VA Premier 485B 2020 Combined Document

For the year ended December 31,

Discount rate

Rate of compensation increase

Registration No. 33-44670

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. 36

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940

Amendment No. 266

(Check appropriate box or boxes)

Principal Life Insurance Company Separate Account B

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(Exact Name of Registrant)

Principal Life Insurance Company

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(Name of Depositor)

The Principal Financial Group, Des Moines, Iowa 50392

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

(515) 362-2384

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Depositor's Telephone Number, including Area Code

Doug Hodgson

The Principal Financial Group, Des Moines, Iowa 50392

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(Name and Address of Agent for Service)

Title of Securities Being Registered: Premier 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, 2020 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

PREMIER VARIABLE

This prospectus is dated May 1, 2020

This prospectus describes Premier 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. The Contract is funded with the Principal Life Insurance Company Separate Account B (“Separate Account”). The assets of the Separate Account divisions (“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⁾	• International Emerging Markets Account
Principal Variable Contracts Funds, Inc. – Class 1	• LargeCap Growth I Account⁽³⁾
• Core Plus Bond Account	• LargeCap S&P 500 Index Account
• Diversified Balanced Account⁽²⁾	• MidCap Account⁽⁴⁾
• Diversified International Account	• Real Estate Securities Account
• Equity Income Account	• SmallCap Account
• Government & High Quality Bond Account	• Strategic Asset Management Balanced Portfolio⁽²⁾


⁽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.


⁽³⁾	The LargeCap Growth Account merged into LargeCap Growth Account I effective June 8, 2019.


⁽⁴⁾	Effective August 16, 2013, the MidCap Account is no longer available to customers with an application signature date on or after August 16, 2013. Beginning June 6, 2020, available to all investors regardless of application date.

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, 2020, 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 prospectuses for the 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
Example	8
Summary	8
The Company	9
The Separate Account	9
The Underlying Mutual Funds	10
Deductions Under the Contract	11
Other Expenses	12
Surplus Distribution at Sole Discretion of the Company	12
The Contract	12
Statement of Values	22
Services Available by Telephone	22
Distribution of the Contract	22
Performance Calculation	22
Federal Tax Status	23
General Information	28
Table of Separate Account Divisions	31
Table of Contents of the SAI	34
Condensed Financial Information	35
Appendix A	39

GLOSSARY OF SPECIAL TERMS

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

Annual Average 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 which correlate to a Plan Participant that are not allocated to the Contract or an Associated or Companion Contract but for which the Company provides recordkeeping 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.

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.

Commuted Value – The dollar value, as of a given date, of remaining 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 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. 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 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 and 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 is (i) a participant under the Plan, (ii) a beneficiary of a deceased Plan 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 each of which invest in a corresponding underlying mutual fund.

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 between the time as of which the net asset value of an Investment Account is determined on one Valuation Date and the time as of which 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 purchase payments (as a percentage of purchase payments)	none
Transaction Fees (as a percentage of amount surrendered) • guaranteed maximum • current	• the lesser of $25 or 2.00% of each unscheduled partial surrender after the 12th in a Contract Year • none
Transfer Fee • guaranteed maximum • current	• the lesser of $30 or 2.00% of each unscheduled transfer after the 12th in a Contract Year plus a $15 charge if transfers are made via paper instruction • none (if transfer instructions are received via our toll-free number); a $15 charge is imposted 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
Separate Account Annual Expenses (as a percentage of average account value) • guaranteed maximum • current	1.25% 0.42%
Annual Recordkeeping Expense paid quarterly⁽¹⁾ • maximum charge (5,000 plan participants or more) • minimum charge (1 through 25 plan participants)	$10 per participant + $25,316 $2,250
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
Location Fee • one location • each additional location	none $150 per quarter for each employee location
Flexible Income Option (if elected by the Owner of Benefits)	$25 per year


⁽¹⁾	If reports are provided annually, the recordkeeping expense is reduced by 9%; if the Company performs no more than one non-discrimination test in a Deposit Year the recordkeeping expense is increased (reduced) by 3% for each additional test performed (or test not performed); and the recordkeeping expense is increased by 10% if the standard reporting format is not used.


⁽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, 2019



	Minimum	Maximum
Total annual underlying mutual fund operating expenses (expenses that are deducted from underlying mutual fund assets, including management fees and other expenses)	0.25%	1.20%

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, 2019 (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 (1.20%)	$166	$518	$902	$2,016	$166	$518	$902	$2,016
Minimum Total Underlying Mutual Fund Operating Expenses (0.25%)	$69	$217	$382	$877	$69	$217	$382	$877

SUMMARY

The following summary should be read in conjunction with the detailed information appearing elsewhere in this prospectus.

The group variable annuity contract described in 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, 2006, the contract was no longer offered or issued.

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 which correlate to a Plan Participant. An Investment Account is established for each type of Contribution for each Division of the Separate Account. A complete list of the divisions available under this Contract may be found in the Table of Separate Account Divisions later in this prospectus. 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.

The Contractholder may choose to 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. Additional Divisions may be added in the future. If no direction is provided for a particular Contribution, such Contribution will be allocated to an Investment Account which is invested in the Money Market Division.


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

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

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 59 ½ may involve an income tax penalty. See “Federal Tax Status.” No withdrawals are permitted after the Annuity Purchase Date.

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 our other income, gains, or losses. Obligations arising from the Contract, including the promise to make annuity benefit payments, are general corporate obligations of the Company. Assets of the Separate Account attributed to the reserves and other liabilities under the Contract may not be charged with liabilities arising from any of 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 are 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

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 underlying mutual fund as described in the Fund’s prospectus.

Mortality and Expense Risks Charge

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 0.42%. The Company does not believe that it is possible to specifically identify that portion of the 0.42% deduction applicable to the separate risks involved, but estimates that a reasonable approximate allocation would be 0.28% for the mortality risks and 0.14% 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 risk 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 unscheduled partial surrender after the twelfth unscheduled partial surrender in a Contract Year. The fee will be taken by redeeming a sufficient number of units from the Investment Account(s) from which the unscheduled partial surrender 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 unscheduled partial surrender 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 unscheduled transfer is made by an amount equal to the fee. If the Investment Account(s) from which the unscheduled transfer 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.

