
6.57
%
to
8.30
%
 
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 (6)
 
4
 
$
10.56
to
$
10.55
 
$
42
 
—%

 
1.15% to 1.40%

 
1.05
%
to
0.96
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Income VIP Class 4:
 
 
 
 
 
 
 
 
 
2018 (13)
 
9
 
$
9.40
to
$
9.37
 
$
87
 
—%

 
0.75% to 1.40%

 
(6.37)
%
to
(6.58)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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 Rising Dividends VIP Class 4:
 
 
 
 
 
 
 
 
 
2018
 
131

 
$
9.66
to
$
12.45
 
$
1,480

 
1.21
%
 
0.75% to 1.40%
 
(3.50)

%
to
(6.53)
%
 
2017
 
104

 
$
11.48
to
$
13.32
 
$
1,339

 
1.37
%
 
1.00% to 1.40%
 
14.46

%
to
18.82
%
 
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 (6)
 
7

 
 
 
 
$
10.34
 
$
71

 
—%

 
1.15% to 1.40%
 
 
 
 
(0.39)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Small Cap Value VIP Class 2:
 
 
 
 
 
 
 
 
 
2018
 
178

 
$
20.73
to
$
19.54
 
$
3,647

 
0.88
%
 
1.30% to 2.00%
 
(14.02)

%
to
(14.60)
%
 
2017
 
206

 
$
24.11
to
$
22.88
 
$
4,897

 
0.52
%
 
1.30% to 2.00%
 
9.24

%
to
8.49
%
 
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)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Mid Cap Value Institutional Shares:
 
 
 
 
 
 
 
 
 
2018
 
456

 
$
23.66
to
$
21.59
 
$
10,678

 
1.29
%
 
1.30% to 2.00%
 
(11.62)

%
to
(12.24)
%
 
2017
 
509

 
$
26.77
to
$
24.60
 
$
13,514

 
0.71
%
 
1.30% to 2.00%
 
9.62

%
to
8.90
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Goldman Sachs VIT Mid Cap Value Service Shares:
 
 
 
 
 
 
 
 
 
2018
 
69

 
$
9.02
to
$
9.82
 
$
658

 
0.65
%
 
0.75% to 1.40%
 
(9.71)

%
to
(12.01)
%
 
2017
 
50

 
$
10.73
to
$
11.16
 
$
558

 
0.53
%
 
1.00% to 1.40%
 
6.55

%
to
9.30
%
 
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)
%
 
2
 
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:
 
 
 
 
 
 
 
 
 
2018
 
5

 
$
9.43
to
$
8.79
 
$
46

 
5.14
%
 
0.75% to 1.40%
 
(5.61)

%
to
(8.25)
%
 
2017
 
—

 
$
10.20
to
$
9.58
 
$
2

 
3.31
%
 
1.00% to 1.40%
 
2.00

%
to
3.90
%
 
2016
 
—

 
$
9.26
to
$
9.22
 
$
—

 
—%

 
1.15% to 1.40%
 
(0.86)

%
to
(1.18)
%
 
2015 (8)
 
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:
 
 
 
 
 
 
 
 
 
2018
 
270

 
$
21.45
to
$
19.57
 
$
5,728

 
0.47
%
 
1.30% to 2.00%
 
(9.80)

%
to
(10.43)
%
 
2017
 
291

 
$
23.78
to
$
21.85
 
$
6,852

 
0.53
%
 
1.30% to 2.00%
 
10.14

%
to
9.36
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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:
 
 
 
 
 
 
 
 
 
2018
 
33

 
$
8.84
to
$
12.20
 
$
337

 
0.28
%
 
0.75% to 1.40%
 
(11.95)

%
to
(10.10)
%
 
2017
 
15

 
$
11.29
to
$
13.57
 
$
187

 
0.41
%
 
1.00% to 1.40%
 
11.67

%
to
9.61
%
 
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 (6)
 
—

 
$
10.62
to
$
10.61
 
$
5

 
6.02
%
 
1.15% to 1.40%
 
1.63

%
to
1.53
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government & High Quality Bond Class 1:
 
 
 
 
 
 
 
 
 
2018
 
7,616

 
$
2.98
to
$
11.35
 
$
83,790

 
3.77
%
 
0.39% to 2.00%
 
0.49

%
to
(1.05)
%
 
2017
 
9,071

 
$
2.88
to
$
11.47
 
$
98,248

 
3.94
%
 
0.42% to 2.00%
 
1.45

%
to
(0.17)
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government & High Quality Bond Class 2:
 
 
 
 
 
 
 
 
 
2018
 
182

 
$
10.16
to
$
9.99
 
$
1,824

 
3.86
%
 
0.75% to 1.40%
 
1.70

%
to
(0.70)
%
 
2017
 
140

 
$
10.00
to
$
10.06
 
$
1,414

 
4.10
%
 
1.00% to 1.40%
 
—

%
to
0.10
%
 
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 (6)
 
2

 
 
 
 
$
10.12
 
$
20

 
—%

 
1.15% to 1.40%
 
—

%
to
0.10
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Floating Rate Strategies Series F:
 
 
 
 
 
 
 
 
 
2018
 
333

 
$
9.75
to
$
10.15
 
$
3,431

 
2.63
%
 
0.75% to 2.00%
 
(2.50)

%
to
(2.78)
%
 
2017
 
172

 
$
10.17
to
$
10.44
 
$
1,825

 
2.85
%
 
1.00% to 2.00%
 
1.70

%
to
1.36
%
 
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 (6)
 
1

 
$
9.94
to
$
9.93
 
$
13

 
—%

 
1.15% to 1.40%
 
(0.80)

%
to
(0.90)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Investments Global Managed Futures Strategy:
 
 
 
 
 
 
 
 
 
2018
 
21

 
$
9.09
to
$
7.63
 
$
182

 
—%

 
0.75% to 2.00%
 
(8.83)

%
to
(10.86)
%
 
2017
 
13

 
$
10.60
to
$
8.56
 
$
118

 
1.54
%
 
1.00% to 2.00%
 
5.79

%
to
6.60
%
 
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 (6)
 
2

 
$
10.75
to
$
10.74
 
$
21

 
—%

 
1.15% to 1.40%
 
5.50

%
to
5.40
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Guggenheim Investments Long Short Equity:
 
 
 
 
 
 
 
 
 
2018
 
21

 
$
9.19
to
$
9.33
 
$
203

 
—%

 
0.75% to 2.00%
 
(7.64)

%
to
(14.64)
%
 
2017
 
12

 
$
11.54
to
$
10.93
 
$
141

 
0.36
%
 
1.00% to 2.00%
 
15.05

%
to
12.56
%
 
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 (6)
 
4

 
$
10.45
to
$
10.44
 
$
43

 
—%

 
1.15% to 1.40%
 
2.96

%
to
2.86
%


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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:
 
 
 
 
 
 
 
 
 
2018
 
57

 
$
9.75
to
$
9.18
 
$
539

 
—%

 
0.75% to 2.00%
 
(2.11)

%
to
(6.99)
%
 
2017
 
53

 
$
10.29
to
$
9.87
 
$
537

 
—%

 
1.00% to 2.00%
 
2.80

%
to
1.65
%
 
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 (6)
 
1

 
$
10.26
to
$
10.25
 
$
8

 
—%

 
1.15% to 1.40%
 
2.29

%
to
2.30
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Class 1:
 
 
 
 
 
 
 
 
 
2018
 
489

 
$
10.46
to
$
10.20
 
$
5,073

 
4.44
%
 
1.30% to 2.00%
 
(0.57)

%
to
(1.26)
%
 
2017
 
486

 
$
10.52
to
$
10.33
 
$
5,092

 
4.43
%
 
1.30% to 2.00%
 
3.75

%
to
3.09
%
 
2016
 
462

 
$
10.14
to
$
10.02
 
$
4,669

 
4.48
%
 
1.30% to 2.00%
 
4.43

%
to
3.62
%
 
2015 (8)
 
60

 
$
9.71
to
$
9.67
 
$
582

 
4.78
%
 
1.30% to 2.00%
 
(2.61)

%
to
(3.01)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Class 2:
 
 
 
 
 
 
 
 
 
2018
 
138

 
$
10.10
to
$
10.33
 
$
1,403

 
4.93
%
 
0.75% to 1.40%
 
1.20

%
to
(0.86)
%
 
2017
 
83

 
$
10.25
to
$
10.42
 
$
860

 
5.10
%
 
1.00% to 1.40%
 
2.30

%
to
3.37
%
 
2016
 
44

 
$
10.12
to
$
10.08
 
$
446

 
7.41
%
 
1.15% to 1.40%
 
4.33

%
to
4.02
%
 
2015 (8)
 
2

 
$
9.70
to
$
9.69
 
$
17

 
11.21
%
 
1.15% to 1.40%
 
(2.71)

%
to
(2.81)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Emerging Markets Class 1:
 
 
 
 
 
 
 
 
 
2018
 
1,414

 
$
3.73
to
$
28.27
 
$
40,999

 
1.18
%
 
0.48% to 2.00%
 
(21.36)

%
to
(22.59)
%
 
2017
 
1,609

 
$
4.74
to
$
36.52
 
$
59,753

 
1.25
%
 
0.42% to 2.00%
 
40.25

%
to
38.07
%
 
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)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
International Emerging Markets Class 2:
 
 
 
 
 
 
 
 
 
2018
 
169

 
$
7.82
to
$
9.01
 
$
1,532

 
1.31
%
 
0.75% to 1.40%
 
(21.80)

%
to
(22.39)
%
 
2017
 
77

 
$
12.33
to
$
11.61
 
$
935

 
1.45
%
 
1.00% to 1.40%
 
23.80

%
to
38.54
%
 
2016
 
14

 
$
8.41
to
$
8.38
 
$
115

 
1.15
%
 
1.15% to 1.40%
 
7.82

%
to
7.71
%
 
2015 (8)
 
4

 
$
7.80
to
$
7.78
 
$
33

 
1.58
%
 
1.15% to 1.40%
 
(21.84)

%
to
(21.97)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco American Franchise Series I:
 
 
 
 
 
 
 
 
 
2018
 
213

 
$
17.93
to
$
17.23
 
$
3,826

 
—%

 
1.30% to 1.90%
 
(4.88)

%
to
(5.43)
%
 
2017
 
237

 
$
18.85
to
$
18.22
 
$
4,468

 
0.08
%
 
1.30% to 1.90%
 
25.67

%
to
24.97
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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 Balanced-Risk Allocation Series II:
 
 
 
 
 
 
 
 
 
2018
 
30

 
$
9.31
to
$
10.41
 
$
310

 
1.33
%
 
0.75% to 1.40%
 
(6.71)
%
to
(7.96)
%
 
2017
 
24

 
$
10.62
to
$
11.31
 
$
266

 
4.11
%
 
1.00% to 1.40%
 
6.09
%
to
8.33
%
 
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 (6)
 
—

 
 
 
 
$
10.08
 
$
—

 
—%

 
1.15% to 1.40%
 
 
 
 
(0.69)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Core Equity Series I:
 
 
 
 
 
 
 
 
 
2018
 
788

 
$
15.88
to
$
14.24
 
$
12,518

 
0.88
%
 
1.30% to 1.90%
 
(10.59)
%
to
(11.11)
%
 
2017
 
944

 
$
17.76
to
$
16.02
 
$
16,764

 
1.02
%
 
1.30% to 1.90%
 
11.77
%
to
11.02
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Health Care Series I:
 
 
 
 
 
 
 
 
 
2018 (17)
 
312

 
$
22.81
to
$
10.92
 
$
6,469

 
—%

 
1.30% to 2.00%
 
(0.39)
%
to
(1.09)
%
 
2017
 
353

 
$
22.90
to
$
11.04
 
$
7,458

 
0.36
%
 
1.30% to 2.00%
 
14.33
%
to
13.58
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Health Care Series II:
 
 
 
 
 
 
 
 
 
2018 (18)
 
127

 
$
10.19
to
$
10.32
 
$
1,313

 
—%

 
0.75% to 1.40%
 
1.49
%
to
(0.77)
%
 
2017
 
98

 
$
10.61
to
$
10.40
 
$
1,028

 
0.09
%
 
1.00% to 1.40%
 
6.10
%
to
13.91
%
 
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 (6)
 
7

 
$
10.34
to
$
10.33
 
$
71

 
—%

 
1.15% to 1.40%
 
 
 
 
0.39
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco International Growth Series I:
 
 
 
 
 
 
 
 
 
2018
 
621

 
$
10.67
to
$
10.01
 
$
6,592

 
2.05
%
 
1.40% to 2.00%
 
(16.18)
%
to
(16.65)
%
 
2017
 
752

 
$
12.73
to
$
12.01
 
$
9,528

 
1.41
%
 
1.40% to 2.00%
 
21.35
%
to
20.58
%
 
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)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco International Growth Series II:
 
 
 
 
 
 
 
 
 
2018
 
94

 
$
8.60
to
$
9.14
 
$
861

 
1.97
%
 
0.75% to 1.40%
 
(13.48)
%
to
(16.38)
%
 
2017
 
60

 
$
11.31
to
$
10.93
 
$
665

 
1.39
%
 
1.00% to 1.40%
 
13.21
%
to
21.04
%
 
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 (6)
 
3

 
$
9.61
to
$
9.60
 
$
32

 
—%

 
1.15% to 1.40%
 
(3.12)
%
to
(3.23)
%


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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:
 
 
 
 
 
 
 
 
 
2018
 
66

 
$
15.82
to
$
15.20
 
$
1,042

 
—%

 
1.30% to 1.90%
 
(6.78)
%
to
(7.32)
%
 
2017
 
71

 
$
16.97
to
$
16.40
 
$
1,209

 
—%

 
1.30% to 1.90%
 
20.87
%
to
20.15
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Small Cap Equity Series I:
 
 
 
 
 
 
 
 
 
2018
 
253

 
$
22.42
to
$
20.45
 
$
5,591

 
—%

 
1.30% to 2.00%
 
(16.16)
%
to
(16.77)
%
 
2017
 
297

 
$
26.74
to
$
24.57
 
$
7,855

 
—%

 
1.30% to 2.00%
 
12.59
%
to
11.78
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Technology Series I:
 
 
 
 
 
 
 
 
 
2018
 
245

 
$
12.42
to
$
11.18
 
$
3,047

 
—%

 
1.30% to 1.90%
 
(1.82)
%
to
(2.27)
%
 
2017
 
292

 
$
12.65
to
$
11.44
 
$
3,692

 
—%

 
1.30% to 1.90%
 
33.44
%
to
32.56
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Value Opportunities Series I:
 
 
 
 
 
 
 
 
 
2018
 
204

 
$
14.27
to
$
13.09
 
$
2,905

 
0.31
%
 
1.40% to 2.00%
 
(20.28)
%
to
(20.76)
%
 
2017
 
247

 
$
17.90
to
$
16.52
 
$
4,385

 
0.39
%
 
1.40% to 2.00%
 
15.78
%
to
15.12
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Janus Henderson Enterprise Service Shares:
 
 
 
 
 
 
 
 
 
2018
 
417

 
$
20.63
to
$
18.50
 
$
8,592

 
0.13
%
 
1.30% to 1.90%
 
(1.95)
%
to
(2.53)
%
 
2017
 
465

 
$
21.04
to
$
18.98
 
$
9,775

 
0.52
%
 
1.30% to 1.90%
 
25.46
%
to
24.70
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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 Henderson Flexible Bond Service Shares:
 
 
 
 
 
 
 
 
 
2018
 
188

 
$
10.05
to
$
9.66
 
$
1,858

 
2.64
%
 
0.75% to 2.00%
 
0.70

%
to
(3.30)
%
 
2017
 
213

 
$
10.13
to
$
9.99
 
$
2,165

 
2.61
%
 
1.00% to 2.00%
 
1.30

%
to
1.32
%
 
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 (6)
 
7

 
$
10.05
to
$
10.04
 
$
73

 
4.49
%
 
1.15% to 1.40%
 
(0.10)

%
to
(0.20)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth Class 1:
 
 
 
 
 
 
 
 
 
2018
 
2,219

 
$
4.06
to
$
33.97
 
$
39,308

 
0.22
%
 
0.51% to 2.00%
 
(7.69)

%
to
(9.16)
%
 
2017
 
2,338

 
$
4.40
to
$
33.97
 
$
48,371

 
0.37
%
 
0.43% to 2.00%
 
34.32

%
to
32.23
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth Class 2:
 
 
 
 
 
 
 
 
 
2018
 
153

 
$
8.71
to
$
11.78
 
$
1,526

 
0.13
%
 
0.75% to 1.40%
 
(13.33)

%
to
(8.82)
%
 
2017
 
54

 
$
12.08
to
$
12.92
 
$
682

 
0.16
%
 
1.00% to 1.40%
 
20.32

%
to
32.65
%
 
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 (6)
 
1

 
$
10.12
to
$
10.11
 
$
6

 
—%

 
1.15% to 1.40%
 
(0.39)

%
to
(0.49)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth I Class 1:
 
 
 
 
 
 
 
 
 
2018
 
1,582

 
$
3.07
to
$
70.22
 
$
102,803

 
0.04
%
 
0.61% to 2.00%
 
3.16

%
to
1.55
%
 
2017
 
1,778

 
$
2.98
to
$
69.15
 
$
112,164

 
0.03
%
 
0.42% to 2.00%
 
33.15

%
to
31.07
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap Growth I Class 2:
 
 
 
 
 
 
 
 
 
2018
 
288

 
$
9.67
to
$
13.33
 
$
3,159

 
—%

 
0.75% to 1.40%
 
(3.88)

%
to
1.91
%
 
2017
 
57

 
$
12.12
to
$
13.08
 
$
702

 
—%

 
1.00% to 1.40%
 
21.08

%
to
31.46
%
 
2016
 
13

 
$
9.99
to
$
9.95
 
$
127

 
—%

 
1.15% to 1.40%
 
—

%
to
(0.30)
%
 
2015 (8)
 
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:
 
 
 
 
 
 
 
 
 
2018
 
5,075

 
$
2.56
to
$
17.84
 
$
88,547

 
1.69
%
 
0.47% to 2.00%
 
(4.98)

%
to
(6.45)
%
 
2017
 
5,160

 
$
2.70
to
$
19.07
 
$
104,391

 
1.65
%
 
0.42% to 2.00%
 
20.98

%
to
19.11
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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:
 
 
 
 
 
 
 
 
 
2018
 
678

 
$
9.52
to
$
11.86
 
$
7,080

 
1.80
%
 
0.75% to 1.40%
 
(4.99)

%
to
(6.25)
%
 
2017
 
275

 
$
11.40
to
$
12.65
 
$
3,235

 
2.08
%
 
1.00% to 1.40%
 
13.77

%
to
19.57
%
 
2016
 
72

 
$
10.63
to
$
10.58
 
$
766

 
2.04
%
 
1.15% to 1.40%
 
10.04

%
to
9.75
%
 
2015 (8)
 
16

 
$
9.66
to
$
9.64
 
$
151

 
2.15
%
 
1.15% to 1.40%
 
(3.69)

%
to
(3.89)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS International Value Service Class:
 
 
 
 
 
 
 
 
 
2018
 
531

 
$
9.08
to
$
10.58
 
$
5,717

 
0.95
%
 
0.75% to 2.00%
 
(8.93)

%
to
(11.46)
%
 
2017
 
548

 
$
11.76
to
$
11.95
 
$
6,698

 
1.47
%
 
1.00% to 2.00%
 
17.72

%
to
24.35
%
 
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 (6)
 
6

 
 
 
 
$
9.83
 
$
61

 
—%

 
1.15% to 1.40%
 
 
 
 
(2.09)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS New Discovery Service Class:
 
 
 
 
 
 
 
 
 
2018
 
197

 
$
9.27
to
$
13.05
 
$
2,463

 
—%

 
0.75% to 2.00%
 
(7.67)

%
to
(3.62)
%
 
2017
 
110

 
$
12.00
to
$
13.54
 
$
1,497

 
—%

 
1.00% to 2.00%
 
19.05

%
to
23.77
%
 
2016
 
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)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS Utilities Service Class:
 
 
 
 
 
 
 
 
 
2018
 
633

 
$
9.99
to
$
22.07
 
$
12,388

 
0.83
%
 
0.75% to 2.00%
 
(0.10)

%
to
(1.21)
%
 
2017
 
643

 
$
10.57
to
$
22.34
 
$
13,276

 
4.13
%
 
1.00% to 2.00%
 
5.38

%
to
12.26
%
 
2016
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS Value Service Class:
 
 
 
 
 
 
 
 
 
2018
 
192

 
$
24.47
to
$
23.10
 
$
4,681

 
1.28
%
 
1.40% to 2.00%
 
(11.60)

%
to
(12.13)
%
 
2017
 
226

 
$
27.68
to
$
26.29
 
$
6,239

 
1.70
%
 
1.40% to 2.00%
 
15.72

%
to
15.05
%
 
2016
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MidCap Class 1:
 
 
 
 
 
 
 
 
 
2018
 
3,361

 
$
12.25
to
$
90.97
 
$
283,507

 
0.28
%
 
0.45% to 2.00%
 
(6.94)

%
to
(8.41)
%
 
2017
 
3,871

 
$
13.16
to
$
99.32
 
$
351,847

 
0.54
%
 
0.43% to 2.00%
 
24.99

%
to
23.04
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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
Multi-Asset Income Class 1:
 
 
 
 
 
 
 
 
 
2018
 
17

 
$
10.71
to
$
10.51
 
$
183

 
2.82
%
 
1.30% to 2.00%
 
(6.87)

%
to
(7.56)
%
 
2017
 
14

 
$
11.50
to
$
11.37
 
$
161

 
1.71
%
 
1.30% to 2.00%
 
10.58

%
to
9.75
%
 
2016 (1)
 
16

 
$
10.40
to
$
10.36
 
$
170

 
—%

 
1.30% to 2.00%
 
4.10

%
to
3.70
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Multi-Asset Income Class 2:
 
 
 
 
 
 
 
 
 
2018
 
4

 
$
9.46
to
$
10.61
 
$
43

 
3.93
%
 
0.75% to 1.40%
 
(5.31)

%
to
(7.26)
%
 
2017
 
1

 
$
10.68
to
$
11.44
 
$
14

 
—%

 
1.00% to 1.40%
 
6.69

%
to
10.32
%
 
2016 (10)
 
—

 
$
10.39
to
$
10.37
 
$
—

 
—%

 
1.15% to 1.40%
 
4.00

%
to
3.80
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Large Cap Value Class I:
 
 
 
 
 
 
 
 
 
2018
 
169

 
$
22.80
to
$
20.91
 
$
3,818

 
1.16
%
 
1.40% to 2.00%
 
(2.40)

%
to
(3.01)
%
 
2017
 
196

 
$
23.36
to
$
21.56
 
$
4,562

 
0.57
%
 
1.40% to 2.00%
 
11.77

%
to
11.13
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Mid Cap Growth Portfolio Class S:
 
 
 
 
 
 
 
 
 
2018
 
223

 
$
9.14
to
$
10.94
 
$
2,453

 
—%

 
0.75% to 2.00%
 
(9.05)

%
to
(8.45)
%
 
2017
 
215

 
$
11.77
to
$
11.95
 
$
2,599

 
—%

 
1.00% to 2.00%
 
17.00

%
to
22.19
%
 
2016
 
249

 
$
9.46
to
$
9.78
 
$
2,448

 
—%

 
1.15% to 2.00%
 
2.94

%
to
2.09
%
 
2015 (8)
 
286

 
$
9.19
to
$
9.58
 
$
2,746

 
—%

 
1.15% to 2.00%
 
(8.83)

%
to
(4.49)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Sustainable Equity Class I:
 
 
 
 
 
 
 
 
 
2018 (19)
 
132

 
$
24.40
to
$
22.38
 
$
3,205

 
0.46
%
 
1.40% to 2.00%
 
(7.01)

%
to
(7.60)
%
 
2017
 
167

 
$
26.24
to
$
24.22
 
$
4,355

 
0.50
%
 
1.40% to 2.00%
 
16.78

%
to
16.11
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Sustainable Equity Class S:
 
 
 
 
 
 
 
 
 
2018 (13)
 
—

 
$
8.87
to
$
8.84
 
$
2

 
0.97
%
 
0.75% to 1.40%
 
(11.48)

%
to
(11.78)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Oppenheimer Main Street Small Cap Service Shares:
 
 
 
 
 
 
 
 
 
2018
 
30

 
$
13.59
to
$
13.14
 
$
402

 
0.06
%
 
1.30% to 1.90%
 
(11.70)

%
to
(12.22)
%
 
2017
 
39

 
$
15.39
to
$
14.97
 
$
602

 
0.64
%
 
1.30% to 1.90%
 
12.42

%
to
11.80
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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 All Asset Administrative Class:
 
 
 
 
 
 
 
 
 
2018
 
184
 
$
15.01
to
$
14.17
 
$
2,747

 
3.13
%
 
1.40% to 2.00%
 
(6.71)

%
to
(7.26)
%
 
2017
 
230
 
$
16.09
to
$
15.28
 
$
3,688

 
4.55
%
 
1.40% to 2.00%
 
11.97

%
to
11.29
%
 
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)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO All Asset Advisor Class:
 
 
 
 
 
 
 
 
 
2018
 
10
 
$
9.39
to
$
10.16
 
$
100

 
3.11
%
 
0.75% to 1.40%
 
(5.72)

%
to
(6.70)
%
 
2017
 
9
 
$
10.71
to
$
10.89
 
$
98

 
5.25
%
 
1.00% to 1.40%
 
7.21

%
to
11.81
%
 
2016
 
5
 
$
9.78
to
$
9.74
 
$
53

 
6.46
%
 
1.15% to 1.40%
 
11.52

%
to
11.31
%
 
2015 (8)
 
—
 
$
8.77
to
$
8.75
 
$
—

 
—%

 
1.15% to 1.40%
 
(12.12)

%
to
(12.32)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO Commodity Real Return Strategy M Class:
 
 
 
 
 
 
 
 
 
2018
 
5
 
$
8.38
to
$
6.93
 
$
44

 
1.32
%
 
0.75% to 1.40%
 
(15.86)

%
to
(15.59)
%
 
2017
 
1
 
$
10.24
to
$
8.21
 
$
11

 
11.10
%
 
1.00% to 1.40%
 
2.40

%
to
0.49
%
 
2016
 
1
 
$
8.20
to
$
8.17
 
$
12

 
0.93
%
 
1.15% to 1.40%
 
13.26

%
to
13.16
%
 
2015 (8)
 
2
 
$
7.24
to
$
7.22
 
$
13

 
—%

 
1.15% to 1.40%
 
(27.45)

%
to
(27.66)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO High Yield Administrative Class:
 
 
 
 
 
 
 
 
 
2018
 
1,264
 
$
9.77
to
$
14.26
 
$
17,923

 
5.11
%
 
0.75% to 2.00%
 
(2.20)

%
to
(4.55)
%
 
2017
 
1,441
 
$
10.34
to
$
14.94
 
$
21,731

 
4.86
%
 
1.00% to 2.00%
 
3.40

%
to
4.48
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO Low Duration Advisor Class:
 
 
 
 
 
 
 
 
 
2018
 
105
 
$
10.03
to
$
9.52
 
$
1,029

 
1.79
%
 
0.75% to 2.00%
 
0.40

%
to
(1.75)
%
 
2017
 
40
 
$
10.00
to
$
9.69
 
$
392

 
1.22
%
 
1.00% to 2.00%
 
—

%
to
(0.82)
%
 
2016
 
32
 
$
9.90
to
$
9.77
 
$
315

 
1.41
%
 
1.15% to 2.00%
 
0.10

%
to
(0.71)
%
 
2015 (8)
 
37
 
$
9.89
to
$
9.84
 
$
361

 
11.09
%
 
1.15% to 2.00%
 
(1.10)

%
to
(1.60)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PIMCO Total Return Administrative Class:
 
 
 
 
 
 
 
 
 
2018
 
1,741
 
$
10.10
to
$
12.05
 
$
21,623

 
2.54
%
 
0.75% to 2.00%
 
1.30

%
to
(2.51)
%
 
2017
 
2,027
 
$
10.22
to
$
12.36
 
$
26,016

 
2.02
%
 
1.00% to 2.00%
 
2.20

%
to
2.83
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended December 31, except as noted
 
 
 
 
 
Unit fair value
 
 
 
 
 
 
 
 
Total return (3)
 
 
 
 
 
corresponding
 
 
 
 
 
 
Expense
 
corresponding
 
 
 
 
 
to lowest
 
Net
 
Investment
 
ratio (2)
 
to lowest
 
 
 
Units
 
to highest
 
assets
 
income
 
lowest to
 
to highest
Division
 
(000's)
 
expense ratio
 
(000's)
 
ratio (1)
 
highest
 
expense ratio
Principal Capital Appreciation Class 1:
 
 
 
 
 
 
 
 
 
2018
 
5,616

 
$
20.63
to
$
18.42
 
$
91,429

 
1.13
%
 
0.95% to 2.00%
 
(4.36)
%
to
(5.34)
%
 
2017
 
6,546

 
$
21.57
to
$
19.46
 
$
112,554

 
1.25
%
 
0.95% to 2.00%
 
19.63
%
to
18.37
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal Capital Appreciation Class 2:
 
 
 
 
 
 
 
 
 
2018
 
201

 
$
9.66
to
$
12.56
 
$
2,144

 
1.04
%
 
0.75% to 1.40%
 
(3.69)
%
to
(4.92)
%
 
2017
 
82

 
$
11.38
to
$
13.21
 
$
999

 
1.27
%
 
1.00% to 1.40%
 
13.57
%
to
18.79
%
 
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 (6)
 
19

 
$
10.32
to
$
10.31
 
$
192

 
—%

 
1.15% to 1.40%
 
 
 
 
(0.29)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2010 Class 1:
 
 
 
 
 
 
 
 
 
2018
 
1,096

 
$
14.52
to
$
14.80
 
$
17,559

 
2.90
%
 
0.95% to 2.00%
 
(4.79)
%
to
(5.79)
%
 
2017
 
1,437

 
$
15.25
to
$
15.71
 
$
24,297

 
2.18
%
 
0.95% to 2.00%
 
10.43
%
to
9.25
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2020 Class 1:
 
 
 
 
 
 
 
 
 
2018
 
4,619

 
$
15.81
to
$
16.60
 
$
83,004

 
2.65
%
 
0.95% to 2.00%
 
(6.28)
%
to
(7.31)
%
 
2017
 
5,445

 
$
16.87
to
$
17.91
 
$
104,894

 
1.94
%
 
0.95% to 2.00%
 
13.91
%
to
12.71
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2020 Class 2:
 
 
 
 
 
 
 
 
 
2018
 
131

 
$
9.43
to
$
10.27
 
$
1,312

 
3.03
%
 
0.75% to 1.40%
 
(5.61)
%
to
(7.06)
%
 
2017
 
61

 
$
10.96
to
$
11.05
 
$
673

 
2.29
%
 
1.00% to 1.40%
 
9.38
%
to
13.10
%
 
2016
 
2

 
$
9.81
to
$
9.77
 
$
16

 
1.84
%
 
1.15% to 1.40%
 
4.36
%
to
4.16
%
 
2015 (8)
 
2

 
$
9.40
to
$
9.38
 
$
16

 
6.44
%
 
1.15% to 1.40%
 
(6.00)
%
to
(6.20)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2030 Class 1:
 
 
 
 
 
 
 
 
 
2018
 
2,985

 
$
16.08
to
$
16.88
 
$
54,595

 
2.32
%
 
0.95% to 2.00%
 
(7.90)
%
to
(8.95)
%
 
2017
 
3,430

 
$
17.46
to
$
18.54
 
$
68,465

 
1.55
%
 
0.95% to 2.00%
 
17.10
%
to
15.95
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended December 31, except as noted
 
 
 
 
 
Unit fair value
 
 
 
 
 
 
 
 
Total return (3)
 
 
 
 
 
corresponding
 
 
 
 
 
 
Expense
 
corresponding
 
 
 
 
 
to lowest
 
Net
 
Investment
 
ratio (2)
 
to lowest
 
 
 
Units
 
to highest
 
assets
 
income
 
lowest to
 
to highest
Division
 
(000's)
 
expense ratio
 
(000's)
 
ratio (1)
 
highest
 
expense ratio
Principal LifeTime 2030 Class 2:
 
 
 
 
 
 
 
 
 
2018
 
182

 
$
9.24
to
$
10.32
 
$
1,798

 
2.81
%
 
0.75% to 1.40%
 
(7.60)
%
to
(8.67)
%
 
2017
 
76

 
$
11.20
to
$
11.30
 
$
852

 
1.91
%
 
1.00% to 1.40%
 
11.78
%
to
16.37
%
 
2016
 
8

 
$
9.75
to
$
9.71
 
$
82

 
1.50
%
 
1.15% to 1.40%
 
4.39
%
to
4.07
%
 
2015 (8)
 
2

 
$
9.34
to
$
9.33
 
$
16

 
3.07
%
 
1.15% to 1.40%
 
(6.69)
%
to
(6.79)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 1:
 
 
 
 
 
 
 
 
 
2018
 
676

 
$
16.60
to
$
17.74
 
$
12,970

 
2.06
%
 
0.95% to 2.00%
 
(8.69)
%
to
(9.67)
%
 
2017
 
718

 
$
18.18
to
$
19.64
 
$
15,164

 
1.32
%
 
0.95% to 2.00%
 
19.53
%
to
18.24
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 2:
 
 
 
 
 
 
 
 
 
2018
 
65

 
$
9.13
to
$
10.38
 
$
657

 
2.25
%
 
0.75% to 1.40%
 
(8.79)
%
to
(9.42)
%
 
2017
 
33

 
$
11.37
to
$
11.46
 
$
377

 
1.58
%
 
1.00% to 1.40%
 
13.47
%
to
18.76
%
 
2016
 
13

 
$
9.69
to
$
9.65
 
$
121

 
0.38
%
 
1.15% to 1.40%
 
3.97
%
to
3.65
%
 
2015 (8)
 
—

 
$
9.32
to
$
9.31
 
$
—

 
—%

 
1.15% to 1.40%
 
(6.89)
%
to
(6.99)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2050 Class 1:
 
 
 
 
 
 
 
 
 
2018
 
500

 
$
16.71
to
$
17.94
 
$
9,720

 
2.07
%
 
0.95% to 2.00%
 
(9.48)
%
to
(10.43)
%
 
2017
 
523

 
$
18.46
to
$
20.03
 
$
11,287

 
1.27
%
 
0.95% to 2.00%
 
20.97
%
to
19.73
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2050 Class 2:
 
 
 
 
 
 
 
 
 
2018
 
93

 
$
9.04
to
$
10.41
 
$
927

 
1.71
%
 
0.75% to 1.40%
 
(9.69)
%
to
(10.18)
%
 
2017
 
68

 
$
11.47
to
$
11.59
 
$
778

 
1.95
%
 
1.00% to 1.40%
 
14.47
%
to
20.23
%
 
2016
 
9

 
$
9.68
to
$
9.64
 
$
84

 
1.23
%
 
1.15% to 1.40%
 
3.97
%
to
3.77
%
 
2015 (8)
 
3

 
$
9.31
to
$
9.29
 
$
25

 
3.71
%
 
1.15% to 1.40%
 
(7.09)
%
to
(7.29)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime Strategic Income Class 1:
 
 
 
 
 
 
 
 
 
2018
 
788

 
$
13.43
to
$
13.32
 
$
11,401

 
2.59
%
 
0.95% to 2.00%
 
(3.93)
%
to
(4.93)
%
 
2017
 
1,004

 
$
13.98
to
$
14.01
 
$
15,184

 
2.32
%
 
0.95% to 2.00%
 
7.79
%
to
6.62
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended December 31, except as noted
 
 
 
 
 
Unit fair value
 
 
 
 
 
 
 
 
Total return (3)
 
 
 
 
 
corresponding
 
 
 
 
 
 
Expense
 
corresponding
 
 
 
 
 
to lowest
 
Net
 
Investment
 
ratio (2)
 
to lowest
 
 
 
Units
 
to highest
 
assets
 
income
 
lowest to
 
to highest
Division
 
(000's)
 
expense ratio
 
(000's)
 
ratio (1)
 
highest
 
expense ratio
Real Estate Securities Class 1:
 
 
 
 
 
 
 
 
 
2018
 
1,138
 
$
5.51
to
$
50.79
 
$
61,500

 
1.80
%
 
0.39% to 2.00%
 
(4.62)
%
to
(6.12)
%
 
2017
 
1,312
 
$
5.78
to
$
54.10
 
$
75,318

 
1.74
%
 
0.41% to 2.00%
 
8.74
%
to
7.02
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Estate Securities Class 2:
 
 
 
 
 
 
 
 
 
2018
 
295
 
$
9.96
to
$
12.29
 
$
3,271

 
1.72
%
 
0.75% to 1.40%
 
(1.39)
%
to
(5.82)
%
 
2017
 
206
 
$
10.62
to
$
13.05
 
$
2,537

 
1.35
%
 
1.00% to 1.40%
 
5.67
%
to
7.41
%
 
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 (6)
 
16
 
$
11.39
to
$
11.38
 
$
181

 
—%

 
1.15% to 1.40%
 
3.45
%
to
3.36
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rydex Basic Materials:
 
 
 
 
 
 
 
 
 
2018
 
52
 
$
8.57
to
$
9.69
 
$
490

 
0.56
%
 
0.75% to 1.40%
 
(14.04)
%
to
(18.57)
%
 
2017
 
37
 
$
11.36
to
$
11.90
 
$
440

 
0.69
%
 
1.00% to 1.40%
 
12.92
%
to
19.72
%
 
2016
 
34
 
$
9.98
to
$
9.94
 
$
340

 
—%

 
1.15% to 1.40%
 
29.44
%
to
29.09
%
 
2015 (8)
 
—
 
$
7.71
to
$
7.70
 
$
—

 
—%

 
1.15% to 1.40%
 
(22.75)
%
to
(22.85)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rydex Commodities Strategy:
 
 
 
 
 
 
 
 
 
2018
 
66
 
$
7.90
to
$
5.90
 
$
424

 
3.51
%
 
0.75% to 2.00%
 
(20.36)
%
to
(16.78)
%
 
2017
 
44
 
$
10.89
to
$
7.09
 
$
271

 
—%

 
1.00% to 2.00%
 
8.04
%
to
2.31
%
 
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 (6)
 
2
 
$
7.08
to
$
7.07
 
$
11

 
—%

 
1.15% to 1.40%
 
(20.00)
%
to
(20.11)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Rydex NASDAQ 100:
 
 
 
 
 
 
 
 
 
