VA-Personal-485B-2019 Combined Document

For the year ended December 31,

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485BPOS 1 vapersonal485b2019filingbo.htm 485BPOS VA-Personal-485B-2019 Combined Document

Registration No. 33-44565

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM N-4

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

Pre-Effective Amendment No.

Post-Effective Amendment No. 35

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 261

(Check appropriate box or boxes)

Principal Life Insurance Company Separate Account B

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(Exact Name of Registrant)

Principal Life Insurance Company

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(Name of Depositor)

The Principal Financial Group, Des Moines, Iowa 50392

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

(515) 362-1784

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Depositor's Telephone Number, including Area Code

Steve Gallaher

The Principal Financial Group, Des Moines, Iowa 50392

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(Name and Address of Agent for Service)

Title of Securities Being Registered: Personal Variable Annuity Contract

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

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

_X__ on May 1, 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 LIFE INSURANCE COMPANY

SEPARATE ACCOUNT B

PERSONAL VARIABLE

This prospectus is dated May 1, 2019

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



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


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


⁽²⁾	This underlying mutual fund is a fund of funds. The fund of funds expenses may be higher than other fund types because the expenses of the selected fund include the expenses of the funds it holds.

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

Additional information about the Contract, including a Statement of Additional Information (“SAI”), dated May 1, 2019, has been filed with the Securities and Exchange Commission (“SEC”). The SAI is part of this prospectus. The table of contents of the SAI appears at the end of this prospectus. A copy of the SAI can be obtained, free of charge, upon request by writing or calling:

Principal Securities, Inc.

Des Moines, IA 50392-2080

Telephone: 1-800-633-1373

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.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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

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

TABLE OF CONTENTS



	Page
Glossary of Special Terms	4
Synopsis	6
Summary	7
The Company	8
The Separate Account	9
The Underlying Mutual Funds	9
Deductions under the Contract	10
Other Expenses	11
Surplus Distribution at Sole Discretion of the Company	11
The Contract	11
Statement of Values	21
Services Available by Telephone	22
Distribution of the Contract	22
Federal Tax Status	22
State Regulation	27
General Information	27
Table of Separate Account Divisions	29
Table of Contents of the SAI	31
Condensed Financial Information	32
Appendix A	34

GLOSSARY OF SPECIAL TERMS

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

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

Annuity Commencement Date – The beginning date for Annuity Payments.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

SYNOPSIS

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



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

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



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

⁽¹⁾

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


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

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

Annual Underlying Mutual Fund Operating Expenses as of December 31, 2018:



	Minimum	Maximum
Total annual underlying mutual fund operating expenses (expenses that are deducted from underlying mutual fund assets, including management fees and other expenses)	0.24%	0.91%

EXAMPLE

This Example is intended to help you compare the cost of investing in the Contract with the cost of investing in other variable annuity contracts. These costs include Contractholder transaction expenses, contract fees, Separate Account annual expenses, and underlying mutual fund fees and expenses.

This Example assumes


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


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


•	the maximum annual fees and operating expenses for any underlying mutual fund as of December 31, 2018 (without voluntary waivers of fees by the underlying fund, if any).

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



	If the Owner of Benefits Surrenders the Contract at the End of the Applicable Time Period				If the Owner of Benefits Does Not Surrender the Contract at the End of the Applicable Time Period
Separate Account Divisions	1 Year	3 Years	5 Years	10 Years	1 Year	3 Years	5 Years	10 Years
Maximum Total Underlying Mutual Fund Operating Expenses (0.91%)	$158	$496	$865	$1,936	$158	$496	$865	$1,936
Minimum Total Underlying Mutual Fund Operating Expenses (0.24%)	$90	$285	$499	$1,139	$90	$285	$499	$1,139

SUMMARY

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

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

Contributions

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

All Contributions made pursuant to the Contract are allocated to one or more Investment Accounts. Each Investment Account correlates to a Division of the Separate Account B. Each Division invests in shares of an underlying mutual fund. More detailed information about the underlying mutual funds may be found in the current prospectus for the underlying mutual fund.

Distributions, Transfers and Withdrawals

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

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

Performance Calculation

From time to time, the Separate Account will advertise the average annual total return of its various Divisions for the Contract. The average annual total return for any of the Divisions is computed by calculating the average annual compounded rate of return over the stated period that would equate an initial $1,000 investment to the ending redeemable Investment Account Value. The yield and total return figures vary depending upon market conditions, the composition of the underlying mutual fund’s portfolios and operating expenses. These factors and possible differences in the methods used in calculating yield and total return should be considered when comparing the Separate Account performance figures to performance figures published for other investment vehicles. The Separate Account may also quote rankings, yields or returns as published by independent statistical services or publishers and information regarding performance of certain market indices. Any performance data quoted for the Separate Account represents only historical performance and is not intended to indicate future performance.