OTHER EXPENSES

The Contractholder is obligated to pay additional expenses associated with the servicing of the Contract and the Plan in accordance with the terms of a Service and Expense Agreement between the Contractholder and the Company. The Contractholder, in its sole discretion, elects whether to pay these expenses directly or directs the Company to deduct the fees from the Investment Accounts that correlate to a Plan Participant. If expenses are deducted from the Investment Accounts, the charges will be allocated among Investment Accounts which correlate to the Plan Participant in proportion to the relative value of such Investment Accounts and will be effected by canceling a number of units in each such Investment Account equal to such Investment Account’s proportionate share of the deductions. Please see Appendix A for services available under the contract.

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 Contracts were 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. Contributions that correlate to a Plan Participant are allocated to and 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 are late, or not completed, the Company will invest such unallocated Contributions in the Money Market Division 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 as described above 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 benefits, (b) paid to the Owner of Benefits or the beneficiary, (c) transferred in accordance with the provisions of the Contract or (d) cancelled to pay the recordkeeping expenses for a Plan Participant where Termination of Employment, retirement or death has occurred or for an alternate payee under a Qualified Domestic Relations Order.

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 the 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 valuation 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.

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 0.42%.

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 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 underlying mutual fund and no adjustment for taxes since the last determination; that the net asset value of an underlying 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 0.0000115, which is the rate for one day that is equivalent to a simple annual rate of 0.42%. The result, 1.0013417, is the current Net Investment Factor. The last Unit Value ($1.0185363) is then multiplied by the current Net Investment Factor (1.0013417) which produces a current Unit Value of $1.01990281.

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 underlying mutual fund prior to calculation of the net asset value of the underlying mutual fund share and that no other distributions and no adjustment for taxes were made since the last determination; that the net asset value of an underlying 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 ($0.000328767) 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 0.0000115 (the proportionate rate for one day based on a simple annual rate of 0.42%). The result (1.0003173) is the current Net Investment Factor. The last Unit Value ($1.0162734) is then multiplied by the current Net Investment Factor (1.0003173), resulting in a current Unit Value of $1.0165959.

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 is required to 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 59 ½, 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 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 Investment Account Values applied under one of the following annuity options. However, if the monthly Variable Annuity Payment would be less than $20, the Company may, at its sole option, pay the Investment Account Values 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 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.)

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 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 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 sex 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 neutral rates, as described above. The sex distinct male rates are determined for all Plan Participants in the same way as 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.

Each 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 (a) 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 (b) 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 the, flexible income payments are to be made, flexible income payments will be withdrawn on a pro rata basis from all Investment Accounts which correlate to the Plan Participant. Flexible income payments will end, however, on the date no amounts remain in such Investment Accounts or the date such Investment Accounts are paid or applied in full as described below. Flexible income 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. Flexible income payments may begin any time after the Flexible Income Option is requested. Flexible income 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. Flexible income 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 Values which correlate 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 flexible income 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 flexible income payment would reduce the total value of such Investment Accounts to a total balance of less than $1,750 then such request will be a deemed request for the total of such Investment Accounts.

The Owner of Benefits may request termination of 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 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 of $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 amount of the death benefit is determined by the terms of the Plan. The Owner of Benefits may elect to (1) leave the assets in the contract to the extent permitted by applicable law; (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 described in the Prospectus.

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 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. 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 the 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 election must be in writing. The annuity conversion rates applicable to a beneficiary shall be the annuity conversion rates the Company makes available to all beneficiaries 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 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, any restrictions imposed by provisions of the Code 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. 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 59 ½ 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 requests be accompanied by such certificate.

d. If the Aggregate Investment Account Values are insufficient to satisfy the amount of the requested withdrawal and applicable charges, if any, 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 Investment Account divided by the Unit Value for the Division of Separate Account in which the Investment 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 of the Separate Account in which the Investment Account is invested 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 a 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 recordkeeping expense.

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 underlying mutual fund 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 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 underlying 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 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 add Divisions to the Separate Account B 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 Recordkeeping Expense; and the provisions with respect to transfers to or from a Companion Contract or between Investment Accounts.

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 a governmental agency to which the Company is subject. In addition, no change in the guaranteed annuity conversion rates will take effect for a 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 recordkeeping expense will not take effect 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 effect, 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 affected by the change, 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 telephoning 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.

PERFORMANCE CALCULATION

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 included 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. For further information on how the Separate Account calculates yield and total return figures, see the SAI.

From time to time the Separate Account advertises its Money Market Division’s “yield” and “effective yield.” Both yield figures are based on historical earnings and are not intended to indicate future performance. The “yield” of the division refers to the income generated by an investment in the division over a 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.

In addition, from time to time, the Separate Account may advertise its “yield” for the Bond & Mortgage Securities Division and Government High Quality Bond Division for these Contracts. The “yield” of the Divisions is determined by annualizing the net investment income per unit for a specific, historical 30-day period and dividing the result by the ending maximum offering price of the unit for the same period.

Also, from time to time, the Separate Account will advertise the average annual total return of its various divisions. The average annual total return for any of the divisions is computed by calculating the average annual compounded rate of return over the stated period that would equate an initial $1,000 investment to the ending redeemable contract value.

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.

Note: Required minimum distributions (RMDs) for 2020 are waived for certain defined contribution plans (including 401(k), 403(b), and governmental 457(b) plans) and IRAs. Beneficiaries receiving distributions over a 5-year period can waive the distribution for 2020 and determine the 5-year period without regard to calendar year 2020 .


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 2020, an individual’s voluntary salary reduction contributions under section 403(b) are generally limited to $19,500; additional catch-up contributions up to $6,500 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 $57,000 (plus, if applicable, the $6,500 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 the Code and are subject to 20% income tax withholding if they are eligible rollover distributions. 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 (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, (9) distribution for certain natural disaster victims or (10) a qualified birth or adoption distribution (not to exceed $5,000).

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 72or the calendar year in which the participant retires (“Required Beginning Date”) 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 72.

Upon the death of the Plan Participant the required minimum distribution options available to the beneficiary will depend upon their status at the time of death. An eligible designated beneficiary must direct that payment of his/her benefits be made or started no later than December 31 of the year following the year of Plan Participant’s death with annual distributions of at least the required minimum distribution. An eligible designated beneficiary is any designated beneficiary who is (1) the Plan Participant’s spouse, (2) no more than ten (10) years younger than the Plan Participant, (3) the Plan Participant’s minor child who has not reached majority, (4) disabled, or chronically ill. If the surviving spouse is the eligible designated beneficiary of the Contract, the surviving spouse may have additional distribution options.

A non-eligible individual designated beneficiary must distribute the entire balance of the Contract by December 31 of the year in which occurs the tenth anniversary of Plan Participant’s death. An eligible designated beneficiary who is Plan Participant’s minor child ceases to retain the status upon reaching majority. Upon reaching majority the entire remaining balance of the Contract must be distributed by December 31 of the year in which occurs the tenth anniversary of the minor attaining majority.