2018
 
153
 
$
9.48
to
$
14.35
 
$
1,825

 
—%

 
0.75% to 1.40%
 
(6.32)
%
to
(3.17)
%
 
2017
 
103
 
$
11.69
to
$
14.82
 
$
1,359

 
—%

 
1.00% to 1.40%
 
16.90
%
to
29.32
%
 
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 (6)
 
9
 
 
 
 
$
10.28
 
$
97

 
—%

 
1.15% to 1.40%
 
 
 
 
(1.34)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Balanced Portfolio Class 1:
 
 
 
 
 
 
 
 
 
2018
 
28,289
 
$
2.30
to
$
14.33
 
$
432,209

 
3.06
%
 
0.75% to 2.00%
 
(5.44)
%
to
(6.89)
%
 
2017
 
32,925
 
$
2.44
to
$
15.39
 
$
536,023

 
2.11
%
 
0.41% to 2.00%
 
14.73
%
to
12.91
%
 
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
%

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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 2:
 
 
 
 
 
 
 
 
 
2018
 
1,266
 
$
9.48
to
$
10.89
 
$
13,097

 
3.13
%
 
0.75% to 1.40%
 
(5.11)
%
to
(6.60)
%
 
2017
 
807
 
$
10.96
to
$
11.66
 
$
9,147

 
2.05
%
 
1.00% to 1.40%
 
9.38
%
to
13.31
%
 
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 (6)
 
63
 
$
10.04
to
$
10.03
 
$
634

 
—%

 
1.15% to 1.40%
 
(0.69)
%
to
(0.79)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 1:
 
 
 
 
 
 
 
 
 
2018
 
6,934
 
$
15.55
to
$
13.88
 
$
102,968

 
3.31
%
 
0.95% to 2.00%
 
(4.37)
%
to
(5.45)
%
 
2017
 
8,225
 
$
16.26
to
$
14.68
 
$
128,349

 
2.70
%
 
0.95% to 2.00%
 
10.39
%
to
9.31
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 2:
 
 
 
 
 
 
 
 
 
2018
 
584
 
$
9.64
to
$
10.66
 
$
6,004

 
3.25
%
 
0.75% to 1.40%
 
(3.50)
%
to
(5.16)
%
 
2017
 
473
 
$
10.69
to
$
11.24
 
$
5,204

 
2.97
%
 
1.00% to 1.40%
 
6.79
%
to
9.66
%
 
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 (6)
 
55
 
$
10.04
to
$
10.03
 
$
553

 
—%

 
1.15% to 1.40%
 
(0.50)
%
to
(0.59)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 1:
 
 
 
 
 
 
 
 
 
2018
 
5,607
 
$
16.05
to
$
14.33
 
$
85,786

 
2.71
%
 
0.95% to 2.00%
 
(7.49)
%
to
(8.49)
%
 
2017
 
6,430
 
$
17.35
to
$
15.66
 
$
106,720

 
1.54
%
 
0.95% to 2.00%
 
18.67
%
to
17.48
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 2:
 
 
 
 
 
 
 
 
 
2018
 
1,015
 
$
9.29
to
$
11.14
 
$
10,749

 
2.78
%
 
0.75% to 1.40%
 
(7.01)
%
to
(8.09)
%
 
2017
 
707
 
$
11.28
to
$
12.12
 
$
8,479

 
1.46
%
 
1.00% to 1.40%
 
12.57
%
to
17.78
%
 
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 (6)
 
43
 
 
 
 
$
10.05
 
$
430

 
—%

 
1.15% to 1.40%
 
 
 
 
(0.79)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 1:
 
 
 
 
 
 
 
 
 
2018
 
8,584
 
$
15.48
to
$
13.82
 
$
126,847

 
3.95
%
 
0.95% to 2.00%
 
(2.89)
%
to
(3.89)
%
 
2017
 
10,450
 
$
15.94
to
$
14.38
 
$
159,705

 
3.30
%
 
0.95% to 2.00%
 
7.41
%
to
6.28
%
 
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
%

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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 2:
 
 
 
 
 
 
 
 
 
2018
 
1,231
 
$
9.83
to
$
10.53
 
$
12,512

 
3.98
%
 
0.75% to 1.40%
 
(1.50)
%
to
(3.57)
%
 
2017
 
757
 
$
10.47
to
$
10.92
 
$
8,096

 
3.56
%
 
1.00% to 1.40%
 
4.60
%
to
6.64
%
 
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 (6)
 
42
 
$
10.03
to
$
10.02
 
$
418

 
—%

 
1.15% to 1.40%
 
 
 
 
(0.50)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Strategic Growth Portfolio Class 1:
 
 
 
 
 
 
 
 
 
2018
 
3,391
 
$
15.82
to
$
14.12
 
$
50,949

 
2.32
%
 
0.95% to 2.00%
 
(9.44)
%
to
(10.46)
%
 
2017
 
3,988
 
$
17.47
to
$
15.77
 
$
66,383

 
1.41
%
 
0.95% to 2.00%
 
21.07
%
to
19.83
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Strategic Growth Portfolio Class 2:
 
 
 
 
 
 
 
 
 
2018
 
573
 
$
9.09
to
$
11.01
 
$
6,019

 
2.32
%
 
0.75% to 1.40%
 
(9.10)
%
to
(10.12)
%
 
2017
 
425
 
$
11.44
to
$
12.25
 
$
5,078

 
1.34
%
 
1.00% to 1.40%
 
14.17
%
to
20.22
%
 
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 (6)
 
62
 
$
10.09
to
$
10.08
 
$
624

 
—%

 
1.15% to 1.40%
 
(0.69)
%
to
(0.79)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-Term Income Class 1:
 
 
 
 
 
 
 
 
 
2018
 
6,315
 
$
12.25
to
$
10.98
 
$
73,768

 
2.12
%
 
0.85% to 2.00%
 
0.16
%
to
(0.99)
%
 
2017
 
7,454
 
$
12.23
to
$
11.09
 
$
87,366

 
1.92
%
 
0.85% to 2.00%
 
1.58
%
to
0.36
%
 
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)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-Term Income Class 2:
 
 
 
 
 
 
 
 
 
2018
 
345
 
$
10.07
to
$
9.99
 
$
3,471

 
2.34
%
 
0.75% to 1.40%
 
0.70
%
to
(0.20)
%
 
2017
 
147
 
$
10.02
to
$
10.01
 
$
1,473

 
1.44
%
 
1.00% to 1.40%
 
0.20
%
to
0.30
%
 
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 (6)
 
9
 
$
10.01
to
$
10.00
 
$
94

 
—%

 
1.15% to 1.40%
 
 
 
 
(0.10)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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:
 
 
 
 
 
 
 
 
 
2018
 
3,888
 
$
2.52
to
$
20.71
 
$
86,881

 
0.30
%
 
0.56% to 2.00%

 
(11.27)
%
to
(12.65)
%
 
2017
 
4,394
 
$
2.84
to
$
23.71
 
$
112,085

 
0.37
%
 
0.41% to 2.00%

 
12.40
%
to
10.64
%
 
2016
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Class 2:
 
 
 
 
 
 
 
 
 
2018
 
133
 
$
8.61
to
$
10.24
 
$
1,292

 
0.09
%
 
0.75% to 1.40%

 
(14.16)
%
to
(12.48)
%
 
2017
 
88
 
$
11.12
to
$
11.70
 
$
1,014

 
0.15
%
 
1.00% to 1.40%

 
10.10
%
to
11.01
%
 
2016
 
82
 
$
10.58
to
$
10.54
 
$
871

 
0.09
%
 
1.15% to 1.40%

 
15.75
%
to
15.57
%
 
2015 (7)
 
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:
 
 
 
 
 
 
 
 
 
2018
 
664
 
$
31.89
to
$
29.25
 
$
20,946

 
—%

 
1.40% to 2.00%

 
0.25
%
to
(0.37)
%
 
2017
 
685
 
$
31.81
to
$
29.36
 
$
21,628

 
—%

 
1.40% to 2.00%

 
33.94
%
to
33.15
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
T. Rowe Price Health Sciences Portfolio II:
 
 
 
 
 
 
 
 
 
2018
 
467
 
$
54.07
to
$
49.61
 
$
25,079

 
—%

 
1.40% to 2.00%

 
(0.55)
%
to
(1.14)
%
 
2017
 
524
 
$
54.37
to
$
50.18
 
$
28,307

 
—%

 
1.40% to 2.00%

 
25.54
%
to
24.79
%
 
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
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Templeton Global Bond VIP Class 4:
 
 
 
 
 
 
 
 
 
2018
 
468
 
$
9.91
to
$
9.38
 
$
4,505

 
—%

 
0.75% to 2.00%

 
(1.10)
%
to
(0.11)
%
 
2017
 
213
 
$
9.70
to
$
9.39
 
$
2,026

 
—%

 
1.00% to 2.00%

 
(3.10)
%
to
(0.32)
%
 
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 (6)
 
7
 
$
9.75
to
$
9.74
 
$
68

 
—%

 
1.15% to 1.40%

 
(2.30)
%
to
(2.31)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Templeton Growth VIP Class 2:
 
 
 
 
 
 
 
 
 
2018
 
35
 
 
 
 
$
21.14
 
$
737

 
2.00
%
 
0.85
%
 
 
 
 
(15.54)
%
 
2017
 
36
 
 
 
 
$
25.03
 
$
891

 
1.61
%
 
0.85
%
 
 
 
 
17.46
%
 
2016
 
40
 
 
 
 
$
21.31
 
$
854

 
2.01
%
 
0.85
%
 
 
 
 
8.72
%
 
2015
 
44
 
 
 
 
$
19.60
 
$
869

 
2.66
%
 
0.85
%
 
 
 
 
(7.28)
%
 
2014
 
45
 
 
 
 
$
21.14
 
$
960

 
1.34
%
 
0.85
%
 
 
 
 
(3.65)
%

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


 
 
 
December 31,
 
For the year ended 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:
 
 
 
 
 
 
 
 
 
2018
 
17
 
$
10.42
to
$
10.40
 
$
180

 
1.19
%
 
0.75% to 1.40%

 
4.41
%
to
5.58
%
 
2017
 
1
 
$
10.07
to
$
9.85
 
$
6

 
—%

 
1.00% to 1.40%

 
0.60
%
to
1.23
%
 
2016
 
—
 
$
9.77
to
$
9.73
 
$
—

 
—%

 
1.15% to 1.40%

 
1.24
%
to
0.93
%
 
2015 (8)
 
—
 
$
9.65
to
$
9.64
 
$
—

 
—%

 
1.15% to 1.40%

 
(3.50)
%
to
(3.60)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOPS Aggressive Growth ETF Portfolio Investor Class:
 
 
 
 
 
 
 
 
 
2018 (13)
 
2
 
$
8.65
to
$
8.59
 
$
20

 
1.89
%
 
0.75% to 2.00%

 
(13.67)
%
to
(14.27)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOPS Balanced ETF Portfolio Investor Class:
 
 
 
 
 
 
 
 
 
2018 (13)
 
3
 
$
9.32
to
$
9.26
 
$
26

 
3.21
%
 
0.75% to 2.00%

 
(6.89)
%
to
(7.49)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOPS Conservative ETF Portfolio Investor Class:
 
 
 
 
 
 
 
 
 
2018 (13)
 
—
 
$
9.65
to
$
9.58
 
$
—

 
—%

 
0.75% to 2.00%

 
(3.50)
%
to
(4.20)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOPS Growth ETF Portfolio Investor Class:
 
 
 
 
 
 
 
 
 
2018 (13)
 
4
 
$
8.84
to
$
8.78
 
$
34

 
1.18
%
 
0.75% to 2.00%

 
(11.78)
%
to
(12.38)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOPS Moderate Growth ETF Portfolio Investor Class:
 
 
 
 
 
 
 
 
 
2018 (13)
 
1
 
$
9.16
to
$
9.09
 
$
11

 
—%

 
0.75% to 2.00%

 
(8.49)
%
to
(9.19)
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
VanEck Global Hard Assets Class S:
 
 
 
 
 
 
 
 
 
2018
 
523
 
$
7.08
to
$
7.24
 
$
3,896

 
—%

 
0.75% to 2.00%

 
(28.92)
%
to
(29.84)
%
 
2017
 
550
 
$
10.05
to
$
10.32
 
$
5,838

 
—%

 
1.00% to 2.00%

 
(0.59)
%
to
(3.82)
%
 
2016
 
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)
%


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


(1)
These amounts represent the dividends, excluding distributions of capital gains, received by the division from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the division is affected by the timing of the declaration of dividends by the underlying fund in which the divisions invest. These ratios are annualized for periods less than one year.
(2)
These ratios represent the annualized contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to 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 24, 2014. Investment income ratios have been annualized for the year ended December 31, 2014.
(5)
Commencement of operations, May 17, 2014. Investment income ratios have been annualized for the year ended December 31, 2014.
(6)
Commencement of operations, November 10, 2014. Investment income ratios have been annualized for the year ended December 31, 2014.
(7)
Commencement of operations, April 17, 2015. Investment income ratios have been annualized for the year ended December 31, 2015.
(8)
Commencement of operations, May 18, 2015. Investment income ratios have been annualized for the year ended December 31, 2015.
(9)
Commencement of operations, February 8, 2016. Investment income ratios have been annualized for the year ended December 31, 2016.
(10)
Commencement of operations, May 23, 2016. Investment income ratios have been annualized for the year ended December 31, 2016.
(11)
Commencement of operations, April 6, 2017. Investment income ratios have been annualized for the year ended December 31, 2017.
(12)
Commencement of operations, May 26, 2017. Investment income ratios have been annualized for the year ended December 31, 2017.
(13)
Commencement of operations, June 11, 2018. Investment income ratios have been annualized for the year ended December 31, 2018.
(14)
Represented the operations of Deutsche Alternative Asset Allocation Class B Division until October 13, 2018.
(15)
Represented the operations of Deutsche Equity 500 Index Class B2 Division until October 13, 2018.
(16)
Represented the operations of Deutsche Small Mid Cap Value Class B Division until October 13, 2018.
(17)
Represented the operations of Invesco Global Health Care Series I Division until June 9, 2018.
(18)
Represented the operations of Invesco Global Health Care Series II Division until June 9, 2018.
(19)
Represented the operations of Neuberger Berman AMT Socially Responsive Class I Division until June 9, 2018.



Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


Following is a list of divisions and corresponding unit values and total return for divisions that had unit values and/or total return outside the ranges indicated above for applicable years.

Division
 
2018 Unit Value ($)
 
 
 
Alps/Red Rocks Listed Private Equity Class III
 
10.24
American Century VP Inflation Protection Class II
 
9.54, 9.63, 9.74, 9.75 and 12.71
American Century VP Value Class II
 
22.94
American Funds Insurance Series Asset Allocation Fund Class 4
 
11.29
American Funds Insurance Series Blue Chip Income and Growth
   Class 4
 
11.91
American Funds Insurance Series Global Small Capitalization
   Fund Class 4
 
10.74
Division
 
2018 Unit Value ($)
 
 
 
American Funds Insurance Series Managed Risk Asset Allocation
   Fund Class P2
 
10.96
American Funds Insurance Series Managed Risk Growth Fund
   Class P2
 
12.11
American Funds Insurance Series Managed Risk International
   Fund Class P2
 
9.40 and 10.43
American Funds Insurance Series New World Fund Class 2
 
9.53 and 10.02
American Funds Insurance Series New World Fund Class 4
 
9.66 and 9.89
BlackRock Advantage U.S. Total Market Class III
 
11.40
BlackRock Global Allocation Class III
 
9.54, 9.72, 9.75, 9.80 and 9.91
BlackRock iShares Dynamic Allocation Class III
 
9.93, 10.11, 10.15, 10.21 and 10.32
Calvert EAFE International Index Class F
 
9.33 and 9.86
Calvert Russell 2000 Small Cap Index Class F
 
11.54
Calvert S&P MidCap 400 Index Class F
 
11.63
ClearBridge Small Cap Growth Class II
 
12.36
Columbia Small Cap Value Class 2
 
10.89
Core Plus Bond Class 1
 
2.83, 21.68, 24.04 and 24.17
Core Plus Bond Class 2
 
10.04
Diversified Balanced Class 2
 
15.53
Diversified Balanced Managed Volatility Class 2
 
11.47
Diversified Growth Class 2
 
16.98
Diversified Growth Managed Volatility Class 2
 
11.82
Diversified Income Class 2
 
12.53
Diversified International Class 1
 
3.17, 24.62, 27.30 and 27.45
Diversified International Class 2
 
9.43 and 9.63
Dreyfus IP MidCap Stock Service Shares
 
10.01
DWS Equity 500 Index Class B2
 
12.61
DWS Small Mid Cap Value Class B
 
11.38, 11.71 and 11.77
Equity Income Class 1
 
2.47, 9.33, 9.34, 9.35 and 9.39
Equity Income Class 2
 
12.37
Fidelity VIP Contrafund Service Class 2
 
26.56

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


Division
 
2018 Unit Value ($)
Fidelity VIP Government Money Market Initial Class
 
0.98, 9.70, 9.85, 9.87, 9.98 and 10.00
Fidelity VIP Government Money Market Service Class 2
 
9.85 and 9.78
Fidelity VIP Mid Cap Service Class 2
 
27.74
Fidelity VIP Overseas Service Class 2
 
16.43
Franklin Global Real Estate VIP Class 2
 
9.50, 9.54, 9.87, 10.39 and 10.50
Franklin Rising Dividends VIP Class 4
 
12.59
Goldman Sachs VIT Mid Cap Value Service Shares
 
9.93
Goldman Sachs VIT Small Cap Equity Insights Service Shares
 
12.33
Government & High Quality Bond Class 1
 
2.73, 11.41, 12.06, 12.12, 12.53 and 12.66
Government & High Quality Bond Class 2
 
9.96
Guggenheim Floating Rate Strategies Series F
 
10.19, 10.38, 10.42, 10.54 and 10.65
Guggenheim Investments Global Managed Futures Strategy
 
9.55
Guggenheim Investments Long Short Equity
 
9.36, 9.53, 9.57, 9.95, 10.06 and 10.17
Guggenheim Investments Multi-Hedge Strategies
 
9.77
Income Class 2
 
10.42
International Emerging Markets Class 1
 
28.42, 31.51 and 31.68
International Emerging Markets Class 2
 
9.09, 9.61
Invesco Balanced-Risk Allocation Series II
 
10.52
Invesco Health Care Series II
 
10.43, 10.57
Invesco International Growth Series II
 
9.24, 9.50
LargeCap Growth Class 1
 
3.85, 31.03, 34.41 and 34.59
LargeCap Growth Class 2
 
11.91
LargeCap Growth I Class 1
 
70.60, 78.28 and 78.70
LargeCap Growth I Class 2
 
13.45
LargeCap S&P 500 Index Class 1
 
17.93, 19.88, 19.99, 21.69 and 21.79
LargeCap S&P 500 Index Class 2
 
11.97
MFS International Value Service Class
 
10.61, 10.81, 10.85, 11.75,and 11.87
MFS New Discovery Service Class
 
13.12, 13.49 and 13.57
MFS Utilities Service Class
 
23.38
MidCap Class 1
 
94.46, 101.41 and 101.96
Multi-Asset Income Class 2
 
10.68
Neuberger Berman AMT Mid Cap Growth Portfolio Class S
 
11.15
PIMCO All Asset Advisor Class
 
10.25
PIMCO Commodity Real Return Strategy M Class
 
8.69
PIMCO High Yield Administrative Class
 
15.05
PIMCO Total Return Administrative Class
 
10.06 and 12.77
Principal Capital Appreciation Class 1
 
11.70 and 11.96
Principal Capital Appreciation Class 2
 
12.69
Principal LifeTime 2010 Class 1
 
14.88, 16.13 and 16.21
Principal LifeTime 2020 Class 1
 
16.69, 18.10 and 18.20
Principal LifeTime 2020 Class 2
 
10.37
Principal LifeTime 2030 Class 1
 
16.98, 18.40 and 18.50
Principal LifeTime 2030 Class 2
 
10.42

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


Division
 
2018 Unit Value ($)
Principal LifeTime 2040 Class 1
 
17.84, 19.34 and 19.44
Principal LifeTime 2040 Class 2
 
10.48
Principal LifeTime 2050 Class 1
 
18.03, 19.55 and 19.66
Principal LifeTime 2050 Class 2
 
10.51
Principal LifeTime Strategic Income Class 1
 
14.51 and 14.59
Real Estate Securities Class 1
 
51.07, 56.62 and 56.93
Real Estate Securities Class 2
 
12.42
Rydex Basic Materials
 
9.78
Rydex Commodities Strategy
 
4.33, 4.38 and 9.15
Rydex NASDAQ 100
 
14.51
SAM Balanced Portfolio Class 1
 
14.40, 15.37, 15.45 and 16.04
SAM Balanced Portfolio Class 2
 
11.01
SAM Conservative Balanced Portfolio Class 2
 
10.78
SAM Conservative Growth Portfolio Class 2
 
11.26
SAM Flexible Income Portfolio Class 2
 
10.64
SAM Strategic Growth Portfolio Class 2
 
11.13
Short-Term Income Class 2
 
10.10
SmallCap Class 1
 
20.82, 23.08, 23.21 and 30.80
SmallCap Class 2
 
10.34
The Merger Fund
 
10.49 and 10.67
VanEck Global Hard Assets Class S
 
4.80, 4.86, 7.28, 7.67 and 7.71
 
 
 
Division
 
2018 Total Return (%)
 
 
 
American Funds Insurance Series Global Small Capitalization Fund Class 4
 
(11.89) and (11.65)
American Funds Insurance Series Managed Risk Growth Fund Class P2
 
(1.46) and (1.39)
Calvert Russell 2000 Small Cap Index Class F
 
(12.44) and (12.35)
ClearBridge Small Cap Growth Class II
 
1.98 and 2.18
Diversified Growth Class 2
 
(5.860)
Diversified Income Class 2
 
(3.700)
Fidelity VIP Contrafund Service Class 2
 
(7.96,) (7.94), (7.74) and (7.54)
Fidelity VIP Mid Cap Service Class 2
 
(15.81) and (15.67)
Goldman Sachs VIT Small Cap Equity Insights Service Shares
 
(9.87) and (9.74)
Guggenheim Floating Rate Strategies Series F
 
(2.17), (2.14), (2.07), (1.93) and (1.77)
LargeCap Growth Class 2
 
(8.60) and (8.44)
LargeCap Growth I Class 2
 
2.13 and 2.31
MFS New Discovery Service Class
 
(3.53), (3.11), (3.09), (3.00), (2.85) and (2.67)
Neuberger Berman AMT Mid Cap Growth Portfolio Class S
 
(7.86), (7.85), (7.64) and (7.48)
PIMCO Commodity Real Return Strategy M Class
 
(15.25) and (15.14)
Rydex Commodities Strategy
 
(16.74), (16.41), (16.37), (16.20), (16.09) and (15.98)
Rydex NASDAQ 100
 
(2.88) and (2.82)
SmallCap Class 2
 
(12.15) and (12.05)
Templeton Global Bond VIP Class 4
 
0.43, 0.52, 0.74, 0.82 and 0.00
The Merger Fund
 
5.85 and 5.96

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


Division
 
2017 Unit Value ($)
 
 
 
Alps/Red Rocks Listed Private Equity Class III
 
11.84
American Century VP Inflation Protection Class II
 
10.00, 10.05 and 13.27
American Century VP Value Class II
 
25.62
American Funds Insurance Series Asset Allocation Fund Class 4
 
12.00
American Funds Insurance Series Blue Chip Income and Growth
   Class 4
 
13.22
American Funds Insurance Series Global Small Capitalization
   Fund Class 4
 
12.19
American Funds Insurance Series Managed Risk Asset Allocation
   Fund Class P2
 
11.66
American Funds Insurance Series Managed Risk Growth Fund
   Class P2
 
12.29
American Funds Insurance Series New World Fund Class 2
 
11.29 and 11.83
BlackRock Advantage U.S. Total Market Class III
 
12.36
BlackRock iShares Alternative Strategies Class III
 
10.64, 10.78, 10.81 and 10.85
Calvert Russell 2000 Small Cap Index Class F
 
13.18
Calvert S&P MidCap 400 Index Class F
 
13.31
ClearBridge Small Cap Growth Class II
 
12.12
Columbia Small Cap Value Class 2
 
13.46
Core Plus Bond Class 1
 
2.89, 22.42, 24.73 and 24.84
Core Plus Bond Class 2
 
10.32
Deutsche Equity 500 Index Class B2
 
13.43
Deutsche Small Mid Cap Value Class B
 
13.86, 14.19 and 14.25
Diversified Balanced Class 2
 
16.30
Diversified Balanced Managed Volatility Class 2
 
10.68 and 12.02
Diversified Growth Class 2
 
18.04
Diversified Growth Managed Volatility Class 2
 
10.86 and 12.50
Diversified Income Class 2
 
13.02
Diversified International Class 1
 
3.87
Dreyfus IP MidCap Stock Service Shares
 
12.01
Equity Income Class 1
 
18.15, 19.30 and 19.38
Equity Income Class 2
 
13.21
Fidelity VIP Contrafund Service Class 2
 
28.85
Fidelity VIP Government Money Market Initial Class
 
0.98, 1.00, 9.73, 9.82, 9.84, 9.91 and 9.93
Fidelity VIP Government Money Market Service Class 2
 
9.78 and 9.83
Fidelity VIP Mid Cap Service Class 2
 
33.00
Fidelity VIP Overseas Service Class 2
 
10.71, 10.88 , 11.50, 11.59 and 19.62
Franklin Global Real Estate VIP Class 2
 
11.30 and 11.39
Franklin Rising Dividends VIP Class 4
 
13.43
Goldman Sachs VIT Mid Cap Value Service Shares
 
11.25
Goldman Sachs VIT Small Cap Equity Insights Service Shares
 
13.68
Government & High Quality Bond Class 1
 
2.72, 11.53, 12.12, 12.17, 12.54 and 12.65
Government & High Quality Bond Class 2
 
10.15

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


Division
 
2017 Unit Value ($)
 
 
 
Guggenheim Floating Rate Strategies Series F
 
10.47, 10.61, 10.64, 10.77 and 10.86
Guggenheim Investments Long Short Equity
 
11.72 and 11.81
Guggenheim Investments Multi-Hedge Strategies
 
10.33 and 10.42
Income Class 2
 
10.49
International Emerging Markets Class 1
 
36.68, 40.47 and 40.65
Invesco Balanced-Risk Allocation Series II
 
11.41
Janus Henderson Flexible Bond Service Shares
 
10.17 and 10.25
LargeCap Growth Class 1
 
4.18, 34.12, 37.64 and 37.81
LargeCap Growth Class 2
 
13.03
LargeCap Growth I Class 1
 
69.46, 76.63 and 76.97
LargeCap Growth I Class 2
 
13.17
LargeCap S&P 500 Index Class 1
 
19.16, 21.13, 21.23, 22.92 and 23.06
LargeCap S&P 500 Index Class 2
 
12.73
LargeCap Value Class 1
 
6.17,43.22, 47.68, 47.89 and 64.98
LargeCap Value Class 2
 
11.77
MFS International Value Service Class
 
11.98, 12.14, 12.17, 13.19 and 13.30
MFS New Discovery Service Class
 
13.60, 13.92 and 13.99
MFS Utilities Service Class
 
10.20, 10.28 and 23.52
MidCap Class 1
 
12.50, 99.76, 110.05 and 110.54
Multi-Asset Income Class 2
 
11.49
Neuberger Berman AMT Mid Cap Growth Portfolio Class S
 
11.58, 11.65 and 12.10
PIMCO All Asset Advisor Class
 
10.97
PIMCO High Yield Administrative Class
 
15.68
PIMCO Total Return Administrative Class
 
13.02
Principal Capital Appreciation Class 1
 
12.34 and 12.55
Principal Capital Appreciation Class 2
 
13.32
Principal LifeTime 2010 Class 1
 
15.78, 17.01 and 17.09
Principal LifeTime 2020 Class 1
 
17.99, 19.40 and 19.49
Principal LifeTime 2020 Class 2
 
11.12
Principal LifeTime 2030 Class 1
 
18.62, 20.08 and 20.17
Principal LifeTime 2030 Class 2
 
11.37
Principal LifeTime 2040 Class 1
 
19.73, 21.28 and 21.38
Principal LifeTime 2040 Class 2
 
11.54
Principal LifeTime 2050 Class 1
 
20.12, 21.70 and 21.80
Principal LifeTime 2050 Class 2
 
11.67
Principal LifeTime Strategic Income Class 1
 
14.07, 15.17 and 15.24
Real Estate Securities Class 1
 
54.34, 59.95 and 60.22
Real Estate Securities Class 2
 
13.16
Rydex Basic Materials
 
11.98
Rydex Commodities Strategy
 
5.18 and 5.22
Rydex NASDAQ 100
 
14.94
SAM Balanced Portfolio Class 1
 
15.46, 16.41,16.48 and 17.06
SAM Balanced Portfolio Class 2
 
11.75

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


Division
 
2017 Unit Value ($)
 
 
 
SAM Conservative Balanced Portfolio Class 2
 
11.33
SAM Conservative Growth Portfolio Class 2
 
12.22
SAM Flexible Income Portfolio Class 2
 
11.01
SAM Strategic Growth Portfolio Class 2
 
12.35
Short-Term Income Class 2
 
10.10
SmallCap Class 1
 
23.81, 26.27, 26.39 and 34.86
SmallCap Class 2
 
11.77
Templeton Global Bond VIP Class 4
 
9.35
VanEck Global Hard Assets Class S
 
6.81, 6.86, 10.36, 10.86 and 10.91
 
 
 
Division
 
2017 Total Return (%)
 
 
 
Alps/Red Rocks Listed Private Equity Class III
 
23.46
American Century VP Inflation Protection Class II
 
1.73, 2.23, 2.24, 2.32 and 2.53
American Century VP Value Class II
 
7.03, 7.15 and 7.34
American Funds Insurance Series Asset Allocation Fund Class 4
 
14.50
American Funds Insurance Series Blue Chip Income and Growth
   Class 4
 
15.36
American Funds Insurance Series Global Small Capitalization
   Fund Class 4
 
24.26
American Funds Insurance Series Managed Risk Asset Allocation
   Fund Class P2
 
13.42
American Funds Insurance Series Managed Risk Growth Fund
   Class P2
 
24.52
American Funds Insurance Series Managed Risk International
   Fund Class P2
 
27.15
American Funds Insurance Series New World Fund Class 4
 
27.55
BlackRock Global Allocation Class III
 
11.56, 12.09, 12.29 and 12.36
BlackRock iShares Alternative Strategies Class III
 
10.37, 10.91, 10.99 and 11.17
BlackRock iShares Dynamic Allocation Class III
 
12.66, 13.18, 13.26 and 13.44
BlackRock iShares Dynamic Fixed Income Class III
 
2.13, 2.22 and 2.42
BlackRock iShares Equity Appreciation Class III
 
19.28, 19.87, 20.06 and 20.24
Calvert EAFE International Index Class F
 
23.03
Calvert Russell 2000 Small Cap Index Class F
 
12.75
Calvert S&P MidCap 400 Index Class F
 
14.35
ClearBridge Small Cap Growth Class II
 
22.55
Columbia Limited Duration Credit Class 2
 
0.40, 0.50 and 0.60
Core Plus Bond Class 2
 
3.30
Delaware Limited Term Diversified Income Service Class
 
0.51, 0.61 and 0.81
Deutsche Alternative Asset Allocation Class B
 
5.84
Deutsche Equity 500 Index Class B2
 
19.70
Deutsche Small Mid Cap Value Class B
 
8.03, 8.60, 8.65, 8.70 and 8.82
Diversified Balanced Class 2
 
9.91

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


Division
 
2017 Total Return (%)
 
 
 
Diversified Balanced Managed Volatility Class 2
 
6.59, 8.86, 9.37, 9.42, 9.46 and 9.65
Diversified Growth Class 2
 
12.61
Diversified Growth Managed Volatility Class 2
 
8.38, 11.30, 11.78, 11.81, 11.87 and 12.00
Diversified Income Class 2
 
7.34
Diversified International Class 2
 
27.30
Dreyfus IP MidCap Stock Service Shares
 
13.73
Equity Income Class 2
 
19.44
Fidelity VIP Contrafund Service Class 2
 
19.83, 19.91 and 20.19
Fidelity VIP Government Money Market Service Class 2
 
(1.01) and (0.71)
Fidelity VIP Mid Cap Service Class 2
 
18.83, 18.87 and 19.22
Fidelity VIP Overseas Service Class 2
 
27.50, 28.21, 28.24, 28.30 and 28.49
Franklin Global Real Estate VIP Class 2
 
8.40, 8.96, 8.97, 9.04 and 9.20
Franklin Rising Dividends VIP Class 4
 
19.06
Goldman Sachs VIT Mid Cap Value Service Shares
 
9.65
Goldman Sachs VIT Multi-Stategy Alternatives Portfolio Service
   Shares
 
4.21
Government & High Quality Bond Class 2
 
0.40
Guggenheim Floating Rate Strategies Series F
 
1.99, 2.02, 2.11 and 2.26
Guggenheim Investments Global Managed Futures Strategy
 
7.18, 7.26, 7.27 and 7.37
Income Class 2
 
3.66
International Emerging Markets Class 2
 
38.88
Invesco Balanced-Risk Allocation Series II
 
8.67
Invesco Global Health Care Series II
 
14.27
Invesco International Growth Series II
 
21.37
Janus Henderson Flexible Bond Service Shares
 
1.42, 1.90, 1.92, 2.02 and 2.19
LargeCap Growth Class 2
 
32.96
LargeCap Growth I Class 2
 
31.83
LargeCap S&P 500 Index Class 2
 
19.76
LargeCap Value Class 2
 
15.17
MFS International Value Service Class
 
24.40, 25.02, 25.03, 25.21 and 25.35
MFS New Discovery Service Class
 
23.97, 24.51, 24.59, 24.80 and 24.90
MFS Utilities Service Class
 
12.86, 12.96 and 13.22
Multi-Asset Income Class 2
 
10.59
Neuberger Berman AMT Mid Cap Growth Portfolio Class S
 
22.80, 22.84 and 23.15
PIMCO All Asset Advisor Class
 
12.17
PIMCO High Yield Administrative Class
 
5.16, 5.18 and 5.43
PIMCO Low Duration Advisor Class
 
0.10
PIMCO Total Return Administrative Class
 
3.46, 3.50 and 3.73
Principal Capital Appreciation Class 2
 
19.03
Principal LifeTime 2020 Class 2
 
13.35
Principal LifeTime 2030 Class 2
 
16.62
Principal LifeTime 2040 Class 2
 
19.09
Principal LifeTime 2050 Class 2
 
20.56

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


Division
 
2017 Total Return (%)
 
 
 
Real Estate Securities Class 2
 
7.78
Rydex Basic Materials
 
20.04
Rydex NASDAQ 100
 
29.58
SAM Balanced Portfolio Class 2
 
13.53
SAM Conservative Balanced Portfolio Class 2
 
9.89
SAM Conservative Growth Portfolio Class 2
 
18.07
SAM Flexible Income Portfolio Class 2
 
6.89
SAM Strategic Growth Portfolio Class 2
 
20.49
Short-Term Income Class 2
 
0.70
SmallCap Class 2
 
11.25
Templeton Global Bond VIP Class 4
 
(0.11), 0.32, 0.42 and 0.64
The Merger Fund
 
1.43
 
 
 
Division
 
2016 Unit Value ($)
 
 
 
American Century VP Inflation Protection Class II
 
9.83 and 12.98
American Century VP Value Class II
 
11.38 and 23.91
American Funds Insurance Series New World Fund Class 2
 
8.89 and 9.27
Balanced Class 1
 
3.31 and 29.48
Core Plus Bond Class 1
 
21.80, 23.93 and 24.01
Deutsche Small Mid Cap Value Class B
 
11.16, 12.83, 13.06 and 13.11
Diversified Balanced Managed Volatility Class 2
 
10.05, 10.15, 10.51 and 10.99
Diversified Growth Managed Volatility Class 2
 
10.09, 10.19, 10.61 and 11.18
Diversified International Class 1
 
24.03, 26.38 and 26.47
Equity Income Class 1
 
15.27, 16.16 and 16.22
Fidelity VIP Contrafund Service Class 2
 
10.69 and 24.06
Fidelity VIP Government Money Market Initial Class
 
9.84, 9.85, 9.89, 9.90, 9.93 and 9.94
Fidelity VIP Mid Cap Service Class 2
 
10.76 and 27.77
Fidelity VIP Overseas Service Class 2
 
8.40, 8.48, 8.97 and 15.30
Government & High Quality Bond Class 1
 
2.69, 11.53, 12.06, 12.10, 12.42 and 12.52
International Emerging Markets Class 1
 
26.54, 29.14 and 29.24
LargeCap Growth Class 1
 
3.12, 25.78, 28.30 and 28.39
LargeCap Growth I Class 1
 
52.94, 58.11 and 58.31
LargeCap S&P 500 Index Class 1
 
16.07, 17.64, 17.70, 19.03 and 19.16
LargeCap Value Class 1
 
5.32, 5.61, 10.10, 12.24, 16.48 and 18.05
MFS New Discovery Service Class
 
9.80, 10.97, 11.18 and 11.21
MFS Utilities Service Class
 
9.03 and 20.84
MidCap Class 1
 
81.00, 88.91 and 89.22
Neuberger Berman AMT Mid Cap Growth Portfolio Class S
 
9.43 and 9.85
PIMCO High Yield Administrative Class
 
10.62 and 14.91
PIMCO Total Return Administrative Class
 
10.13 and 12.58
Principal Capital Appreciation Class 1
 
10.42 and 10.53
Principal LifeTime 2010 Class 1
 
14.43, 15.49 and 15.54
Principal LifeTime 2020 Class 1
 
15.94, 17.11 and 17.16

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


Division
 
2016 Unit Value ($)
 
 
 
Principal LifeTime 2030 Class 1
 
16.05, 17.22 and 17.28
Principal LifeTime 2040 Class 1
 
16.66, 17.88 and 17.94
Principal LifeTime 2050 Class 1
 
16.79, 18.02 and 18.08
Principal LifeTime Strategic Income Class 1
 
13.18, 14.15 and 14.20
Real Estate Securities Class 1
 
50.72, 55.68 and 55.87
Rydex Commodities Strategy
 
5.03, 6.94, 7.00 and 7.01
SAM Balanced Portfolio Class 1
 
13.68, 14.45, 14.50 and 14.95
SmallCap Class 1
 
21.50, 23.60, 23.68 and 31.15
Templeton Global Bond VIP Class 4
 
9.32, 9.43, 9.51 and 9.53
VanEck Global Hard Assets Class S
 
7.04, 10.77, 11.24 and 11.28
 
 
 