From time to time the Separate Account advertises its Money Market Division’s “yield” and “effective yield” for the Contract. Both yield figures are based on historical earnings and are not intended to indicate future performance. The “yield” of the Division refers to the income generated by an investment under the Contract in the Division over a seven-day period (which period will be stated in the advertisement). This income is then “annualized.” The “effective yield” is calculated similarly but, when annualized, the income earned by an investment in the division is assumed to be reinvested. The “effective yield” will be slightly higher than the “yield” because of the compounding effect of this assumed reinvestment.


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

Financial Statements

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

THE COMPANY

The Company is a stock life insurance company with authority to transact life and annuity business in all states of the United States and the District of Columbia. The Company’s home office is located at: Principal Financial Group, Des Moines, Iowa 50392. The Company is a wholly owned subsidiary of Principal Financial Services, Inc., which in turn, is a wholly owned direct subsidiary of Principal Financial Group, Inc., a publicly-traded company.

On June 24, 1879, the Company was incorporated under Iowa law as a mutual assessment life insurance company named Bankers Life Association. The Company became a legal reserve life insurance company and changed its name to Bankers Life Company in 1911. In 1986, the Company changed its name to Principal Mutual Life Insurance Company. In 1998, the Company became Principal Life Insurance Company, a subsidiary stock life insurance company of Principal Mutual Holding Company, as part of a reorganization into a mutual insurance holding company structure. In 2001, Principal Mutual Holding Company converted to a stock company through a process called demutualization, resulting in the Company’s current organizational structure.

THE SEPARATE ACCOUNT

Separate Account B was established under Iowa law on January 12, 1970 and was registered as a unit investment trust with the SEC on July 17, 1970. This registration does not involve SEC supervision of the investments or investment policies of the Separate Account. The Company does not guarantee the investment results of the Separate Account. There is no assurance that the value of the Contract will equal the total of the contributions made under the Contract.

The Separate Account is not affected by the rate of return of the Company’s General Account or by the investment performance of any of the Company’s other assets. Any income, gain, or loss (whether or not realized) from the assets of the Separate Account are credited to or charged against the Separate Account without regard to the company’s other income, gains, or losses. Obligations arising from the Contract, including the promise to make annuity benefit payments, are general corporate obligations of the Company. Assets of the Separate Account attributed to the reserves and other liabilities under the Contract may not be charged with liabilities arising from any of the Company’s other businesses.

The Separate Account is divided into divisions. The assets of each division invest in a corresponding underlying mutual fund. New divisions may be added and made available. Divisions may also be eliminated from the Separate Account following SEC approval.

The Company does not guarantee the investment results of the Separate Account. There is no assurance that the value of your Contract will equal the total of your purchase payments.

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

THE UNDERLYING MUTUAL FUNDS

The underlying mutual funds are registered under the Investment Company Act of 1940 as open-end investment management companies. The underlying mutual funds provide the investment vehicles for the Separate Account. A full description of the underlying mutual funds, the investment objectives, policies and restrictions, charges and expenses and other operational information are contained in the accompanying prospectuses (which should be read carefully before investing) and the Statement of Additional Information (“SAI”). You may request additional copies of these documents without charge from your registered representative or by calling us at 1-800-852-4450.

The Company purchases and sells shares of the underlying mutual funds for the Separate Account at their net asset value. Shares represent interests in the underlying mutual fund available for investment by the Separate Account. Each underlying mutual fund corresponds to one of the divisions. The assets of each division are separate from the others. A division’s performance has no effect on the investment performance of any other division.

The underlying mutual funds are NOT available to the general public directly. The underlying mutual funds are available only as investment options in variable life insurance policies or variable annuity contracts issued by life insurance companies and qualified plans. Some of the underlying mutual funds have been established by investment advisers that manage publicly traded mutual funds having similar names and investment objectives. While some of the underlying mutual funds may be similar to, and may in fact be modeled after publicly traded mutual funds, you should understand that the underlying mutual funds are not otherwise directly related to any publicly traded mutual fund. Consequently, the investment performance of any underlying mutual fund may differ substantially from the investment performance of a publicly traded mutual fund.

The Table of Separate Account Divisions later in this prospectus contains a brief summary of the investment objectives of, the advisor and, if applicable, sub-advisor for, each division.