If, Plan Participant had not reached his or her Required Beginning Date and there is no designated beneficiary or Plan Participant’s beneficiary is not an individual, the entire balance of the Contract must be paid by December 31 of the year in which occurs the fifth anniversary of Plan Participant’s death. If the Plan Participant had attained his or her Required Beginning Date prior to death, distributions must continue at least as rapidly as under the method in effect at the date of death. A penalty tax of 50% will be imposed on the amount by which the required minimum 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 2020, 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, $19,500. Catch up contributions of $6,500 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 72. 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 2020, an individual’s voluntary salary reduction contributions for a 401(k) plan are generally limited to $19,500. In addition, an individual over age 50 may make a “catch-up” contribution of up to $6,500.

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 $57,000 (plus, if applicable, the $6,500 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 59½, (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 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, (9) distribution for certain natural disaster victims or (10) a qualified birth or adoption distribution (not to exceed $5,000).

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 72 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 72. 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 59½ 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.

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.

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.

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 Doug Hodgson, Counsel.

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.

Conflicts of Interest Related to Underlying Mutual Funds

Compensation and Underlying Mutual Fund Selection

When selecting the underlying mutual funds, we consider each such fund’s investment strategy, asset class, manager’s reputation, and performance. We also consider the amount of compensation that we receive from the underlying mutual funds, their advisers, sub-advisers, or their distributors, which can be significant. Additionally, we offer certain underlying mutual funds at least in part because they are managed by an affiliate.

Compensation We Receive from Underlying Mutual Funds

The Company and certain of our affiliates receive compensation from certain underlying mutual funds pursuant to Rule 12b-1 under the 1940 Act. This compensation is paid out of an underlying mutual fund’s assets and is as much as 0.25% of the average net assets of an underlying mutual funds that are attributable to the variable life insurance products issued by us and our affiliates that offer the particular fund (the Company’s variable contracts). An investment in an underlying mutual funds with a 12b-1 fee will increase the cost of your investment.

Compensation We Receive from Underlying Mutual Fund Advisors

We and certain of our affiliates also receive compensation from the advisers and sub-advisers to some of the underlying mutual funds. We use this compensation for such purposes as paying expenses that we incur in promoting, issuing, distributing and administering the Policy and providing services on behalf of the underlying mutual funds in our role as intermediary. Some advisers and sub-advisers pay us more than others; some advisers and sub-advisers do not pay us any such compensation. Such compensation is not reflected in an underlying mutual fund's expenses in cases where it is not paid directly out of such fund’s assets, or if it is derived, in whole or in part, from the advisory fee deducted from fund assets. Owners, through their indirect investment in the underlying mutual funds, bear the costs of these advisory fees.

Other Conflicts of Interest

The underlying mutual funds are available to registered separate accounts offering variable annuity and variable life products of other affiliated and unaffiliated insurance companies, as well as to the separate account and other separate accounts of the Company. Although we do not anticipate any disadvantages to these arrangements, it is possible that a material conflict may arise between the interests of the separate account and one or more of the other separate accounts participating in the underlying mutual funds. A conflict may occur, for example, as a result of a change in law affecting the operations of variable life and variable annuity separate accounts, differences in the voting instructions of the owners and payees and those of other insurance companies, or some other reason. In the event of a conflict of interest, we will take steps necessary to protect owners and payees, including withdrawing the Separate Account from participation in the underlying mutual funds involved in the conflict or substituting shares of other funds.

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 SAI have been audited by Ernst & Young LLP, independent registered public accounting firm, 801 Grand Avenue, Suite 3000, 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.



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



LargeCap Growth I Division (The LargeCap Growth Account merged into LargeCap Growth Account I effective June 8, 2019)
Invests in:	Principal Variable Contracts Funds LargeCap Growth Account I – Class 1
Investment Advisor:	T. Rowe Price Associates, Inc. and Brown Advisory LLC through a sub-advisory agreement with Principal Global Investors, LLC
Investment Objective:	seeks long-term growth of capital.



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



MidCap Division (no longer available to new investors with an application signature dated on or after 08/16/2013) (beginning June 6, 2020, available to all investors regardless of application date)
Invests in:	Principal Variable Contracts Funds MidCap Account – Class 1
Investment Advisor:	Principal Global Investors, LLC
Investment Objective:	seeks long-term growth of capital.



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



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



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

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 contracting 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 202-942-8090. 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 33-44670.

Customer Inquiries

Your questions should be directed to: Principal Premier 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	A-1
APPENDIX A - Principal Life Insurance Company Separate Account B	A-1
APPENDIX B - Principal Life Insurance Company	B-1

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
2019	$2.981	$3.260	9.35%	646
2018	3.037	2.981	-1.84	632
2017	2.910	3.037	4.36	785
2016	2.807	2.910	3.67	680
2015	2.833	2.807	-0.92	666
2014	2.703	2.833	4.81	942
2013	2.738	2.703	-1.28	1,003
2012	2.557	2.738	7.08	1,210
2011	2.398	2.557	6.63	1,075
2010	2.156	2.398	11.22	1,182
Diversified Balanced
2019	10.227	12.061	17.93	187
2018	10.604	10.227	-3.55	162
2017⁽¹⁾	10.000	10.604	6.04	195
Diversified International
2019	3.348	4.091	22.18	638
2018	4.077	3.348	-17.88	650
2017	3.173	4.077	28.50	776
2016	3.174	3.173	-0.03	773
2015	3.199	3.174	-0.78	787
2014	3.319	3.199	-3.62	942
2013	2.815	3.319	17.90	1,072
2012	2.387	2.815	17.94	1,167
2011	2.669	2.387	-10.57	1,233
2010	2.357	2.669	13.24	1,613
Equity Income
2019	2.472	3.178	28.56	1,771
2018	2.614	2.472	-5.42	1,871
2017	2.168	2.614	20.56	65
2016	1.881	2.168	15.26	41
2015	1.966	1.881	-4.32	34
2014	1.751	1.966	12.28	28
2013	1.381	1.751	26.79	40
2012	1.227	1.381	12.55	13
2011	1.169	1.227	4.96	17
2010	1.010	1.169	15.74	35
Fidelity Government Money Market
2019	1.013	1.029	1.55	4,633
2018	1.000	1.013	1.25	4,512
2017	0.998	1.000	0.25	3,807
2016⁽²⁾	10.000	0.998	-90.02	3,985