Division
 
2016 Total Return (%)
 
 
 
American Funds Insurance Series New World Fund Class 2
 
3.25
BlackRock iShares Dynamic Allocation Class III
 
4.06
BlackRock iShares Equity Appreciation Class III
 
6.95
Fidelity VIP Government Money Market Initial Class
 
(1.60), (1.50), (1.10), (1.00), (0.70) and (0.60)
Invesco Global Health Care Series I
 
(13.14) and (2.30)
LargeCap Value Class 1
 
0.39
MFS New Discovery Service Class
 
6.71
Rydex Commodities Strategy
 
8.27
 
 
 
Division
 
2015 Unit Value ($)
 
 
 
American Century VP Inflation Protection Class II
 
9.55 and 12.61
American Century VP Value Class II
 
9.59 and 20.14
American Funds Insurance Series New World Fund Class 2
 
8.61 and 8.93
Balanced Class 1
 
3.15 and 28.26
Bond & Mortgage Securities Class 1
 
2.68, 21.34, 23.31 and 23.37
Deutsche Small Mid Cap Value Class B
 
9.72,11.22, 11.38 and 11.40
Diversified Balanced Managed Volatility Class 2
 
9.63, 9.66, 10.02 and 10.47
Diversified Growth Managed Volatility Class 2
 
9.56, 9.60, 10.00 and 10.54
Diversified International Class 1
 
3.03, 24.40, 26.65 and 26.72
Equity Income Class 1
 
13.45, 14.16 and 14.20
Fidelity VIP Contrafund Service Class 2
 
10.06 and 22.65
Fidelity VIP Mid Cap Service Class 2
 
9.75 and 25.16
Fidelity VIP Overseas Service Class 2
 
9.03, 9.07, 9.60 and 16.38
Government & High Quality Bond Class 1
 
2.66, 11.54, 12.02, 12.05, 12.32 and 12.41
International Emerging Markets Class 1
 
24.73, 27.01 and 27.08
LargeCap Growth Class 1
 
3.31, 27.69, 30.25 and 30.32
LargeCap Growth I Class 1
 
53.28, 58.20 and 58.34
LargeCap S&P 500 Index Class 1
 
14.68, 16.03, 16.07, 17.20 and 17.33
LargeCap Value Class 1
 
4.95, 35.52, 38.80 and 38.89
MFS VIT New Discovery Service Class
 
9.13, 10.28, 10.42 and 10.44
MFS VIT Utilities Service Class
 
8.23 and 19.00

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


Division
 
2015 Unit Value ($)
 
 
 
MidCap Class 1
 
9.14, 74.80, 81.70 and 81.89
Money Market Class 1
 
1.58, 12.12, 13.23 and 13.27
Neuberger Berman AMT Mid Cap Growth Portfolio Class S
 
9.18 and 9.59
PIMCO High Yield Administrative Class
 
9.58 and 13.44
PIMCO Total Return Administrative Class
 
10.00 and 12.43
Principal Capital Appreciation Class 1
 
9.73 and 9.77
Principal LifeTime 2010 Class 1
 
13.97, 14.92 and 14.96
Principal LifeTime 2020 Class 1
 
15.36, 16.40 and 16.44
Principal LifeTime 2030 Class 1
 
15.45, 16.50 and 16.54
Principal LifeTime 2040 Class 1
 
16.10, 17.20 and 17.24
Principal LifeTime 2050 Class 1
 
16.21, 17.31 and 17.35
Principal LifeTime Strategic Income Class 1
 
12.82, 13.69 and 13.73
Real Estate Securities Class 1
 
48.84, 53.34 and 53.47
Rydex Commodities Strategy
 
4.62, 6.41 and 6.43
SAM Balanced Portfolio Class 1
 
13.05, 13.71, 13.75 and 14.13
SmallCap Blend Class 1
 
18.67, 20.39, 20.44 and 26.76
Templeton Global Bond VIP Class 4
 
9.19, 9.35, 9.37 and 9.38
Van Eck Global Hard Assets Service Class
 
4.98, 7.65, 7.95 and 7.97
 
 
 
Division
 
2015 Total Return (%)
 
 
 
American Century VP Inflation Protection Class II
 
(3.310)
Diversified Balanced Managed Volatility Class 2
 
(3.60) and (3.30)
Diversified Growth Managed Volatility Class 2
 
(4.50) and (4.10)
Fidelity VIP Overseas Service Class 2
 
(9.43) and (9.03)
LargeCap Value Class 1
 
(1.570)
MFS VIT New Discovery Service Class
 
(9.69), (4.01), (3.52) and (3.42)
Neuberger Berman AMT Mid Cap Growth Portfolio Class
 
(8.93) and (4.39)
Principal Capital Appreciation Class 1
 
(1.72) and (1.31)
 
 
 
Division
 
2014 Unit Value ($)
 
 
 
American Century VP Inflation Protection Class II
 
9.93 and 13.11
American Century VP Value Class II
 
10.14 and 21.26
Balanced Class 1
 
3.16 and 28.15
Bond & Mortgage Securities Class 1
 
2.71, 21.86, 23.76 and 23.79
Diversified Balanced Managed Volatility Class 2
 
10.62
Diversified Growth Managed Volatility Class 2
 
10.68
Diversified International Class 1
 
3.06, 24.96, 27.13 and 27.16
DWS Small Mid Cap Value Class B
 
10.08, 11.70, 11.80 and 11.81
Equity Income Class 1
 
14.27, 14.95 and 14.97
Fidelity VIP Contrafund Service Class 2
 
10.16 and 22.88
Fidelity VIP Mid Cap Service Class 2
 
10.05 and 25.94
Fidelity VIP Overseas Service Class 2
 
16.08
Government & High Quality Bond Class 1
 
2.65, 11.67, 12.09, 12.11, 12.34 and 12.42

Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


Division
 
2014 Unit Value ($)
 
 
 
International Emerging Markets Class 1
 
29.24, 31.78 and 31.82
LargeCap Growth Class 1
 
3.17, 26.88, 29.22 and 29.26
LargeCap Growth I Class 1
 
50.39, 54.76 and 54.84
LargeCap S&P 500 Index Class 1
 
14.79, 16.07, 16.10, 17.15 and 17.30
LargeCap Value Class 1
 
5.03, 5.29, 9.73, 11.67, 15.70 and 17.16
MFS VIT Utilities Service Class
 
22.60
MidCap Class 1
 
9.05, 75.00, 81.51 and 81.62
Money Market Class 1
 
12.35, 13.42 and 13.44
PIMCO High Yield Administrative Class
 
13.86
PIMCO Total Return Administrative Class
 
12.55
Principal LifeTime 2010 Class 1
 
14.41, 15.31 and 15.33
Principal LifeTime 2020 Class 1
 
15.84, 16.82 and 16.85
Principal LifeTime 2030 Class 1
 
15.91, 16.91 and 16.93
Principal LifeTime 2040 Class 1
 
16.55, 17.59 and 17.61
Principal LifeTime 2050 Class 1
 
16.63, 17.67 and 17.70
Principal LifeTime Strategic Income Class 1
 
13.20, 14.02 and 14.04
Real Estate Securities Class 1
 
47.76, 51.91 and 51.98
SAM Balanced Portfolio Class 1
 
13.41, 14.02, 14.04 and 14.38
SmallCap Blend Class 1
 
19.05, 20.70, 20.73 and 27.02
SmallCap Growth II Class 1
 
16.16, 16.32, 16.68, 17.56 and 17.59
SmallCap Value I Class 1
 
34.27, 37.24 and 37.30
Van Eck Global Hard Assets Service Class
 
11.75, 12.14 and 12.16
 
 
 
Division
 
2014 Total Return (%)
 
 
 
American Century VP Inflation Protection Class II
 
(1.10) and 1.86
American Century VP Value Class II
 
11.48
Diversified Balanced Managed Volatility Class 2
 
5.46
Diversified Growth Managed Volatility Class 2
 
5.53
DWS Small Mid Cap Value Class B
 
3.08 and 3.69
Fidelity VIP Contrafund Service Class 2
 
10.11
Fidelity VIP Mid Cap Service Class 2
 
4.60
LargeCap Value Class 1
 
10.70
MFS VIT Utilities Service Class
 
10.89
Money Market Class 1
 
(1.91), (1.49), (1.40), (1.32), (0.92), (0.86), (0.64) and (0.42)
PIMCO High Yield Administrative Class
 
1.91
PIMCO Total Return Administrative Class
 
2.78
SAM Strategic Growth Portfolio Class 1
 
6.57
Van Eck Global Hard Assets Service Class
 
(13.720)


Principal Life Insurance Company
Separate Account B

Notes to Financial Statements

Years ended December 31, 2018 and 2017


7. Subsequent Events

Separate Account B performed an evaluation of subsequent events through April 29, 2019, and determined no items required recognition or disclosure.

 


APPENDIX B - Principal Life Insurance Company Financials






 


 

Report of Independent Auditors
The Board of Directors and Stockholders
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, 2018 and 2017, and the related statements of operations, comprehensive income, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2018, 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, 2018 and 2017, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2018, 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 pages 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
March 15, 2019




Principal Life Insurance Company
Consolidated Statements of Financial Position
 
 
December 31, 2018
 
December 31, 2017
 
 
(in millions)
Assets
 
Fixed maturities, available-for-sale (2018 and 2017 include $94.5 million and $268.0 million related to
 
 
 
 
 
 
consolidated variable interest entities)
$
56,275.3

 
$
55,429.4
Fixed maturities, trading
 
165.5

 
 
49.1
Equity securities
 
84.8

 
 
100.1
Mortgage loans
 
14,662.2

 
 
13,452.1
Real estate (2018 and 2017 include $364.0 million and $370.3 million related to consolidated variable
 
 
 
 
 
 
interest entities)
 
1,726.3

 
 
1,732.6
Policy loans
 
755.9

 
 
765.7
Other investments (2018 and 2017 include $44.1 million and $49.0 million related to consolidated variable
 
 
 
 
 
 
interest entities and $23.6 million and $61.0 million measured at fair value under the fair value option)
 
1,752.5

 
 
1,270.2
 
Total investments
 
75,422.5

 
 
72,799.2
Cash and cash equivalents
 
1,806.3

 
 
923.4
Accrued investment income
 
615.5

 
 
591.0
Premiums due and other receivables
 
1,618.2

 
 
1,708.1
Deferred acquisition costs
 
3,680.4

 
 
3,331.7
Property and equipment
 
692.9

 
 
688.1
Goodwill
 
75.1

 
 
75.1
Other intangibles
 
22.2

 
 
24.8
Separate account assets
 
107,343.0

 
 
117,300.8
Other assets
 
1,135.9

 
 
1,193.8
 
Total assets
$
192,412.0

 
$
198,636.0
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
Contractholder funds
$
36,861.7

 
$
35,330.2
Future policy benefits and claims
 
30,565.5

 
 
27,681.9
Other policyholder funds
 
727.2

 
 
796.0
Long-term debt (2018 and 2017 include $58.4 million and $2.8 million related to consolidated variable
 
 
 
 
 
 
interest entities)
 
129.1

 
 
50.5
Income taxes currently payable
 
—

 
 
10.5
Deferred income taxes
 
1,029.4

 
 
1,258.0
Separate account liabilities
 
107,343.0

 
 
117,300.8
Other liabilities (2018 and 2017 include $101.3 million and $269.3 million related to consolidated variable
 
 
 
 
 
 
interest entities)
 
6,904.9

 
 
6,237.7
Total liabilities
 
183,560.8

 
 
188,665.6
 
 
 
 
 
 
 
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
 
6,331.6

 
 
6,346.0
Retained earnings
 
2,441.2

 
 
2,238.1
Accumulated other comprehensive income
 
55.5

 
 
1,359.8
 
Total stockholder's equity attributable to Principal Life Insurance Company
 
8,830.8

 
 
9,946.4
Noncontrolling interest
 
20.4

 
 
24.0
 
Total stockholder's equity
 
8,851.2

 
 
9,970.4
 
Total liabilities and stockholder's equity
$
192,412.0

 
$
198,636.0
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 



Principal Life Insurance Company
Consolidated Statements of Operations
 
 
 
For the year ended December 31,
 
 
2018
 
2017
 
2016
 
 
(in millions)
Revenues
 
 
 
Premiums and other considerations
$
6,092.4

 
$
5,999.4
 
$
5,024.5
Fees and other revenues
 
2,222.2

 
 
2,182.1
 
 
2,000.5
Net investment income
 
3,022.9

 
 
2,833.7
 
 
2,666.1
Net realized capital gains, excluding impairment losses on available-for-sale
 
 
 
 
 
 
 
 
 
securities
 
121.8

 
 
451.7
 
 
194.7
Net other-than-temporary impairment (losses) recoveries on available-
 
 
 
 
 
 
 
 
 
for-sale securities
 
10.6

 
 
(30.00)
 
 
(93.70)
Other-than-temporary impairment losses on fixed maturities, available-
 
 
 
 
 
 
 
 
 
for-sale reclassified from other comprehensive income
 
(39.70)

 
 
(49.70)
 
 
(3.10)
Net impairment losses on available-for-sale securities
 
(29.10)

 
 
(79.70)
 
 
(96.80)
Net realized capital gains
 
92.7

 
 
372.0
 
 
97.9
 
Total revenues
 
11,430.2

 
 
11,387.2
 
 
9,789.0
Expenses
 
 
 
 
 
 
 
 
Benefits, claims and settlement expenses
 
7,542.0

 
 
7,317.9
 
 
6,339.5
Dividends to policyholders
 
123.6

 
 
124.6
 
 
156.6
Operating expenses
 
2,363.5

 
 
2,226.7
 
 
2,099.3
 
Total expenses
 
10,029.1

 
 
9,669.2
 
 
8,595.4
Income from continuing operations before income taxes
 
1,401.1

 
 
1,718.0
 
 
1,193.6
Income taxes (benefits)
 
146.8

 
 
(518.40)
 
 
211.9
Income from continuing operations, net of related income taxes
 
1,254.3

 
 
2,236.4
 
 
981.7
Income from discontinued operations, net of related income taxes
 
—

 
 
37.0
 
 
131.6
Net income
 
1,254.3

 
 
2,273.4
 
 
1,113.3
Net income attributable to noncontrolling interest
 
3.3

 
 
2.4
 
 
26.6
Net income attributable to Principal Life Insurance Company
$
1,251.0

 
$
2,271.0
 
$
1,086.7
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 



Principal Life Insurance Company
Consolidated Statements of Comprehensive Income
 
 
 
 
 
 
 
For the year ended December 31,
 
 
 
2018
 
2017
 
2016
 
 
 
(in millions)
Net income
$
1,254.3
 
$
2,273.4
 
$
1,113.3
Other comprehensive income (loss), net:
 
 
 
 
 
 
 
 
 
Net unrealized gains (losses) on available-for-sale securities
 
(1,513.30)
 
 
619.9
 
 
103.8
 
Noncredit component of impairment losses on fixed maturities, available-for-sale
 
26.5
 
 
27.4
 
 
0.3
 
Net unrealized gains (losses) on derivative instruments
 
8.0
 
 
(49.10)
 
 
10.2
 
Net unrecognized postretirement benefit obligation
 
(67.60)
 
 
13.3
 
 
2.9
Other comprehensive income (loss)
 
(1,546.40)
 
 
611.5
 
 
117.2
Comprehensive income (loss)
 
(292.10)
 
 
2,884.9
 
 
1,230.5
Comprehensive income attributable to noncontrolling interest
 
3.3
 
 
2.4
 
 
26.6
Comprehensive income (loss) attributable to Principal Life Insurance Company
$
(295.40)
 
$
2,882.5
 
$
1,203.9
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 



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, 2016
$
2.5

 
$
5,334.4

 
$
2,232.6

 
$
641.3

 
$
43.4

 
$
8,254.2

Capital distributions to parent
 
—

 
 
(20.00)

 
 
—

 
 
—

 
 
—

 
 
(20.00)

Stock-based compensation and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
additional related tax benefits
 
—

 
 
59.7

 
 
(4.40)

 
 
—

 
 
0.4

 
 
55.7

Net true-up of assets transferred to affiliate due to
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
prior year change in benefit plan sponsorship
 
—

 
 
(68.50)

 
 
—

 
 
(10.10)

 
 
—

 
 
(78.60)

Dividends to parent
 
—

 
 
—

 
 
(1,175.00)

 
 
—

 
 
—

 
 
(1,175.00)

Distributions to noncontrolling interest
 
—

 
 
—

 
 
—

 
 
—

 
 
(33.00)

 
 
(33.00)

Contributions from noncontrolling interest
 
—

 
 
—

 
 
—

 
 
—

 
 
5.5

 
 
5.5

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

Capital distributions to parent
 
—

 
 
(27.50)

 
 
—

 
 
—

 
 
—

 
 
(27.50)

Stock-based compensation
 
—

 
 
41.9

 
 
(3.00)

 
 
—

 
 
0.1

 
 
39.0

Net true-up of tax asset transferred to affiliate due
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
to prior year change in benefit plan sponsorship
 
—

 
 
(3.00)

 
 
—

 
 
—

 
 
—

 
 
(3.00)

Dividends to parent
 
—

 
 
—

 
 
(1,818.40)

 
 
—

 
 
—

 
 
(1,818.40)

Distributions to noncontrolling interest
 
—

 
 
—

 
 
—

 
 
—

 
 
(3.10)

 
 
(3.10)

Contributions from noncontrolling interest
 
—

 
 
—

 
 
—

 
 
—

 
 
6.0

 
 
6.0

Purchase of subsidiary shares from noncontrolling
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
interest
 
—

 
 
(5.10)

 
 
—

 
 
—

 
 
(1.30)

 
 
(6.40)

Sale of subsidiary to parent, net of related income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
taxes, as part of a common control transaction
 
—

 
 
1,034.1

 
 
(351.40)

 
 
(0.10)

 
 
(23.00)

 
 
659.6

Net income
 
—

 
 
—

 
 
2,271.0

 
 
—

 
 
2.4

 
 
2,273.4

Other comprehensive income
 
—

 
 
—

 
 
—

 
 
611.5

 
 
—

 
 
611.5

Balances as of December 31, 2017
 
2.5

 
 
6,346.0

 
 
2,238.1

 
 
1,359.8

 
 
24.0

 
 
9,970.4

Capital distributions to parent
 
—

 
 
(21.60)

 
 
—

 
 
—

 
 
—

 
 
(21.60)

Stock-based compensation
 
—

 
 
28.6

 
 
(2.20)

 
 
—

 
 
—

 
 
26.4

Dividends to parent
 
—

 
 
—

 
 
(840.00)

 
 
—

 
 
—

 
 
(840.00)

Distributions to noncontrolling interest
 
—

 
 
—

 
 
—

 
 
—

 
 
(8.30)

 
 
(8.30)

Contributions from noncontrolling interest
 
—

 
 
—

 
 
—

 
 
—

 
 
3.0

 
 
3.0

Purchase of subsidiary shares from noncontrolling
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
interest
 
—

 
 
(21.40)

 
 
—

 
 
—

 
 
(1.60)

 
 
(23.00)

Effects of implementation of accounting change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
related to equity investments, net
 
—

 
 
—

 
 
(0.10)

 
 
0.1

 
 
—

 
 
—

Effects of implementation of accounting change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
related to revenue recognition, net
 
—

 
 
—

 
 
36.4

 
 
—

 
 
—

 
 
36.4

Effects of implementation of accounting change
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
related to the reclassification of certain tax
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
effects, net
 
—

 
 
—

 
 
(242.00)

 
 
242.0

 
 
—

 
 
—

Net income
 
—

 
 
—

 
 
1,251.0

 
 
—

 
 
3.3

 
 
1,254.3

Other comprehensive loss
 
—

 
 
—

 
 
—

 
 
(1,546.40)

 
 
—

 
 
(1,546.40)

Balances as of December 31, 2018
$
2.5

 
$
6,331.6

 
$
2,441.2

 
$
55.5

 
$
20.4

 
$
8,851.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



Principal Life Insurance Company
Consolidated Statements of Cash Flows
 
 
For the year ended December 31,
 
 
2018
 
2017
 
2016
 
 
(in millions)
Operating activities
 
 
 
 
 
 
 
 
Net income
$
1,254.3

 
$
2,273.4

 
$
1,113.3

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
 
 
 
 
 
 
Income from discontinued operations, net of related income taxes
 
—

 
 
(37.00)

 
 
(131.60)

 
Net realized capital gains
 
(92.70)

 
 
(372.00)

 
 
(97.90)

 
Depreciation and amortization expense
 
111.6

 
 
112.2

 
 
108.3

 
Amortization of deferred acquisition costs and contract costs
 
260.6

 
 
212.1

 
 
262.6

 
Additions to deferred acquisition costs and contract costs
 
(419.20)

 
 
(397.80)

 
 
(377.70)

 
Stock-based compensation
 
26.6

 
 
39.3

 
 
31.5

 
(Income) loss from equity method investments, net of dividends received
 
(32.50)

 
 
9.7

 
 
60.1

Changes in:
 
 
 
 
 
 
 
 
 
Accrued investment income
 
(24.50)

 
 
(27.30)

 
 
(41.90)

 
Net cash flows for trading securities and equity securities with operating intent
 
(124.80)

 
 
171.3

 
 
301.5

 
Premiums due and other receivables
 
62.2

 
 
(360.10)

 
 
100.9

 
Contractholder and policyholder liabilities and dividends
 
3,324.8

 
 
3,251.9

 
 
2,019.5

 
Current and deferred income taxes (benefits)
 
253.0

 
 
(616.40)

 
 
61.5

 
Real estate acquired through operating activities
 
(89.20)

 
 
(82.50)

 
 
(58.20)

 
Real estate sold through operating activities
 
133.5

 
 
1.2

 
 
227.6

 
Other assets and liabilities
 
244.3

 
 
(212.80)

 
 
(266.60)

Other
 
266.5

 
 
983.3

 
 
755.2

Net adjustments
 
3,900.2

 
 
2,675.1

 
 
2,954.8

Net cash provided by operating activities
 
5,154.5

 
 
4,948.5

 
 
4,068.1

Investing activities
 
 
 
 
 
 
 
 
Fixed maturities available-for-sale and equity securities with intent to hold:
 
 
 
 
 
 
 
 
 
Purchases
 
(12,392.80)

 
 
(12,878.80)

 
 
(13,308.70)

 
Sales
 
2,701.9

 
 
1,142.6

 
 
1,368.7

 
Maturities
 
6,008.4

 
 
8,407.5

 
 
7,562.0

Mortgage loans acquired or originated
 
(3,299.50)

 
 
(2,594.00)

 
 
(2,798.90)

Mortgage loans sold or repaid
 
2,085.6

 
 
1,724.0

 
 
1,968.1

Real estate acquired
 
(88.10)

 
 
(200.50)

 
 
(109.70)

Real estate sold
 
63.5

 
 
481.9

 
 
35.2

Net purchases of property and equipment
 
(48.10)

 
 
(105.70)

 
 
(117.50)

Net change in other investments
 
(355.30)

 
 
(127.90)

 
 
(154.30)

Net cash used in investing activities
 
(5,324.40)

 
 
(4,150.90)

 
 
(5,555.10)

Financing activities
 
 
 
 
 
 
 
 
Proceeds from financing element derivatives
 
—

 
 
0.1

 
 
0.4

Payments for financing element derivatives
 
(65.90)

 
 
(77.60)

 
 
(87.70)

Excess tax benefits from share-based payment arrangements
 
—

 
 
—

 
 
7.8

Purchase of subsidiary shares from noncontrolling interest
 
(23.00)

 
 
(6.40)

 
 
—

Dividends paid to parent
 
(840.00)

 
 
(1,818.40)

 
 
(1,040.30)

Capital contributions from (distributions to) parent
 
(21.60)

 
 
1,006.6

 
 
(16.30)

Issuance of long-term debt
 
80.2

 
 
2.8

 
 
12.0

Principal repayments of long-term debt
 
(1.30)

 
 
(56.50)

 
 
(54.80)

Net repayments of short-term borrowings
 
—

 
 
(76.50)

 
 
(32.30)

Investment contract deposits
 
7,896.0

 
 
9,760.5

 
 
10,462.4

Investment contract withdrawals
 
(6,520.10)

 
 
(9,889.90)

 
 
(8,373.30)

Net increase in banking operation deposits
 
553.0

 
 
136.6

 
 
129.0

Other
 
(4.50)

 
 
(2.50)

 
 
6.1

Net cash provided by (used in) financing activities
 
1,052.8

 
 
(1,021.20)

 
 
1,013.0

Net increase (decrease) in cash and cash equivalents
 
882.9

 
 
(223.60)

 
 
(474.00)

Cash and cash equivalents from continuing operations at beginning of period
 
923.4

 
 
1,147.0

 
 
1,621.0

Cash and cash equivalents from continuing operations at end of period
$
1,806.3

 
$
923.4

 
$
1,147.0

 
 
 
 
 
 
 
 
 
 
Discontinued operations (excluded from amounts above):
 
 
 
 
 
 
 
 
Net cash provided by operating activities
$
—

 
$
47.7

 
$
219.6

Net cash used in investing activities
 
—

 
 
(0.60)

 
 
(22.10)

Net cash used in financing activities
 
—

 
 
(44.70)

 
 
(138.50)

Net cash and cash equivalents provided by discontinued operations
$
—

 
$
2.4

 
$
59.0

 
 
 
 
 
 
 
 
 
 
Supplemental information:
 
 
 
 
 
 
 
 
Cash paid for interest
$
3.1

 
$
3.9

 
$
1.2

Cash paid for (received from) income taxes
$
(91.20)

 
$
91.0

 
$
189.2

 
 
 
 
 
 
 
 
 
 



Supplemental disclosure of non-cash activities:
 
 
 
 
 
 
 
 
Note receivable from parent in consideration of subsidiaries sold to parent
$
—

 
$
300.0

 
$
—

Assets received in kind for pension risk transfer transactions
$
—

 
$
—

 
$
594.3

Assets transferred to parent due to change in benefit plan sponsorship
$
—

 
$
—

 
$
304.1

Liabilities assumed by parent due to change in benefit plan sponsorship
$
—

 
$
—

 
$
(225.50)

Assets and liability changes resulting from exchange agreement to exit real estate joint ventures:
 
 
 
 
 
 
 
 
 
Real estate properties received
$
—

 
$
743.2

 
$
—

 
Long-term debt assumed on real estate properties received
$
—

 
$
269.0

 
$
—

 
Increase in other investments due to discontinuing equity method accounting
$
—

 
$
222.4

 
$
—

 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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 and insurance in the U.S. We are a direct wholly owned subsidiary of Principal Financial Services, Inc. (“PFS”), 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.

On May 1, 2017, we sold our ownership interest in Principal Global Investors, LLC (“PGI LLC”) to PFS in connection with a corporate reorganization designed to better utilize and allocate capital internally. PGI LLC met the criteria to be reported as a discontinued operation. See Note 2, Discontinued Operations, for further details. Information included in the notes to the financial statements excludes information applicable to the discontinued operations, unless otherwise noted.

We evaluated subsequent events through March 15, 2019, 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 5, 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 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.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Recent Accounting Pronouncements



Description

Date of adoption
Effect on our consolidated financial statements or other significant matters
Standards not yet adopted:
 
 
Targeted improvements to the accounting for long-duration insurance contracts
This authoritative guidance updates certain requirements in the accounting for long-duration insurance and annuity contracts.

1.    The assumptions used to calculate the liability for future policy benefits on traditional and limited-payment contracts will be reviewed and updated periodically. Cash flow assumptions will be reviewed at least annually and updated when necessary with the impact recognized in net income. Discount rate assumptions are prescribed as the current upper-medium grade (low credit risk) fixed income instrument yield and will be updated quarterly with the impact recognized in other comprehensive income (“OCI”).
2.    Market risk benefits, which are certain market-based options or guarantees associated with deposit or account balance contracts, will be measured at fair value. The periodic change in fair value related to instrument-specific credit risk will be recognized in OCI while the remaining change in fair value will be recognized in net income.
3.    Deferred acquisition costs (“DAC”) for all insurance and annuity contracts will be amortized on a constant basis over the expected term of the related contracts.
4.    Additional disclosures are required, including disaggregated rollforwards of significant insurance liabilities and other account balances and disclosures about significant inputs, judgments, assumptions and methods used in measurement.

The guidance for the liability for future policy benefits for traditional and limited-payment contracts and DAC will be applied on a modified retrospective basis; that is, to contracts in force as of the beginning of the earliest period presented based on their existing carrying amounts. An entity may elect to apply the changes retrospectively. The guidance for market risk benefits will be applied retrospectively. Early adoption is permitted.

January 1, 2021
Our implementation and evaluation process to date includes, but is not limited to, identifying and documenting contracts and contract features in scope of the guidance; identifying the actuarial models, systems and processes to be updated; and evaluating our systems solutions for implementing the new guidance. As we progress through our implementation, we will be able to better assess the impact to our consolidated financial statements; however, we expect this guidance to significantly change how we account for many of our insurance and annuity products.




















Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018




Description

Date of adoption
Effect on our consolidated financial statements or other significant matters
Goodwill impairment testing
This authoritative guidance simplifies 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 to the carrying amount of that goodwill) from the goodwill impairment test. A goodwill impairment loss will 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, but do not expect it to have a material impact on our consolidated financial statements. We expect the guidance will reduce complexity and costs associated with performing a Step 2 test, should one be needed in the future. However, the impact on the outcome of any such future impairment assessment will be dependent on modeling factors that are not currently determinable.

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 fiscal year of adoption. Early adoption is permitted.

January 1, 2020
Our implementation and evaluation process to date includes, but is not limited to, identifying financial assets within scope of the guidance and developing CECL models for the relevant assets. 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 using a modified retrospective approach, which includes certain optional practical expedients that may be elected. We elected the alternative transition method, which allows entities to initially apply the new standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption.

January 1, 2019
Our evaluation process includes, but is not limited to, identifying leases that are within the scope of the guidance, reviewing and documenting our accounting for these contracts, implementing system and process changes and determining disclosure impacts.

The guidance requires us to establish a lease asset and liability for our operating leases. The guidance will be applied at the beginning of the period of adoption and comparative periods will not be restated. Assets and liabilities will increase approximately $102.0 million and $97.0 million, respectively, due to the adoption of this guidance. The impact to total stockholder’s equity will not be material.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018




Description

Date of adoption
Effect on our consolidated financial statements or other significant matters
Implementation costs in a cloud computing arrangement that is a service contract
This authoritative guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance can be applied either retrospectively or prospectively and early adoption is permitted.

January 1, 2019
The effective date of the guidance is January 1, 2020; however, we have elected to early-adopt this guidance on a prospective basis, effective January 1, 2019. This guidance will not have a material impact on our consolidated financial statements.
Targeted improvements to accounting for hedging activities
This authoritative guidance updates certain recognition and measurement requirements for hedge accounting. The objective of the guidance is to more closely align the economics of a company’s risk management activities in its financial results and reduce the complexity of applying hedge accounting. The updates include the expansion of hedging strategies that are eligible for hedge accounting, elimination of the separate measurement and reporting of hedge ineffectiveness, presentation of the changes in the fair value of the hedging instrument in the same consolidated statement of operations line as the earnings effect of the hedged item and simplification of hedge effectiveness assessments. This guidance also includes new 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 fiscal year of adoption.

January 1, 2019
This guidance will not have a material impact on our consolidated financial statements.
Premium amortization on purchased callable debt securities
This authoritative guidance applies to entities that hold certain non-contingently callable debt securities, where the amortized cost basis is at a premium to the price repayable by the issuer at the earliest call date. Under the guidance the premium will be amortized to the first call date. This guidance requires adoption through a cumulative effect adjustment to retained earnings as of the beginning of the fiscal year of adoption.

January 1, 2019
This guidance will not have a material impact on our consolidated financial statements.
Nonemployee share-based payment accounting
This authoritative guidance simplifies the accounting for share-based payments to nonemployees by generally aligning it with the accounting for share-based payments to employees. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, where today the measurement is fixed at performance completion date. The guidance will be applied to equity-classified nonemployee awards for which a measurement date has not been established as of the date of adoption.

January 1, 2019
This guidance will not have a material impact on our consolidated financial statements.





Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018




Description

Date of adoption
Effect on our consolidated financial statements or other significant matters
Standards adopted:
 
 
Reclassification of certain tax effects from accumulated other
  comprehensive income 
This authoritative guidance permits a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for the stranded tax effects resulting from U.S. tax legislation enacted on December 22, 2017, which is referred to as the ‘‘Tax Cuts and Jobs Act’’ (‘‘U.S. tax reform’’). The amount of that reclassification includes the change in corporate income tax rate, as well as an election to include other income tax effects related to the application of U.S. tax reform. The guidance also requires disclosures about stranded tax effects.


January 1, 2018
The effective date of the guidance was January 1, 2019; however, we elected to early adopt the guidance. The guidance was applied at the beginning of the period of adoption and comparative periods were not restated. We reclassified the stranded tax effects in AOCI resulting from U.S. tax reform, which includes the change in corporate income tax rate and an election to reclassify the tax effects of the one-time deemed repatriation tax. A reclassification of $242.0 million was recorded as an increase to AOCI and a decrease to retained earnings.

Revenue recognition
This authoritative guidance replaces all general and most industry specific revenue recognition guidance 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. In addition, the guidance updates the accounting for certain costs associated with obtaining and fulfilling a customer contract. 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 adopted the guidance using the modified retrospective approach. The guidance did not have a material impact on our consolidated financial statements. Further details are included under the caption “Adoption of Revenue Recognition Guidance” and in Note 18, Revenues from Contracts with Customers.
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.

January 1, 2018
We adopted the guidance using the modified retrospective approach. The guidance did not have a material impact on our consolidated financial statements.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018





Description

Date of adoption
Effect on our consolidated financial statements or other significant matters
Financial instruments - recognition and measurement
This authoritative guidance addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The guidance eliminated the classification of equity securities into different categories (trading or available-for-sale) and requires equity investments to be measured at fair value with changes in the fair value recognized through net income. The guidance also updated certain financial instrument disclosures and eliminated the requirement to disclose the methods and significant assumptions used to estimate the fair value of financial instruments that are measured at amortized cost on the balance sheet.

January 1, 2018
We adopted this guidance using the modified retrospective approach. A cumulative effect adjustment of $0.1 million was recorded as an increase to AOCI and a corresponding decrease to retained earnings. The guidance did not have a material impact on our consolidated financial statements. As of December 31, 2017, we had $94.1 million of equity securities classified as available-for-sale and $6.0 million classified as trading. The consolidated statements of financial position have been updated to eliminate these classifications and present only equity securities. See Note 6, Investments, for further details.

Nonfinancial asset derecognition and partial sales of nonfinancial
  assets
This authoritative guidance clarifies the scope of the recently established guidance on nonfinancial asset derecognition and the accounting for partial sales of nonfinancial assets. The guidance conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue recognition standard.

January 1, 2018
The guidance did not have a material impact on our consolidated financial statements.
Presentation of net periodic pension cost and net periodic
  postretirement benefit cost
This authoritative guidance requires that an employer disaggregate the service cost component from the other components of net benefit cost. The guidance also provides explicit guidance on the presentation of the service cost component and the other components of net benefit cost in the consolidated statement of operations and allows only the service cost component of net benefit cost to be eligible for capitalization.

January 1, 2018
The guidance did not have a material impact on our consolidated financial statements.
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.

January 1, 2018
The guidance did not have a material impact on our consolidated financial statements.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018




Description

Date of adoption
Effect on our consolidated financial statements or other significant matters
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 was adopted prospectively as indicated by the guidance for each area of change and did not have a material impact on our consolidated financial statements.
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 10, Insurance Liabilities, for further details.
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 16, 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 5, Variable Interest Entities, for further details.

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.

Adoption of Revenue Recognition Guidance
On January 1, 2018, we adopted the guidance using the modified retrospective approach. A cumulative effect adjustment of $36.4 million was recorded as an increase to total stockholder’s equity. The impact of the guidance to our consolidated financial statements relates to deferring certain sales compensation related to obtaining customer contracts that was not previously capitalized.
 



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



Results of reporting periods beginning January 1, 2018, are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with our legacy accounting. The guidance did not have a material impact on our consolidated statements of operations. The impacts to the consolidated statements of financial position were as follows:
Consolidated Statements of Financial Position
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
Impact of adopting
 
 
 
 
 
 
 
 
 
 
revenue recognition
 
 
 
 
 
As reported
 
 
As adjusted (1)
 
accounting guidance
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
Other assets (2)
$
1,135.9
 
$
1,093.4
 
$
42.5
Liabilities
 
 
 
 
 
 
 
 
 
Deferred income taxes
 
1,029.4
 
 
1,020.5
 
 
8.9
Stockholder's equity
 
 
 
 
 
 
 
 
 
Total stockholder's equity
 
8,851.2
 
 
8,817.6
 
 
33.6
 
 
 
 
 
 
 
 
 
 
 
 
(1) Excludes the impact of adopting revenue recognition accounting guidance.
(2) Includes the contract cost asset.

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 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 obligation 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. 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 8, 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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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 as either available-for-sale or trading at the time of the purchase and, accordingly, carry them at fair value. Equity securities are also carried at fair value. See Note 16, Fair Value Measurements, for methodologies related to the determination of fair value. Unrealized gains and losses related to fixed maturities, available-for-sale, 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. Mark-to-market adjustments on equity securities, unrealized gains and losses related to hedged portions of fixed maturities, available-for-sale in fair value hedging relationships and mark-to-market adjustments on fixed maturities, trading are reflected in net realized capital gains (losses). Mark-to-market adjustments related to certain securities carried at fair value with an investment objective to realize economic value through mark-to-market changes are reflected in net investment income.
 
The cost of fixed maturities is adjusted for amortization of premiums and accrual of discounts, both computed using the interest method. The cost of fixed maturities classified as available-for-sale is adjusted for declines in value that are other than temporary. Impairments in value deemed to be other than temporary are primarily reported in net income as a component of net realized capital gains (losses), with noncredit impairment losses for certain fixed maturities, available-for-sale reported in OCI. Interest income, as well as prepayment fees and the amortization of the related premium or discount, is reported in net investment income. For loan-backed and structured securities, we recognize income using a constant effective yield based on currently anticipated cash flows.

Real estate investments are reported at cost less accumulated depreciation. The initial cost 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 property is 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 $207.7 million and $210.6 million as of December 31, 2018 and 2017, 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 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 equity securities, mark-to-market adjustments on fixed maturities, trading, mark-to-market adjustments on certain 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



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


which the fair value option has been elected in prior periods. See Note 16, 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 swaps, options and futures. 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 16, Fair Value Measurements, for policies related to the determination of fair value. Fair values can be affected by changes in interest rates, foreign exchange rates, financial indices, values of securities, credit spreads, and market volatility and liquidity.