Deletion or Substitution of Divisions

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

Voting Rights

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

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

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

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

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


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

DEDUCTIONS UNDER THE CONTRACT

Mortality and Expense Risks Charge

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

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

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

Transaction Fee

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

Transfer Fee

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

Contingent Deferred Sales Charge

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

OTHER EXPENSES

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

SURPLUS DISTRIBUTION AT SOLE DISCRETION OF THE COMPANY

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

THE CONTRACT

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

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

A. Contract Values and Accounting Before Annuity Commencement Date

1. Investment Accounts

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

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

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

2. Unit Value

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

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

3. Net Investment Factor

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

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

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

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

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

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

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

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

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

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

B. Income Benefits

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

1. Variable Annuity Payments

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

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

a. Selecting a Variable Annuity

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

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

b. Forms of Variable Annuities

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

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

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

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

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

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

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

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

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

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

c. Basis of Annuity Conversion Rates

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

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

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

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

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

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

d. Determining the Amount of the First Variable Annuity Payment

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

e. Determining the Amount of the Second and Subsequent Monthly Variable Annuity Payments

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

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

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

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

f. Hypothetical Example of Calculation of Variable Annuity Payments

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

2. Flexible Income Option

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

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

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

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

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

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

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

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


C.	Payment on Death of Plan Participant

1. Prior to Annuity Purchase Date

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

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

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

2. Subsequent to Annuity Purchase Date

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

D. Withdrawals and Transfers

1. Cash Withdrawals

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

The procedure with respect to cash withdrawals is as follows:

a. The Plan must allow for such withdrawal.

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

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

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

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

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

2. Transfers Between Divisions

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

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

3. Transfers to the Contract

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

4. Transfers to Companion Contract

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

5. Special Situation Involving Alternate Funding Agents

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

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

6. Postponement of Cash Withdrawal or Transfer

Any cash withdrawal or transfer to be made from the Contract or between Investment Accounts in accordance with the preceding paragraphs will be made (i) within seven calendar days after Notification for such payment or transfer is received by the Company at its Home Office or (ii) on the requested date of payment or transfer, if later. However, such withdrawal or transfer may be deferred during any period when the right to redeem shares is suspended as permitted under provisions of the Investment Company Act of 1940, as amended. The right to redeem shares may be suspended during any period when (a) trading on the New York Stock Exchange is restricted as determined by the Securities and Exchange Commission or such exchange is closed for other than weekends and holidays; (b) an emergency exists, as determined by the Securities and Exchange Commission, as a result of which (i) disposal by the underlying mutual fund of securities owned by it is not reasonably practicable or (ii) it is not reasonably practicable for the mutual fund to fairly determine the value of its net assets; or (c) the Securities and Exchange Commission so permits by order for the protection of security holders. If any deferment of transfer or withdrawal is in effect and has not been cancelled by Notification to the Company within the period of deferment, the amount to be transferred or withdrawn shall be determined as of the first Valuation Date following expiration of the permitted deferment, and transfer or withdrawal will be made within seven calendar days thereafter. The Company will notify the Contractholder of any deferment exceeding 30 days.

7. Loans

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

E. Other Contractual Provisions

1. Contribution Limits

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

2. Assignment

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

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

3. Cessation of Contributions

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

4. Changes in the Contract

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

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

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

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

STATEMENT OF VALUES

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

SERVICES AVAILABLE BY TELEPHONE

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

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

DISTRIBUTION OF THE CONTRACT

The Contract is no longer offered.

FEDERAL TAX STATUS

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

A. Taxes Payable by Owners of Benefits and Annuitants

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

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


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

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

For 2019, an individual’s voluntary salary reduction contributions under section 403(b) are generally limited to $19,000; additional catch-up contributions up to $6,000 are permitted for those age 50 and older. Combined employer and salary reduction contributions are generally limited to the lesser of 100% of the participant’s compensation, or $56,000 (plus, if applicable, the $6,000 catch-up contribution). In addition, for plan years beginning after December 31, 1988, employer contributions must comply with various nondiscrimination rules; these rules may have the effect of further limiting the rate of employer contributions for highly compensated employees.

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

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

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

However, upon the death of the Plan Participant prior to the commencement of annuity payments, the amount accumulated under the contract must be distributed by December 31 of the calendar year that contains fifth anniversary of the Plan Participant’s death or, if distributions to a beneficiary designated under the contract commence by December 31 of the calendar year following the Plan Participant’s death, distributions are permitted over the life of the beneficiary or over a period not extending beyond the beneficiary’s life expectancy. If the surviving spouse is the beneficiary of the contract, the surviving spouse may have additional distribution options. If the Plan Participant has commenced receiving annuity distributions prior to the Plan Participant’s death, distributions must continue at least as rapidly as under the method in effect at the date of death. Amounts accumulated under a contract on December 31, 1986, are not subject to these minimum distribution requirements. In certain instances the distributions may be payable over the remaining life expectancy of the deceased owner. A penalty tax of 50% will be imposed on the amount by which the minimum required distribution in any year exceeds the amount actually distributed in that year.