Accumulation Unit Value
Division	Beginning of Period	End of Period	Percentage Change from Prior Period	Number of Accumulation Units Outstanding End of Period (in thousands)
Government & High Quality Bond
2019	$2.890	$3.064	6.02%	868
2018	2.876	2.890	0.50	843
2017	2.835	2.876	1.46	1,210
2016	2.797	2.835	1.36	984
2015	2.786	2.797	0.39	854
2014	2.663	2.786	4.62	977
2013	2.702	2.663	-1.44	1,042
2012	2.611	2.702	3.48	1,125
2011	2.468	2.611	5.79	1,140
2010⁽³⁾	2.463	2.468	0.20	1,385
International Emerging Markets
2019	3.730	4.368	17.10	141
2018	4.743	3.730	-21.36	128
2017	3.382	4.743	40.23	149
2016	3.104	3.382	8.96	137
2015	3.616	3.104	-14.16	125
2014	3.773	3.616	-4.16	119
2013	3.989	3.773	-5.41	122
2012	3.316	3.989	20.31	139
2011	4.033	3.316	-17.78	140
2010	3.396	4.033	18.76	193
LargeCap Growth I
2019	3.074	4.130	34.35	1,401
2018	2.980	3.074	3.16	205
2017	2.238	2.980	33.14	264
2016	2.219	2.238	0.86	279
2015	2.068	2.219	7.30	282
2014	1.912	2.068	8.16	233
2013	1.410	1.912	35.60	256
2012	1.217	1.410	15.88	201
2011	1.226	1.217	-0.73	198
2010	1.029	1.226	19.14	199



Accumulation Unit Value
Division	Beginning of Period	End of Period	Percentage Change from Prior Period	Number of Accumulation Units Outstanding End of Period (in thousands)
LargeCap S&P 500 Index
2019	$2.562	$3.344	30.53%	746
2018	2.696	2.562	-4.98	744
2017	2.228	2.696	21.00	281
2016	2.005	2.228	11.12	280
2015	1.991	2.005	0.70	238
2014	1.765	1.991	12.80	165
2013	1.342	1.765	31.52	189
2012	1.167	1.342	15.01	113
2011	1.152	1.167	1.30	97
2010	1.009	1.152	14.17	127
MidCap
2019	12.246	17.450	42.50	447
2018	13.159	12.246	-6.94	447
2017	10.528	13.159	24.99	564
2016	9.579	10.528	9.91	593
2015	9.464	9.579	1.22	614
2014	8.412	9.464	12.51	737
2013	6.307	8.412	33.38	836
2012	5.303	6.307	18.94	870
2011	4.917	5.303	7.85	947
2010	3.979	4.917	23.57	1,155
Real Estate Securities
2019	5.513	7.206	30.71	55
2018	5.780	5.513	-4.62	47
2017	5.315	5.780	8.74	49
2016	5.043	5.315	5.39	55
2015	4.860	5.043	3.77	55
2014	3.674	4.860	32.28	54
2013	3.545	3.674	3.64	34
2012	3.038	3.545	16.67	32
2011	2.800	3.038	8.50	28
2010	2.237	2.800	25.17	12
SAM Balanced
2019	2.304	2.754	19.52	216
2018	2.437	2.304	-5.44	166
2017	2.124	2.437	14.74	253
2016	1.997	2.124	6.36	222
2015	2.022	1.997	-1.24	209
2014	1.901	2.022	6.37	151
2013⁽⁴⁾	1.736	1.901	9.50	167



Accumulation Unit Value
Division	Beginning of Period	End of Period	Percentage Change from Prior Period	Number of Accumulation Units Outstanding End of Period (in thousands)
SmallCap
2019	$2.519	$3.196	26.86%	163
2018	2.839	2.519	-11.28	176
2017	2.526	2.839	12.38	181
2016	2.161	2.526	16.89	219
2015	2.171	2.161	-0.46	253
2014	2.079	2.171	4.43	57
2013	1.412	2.079	47.24	45
2012	1.236	1.412	14.27	26
2011	1.260	1.236	-1.90	27
2010	1.018	1.260	23.77	80

⁽¹⁾ Commenced operations on May 26, 2017

⁽²⁾ Commenced operations on April 8, 2016

⁽³⁾ Commenced operations on July 19, 2010

⁽⁴⁾ Commenced operations on April 26, 2013

APPENDIX A

The Contract provides for recordkeeping and other services and fees described below as well as a separate Service Expense Agreement which allows Contractholders to choose, in their sole discretion, a customized Plan-level service package and charges.

A. Recordkeeping Expense

The Contractholder must also pay a recordkeeping expense. The quarterly recordkeeping expense is one-fourth of the charge determined from the table below. The amount of the charge is determined at the end of each quarter based upon the number of Plan Participants, both active and inactive, for whom there are Investment Accounts under the Contract at the end of the quarter.



Plan Participants	Annual Expense (Benefit Report Sent to the Contractholder)
1 - 25	$2,250
26 - 49	$34 per Plan Participant + $1,366
50 - 99	$31 per Plan Participant + $1,516
100 - 299	$28 per Plan Participant + $1,816
300 - 499	$23 per Plan Participant + $3,316
500 - 999	$19 per Plan Participant + $5,316
1,000 - 2,499	$14 per Plan Participant + $10,316
2,500 - 4,999	$12 per Plan Participant + $15,316
5,000 and over	$10 per Plan Participant + $25,316


Example:	Assume 600 Plan Participants with Benefit Reports sent to the Contractholder: The expense is $16,716 [600 x $19 = $11,400+ $5,316 = $16,716] ÷ 4 = $4,179. This would be $6.96 per Plan Participant, per quarter

The recordkeeping expense is increased by $3 per Plan Participant if benefit reports are mailed directly to Plan Participants’ homes.

If, instead of quarterly benefit reports, the Company provides such reports annually, the recordkeeping expense is reduced by 9%. Similarly, if such reports are provided semi-annually, the recordkeeping expense is reduced by 6%. If such reports are provided on a monthly basis, the recordkeeping expense is increased by 24%.

If the Company performs more (or less) than one 401(k) & 401(m) non-discrimination test in a Deposit Year, the recordkeeping expense is increased (reduced) by 3% for each additional test performed (or test not performed).

The recordkeeping expense is increased by 10% if Plan Contributions are not reported in the Company’s standard format by modem.

A charge of $15 is made to the account of plan participants who make investment changes/transfers using paper rather than our toll-free number (1-800-547-7754).

The recordkeeping expense for an employer with both a non-qualified plan in the contract offered under this prospectus and a 401(k) plan in a contract will be determined at the point in scale reached under the 401(k) plan.