Accounting and Financial Statement Presentation

We designate derivatives as either:

(a)
a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, including those denominated in a foreign currency (“fair value hedge”);
(b)
a hedge of a forecasted transaction or the exposure to variability of cash flows to be received or paid related to a recognized asset or liability, including those denominated in a foreign currency (“cash flow hedge”) or
(c)
a derivative not designated as a hedging instrument.

Our accounting for the ongoing changes in fair value of a derivative depends on the intended use of the derivative and the designation, as described above, and is determined when the derivative contract is entered into or at the time of redesignation. Hedge accounting is used for derivatives that are specifically designated in advance as hedges and that reduce our exposure to an indicated risk by having a high correlation between changes in the value of the derivatives and the items being hedged at both the inception of the hedge and throughout the hedge period.

Fair Value Hedges. When a derivative is designated as a fair value hedge and is determined to be highly effective, changes in its fair value, along with changes in the fair value of the hedged asset, liability or firm commitment attributable to the hedged risk, are reported in net realized capital gains (losses). Any difference between the net change in fair value of the derivative and the hedged item represents hedge ineffectiveness.

Cash Flow Hedges. When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in its fair value are recorded as a component of OCI. Any hedge ineffectiveness is recorded immediately in net income. At the time the variability of cash flows being hedged impacts net income, the related portion of deferred gains or losses on the derivative instrument is reclassified and reported in net income.

Non-Hedge Derivatives. If a derivative does not qualify or is not designated for hedge accounting, all changes in fair value are reported in net income without considering the changes in the fair value of the economically associated assets or liabilities.

Hedge Documentation and Effectiveness Testing. At inception, we formally document all relationships between hedging instruments and hedged items, as well as our risk management objective and strategy for undertaking various hedge transactions. This process includes associating all derivatives designated as fair value or cash flow hedges with specific assets or liabilities on the 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.

    




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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 AOCI related to discontinued cash flow hedges that are no longer highly effective is amortized to the consolidated statements of operations consistent with the net income impacts of the original hedged cash flows. If a cash flow hedge is discontinued because it is probable the hedged forecasted transaction will not occur, the deferred gain or loss is immediately reclassified from AOCI into net income.

Embedded Derivatives. We purchase and issue certain financial instruments and products that contain a derivative that is embedded in the financial instrument or product. We assess whether this embedded derivative is clearly and closely related to the asset or liability that serves as its host contract. If we deem that the embedded derivative's terms are not clearly and closely related to the host contract, and a separate instrument with the same terms would qualify as a derivative instrument, the derivative is bifurcated from that contract and held at fair value on the consolidated statements of financial position, with changes in fair value reported in net income.

Contractholder and Policyholder Liabilities

Contractholder and policyholder liabilities (contractholder funds, future policy benefits and claims and other policyholder funds) include reserves for investment contracts, individual and group annuities that provide periodic income payments, universal life insurance, variable universal life insurance, indexed universal life insurance, term life insurance, participating traditional individual life insurance, group dental and vision insurance, group short-term and long-term disability insurance, group life insurance, individual disability insurance and long-term care insurance. It also includes 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, variable universal life and indexed 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 and indexed universal life insurance contracts that contain no lapse guarantee features; and 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 7%, 8% and 8% of our life insurance in force and 26%, 29% and 33% of the number of life insurance policies in force as of December 31, 2018, 2017 and 2016, respectively. Participating business represented approximately 34%, 39% and 43% of life insurance premiums for the years ended December 31, 2018, 2017 and 2016, 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



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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”).

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”), critical illness, accident 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, critical illness, accident 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, Critical Illness and Accident: 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 2018.

Liability for Unpaid Claims

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.

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.

See Note 10, Insurance Liabilities, under the caption “Liability for Unpaid Claims” for further details.

Recognition of Premiums and Other Considerations, Fees and Other Revenues and Benefits

Products with fixed and guaranteed premiums and benefits consist principally of whole life and term life insurance policies and individual disability income. 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.
 



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, dental, vision and disability 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 are associated with earned premiums and result in the recognition of profits over the term of the policies and contracts. Fees for contracts providing claim processing or other administrative services are recorded as revenue over the period the service is provided.

Universal life-type policies are insurance contracts with terms that are not fixed. Amounts received as payments for such contracts are not reported as premium revenues. Revenues for universal life-type insurance contracts consist of policy charges for the cost of insurance, policy initiation and administration, surrender charges and other fees that have been assessed against policy account values and investment income. Policy benefits and claims that are charged to expense include interest credited to contracts and benefit claims incurred in the period in excess of related policy account balances.

Investment contracts do not subject us to significant risks arising from policyholder mortality or morbidity and consist primarily of guaranteed investment contracts (“GICs”), funding agreements and certain deferred annuities. Amounts received as payments for investment contracts are established as investment contract liability balances and are not reported as premium revenues. Revenues for investment contracts consist of investment income and policy administration charges. Investment contract benefits that are charged to expense include benefit claims incurred in the period in excess of related investment contract liability balances and interest credited to investment contract liability balances.

Fees and other revenues are earned for administrative services performed including recordkeeping and reporting services for retirement savings plans and other products. Fees and other revenues received for performance of administrative services are recognized as revenue when earned, typically when the service is performed.

Deferred Acquisition Costs

Incremental direct costs of contract acquisition as well as certain costs directly related to acquisition activities (underwriting, policy issuance and processing, medical and inspection and sales force contract selling) for the successful acquisition of new and renewal insurance policies and investment contract business are capitalized to the extent recoverable. Commissions and other incremental direct costs for the acquisition of long-term service contracts are also capitalized to the extent recoverable. Maintenance costs and acquisition costs that are not deferrable are charged to net income as incurred.

DAC for universal life-type insurance contracts and certain investment contracts are amortized over the expected lifetime of the contracts in relation to EGPs or, in certain circumstances, estimated gross revenues (“EGR”). This amortization is adjusted in the current period when EGPs or EGRs are revised. EGRs include similar assumptions as the revenue component of EGPs and the changes of future estimates and reflection of actual experience and market conditions is done in the same manner as EGPs.

For individual variable universal life insurance, individual variable annuities and group annuities that have separate account U.S. equity investment options, we utilize a mean reversion 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 (“EGM”) rather than EGPs. EGMs include similar assumption items as EGPs. We stopped selling participating business in the early 2000s. Some products allow for underwritten death benefit increases and cost of living adjustments, resulting in a small amount of new DAC each year, and the amortization schedules are modified as appropriate.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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. Once these assumptions are made for a given policy or group of policies, they will not be changed over the life of the policy unless a loss recognition event occurs.

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.

Long-Term Debt

Long-term debt includes notes payable, nonrecourse mortgages and other debt with a maturity date greater than one year at the date of issuance. Current maturities of long-term debt are classified as long-term debt in our consolidated statements of financial position. Long-term debt is primarily recorded at the unpaid principal balance, net of unamortized discount, premium and issuance costs.

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, 2018 and 2017, we had $450.4 million and $427.5 million of net ceded reinsurance recoverables related to claims that have been received, respectively. As of December 31, 2018 and 2017, $435.6 million, or 97%, and $417.4 million, or 98%, 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, 2018 and 2017, the total amount recoverable from reinsurers was $920.8 million and $864.3 million, respectively, and is recognized in premiums due and other receivables.

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




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
For the year ended December 31,
 
 
 
2018
 
2017
 
2016
 
 
 
(in millions)
Premiums and other considerations:
 
 
 
 
 
 
 
 
 
Direct
$
6,284.8
 
$
6,202.7
 
$
5,254.2
 
Assumed
 
327.1
 
 
279.8
 
 
226.0
 
Ceded
 
(519.50)
 
 
(483.10)
 
 
(455.70)
Net premiums and other considerations
$
6,092.4
 
$
5,999.4
 
$
5,024.5
 
 
 
 
 
 
 
 
 
 
 
Benefits, claims and settlement expenses:
 
 
 
 
 
 
 
 
 
Direct
$
7,528.2
 
$
7,296.3
 
$
6,298.8
 
Assumed
 
509.8
 
 
441.1
 
 
356.9
 
Ceded
 
(496.00)
 
 
(419.50)
 
 
(316.20)
Net benefits, claims and settlement expenses
$
7,542.0
 
$
7,317.9
 
$
6,339.5
 
 
 
 
 
 
 
 
 
 
 

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. 

As of December 31, 2018 and 2017, the separate accounts included a separate account valued at $94.9 million and $170.5 million, respectively, which primarily included shares of PFG 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. Subsequent to a change in tax rates and laws, any stranded tax effects remaining in AOCI will be released only if an entire portfolio is liquidated, sold or extinguished. However, a specific exception to this rule was adopted effective January 1, 2018, to reclassify the stranded tax effects generated by U.S. tax reform from AOCI to retained earnings. Further details are included under the caption “Recent Accounting Pronouncements.”




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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 is not amortized. Rather, it is 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. 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. 

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. Discontinued Operations

On May 1, 2017, we sold our ownership interest in PGI LLC to PFS. PGI LLC results are subsequently reported as discontinued operations and the results of operations have been removed from our results of continuing operations for all periods presented. Additionally, intercompany eliminations associated with PGI LLC are reported as discontinued operations and have been removed from our results of continuing operations for all periods presented. PGI LLC continues to provide asset management services for us. 

Operating results of the discontinued operations, which reflect the net impact of discontinuing PGI LLC and associated intercompany eliminations, were as follows:

 
 
For the year ended December 31,
 
 
2017
 
2016
 
 
(in millions)
Revenues
 
 
 
Fees and other revenues
$
155.9
 
$
513.3
Net investment income
 
42.7
 
 
119.4
Net realized capital gains
 
1.8
 
 
1.6
 
Total revenues
 
200.4
 
 
634.3
Expenses
 
 
 
 
 
Operating expenses
 
148.5
 
 
429.5
 
Total expenses
 
148.5
 
 
429.5
Income before income taxes
 
51.9
 
 
204.8
Income taxes
 
14.9
 
 
73.2
Income from discontinued operations
 
37.0
 
 
131.6
Income from discontinued operations attributable to
 
 
 
 
 
 
noncontrolling interest
 
1.5
 
 
4.1
Income from discontinued operations attributable to parent
$
35.5
 
$
127.5

3. Related Party Transactions

Expense Reimbursements

We have entered into various related party transactions with our ultimate parent and its other affiliates. During the years ended December 31, 2018, 2017 and 2016, we received $520.7 million, $431.9 million and $272.7 million, respectively, of expense reimbursements from affiliated entities.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Cash Advance Agreement

We and our direct parent, PFS, are parties to a cash advance agreement, which allows us, collectively, to pool our available cash with other affiliates in order to more efficiently and effectively invest our cash. The cash advance agreement allows (i) us to advance cash to PFS 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) PFS 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 PFS for the costs incurred in maintaining short-term investing and borrowing programs. Under this cash advance agreement, we had a receivable from PFS of $173.4 million and $313.0 million as of December 31, 2018 and 2017, respectively, and earned interest of $4.9 million, $1.7 million and $0.7 million during 2018, 2017 and 2016, respectively.

Debt
We have short-term affiliated debt with our parent. See Note 11, Debt, for additional information.

Reinsurance

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 $3,399.2 million and $2,975.3 million as of December 31, 2018 and 2017, respectively. In addition, we recognized premiums and other fees of $555.4 million, $498.9 million and $404.3 million for the years ended December 31, 2018, 2017 and 2016, respectively, associated with this agreement. Furthermore, we recognized expenses of $776.1 million, $700.3 million and $565.0 million for the years ended December 31, 2018, 2017 and 2016, respectively, associated with this agreement.

Sale of Subsidiaries

On May 1, 2017, we sold our ownership interest in PGI LLC to PFS as part of a common control transaction. Accordingly, no gain or loss was recognized on the sale and the amount received in excess of book value was recorded in additional paid-in capital. We received $1,068.4 million in cash and a $300.0 million 10-year note from PFS, with the note balance approximating the carrying value of PGI LLC. The note bears interest at 2.885% with semi-annual principal and interest payments due in May and November each year. Subsequent to the sale, we paid an extraordinary dividend of $1,068.4 million to PFS with the cash proceeds received from the sale.

Following the sale of our ownership of PGI LLC, it continues to provide asset management services for us. We recognized $103.6 million and $65.7 million of asset management fee expense for the years ended December 31, 2018 and 2017, respectively. Prior to the sale of PGI LLC, these expenses were eliminated upon consolidation.

Our ultimate parent, PFG, is a guarantor of notes received from PFS related to the sale of interests in subsidiaries. We recorded interest income on these notes of $11.1 million, $9.4 million and $6.0 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Distribution of Affiliated Products

We receive commission fees, distribution fees and service fees from Principal Securities, Inc. and PGI LLC. Furthermore, we receive management and administrative fees for investments our products sold in the Principal Mutual Funds and Principal Variable Contracts. Fees and other revenues associated with these fees were $412.0 million, $433.8 million and $409.0 million for the years ended December 31, 2018, 2017 and 2016, respectively. In addition, we pay commission expense to affiliated registered representatives within Principal Securities, Inc. to sell proprietary products. Commission expense was $82.6 million, $84.8 million and $58.8 million for the years ended December 31, 2018, 2017 and 2016, respectively.

Benefit Plans

Effective December 2016, PFG became the sponsor of the qualified 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 from PFG of $32.1 million, $31.6 million and $3.8 million during 2018, 2017 and 2016, respectively. See Note 13, Employee and Agent Benefits, for further details.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



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 from PFG of $2.0 million, $2.4 million, $0.3 million during 2018, 2017 and 2016, respectively. See Note 13, 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 13, Employee and Agent Benefits, for further details.

PFG is the sponsor of the defined benefit pension plans for both employees and individual field agents. We were allocated $51.2 million, $48.4 million and $48.4 million of pension expense from PFG during 2018, 2017 and 2016, respectively. See Note 13, Employee and Agent Benefits, for further details.

Other Agreements

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.

4. Goodwill and Other Intangible Assets

Goodwill

The carrying amount of goodwill did not have any changes during 2018 and 2017.

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,
 
 
2018
 
2017
 
 
(in millions)
Gross carrying value
$
41.4
 
$
41.4
Accumulated amortization
 
19.2
 
 
16.6
Net carrying value
$
22.2
 
$
24.8





Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


The amortization expense for intangible assets with finite useful lives was $2.6 million, $2.6 million and $1.7 million for 2018, 2017 and 2016, respectively. As of December 31, 2018, the estimated amortization expense for the next five years is as follows (in millions):

Year ending December 31:
 
 
 
2019
$
2.6
 
2020
 
2.4
 
2021
 
2.3
 
2022
 
2.2
 
2023
 
2.0

5. 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, 2018 and December 31, 2017.

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 two 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



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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 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. In 2018, the interest-only certificates from one of the grantor trusts were sold to a third party.
 
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 mortgage loans it purchased. This is considered a VIE due to insufficient equity to sustain itself. We 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.

Sponsored Investment Fund

We invest in certain series of an investment fund. These series are VIEs as the equity holders of each series lack the power to direct the most significant activities of the VIE. We determined we are the primary beneficiary of these series as our interest is more than insignificant and collectively we have the power to direct the most significant activities of the fund.

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, 2018
 
December 31, 2017
 
 
Total
 
Total
 
Total
 
Total
 
 
assets
 
liabilities
 
assets
 
liabilities
 
 
(in millions)
Grantor trusts (1)
$
95.0
 
$
89.4

 
$
268.8
 
$
253.2

CMBS
 
6.4
 
 
—

 
 
9.4
 
 
—

Real estate (2)
 
379.2
 
 
70.6

 
 
387.1
 
 
19.5

Sponsored investment fund (3)
 
37.7
 
 
—

 
 
39.7
 
 
—

Total
$
518.3
 
$
160.0

 
$
705.0
 
$
272.7


(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 real estate VIEs primarily include real estate and cash. Liabilities primarily include long-term debt and other liabilities.
(3)
The assets of the sponsored investment fund include other investments.
 
Unconsolidated Variable Interest Entities

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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Unconsolidated VIEs include certain CMBS, residential mortgage-backed pass-through securities ("RMBS") and other asset-backed securities (“ABS”). All of these entities were deemed VIEs because the equity within these entities is insufficient to sustain them. We determined we are not the primary beneficiary in the entities within these categories of investments. This determination was based primarily on the fact we do not own the class of security that controls the unilateral right to replace the special servicer or equivalent function.

We invest in cash collateralized debt obligations, collateralized bond obligations, collateralized loan obligations and other collateralized structures, which are VIEs due to insufficient equity to sustain the entities. We have determined we are not the primary beneficiary of these entities primarily because we do not control the economic performance of the entities and were not involved with the design of the entities or because we do not have a potentially significant variable interest in the entities for which we are the asset manager.

We have invested in various VIE trusts and similar entities as a debt holder. Most of these entities are classified as VIEs due to insufficient equity to sustain them. In addition, we have an entity classified as a VIE based on the combination of our significant economic interest and lack of voting rights. 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.

As previously discussed, we sponsor and invest in certain investment funds that are VIEs. We determined we are not the primary beneficiary of the VIEs for which we are the asset manager but do not have a potentially significant variable interest in the funds.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, 2018
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
Corporate
$
235.3
 
$
222.6
 
Residential mortgage-backed pass-through securities
 
2,416.2
 
 
2,444.4
 
Commercial mortgage-backed securities
 
3,902.8
 
 
3,979.4
 
Collateralized debt obligations
 
2,416.9
 
 
2,447.0
 
Other debt obligations
 
7,139.5
 
 
7,183.0
Fixed maturities, trading:
 
 
 
 
 
 
Residential mortgage-backed pass-through securities
 
13.8
 
 
13.8
 
Commercial mortgage-backed securities
 
13.4
 
 
13.4
 
Collateralized debt obligations (2)
 
11.8
 
 
11.8
 
Other debt obligations
 
9.7
 
 
9.7
Other investments:
 
 
 
 
 
 
Other limited partnership and fund interests
 
575.4
 
 
968.6
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
Corporate
$
244.2
 
$
224.5
 
Residential mortgage-backed pass-through securities
 
2,512.7
 
 
2,483.8
 
Commercial mortgage-backed securities
 
3,667.0
 
 
3,692.6
 
Collateralized debt obligations
 
1,359.3
 
 
1,372.1
 
Other debt obligations
 
5,634.2
 
 
5,633.1
Fixed maturities, trading:
 
 
 
 
 
 
Residential mortgage-backed pass-through securities
 
14.7
 
 
14.7
Other investments:
 
 
 
 
 
 
Other limited partnership and fund interests
 
668.5
 
 
1,149.1

(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.
(2)
Primarily consists of collateralized loan obligations backed by secured corporate loans.

6. Investments

Fixed Maturities and Equity Securities

The amortized cost, gross unrealized gains and losses, other-than-temporary impairments in AOCI and fair value of available-for-sale securities were as follows:




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other-than-
 
 
 
 
 
 
 
Gross
 
Gross
 
 
 
 
temporary
 
 
 
 
Amortized
 
unrealized
 
unrealized
 
 
 
 
impairments in
 
 
 
 
cost
 
gains
 
losses
 
Fair value
 
AOCI (1)
 
 
 
 
(in millions)
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
1,383.7
 
$
16.1

 
$
16.6
 
$
1,383.2
 
$
—

 
Non-U.S. governments
 
683.5
 
 
61.2

 
 
13.9
 
 
730.8
 
 
—

 
States and political subdivisions
 
6,065.7
 
 
194.6

 
 
94.6
 
 
6,165.7
 
 
—

 
Corporate
 
32,037.2
 
 
873.0

 
 
821.8
 
 
32,088.4
 
 
—

 
Residential mortgage-backed pass-through securities
 
2,444.4
 
 
21.4

 
 
49.6
 
 
2,416.2
 
 
—

 
Commercial mortgage-backed securities
 
3,979.4
 
 
17.0

 
 
93.6
 
 
3,902.8
 
 
16.3

 
Collateralized debt obligations (2)
 
2,447.0
 
 
—

 
 
30.1
 
 
2,416.9
 
 
1.2

 
Other debt obligations
 
7,214.8
 
 
39.2

 
 
82.7
 
 
7,171.3
 
 
36.2

Total fixed maturities, available-for-sale
$
56,255.7
 
$
1,222.5

 
$
1,202.9
 
$
56,275.3
 
$
53.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
1,281.0
 
$
44.3

 
$
7.6
 
$
1,317.7
 
$
—

 
Non-U.S. governments
 
492.1
 
 
37.3

 
 
1.1
 
 
528.3
 
 
—

 
States and political subdivisions
 
6,404.4
 
 
369.2

 
 
15.9
 
 
6,757.7
 
 
—

 
Corporate
 
31,555.2
 
 
2,113.9

 
 
79.9
 
 
33,589.2
 
 
0.6

 
Residential mortgage-backed pass-through securities
 
2,483.8
 
 
50.2

 
 
21.3
 
 
2,512.7
 
 
—

 
Commercial mortgage-backed securities
 
3,692.6
 
 
32.3

 
 
57.9
 
 
3,667.0
 
 
50.6

 
Collateralized debt obligations (2)
 
1,372.1
 
 
2.7

 
 
15.5
 
 
1,359.3
 
 
0.3

 
Other debt obligations
 
5,696.1
 
 
41.9

 
 
40.5
 
 
5,697.5
 
 
41.9

Total fixed maturities, available-for-sale
$
52,977.3
 
$
2,691.8

 
$
239.7
 
$
55,429.4
 
$
93.4

Total equity securities, available-for-sale
$
93.2
 
$
6.3

 
$
5.4
 
$
94.1
 
 
 

(1)
Excludes $64.2 million and $103.0 million as of December 31, 2018 and December 31, 2017, 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.
(2)
Primarily consists of collateralized loan obligations backed by secured corporate loans.

The amortized cost and fair value of fixed maturities available-for-sale as of December 31, 2018, by expected maturity, were as follows:

 
 
Amortized cost
 
Fair value
 
 
(in millions)
Due in one year or less
$
2,526.2
 
$
2,527.6
Due after one year through five years
 
10,219.1
 
 
10,234.9
Due after five years through ten years
 
9,990.4
 
 
9,826.4
Due after ten years
 
17,434.4
 
 
17,779.2
Subtotal
 
40,170.1
 
 
40,368.1
Mortgage-backed and other asset-backed securities
 
16,085.6
 
 
15,907.2
Total
 
$
56,255.7
 
$
56,275.3

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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Net Investment Income

Major components of net investment income were as follows:
 
 
 
For the year ended December 31,
 
 
 
2018
 
2017
 
2016
 
 
 
(in millions)
Fixed maturities, available-for-sale
$
2,249.8

 
$
2,143.2

 
$
2,048.6

Fixed maturities, trading
 
6.5

 
 
4.3

 
 
11.1

Equity securities, available-for-sale
 
—

 
 
5.4

 
 
5.4

Equity securities, trading
 
—

 
 
—

 
 
11.5

Equity securities
 
4.6

 
 
—

 
 
—

Mortgage loans
 
587.8

 
 
563.5

 
 
530.2

Real estate
 
158.4

 
 
129.1

 
 
127.7

Policy loans
 
39.9

 
 
40.5

 
 
41.3

Cash and cash equivalents
 
33.5

 
 
12.0

 
 
5.5

Derivatives (1)
 
0.1

 
 
(3.20)

 
 
(36.10)

Other
 
83.6

 
 
96.6

 
 
113.4

Total
 
3,164.2

 
 
2,991.4

 
 
2,858.6

Investment expenses
 
(141.30)

 
 
(157.70)

 
 
(192.50)

Net investment income
$
3,022.9

 
$
2,833.7

 
$
2,666.1

 
 
 
 
 
 
 
 
 
 
 
(1) Relates to periodic settlements of derivatives used in fair value and cash flow hedges of fixed maturities, available-for-
sale. See Note 7, Derivative Financial Instruments, for further details.

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,
 
 
 
2018
 
2017
 
2016
 
 
 
(in millions)
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
Gross gains
$
6.8

 
$
10.3

 
$
56.6

 
Gross losses
 
(68.80)

 
 
(22.70)

 
 
(22.40)

 
Net impairment losses
 
(29.10)

 
 
(79.60)

 
 
(95.10)

 
Hedging, net
 
(39.60)

 
 
(28.50)

 
 
(37.90)

Fixed maturities, trading (1)
 
(7.70)

 
 
1.4

 
 
(4.60)

Equity securities, available-for-sale:
 
 
 
 
 
 
 
 
 
Net impairment losses
 
—

 
 
(0.10)

 
 
(1.70)

Equity securities, trading (2)
 
—

 
 
(1.30)

 
 
(5.30)

Equity securities (3)
 
0.8

 
 
—

 
 
—

Mortgage loans
 
6.4

 
 
9.2

 
 
4.4

Derivatives
 
79.2

 
 
(195.80)

 
 
198.8

Other (4)
 
144.7

 
 
679.1

 
 
5.1

Net realized capital gains
$
92.7

 
$
372.0

 
$
97.9


(1)
Unrealized gains (losses) on fixed maturities, trading still held at the reporting date were $(7.6) million, $2.7 million and $(3.4) million for the years ended December 31, 2018, 2017 and 2016, respectively.
(2)
Unrealized gains (losses) on equity securities, trading still held at the reporting date were $(1.2) million and $0.4 million for the years ended December 31, 2017 and 2016, respectively.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


(3)
Unrealized gains (losses) on equity securities still held at the reporting date were $(12.5) million for the year ended December 31, 2018.
(4)
Other gains in 2018 primarily include a gain from the sale of an equity method investment. See Real Estate Transactions, for further details relating to other gains in 2017.


Proceeds from sales of investments (excluding call and maturity proceeds) in fixed maturities, available-for-sale were $2,658.1 million, $1,149.8 million and $1,370.0 million in 2018, 2017 and 2016, respectively.

Other-Than-Temporary Impairments

We have a process in place to identify fixed maturity securities that could potentially have an impairment that is other than temporary. Prior to 2018, we also used this process to assess equity securities for impairment. 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.

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”). Prior to 2018, impairment losses on equity securities were recognized in net income and were measured as the difference between amortized cost and fair value.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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,
 
 
 
 
2018
 
2017
 
2016
 
 
 
 
(in millions)
Fixed maturities, available-for-sale
$
10.6

 
$
(29.90)
 
$
(92.00)
Equity securities, available-for-sale
 
—

 
 
(0.10)
 
 
(1.70)
Total other-than-temporary impairment losses, net of recoveries from
 
 
 
 
 
 
 
 
 
the sale of previously impaired securities
 
10.6

 
 
(30.00)
 
 
(93.70)
Other-than-temporary impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale reclassified from OCI (1)
 
(39.70)

 
 
(49.70)
 
 
(3.10)
Net impairment losses on available-for-sale securities
$
(29.10)

 
$
(79.70)
 
$
(96.80)


(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,
 
 
2018
 
2017
 
2016
 
 
(in millions)
Beginning balance
$
(124.30)
 
$
(134.70)
 
$
(128.00)
Credit losses for which an other-than-temporary impairment was
 
 
 
 
 
 
 
 
 
not previously recognized
 
(11.30)
 
 
(15.00)
 
 
(41.90)
Credit losses for which an other-than-temporary impairment was
 
 
 
 
 
 
 
 
 
previously recognized
 
(20.00)
 
 
(42.50)
 
 
(31.70)
Reduction for credit losses previously recognized on fixed maturities
 
 
 
 
 
 
 
 
 
now sold, paid down or intended to be sold
 
29.5
 
 
57.9
 
 
60.5
Net reduction for positive changes in cash flows expected
 
 
 
 
 
 
 
 
 
to be collected and amortization (1)
 
8.6
 
 
10.0
 
 
6.4
Ending balance
$
(117.50)
 
$
(124.30)
 
$
(134.70)

(1) Amounts are recognized in net investment income.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Gross Unrealized Losses for Available-for-Sale Securities

For available-for-sale securities 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, 2018
 
 
 
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
$
96.1
 
$
1.4
 
$
486.7
 
$
15.2
 
$
582.8
 
$
16.6
 
Non-U.S. governments
 
191.3
 
 
4.4
 
 
164.7
 
 
9.5
 
 
356.0
 
 
13.9
 
States and political subdivisions
 
1,344.6
 
 
33.4
 
 
1,587.4
 
 
61.2
 
 
2,932.0
 
 
94.6
 
Corporate
 
12,931.1
 
 
461.4
 
 
6,610.9
 
 
360.4
 
 
19,542.0
 
 
821.8
 
Residential mortgage-backed pass-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
through securities
 
210.1
 
 
0.8
 
 
1,410.3
 
 
48.8
 
 
1,620.4
 
 
49.6
 
Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
779.4
 
 
11.4
 
 
2,203.9
 
 
82.2
 
 
2,983.3
 
 
93.6
 
Collateralized debt obligations (1)
 
2,229.4
 
 
23.6
 
 
162.6
 
 
6.5
 
 
2,392.0
 
 
30.1
 
Other debt obligations
 
982.0
 
 
4.9
 
 
3,661.4
 
 
77.8
 
 
4,643.4
 
 
82.7
Total fixed maturities, available-for-sale
$
18,764.0
 
$
541.3
 
$
16,287.9
 
$
661.6
 
$
35,051.9
 
$
1,202.9

(1)
Primarily consists of collateralized loan obligations backed by secured corporate loans.

Of the available-for-sale fixed maturities within our consolidated portfolio in a gross unrealized loss position, 95% were investment grade (rated AAA through BBB-) with an average price of 97 (carrying value/amortized cost) as of December 31, 2018. Gross unrealized losses in our fixed maturities portfolio increased during the year ended December 31, 2018, primarily due to widening of credit spreads and 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 2,076 securities reflecting an average price of 97 as of December 31, 2018. Of this portfolio, 92% was investment grade (rated AAA through BBB-) as of December 31, 2018, with associated unrealized losses of $473.7 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 2,335 securities reflecting an average price of 96 and an average credit rating of AA- as of December 31, 2018. Corporate securities with unrealized losses had an average price of 95 and an average credit rating of A-. Commercial mortgage-backed securities with unrealized losses had an average price of 96 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.

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 at maturity, we did not consider these investments to be other-than-temporarily impaired as of December 31, 2018.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
December 31, 2017
 
 
 
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
$
279.4

 
$
2.1

 
$
180.9
 
$
5.5
 
$
460.3
 
$
7.6
 
Non-U.S. governments
 
65.2

 
 
0.8

 
 
12.6
 
 
0.3
 
 
77.8
 
 
1.1
 
States and political subdivisions
 
717.1

 
 
5.0

 
 
437.7
 
 
10.9
 
 
1,154.8
 
 
15.9
 
Corporate
 
3,487.5

 
 
27.5

 
 
1,527.0
 
 
52.4
 
 
5,014.5
 
 
79.9
 
Residential mortgage-backed pass-
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
through securities
 
354.4

 
 
2.0

 
 
734.5
 
 
19.3
 
 
1,088.9
 
 
21.3
 
Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
1,332.4

 
 
19.9

 
 
811.2
 
 
38.0
 
 
2,143.6
 
 
57.9
 
Collateralized debt obligations (1)
 
460.9

 
 
2.1

 
 
38.3
 
 
13.4
 
 
499.2
 
 
15.5
 
Other debt obligations
 
2,664.0

 
 
16.0

 
 
956.4
 
 
24.5
 
 
3,620.4
 
 
40.5
Total fixed maturities, available-for-sale
$
9,360.9

 
$
75.4

 
$
4,698.6
 
$
164.3
 
$
14,059.5
 
$
239.7
Total equity securities, available-for-sale
$
—

 
$
—

 
$
40.4
 
$
5.4
 
$
40.4
 
$
5.4

(1)
Primarily consists of collateralized loan obligations backed by secured corporate loans.

Of the available-for-sale fixed maturities within our consolidated portfolio in a gross unrealized loss position, 97% were investment grade (rated AAA through BBB-) with an average price of 98 (carrying value/amortized cost) as of December 31, 2017. Gross unrealized losses in our fixed maturities portfolio decreased during the year ended December 31, 2017, primarily due to tightening of credit spreads.
 
For those securities that had been in a continuous unrealized loss position for less than twelve months, our consolidated portfolio held 1,209 securities reflecting an average price of 99 as of December 31, 2017. Of this portfolio, 98% was investment grade (rated AAA through BBB-) as of December 31, 2017, with associated unrealized losses of $71.5 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 775 securities reflecting an average price of 97 and an average credit rating of AA- as of December 31, 2017. Corporate securities with unrealized losses had an average price of 97 and an average credit rating of BBB+. Commercial mortgage-backed securities with unrealized losses had an average price of 96 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.

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 at maturity, we did not consider these investments to be other-than-temporarily impaired as of December 31, 2017.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, policyholder liabilities, noncontrolling interest and applicable income taxes was as follows:
 
 
December 31, 2018
 
December 31, 2017
 
 
(in millions)
Net unrealized gains on fixed maturities, available-for-sale (1)
$
37.8

 
$
2,524.4
Noncredit component of impairment losses on fixed maturities, available-for-sale
 
(53.70)

 
 
(93.40)
Net unrealized gains on equity securities, available-for-sale
 
—

 
 
0.9
Net unrealized gains on derivative instruments
 
123.3

 
 
123.7
Adjustments for assumed changes in amortization patterns
 
30.3

 
 
(150.60)
Adjustments for assumed changes in policyholder liabilities
 
(41.20)

 
 
(397.20)
Net unrealized gains (losses) on other investments and noncontrolling interest
 
 
 
 
 
 
adjustments
 
15.8

 
 
(21.90)
Provision for deferred income taxes
 
(21.90)

 
 
(658.20)
Net unrealized gains on available-for-sale securities and derivative instruments
$
90.4

 
$
1,327.7

(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) first lien mortgages and (2) home equity mortgages. The carrying amount of our mortgage loan portfolio was as follows:

 
 
December 31, 2018
 
December 31, 2017
 
 
(in millions)
Commercial mortgage loans
$
13,780.7
 
$
12,755.2
Residential mortgage loans
 
908.3
 
 
729.1
 
Total amortized cost
 
14,689.0
 
 
13,484.3
 
 
 
 
 
 
 
Valuation allowance
 
(26.80)
 
 
(32.20)
Total carrying value
$
14,662.2
 
$
13,452.1

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,
 
 
2018
 
2017
 
2016
 
 
(in millions)
Commercial mortgage loans:
 
 
 
 
 
 
 
 
 
Purchased
$
24.7

 
$
44.4
 
$
120.5

Residential mortgage loans:
 
 
 
 
 
 
 
 
 
Purchased
 
337.5

 
 
276.5
 
 
242.9

 
Sold
 
—

 
 
89.3
 
 
—





Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, 2018
 
 
December 31, 2017
 
 
Amortized
 
Percent
 
Amortized
 
Percent
 
cost
 
of total
 
cost
 
of total
 
($ in millions)
 
Geographic distribution
 
 
 
 
 
 
 
 
 
 
 
 
 
New England
$
642.2
 
 
4.7
%
 
$
593.2
 
 
4.6
%
Middle Atlantic
 
3,937.9
 
 
28.6
 
 
 
3,630.7
 
 
28.5
 
East North Central
 
594.7
 
 
4.3
 
 
 
677.2
 
 
5.3
 
West North Central
 
206.2
 
 
1.5
 
 
 
175.1
 
 
1.4
 
South Atlantic
 
2,211.9
 
 
16.1
 
 
 
2,330.2
 
 
18.3
 
East South Central
 
423.3
 
 
3.1
 
 
 
376.4
 
 
3.0
 
West South Central
 
1,216.8
 
 
8.8
 
 
 
1,074.6
 
 
8.4
 
Mountain
 
970.8
 
 
7.0
 
 
 
1,041.9
 
 
8.2
 
Pacific
 
3,576.9
 
 
25.9
 
 
 
2,855.9
 
 
22.3
 
Total
$
13,780.7
 
 
100.0
%
 
$
12,755.2
 
 
100.0
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Property type distribution
 
 
 
 
 
 
 
 
 
 
 
 
 
Office
$
4,637.6
 
 
33.7
%
 
$
4,711.9
 
 
36.9
%
Retail
 
2,310.0
 
 
16.8
 
 
 
2,617.3
 
 
20.5
 
Industrial
 
2,319.1
 
 
16.8
 
 
 
1,885.4
 
 
14.8
 
Apartments
 
4,262.5
 
 
30.9
 
 
 
3,309.5
 
 
25.9
 
Hotel
 
100.1
 
 
0.7
 
 
 
131.3
 
 
1.0
 
Mixed use/other
 
151.4
 
 
1.1
 
 
 
99.8
 
 
0.9
 
Total
$
13,780.7
 
 
100.0
%
 
$
12,755.2
 
 
100.0
%

Our residential mortgage loan portfolio is composed of first lien mortgages with an amortized cost of $893.2 million and $706.1 million and home equity mortgages with an amortized cost of $15.1 million and $23.0 million as of December 31, 2018 and December 31, 2017, respectively. Our residential home equity mortgages are generally second lien mortgages comprised of closed-end loans and lines of credit.

Mortgage Loan Credit Monitoring

Commercial Credit Risk Profile Based on Internal Rating

We actively monitor and manage our commercial mortgage loan portfolio. All commercial mortgage loans are analyzed regularly and substantially all are internally rated, based on a proprietary risk rating cash flow model, in order to monitor the financial quality of these assets. The model stresses expected cash flows at various levels and at different points in time depending on the durability of the income stream, which includes our assessment of factors such as location (macro and micro markets), tenant quality and lease expirations. Our internal rating analysis presents expected losses in terms of 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 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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, 2018
 
 
Brick and mortar
 
CTL
 
Total
 
 
(in millions)
A- and above
$
12,571.4

 
$
84.5

 
$
12,655.9
BBB+ thru BBB-
 
932.1

 
 
105.7

 
 
1,037.8
BB+ thru BB-
 
87.0

 
 
—

 
 
87.0
Total
$
13,590.5

 
$
190.2

 
$
13,780.7
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
Brick and mortar
 
CTL
 
Total
 
 
(in millions)
A- and above
$
11,555.6

 
$
129.2

 
$
11,684.8
BBB+ thru BBB-
 
882.0

 
 
102.4

 
 
984.4
BB+ thru BB-
 
85.7

 
 
—

 
 
85.7
B+ and below
 
—

 
 
0.3

 
 
0.3
Total
$
12,523.3

 
$
231.9

 
$
12,755.2

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, 2018
 
 
First liens
 
Home equity
 
Total
 
 
(in millions)
Performing
$
890.3
 
$
10.8
 
$
901.1
Non-performing
 
2.9
 
 
4.3
 
 
7.2
Total
$
893.2
 
$
15.1
 
$
908.3
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
First liens
 
Home equity
 
Total
 
 
(in millions)
Performing
$
704.2
 
$
16.5
 
$
720.7
Non-performing
 
1.9
 
 
6.5
 
 
8.4
Total
$
706.1
 
$
23.0
 
$
729.1

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, against the valuation allowance 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.





Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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

 
 
 
December 31, 2018
 
December 31, 2017
 
 
 
(in millions)
Residential:
 
 
 
 
 
 
First liens
$
2.9
 
$
1.9
 
Home equity
 
4.3
 
 
6.5
Total
$
7.2
 
$
8.4

The aging of our mortgage loans, based on amortized cost, was as follows:
 
 
December 31, 2018
 
 
 
 
 
 
 
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
$
—

 
$
—

 
$
—

 
$
—

 
$
13,590.5
 
$
13,590.5
Commercial-CTL
 
—

 
 
—

 
 
—

 
 
—

 
 
190.2
 
 
190.2
Residential-first liens
 
3.7

 
 
0.8

 
 
2.3

 
 
6.8

 
 
886.4
 
 
893.2
Residential-home equity
 
0.8

 
 
0.6

 
 
0.4

 
 
1.8

 
 
13.3
 
 
15.1
Total
$
4.5

 
$
1.4

 
$
2.7

 
$
8.6

 
$
14,680.4
 
$
14,689.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
 
 
 
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
$
—

 
$
—

 
$
—

 
$
—

 
$
12,523.3
 
$
12,523.3
Commercial-CTL
 
—

 
 
—

 
 
—

 
 
—

 
 
231.9
 
 
231.9
Residential-first liens
 
3.4

 
 
1.7

 
 
1.1

 
 
6.2

 
 
699.9
 
 
706.1
Residential-home equity
 
1.9

 
 
0.7

 
 
0.8

 
 
3.4

 
 
19.6
 
 
23.0
Total
$
5.3

 
$
2.4

 
$
1.9

 
$
9.6

 
$
13,474.7
 
$
13,484.3

We did not have any mortgage loans that were 90 days or more past due and still accruing interest as of either December 31, 2018 or December 31, 2017.

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.

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



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, 2018
 
 
 
 
 
 
 
 
Beginning balance
$
25.8

 
$
6.4
 
$
32.2
 
Provision
 
(1.50)

 
 
(4.60)
 
 
(6.10)
 
Charge-offs
 
—

 
 
(2.40)
 
 
(2.40)
 
Recoveries
 
—

 
 
3.1
 
 
3.1
Ending balance
$
24.3

 
$
2.5
 
$
26.8
Allowance ending balance by basis of impairment method:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
—

 
$
1.4
 
$
1.4
 
Collectively evaluated for impairment
 
24.3

 
 
1.1
 
 
25.4
Allowance ending balance
$
24.3

 
$
2.5
 
$
26.8
Loan balance by basis of impairment method:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
—

 
$
9.1
 
$
9.1
 
Collectively evaluated for impairment
 
13,780.7

 
 
899.2
 
 
14,679.9
Loan ending balance
$
13,780.7

 
$
908.3
 
$
14,689.0
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2017
 
 
 
 
 
 
 
 
Beginning balance
$
27.4

 
$
17.1
 
$
44.5
 
Provision
 
(1.60)

 
 
(10.50)
 
 
(12.10)
 
Charge-offs
 
—

 
 
(5.00)
 
 
(5.00)
 
Recoveries
 
—

 
 
4.8
 
 
4.8
Ending balance
$
25.8

 
$
6.4
 
$
32.2
Allowance ending balance by basis of impairment method:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
—

 
$
4.5
 
$
4.5
 
Collectively evaluated for impairment
 
25.8

 
 
1.9
 
 
27.7
Allowance ending balance
$
25.8

 
$
6.4
 
$
32.2
Loan balance by basis of impairment method:
 
 
 
 
 
 
 
 
 
Individually evaluated for impairment
$
—

 
$
12.3
 
$
12.3
 
Collectively evaluated for impairment
 
12,755.2

 
 
716.8
 
 
13,472.0
Loan ending balance
$
12,755.2

 
$
729.1
 
$
13,484.3
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2016
 
 
 
 
 
 
 
 
Beginning balance
$
27.5

 
$
23.9
 
$
51.4
 
Provision
 
1.4

 
 
(5.60)
 
 
(4.20)
 
Charge-offs
 
(1.50)

 
 
(4.80)
 
 
(6.30)
 
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
 
11,992.1

 
 
678.3
 
 
12,670.4
Loan ending balance
$
11,992.1

 
$
697.5
 
$
12,689.6




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, against the valuation allowance 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, 2018
 
 
 
 
Unpaid
 
 
 
 
Recorded
 
principal
 
Related
 
 
investment
 
balance
 
allowance
 
 
(in millions)
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
Residential-first liens
$
1.6
 
$
1.6
 
$
—

With an allowance recorded:
 
 
 
 
 
 
 
 
 
Residential-first liens
 
2.1
 
 
2.1
 
 
—

 
Residential-home equity
 
5.4
 
 
6.5
 
 
1.4

Total:
 
 
 
 
 
 
 
 
 
Residential
$
9.1
 
$
10.2
 
$
1.4

 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
Unpaid
 
 
 
 
Recorded
 
principal
 
Related
 
 
investment
 
balance
 
allowance
 
 
(in millions)
With no related allowance recorded:
 
 
 
 
 
 
 
 
 
Residential-first liens
$
0.9
 
$
0.8
 
$
—

With an allowance recorded:
 
 
 
 
 
 
 
 
 
Residential-first liens
 
3.8
 
 
3.8
 
 
0.2

 
Residential-home equity
 
7.6
 
 
8.6
 
 
4.3

Total:
 
 
 
 
 
 
 
 
 
Residential
$
12.3
 
$
13.2
 
$
4.5





Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
Average
 
 
 
 
recorded
 
Interest income
 
 
investment
 
recognized
 
 
(in millions)
For the year ended December 31, 2018
 
 
 
 
 
With no related allowance recorded:
 
 
 
 
 
 
Residential-first liens
$
1.3
 
$
—

With an allowance recorded:
 
 
 
 
 
 
Residential-first liens
 
2.9
 
 
0.1

 
Residential-home equity
 
6.5
 
 
0.2

Total:
 
 
 
 
 
 
Residential
$
10.7
 
$
0.3

 
 
 
 
 
 
 
For the year ended December 31, 2017
 
 
 
 
 
With no related allowance recorded:
 
 
 
 
 
 
Residential-first liens
$
1.2
 
$
—

With an allowance recorded:
 
 
 
 
 
 
Residential-first liens
 
4.2
 
 
0.2

 
Residential-home equity
 
10.3
 
 
0.2

Total:
 
 
 
 
 
 
Residential
$
15.7
 
$
0.4

 
 
 
 
 
 
 
For the year ended December 31, 2016
 
 
 
 
 
With no related allowance recorded:
 
 
 
 
 
 
Residential-first liens
$
2.6
 
$
—

With an allowance recorded:
 
 
 
 
 
 
Residential-first liens
 
5.3
 
 
0.1

 
Residential-home equity
 
13.4
 
 
0.3

Total:
 
 
 
 
 
 
Residential
$
21.3
 
$
0.4


Mortgage Loan Modifications

Our commercial and residential mortgage loan portfolios can include loans that have been modified. We assess loan modifications on a case-by-case basis to evaluate whether a TDR has occurred. When we have commercial mortgage loan TDRs, they are modified to delay or reduce principal payments and to reduce or delay interest payments. The commercial mortgage loan modifications result in delayed cash receipts, a decrease in interest income and loan rates that are considered below market. When we have residential mortgage loan TDRs, they include modifications of interest-only payment periods, delays in principal balloon payments and interest rate reductions. Residential mortgage loan modifications result in delayed or decreased cash receipts and a decrease in interest income.

When we have commercial mortgage loan TDRs, they are reserved for in the mortgage loan valuation allowance at the estimated fair value of the underlying collateral reduced by the cost to sell.

When we have residential mortgage loan TDRs, they 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.

We did not have any significant loans that were modified and met the criteria of a TDR in 2018, 2017 and 2016.







Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Real Estate

Depreciation expense on invested real estate was $54.1 million, $55.9 million and $52.0 million in 2018, 2017 and 2016, respectively. Accumulated depreciation was $487.0 million and $451.3 million as of December 31, 2018 and 2017, respectively.

Real Estate Transactions

In September 2017, we entered an exchange agreement to exit certain real estate joint ventures. The transaction resulted in us transferring our interest in certain real estate properties in exchange for our joint venture partner’s interest in certain other real estate properties. In a subsequent transaction we sold certain of these real estate properties to a third party. Both transactions closed in September 2017.

In September 2017, we recognized a net pre-tax realized capital gain of $690.9 million (net after-tax realized capital gain of $410.8 million) as a result of these transactions. The following consolidated statement of financial position line items were most significantly impacted by the transactions, each having a net increase as of September 30, 2017, (in millions):

Real estate
$
293.4
Other investments
 
222.4
Cash and cash equivalents
 
219.6
Long-term debt
 
49.4
Income taxes currently payable
 
179.1
Deferred income taxes
 
101.0

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,
 
 
 
 
 
2018
 
2017
 
 
 
 
 
(in millions)
Total assets
 
 
 
$
61,696.6
 
$
53,906.3
Total liabilities
 
 
 
 
11,589.8
 
 
9,710.2
Total equity
 
 
 
$
50,106.8
 
$
44,196.1
Net investment in unconsolidated entities
 
 
 
$
744.6
 
$
709.5
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31,
 
 
2018
 
2017
 
2016
 
 
(in millions)
Total revenues
$
8,968.6
 
$
6,561.9
 
$
5,982.3
Net income
 
5,491.6
 
 
3,319.6
 
 
2,220.0
Our share of net income of unconsolidated entities
 
57.7
 
 
83.3
 
 
91.7

In addition, other investments include $502.6 million and $0.0 million of cash surrender value of company owned life insurance as of December 31, 2018 and 2017, respectively.

Derivative assets are carried at fair value and reported as a component of other investments. See Note 7, Derivative Financial Instruments, for further details.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Securities Posted as Collateral

As of December 31, 2018 and 2017, we posted $3,761.3 million and $2,807.4 million, respectively, in commercial mortgage loans and residential first lien 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, 2018 and 2017, we posted $2,383.0 million and $2,481.6 million, respectively, in fixed maturities, available-for-sale and trading 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 mortgage loans, fixed maturities, available-for-sale and fixed maturities, trading, respectively, on our consolidated statements of financial position. Of the securities posted as collateral, as of December 31, 2018 and 2017, $124.2 million and $173.3 million, respectively, could be sold or repledged by the secured party.

Balance Sheet Offsetting

Financial assets subject to master netting agreements or similar agreements were as follows:

 
 
 
 
 
 
Gross amounts not offset in the
 
 
 
 
 
 
 
 
 
consolidated statements
 
 
 
 
 
 
 
 
 
of financial position
 
 
 
 
 
 
Gross amount
 
 
 
 
 
 
 
 
 
 
of recognized
 
Financial
 
Collateral
 
 
 
 
 
 
assets (1)
 
instruments (2)
 
received
 
Net amount
 
 
 
(in millions)
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
Derivative assets
$
172.6
 
$
(63.70)
 
$
(101.60)
 
$
7.3
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Derivative assets
$
247.2
 
$
(114.30)
 
$
(128.80)
 
$
4.1

(1)
The gross amount of recognized derivative assets is reported with other investments on the consolidated statements of financial position. The gross amounts of derivative assets are 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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, 2018
 
 
 
 
 
 
 
 
 
 
 
Derivative liabilities
$
104.4
 
$
(63.70)
 
$
(34.30)
 
$
6.4
December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
Derivative liabilities
$
267.6
 
$
(114.30)
 
$
(141.60)
 
$
11.7

(1)
The gross amount of recognized derivative liabilities is reported with other liabilities on the consolidated statements of financial position. The above excludes $94.6 million and $372.7 million of derivative liabilities as of December 31, 2018 and December 31, 2017, respectively, which are primarily embedded derivatives that are not subject to master netting agreements or similar agreements. The gross amounts of derivative liabilities are not netted against offsetting assets for presentation on the consolidated statements of financial position.
(2)
Represents amount of offsetting derivative assets that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative liabilities for presentation on the consolidated statements of financial position.

The financial instruments that are subject to master netting agreements or similar agreements include right of setoff provisions. Derivative instruments include provisions to setoff positions covered under the agreements with the same counterparties and provisions to setoff positions outside of the agreements with the same counterparties in the event of default by one of the parties. Derivative instruments also include collateral or variation margin provisions, which are generally settled daily with each counterparty. See Note 7, Derivative Financial Instruments, for further details.

Repurchase and reverse repurchase agreements include provisions to setoff other repurchase and reverse repurchase balances with the same counterparty. Repurchase and reverse repurchase agreements also include collateral provisions with the counterparties. For reverse repurchase agreements we require the counterparties to pledge collateral with a value greater than the amount of cash transferred. We have the right but do not sell or repledge collateral received in reverse repurchase agreements. Repurchase agreements are structured as secured borrowings for all counterparties. We pledge fixed maturities available-for-sale, which the counterparties have the right to sell or repledge. Interest incurred on repurchase agreements is reported as part of operating 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, 2018 and December 31, 2017.

7. 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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Interest rate swaps are contracts in which we agree with other parties to exchange, at specified intervals, the difference between fixed rate and/or 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 options to manage prepayment risks in our assets and minimum guaranteed interest rates and lapse risks in our liabilities.

A swaption is an option to enter into an interest rate swap at a future date. We have purchased swaptions to offset or modify existing exposures. Swaptions provide us the benefit of the agreed-upon strike rate if the market rates for liabilities are higher, with the flexibility to enter into the current market rate swap if the market rates for liabilities are lower. Swaptions not only hedge against the downside risk, but also allow us to take advantage of any upside benefits.

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

Foreign Exchange Contracts

Foreign currency risk is the risk we will incur economic losses due to adverse fluctuations in foreign currency exchange rates. This risk arises from foreign currency-denominated funding agreements we issue and foreign currency-denominated fixed maturities we invest in. We use currency swaps to manage our exposure to 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 (“option collars”) 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. The premium associated with certain options is paid quarterly over the life of the option contract.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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 have used futures traded on an exchange (“exchange-traded”) and total return swaps referencing equity indices to hedge our portfolio from potential credit losses related to systemic events.

Other Contracts

Embedded Derivatives. We purchase or issue certain financial instruments or products that contain a derivative instrument that is embedded in the financial instrument or product. When it is determined that the embedded derivative possesses economic characteristics that are not clearly or closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host instrument for measurement purposes. The embedded derivative, which is reported with the host instrument in the consolidated statements of financial position, is carried at fair value.

We had investment contracts in which the return was tied to a leveraged inflation index. We economically hedged 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 products 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”)



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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 of bilateral OTC derivatives 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. OTC cleared derivatives have variation margin that is legally characterized as settlement of the derivative exposure, which reduces their fair value in the consolidated statements of financial position.

We posted $88.7 million and $189.3 million in cash and securities under collateral arrangements as of December 31, 2018 and December 31, 2017, respectively, to satisfy collateral and initial margin requirements associated with our derivative credit support agreements and FCM agreements.

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, 2018 and December 31, 2017, was $108.7 million and $276.4 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 $88.7 million and $189.3 million as of December 31, 2018 and December 31, 2017, 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, 2018, we would be required to post an additional $28.9 million of collateral to our counterparties.

As of December 31, 2018 and December 31, 2017, we had received $70.1 million and $105.5 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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, 2018
 
December 31, 2017
 
 
(in millions)
Notional amounts of derivative instruments
 
 
 
 
 
Interest rate contracts:
 
 
 
 
 
 
Interest rate swaps
$
34,393.7

 
$
23,543.4
 
Interest rate options
 
1,126.9

 
 
656.9
 
Interest rate futures
 
260.0

 
 
236.5
 
Swaptions
 
—

 
 
14.0
Foreign exchange contracts:
 
 
 
 
 
 
Currency swaps
 
697.7

 
 
687.8
Equity contracts:
 
 
 
 
 
 
Equity options
 
1,522.5

 
 
3,649.5
 
Equity futures
 
491.7

 
 
357.8
Credit contracts:
 
 
 
 
 
 
Credit default swaps
 
420.0

 
 
668.5
Other contracts:
 
 
 
 
 
 
Embedded derivatives
 
8,793.9

 
 
8,758.8
Total notional amounts at end of period
$
47,706.4

 
$
38,573.2
 
 
 
 
 
 
 
Credit exposure of derivative instruments
 
 
 
 
 
Interest rate contracts:
 
 
 
 
 
 
Interest rate swaps
$
95.4

 
$
163.4
 
Interest rate options
 
16.3

 
 
19.8
Foreign exchange contracts:
 
 
 
 
 
 
Currency swaps
 
54.4

 
 
48.2
Equity contracts:
 
 
 
 
 
 
Equity options
 
7.7

 
 
18.2
Credit contracts:
 
 
 
 
 
 
Credit default swaps
 
2.4

 
 
5.0
Total gross credit exposure
 
176.2

 
 
254.6
Less: collateral received
 
104.6

 
 
132.9
Net credit exposure
$
71.6

 
$
121.7





Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018




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

 
 
 
Derivative assets (1)
 
Derivative liabilities (2)
 
 
 
December 31, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
 
 
 
(in millions)
Derivatives designated as hedging
 
 
 
 
 
 
 
 
 
 
 
 
instruments
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
$
—

 
$
—

 
$
16.1
 
$
22.9
Foreign exchange contracts
 
37.6

 
 
39.6

 
 
13.5
 
 
36.3
Total derivatives designated as hedging
 
 
 
 
 
 
 
 
 
 
 
 
instruments
$
37.6

 
$
39.6

 
$
29.6
 
$
59.2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives not designated as hedging
 
 
 
 
 
 
 
 
 
 
 
 
instruments
 
 
 
 
 
 
 
 
 
 
 
Interest rate contracts
$
108.0

 
$
175.2

 
$
22.6
 
$
33.6
Foreign exchange contracts
 
17.0

 
 
9.4

 
 
20.2
 
 
19.2
Equity contracts
 
7.7

 
 
18.2

 
 
27.6
 
 
154.1
Credit contracts
 
2.3

 
 
4.8

 
 
4.4
 
 
1.5
Other contracts
 
—

 
 
—

 
 
94.6
 
 
372.7
Total derivatives not designated as hedging
 
 
 
 
 
 
 
 
 
 
 
 
instruments
 
135.0

 
 
207.6

 
 
169.4
 
 
581.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total derivative instruments
$
172.6

 
$
247.2

 
$
199.0
 
$
640.3
(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 derivatives with a net liability fair value of $5.3 million and $119.6 million as of December 31, 2018 and December 31, 2017, 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. Our credit derivative contracts sold reference a single name or reference security (referred to as “single name credit default swaps”). 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 may have purchased credit protection with identical underlyings to certain of our sold protection transactions. As of December 31, 2018 and December 31, 2017, 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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



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, 2018
 
 
 
 
 
 
 
 
 
Weighted
 
 
 
 
 
 
 
Maximum
 
average
 
 
 
Notional
 
Fair
 
future
 
expected life
 
 
 
amount
 
value
 
payments
 
(in years)
 
 
 
(in millions)
 
 
 
Single name credit default swaps
 
 
 
 
 
 
 
 
 
 
 
 
Corporate debt
 
 
 
 
 
 
 
 
 
 
 
 
 
AAA
$
10.0
 
$
0.1

 
$
10.0
 
 
0.7
 
 
A
 
15.0
 
 
0.1

 
 
15.0
 
 
1.0
 
 
BBB
 
190.0
 
 
0.4

 
 
190.0
 
 
1.7
 
 
BB
 
10.0
 
 
—

 
 
10.0
 
 
0.5
 
 
CCC
 
15.0
 
 
(3.60)

 
 
15.0
 
 
0.9
 
Government/municipalities
 
 
 
 
 
 
 
 
 
 
 
 
 
AA
 
20.0
 
 
0.2

 
 
20.0
 
 
1.0
 
Sovereign
 
 
 
 
 
 
 
 
 
 
 
 
 
A
 
10.0
 
 
0.1

 
 
10.0
 
 
0.7
 
 
BBB
 
55.0
 
 
0.4

 
 
55.0
 
 
1.3
Total credit default swap protection sold
$
325.0
 
$
(2.30)

 
$
325.0
 
 
1.4

 
 
 
December 31, 2017
 
 
 
 
 
 
 
 
 
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
 
$
0.3
 
$
30.0
 
 
1.2
 
 
AA
 
30.0
 
 
0.1
 
 
30.0
 
 
0.5
 
 
A
 
105.0
 
 
0.5
 
 
105.0
 
 
0.6
 
 
BBB
 
255.0
 
 
2.5
 
 
255.0
 
 
1.3
 
 
B
 
20.0
 
 
(0.50)
 
 
20.0
 
 
1.8
 
Government/municipalities
 
 
 
 
 
 
 
 
 
 
 
 
 
AA
 
20.0
 
 
0.3
 
 
20.0
 
 
2.0
 
Sovereign
 
 
 
 
 
 
 
 
 
 
 
 
 
A
 
10.0
 
 
0.2
 
 
10.0
 
 
1.7
 
 
BBB
 
55.0
 
 
0.8
 
 
55.0
 
 
2.3
Total credit default swap protection sold
$
525.0
 
$
4.2
 
$
525.0
 
 
1.3
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Fair Value Hedges

We use fixed-to-floating rate interest rate swaps to more closely align the interest rate characteristics of certain assets and have used them to align the interest rate characteristics of certain 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.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



The net interest effect of interest rate swap transactions for derivatives in fair value hedges is recorded as an adjustment to income or expense of the underlying hedged item in our consolidated statements of operations.

Hedge effectiveness testing for fair value relationships is performed utilizing a regression analysis approach for both prospective and retrospective evaluations. This regression analysis will consider multiple data points for the assessment that the hedge continues to be highly effective in achieving offsetting changes in fair value. In certain periods, the comparison of the change in value of the derivative and the change in the value of the hedged item may not be offsetting at a specific period in time due to small movements in value. However, any amounts recorded as fair value hedges have shown to be highly effective in achieving offsetting changes in fair value both for present and future periods.

The following table shows the effect of derivatives in fair value hedging relationships and the related hedged items on the consolidated statements of operations. All gains or losses on derivatives were included in the assessment of hedge effectiveness.

 
 
 
Amount of gain (loss)
 
 
 
 
Amount of gain (loss)
 
 
 
recognized in net income on
 
 
 
 
recognized in net income on
 
 
 
derivatives for the year
 
Hedged items in
 
related hedged item for the year ended
Derivatives in fair value
 
ended December 31, (1)
 
fair value hedging
 
December 31, (1)
hedging relationships
 
2018
 
2017
 
2016
 
relationships
 
2018
 
2017
 
2016
 
 
 
(in millions)
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
Interest rate contracts
 
$
6.2

 
$
4.7
 
$
19.5
 
 
available-for-sale
 
$
(6.60)

 
$
(5.20)
 
$
(19.20)
Interest rate contracts
 
 
—

 
 
(0.60)
 
 
(0.90)
 
Investment contracts
 
 
—

 
 
0.6
 
 
1.0
Total
 
$
6.2

 
$
4.1
 
$
18.6
 
Total
 
$
(6.60)

 
$
(4.60)
 
$
(18.20)

(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
 
2018
 
2017
 
2016
 
 
 
(in millions)
Fixed maturities, available-for-sale (1)
 
$
(5.90)

 
$
(10.30)
 
$
(41.90)
Investment contracts (2)
 
 
—

 
 
0.9
 
 
2.6

(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 utilized 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.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



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 1.5 years. As of December 31, 2018, we had $0.0 million of net gains reported in AOCI on the consolidated statements of financial position related to active hedges of forecasted transactions. If a hedged forecasted transaction is no longer probable of occurring, cash flow hedge accounting is discontinued. If it is probable that the hedged forecasted transaction will not occur, the deferred gain or loss is immediately reclassified from AOCI into net income. We reclassified $0.3 million and $0.2 million from AOCI into net realized capital gains (losses) as a result of the determination that hedged cash flows were probable of not occurring during 2018 and 2017, respectively.

The following table shows the effect of derivatives in cash flow hedging relationships on the consolidated statements of operations and consolidated statements of financial position. All gains or losses on derivatives were included in the assessment of hedge effectiveness.

 
 
 
 
 
 
 
Amount of gain (loss)
 
 
 
 
Amount of gain (loss)
 
 
 
 
 
 
 
recognized in AOCI on
 
 
 
 
reclassified from AOCI on
Derivatives in
 
 
 
 
derivatives (effective portion)
 
Location of gain (loss)
 
derivatives (effective portion)
cash flow
 
 
 
 
for the year ended
 
reclassified from
 
for the year ended
hedging
 
Related
 
December 31,
 
AOCI into net income
 
December 31,
relationships
 
hedged item
 
2018
 
2017
 
2016
 
(effective portion)
 
2018
 
2017
 
2016
 
 
 
 
 
 
 
(in millions)
 
 
 
 
(in millions)
Interest rate
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
 
Net investment
 
 
 
 
 
 
 
 
 
 
contracts
 
 
available-for-sale
 
$
36.7

 
$
(51.70)

 
$
(33.10)
 
 
income
 
$
20.9

 
$
21.0

 
$
19.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net realized capital
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
gains (losses)
 
 
17.0

 
 
(0.60)

 
 
11.2

Interest rate
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits, claims and
 
 
 
 
 
 
 
 
 
 
contracts
 
Investment contracts
 
 
—

 
 
—

 
 
1.6
 
 
settlement expenses
 
 
(0.10)

 
 
—

 
 
—

Foreign exchange
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
 
Net realized capital
 
 
 
 
 
 
 
 
 
 
contracts
 
 
available-for-sale
 
 
20.8

 
 
(68.50)

 
 
4.0
 
 
gains
 
 
12.7

 
 
22.0

 
 
6.2

Foreign exchange
 
 
 
 
 
 
 
 
 
 
 
 
 
Benefits, claims and
 
 
 
 
 
 
 
 
 
 
contracts
 
Investment contracts
 
 
(0.10)

 
 
—

 
 
6.0
 
 
settlement expenses
 
 
—

 
 
—

 
 
—

Total
 
 
 
 
$
57.4

 
$
(120.20)

 
$
(21.50)
 
Total
 
$
50.5

 
$
42.4

 
$
36.8


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
 
2018
 
2017
 
2016
 
 
 
(in millions)
Fixed maturities, available-for-sale (1)
 
$
6.0
 
$
7.1
 
$
5.8
Investment contracts (2)
 
 
(0.10)
 
 
(1.10)
 
 
(15.70)

(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 (loss) resulting from the ineffective portion of derivatives in cash flow hedging relationships was insignificant for the years ended December 31, 2018, 2017 and 2016.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


We expect to reclassify net gains of $25.6 million from AOCI into net income in the next 12 months, which includes 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, option 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
 
2018
 
2017
 
2016
 
 
 
(in millions)
Interest rate contracts
 
$
(27.60)
 
$
(26.90)
 
$
243.3
Foreign exchange contracts
 
 
4.1
 
 
18.1
 
 
(10.70)
Equity contracts
 
 
(31.00)
 
 
(181.30)
 
 
(123.50)
Credit contracts
 
 
(1.60)
 
 
(15.90)
 
 
37.4
Other contracts
 
 
107.9
 
 
6.8
 
 
14.5
Total
 
$
51.8
 
$
(199.20)
 
$
161.0

8. 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, assets and liabilities in the Closed Block, adjusted to eliminate the impact of related amounts in AOCI. These projections are utilized to determine ratios that will allow us to compare actual cumulative earnings to expected cumulative earnings.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



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 both December 31, 2018 and 2017, cumulative actual earnings were less than cumulative expected earnings. As of December 31, 2018 and 2017, cumulative net unrealized gains were greater than expected, resulting in the recognition of a PDO of $36.6 million and $161.7 million, respectively.

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

 
 
December 31, 2018
 
December 31, 2017
 
 
(in millions)
Closed Block liabilities
 
 
 
 
 
Future policy benefits and claims
$
3,732.5
 
$
3,899.7
Other policyholder funds
 
6.5
 
 
7.0
Policyholder dividends payable
 
211.3
 
 
219.6
Policyholder dividends obligation
 
36.6
 
 
161.7
Other liabilities
 
9.5
 
 
6.9
 
Total Closed Block liabilities
 
3,996.4
 
 
4,294.9
 
 
 
 
 
 
 
Assets designated to the Closed Block
 
 
 
 
 
Fixed maturities, available-for-sale
 
2,176.4
 
 
2,304.4
Fixed maturities, trading
 
2.5
 
 
2.9
Equity securities
 
1.0
 
 
1.3
Mortgage loans
 
678.5
 
 
766.3
Policy loans
 
510.5
 
 
537.1
Other investments
 
33.8
 
 
49.4
 
Total investments
 
3,402.7
 
 
3,661.4
Cash and cash equivalents
 
42.1
 
 
13.2
Accrued investment income
 
39.5
 
 
41.1
Premiums due and other receivables
 
10.0
 
 
14.4
Deferred tax asset
 
30.5
 
 
34.6
 
Total assets designated to the Closed Block
 
3,524.8
 
 
3,764.7
Excess of Closed Block liabilities over assets designated to the Closed Block
 
471.6
 
 
530.2
Amounts included in accumulated other comprehensive income
 
5.2
 
 
1.9
Maximum future earnings to be recognized from Closed Block assets and
 
 
 
 
 
 
liabilities
$
476.8
 
$
532.1

    



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Closed Block revenues and expenses were as follows:

 
 
For the year ended December 31,
 
 
2018
 
2017
 
2016
 
 
(in millions)
Revenues
 
 
 
 
 
 
 
 
Premiums and other considerations
$
244.2
 
$
275.6
 
$
298.0
Net investment income
 
160.5
 
 
169.4
 
 
181.6
Net realized capital losses
 
(3.40)
 
 
(5.80)
 
 
(1.00)
 
Total revenues
 
401.3
 
 
439.2
 
 
478.6
 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
Benefits, claims and settlement expenses
 
211.5
 
 
245.6
 
 
267.1
Dividends to policyholders
 
120.9
 
 
122.0
 
 
153.5
Operating expenses
 
3.3
 
 
3.5
 
 
3.6
 
Total expenses
 
335.7
 
 
371.1
 
 
424.2
Closed Block revenues, net of Closed Block expenses, before income taxes
 
65.6
 
 
68.1
 
 
54.4
Income taxes
 
11.1
 
 
46.0
 
 
17.1
Closed Block revenues, net of Closed Block expenses and income taxes
 
54.5
 
 
22.1
 
 
37.3
Funding adjustments
 
(0.50)
 
 
(4.40)
 
 
9.3
Closed Block revenues, net of Closed Block expenses, income taxes and
 
 
 
 
 
 
 
 
 
funding adjustments
$
54.0
 
$
17.7
 
$
46.6

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

 
 
For the year ended December 31,
 
 
2018
 
2017
 
2016
 
 
(in millions)
Beginning of year
$
532.1
 
$
549.8
 
$
596.4

Effects of implementation of accounting changes (1)
 
1.3
 
 
—
 
 
—

End of year
 
476.8
 
 
532.1
 
 
549.8

Change in maximum future earnings
$
(54.00)
 
$
(17.70)
 
$
(46.60)


(1)
Includes the effects of implementation of accounting changes related to equity investments and the reclassification of certain tax effects.

We charge the Closed Block with U.S. 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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


9. Deferred Acquisition Costs

Acquisition costs deferred and amortized were as follows:

 
 
For the year ended December 31,
 
 
2018
 
2017
 
2016
 
 
(in millions)
Balance at beginning of year
$
3,331.7
 
$
3,184.2
 
$
3,057.3
Costs deferred during the year
 
414.2
 
 
397.8
 
 
377.7
Amortized to expense during the year (1)
 
(252.20)
 
 
(212.10)
 
 
(262.60)
Adjustment related to unrealized (gains) losses on available-for-sale
 
 
 
 
 
 
 
 
 
securities and derivative instruments
 
186.7
 
 
(38.20)
 
 
11.8
Balance at end of year
$
3,680.4
 
$
3,331.7
 
$
3,184.2

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

10. Insurance Liabilities

Contractholder Funds

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

 
 
December 31,
 
 
2018
 
2017
 
 
(in millions)
Liabilities for investment contracts:
 
 
 
 
 
 
Liabilities for individual annuities
$
12,913.9
 
$
11,336.2
 
GICs
 
10,321.7
 
 
9,969.1
 
Funding agreements
 
7,729.5
 
 
8,106.5
 
Other investment contracts
 
907.3
 
 
931.5
Total liabilities for investment contracts
 
31,872.4
 
 
30,343.3
Universal life and other reserves
 
4,989.3
 
 
4,986.9
Total contractholder funds
$
36,861.7
 
$
35,330.2

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 and those issued to the
FHLB Des Moines under their membership funding programs. As of December 31, 2018 and 2017, $3,512.2 million and $3,256.7 million, respectively, of liabilities were outstanding with respect to issuances under the program with FHLB Des Moines. In addition, we have 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, 2018 and 2017, $109.6 million and $111.1 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 entity. As of December 31, 2018 and 2017, $114.4 million and $177.4 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.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



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, 2018 and 2017, $201.6 million and $201.6 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, 2018 and 2017, $26.2 million and $67.8 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.

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. In November 2017, this program was amended to authorize issuance of up to an additional $4.0 billion. As of December 31, 2018 and 2017, $3,765.3 million and $4,291.9 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,
 
 
2018
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
Balance at beginning of year
$
2,130.5
 
$
2,001.3
 
$
1,872.2
Less: reinsurance recoverable
 
375.8
 
 
340.3
 
 
314.1
Net balance at beginning of year
 
1,754.7
 
 
1,661.0
 
 
1,558.1
Incurred:
 
 
 
 
 
 
 
 
 
Current year
 
1,268.8
 
 
1,196.6
 
 
1,103.5
 
Prior years
 
0.3
 
 
18.2
 
 
24.4
Total incurred
 
1,269.1
 
 
1,214.8
 
 
1,127.9
Payments:
 
 
 
 
 
 
 
 
 
Current year
 
815.7
 
 
767.2
 
 
701.9
 
Prior years
 
359.7
 
 
353.9
 
 
323.1
Total payments
 
1,175.4
 
 
1,121.1
 
 
1,025.0
Net balance at end of year
 
1,848.4
 
 
1,754.7
 
 
1,661.0
Plus: reinsurance recoverable
 
404.3
 
 
375.8
 
 
340.3
Balance at end of year
$
2,252.7
 
$
2,130.5
 
$
2,001.3
 
 
 
 
 
 
 
 
 
 
Amounts not included in the rollforward above:
 
 
 
 
 
 
 
 
 
Claim adjustment expense liabilities
$
54.6
 
$
50.7
 
$
49.3



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018




Incurred liability adjustments relating to prior years, which affected current operations during 2018, 2017 and 2016, 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.

LTD and Group Life Waiver Claims

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Incurred
 
Cumulative
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
but not
 
number of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
reported
 
reported
 
 
 
Net incurred claims (1)
claims
 
claims
 
 
 
December 31,
 
 
 
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2018
 
2018
 
 
($ in millions)
 
 
Incurral
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2009
$
218.6
$
224.4
$
224.2
$
224.8
$
217.7
$
214.1
$
208.5
$
205.8
$
205.6
$
203.9
$
0.7
 
6,555
 
2010
 
 
 
184.1
 
176.7
 
176.2
 
172.0
 
162.7
 
155.7
 
154.1
 
153.4
 
152.1
 
0.6
 
5,649
 
2011
 
 
 
 
 
203.7
 
192.6
 
185.4
 
184.8
 
178.4
 
172.3
 
169.6
 
167.6
 
0.1
 
6,289
 
2012
 
 
 
 
 
 
 
217.9
 
200.0
 
191.1
 
189.5
 
181.8
 
174.8
 
173.3
 
0.1
 
6,443
 
2013
 
 
 
 
 
 
 
 
 
219.3
 
203.3
 
188.4
 
190.7
 
182.3
 
179.5
 
0.1
 
7,047
 
2014
 
 
 
 
 
 
 
 
 
 
 
242.2
 
231.4
 
214.4
 
218.1
 
206.2
 
0.1
 
7,595
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
231.0
 
227.2
 
217.2
 
215.3
 
5.1
 
7,170
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
229.8
 
228.4
 
219.4
 
7.0
 
6,144
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
238.4
 
239.7
 
3.1
 
5,991
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
239.4
 
85.4
 
3,516
 
Total net incurred claims
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
1,996.4
 
 
 
 




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
Net cumulative paid claims (1)
 
 
 
December 31,
 
 
 
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
 
 
 
(in millions)
Incurral
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
year
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
2009
$
13.4
$
55.2
$
82.6
$
101.0
$
113.8
$
124.6
$
133.1
$
141.8
$
149.8
$
156.4
 
2010
 
 
 
10.4
 
46.5
 
67.1
 
78.4
 
85.9
 
94.2
 
100.9
 
107.2
 
112.1
 
2011
 
 
 
 
 
11.2
 
50.0
 
72.5
 
85.7
 
95.4
 
105.2
 
112.6
 
119.3
 
2012
 
 
 
 
 
 
 
13.8
 
55.1
 
80.8
 
93.7
 
104.6
 
112.9
 
120.0
 
2013
 
 
 
 
 
 
 
 
 
12.5
 
55.0
 
81.4
 
97.0
 
106.4
 
116.4
 
2014
 
 
 
 
 
 
 
 
 
 
 
16.1
 
66.0
 
96.3
 
111.8
 
122.3
 
2015
 
 
 
 
 
 
 
 
 
 
 
 
 
16.9
 
67.0
 
98.0
 
114.6
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
16.2
 
70.6
 
105.6
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
17.8
 
76.5
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
20.1
 
Total net paid claims
 
 
 
 
 
 
 
1,063.3
 
All outstanding liabilities for unpaid claims prior to 2009 net of reinsurance
 
 
 
237.4
 
Total outstanding liabilities for unpaid claims net of reinsurance
 
 
 
 
$
1,170.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 2009-2017 unaudited.
 