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

2. 457 Plans

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

These plans allow individuals to defer the receipt of compensation which would otherwise be presently payable and to therefore defer the payment of Federal income taxes on the amounts. For 2019, participants in a tax exempt 457(b) or a governmental 457(b) may defer both employee and employer contributions up to the 402(g) limit, $19,000. Catch up contributions of $6,000 are also allowed for governmental 457(b) plan participants age 50 and older. Special catch-up contributions rules may also apply to tax exempt 457(b) plans. The amounts which are deferred may be used by the employer to purchase the Contract. The amounts in a tax exempt 457(b) plan and a 457(f) plan are owned by the employer and are subject to the claims of the employer’s creditors. The amounts which are deferred for a governmental 457(b) plan are held for the exclusive benefit of the participants and beneficiaries.

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

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

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

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

3. 401(a) Plans

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

For 2019, an individual’s voluntary salary reduction contributions for a 401(k) plan are generally limited to $19,000. In addition, an individual over age 50 may make a “catch-up” contribution of up to $6,000.

For 401(a) qualified plans, the maximum annual contribution that a member can receive is limited to the lesser of 100% of includible compensation or $56,000 (plus, if applicable, the $6,000 catch-up contribution).

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

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

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

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

4. Creditor-Exempt Non-Qualified Plans

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

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

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

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

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

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

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

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

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

Required Distributions. The Code does not require a Plan Participant under a Creditor-Exempt Non-Qualified Plan to commence receiving distributions at any particular time and does not limit the duration of annuity payments. However, upon the death of the Plan Participant prior to the commencement of annuity payments, the amount accumulated under the Contract must be distributed within five years or, if distributions to a designated beneficiary under the Contract commence within one year of the Plan Participant’s death, distributions are permitted over the life of the beneficiary or over a period not extending beyond the beneficiary’s life expectancy. If the Plan Participant has commenced receiving annuity distributions prior to the Plan Participant’s death, distributions must continue at least as rapidly as under the method in effect at the date of death.

Tax-Free Exchanges. Under Section 1035 of the Code, the exchange of one annuity contract for another is not a taxable transaction if the same owner is on each contract in the exchange, but is reportable to the IRS. Transferring Investment Account Values from this contract to a Companion Contract would fall within the provisions of Section 1035 of the Code.

5. General Creditor Non-Qualified Plans

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

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

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

B. Fund Diversification

Separate Account investments must be adequately diversified in order for the increase in the value of Creditor-Exempt Non-Qualified Contracts to receive tax-deferred treatment. In order to be adequately diversified, the portfolio of each underlying mutual fund must, as of the end of each calendar quarter or within 30 days thereafter, have no more than 55% of its assets invested in any one investment, 70% in any two investments, 80% in any three investments and 90% in any four investments. Failure of an underlying mutual fund to meet the diversification requirements could result in tax liability to Creditor-Exempt Non-Qualified Contractholders.

The investment opportunities of the mutual fund could conceivably be limited by adhering to the above diversification requirements. This would affect all Contractholders, including those owners of Contracts for whom diversification is not a requirement for tax-deferred treatment.

STATE REGULATION

The Company is subject to the laws of the State of Iowa governing insurance companies and to regulation by the Insurance Department of the State of Iowa. An annual statement in a prescribed form must be filed by March 1 in each year covering the operations of the Company for the preceding year and its financial condition on December 31st of such year. Its books and assets are subject to review or examination by the Commissioner of Insurance of the State of Iowa, or the Commissioner’s representatives, at all times, and a full examination of its operations is conducted periodically by the National Association of Insurance Commissioners. Iowa law and regulations also prescribe permissible investments, but this does not involve supervision of the investment management or policy of the Company.

In addition, the Company is subject to the insurance laws and regulations of other states and jurisdictions in which it is licensed to operate. Generally, the insurance departments of these states and jurisdictions apply the laws of the state of domicile in determining the field of permissible investments.

GENERAL INFORMATION

Frequent Trading and Market-Timing (Abusive Trading Practices)

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

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

•Disrupt the management of the underlying mutual funds by;


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


•	causing unplanned portfolio turnover;

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

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

•increased broker-dealer commissions; and

•increased recordkeeping and related costs.