If the initial Deposit Year is less than twelve months, an adjustment will be made in the amount of the charge so that the full amount of the annual charge per Plan Participant will be assessed during the year.

If all Investment Accounts attributable to a Plan Participant are canceled during the Deposit Year as a result of a withdrawal, the unassessed portion of the full annual charge attributable to the Plan Participant will be charged.

If the Company provides recordkeeping services for Plan assets not allocated to the Contract or an Associated or Companion Contract (“Outside Assets”), the Contractholder must pay an Outside Asset recordkeeping expense. The annual charge is calculated based upon the following table.



Number of Plan Participants With Outside Accounts During the Quarter	Outside Asset Annual Recordkeeping Expense
1 - 25	$1,000 minimum
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
1,000 - 2,499	$6.30 per member + $4,642.20
2,500 - 4,999	$5.40 per member + $6,892.20
5,000 and over	$4.50 per member + $11,392.20

The charge calculated in accordance with the above table will be increased by 15% for the second and each additional Outside Asset for which the Company provides recordkeeping services. One-fourth of the annual Outside Asset Recordkeeping Charge will be billed on a quarterly basis. This charge does not apply if the Outside Assets which correlate to the Plan Participant consist solely of shares of mutual funds for which a subsidiary of the Company serves as investment adviser.

The Contractholder may elect to have the recordkeeping expense attributable to investments in this Contract which correlate to inactive Plan Participants deducted from the Investment Account Values of such Plan Participants. The portion of the charge attributable to a Plan Participant will be allocated to his or her Investment Account in proportion to their relative value.

B. 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 charged $150 on a quarterly basis for each additional employee group or location.

C. Flexible Income Option Charge

An additional charge of $25 annually will be made for any Plan Participant receiving benefits under the Flexible Income Option. The charge is added to the portion of the recordkeeping expense attributable to such Plan Participants. If a Plan Participant is receiving benefits under the Flexible Income Option from a Companion Contract to which a Flexible Income Option Charge applies, the charge will not apply to the contract.

D. Documentation Expense

The Company provides a sample Plan document and summary plan descriptions to the Contractholder. The Contractholder will pay $300 if the Contractholder uses a Principal Standard Plan. If the Company provides a sample custom-written Plan, the Contractholder will pay $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.

PART B

PRINCIPAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT B

PREMIER VARIABLE

(A Group Variable Annuity Contract for

Employer-Sponsored Qualified and Non-Qualified Retirement Plans)

Statement of Additional Information

dated May 1, 2020

This Statement of Additional Information provides information about Principal Life Insurance Company Separate Account B Premier 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, 2020.

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	A-1
APPENDIX A - Principal Life Insurance Company Separate Account B	A-1
APPENDIX B - Principal Life Insurance Company	B-1

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 Avenue, Suite 3000, Des Moines, Iowa 50309, serves as the independent registered public accounting firm for Principal Life Insurance Company Separate Account B and the Principal Life Insurance Company.

UNDERWRITING COMMISSIONS

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



Year	Paid To	Retained by
2019	$0	—
2018	$0	—
2017	$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. Some of the underlying mutual funds were offered prior to the date that they were made available in the Contract. Thus, the Separate Account may publish advertisements containing information about the hypothetical performance of one or more of its Divisions for this Contract had the Contract been issued on or after the date the underlying mutual funds in which such Division invests was first offered. The hypothetical performance from the date of inception of the mutual fund’s in which the Division invests is derived by reducing the actual performance of the underlying mutual fund’s by the fees and charges of the Contract as if it had been in existence. The yield and total return figures described below will vary depending upon market conditions, the composition of the underlying mutual fund’s portfolios and operating expenses. These factors and possible differences in the methods used in calculating yield and total return should be considered when comparing the Separate Account performance figures to performance figures published for other investment vehicles. The Separate Account may also quote rankings, yields or returns as published by independent statistical services or publishers and information regarding performance of certain market indices. Any performance data quoted for the Separate Account represents only historical performance and is not intended to indicate future performance.

From time to time the Separate Account advertises its 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 which, if included, would reduce the “yield” and “effective yield.” For the period ended December 31, 2019, the 7-day annualized and effective yields of the Fidelity VIP Government Money Market Division were 1.01% and 1.01%, 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.

Assuming the Contract had been offered as of the periods indicated in the table below, the hypothetical average annual total returns for the periods ending December 31, 2019 are:



Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
Core Plus Bond	12/18/1987	9.35%	2.85%	4.22%
Diversified Balanced	05/26/2017	17.93%			7.47%
Diversified International	05/02/1994	22.17%	5.04%	5.67%
Equity Income	04/28/1998	28.55%	10.08%	12.14%
Fidelity Government Money Market	04/01/1982	1.59%	0.47%	0.07%
Government & High Quality Bond	05/06/1993	6.01%	1.92%	2.72%
International Emerging Markets	10/24/2000	17.11%	3.85%	2.55%
LargeCap Growth I	06/01/1994	34.35%	14.84%	14.90%
LargeCap S&P 500 Index	05/03/1999	30.55%	10.93%	12.73%
MidCap	12/18/1987	42.50%	13.02%	15.93%
Real Estate Securities	05/01/1998	30.71%	8.20%	12.41%
SAM Balanced	06/03/1997	19.50%	6.38%	8.05%
SmallCap	05/01/1998	26.87%	8.03%	12.11%

FINANCIAL STATEMENTS

APPENDIX A - Principal Life Insurance Company Separate Account B Financials

A-1

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, 2019, 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, 2019, the results of its operations and 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 Account 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, 2019, 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

March 27, 2020

A-2

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	For the year ended December 31, 2019	For each of the two years in the period ended December 31, 2019
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 60/40 Target Allocation Class III Division (1) BlackRock Advantage U.S. Total Market Class III Division
BlackRock Global Allocation Class III Division BNY Mellon IP MidCap Stock Service Shares Division (2) BNY Mellon IP Technology Growth Service Shares Division (3) 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 Delaware Limited Term Diversified Income Service Class Division
Delaware Small Cap Value Service Class Division Diversified Balanced Class 1 Division Diversified Balanced Class 2 Division Diversified Balanced Managed Volatility Class 2 Division
Diversified Balanced Volatility Control Class 2 Division Diversified Growth Class 2 Division Diversified Growth Managed Volatility Class 2 Division Diversified Growth Volatility Control Class 2 Division
Diversified Income Class 2 Division Diversified International Class 1 Division DWS Alternative Asset Allocation Class B Division DWS Equity 500 Index Class B2 Division
DWS Small Mid Cap Value Class B Division