 
 
 
 
 
 
 
 
 

Dental, Vision, STD, Critical Illness and Accident Claims

 
 
 
 
 
 
 
 
 
 
Incurred
 
Cumulative
 
 
 
 
 
 
 
 
 
 
but not
 
number of
 
 
 
 
 
 
 
 
 
 
reported
 
reported
 
 
 
Net incurred claims (1)
 
 
claims
 
claims
 
 
 
December 31,
 
 
 
2017
 
2018
 
2018
 
2018
 
 
 
($ in millions)
Incurral year
 
 
 
 
 
 
 
 
 
 
 
2017
$
595.8
 
$
590.6

 
$
—

 
2,786,877
 
2018
 
 
 
 
648.3

 
 
35.9

 
2,893,347
 
Total net incurred claims
 
 
 
$
1,238.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cumulative
 
 
 
 
 
 
 
 
paid claims (1)
 
 
 
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
2017
 
2018
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
Incurral year
 
 
 
 
 
 
 
 
 
 
 
2017
$
542.3
 
$
590.5

 
 
 
 
 
 
2018
 
 
 
 
589.1

 
 
 
 
 
 
Total net paid claims
 
 
 
 
1,179.6

 
 
 
 
 
 
All outstanding liabilities for unpaid claims prior to 2017 net of
 
 
 
 
 
 
 
 
 
 
 
 
reinsurance
 
 
 
 
—

 
 
 
 
 
 
Total outstanding liabilities for unpaid claims net of reinsurance
 
 
 
$
59.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 2017 unaudited.
 
 
 
 
 
 
 
 
 
 






Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Group Life Claims

 
 
 
 
 
 
 
 
 
 
Incurred
 
Cumulative
 
 
 
 
 
 
 
 
 
 
but not
 
number of
 
 
 
 
 
 
 
 
 
 
reported
 
reported
 
 
 
Net incurred claims (1)
 
 
claims
 
claims
 
 
 
December 31,
 
 
 
2017
 
2018
 
2018
 
2018
 
 
 
($ in millions)
Incurral year
 
 
 
 
 
 
 
 
 
 
 
2017
$
239.8
 
$
237.6
 
$
0.7
 
5,618
 
2018
 
 
 
 
239.6
 
 
22.0
 
4,735
 
Total net incurred claims
 
 
 
$
477.2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net cumulative
 
 
 
 
 
 
 
 
paid claims (1)
 
 
 
 
 
 
 
 
December 31,
 
 
 
 
 
 
 
 
2017
 
2018
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
Incurral year
 
 
 
 
 
 
 
 
 
 
 
2017
$
195.2
 
$
236.0
 
 
 
 
 
 
2018
 
 
 
 
193.9
 
 
 
 
 
 
Total net paid claims
 
 
 
 
429.9
 
 
 
 
 
 
All outstanding liabilities for unpaid claims prior to 2017 net of
 
 
 
 
 
 
 
 
 
 
 
 
reinsurance
 
 
 
 
1.0
 
 
 
 
 
 
Total outstanding liabilities for unpaid claims net of reinsurance
 
 
 
$
48.3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) 2017 unaudited.
 
 
 
 
 
 
 
 
 
 

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, 2018
 
 
 
 
 
Dental, Vision, STD,
 
 
 
 
 
 
 
LTD and Group
 
Critical Illness and
 
 
 
 
 
 
 
 
Life Waiver
 
Accident
 
Group Life
 
Consolidated
 
 
(in millions)
Net outstanding liabilities for unpaid claims
$
1,170.5
 
$
59.3

 
$
48.3

 
$
1,278.1
 
 
 
 
 
 
 
 
 
 
 
 
Reconciling items:
 
 
 
 
 
 
 
 
 
 
 
 
Reinsurance recoverable on unpaid claims
 
67.2
 
 
—

 
 
1.4

 
 
68.6
 
Impact of discounting
 
(217.70)
 
 
—

 
 
—

 
 
(217.70)
Liability for unpaid claims - short-duration
 
 
 
 
 
 
 
 
 
 
 
 
contracts
$
1,020.0
 
$
59.3

 
$
49.7

 
 
1,129.0
Insurance contracts other than short-duration
 
 
 
 
 
 
 
 
 
 
1,123.7
Liability for unpaid claims
 
 
 
 
 
 
 
 
 
$
2,252.7





Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Claim Duration and Payout

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

 
 
December 31, 2018 (1)
 
 
 
 
 
Dental, Vision, STD,
 
 
 
 
LTD and Group Life
 
Critical Illness and
 
 
 
Year
 
Waiver
 
Accident
 
Group Life
1
 
7.4
%
 
91.8
%
 
81.8
%
2
 
23.6
 
 
8.0
 
 
17.2
 
3
 
14.4
 
 
 
 
 
 
 
4
 
8.0
 
 
 
 
 
 
 
5
 
5.6
 
 
 
 
 
 
 
6
 
5.4
 
 
 
 
 
 
 
7
 
4.3
 
 
 
 
 
 
 
8
 
4.1
 
 
 
 
 
 
 
9
 
3.6
 
 
 
 
 
 
 
10
 
3.2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Unaudited.
 
 
 
 
 
 
 
 
 

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.

 
 
 
 
 
 
 
 
 
Dental, Vision, STD,
 
 
 
 
 
 
 
 
 
LTD and Group
 
Critical Illness and
 
 
 
 
 
 
 
 
 
Life Waiver
 
Accident
 
Group Life
 
 
 
($ in millions)
Carrying amount of liabilities for unpaid claims
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
$
1,020.0
 
 
$
59.3
 
 
 
$
49.7
 
 
 
December 31, 2017
 
1,003.2
 
 
 
53.6
 
 
 
 
47.3
 
 
Range of discount rates
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
 
3.3
-
7.0
%
 
 
—

-
—

%
 
 
—

-
—

%
 
December 31, 2017
 
3.3
-
7.0
 
 
 
—

-
—

 
 
 
—

-
—

 
Aggregate amount of discount
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
$
217.7
 
 
$
—
 
 
 
$
—
 
 
 
December 31, 2017
 
226.2
 
 
 
—
 
 
 
 
—
 
 
Interest accretion
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2018
$
34.5
 
 
$
—
 
 
 
$
—
 
 
 
 
December 31, 2017
 
35.0
 
 
 
—
 
 
 
 
—
 
 
 
 
December 31, 2016
 
36.3
 
 
 
—
 
 
 
 
—
 
 




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


11. Debt

Short-Term Debt

The components of short-term debt were as follows:

 
 
 
 
 
 
 
 
December 31, 2018
 
 
 
Financing
 
 
 
 
 
Short-term debt
Obligor/Applicant
 
structure
 
Maturity
 
Capacity
 
outstanding
 
 
 
 
 
 
 
 
(in millions)
PFG, PFS, PLIC as co-borrowers
 
Credit facility
 
November 2023
 
$
600.0
 
$
—

PFG, PFS, PLIC and Principal Financial Services V
 
 
 
 
 
 
 
 
 
 
 
 
(UK) LTD as co-borrowers
 
Credit facility
 
November 2023
 
 
200.0
 
 
—

 
 
 
Unsecured
 
 
 
 
 
 
 
 
PLIC
 
 
line of credit
 
September 2019
 
 
60.0
 
 
—

Total
 
 
 
 
 
 
$
860.0
 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
Financing
 
 
 
 
 
Short-term debt
Obligor/Applicant
 
structure
 
Maturity
 
Capacity
 
outstanding
 
 
 
 
 
 
 
 
(in millions)
PFG, PFS, PLIC as co-borrowers
 
Credit facility
 
March 2022
 
$
600.0
 
$
—

PFG, PFS, PLIC and Principal Financial Services V
 
 
 
 
 
 
 
 
 
 
 
 
(UK) LTD as co-borrowers
 
Credit facility
 
March 2022
 
 
189.0
 
 
—

PFG, PFS, PLIC and Principal Financial Services V
 
 
 
 
 
 
 
 
 
 
 
 
(UK) LTD as co-borrowers
 
Credit facility
 
March 2020
 
 
11.0
 
 
—

 
 
 
Unsecured
 
 
 
 
 
 
 
 
PLIC
 
 
line of credit
 
December 2018
 
 
45.0
 
 
—

Total
 
 
 
 
 
 
$
845.0
 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 

Our revolving credit facilities are committed and available for general corporate purposes. Our commercial paper programs require 100% back-stop support, of which we had no outstanding balances as of December 31, 2018 and 2017. The weighted‑average interest rate on short-term borrowings as of December 31, 2018 and 2017, was 0.0% and 0.9%, respectively.

Interest paid on intercompany debt was $0.0 million, $0.6 million and $0.6 million during 2018, 2017 and 2016, respectively.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Long-Term Debt

The components of long-term debt were as follows:

 
December 31, 2018
 
 
 
Net unamortized
 
 
 
 
 
 
 
discount,
 
 
 
 
 
 
 
premium and
 
 
 
 
 
 
 
debt issuance
 
Carrying
 
Principal
 
costs
 
amount
 
(in millions)
Non-recourse mortgages and notes payable
$
127.9
 
$
1.2
 
$
129.1
Total long-term debt
$
127.9
 
$
1.2
 
$
129.1
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
Net unamortized
 
 
 
 
 
 
 
discount,
 
 
 
 
 
 
 
premium and
 
 
 
 
 
 
 
debt issuance
 
Carrying
 
Principal
 
costs
 
amount
 
(in millions)
Non-recourse mortgages and notes payable
$
49.0
 
$
1.5
 
$
50.5
Total long-term debt
$
49.0
 
$
1.5
 
$
50.5

The non-recourse mortgages and notes payable are primarily financings for real estate developments. Outstanding principal balances as of December 31, 2018, ranged from $3.8 million to $58.4 million per development with interest rates ranging from 3.9% to 4.8%. Outstanding principal balances as of December 31, 2017, ranged from $2.8 million to $16.4 million per development with interest rates ranging from 3.9% to 4.8%. Outstanding debt is secured by the underlying real estate properties, which were reported as real estate on our consolidated statements of financial position with a carrying value of $307.3 million and $179.6 million as of December 31, 2018 and 2017, respectively.

As of December 31, 2018, future annual maturities of long-term debt were as follows (in millions):

Year ending December 31:
 
 
 
2019
$
25.9

 
2020
 
59.8

 
2021
 
—

 
2022
 
—

 
2023
 
—

 
Thereafter
 
43.4

 
Total future maturities of long-term debt
$
129.1






Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


12. Income Taxes

Income Taxes (Benefits)

Our income taxes (benefit) were as follows:

 
 
 
For the year ended December 31,
 
 
 
2018
 
2017
 
2016
 
 
 
(in millions)
Current income taxes (benefits):
 
 
 
 
 
 
 
 
 
U.S. federal
$
(29.70)

 
$
(36.80)
 
$
63.1

 
State
 
2.0

 
 
45.7
 
 
9.3

 
Foreign
 
(0.10)

 
 
0.1
 
 
—

 
Tax benefit of operating loss carryforward
 
(0.20)

 
 
(0.10)
 
 
—

Total current income taxes (benefits)
 
(28.00)

 
 
8.9
 
 
72.4

Deferred income taxes (benefits):
 
 
 
 
 
 
 
 
 
U.S. federal
 
174.8

 
 
(551.30)
 
 
139.7

 
State
 
—

 
 
24.0
 
 
(0.20)

Total deferred income taxes (benefits)
 
174.8

 
 
(527.30)
 
 
139.5

Income taxes (benefits)
$
146.8

 
$
(518.40)
 
$
211.9


Our income before income taxes was as follows:

 
 
 
 
For the year ended December 31,
 
 
 
 
2018
 
2017
 
2016
 
 
 
 
(in millions)
Domestic
$
1,398.7
 
$
1,717.7
 
$
1,193.3
Foreign
 
2.4
 
 
0.3
 
 
0.3
 
Total income before income taxes
$
1,401.1
 
$
1,718.0
 
$
1,193.6

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,
 
 
 
2018
 
2017
 
2016
U.S. corporate income tax rate
21

%
 
35

%
 
35

%
Dividends received deduction
(5)

 
 
(10)

 
 
(14)

 
Tax credits
(3)

 
 
(3)

 
 
(3)

 
Impact of the Tax Cuts and Jobs Act
(2)

 
 
(54)

 
 
—

 
Interest exclusion from taxable income
(1)

 
 
(1)

 
 
(2)

 
Low income housing credit amortization
1

 
 
—

 
 
—

 
State income taxes
—

 
 
3

 
 
—

 
Other
(1)

 
 
—

 
 
2

 
Effective income tax rate
10

%
 
(30)

%
 
18

%




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


The U.S. tax reform enacted on December 22, 2017, made broad and complex changes to the U.S. Internal Revenue Code applicable to us. The U.S. statutory tax rate was reduced from 35% to 21% effective January 1, 2018. Other provisions of U.S. tax reform effective January 1, 2018, included, but were not limited to: 1) provisions reducing the dividends received deduction; 2) essentially eliminating U.S. federal income taxes on dividends from foreign subsidiaries; 3) retaining an element of current inclusion of certain earnings of controlled foreign corporations; 4) eliminating the corporate alternative minimum tax (“AMT”); and, 5) changing how existing AMT credits are realized.

Unrecognized Tax Benefits

Our changes in unrecognized tax benefits were as follows:

 
 
For the year ended December 31,
 
 
2018
 
2017
 
 
(in millions)
Balance at beginning of period
$
188.5

 
$
202.6
 
Additions based on tax positions related to the current year
 
—

 
 
7.2
 
Additions for tax positions of prior years
 
43.1

 
 
19.3
 
Reductions for tax positions related to the current year
 
(10.60)

 
 
(3.40)
 
Reductions for tax positions of prior years
 
(23.20)

 
 
(0.50)
 
Settlements
 
(160.60)

 
 
(36.70)
Balance at end of period (1)
$
37.2

 
$
188.5

(1) There would be no impact to the effective income tax rate if the 2018 benefits were recognized. We recognize interest and penalties related to uncertain tax positions in operating expenses within the consolidated statements of operations.

As of December 31, 2018 and 2017, we had recognized $1.3 million and $125.3 million of accumulated pre-tax interest and penalties related to unrecognized tax benefits, respectively. We do not believe there is a reasonable possibility the total amount of the unrecognized tax benefits will significantly increase or decrease in the next twelve months considering recent settlements and the status of current and pending Internal Revenue Service (“IRS”) examinations. Settlement agreements applicable to tax years 1995 to 2003 were executed in 2018 with the Department of Justice, as previously approved by the Joint Committee of Taxation in August 2017. An IRS 30-day letter on examination of tax years 2009 through 2012, and the start of IRS examination of tax years 2015 through 2017 are expected in 2019.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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. The deferred tax balances as of December 31, 2017, were remeasured as a result of the U.S. tax reform reducing the U.S. statutory tax rate from 35% to 21% effective January 1, 2018. This was because the new rate was applicable to the reversal of cumulative temporary differences thereafter. Our significant components of net deferred income taxes were as follows:

 
 
 
December 31,
 
 
 
2018
 
2017
 
 
 
(in millions)
Deferred income tax assets:
 
 
 
 
 
 
Insurance liabilities
$
—

 
$
9.8

 
Investments, including derivatives
 
122.6

 
 
159.1

 
Net unrealized losses on available-for-sale securities
 
1.5

 
 
—

 
Net operating and capital loss carryforwards
 
13.7

 
 
0.4

 
Tax credit carryforwards
 
163.2

 
 
235.7

 
Employee benefits
 
10.7

 
 
—

 
Intangible assets
 
—

 
 
0.1

 
Other deferred income tax assets
 
—

 
 
33.6

 
 
Total deferred income tax assets
 
311.7

 
 
438.7

Deferred income tax liabilities:
 
 
 
 
 
 
Deferred acquisition costs
 
(615.90)

 
 
(551.70)

 
Investments, including derivatives
 
(238.30)

 
 
(267.00)

 
Net unrealized gains on available-for-sale securities
 
—

 
 
(499.40)

 
Real estate
 
(144.50)

 
 
(146.00)

 
Insurance liabilities
 
(87.90)

 
 
 
 
Intangible assets
 
(7.60)

 
 
—

 
Gain on sale of discontinued operations (1)
 
(209.20)

 
 
(213.80)

 
Employee benefits
 
—

 
 
(5.20)

 
Other deferred income tax liabilities
 
(37.70)

 
 
(13.60)

 
 
Total deferred income tax liabilities
 
(1,341.10)

 
 
(1,696.70)

 
 
Total net deferred income tax liabilities
$
(1,029.40)

 
$
(1,258.00)


(1)
Represents a deferred intercompany gain on the sale of PGI LLC to PFS, which was allocated to stockholder’s equity as the result of a taxable common control transaction on the standalone financials of the transferring entity. 

Our net deferred income taxes by jurisdiction were as follows:
 
 
 
December 31,
 
 
 
2018
 
2017
 
 
 
(in millions)
Deferred income tax liabilities:
 
 
 
 
 
 
U.S. federal
$
(999.10)
 
$
(1,225.40)
 
State
 
(30.30)
 
 
(32.60)
Total net deferred income tax liabilities
$
(1,029.40)
 
$
(1,258.00)

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, 2018 and 2017, we had tax credit carryforwards for U.S. federal income tax purposes of $163.2 million and $235.7 million, respectively. Alternative minimum, general business tax credit carryovers were generated during and since the period we utilized net operating losses, primarily attributable to our captive reinsurance companies that joined our consolidated U.S.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


federal income tax return beginning in 2012 and 2013. The AMT credit carryforwards became refundable in 2018 and will be fully recovered by 2021, and the other tax credits will expire by 2023 if unused. As of December 31, 2018, 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, 2018 and 2017, domestic state net operating loss carryforwards were $4.7 million and $6.7 million, respectively, and will expire between 2026 and 2036. As of December 31, 2018, 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.

The effects of tax legislation on deferred taxes are recognized in the period of enactment. The primary impact of U.S. tax reform on our 2017 financial results was associated with the effect of reducing the U.S. statutory tax rate from 35% to 21% on our deferred tax balances as of December 31, 2017. The effects of the U.S. tax reform were reflected in the 2017 financial statements as determined or as reasonably estimated provisional amounts based on available information subject to interpretation in accordance with the SEC's Staff Accounting Bulletin No. 118. The provisional amounts apply in regard to potential technical interpretations of accounting and taxing authorities related to elements of the U.S. tax reform subject to change. The provisional amount was finalized within the one-year measurement period with no material adjustments.

Other Tax Information

Income tax returns are filed in the U.S. federal jurisdiction as well as various states and foreign jurisdictions where we and one or more of our subsidiaries conduct business. Although determined by jurisdiction, with few exceptions our tax uncertainties relate primarily to the U.S. federal jurisdiction. The IRS has completed examination of our consolidated U.S. federal income tax returns for years prior to 2009. A settlement was reached in 2018 with the Department of Justice involving a suit in the Court of Federal Claims, requesting refunds for the years 1995-2003. IRS claims for refund for tax years 2004 through 2018, as a result of the settlement of earlier years with the Department of Justice, are pending. As of December 31, 2018 and 2017, we had $195.7 million and $231.9 million, respectively, of current income tax receivables associated with outstanding audit issues reported as other assets in our consolidated statements of financial position.

PFG 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. The U.S. federal statute of limitations expired for years prior to 2009, except for pending audit issues. The statute was extended until June 30, 2019 for 2009 through 2012, has expired for 2013 and 2014, and remains open for years thereafter. The ultimate settlement of earlier tax years can be adjusted into subsequent tax years regardless of statute status. We do not expect the results of these audits, subsequent related adjustments 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.

We believe we have adequate defenses against, or sufficient provisions for, contested issues, but final resolution could take several years while legal remedies are pursued. Consequently, we do not expect the resolved 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.

13. Employee and Agent Benefits

PFG sponsors 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 U.S. 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



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


(“ERISA”), and, generally, not greater than the maximum amount that can be deducted for U.S. 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. We reflect pension expense through our expense allocation agreement with PFG.

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.

Obligations and Funded Status

The combined funded status, reconciled to amounts recognized in the consolidated statements of financial position relating to other postretirement employee benefit (“OPEB”) plan, was as follows:




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
December 31,
 
 
2018
 
2017
 
 
 
(in millions)
Change in benefit obligation
 
 
 
 
 
 
Benefit obligation at beginning of year
 
$
(91.80)

 
$
(92.60)
Service cost
 
 
(0.10)

 
 
(0.10)
Interest cost
 
 
(2.90)

 
 
(3.30)
Actuarial gain (loss)
 
 
6.6

 
 
(0.50)
Participant contributions
 
 
(3.80)

 
 
(3.50)
Benefits paid
 
 
8.2

 
 
8.2
Benefit obligation at end of year
 
$
(83.80)

 
$
(91.80)
 
 
 
 
 
 
 
 
Change in plan assets
 
 
 
 
 
 
Fair value of plan assets at beginning of year
 
$
668.3

 
$
601.4
Actual return on plan assets
 
 
(46.00)

 
 
70.9
Employer contribution
 
 
0.8

 
 
0.7
Participant contributions
 
 
3.8

 
 
3.5
Benefits paid
 
 
(8.20)

 
 
(8.20)
Fair value of plan assets at end of year
 
$
618.7

 
$
668.3
 
 
 
 
 
 
 
 
Amount recognized in statement of financial position
 
 
 
 
 
 
Other assets
 
$
536.8

 
$
578.3
Other liabilities
 
 
(1.90)

 
 
(1.80)
Total
 
$
534.9

 
$
576.5
 
 
 
 
 
 
 
 
Amount recognized in accumulated other comprehensive (income) loss
 
 
 
 
 
 
Total net actuarial (gain) loss
 
$
44.3

 
$
(28.50)
Prior service benefit
 
 
—

 
 
(12.80)
Pre-tax accumulated other comprehensive (income) loss
 
$
44.3

 
$
(41.30)
 
 
 
 
 
 
 
 

Other Postretirement Plan Changes and Plan Gains/Losses

For the year ended December 31, 2018, the other postretirement benefit plans had an actuarial gain primarily due to an increase in the discount rate and a gain from actual and projected medical claims cost being lower than expected. For the year ended December 31, 2017, the other postretirement benefit plans had an actuarial loss primarily due to a decrease in the discount rate offset by actual and projected medical claims costs being lower than previously expected.

Information for Other Postretirement Benefit Plans With an Accumulated Postretirement Benefit Obligation
in Excess of Plan Assets
 
 
 
 
 
 
 
 
 
December 31,
 
 
2018
 
2017
 
 
(in millions)
Accumulated postretirement benefit obligation
 
$
2.1
 
$
2.2
Fair value of plan assets
 
 
0.2
 
 
0.4




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Components of Other Postretirement Benefits Net Periodic Benefit Cost
 
 
 
 
 
 
 
 
 
 
For the year ended December 31,
 
2018
 
2017
 
2016
 
(in millions)
Service cost
$
0.1
 
$
0.1
 
$
2.1
Interest cost
 
2.9
 
 
3.3
 
 
5.3
Expected return on plan assets
 
(32.20)
 
 
(26.20)
 
 
(31.50)
Amortization of prior service benefit
 
(12.80)
 
 
(33.40)
 
 
(22.90)
Recognized net actuarial (gain) loss
 
(1.20)
 
 
0.1
 
 
0.2
Net periodic benefit income
$
(43.20)
 
$
(56.10)
 
$
(46.80)

The components of net periodic benefit cost including the service cost component are included in operating expenses on the consolidated statements of operations.

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

For the other postretirement benefit plans, amounts recognized in pre-tax accumulated other comprehensive (income) loss were as follows:

 
 
For the year ended December 31,
 
 
2018
 
2017
 
 
(in millions)
Other changes recognized in accumulated other comprehensive (income) loss
 
 
 
 
 
 
Net actuarial (gain) loss
 
$
71.6
 
$
(44.20)
Amortization of gain (loss)
 
 
1.2
 
 
(0.10)
Amortization of prior service benefit
 
 
12.8
 
 
33.4
Total recognized in pre-tax accumulated other comprehensive (income) loss
 
$
85.6
 
$
(10.90)
Total recognized in net periodic benefit cost and pre-tax accumulated
 
 
 
 
 
 
 
other comprehensive (income) loss
 
$
42.4
 
$
(67.00)

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 2019 fiscal year are $0.1 million and $(1.2) million, respectively.

Assumptions

Weighted‑average assumptions used for other postretirement benefit plans to determine benefit obligations as disclosed under the Obligations and Funded Status section

 
 
For the year ended December 31,
 
2018
 
2017
Discount rate
3.95
%
 
3.35
%
Rate of compensation increase
N/A
 
 
2.39
%




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Weighted average assumptions used for other postretirement benefit plans to determine net periodic benefit cost
 
 
 
 
 
 
 
 
 
 
For the year ended December 31,
 
2018
 
2017
 
2016
Discount rate (1)
3.35
%
 
3.75
%
 
3.35
%
Expected long-term return on plan assets
4.85
%
 
4.40
%
 
5.25
%
Rate of compensation increase
2.39
%
 
2.44
%
 
4.82
%

(1)
The funded statuses of the OPEB plans for which subsidies were eliminated in 2016 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.

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 4.85% expected long-term return on plan assets for 2018 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 home office medical/life, agent medical/life, long-term care and post-65 medical plans were 4.90%, 4.60% and 3.75% , respectively.

Assumed Health Care Cost Trend Rates

 
 
December 31,
 
2018
 
2017
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
N/A
 
 
7.0
%
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)
2026
 
 
2024
 
Year that the rate reaches the ultimate trend rate (65 and older)
N/A
 
 
2024
 

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
$
0.1
 
$
(0.10)
Effect on accumulated postretirement benefit obligation
 
(1.20)
 
 
1.2

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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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

 
 
 
 
December 31, 2018
 
 
 
 
Assets
 
Fair value hierarchy level
 
 
 
 
measured at
 
 
 
 
 
 
 
 
 
 
 
fair value
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
(in millions)
Asset category
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
0.3
 
$
0.3
 
$
—

 
$
—

Fixed income security portfolios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed income investment funds (1)
 
 
194.2
 
 
156.7
 
 
37.5

 
 
—

U.S. equity portfolios (2)
 
 
130.5
 
 
95.7
 
 
34.8

 
 
—

International equity portfolios (3)
 
 
57.6
 
 
43.8
 
 
13.8

 
 
—

Alternative mutual fund portfolios (4)
 
 
229.8
 
 
229.8
 
 
—

 
 
—

Real estate mutual fund (5)
 
 
6.3
 
 
6.3
 
 
—

 
 
—

Total
 
$
618.7
 
$
532.6
 
$
86.1

 
$
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2017
 
 
 
 
Assets
 
Fair value hierarchy level
 
 
 
 
measured at
 
 
 
 
 
 
 
 
 
 
 
fair value
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
(in millions)
Asset category
 
 
 
 
 
 
 
 
 
 
 
 
Cash and cash equivalents
 
$
0.3
 
$
0.3
 
$
—

 
$
—

Fixed income security portfolios:
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed income investment funds (1)
 
 
200.1
 
 
168.0
 
 
32.1

 
 
—

U.S. equity portfolios (2)
 
 
153.3
 
 
102.4
 
 
50.9

 
 
—

International equity portfolios (3)
 
 
63.1
 
 
53.0
 
 
10.1

 
 
—

Alternative mutual fund portfolios (4)
 
 
244.8
 
 
244.8
 
 
—

 
 
—

Real estate mutual fund (5)
 
 
6.7
 
 
6.7
 
 
—

 
 
—

Total
 
$
668.3
 
$
575.2
 
$
93.1

 
$
—


(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 portfolios invest primarily in publicly traded equity securities of large U.S. companies.
(3)
The portfolios invest primarily in publicly traded equity securities of non-U.S. companies.
(4)
The portfolios invest primarily in equities, corporate bonds, foreign currencies, convertible securities and derivatives.
(5)
The mutual fund invests primarily in U.S. commercial real estate properties.
As of December 31, 2018 and 2017, $86.1 million and $93.2 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.

The reconciliation for a general account investment that was previously included in plan assets and measured at fair value using significant unobservable inputs (Level 3) is as follows:




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
For the year ended December 31, 2016
 
 
 
 
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,
 
 
2015
 
date
 
period
 
settlements
 
Level 3
 
Level 3
 
2016
 
 
(in millions)
Asset category
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
General account investment
$
33.5
 
$
(1.70)
 
$
(33.60)
 
$
1.8
 
$
—

 
$
—

 
$
—


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.

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 are:




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
Other postretirement
 
 
 
benefits (gross benefit
 
 
 
payments, including
 
 
prescription drug benefits)
 
 
(in millions)
Year ending December 31:
 
 
2019
$
11.9
2020
 
11.1
2021
 
10.3
2022
 
9.7
2023
 
8.8
2024-2028
 
34.4

The above table reflects the total estimated future benefits to be paid from the plan, including both our share of the benefit cost and the participants' share of the cost, which is funded by their contributions to the plan. The assumptions used in calculating the estimated future benefit payments are the same as those used to measure the benefit obligation for the year ended December 31, 2018.

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 $18,500 of their compensation to the plans in 2018. 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 in 2016 to the qualified defined contribution plans.

 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 in 2016, 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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


14. Contingencies, Guarantees and Indemnifications

Litigation and Regulatory Contingencies

We are regularly involved in litigation, both as a defendant and as a plaintiff, but primarily as a defendant. Litigation naming us as a defendant ordinarily arises out of our business operations as a provider of asset management and accumulation products and services; individual life insurance, specialty benefits insurance and our investment activities. Some of the lawsuits may be class actions, or purport to be, and some may include claims for unspecified or substantial punitive and treble damages.

We may discuss such litigation in one of three ways. We accrue a charge to income and disclose legal matters for which the chance of loss is probable and for which the amount of loss can be reasonably estimated. We may disclose contingencies for which the chance of loss is reasonably possible and provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. Finally, we may voluntarily disclose loss contingencies for which the chance of loss is remote in order to provide information concerning matters that potentially expose us to possible losses.

In addition, regulatory bodies such as state insurance departments, the SEC, the Financial Industry Regulatory Authority, the Department of Labor and other regulatory agencies regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, ERISA and laws governing the activities of broker-dealers. We receive requests from regulators and other governmental authorities relating to industry issues and may receive additional requests, including subpoenas and interrogatories, in the future.

As of December 31, 2018, we had no litigation or regulatory contingencies for which we believe disclosure is appropriate.

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. We also provided guarantees to third parties primarily related to a former subsidiary. The terms of these agreements range in duration and often are not explicitly defined. The maximum exposure under these agreements as of December 31, 2018, was approximately $227.0 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 are also subject to various other indemnification obligations issued in conjunction with divestitures, acquisitions and financing transactions whose terms range in duration and often are not explicitly defined. Certain portions of these indemnifications may be capped, while other portions are not subject to such limitations; therefore, the overall maximum amount of the obligation under the indemnifications cannot be reasonably estimated. At inception, the fair value of such indemnifications was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. While we are unable to estimate with certainty the ultimate legal and financial liability with respect to these indemnifications, we believe that performance under these indemnifications would not result in a material adverse effect on our business or financial position. While the likelihood is remote, performance under these indemnifications could materially affect net income in a particular quarter or annual period.

Guaranty Funds

Under state insurance guaranty fund laws, insurers doing business in a state can be assessed, up to prescribed limits, for certain obligations of insolvent insurance companies to policyholders and claimants. A state’s fund assesses its members based on their pro rata market share of written premiums in the state for the classes of insurance for which the insolvent insurer was engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets. We accrue liabilities for guaranty fund assessments when an assessment is probable, can be reasonably estimated and



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, 2018 and 2017, the liability balance for guaranty fund assessments, which is not discounted, was $22.2 million and $23.3 million, respectively, and was reported within other liabilities in the consolidated statements of financial position. As of December 31, 2018 and 2017, $10.4 million and $11.3 million, respectively, related to premium tax offsets were included in premiums due and other receivables in the consolidated statements of financial position.

Operating Leases

As a lessee, we lease office space, data processing equipment, office furniture and office equipment under various operating leases. Rental expense for the years ended December 31, 2018, 2017 and 2016, was $17.1 million, $23.0 million and $27.2 million, respectively.

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

Year ending December 31:
 
 
 
2019
$
28.1
 
2020
 
23.5
 
2021
 
18.7
 
2022
 
13.0
 
2023
 
7.4
 
2024 and thereafter
 
21.4
 
 
Total operating lease obligations
 
112.1
 
 
Less: Future sublease rental income on noncancelable leases
 
5.1
 
 
Total future minimum lease payments
$
107.0

Capital Leases

We lease buildings and hardware storage equipment under capital leases. As of December 31, 2018 and 2017, these leases had a gross asset balance of $67.0 million and $54.3 million and accumulated depreciation of $35.1 million and $30.6 million, respectively. Depreciation expense for the years ended December 31, 2018, 2017 and 2016, was $9.9 million, $9.9 million and $11.1 million, respectively.

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

Year ending December 31:
 
 
 
2019
$
12.6

 
2020
 
11.0

 
2021
 
8.1

 
2022
 
1.8

 
2023
 
0.4

 
2024 and thereafter
 
—

 
 
Total
 
33.9

 
 
Less: Amounts representing interest
 
1.4

 
 
Net present value of minimum lease payments
$
32.5






Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


15. Stockholder's Equity

Other Comprehensive Income (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2018
 
Pre-Tax
 
Tax
 
After-Tax
 
 
 
(in millions)
Net unrealized losses on available-for-sale securities during the period
$
(2,534.30)
 
$
526.0
 
$
(2,008.30)
Reclassification adjustment for losses included in net income (1)
 
84.4
 
 
(13.60)
 
 
70.8
Adjustments for assumed changes in amortization patterns
 
185.9
 
 
(39.10)
 
 
146.8
Adjustments for assumed changes in policyholder liabilities
 
351.1
 
 
(73.70)
 
 
277.4
Net unrealized losses on available-for-sale securities
 
(1,912.90)
 
 
399.6
 
 
(1,513.30)
 
 
 
 
 
 
 
 
 
 
 
Noncredit component of impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale during the period
 
39.7
 
 
(8.30)
 
 
31.4
Adjustments for assumed changes in amortization patterns
 
(5.30)
 
 
1.1
 
 
(4.20)
Adjustments for assumed changes in policyholder liabilities
 
(0.80)
 
 
0.1
 
 
(0.70)
Noncredit component of impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale (2)
 
33.6
 
 
(7.10)
 
 
26.5
 
 
 
 
 
 
 
 
 
 
 
Net unrealized gains on derivative instruments during the period
 
50.4
 
 
(3.60)
 
 
46.8
Reclassification adjustment for gains included in net income (3)
 
(50.80)
 
 
7.1
 
 
(43.70)
Adjustments for assumed changes in amortization patterns
 
0.3
 
 
(0.10)
 
 
0.2
Adjustments for assumed changes in policyholder liabilities
 
5.7
 
 
(1.00)
 
 
4.7
Net unrealized gains on derivative instruments
 
5.6
 
 
2.4
 
 
8.0
 
 
 
 
 
 
 
 
 
 
 
Unrecognized postretirement benefit obligation during the period
 
(71.60)
 
 
15.1
 
 
(56.50)
Amortization of amounts included in net periodic benefit cost (4)
 
(14.00)
 
 
2.9
 
 
(11.10)
Net unrecognized postretirement benefit obligation
 
(85.60)
 
 
18.0
 
 
(67.60)
 
 
 
 
 
 
 
 
 
Other comprehensive loss
$
(1,959.30)
 
$
412.9
 
$
(1,546.40)
 
 
 
 
 
 
 
 
 
 
 
























Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
For the year ended December 31, 2017
 
Pre-Tax
 
Tax
 
After-Tax
 
 
 
(in millions)
Net unrealized gains on available-for-sale securities during the period
$
1,028.5
 
$
(325.00)
 
$
703.5
Reclassification adjustment for losses included in net income (1)
 
65.6
 
 
(22.80)
 
 
42.8
Adjustments for assumed changes in amortization patterns
 
(26.20)
 
 
9.3
 
 
(16.90)
Adjustments for assumed changes in policyholder liabilities
 
(168.50)
 
 
59.0
 
 
(109.50)
Net unrealized gains on available-for-sale securities
 
899.4
 
 
(279.50)
 
 
619.9
 
 
 
 
 
 
 
 
 
 
 
Noncredit component of impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale during the period
 
49.7
 
 
(17.40)
 
 
32.3
Adjustments for assumed changes in amortization patterns
 
(6.40)
 
 
2.3
 
 
(4.10)
Adjustments for assumed changes in policyholder liabilities
 
(1.30)
 
 
0.5
 
 
(0.80)
Noncredit component of impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale (2)
 
42.0
 
 
(14.60)
 
 
27.4
 
 
 
 
 
 
 
 
 
 
 
Net unrealized losses on derivative instruments during the period
 
(46.70)
 
 
16.0
 
 
(30.70)
Reclassification adjustment for gains included in net income (3)
 
(42.40)
 
 
15.1
 
 
(27.30)
Adjustments for assumed changes in amortization patterns
 
3.9
 
 
(1.30)
 
 
2.6
Adjustments for assumed changes in policyholder liabilities
 
9.6
 
 
(3.30)
 
 
6.3
Net unrealized losses on derivative instruments
 
(75.60)
 
 
26.5
 
 
(49.10)
 
 
 
 
 
 
 
 
 
 
 
Unrecognized postretirement benefit obligation during the period
 
44.2
 
 
(9.20)
 
 
35.0
Amortization of amounts included in net periodic benefit cost (4)
 
(33.30)
 
 
11.6
 
 
(21.70)
Net unrecognized postretirement benefit obligation
 
10.9
 
 
2.4
 
 
13.3
 
 
 
 
 
 
 
 
 
Other comprehensive income
$
876.7
 
$
(265.20)
 
$
611.5
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
$
(44.40)
 
$
71.8
Reclassification adjustment for losses included in net income (1)
 
78.1
 
 
(23.30)
 
 
54.8
Adjustments for assumed changes in amortization patterns
 
5.6
 
 
(2.00)
 
 
3.6
Adjustments for assumed changes in policyholder liabilities
 
(40.50)
 
 
14.1
 
 
(26.40)
Net unrealized gains on available-for-sale securities
 
159.4
 
 
(55.60)
 
 
103.8
 
 
 
 
 
 
 
 
 
 
 
Noncredit component of impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale during the period
 
3.1
 
 
(1.10)
 
 
2.0
Adjustments for assumed changes in amortization patterns
 
(3.40)
 
 
1.2
 
 
(2.20)
Adjustments for assumed changes in policyholder liabilities
 
0.8
 
 
(0.30)
 
 
0.5
Noncredit component of impairment losses on fixed maturities,
 
 
 
 
 
 
 
 
 
available-for-sale (2)
 
0.5
 
 
(0.20)
 
 
0.3
 
 
 
 
 
 
 
 
 
 
 
Net unrealized gains on derivative instruments during the period
 
32.6
 
 
(7.50)
 
 
25.1
Reclassification adjustment for gains included in net income (3)
 
(36.80)
 
 
9.1
 
 
(27.70)
Adjustments for assumed changes in amortization patterns
 
2.9
 
 
(1.00)
 
 
1.9
Adjustments for assumed changes in policyholder liabilities
 
16.9
 
 
(6.00)
 
 
10.9
Net unrealized gains on derivative instruments
 
15.6
 
 
(5.40)
 
 
10.2
 
 
 
 
 
 
 
 
 
 
 
Unrecognized postretirement benefit obligation during the period
 
27.1
 
 
(9.50)
 
 
17.6
Amortization of amounts included in net periodic benefit cost (4)
 
(22.70)
 
 
8.0
 
 
(14.70)
Net unrecognized postretirement benefit obligation
 
4.4
 
 
(1.50)
 
 
2.9
 
 
 
 
 
 
 
 
 
Other comprehensive income
$
179.9
 
$
(62.70)
 
$
117.2




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


(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 7, Derivative Financial Instruments – Cash Flow Hedges, for further details.
(4) Amount is comprised of amortization of prior service cost (benefit) and recognized net actuarial (gain) loss, which is reported in operating expenses on the consolidated statements of operations. See Note 13, Employee and Agent Benefits – Components of Net Periodic Benefit Cost, for further details.