If the Company is not able to identify such abusive trading practices, the abuses described above will negatively impact the Contract and cause investors to suffer the harms described.

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

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


•	Rejecting transfer instructions from a contractholder or other person authorized by the contractholder to direct transfers;


•	Restricting submission of transfer requests by, for example, allowing transfer requests to be submitted by 1st class U.S. mail only and disallowing requests made via the internet, by facsimile, by overnight courier or by telephone;


•	Limiting the number of unscheduled transfers during a Contract year to no more than 12;


•	Prohibiting requests to transfer among the divisions for a minimum of thirty days where there is evidence of at least one round-trip transaction (exchange or redemption of shares that were purchased within 30 days of the exchange/ redemption); and


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

The Company will support the underlying mutual funds’ right to accept, reject or restrict, without prior written notice, any transfer requests into a fund.

In some instances, a transfer may be completed prior to a determination of abusive trading. In those instances, the Company will reverse the transfer (within two business days of the transfer) and return the Contract to the investment option holdings it had prior to the transfer. The Company will give you notice in writing in this instance.

Important Information About Customer Identification Procedures

To help the government fight the funding of terrorism and money laundering activities, Federal law requires financial institutions to obtain, verify, and record information that identifies each person who opens an account. When you open an account, we will ask for your name, address, date of birth, and other information that will allow us to verify your identity. We may also ask to see your driver’s license or other identifying documents.

If concerns arise with verification of your identification, no transactions, other than redemptions, will be permitted while we attempt to reconcile the concerns. If we are unable to verify your identity within 30 days of our receipt of your original purchase, the account(s) will be closed and redeemed in accordance with normal redemption procedures.

We do not knowingly sell annuities that are for the benefit of a business/organization that is illegal under Federal and/or State law (such as a marijuana clinic), or a person who owns or receives income from such an entity or whose source of funds is illegal.

Legal Opinions

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

Legal Proceedings

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

Other Variable Annuity Contracts

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

Householding

To avoid sending duplicate copies of materials to owners, only one copy of the prospectus and annual and semi-annual reports for the funds will be mailed to owners having the same name and address on our records. The consolidation of these mailings, called householding, benefits us through reduced mailing expense. If you want to receive multiple copies of these materials, you may call us at 1-800-852-4450. You may also notify us in writing. Individual copies of prospectuses and reports will be sent to you within thirty (30) days after we receive your request to stop householding.

Independent Registered Public Accounting Firm

The financial statements of Principal Life Insurance Company Separate Account B and the consolidated financial statements of Principal Life Insurance Company which are included in the Statement of Additional Information have been audited by Ernst & Young LLP, independent registered public accounting firm, 801 Grand Avenue, Des Moines, Iowa 50309, for the periods indicated in their reports thereon which appear in the Statement of Additional Information.

Financial Statements

The financial statements of the Principal Life Insurance Company which are included in the SAI should be considered only as they relate to our ability to meet our obligations under the Contract. They do not relate to investment performance of the assets held in the Separate Account.

Customer Inquiries

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

TABLE OF SEPARATE ACCOUNT DIVISIONS

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



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.



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 1
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.



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 to provide a high level of current income consistent with safety and liquidity.



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



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

Registration Statement

This prospectus (Part A of the registration statement) omits some information contained in the SAI (Part B of the registration statement) and Part C of the registration statement which the Company has filed with the SEC. The SAI is hereby incorporated by reference into this prospectus. You may request, a free copy of the SAI by contacting your registered representative or calling us at 1-800-852-4450.

Information about the Contract (including the SAI and Part C of the registration statement) can be reviewed and copied at the SEC’s Public Reference Room in Washington, D.C. Information on the operation of the public reference room may be obtained by calling the SEC at 202-551-8090. Reports and other information about the Contract are available on the SEC’s internet site at http://www.sec.gov. Copies of this information may be obtained, upon payment of a duplicating fee, by writing the Public Reference Section of the SEC, 100 F Street NE, Washington, D.C. 20549-0102.

The registration number for the Contract is 33-44565.