A-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 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 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 International Emerging Markets Class 1 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 Invesco Health Care Series II Division Invesco International Growth Series I Division
Invesco International Growth Series II Division Invesco Mid Cap Growth Series I Division Invesco Oppenheimer V.I. Main Street Small Cap Series II Division (4) Invesco Small Cap Equity Series I Division
Invesco Technology Series I Division Invesco Value Opportunities Series I Division Janus Henderson Enterprise Service Shares Division Janus Henderson Flexible Bond Service Shares Division
LargeCap Growth I Class 1 Division LargeCap S&P 500 Index Class 1 Division LargeCap S&P 500 Index Class 2 Division
MFS International Intrinsic Value Service Class Division (5) MFS New Discovery Service Class Division MFS Utilities Service Class Division MFS Value Service Class Division
MidCap Class 1 Division Neuberger Berman AMT Mid Cap Growth Portfolio Class S Division Neuberger Berman AMT Sustainable Equity Class I 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

A-4



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 2030 Class 1 Division Principal LifeTime 2040 Class 1 Division
Principal LifeTime 2050 Class 1 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 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
EQ Convertible Securities Class IB Division EQ GAMCO Small Company Value Class IB Division EQ Micro Cap Class IB Division EQ SmartBeta Equity Class IB Division EQ Socially Responsible Class IB Division Fidelity VIP Freedom 2020 Service Class 2 Division Fidelity VIP Freedom 2030 Service Class 2 Division Fidelity VIP Freedom 2040 Service Class 2 Division Fidelity VIP Freedom 2050 Service Class 2 Division Franklin U.S. Government Fund Class 2 Division Janus Henderson Global Technology Service Shares Division	For the period from June 7, 2019 (commencement of operations) through December 31, 2019

A-5



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 year ended December 31, 2019	For the year ended December 31, 2019 and the period from June 11, 2018 (commencement of operations) through December 31, 2018
(1) Represented the operations of BlackRock iShares Dynamic Allocation Class III Division until June 6, 2019. (2) Represented the operations of Dreyfus IP MidCap Stock Service Shares Division until June 2, 2019. (3) Represented the operations of Dreyfus IP Technology Growth Service Shares Division until June 2, 2019. (4) Represented the operations of Oppenheimer Main Street Small Cap Service Shares Division until May 24, 2019. (5) Represented the operations of MFS International Value Service Class Division until June 6, 2019.

A-6



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		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		$	4,548,893	$	4,879,162	$	527,254	$	1,666,093
Total assets			4,548,893		4,879,162		527,254		1,666,093
Total liabilities			—		—		—		—
Net assets		$	4,548,893	$	4,879,162	$	527,254	$	1,666,093

Net assets
Applicable to accumulation units		$	4,548,893	$	4,879,162	$	527,254	$	1,666,093
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	4,548,893	$	4,879,162	$	527,254	$	1,666,093

Investments in shares of mutual funds, at cost		$	3,653,539	$	5,235,837	$	452,014	$	1,472,461

Shares of mutual funds owned			228,358		272,427		34,439		104,392

Accumulation units outstanding			99,603		315,018		41,622		100,483
Annuitized units outstanding			—		—		—		—
Total units outstanding			99,603		315,018		41,622		100,483


Statements of Operations
Year ended December 31, 2019
		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	$	—	$	27,316	$	—	$	—

Expenses:
	Mortality and expense risks		62,141		58,219		2,689		24,685
	Administrative charges		7,458		6,769		539		2,963
	Separate account rider charges		2,335		4,174		—		118
Net investment income (loss)			(71,934)		(41,846)		(3,228)		(27,766)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(66,541)		1,222		1,342		7,256
Capital gains distributions			606,000		509,704		5,655		360,638
Total realized gains (losses) on investments			539,459		510,926		6,997		367,894

Change in net unrealized appreciation (depreciation)
	of investments		981,251		290,994		110,089		244,068

Net gains (losses) on investments			1,448,776		760,074		113,858		584,196

Net increase (decrease) in net assets resulting from operations		$	1,448,776	$	760,074	$	113,858	$	584,196

See accompanying notes.

A-7



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		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		$	9,811,230	$	32,718,900	$	9,130,144	$	3,723,090
Total assets			9,811,230		32,718,900		9,130,144		3,723,090
Total liabilities			—		—		—		—
Net assets		$	9,811,230	$	32,718,900	$	9,130,144	$	3,723,090

Net assets
Applicable to accumulation units		$	9,811,230	$	32,718,900	$	9,130,144	$	3,723,090
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	9,811,230	$	32,718,900	$	9,130,144	$	3,723,090

Investments in shares of mutual funds, at cost		$	8,372,290	$	32,626,208	$	8,673,590	$	2,941,868

Shares of mutual funds owned			979,165		3,188,977		441,070		177,883

Accumulation units outstanding			393,652		2,413,770		340,613		127,216
Annuitized units outstanding			—		—		—		—
Total units outstanding			393,652		2,413,770		340,613		127,216


Statements of Operations
Year ended December 31, 2019
		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	$	198,118	$	778,756	$	166,007	$	—

Expenses:
	Mortality and expense risks		110,445		424,119		108,862		47,717
	Administrative charges		3,518		51,008		12342		1,909
	Separate account rider charges		0		502		5193		0
Net investment income (loss)			84,155		303,127		39,610		(49,626)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			685,394		(524,818)		(4,368)		472,061
Capital gains distributions			832,685		0		918,251		410,089
Total realized gains (losses) on investments			1,518,079		(524,818)		913,883		882,150

Change in net unrealized appreciation (depreciation)
	of investments		331,794		2,697,738		1,096,939		213,258

Net gains (losses) on investments			1,934,028		2,476,047		2,050,432		1,045,782

Net increase (decrease) in net assets resulting from operations		$	1,934,028	$	2,476,047	$	2,050,432	$	1,045,782


See accompanying notes.