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, 2016
$
609.8

 
$
(86.10)

 
$
91.5

 
$
(0.90)

 
$
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

 
 
(27.70)

 
 
—

 
 
(14.70)

 
 
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
 
—

 
 
—

 
 
—

 
 
—

 
 
(10.10)

 
 
(10.10)
Balances as of December 31, 2016
 
713.6

 
 
(85.80)

 
 
101.7

 
 
(0.90)

 
 
19.8

 
 
748.4
Other comprehensive income
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
during the period, net of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
adjustments
 
577.1

 
 
—

 
 
(21.80)

 
 
—

 
 
35.0

 
 
590.3
Amounts reclassified from AOCI
 
42.8

 
 
27.4

 
 
(27.30)

 
 
—

 
 
(21.70)

 
 
21.2
Other comprehensive income
 
619.9

 
 
27.4

 
 
(49.10)

 
 
—

 
 
13.3

 
 
611.5
Sale of subsidiary to parent, net of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
related income taxes, as part of a
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
common control transaction
 
—

 
 
—

 
 
—

 
 
(0.10)

 
 
—

 
 
(0.10)
Balances as of December 31, 2017
 
1,333.5

 
 
(58.40)

 
 
52.6

 
 
(1.00)

 
 
33.1

 
 
1,359.8
Other comprehensive loss
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
during the period, net of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
adjustments
 
(1,584.10)

 
 
—

 
 
51.7

 
 
—

 
 
(56.50)

 
 
(1,588.90)
Amounts reclassified from AOCI
 
70.8

 
 
26.5

 
 
(43.70)

 
 
—

 
 
(11.10)

 
 
42.5
Other comprehensive loss
 
(1,513.30)

 
 
26.5

 
 
8.0

 
 
—

 
 
(67.60)

 
 
(1,546.40)
Effects of implementation of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
accounting change related to
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
equity investments, net
 
0.1

 
 
—

 
 
—

 
 
—

 
 
—

 
 
0.1
Effects of implementation of
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
accounting change related to
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
the reclassification of certain
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
tax effects, net
 
248.9

 
 
(15.20)

 
 
7.7

 
 
1.0

 
 
(0.40)

 
 
242.0
Balances as of December 31, 2018
$
69.2

 
$
(47.10)

 
$
68.3

 
$
—

 
$
(34.90)

 
$
55.5





Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


Dividend Limitations

Under Iowa law, we may pay dividends only from the earned surplus arising from our business and must receive the prior approval of the Commissioner of Insurance of the State of Iowa (“the Commissioner”) to pay stockholder dividends or make any other distribution if such distribution would exceed certain statutory limitations. Iowa law gives the Commissioner discretion to disapprove requests for distributions in excess of these limitations. Extraordinary dividends include those made, together with dividends and other distributions, within the preceding twelve months that exceed the greater of (i) 10% of our statutory policyholder surplus as of the previous year-end or (ii) the statutory net gain from operations from the previous calendar year, not to exceed earned surplus. Based on this limitation and 2018 statutory results, our dividend limitation is approximately $1,085.7 million in ordinary stockholder dividends in 2019 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 2019, some or all of such dividends may be extraordinary and require regulatory approval.

On May 1, 2017, we sold our ownership interest in PGI LLC to PFS in connection with a corporate reorganization designed to better utilize and allocate capital internally. Subsequent to the sale, we paid an extraordinary dividend of $1,068.4 million to PFS with the cash proceeds received from the sale, which was approved by the Commissioner.

16. 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.

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 2018.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



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 when 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 also be impacted by company specific factors.

If we are unable to price a fixed maturity security using prices from third party pricing vendors or other sources specific to the asset class, we may obtain a broker quote or utilize an internal pricing model specific to the asset utilizing relevant market information, to the extent available and where at least one significant unobservable input is utilized. These are reflected in Level 3 in the fair value hierarchy and can include fixed maturities across all asset classes. As of December 31, 2018, 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. 





Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, which reduces their fair value in the consolidated statements of financial position. The fair values of OTC cleared derivatives are determined through market prices published by the clearinghouses, which are reflected in Level 2. The clearinghouses may utilize the overnight indexed swap (“OIS”) curve in their valuation. Variation margin associated with OTC cleared derivatives is settled daily, which reduces their fair value in the consolidated statements of financial position. The fair values of bilateral OTC derivative instruments are determined using either pricing valuation models that utilize market observable inputs or broker quotes. The majority of our bilateral OTC derivatives are valued with models that use market observable inputs, which are reflected in Level 2. Significant inputs include contractual terms, interest rates, currency exchange rates, credit spread curves, equity prices and volatilities. These valuation models consider projected discounted cash flows, relevant swap curves and appropriate implied volatilities. Certain bilateral OTC derivatives utilize unobservable market data, primarily independent broker quotes that are nonbinding quotes based on models that do not reflect the result of market transactions, which are reflected in Level 3.

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

Other Investments

Other investments reported at fair value include investment funds reported at fair value, commercial mortgage loans of consolidated VIEs for which the fair value option was elected, equity method real estate investments for which the fair value option was elected and certain redeemable preferred stock. In addition, in 2017 we had other investment funds for which the fair value option was elected.

The fair value of investment funds is determined using the NAV of the fund. The NAV of the fund represents the price at which 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 are valued using the more observable fair value of the liabilities of the consolidated collateralized financing entities (“CCFEs”) under the measurement alternative guidance and are reflected in Level 2. The liabilities are affiliated so are not reflected in our consolidated results.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



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.

The fair value of certain redeemable preferred stock is based on an internal model using observable inputs and is included in Level 2.

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.

Separate Account Assets

Separate account assets include equity securities, debt securities, cash equivalents 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.

Certain obligations of consolidated VIEs for which the fair value option was elected were included in other liabilities. The synthetic entity that had these obligations matured in the first quarter of 2017. The VIEs’ unaffiliated obligations were valued utilizing internal pricing models, which were reflected in Level 3.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



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, 2018
 
 
 
Assets/
 
Amount
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
measured at
 
Fair value hierarchy level
 
 
 
measured at
 
net asset
 
 
 
 
 
 
 
 
 
 
 
fair value
 
value (4)
 
Level 1
 
Level 2
 
Level 3
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
 
$
1,383.2
 
$
—

 
$
993.1

 
$
390.1

 
$
—

Non-U.S. governments
 
 
730.8
 
 
—

 
 
—

 
 
726.2

 
 
4.6

States and political subdivisions
 
 
6,165.7
 
 
—

 
 
—

 
 
6,165.7

 
 
—

Corporate
 
 
32,088.4
 
 
—

 
 
19.2

 
 
32,011.3

 
 
57.9

Residential mortgage-backed securities
 
 
2,416.2
 
 
—

 
 
—

 
 
2,416.2

 
 
—

Commercial mortgage-backed securities
 
 
3,902.8
 
 
—

 
 
—

 
 
3,893.3

 
 
9.5

Collateralized debt obligations (1)
 
 
2,416.9
 
 
—

 
 
—

 
 
2,408.6

 
 
8.3

Other debt obligations
 
 
7,171.3
 
 
—

 
 
—

 
 
7,112.8

 
 
58.5

Total fixed maturities, available-for-sale
 
 
56,275.3
 
 
—

 
 
1,012.3

 
 
55,124.2

 
 
138.8

Fixed maturities, trading
 
 
165.5
 
 
—

 
 
—

 
 
165.5

 
 
—

Equity securities
 
 
84.8
 
 
—

 
 
46.6

 
 
38.2

 
 
—

Derivative assets (2)
 
 
172.6
 
 
—

 
 
—

 
 
154.0

 
 
18.6

Other investments
 
 
109.0
 
 
75.4

 
 
—

 
 
16.4

 
 
17.2

Cash equivalents
 
 
945.8
 
 
—

 
 
—

 
 
945.8

 
 
—

Sub-total excluding separate account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
assets
 
 
57,753.0
 
 
75.4

 
 
1,058.9

 
 
56,444.1

 
 
174.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Separate account assets
 
 
107,343.0
 
 
124.6

 
 
79,303.1

 
 
19,471.3

 
 
8,444.0

Total assets
 
$
165,096.0
 
$
200.0

 
$
80,362.0

 
$
75,915.4

 
$
8,618.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment contracts (3)
 
$
(5.30)
 
$
—

 
$
—

 
$
—

 
$
(5.30)

Derivative liabilities (2)
 
 
(104.40)
 
 
—

 
 
—

 
 
(89.30)

 
 
(15.10)

Other liabilities (3)
 
 
(89.30)
 
 
—

 
 
—

 
 
(89.30)

 
 
—

Total liabilities
 
$
(199.00)
 
$
—

 
$
—

 
$
(178.60)

 
$
(20.40)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
$
164,897.0
 
$
200.0

 
$
80,362.0

 
$
75,736.8

 
$
8,598.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
December 31, 2017
 
 
 
Assets/
 
Amount
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
measured at
 
Fair value hierarchy level
 
 
 
measured at
 
net asset
 
 
 
 
 
 
 
 
 
 
 
fair value
 
value (4)
 
Level 1
 
Level 2
 
Level 3
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
 
$
1,317.7
 
$
—

 
$
886.8

 
$
430.9

 
$
—

Non-U.S. governments
 
 
528.3
 
 
—

 
 
—

 
 
522.2

 
 
6.1

States and political subdivisions
 
 
6,757.7
 
 
—

 
 
—

 
 
6,757.7

 
 
—

Corporate
 
 
33,589.2
 
 
—

 
 
20.7

 
 
33,467.9

 
 
100.6

Residential mortgage-backed securities
 
 
2,512.7
 
 
—

 
 
—

 
 
2,512.7

 
 
—

Commercial mortgage-backed securities
 
 
3,667.0
 
 
—

 
 
—

 
 
3,656.4

 
 
10.6

Collateralized debt obligations (1)
 
 
1,359.3
 
 
—

 
 
—

 
 
1,234.3

 
 
125.0

Other debt obligations
 
 
5,697.5
 
 
—

 
 
—

 
 
5,695.2

 
 
2.3

Total fixed maturities, available-for-sale
 
 
55,429.4
 
 
—

 
 
907.5

 
 
54,277.3

 
 
244.6

Fixed maturities, trading
 
 
49.1
 
 
—

 
 
—

 
 
49.1

 
 
—

Equity securities, available-for-sale
 
 
94.1
 
 
—

 
 
47.4

 
 
44.0

 
 
2.7

Equity securities, trading
 
 
6.0
 
 
—

 
 
6.0

 
 
—

 
 
—

Derivative assets (2)
 
 
247.2
 
 
—

 
 
—

 
 
223.0

 
 
24.2

Other investments
 
 
101.6
 
 
85.8

 
 
—

 
 
9.3

 
 
6.5

Cash equivalents
 
 
374.2
 
 
—

 
 
—

 
 
374.2

 
 
—

Sub-total excluding separate account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
assets
 
 
56,301.6
 
 
85.8

 
 
960.9

 
 
54,976.9

 
 
278.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Separate account assets
 
 
117,300.8
 
 
120.4

 
 
89,824.1

 
 
19,870.0

 
 
7,486.3

Total assets
 
$
173,602.4
 
$
206.2

 
$
90,785.0

 
$
74,846.9

 
$
7,764.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment contracts (3)
 
$
(119.60)
 
$
—

 
$
—

 
$
—

 
$
(119.60)

Derivative liabilities (2)
 
 
(267.50)
 
 
—

 
 
—

 
 
(262.90)

 
 
(4.60)

Other liabilities (3)
 
 
(253.20)
 
 
—

 
 
—

 
 
(253.20)

 
 
—

Total liabilities
 
$
(640.30)
 
$
—

 
$
—

 
$
(516.10)

 
$
(124.20)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets
 
$
172,962.1
 
$
206.2

 
$
90,785.0

 
$
74,330.8

 
$
7,640.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1)
Primarily consists of collateralized loan obligations backed by secured corporate loans.
(2) Within the consolidated statements of financial position, derivative assets are reported with other investments and derivative liabilities are reported with other liabilities. The amounts are presented gross in the tables above to reflect the presentation on the consolidated statements of financial position; however, are presented net for purposes of the rollforward in the Changes in Level 3 Fair Value Measurements tables. Refer to Note 7, Derivative Financial Instruments, for further information on fair value by class of derivative instruments.
(3) Includes bifurcated embedded derivatives that are reported at net asset (liability) fair value within the same line item in the consolidated statements of financial position in which the host contract is reported.
(4) 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. Other investments using the NAV practical expedient consist of certain fund interests that are restricted until maturity with unfunded commitments totaling $32.0 million and $46.1 million as of December 31, 2018 and December 31, 2017, respectively. Separate account assets using the NAV practical expedient consist of hedge funds with varying investment strategies that also have a variety of redemption terms and conditions. We do not have unfunded commitments associated with these hedge funds.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



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, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
 
 
 
 
2017
 
(1)
 
income
 
(3)
 
Level 3
 
Level 3
 
2018
 
held (1)
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
governments
$
6.1

 
$
—

 
$
(0.10)

 
$
(1.40)
 
$
—

 
$
—

 
$
4.6

 
$
—

 
Corporate
 
100.6

 
 
(1.00)

 
 
0.3

 
 
(22.00)
 
 
—

 
 
(20.00)

 
 
57.9

 
 
—

 
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
10.6

 
 
(3.50)

 
 
0.2

 
 
0.1
 
 
3.6

 
 
(1.50)

 
 
9.5

 
 
(1.90)

 
Collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
debt obligations
 
125.0

 
 
(0.90)

 
 
0.2

 
 
64.4
 
 
54.7

 
 
(235.10)

 
 
8.3

 
 
(0.90)

 
Other debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
obligations
 
2.3

 
 
—

 
 
(0.20)

 
 
147.4
 
 
—

 
 
(91.00)

 
 
58.5

 
 
—

Total fixed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
244.6

 
 
(5.40)

 
 
0.4

 
 
188.5
 
 
58.3

 
 
(347.60)

 
 
138.8

 
 
(2.80)

Fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
trading
 
—

 
 
—

 
 
—

 
 
3.7
 
 
—

 
 
(3.70)

 
 
—

 
 
—

Equity securities
 
2.7

 
 
12.9

 
 
—

 
 
(15.60)
 
 
—

 
 
—

 
 
—

 
 
—

Other investments
 
6.5

 
 
1.7

 
 
—

 
 
9.0
 
 
—

 
 
—

 
 
17.2

 
 
1.7

Separate account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
assets (2)
 
7,486.3

 
 
889.7

 
 
—

 
 
106.8
 
 
2.3

 
 
(41.10)

 
 
8,444.0

 
 
829.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment contracts
 
(119.60)

 
 
107.9

 
 
—

 
 
6.4
 
 
—

 
 
—

 
 
(5.30)

 
 
110.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net derivative assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
19.6

 
 
(18.60)

 
 
—

 
 
2.5
 
 
—

 
 
—

 
 
3.5

 
 
(17.10)





Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
 
 
For the year ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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
 
 
 
 
 
2016
 
(1)
 
income
 
(3)
 
Level 3
 
Level 3
 
2017
 
held (1)
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
governments
$
7.6

 
$
—

 
$
(0.10)

 
$
(1.40)

 
$
—

 
$
—

 
$
6.1

 
$
—

 
Corporate
 
145.6

 
 
(1.50)

 
 
4.4

 
 
(32.80)

 
 
22.2

 
 
(37.30)

 
 
100.6

 
 
—

 
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
71.1

 
 
(12.70)

 
 
11.1

 
 
(0.70)

 
 
26.3

 
 
(84.50)

 
 
10.6

 
 
(4.00)

 
Collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
debt obligations
 
33.6

 
 
—

 
 
1.7

 
 
7.3

 
 
183.7

 
 
(101.30)

 
 
125.0

 
 
—

 
Other debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
obligations
 
91.5

 
 
—

 
 
(0.20)

 
 
(0.80)

 
 
0.1

 
 
(88.30)

 
 
2.3

 
 
—

Total fixed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
349.4

 
 
(14.20)

 
 
16.9

 
 
(28.40)

 
 
232.3

 
 
(311.40)

 
 
244.6

 
 
(4.00)

Fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
trading
 
92.9

 
 
(0.50)

 
 
—

 
 
(92.40)

 
 
—

 
 
—

 
 
—

 
 
—

Equity securities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
2.7

 
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
2.7

 
 
—

Equity securities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
trading
 
—

 
 
—

 
 
—

 
 
(0.70)

 
 
0.7

 
 
—

 
 
—

 
 
—

Other investments
 
36.9

 
 
3.9

 
 
—

 
 
(34.30)

 
 
—

 
 
—

 
 
6.5

 
 
3.8

Separate account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
assets (2)
 
7,226.3

 
 
788.8

 
 
—

 
 
(493.20)

 
 
3.1

 
 
(38.70)

 
 
7,486.3

 
 
696.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment contracts
 
(130.80)

 
 
6.8

 
 
—

 
 
4.4

 
 
—

 
 
—

 
 
(119.60)

 
 
4.0

Other liabilities
 
(59.90)

 
 
(0.10)

 
 
—

 
 
60.0

 
 
—

 
 
—

 
 
—

 
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net derivative assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
11.8

 
 
7.5

 
 
—

 
 
0.3

 
 
—

 
 
—

 
 
19.6

 
 
6.7





Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
 
 
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

 
$
(1.40)

 
$
—

 
$
(32.60)

 
$
7.6
 
$
—

 
Corporate
 
156.3
 
 
(1.40)

 
 
(1.90)

 
 
(21.40)

 
 
15.7

 
 
(1.70)

 
 
145.6
 
 
(1.40)

 
Commercial
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
4.8
 
 
(8.30)

 
 
8.8

 
 
32.7

 
 
35.4

 
 
(2.30)

 
 
71.1
 
 
(8.30)

 
Collateralized
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
debt obligations
 
63.5
 
 
—

 
 
0.8

 
 
(30.70)

 
 
—

 
 
—

 
 
33.6
 
 
—

 
Other debt
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
obligations
 
7.5
 
 
—

 
 
0.5

 
 
100.1

 
 
—

 
 
(16.60)

 
 
91.5
 
 
—

Total fixed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
271.6
 
 
(9.70)

 
 
10.3

 
 
79.3

 
 
51.1

 
 
(53.20)

 
 
349.4
 
 
(9.70)

Fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
trading
 
135.5
 
 
0.5

 
 
—

 
 
(43.10)

 
 
—

 
 
—

 
 
92.9
 
 
0.1

Equity securities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
4.1
 
 
(1.30)

 
 
(0.10)

 
 
—

 
 
—

 
 
—

 
 
2.7
 
 
(1.40)

Other investments
 
35.1
 
 
1.5

 
 
—

 
 
0.3

 
 
—

 
 
—

 
 
36.9
 
 
1.5

Separate account
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
assets (2)
 
6,891.5
 
 
748.2

 
 
—

 
 
(417.90)

 
 
5.3

 
 
(0.80)

 
 
7,226.3
 
 
669.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment contracts
 
(151.10)
 
 
14.6

 
 
—

 
 
5.7

 
 
—

 
 
—

 
 
(130.80)
 
 
7.8

Other liabilities
 
(68.10)
 
 
(9.20)

 
 
—

 
 
17.4

 
 
—

 
 
—

 
 
(59.90)
 
 
(7.50)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net derivative assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(liabilities)
 
(3.80)
 
 
13.8

 
 
0.5

 
 
1.3

 
 
—

 
 
—

 
 
11.8
 
 
10.9


(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 securities with an investment objective to realize economic value through mark-to-market changes 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:




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
 
 
For the year ended December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Net purchases,
 
 
 
 
 
 
 
 
 
 
 
 
 
sales, issuances
 
 
 
 
 
Purchases
 
Sales
 
Issuances
 
Settlements
 
and settlements
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S. governments
$
—

 
$
—

 
$
—

 
$
(1.40)

 
$
(1.40)
 
Corporate
 
2.3

 
 
(6.30)

 
 
—

 
 
(18.00)

 
 
(22.00)
 
Commercial mortgage-backed securities
 
—

 
 
—

 
 
—

 
 
0.1

 
 
0.1
 
Collateralized debt obligations
 
91.7

 
 
—

 
 
—

 
 
(27.30)

 
 
64.4
 
Other debt obligations
 
152.0

 
 
—

 
 
—

 
 
(4.60)

 
 
147.4
Total fixed maturities, available-for-sale
 
246.0

 
 
(6.30)

 
 
—

 
 
(51.20)

 
 
188.5
Fixed maturities, trading
 
3.7

 
 
—

 
 
—

 
 
—

 
 
3.7
Equity securities
 
—

 
 
(15.60)

 
 
—

 
 
—

 
 
(15.60)
Other investments
 
9.0

 
 
—

 
 
—

 
 
—

 
 
9.0
Separate account assets (4)
 
627.1

 
 
(519.40)

 
 
(206.50)

 
 
205.6

 
 
106.8
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment contracts
 
—

 
 
—

 
 
2.8

 
 
3.6

 
 
6.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net derivative assets (liabilities)
 
1.8

 
 
0.7

 
 
—

 
 
—

 
 
2.5

 
 
 
 
 
For the year ended December 31, 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Net purchases,
 
 
 
 
 
 
 
 
 
 
 
 
 
sales, issuances
 
 
 
 
 
Purchases
 
Sales
 
Issuances
 
Settlements
 
and settlements
 
 
 
 
 
(in millions)
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Non-U.S. governments
$
—

 
$
—

 
$
—

 
$
(1.40)

 
$
(1.40)
 
Corporate
 
20.9

 
 
(1.60)

 
 
—

 
 
(52.10)

 
 
(32.80)
 
Commercial mortgage-backed securities
 
—

 
 
—

 
 
—

 
 
(0.70)

 
 
(0.70)
 
Collateralized debt obligations
 
22.9

 
 
—

 
 
—

 
 
(15.60)

 
 
7.3
 
Other debt obligations
 
—

 
 
—

 
 
—

 
 
(0.80)

 
 
(0.80)
Total fixed maturities, available-for-sale
 
43.8

 
 
(1.60)

 
 
—

 
 
(70.60)

 
 
(28.40)
Fixed maturities, trading
 
—

 
 
—

 
 
—

 
 
(92.40)

 
 
(92.40)
Equity securities, trading
 
—

 
 
—

 
 
—

 
 
(0.70)

 
 
(0.70)
Other investments
 
2.4

 
 
(36.70)

 
 
—

 
 
—

 
 
(34.30)
Separate account assets (4)
 
302.2

 
 
(580.60)

 
 
(284.60)

 
 
69.8

 
 
(493.20)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment contracts
 
—

 
 
—

 
 
—

 
 
4.4

 
 
4.4
Other liabilities
 
—

 
 
—

 
 
—

 
 
60.0

 
 
60.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net derivative assets (liabilities)
 
0.8

 
 
(0.50)

 
 
—

 
 
—

 
 
0.3




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
 
 
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
$
—

 
$
—

 
$
—

 
$
(1.40)

 
$
(1.40)
 
Corporate
 
4.3

 
 
—

 
 
—

 
 
(25.70)

 
 
(21.40)
 
Commercial mortgage-backed securities
 
35.7

 
 
—

 
 
—

 
 
(3.00)

 
 
32.7
 
Collateralized debt obligations
 
—

 
 
—

 
 
—

 
 
(30.70)

 
 
(30.70)
 
Other debt obligations
 
105.0

 
 
(2.30)

 
 
—

 
 
(2.60)

 
 
100.1
Total fixed maturities, available-for-sale
 
145.0

 
 
(2.30)

 
 
—

 
 
(63.40)

 
 
79.3
Fixed maturities, trading
 
—

 
 
(18.00)

 
 
—

 
 
(25.10)

 
 
(43.10)
Other investments
 
0.7

 
 
(0.40)

 
 
—

 
 
—

 
 
0.3
Separate account assets (4)
 
453.3

 
 
(615.20)

 
 
(345.40)

 
 
89.4

 
 
(417.90)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment contracts
 
—

 
 
—

 
 
1.7

 
 
4.0

 
 
5.7
Other liabilities
 
—

 
 
17.4

 
 
—

 
 
—

 
 
17.4
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Derivatives
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net derivative assets (liabilities)
 
0.5

 
 
0.8

 
 
—

 
 
—

 
 
1.3

(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, 2018
 
 
 
 
 
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
$
—

 
$
—

 
$
—

 
$
—

 
$
—

 
$
20.0
 
Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
—

 
 
—

 
 
—

 
 
3.6

 
 
—

 
 
1.5
 
Collateralized debt obligations
 
—

 
 
—

 
 
—

 
 
54.7

 
 
—

 
 
235.1
 
Other debt obligations
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
91.0
Total fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
—

 
 
—

 
 
—

 
 
58.3

 
 
—

 
 
347.6
Fixed maturities, trading
 
—

 
 
—

 
 
—

 
 
—

 
 
—

 
 
3.7
Separate account assets
 
287.5

 
 
—

 
 
0.8

 
 
2.3

 
 
0.2

 
 
40.9




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
 
 
For the year ended December 31, 2017
 
 
 
 
 
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
$
—

 
$
—

 
$
—

 
$
22.2
 
$
—

 
$
37.3

 
Commercial mortgage-backed
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
securities
 
—

 
 
—

 
 
—

 
 
26.3
 
 
—

 
 
84.5

 
Collateralized debt obligations
 
—

 
 
—

 
 
—

 
 
183.7
 
 
—

 
 
101.3

 
Other debt obligations
 
—

 
 
—

 
 
—

 
 
0.1
 
 
—

 
 
88.3

Total fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
 
—

 
 
—

 
 
—

 
 
232.3
 
 
—

 
 
311.4

Equity securities, trading
 
—

 
 
—

 
 
—

 
 
0.7
 
 
—

 
 
—

Separate account assets
 
12.5

 
 
—

 
 
5.9

 
 
3.1
 
 
—

 
 
38.7


 
 
 
 
 
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

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

Separate account assets transferred from Level 1 to Level 2 during 2018, primarily included cash equivalents as a result of additional analysis to clarify the source of the price. Separate account assets transferred between Level 1 and Level 2 during 2017 and 2016, 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.

Assets transferred into Level 3 during 2018, 2017 and 2016, 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 2018, 2017 and 2016, 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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
 
 
December 31, 2018
 
 
 
 
 
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
$
4.6
 
Discounted cash
  flow
 
Discount rate (1)
 
3.2
%
 
3.2
%
 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
50 basis points ("bps")

 
50bps

 
 
 
 
 
 
 
 
 
 
Comparability
  adjustment
 

(25)bps

 

(25)bps

 
Corporate
 
25.4
 
Discounted cash
  flow
 
Discount rate (1)
 
3.3%-4.5%

 
3.9
%
 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
0bps-60bps

 
36bps

 
Other debt obligations
 
1.7
 
Discounted cash
  flow
 
Discount rate (1)
 
5.0
%
 
5.0
%
 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
500bps

 
500bps

Separate account assets
 
8,440.8
 
Discounted cash
  flow - mortgage
  loans
 
Discount rate (1)
 
3.3%-4.7%

 
4.2
%
 
 
 
 
 
 
 
Illiquidity premium
 
0bps-60bps

 
56bps

 
 
 
 
 
 
 
Credit spread rate
 
85bps-172bps

 
168bps

 
 
 
 
 
Discounted cash
  flow - real estate
 
Discount rate (1)
 
5.6%-11.5%

 
6.7
%
 
 
 
 
 
 
 
Terminal
  capitalization rate
 

4.3%-9.3%

 

5.8%

 
 
 
 
 
 
 
Average market rent
  growth rate
 

2.0%-4.7%

 

2.9%

 
 
 
 
 
 
 
 
Discounted cash
  flow - real estate
  debt
 
Loan to value
 
11.0%-69.3%

 
45.9
%
 
 
 
 
 
 
 
 
 
 
Market interest rate
 
3.9%-6.0%

 
4.3
%
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
Investment contracts (5)
 
(5.30)
 
Discounted cash
  flow
 
Long duration
  interest rate
 

2.8% (2)

 
 
 
 
 
 
 
 
 
Long-term equity
  market volatility
 

16.7%-27.8%

 
 
 
 
 
 
 
 
 
Non-performance risk
 
0.6%-1.6%

 
 
 
 
 
 
 
 
 
Utilization rate
 
See note (3)

 
 
 
 
 
 
 
 
 
Lapse rate
 
1.3%-9.3%

 
 
 
 
 
 
 
 
 
Mortality rate
 
See note (4)

 
 




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


 
 
 
 
 
December 31, 2017
 
 
 
 
 
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
$
6.1
 
Discounted cash
  flow
 
Discount rate (1)
 
2.7
%
 
2.7
%
 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
50bps

 
50bps

 
 
 
 
 
 
 
 
 
 
Comparability
  adjustment
 

(25)bps

 

(25)bps

 
Corporate
 
51.0
 
Discounted cash
  flow
 
Discount rate (1)
 
1.9%-7.5%

 
4.6
%
 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
0bps-60bps

 
21bps

 
Commercial mortgage-backed
  securities
 
0.5
 
Discounted cash
  flow
 
Discount rate (1)
 
6.0
%
 
6.0
%
 
 
 
 
 
 
 
 
 
 
Probability of default
 
85.0
%
 
85.0
%
 
 
 
 
 
 
 
Potential loss
  severity
 

32.0%

 

32.0%

 
Other debt obligations
 
2.3
 
Discounted cash
  flow
 
Discount rate (1)
 
5.0
%
 
5.0
%
 
 
 
 
 
 
 
 
 
 
Illiquidity premium
 
500bps

 
500bps

Separate account assets
 
7,484.6
 
Discounted cash
  flow - mortgage
  loans
 
Discount rate (1)
 
2.3%-8.0%

 
4.8
%
 
 
 
 
 
 
 
Illiquidity premium
 
0bps-60bps

 
17bps

 
 
 
 
 
 
 
Credit spread rate
 
62bps-690bps

 
293bps

 
 
 
 
 
Discounted cash
  flow - real estate
 
Discount rate (1)
 
5.8%-17.2%

 
6.9
%
 
 
 
 
 
 
 
Terminal
  capitalization rate
 

4.3%-9.3%

 

6.1%

 
 
 
 
 
 
 
Average market rent
  growth rate
 

0.5%-4.7%

 

2.9%

 
 
 
 
 
 
 
 
Discounted cash
  flow - real estate
  debt
 
Loan to value
 
12.1%-71.4%

 
45.8
%
 
 
 
 
 
 
 
 
 
 
Market interest rate
 
3.1%-4.5%

 
3.8
%
 
 
 
 
 
 
 
 
 
 
 
Liabilities
 
 
 
 
 
 
 
 
 
 
Investment contracts (5)
 
(119.60)
 
Discounted cash
  flow
 
Long duration
  interest rate
 

2.5% (2)

 
 
 
 
 
 
 
 
 
Long-term equity
  market volatility
 

18.7%-41.1%

 
 
 
 
 
 
 
 
 
Non-performance risk
 
0.2%-1.2%

 
 
 
 
 
 
 
 
 
Utilization rate
 
See note (3)

 
 
 
 
 
 
 
 
 
Lapse rate
 
1.3%-9.3%

 
 
 
 
 
 
 
 
 
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 illiquidity or other adjustments, where applicable.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


(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.
(5)
Includes bifurcated embedded derivatives that are reported at net asset (liability) fair value within the same line item in the consolidated statements of financial position in which the host contract is reported.

Market comparable discount rates are used as the base rate in the discounted cash flows used to determine the fair value of certain assets. Increases or decreases in the credit spreads on the comparable assets could cause the fair value of the assets to significantly decrease or increase, respectively. Additionally, we may adjust the base discount rate or the modeled price by applying an illiquidity premium given the highly structured nature of certain assets. Increases or decreases in this illiquidity premium could cause significant decreases or increases, respectively, in the fair value of the asset.

Embedded derivatives within our investment contracts liability can be in either an asset or liability position, 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

No significant assets and liabilities were measured at fair value on a nonrecurring basis for the years ended December 31, 2018, 2017 and 2016.

Fair Value Option

We elected fair value accounting for:
•
Certain commercial mortgage loans of consolidated VIEs for which it was not practicable for us to determine the carrying value. In addition, we had certain obligations of consolidated VIEs held by a synthetic entity for which it was not practicable for us to determine the carrying value. The synthetic entity matured in the first quarter of 2017.
•
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.
•
In 2017, we had certain investment funds for which we did 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 did not elect the fair value option for other similar investments as these investments are generally accounted for under the equity method of accounting.




Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


The following tables present information regarding the assets and liabilities for which the fair value option was elected.

 
 
December 31, 2018
 
December 31, 2017
 
 
(in millions)
Commercial mortgage loans of consolidated VIEs (1) (2)
 
 
 
 
 
 
Fair value
$
6.4

 
$
9.3
 
Aggregate contractual principal
 
6.5

 
 
9.2
 
 
 
 
 
 
 
Real estate ventures (1)
 
 
 
 
 
 
Fair value
 
17.2

 
 
6.5
 
 
 
 
 
 
 
Investment funds (1)
 
 
 
 
 
 
Fair value
 
—

 
 
45.2

(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.

 
 
 
For the year ended December 31,
 
 
 
2018
 
2017
 
2016
 
 
 
 
Commercial mortgage loans of consolidated VIEs
 
 
 
 
 
 
 
 
 
Change in fair value pre-tax loss (1) (2)
$
(0.20)

 
$
(0.40)
 
$
(0.10)
 
Interest income (3)
 
0.7

 
 
0.9
 
 
1.2
 
 
 
 
 
 
 
 
 
 
 
Obligations of consolidated VIEs
 
 
 
 
 
 
 
 
 
Change in fair value pre-tax loss - instrument-specific credit risk (2) (4)
 
—

 
 
(0.10)
 
 
(9.80)
 
Change in fair value pre-tax loss (2)
 
—

 
 
(0.10)
 
 
(9.80)
 
Interest expense (5)
 
—

 
 
0.3
 
 
1.1
 
 
 
 
 
 
 
 
 
 
 
Real estate ventures
 
 
 
 
 
 
 
 
 
Change in fair value pre-tax gain (6)
 
1.7

 
 
3.8
 
 
1.5
 
 
 
 
 
 
 
 
 
 
 
Investment funds
 
 
 
 
 
 
 
 
 
Change in fair value pre-tax gain (6) (7)
 
—

 
 
1.7
 
 
2.8
 
Dividend income (6)
 
—

 
 
1.9
 
 
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.






Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, 2018
 
 
 
 
 
 
Fair value hierarchy level
 
 
Carrying amount
 
Fair value
 
Level 1
 
Level 2
 
Level 3
 
 
(in millions)
Assets (liabilities)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage loans
 
$
14,662.2
 
$
14,708.8
 
$
—

 
$
—

 
$
14,708.8

Policy loans
 
 
755.9
 
 
916.3
 
 
—

 
 
—

 
 
916.3

Other investments
 
 
240.9
 
 
233.3
 
 
—

 
 
151.0

 
 
82.3

Cash and cash equivalents
 
 
860.5
 
 
860.5
 
 
860.5

 
 
—

 
 
—

Investment contracts
 
 
(31,867.10)
 
 
(30,739.20)
 
 
—

 
 
(4,085.70)

 
 
(26,653.50)

Long-term debt
 
 
(129.10)
 
 
(127.80)
 
 
—

 
 
—

 
 
(127.80)

Separate account liabilities
 
 
(95,341.60)
 
 
(94,488.70)
 
 
—

 
 
—

 
 
(94,488.70)

Bank deposits (1)
 
 
(500.00)
 
 
(489.10)
 
 
—

 
 
(489.10)

 
 
—

Cash collateral payable
 
 
(70.10)
 
 
(70.10)
 
 
(70.10)

 
 
—

 
 
—


 
 
December 31, 2017
 
 
 
 
 
 
Fair value hierarchy level
 
 
Carrying amount
 
Fair value
 
Level 1
 
Level 2
 
Level 3
 
 
(in millions)
Assets (liabilities)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Mortgage loans
 
$
13,452.1
 
$
13,744.8
 
$
—

 
$
—

 
$
13,744.8

Policy loans
 
 
765.7
 
 
952.4
 
 
—

 
 
—

 
 
952.4

Other investments
 
 
218.4
 
 
215.6
 
 
—

 
 
141.0

 
 
74.6

Cash and cash equivalents
 
 
549.2
 
 
549.2
 
 
549.2

 
 
—

 
 
—

Investment contracts
 
 
(30,223.70)
 
 
(29,700.20)
 
 
—

 
 
(4,736.00)

 
 
(24,964.20)

Long-term debt
 
 
(50.50)
 
 
(49.00)
 
 
—

 
 
—

 
 
(49.00)

Separate account liabilities
 
 
(104,011.70)
 
 
(103,049.70)
 
 
—

 
 
—

 
 
(103,049.70)

Bank deposits (1)
 
 
(2,336.40)
 
 
(2,328.90)
 
 
(1,780.30)

 
 
(548.60)

 
 
—

Cash collateral payable
 
 
(106.60)
 
 
(106.60)
 
 
(106.60)

 
 
—

 
 
—


(1)
Deposit liabilities without defined or contractual maturities are no longer in scope of these disclosures upon adoption of authoritative guidance effective January 1, 2018.