Customer Inquiries

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

TABLE OF CONTENTS OF THE SAI

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



TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY	3
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	3
UNDERWRITING COMMISSIONS	3
CALCULATION OF PERFORMANCE DATA	3
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

CONDENSED FINANCIAL INFORMATION

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



Accumulation Unit Value
Division	Beginning of Period	End of Period	Percentage Change from Prior Period	Number of Accumulation Units Outstanding End of Period (in thousands)
Core Plus Bond
2018	$2.885	$2.826	-2.04%	56
2017	2.771	2.885	4.12	111
2016	2.679	2.771	3.43	76
2015	2.709	2.679	-1.11	73
2014	2.591	2.709	4.55	79
2013	2.630	2.591	-1.48	99
2012	2.461	2.630	6.87	94
2011	2.313	2.461	6.40	128
2010	2.085	2.313	10.96	122
2009	1.736	2.085	20.10	149
Diversified Balanced
2018	10.590	10.191	-3.77	58
2017⁽¹⁾	10.000	10.590	5.90	74
Diversified International
2018	3.875	3.175	-18.07	92
2017	3.021	3.875	28.26	89
2016	3.030	3.021	-0.30	92
2015	3.060	3.030	-0.98	80
2014	3.182	3.060	-3.83	93
2013	2.705	3.182	17.63	112
2012	2.298	2.705	17.71	110
2011	2.576	2.298	-10.79	225
2010	2.280	2.576	12.98	224
2009	1.796	2.280	26.95	234
Equity Income
2018⁽²⁾	10.000	9.348	-6.52	33
Fidelity Government Money Market
2018	0.997	1.007	0.96	408
2017	0.997	0.997	-0.02	334
2016⁽³⁾	10.000	0.997	-90.03	423
Government & High Quality Bond
2018	2.720	2.727	0.26	39
2017	2.687	2.720	1.22	49
2016	2.656	2.687	1.17	50
2015	2.652	2.656	0.15	46
2014	2.540	2.652	4.41	59
2013	2.583	2.540	-1.66	63
2012	2.502	2.583	3.23	58
2011	2.370	2.502	5.57	64
2010⁽⁴⁾	2.367	2.370	0.13	54



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	$4.176	$3.847	-7.89%	267
2017	3.116	4.176	34.03	221
2016	3.306	3.116	-5.75	215
2015	3.169	3.306	4.32	242
2014	2.870	3.169	10.42	244
2013	2.157	2.870	33.06	268
2012	1.858	2.157	16.10	256
2011	1.953	1.858	-4.86	361
2010	1.660	1.953	17.63	344
2009	1.315	1.660	26.24	404
MidCap
2018	12.503	11.609	-7.15	111
2017	10.025	12.503	24.71	102
2016	9.141	10.025	9.67	101
2015	9.051	9.141	0.99	116
2014	8.062	9.051	12.27	122
2013	6.059	8.062	33.06	142
2012	5.105	6.059	18.68	138
2011	4.745	5.105	7.59	221
2010	3.848	4.745	23.30	215
2009	2.895	3.848	32.92	255

⁽¹⁾ Commenced operations on May 26, 2017.

⁽²⁾ Commenced operations on October 12, 2018.

⁽³⁾ Commenced operations on April 8, 2016.

⁽⁴⁾ Commenced operations on July 19, 2010.

APPENDIX A

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

Contract Administration Expense/Recordkeeping Charge

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

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

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

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



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

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

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

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

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

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

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

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

Documentation Expense

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

Location Fee

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

Outside Asset Recordkeeping Charge

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



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

PART B

PRINCIPAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT B

PERSONAL VARIABLE

(A Group Variable Annuity Contract for Employer Sponsored

Qualified and Non-Qualified Retirement Plans)

Statement of Additional Information

dated May 1, 2019

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

Principal Securities, Inc.

a company of

the Principal Financial Group

Des Moines Iowa 50392-2080

Telephone: 1-800-633-1373



TABLE OF CONTENTS
GENERAL INFORMATION AND HISTORY	3
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	3
UNDERWRITING COMMISSIONS	3
CALCULATION OF PERFORMANCE DATA	3
FINANCIAL STATEMENTS
APPENDIX A - Principal Life Insurance Company Separate Account B
APPENDIX B - Principal Life Insurance Company

GENERAL INFORMATION AND HISTORY

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

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

INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Ernst & Young LLP, 801 Grand, Des Moines, Iowa 50309, serves as the independent registered public accounting firm for Principal Life Insurance Company Separate Account B and the Principal Life Insurance Company.

UNDERWRITING COMMISSIONS

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



Year	Paid To	Retained by
2018	$0	—
2017	$0	—
2016	$0	—

CALCULATION OF PERFORMANCE DATA

The Separate Account may publish advertisements containing information (including graphs, charts, tables and examples) about the performance of one or more of its Divisions. The Contract was not offered prior to July 15, 1992. Certain of the underlying funds were offered prior to the date the Contract was available. Thus, the Separate Account may publish advertisements containing information about the hypothetical performance of one or more of its divisions for this Contract as the Contract was issued on or after the date the underlying mutual fund was first offered. The hypothetical performance from the date of inception of the underlying mutual fund in which the division invests is derived by reducing the actual performance of the underlying mutual fund by the highest level of fees and charges of the Contract as if it had been in existence.