A-8



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		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		$	26,467,436	$	14,004,030	$	2,711,263	$	8,179,899
Total assets			26,467,436		14,004,030		2,711,263		8,179,899
Total liabilities			—		—		—		—
Net assets		$	26,467,436	$	14,004,030	$	2,711,263	$	8,179,899

Net assets
Applicable to accumulation units		$	26,467,436	$	14,004,030	$	2,711,263	$	8,179,899
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	26,467,436	$	14,004,030	$	2,711,263	$	8,179,899

Investments in shares of mutual funds, at cost		$	20,705,744	$	8,449,096	$	2,577,608	$	7,867,175

Shares of mutual funds owned			1,292,355		1,192,848		113,966		345,581

Accumulation units outstanding			780,422		544,093		199,089		687,298
Annuitized units outstanding			—		—		—		—
Total units outstanding			780,422		544,093		199,089		687,298


Statements of Operations
Year ended December 31, 2019
		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	$	—	$	260,704	$	51,102	$	116,175

Expenses:
	Mortality and expense risks		343,049		165,135		33,858		44,042
	Administrative charges		41,171		7,836		3,731		8,270
	Separate account rider charges		3,781		—		5,357		—
Net investment income (loss)			(388,001)		87,733		8,156		63,863

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			3,732,834		913,814		18,105		51,610
Capital gains distributions			3,151,946		779,679		137,680		236,875
Total realized gains (losses) on investments			6,884,780		1,693,493		155,785		288,485

Change in net unrealized appreciation (depreciation)
	of investments		1,259,749		1,236,399		304,219		610,593

Net gains (losses) on investments			7,756,528		3,017,625		468,160		962,941

Net increase (decrease) in net assets resulting from operations		$	7,756,528	$	3,017,625	$	468,160	$	962,941


See accompanying notes.

A-9



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		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		$	3,398,913	$	6,584,481	$	1,573,419	$	1,433,725
Total assets			3,398,913		6,584,481		1,573,419		1,433,725
Total liabilities			—		—		—		—
Net assets		$	3,398,913	$	6,584,481	$	1,573,419	$	1,433,725

Net assets
Applicable to accumulation units		$	3,398,913	$	6,584,481	$	1,573,419	$	1,433,725
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	3,398,913	$	6,584,481	$	1,573,419	$	1,433,725

Investments in shares of mutual funds, at cost		$	3,473,781	$	6,562,298	$	1,375,056	$	1,304,361

Shares of mutual funds owned			253,840		494,702		60,470		54,806

Accumulation units outstanding			245,566		554,400		120,775		117,268
Annuitized units outstanding			—		—		—		—
Total units outstanding			245,566		554,400		120,775		117,268


Statements of Operations
Year ended December 31, 2019
		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	$	63939	$	112,403	$	2,331	$	83

Expenses:
	Mortality and expense risks		39,354		38,873		18,631		8,159
	Administrative charges		4,127		7,398		1,775		1,586
	Separate account rider charges		4,742		—		757		—
Net investment income (loss)			15,716		66,132		-18,832		-9,662

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(42,973)		(20,439)		3,197		1,760
Capital gains distributions			254,342		380,587		96,609		62,618
Total realized gains (losses) on investments			211,369		360,148		99,806		64,378

Change in net unrealized appreciation (depreciation)
	of investments		328,167		480,315		300,967		206,083

Net gains (losses) on investments			555,252		906,595		381,941		260,799

Net increase (decrease) in net assets resulting from operations		$	555,252	$	906,595	$	381,941	$	260,799


See accompanying notes.

A-10



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		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		$	1,237,229	$	2,153,368	$	2,093,014	$	200,535
Total assets			1,237,229		2,153,368		2,093,014		200,535
Total liabilities			—		—		—		—
Net assets		$	1,237,229	$	2,153,368	$	2,093,014	$	200,535

Net assets
Applicable to accumulation units		$	1,237,229	$	2,153,368	$	2,093,014	$	200,535
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	1,237,229	$	2,153,368	$	2,093,014	$	200,535

Investments in shares of mutual funds, at cost		$	1,286,658	$	2,059,175	$	1,951,811	$	192,288

Shares of mutual funds owned			127,549		159,983		152,663		18,364

Accumulation units outstanding			106,316		184,160		162,555		17,453
Annuitized units outstanding			—		—		—		—
Total units outstanding			106,316		184,160		162,555		17,453


Statements of Operations
Year ended December 31, 2019
		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	$	77042	$	34,475	$	15,874	$	2,812

Expenses:
	Mortality and expense risks		15,924		12,899		14,197		1,505
	Administrative charges		637		2,386		2,733		251
	Separate account rider charges		0		—		0		—
Net investment income (loss)			60,481		19,190		(1,056)		1,056

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(13,107)		(415)		2,079		102
Capital gains distributions			0		63,243		125,230		5,358
Total realized gains (losses) on investments			(13,107)		62,828		127,309		5,460

Change in net unrealized appreciation (depreciation)
	of investments		84,089		161,896		211,306		18,281

Net gains (losses) on investments			131,463		243,914		337,559		24,797

Net increase (decrease) in net assets resulting from operations		$	131,463	$	243,914	$	337,559	$	24,797


See accompanying notes.

A-11



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		American Funds Insurance Series New World Fund Class 2 Division		American Funds Insurance Series New World Fund Class 4 Division		BlackRock 60/40 Target Allocation Class III Division (1)		BlackRock Advantage U.S. Total Market Class III Division




Assets
Investments in shares of mutual funds, at fair value		$	1,786,844	$	2,183,210	$	799,242	$	1,002,094
Total assets			1,786,844		2,183,210		799,242		1,002,094
Total liabilities			—		—		—		—
Net assets		$	1,786,844	$	2,183,210	$	799,242	$	1,002,094

Net assets
Applicable to accumulation units		$	1,786,844	$	2,183,210	$	799,242	$	1,002,094
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	1,786,844	$	2,183,210	$	799,242	$	1,002,094

Investments in shares of mutual funds, at cost		$	1,629,473	$	1,975,379	$	740,746	$	1,103,410

Shares of mutual funds owned			69,826		85,717		65,944		61,365

Accumulation units outstanding			141,002		189,190		68,378		76,411
Annuitized units outstanding			—		—		—		—
Total units outstanding			141,002		189,190		68,378		76,411


Statements of Operations
Year ended December 31, 2019
		American Funds Insurance Series New World Fund Class 2 Division		American Funds Insurance Series New World Fund Class 4 Division		BlackRock 60/40 Target Allocation Class III Division (1)		BlackRock Advantage U.S. Total Market Class III Division




Net investment income (loss)
Investment income:
	Dividends	$	15,549	$	14,401	$	14,276	$	21,116

Expenses:
	Mortality and expense risks		19,685		12,252		4,590		7,623
	Administrative charges		1,905		2,288		829		1,446
	Separate account rider charges		432		—		317		—
Net investment income (loss)			(6,473)		(139)		8,540		12,047

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			46,192		3,086		9,949		(36,908)
Capital gains distributions			60,863		53,931		7,222		113,040
Total realized gains (losses) on investments			107,055		57,017		17,171		76,132

Change in net unrealized appreciation (depreciation)
	of investments		271,823		305,814		82,300		132,279

Net gains (losses) on investments			372,405		362,692		108,011		220,458

Net increase (decrease) in net assets resulting from operations		$	372,405	$	362,692	$	108,011	$	220,458


(1) Represented the operations of BlackRock iShares Dynamic Allocation Class III Division until June 6, 2019.