17. 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, 2018 and 2017, use of prescribed statutory accounting practices resulted in higher statutory surplus of $546.3 million and $275.6 million, respectively, relative to the accounting practices and procedures of the NAIC due to its accounting for reserve credits associated with a reinsurance transaction with an affiliated reinsurer. In addition, as of December 31, 2018 and 2017, our permitted statutory accounting practice relating to variable annuities with a guaranteed living benefit rider resulted in lower statutory surplus of $69.9 million and $123.9 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



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


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, 2018 and 2017, our affiliated reinsurance subsidiaries assumed statutory reserves of $6,850.3 million and $5,977.3 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, 2018 and 2017, assets admitted under these practices totaled $2,852.0 million and $2,417.7 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, 2018, 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,
 
2018
 
2017
 
2016
 
(in millions)
Statutory net income
$
1,017.6
 
$
1,976.7
 
$
996.7
Statutory capital and surplus
 
5,319.6
 
 
4,946.8
 
 
4,643.8

18. Revenues from Contracts with Customers

Administrative Service Fee Revenue

We offer service and trust agreements for defined contribution plans, including 401(k) plans, 403(b) plans, and employee stock ownership plans. The investment components of these service agreements are in the form of mutual fund offerings. In addition, plan sponsor trust services are also available through an affiliated trust company.
 
•
Fees and other revenues are earned for administrative activities performed for the defined contribution plans including recordkeeping and reporting as well as trust, asset management and investment services. The majority of these activities are performed daily over time. Fee-for-service transactions are also provided upon client request. These services are considered distinct or grouped into a bundle until a distinct performance obligation is identified. Some performance obligations are considered a series of distinct services, which are substantially the same and have the same pattern of transfer to the customer.

•
Fees and other revenues can be based on a fixed contractual rate for these services or can be variable based upon contractual rates applied to the market value of the client's investment portfolio each day. If the consideration for this series of performance obligations is based on daily market value, it is considered variable each day as the services are performed over time. The consideration becomes unconstrained and thus recognized as revenue for each day’s series of distinct services once the market value of the clients’ investment portfolios is determined at market close or carried over at the end of the day for days when the market is closed. Additionally, fixed fees and other revenues are recognized point-in-time as fee-for-service transactions upon completion.

We offer administrative services performed for our fee-for-service products, nonqualified benefit plans, separate accounts and dental networks.

•
Fees and other revenues are earned for administrative services performed, which include recordkeeping and reporting services. Services within contracts are not distinct on their own; however, we combine the services into a distinct bundle and account for the bundle as a single performance obligation, which is satisfied over time utilizing the output method as services are rendered. The transaction price corresponds with the performance completed to date, for which the value is recognized as revenue during the period. Variability of consideration is resolved at the end of each period and payments are due when billed.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



Deposit Account Fee Revenue

We offer individual retirement accounts (“IRAs”) through our subsidiary, Principal Bank, which are primarily funded by retirement savings rolled over from qualified retirement plans. The IRAs are held in savings accounts, money market accounts and certificates of deposit. Revenues are earned through fees as the performance of establishing and maintaining IRA accounts is completed. Fee-for-service transactions are also provided upon client request. The establishment fees and annual maintenance fees are accrued into earnings over a period of time using the average account life. Upfront and recurring bank fees are related to performance obligations that have the same pattern of transfer to the customer and are recognized in income over time with control transferred to the customers utilizing the output method. These fees are based on a fixed contractual rate. Fixed fees and other revenues are also recognized point-in-time as fee-for-service transactions upon completion.

Commission Income

Commission income is earned through sponsored brokerage services. Performance obligations are satisfied at a point in time, upon delivery of a placed case, and the transaction price calculated per the compensation schedule is recognized as revenue.

Disaggregation of Revenues from Contracts with Customers

The following table summarizes the disaggregation of revenues from contracts with customers and reconciles totals to those reported in the consolidated financial statements. Revenues from contracts with customers are included in fees and other revenues on the consolidated statements of operations.

 
 
 
 
For the year ended December 31,
 
 
 
 
2018
 
2017
 
2016
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
Administrative service fee revenue
$
284.1
 
$
288.0
 
$
278.0
 
Deposit account fee revenue
 
10.5
 
 
10.2
 
 
8.8
 
Commission income
 
19.6
 
 
14.9
 
 
17.1
 
Other fee revenue
 
2.3
 
 
2.1
 
 
10.5
 
 
Total revenues from contracts with customers
 
316.5
 
 
315.2
 
 
314.4
 
Fees and other revenues not within the scope of revenue
 
 
 
 
 
 
 
 
 
 
recognition guidance (1)
 
1,905.7
 
 
1,866.9
 
 
1,686.1
 
Total fees and other revenues per consolidated statements of
 
 
 
 
 
 
 
 
 
 
operations
 
$
2,222.2
 
$
2,182.1
 
$
2,000.5

(1)
Fees and other revenues not within the scope of the revenue recognition guidance primarily represent revenue on contracts accounted for under the financial instruments or insurance contracts standards.

Contract Costs

Sales compensation and other incremental costs of obtaining a contract are capitalized and amortized over the period of contract benefit if the costs are expected to be recovered. The contract cost asset, which is included in other assets on the consolidated statements of financial position, was $42.5 million as of December 31, 2018.
We apply the practical expedient for certain costs where we recognize the incremental costs of obtaining these contracts as an expense when incurred if the amortization period of the assets is one year or less. These costs, along with costs that are not deferrable, are included in operating expenses on the consolidated statements of operations.
 
Deferred contract costs consist primarily of commissions and variable compensation. We amortize capitalized contract costs on a straight-line basis over the expected contract life, reflecting lapses as they are incurred. Deferred contract costs on contracts are subject to impairment testing on an annual basis, or when a triggering event occurs that could warrant



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018


an impairment. To the extent future revenues less future maintenance expenses are not adequate to cover the asset balance, an impairment is recognized. For the year ended December 31, 2018, $8.4 million of amortization expense was recorded in operating expenses on the consolidated statements of operations and no impairment loss was recognized in relation to the costs capitalized.

19. Stock‑Based Compensation Plans

As of December 31, 2018, our ultimate parent, PFG, sponsored the 2014 Stock Incentive Plan, the Employee Stock Purchase Plan, the Amended and Restated 2010 Stock Incentive Plan and the Stock Incentive Plan ("Stock-Based Compensation Plans"), which resulted in expense to us. 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 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 from continuing operations for stock-based awards granted under the Stock-Based Compensation Plans was as follows:

 
 
For the year ended December 31,
 
 
2018
 
2017
 
2016
 
 
(in millions)
Compensation cost
$
26.4
 
$
28.4
 
$
28.4
Related income tax benefit
 
5.2
 
 
9.8
 
 
8.3
Capitalized as part of an asset
 
1.9
 
 
2.5
 
 
2.8

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
 
2018
 
2017
 
2016
Expected volatility
 
 
26.0
%
 
 
27.6
%
 
 
31.7
%
Expected term (in years)
 
 
7.0
 
 
 
7.0
 
 
 
6.5
 
Risk-free interest rate
 
 
2.8
%
 
 
2.2
%
 
 
1.5
%
Expected dividend yield
 
 
3.19
%
 
 
2.87
%
 
 
4.07
%
Weighted average estimated fair value
 
$
14.85
 
 
$
15.31
 
 
$
8.91
 


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.



Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2018



As of December 31, 2018, we had $1.3 million of total unrecognized compensation cost related to nonvested stock options. The cost is expected to be recognized over a weighted‑average service period of approximately 1.8 years.

Performance Share Awards

Performance share awards were granted to certain employees under the 2014 Stock Incentive Plan and the Amended and Restated 2010 Stock Incentive Plan. The performance share awards are treated as an equity award and are paid in shares. Whether the performance shares are earned depends upon the participant's continued employment through the performance period (except in the case of specific types of terminations) and PFG’s performance against three-year goals set at the beginning of the performance period. Performance goals based on various PFG factors 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 2018, 2017 and 2016 was $63.98, $62.78 and $37.38, respectively.

As of December 31, 2018, we had $1.8 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 1.6 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 2018, 2017 and 2016 was $63.77, $62.80 and $37.45, respectively.

As of December 31, 2018, we had $17.4 million of total unrecognized compensation cost related to nonvested restricted stock unit awards granted under these plans. The cost is expected to be recognized over a weighted‑average period of approximately 1.7 years.

Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, participating employees had the opportunity to purchase shares of PFG common stock on a semi-annual basis through 2017. Beginning in 2018, participating employees had the opportunity to purchase shares of our common stock on a quarterly 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 $9.27, $14.72 and $14.00 during 2018, 2017 and 2016, respectively.


 


PART C
OTHER INFORMATION
Item 24.    Financial Statements and Exhibits
(a)
Financial Statements included in the Registration Statement
(1)
Part A:
Condensed Financial Information for the 10 years ended December 31, 2018
(2)
Part B:
Principal Life Insurance Company Separate Account B:
Report of Independent Registered Public Accounting Firm
Statements of Assets and Liabilities, December 31, 2018
Statements of Operations for the year ended December 31, 2018
Statements of Changes in Net Assets for the years ended December 31, 2018 and 2017
Notes to Financial Statements
Principal Life Insurance Company:
Report of Independent Registered Public Accounting Firm
Consolidated Statements of Financial Position at December 31, 2018 and 2017
Consolidated Statements of Operations for the years ended December 31, 2018, 2017 and 2016
Consolidated Statements of Stockholder's Equity for the years ended December 31, 2018, 2017 and 2016
Consolidated Statements of Cash Flows for the years ended December 31, 2018, 2017 and 2016
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, 2018 *
Schedule III - Supplementary Insurance Information as of December 31, 2018, 2017 and 2016 and for each of the years then ended *
Schedule IV - Reinsurance as of December 31, 2018, 2017 and 2016 and for each of the years then ended *
(b)
Exhibits
 
 
 
 
(1)
Resolution of Board of Directors of the Depositor (filed with the Commission for 333-116220 on 06/07/2004 Accession No. 0000870786-04-000093)
 
(3a)
Distribution Agreement dated 08/04/2015 (filed with the commission on 08/06/2015 Accession No. 0000009713-15-000107 )
 
(3b)
Selling Agreement (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4a)
Form of Variable Annuity Contract (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4b)
Premium Payment Credit Rider (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4c)
Fixed Account Endorsement (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4d)
Fixed DCA Account Endorsement (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4e)
GMWB Rider (PIB3) (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4f)
GMWB Rider (PIB10) (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4g)
IRA Rider (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4h)
Roth IRA Rider (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4i)
Simple IRA Rider (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4j)
Pension Trust Rider (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4k)
Waiver of Surrender Charge Rider (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4l)
Contract Data Page (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(4m)
Partial Annuitization Endorsement (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(5)
Form of Variable Annuity Application (filed with the Commission for 333-116220 on 05/02/2013 Accession No. 0000812797-13-000071)




 
(6a)
Articles of Incorporation of the Depositor (filed with the Commission for 333-116220 on 06/07/2004 Accession No. 0000870786-04-000093)
 
(6b)
Bylaws of Depositor (filed with the Commission for 333-116220 on 06/07/2004 Accession No. 0000870786-04-000093)
 
(8a1)
Participation Agreement with AIM Variable Insurance Funds, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8a2)
AIM Variable Insurance Funds Amendment to Participation Agreement dated 04/30/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8a3)
AIM Variable Insurance Funds Tenth Amendment to Participation Agreement dated 04/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8a4)
AIM Variable Insurance Funds Eleventh Amendment & Joinder to Participation Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8a5)
AIM Advisors, Inc. First Amendment to the Administrative Services Agreement dated 04/30/2004 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8a6)
AIM Advisors, Inc. Second Amendment & Joinder to the Administrative Services Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8a7)
Distribution Agreement with AIM Variable Insurance Funds, (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8a8)
Rule 22c-2 Agreement with AIM Variable Insurance Funds, (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8a9)
AIM Investment Services, Inc. First Amendment & Joinder to the Rule 22c-2 Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8a10)
AIM Advisors, Inc. Administrative Services Agreement Second Amendment & Joinder dated 11/01/2011 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(8b1)
Participation Agreement with AllianceBernstein Variable Products Series Fund, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8b2)
AllianceBernstein Investment, Inc. Participation Agreement Amendment No. 1 dated 01/01/2008 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8b3)
AllianceBernstein Investment, Inc. Participation Agreement Amendment No. 2 dated 05/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8b4)
AllianceBernstein Investment Research and Management, Inc. Master Administrative Services Agreement Letter dated 12/15/2004 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8b5)
Rule 22c-2 Agreement with AllianceBernstein Variable Products Series Fund, (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8c1)
Shareholder Services Agreement with American Century Investment Management Inc., as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8c2)
American Century Investment Services, Inc. Amendment No. 5 to Shareholder Services Agreement dated 06/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8c3)
American Century Investment Services, Inc. Amendment No. 6 and Joinder to Shareholder Service Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8c4)
American Century Investment Services, Inc. Amendment No. 7 to Shareholder Services Agreement dated 03/20/2014 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8c5)
Rule 22c-2 Agreement with American Century Investment Management Inc., (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8c6)
American Century Investment Services, Inc. Amendment No. 1 to Rule 22c-2 Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8d1)
American Funds Distributors, Inc. Participation and Service Agreement dated 05/01/2014 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(8d2)
American Funds Distributors, Inc. Business Agreement dated 05/01/2014 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(8d3)
American Funds Service Company Rule 22c-2 Agreement dated 05/19/2014 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(8d4)
American Funds Form of First Amendment To Fund Participation and Service Agreement (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000045)




 
(8e1)
BlackRock Variable Series Funds, Inc. Participation Agreement dated 05/19/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8e2)
BlackRock Advisors, LLC Administrative Services Agreement dated 05/19/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8e3)
BlackRock Variable Series Funds, Inc. Distribution Sub-Agreement dated 05/19/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8f1)
Columbia Management Investment Distributors, Inc. Participation Agreement dated 04/28/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8f2)
Columbia Management Investment Distributors, Inc. Services Agreement dated 05/01/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8g1)
Delaware VIP Trust & Delaware Distribution, L. P. Participation Agreement dated 04/26/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8g2)
Delaware VIP Trust & Delaware Distribution, L. P. Participation Agreement Amendment No. 1 dated 12/30/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8g3)
Delaware VIP Trust & Delaware Distribution, L. P. Participation Agreement Amendment No. 2 dated 04/04/2014 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8g4)
Delaware VIP Trust & Delaware Distribution, L. P. Participation Agreement Amendment No. 3 dated 07/01/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8g5)
Delaware Distributions, L.P. Administrative Services Agreement dated 04/26/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8h1)
Participation Agreement with Dreyfus Investment Portfolios, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8h2)
Dreyfus Services Corporation Participation Agreement Amendment No. 2 dated 04/15/11 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8h3)
Dreyfus Services Corporation Participation Agreement Amendment No. 3 dated 04/25/12 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8h4)
Administrative Services Agreement with Dreyfus Investment Portfolios, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8h5)
Dreyfus Services Corporation Administrative Services Agreement Amendment No. 2 and Joinder dated 04/25/12 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8h6)
Rule 12b-1 Agreement with Dreyfus Investment Portfolios, as amended (filed with the Commission on May 1, 2008)
 
(8h7)
Dreyfus Service Corporation 12b-1 Letter Agreement for Service Class Shares dated 03/26/2002 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8h8)
Dreyfus Service Corporation 12b-1 Letter Agreement Amendment No. 2 and Joinder dated 04/25/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8h9)
Dreyfus Service Corporation 22c-2 Supplement Agreement dated 04/16/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8i1)
DWS Scudder Distributors, Inc. Participation Agreement dated 12/01/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8i2)
DWS Investments Distributors, Inc. Amendment No. 1 to Participation Agreement dated 01/05/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8i3)
DWS Investments Distributors, Inc. Amendment No. 2 to Participation Agreement dated 05/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8i4)
DWS Investments Distributors, Inc. Amendment No. 3 and Joinder to Participation Agreement dated 12/18/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8i5)
DWS Investments Distributors, Inc. Amendment No. 4 to Participation Agreement dated 04/10/2013 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8j1)
Amended & Restated Participation Agreement with Fidelity Insurance Products Fund (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8j2)
Distribution Agreement with Fidelity Variable Insurance Products Fund (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8j3)
Service Agreement dated 3/26/2002 with Fidelity Variable Insurance Products Fund (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8j4)
Rule 22c-2 Agreement with Fidelity Insurance Products Fund (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)




 
(8k1)
Franklin Templeton Distributors, Inc. Amended and Restated Participation Agreement dated 11/01/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k2)
Franklin Templeton Distributors, Inc. Amendment No. 1 to Amended and Restated Participation Agreement dated 09/10/2009 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k3)
Franklin Templeton Distributors, Inc. Amendment No. 2 to Amended and Restated Participation Agreement dated 08/16/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k4)
Franklin Templeton Distributors, Inc. Amended and Restated Participation Agreement Addendum dated 05/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k5)
Franklin Templeton Distributors, Inc. Amendment No. 3 to Amended and Restated Participation Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k6)
Franklin Templeton Distributors, Inc. Amendment No. 4 to Amended and Restated Participation Agreement dated 09/16/2013 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k7)
Franklin Templeton Distributors, Inc. Amendment No. 5 to Amended and Restated Participation Agreement dated 05/01/2014 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(8k8)
Franklin Templeton Services, LLC Administrative Services Agreement dated 12/14/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k9)
Franklin Templeton Services, LLC Amendment No. 1 to Administrative Services Agreement dated 09/10/2009 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k10)
Franklin Templeton Services, LLC Amendment No. 2 to Administrative Services Agreement dated 04/20/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k11)
Franklin Templeton Services, LLC Amendment No. 3 to Administrative Services Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k12)
Franklin Templeton Services, LLC Amendment No. 4 to Administrative Services Agreement dated 05/24/2013 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
 
(8k13)
Franklin Templeton Services, LLC Amendment 5 to Administrative Services Agreement dated May 1, 2014 (filed with the Commission on 04/28/2017 Accession No. 0000009713-17-000049)
 
(8k14)
Franklin Templeton Services, LLC Amendment 6 to Administrative Services Agreement dated August 30, 2016 (filed with the Commission on 04/28/2017 Accession No. 0000009713-17-000049)
 
(8k15)
Franklin Templeton Distributors, Inc. Rule 22c-2 Agreement dated 04/16/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8k16)
Franklin Templeton Amendment to Shareholder Information Agreement (22c-2) dated April 2015 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000045)
 
(8k17)
Franklin Templeton Amendment to Participation Agreement Addendum dated March 31, 2015 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000045)
 
(8l1)
Participation Agreement with Goldman Sachs Variable Insurance Trust, (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8l2)
Goldman Sachs Variable Insurance Trust Participation Agreement Amendment No. 1 dated 06/20/2008 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8l3)
Goldman Sachs Variable Insurance Trust Participation Agreement Amendment No. 2 dated 04/07/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8l4)
Goldman Sachs Variable Insurance Trust Participation Agreement Amendment No. 3 dated 10/26/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8l5)
Administrative Services Agreement with Goldman Sachs Variable Insurance Trust (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8l6)
Goldman Sachs & Co. Administrative Services Agreement Amendment No. 1 dated 06/20/2008 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8l7)
Goldman Sachs & Co. Administrative Services Agreement Amendment No. 2 dated 10/26/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8l8)
Rule 22c-2 Agreement with Goldman Sachs Variable Insurance Trust (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8l9)
Goldman Sachs & Co. Rule 22c-2 Agreement Amendment No. 1 dated 10/26/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8m1)
Guggenheim Variable Funds Trust and Rydex Variable Trust Participation Agreement dated 05/01/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8m2)
Guggenheim Funds Distributors, LLC Variable Product Services Agreement for the Rydex Variable Trust dated 05/01/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)




 
(8m3)
Guggenheim Funds Distributors, LLC Services Agreement dated 05/01/2015 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8m4)
Guggenheim Distributors, LLC FUND/SERV and Networking Agreement dated 10/28/2014 (filed with the commission on 10/22/2015 Accession No. 0000009713-15-000115)
 
(8n1)
MFS Fund Distributors, Inc. Amended and Restated Participation Agreement dated 05/01/2013 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8n2)
MFS Fund Distributors, Inc. Fund/Serv and Networking Agreement to Amended and Restated Participation Agreement dated 05/01/2013 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8n3)
MFS Fund Distributors, Inc. Amended & Restated Administrative Services Letter Agreement dated 04/01/2016 (filed with the Commission on 04/28/2017 Accession No. 0000009713-17-000049)
 
(8n4)
Website Regulatory Document Agreement with MFS Variable Insurance Trust dtd 03/06/08– (filed with the Commission for 333-116220 on 3/01/10 Accession No. 0000898745-10-000129)
 
(8n5)
Rule 22c-2 Shareholder Information Agreement with MFS Variable Insurance Trust dtd 03/06/07– (filed with the Commission for 333-116220 on 3/01/10 Accession No. 0000898745-10-000129)
 
(8n6)
MFS Fund Distributors, Inc. Amendment No. 1 to Rule 22c-2 Shareholder Information Agreement dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8o1)
Participation Agreement with Neuberger Berman Advisers Management Trust, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8o2)
Neuberger Berman Advisers Management Trust Fund Participation Agreement Amendment No. 4 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8o3)
Distribution & Administrative Services Agreement with Neuberger Berman Advisers Management Trust (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8o4)
Neuberger Berman Management LLC Distribution and Administrative Services Agreement Amendment No. 1 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8o5)
Rule 22c-2 Agreement with Neuberger Berman Advisers Management Trust (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8o6)
Neuberger Berman Advisers Management Trust Rule 22c-2 Agreement Amendment No. 1 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8p1)
Participation Agreement with PIMCO Variable Insurance Trust dtd 03/09/09– (filed with the Commission for 333-116220 as Ex-99.B (8k1) on 3/01/10 Accession No. 0000898745-10-000129)
 
(8p2)
PIMCO Participation Agreement Amendment and Novation dated 10/22/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8p3)
PIMCO Novation 1 dated 10/22/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8p4)
PIMCO Novation 2 dated 10/22/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8p5)
Administrative Services Agreement for Administrative Class Shares of PIMCO Variable Insurance Trust dtd 03/09/09 (filed with the Commission for 333-116220 as Ex-99.B (8k2) on 3/01/10 Accession No. 0000898745-10-000129)
 
(8p6)
Administrative Services Agreement for Administrative Class Shares of PIMCO Variable Insurance Trust amendment 1 dtd 04/22/09 (filed with the Commission for 333-116220 as Ex-99.B (8k3) on 3/01/10 Accession No. 0000898745-10-000129)
 
(8p7)
PIMCO Assignment and Amendment to Services Agreement dated 03/29/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8p8)
PIMCO Instrument of Accession and Amendment dated 08/29/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q1)
Principal Variable Contracts Funds, Inc. Participation Agreement dated 01/05/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q2)
Principal Variable Contracts Funds, Inc. Participation Agreement Amendment No. 1 dated 06/01/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q3)
Principal Variable Contracts Funds, Inc. Participation Agreement Amendment No. 2 dated 01/01/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q4)
Principal Variable Contracts Funds, Inc. Participation Agreement Amendment No. 3 (letter) dated 06/17/2010 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)




 
(8q5)
Principal Variable Contracts Funds, Inc. Participation Agreement Amendment No. 4 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q6)
Principal Variable Contracts Fund, Inc. Participation Agreement Amendment No. 5 dated 02/09/2015 (filed with the Commission on 04/29/2015 Accession No. 0000009713-15-000045)
 
(8q7)
Principal Variable Contracts Fund, Inc. Participation Agreement Amendment No. 6 dated 08/10/2016 (filed with the Commission on 04/28/2017 Accession No. 0000009713-17-000049)
 
(8q8)
Principal Variable Contracts Funds, Inc. 12b-1 Letter dated 12/30/2009 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q9)
Principal Variable Contracts Funds, Inc. 12b-1 Letter Amendment No. 1 dated 11/09/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q10)
Principal Variable Contracts Funds, Inc. Rule 22c-2 dated 04/16/2007 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8q11)
Principal Variable Contracts Funds, Inc. Rule 22c-2 Agreement Amendment No. 1 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8r1)
Rydex Participation Agreement (see 8m1 through 8m4 above)
 
(8s1)
Participation Agreement with T Rowe Equity Series Inc, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8s2)
Administrative Services Agreement with T. Rowe Equity Series Inc, as amended (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-06515)
 
(8s3)
T. Rowe Price Administrative Services Agreement Letter Amendment No. 2 dated 03/16/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8s4)
Rule 12b-1 Agreement with T Rowe Equity Series Inc (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8s5)
Rule 22c-2 Agreement with T Rowe Equity Series Inc (filed with the Commission for 333-116220 on 05/01/2008 0000950137-08-006515)
 
(8t1)
Participation Agreement with Van Eck Worldwide Insurance Trust dtd 11/28/07 (filed with the Commission for 333-116220 on 3/01/10 Accession No. 0000898745-10-000129)
 
(8t2)
Van Eck Worldwide Insurance Trust Participation Agreement Amendment No. 1 dated 04/24/2009 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t3)
Van Eck VIP Trust Participation Agreement Amendment No. 2 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t4)
Service Agreement with Van Eck Worldwide Insurance Trust dtd 11/28/07 (filed with the Commission for 333-116220 on 3/01/10 Accession No. 0000898745-10-000129)
 
(8t5)
Van Eck Securities Corporation Service Agreement Amendment No. 1 dated 04/24/2009 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t6)
Van Eck Securities Corporation Service Agreement Amendment No. 2 dated 05/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t7)
Van Eck Securities Corporation Service Agreement Amendment No. 2 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t8)
Van Eck Securities Corporation Service Agreement Amendment No.4 dated 05/01/2012 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t9)
Rule 22c-2 Agreement with Van Eck Worldwide Insurance Trust dtd 11/28/07 (filed with the Commission for 333-116220 on 3/01/10 Accession No. 0000898745-10-000129)
 
(8t10)
Van Eck Securities Corporation Shareholder Information Agreement (Rule 22c-2) Amendment No. 1 and Joinder dated 11/01/2011 (filed with the commission on 02/23/2015 Accession No. 0000009713-15-000007)
 
(8t11)
Van Eck Securities Corporation Service Agreement Amendment No. 5 dated 05/01/2018 *
 
(9)
Opinion of Counsel (filed with the commission on 07/25/2013 Accession No. 0000009713-13-000039)
 
(10a)
Consent of Ernst & Young LLP *
 
 
 
(10b)
Powers of Attorney (filed with the Commission on 04/27/2018 Accession No. 0000009713-18-000052)
 
(10c)
Consent of Counsel *
 
 
 
(11)
Financial Statement Schedules *
 
 
* Filed Herein
 
 
 
 
** To be filed by amendment
 
 
 
 




Item 25. Officers and Directors of the Depositor
Principal Life Insurance Company is managed by a Board of Directors which is elected by its policyowners. The directors and executive officers of the Company, their positions with the Company, including Board Committee memberships, and their principal business address, are as follows:
DIRECTORS:
Name and Principal Business Address
Positions and Offices
BETSY J. BERNARD
28556 Chianti Terrace
Bonita Springs, FL 34135
Director
Chair, Human Resources Committee
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
Member, Human Resources and Nominating and Governance Committees
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 Committee
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
BET Networks
1540 Broadway
New York, NY 10036
Director
Chair, Nominating and Governance Committee
Member, Human Resources Committee
DIANE C. NORDIN
140 Monument Street
Concord, MA 01742
Director
Member, Audit and Human Resources Committee
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
DAVID M. BLAKE(1)
Senior Executive Director - Fixed Income
PEDRO ESTEBAN BORDA TERUGGI(1)
Senior Vice President and Chief Operating Officer - Principal International
NICHOLAS M. CECERE(1)
Senior Vice President - USIS Distribution
JON N. COUTURE(1)
Senior Vice President and Chief Human Resources Officer
TIMOTHY M. DUNBAR(1)
President - Principal Global Asset Management
AMY C. FRIEDRICH(1)
President U.S. Insurance Solutions
GINA L. GRAHAM(1)
Vice President and Treasurer
PATRICK G. HALTER(1)
Chief Executive Officer and President - Principal Global Investors
ELIZABETH B. HAPPE(1)
Senior Vice President and Chief Compliance Officer
MARK S. LAGOMARCINO(1)
Senior Vice President and Deputy General Counsel
JULIA M. LAWLER(1)
Executive Vice President and Chief Risk Officer
GREGORY A. LINDE(1)
Senior Vice President Individual Life
BARBARA A. MCKENZIE(1)
Senior Executive Director - Investments
DENNIS J. MENKEN(1)
Senior Vice President and Chief Investment Officer - Principal Life Insurance Company
GERALD W. PATTERSON(1)
Senior Vice President Retirement and Income Solutions
SRINIVAS D. REDDY(1)
Senior Vice President - Retirement and Income Solutions
ANGELA R. SANDERS(1)
Senior Vice President and Controller
RENEE V. SCHAAF(1)
President - Retirement and Income Solutions
GARY P. SCHOLTEN(1)
Executive Vice President, Chief Information Officer and Chief Digital Officer
KAREN E. SHAFF(1)
Executive Vice President, General Counsel and Secretary
ELLEN W. SHUMWAY(1)
Senior Executive Director - Strategy and Investments
DEANNA D. STRABLE(1)
Executive Vice President and Chief Financial Officer
LUIS E. VALDES(1)
President - International Asset Management and Accumulation
LEANNE M. VALENTINE(1)
Senior Vice President and Deputy General Counsel
ROBERTO WALKER(2)
Senior Vice President and President, Principal Financial Group - Latin America
 
 
(1) 
711 High Street
 
Des Moines, IA 50392
 
 
(2) 
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, 2018 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, 2018)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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

 
 
 
-->PFG Do Brasil 2 Participacoes LTDA*#
Brazil
 
100

 
 
 
 
-->Ciclic Corretora de Seguros S.A.*#
 
Brazil
 
50.01

 
 
-->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
 
60

 
 
 
 
 
-->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 (EU) Limited*
 
 
Ireland
 
100

 
 
 
 
 
-->Principal Global Investors (Switzerland) GMBH*
 
 
Switzerland
 
100

 
 
 
 
-->PGI Origin Holding Company LTD*#<
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
-->Origin Asset Management LLP*#<
 
 
Wales/United Kingdom
 
83.52

 
 
 
 
-->PGI Finisterre Holding Company LTD*
 
 
 
Wales/United Kingdom
 
100

 
 
 
 
-->Finisterre Holdings Limited*
 
 
Malta
 
88.3

 
 
 
 
 
-->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 Real Estate Europe Limited
 
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
-->Principal Opportunity Fund LP
 
 
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
-->Principal Real Estate Limited
 
 
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
 
-->Benelux Industrial Partnership General Partner B.V.
 
 
Netherlands
 
100

 
 
 
 
 
 
-->INTERNOS Real Estate Limited
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
 
-->Principal Hotel Immobilienfonds II General Partner S.ã.r.l.
 
 
Luxembourg
 
100

 
 
 
 
 
 
-->Principal Real Estate B.V.
 
 
Netherlands
 
100

 
 
 
 
 
 
-->Principal Real Estate GmbH
 
 
Germany
 
100

 
 
 
 
 
 
-->Principal Real Estate Kapitalverwaltungsgesellschaft mbH
 
 
Germany
 
94.9

 
 
 
 
 
 
-->Principal Real Estate S.ã.r.l.
 
 
Luxembourg
 
100

 
 
 
 
 
 
-->Principal Real Estate SAS
 
 
France
 
100

 
 
 
 
 
 
-->Principal Real Estate S.L.
 
 
Spain
 
100





 
 
 
 
 
-->Principal Real Estate Spezialfondsgesellschaft mbH
 
 
Germany
 
94.9

 
 
 
-->Principal Global Investors (Singapore) Limited*#
 
 
 
Singapore
 
100

 
 
 
-->Principal Global Investors (Japan) Limited*#
 
 
 
Japan
 
100

 
 
 
-->Principal Global Investors (Hong Kong) Limited*#
 
 
 
Hong Kong
 
100

 
 
-->Principal Global Investors Holding Company (US), LLC*#
 
 
Delaware
 
100

 
 
 
-->Spectrum Asset Management, Inc.*#<
 
 
Connecticut
 
100

 
 
 
 
-->SAMI Brokerage LLC
 
 
Connecticut
 
100

 
 
 
-->CCIP, LLC*#<
 
 
Delaware
 
100

 
 
 
 
--> Columbus Circle Investors*#<
 
 
Delaware
 
100

 
 
 
--> Post Advisory Group, LLC*#<
 
Delaware
 
79.18

 
 
 
--> Principal Commercial Funding, LLC*#<
 
 
Delaware
 
100

 
 
 
--> Principal Global Columbus Circle, LLC*#<
 
 
Delaware
 
100

 
 
 
 
--> CCI Capital Partners, LLC *#<
 
 
Delaware
 
100

 
 
 
-->Principal Enterprise Capital, LLC*#
 
 
Delaware
 
100

 
 
 
-->Principal Global Investors, LLC*#<
 
 
Delaware
 
100

 
 
 
-->Principal Real Estate Investors, LLC*#
 
 
Delaware
 
100

 
 
 
-->Principal Financial Advisors, Inc.*#
 
 
Iowa
 
100

 
 
 
-->Principal Global Investors Trust Company*#
 
 
Oregon
 
100

 
 
 
-->Principal Shareholder Services, Inc.*#
 
 
Washington
 
100

 
 
 
-->Principal Funds Distributor, Inc.*#
 
 
Washington
 
100

 
 
-->CIMB Principal Islamic Asset Management SDN. BHD*#
 
 
Malaysia
 
60

 
 
-->Principal Financial Group (Mauritius) LTD*#
 
 
Mauritius
 
100

 
 
 
-->Principal Asset Management 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 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

 
 
 
 
 
-->Principal Advised Services, LLC
 
 
 
Delaware
 
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), LLC*#
 
 
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 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 Asia LTD*#
 
 
United Kingdom
 
100

 
 
 
 
 
 
 
-->Principal Global Investors Asia (UK) Ltd
 
 
United Kingdom
 
100

 
 
 
 
 
 
 
-->Principal International Asia (UK) Ltd
 
 
United Kingdom
 
100

 
 
 
 
 
 
 
-->Principal International India LTD*#
 
 
United Kingdom
 
100

 
 
 
 
 
 
-->Principal Financial Services VI (UK) LTD*#
 
 
United Kingdom
 
100

 
 
 
 
 
 
 
-->Principal Global Financial Services (Europe) LTD*#
 
 
United Kingdom
 
100

 
 
 
 
 
 
 
 
-->Liongate Limited*
 
 
Malta
 
100

 
 
 
 
 
 
 
 
-->Liongate Capital Management LLP*
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
 
 
 
-->LGCM (Cayman) Limited*
 
 
Cayman Islands
 
100

 
 
 
 
 
 
 
 
 
-->Liongate Capital Management (Cayman) Limited*
 
 
Cayman Islands
 
100

 
 
 
 
 
 
 
 
 
 
-->Liongate Capital Management (UK) Limited*
 
 
Wales/United Kingdom
 
100

 
 
 
 
 
 
 
 
 
-->Liongate Capital Management Limited*
 
 
Malta
 
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

 
 
 
 
-->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 Ahorro e Inversiones 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

 
 
-->Principal Securities, Inc.
 
 
Iowa
 
100

 
 
-->Diversified Dental Services, Inc.*#
 
 
Nevada
 
100

 
 
-->Principal Investors Corporation*#
 
 
New Jersey
 
100

 
 
-->Principal Innovations, Inc.
 
 
Delaware
 
89.6

 
 
 
-->RobustWealth, Inc.
 
 
Delaware
 
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, 2019
(1)
(2)
 
Number of
Title of Class
Contractowners
BFA Variable Annuity Contracts
6
Pension Builder Plus Contracts
51
Personal Variable Contracts
8
Premier Variable Contracts
19
Flexible Variable Annuity Contract
16,533
Freedom Variable Annuity Contract
633
Freedom 2 Variable Annuity Contract
215
Investment Plus Variable Annuity Contract
60,746
Principal Lifetime Income Solutions
1,000
Principal Pivot Series Variable Annuity
1,843
Principal Lifetime Income Solutions II
5,097

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
 
 
Carla Beitzel
Vice President/Distribution
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)
 
 
 
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)
 
 
 
Doug Hodgson
Vice President/Chief Compliance Officer
Principal Financial Group(1)
 
 
 
Grady Holt
Vice President - Advisory Services
Principal Financial Group(1)
 
 
 
Julia M. Lawler
Director
Principal Financial Group(1)
 
 
 
Julie LeClere
Senior Vice President/Managing Director
Principal Financial Group(1)
 
 
 
Michael F. Murray
Chairman, President and Chief Executive Officer
Principal Financial Group(1)
 
 
 
Martin R. Richardson
Vice President - Broker Dealer Operations
Principal Financial Group(1)
 
 
 
Karen E. Shaff
Executive Vice President/General Counsel/Corporate Secretary
Principal Financial Group(1)
 
 
 
Deanna D. Strable-Soethout
Director
Principal Financial Group(1)
 
 
 




Jeffrey A. Van Baale
Chief Information Officer
Principal Financial Group(1)
 
 
 
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 50309
(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)
$36,448,817.80
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 Separate Account B, has duly caused this Amendment to the Registration Statement to be signed on its behalf by the undersigned thereto duly authorized, and its seal to be hereunto affixed and attested, in the City of Des Moines and State of Iowa, on the 29th day of April, 2019.
 
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 29, 2019
D. J. Houston
Chairman, President, and Chief Executive Officer
 
 
 
 
/s/ A. R. Sanders
Senior Vice President and Controller
April 29, 2019
A. R. Sanders
(Principal Accounting Officer)
 
 
 
 
/s/ D. D. Strable-Soethout
Executive Vice President and
April 29, 2019
D. D. Strable-Soethout
Chief Financial Officer
 
 
(Principal Financial Officer)
 
 
 
 
  (B. J. Bernard)*
Director
April 29, 2019
B. J. Bernard
 
 
 
 
 
  (J. Carter-Miller)*
Director
April 29, 2019
J. Carter-Miller
 
 
 
 
 
  (M. T. Dan)*
Director
April 29, 2019
M. T. Dan
 
 
 
 
 
  (C. D. Gelatt, Jr.)*
Director
April 29, 2019
C. D. Gelatt, Jr.
 
 
 
 
 
  (S. L. Helton)*
Director
April 29, 2019
S. L. Helton
 
 
 
 
 
  (R. C. Hochschild)*
Director
April 29, 2019
R. C. Hochschild
 
 
 
 
 
  (S. M. Mills)*
Director
April 29, 2019
S. M. Mills
 
 
 
 
 
  (D. C. Nordin)*
Director
April 29, 2019
D. C. Nordin
 
 
 
 
 
  (B. C. Pickerell)*
Director
April 29, 2019
B. C. Pickerell
 
 
 
 
 
  (E. E. Tallett)*
Director
April 29, 2019
E. E. Tallett
 
 
 
 
*By
/s/ D. J. Houston
 
D. J. Houston
 
 
Director, Chairman of the Board
 
 
Chairman, President and Chief Executive Officer
 
 
*
Pursuant to Powers of Attorney 
Previously Filed on April 27, 2018