In addition, as certain of the underlying mutual funds have added classes since the inception of the fund, performance may be shown for periods prior to the inception date of the new class which represents the historical results of initial class shares and do not include the effects of the subsequent class’ annual fees and expenses. The yield and total return figures described below will vary depending upon market conditions, the composition of the underlying Account’s portfolios and operating expenses. These factors and possible differences in the methods used in calculating yield and total return should be considered when comparing the Separate Account performance figures to performance figures published for other investment vehicles. The Separate Account may also quote rankings, yields or returns as published by independent statistical services or publishers and information regarding performance of certain market indices. Any performance data quoted for the Separate Account represents only historical performance and is not intended to indicate future performance.

From time to time the Account advertises its Fidelity VIP Government Money Market Division’s “yield” and “effective yield” for these Contracts. Both yield figures are based on historical earnings and are not intended to indicate future performance. The “yield” of the Division refers to the income generated by an investment under the contract in the Division over a seven-day period (which period will be stated in the advertisement).

This income is then “annualized.” That is, the amount of income generated by the investment during that week is assumed to be generated each week over a 52-week period and is shown as a percentage of the investment. The “effective yield” is calculated similarly but, when annualized, the income earned by an investment in the division is assumed to be reinvested. The “effective yield” will be slightly higher than the “yield” because of the compounding effect of this assumed reinvestment. Neither yield quotation reflects sales load deducted from purchase payments that, if included, would reduce the “yield” and “effective yield.” For the period ended December 31, 2018, the 7-day annualized and effective yields of the Fidelity VIP Government Money Market Division were 1.08% and 1.09%, respectively.

From time to time, the Separate Account will advertise the average annual total return of its various divisions for these Contracts. The average annual total return for any of the divisions is computed by calculating the average annual compounded rate of return over the stated period that would equate an initial $1,000 investment to the ending redeemable contract value. In this calculation the ending value is reduced by a contingent deferred sales charge that decreases from 5% to 0% over a period of 7 years. The Separate Account may also advertise total return figures of its Divisions for a specified period that does not take into account the sales charge in order to illustrate the change in the Division’s unit value over time. See “Deductions Under the Contract” for a discussion of contingent deferred sales charges.

Assuming the Contract had been offered as of the dates indicated in the table below, the hypothetical average annual total returns for the periods ending December 31, 2018 are:



	With Contingent Deferred Sales Charge
	Effective Date	One Year	Five Years	Ten Years	Since Inception
Core Plus Bond	12/18/1987	-7.39%	0.95%	4.77%
Diversified Balanced	05/26/2017	-9.03%			-2.08%
Diversified International	05/02/1994	-22.61%	-0.86%	5.65%
Equity Income	04/28/1998	-11.51%	5.66%	10.46%
Fidelity Government Money Market	04/01/1982	-4.52%	-0.97%	-0.61%
Government & High Quality Bond	05/06/1993	-5.20%	0.62%	2.22%
LargeCap Growth	05/02/1994	-12.95%	5.25%	11.15%
MidCap	12/18/1987	-12.24%	6.79%	14.76%



	Without Contingent Deferred Sales Charge
	Effective Date	One Year	Five Years	Ten Years	Since Inception
Core Plus Bond	12/18/1987	-2.52%	1.36%	4.77%
Diversified Balanced	05/26/2017	-4.24%			0.61%
Diversified International	05/02/1994	-18.54%	-0.45%	5.65%
Equity Income	04/28/1998	-6.85%	6.09%	10.46%
Fidelity Government Money Market	04/01/1982	0.51%	-0.57%	-0.61%
Government & High Quality Bond	05/06/1993	-0.21%	1.03%	2.22%
LargeCap Growth	05/02/1994	-8.37%	5.67%	11.15%
MidCap	12/18/1987	-7.62%	7.22%	14.76%

FINANCIAL STATEMENTS

APPENDIX A - Principal Life Insurance Company Separate Account B Financials

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 SharesDivision Janus Henderson Flexible Bond Service SharesDivision 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.

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

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

as of

December 31,

reporting

during the

and

into

out of

December 31,

2015

date

period

settlements

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


•	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

Illiquidity premium

50 basis points ("bps")

50bps

Comparability

adjustment

(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

Illiquidity premium

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 *

All other schedules for which provision is made in the applicable accounting regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable and therefore have been omitted.



(b)	Exhibits
	(1)	Resolution of Board of Directors of the Depositor - filed with the Commission on filed on 03/01/1996
	(3a)	Distribution Agreement (filed 03/01/1996)
	(3b)	Selling Agreement (filed 03/01/1996)
	(4a)	Form of Variable Annuity Contract (filed 12/16/1997)
	(4b)	Form of Variable Annuity Contract Endorsement (filed 12/16/1997)
	(4c)	Form of Variable Annuity Contract Rider (filed 12/16/1997)
	(5)	Form of Variable Annuity Application (filed 10/23/1997)
	(6a)	Articles of Incorporation of the Depositor (filed 03/01/1996)
	(6b)	Bylaws of Depositor (filed 03/01/1996)



(8)	Participation Agreements
	a. Principal Variable Contracts Funds, Inc.
	(1)	Participation Agreement dated 01/05/2007 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(2)	Participation Agreement Amendment No. 1 dated 06/01/2007 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(3)	Participation Agreement Amendment No. 2 dated 01/01/2010 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(4)	Participation Agreement Letter Amendment No. 3 (letter) dated 06/17/2010 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(5)	Participation Agreement Amendment No. 4 and Joinder dated 11/01/2011 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(6)	Participation Agreement Amendment No. 5 dated 02/09/2015 (filed with the Commission on 04/30/2015 Accession No. 0000009713-15-000052)
	(7)	Participation Agreement Amendment No. 6 dated 08/10/2016 (filed with the Commission on 04/28/2017 Accession No. 0000009713-17-000047)
	(8)	Rule 12b-1 Compensation Letter dated 12/30/2009 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(9)	Amendment to Rule 12b-1 Compensation Letter dated 11/09/2011 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(10)	Rule 22c-2 Agreement dated 04/16/2007 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)
	(11)	Rule 22c-2 Agreement Amendment No. 1 and Joinder dated 11/01/2011 (filed with the Commission on 10/07/2014 Accession No. 0000009713-14-000086)



	(9)	Opinion of Counsel (filed 03/01/1996)
	(10a)	Consent of Ernst & Young LLP *
	(10b)	Powers of Attorney (filed with the Commission on 04/27/2018 Accession No. 0000009713-18-000049)
	(10c)	Consent of Counsel *
	(11)	Financial Statement Schedules *
	(13a)	Total Return Calculation (filed 03/01/1996)
	(13b)	Annualized Yield for Separate Account B (filed 03/01/1996)

* Filed herein

** To be filed by Amendment.

Item 25. Officers and Directors of the Depositor

Principal Life Insurance Company is managed by a Board of Directors which is elected by its policyowners. The directors and executive officers of the Company, their positions with the Company, including Board Committee memberships, and their principal business address, are as follows:

DIRECTORS:



Name and Principal Business Address	Positions and Offices
BETSY J. BERNARD 28556 Chianti Terrace Bonita Springs, FL 34135	Director 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

-->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

-->CIMB Wealth Advisors Berhad*

Malaysia

100

-->CIMB - Principal Asset Management (S) PTE LTD*#

Singapore

100

-->CIMB - Principal Asset Management Company Limited*

Thailand

99.99

-->Finansa Asset Management Limited *#<

Thailand

100

-->PT CIMB Principal Asset Management*

Indonesia

-->Principal Trust Company (Asia) Limited*#

Hong Kong

100

-->Principal Investment & Retirement Services Limited*#

Hong Kong

100

-->Principal 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

-->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

-->Principal Financial Group (Mauritius) LTD*#

Mauritius

100

-->Principal Asset Management Private Limited*#

India

78.6

-->Principal Trustee Company Private Limited*#

India

-->Principal Retirement Advisors Private Limited*#

India

100

-->Principal Life Insurance Company+#

Iowa

100

-->Principal Real Estate Fund Investors, LLC*#<

Delaware

100

-->Principal Development Investors, LLC*#<

Delaware

100

-->Principal Real Estate Holding Company, LLC*#<

Delaware

100

-->GAVI PREHC HC, LLC*#<

Delaware

100

-->Principal 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

-->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

-->Principal Holding Company Chile S.A.*#

Chile

100

-->Principal Chile Limitada*#

Chile

100

-->Administradora de Fondos de Pensiones Cuprum S.A.*#

Chile

-->Inversiones Cuprum Internacional S.A.*#

Chile

100

-->Principal National Life Insurance Company+#

Iowa

100

-->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 9^th Street
Des Moines, IA 50309



(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

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