See accompanying notes.

A-12



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		BlackRock Global Allocation Class III Division		BNY Mellon IP MidCap Stock Service Shares Division (1)		BNY Mellon IP Technology Growth Service Shares Division (2)		Calvert EAFE International Index Class F Division




Assets
Investments in shares of mutual funds, at fair value		$	2,139,796	$	546,882	$	8,637,728	$	1,308,483
Total assets			2,139,796		546,882		8,637,728		1,308,483
Total liabilities			—		—		—		—
Net assets		$	2,139,796	$	546,882	$	8,637,728	$	1,308,483

Net assets
Applicable to accumulation units		$	2,139,796	$	546,882	$	8,637,728	$	1,308,483
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	2,139,796	$	546,882	$	8,637,728	$	1,308,483

Investments in shares of mutual funds, at cost		$	2,050,166	$	575,877	$	7,343,726	$	1,262,365

Shares of mutual funds owned			147,776		29,513		365,541		14,532

Accumulation units outstanding			191,568		49,716		212,729		126,237
Annuitized units outstanding			—		—		—		—
Total units outstanding			191,568		49,716		212,729		126,237


Statements of Operations
Year ended December 31, 2019
		BlackRock Global Allocation Class III Division		BNY Mellon IP MidCap Stock Service Shares Division (1)		BNY Mellon IP Technology Growth Service Shares Division (2)		Calvert EAFE International Index Class F Division




Net investment income (loss)
Investment income:
	Dividends	$	26,036	$	1,940	$	—	$	27,731

Expenses:
	Mortality and expense risks		20,192		4,238		113,558		5,421
	Administrative charges		2,726		756		13,628		1,267
	Separate account rider charges		1,379		—		5,855		—
Net investment income (loss)			1,739		(3,054)		(133,041)		21,043

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			1,139		(6,319)		556,806		185
Capital gains distributions			79,588		35,182		1,168,054		—
Total realized gains (losses) on investments			80,727		28,863		1,724,860		185

Change in net unrealized appreciation (depreciation)
	of investments		192,061		56,114		329,247		128,980

Net gains (losses) on investments			274,527		81,923		1,921,066		150,208

Net increase (decrease) in net assets resulting from operations		$	274,527	$	81,923	$	1,921,066	$	150,208


(1) Represented the operations of Dreyfus IP MidCap Stock Service Shares Division until June 2, 2019.
(2) Represented the operations of Dreyfus IP Technology Growth Service Shares Division until June 2, 2019.

See accompanying notes.

A-13



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Calvert Investment Grade Bond Portfolio 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




Assets
Investments in shares of mutual funds, at fair value		$	943,274	$	2,707,946	$	4,488,888	$	2,018,227
Total assets			943,274		2,707,946		4,488,888		2,018,227
Total liabilities			—		—		—		—
Net assets		$	943,274	$	2,707,946	$	4,488,888	$	2,018,227

Net assets
Applicable to accumulation units		$	943,274	$	2,707,946	$	4,488,888	$	2,018,227
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	943,274	$	2,707,946	$	4,488,888	$	2,018,227

Investments in shares of mutual funds, at cost		$	949,793	$	2,744,513	$	4,454,360	$	2,062,546

Shares of mutual funds owned			17,160		33,568		39,955		77,297

Accumulation units outstanding			86,794		235,609		375,505		157,109
Annuitized units outstanding			—		—		—		—
Total units outstanding			86,794		235,609		375,505		157,109


Statements of Operations
Year ended December 31, 2019
		Calvert Investment Grade Bond Portfolio 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




Net investment income (loss)
Investment income:
	Dividends	$	23,534	$	21,258	$	44,075	$	—

Expenses:
	Mortality and expense risks		2,710		15,433		27,751		11,108
	Administrative charges		671		3,089		5,115		2,328
	Separate account rider charges		—		—		—		—
Net investment income (loss)			20,153		2,736		11,209		(13,436)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			1,867		(13,593)		(7,714)		8,742
Capital gains distributions			—		175,581		264,221		178,699
Total realized gains (losses) on investments			1,867		161,988		256,507		187,441

Change in net unrealized appreciation (depreciation)
	of investments		(4,096)		246,207		420,984		140,223

Net gains (losses) on investments			17,924		410,931		688,700		314,228

Net increase (decrease) in net assets resulting from operations		$	17,924	$	410,931	$	688,700	$	314,228


See accompanying notes.

A-14



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Columbia Limited Duration Credit Class 2 Division		Columbia Small Cap Value Class 2 Division		Core Plus Bond Class 1 Division		Delaware Limited Term Diversified Income Service Class Division




Assets
Investments in shares of mutual funds, at fair value		$	404,751	$	1,033,855	$	116,174,195	$	475,876
Total assets			404,751		1,033,855		116,174,195		475,876
Total liabilities			—		—		—		—
Net assets		$	404,751	$	1,033,855	$	116,174,195	$	475,876

Net assets
Applicable to accumulation units		$	404,751	$	1,033,855	$	116,174,195	$	475,876
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	404,751	$	1,033,855	$	116,174,195	$	475,876

Investments in shares of mutual funds, at cost		$	394,951	$	1,103,779	$	112,858,787	$	474,241

Shares of mutual funds owned			41,641		66,486		10,102,104		48,807

Accumulation units outstanding			38,559		94,994		5,336,883		46,511
Annuitized units outstanding			—		—		—		—
Total units outstanding			38,559		94,994		5,336,883		46,511


Statements of Operations
Year ended December 31, 2019
		Columbia Limited Duration Credit Class 2 Division		Columbia Small Cap Value Class 2 Division		Core Plus Bond Class 1 Division		Delaware Limited Term Diversified Income Service Class Division




Net investment income (loss)
Investment income:
	Dividends	$	5,625	$	2,100	$	3,694,346	$	9,270

Expenses:
	Mortality and expense risks		2,805		6,460		1,377,910		4,118
	Administrative charges		383		1,146		113,372		463
	Separate account rider charges		74		—		22,901		88
Net investment income (loss)			2,363		(5,506)		2,180,163		4,601

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			1,134		(16,730)		1,285,718		(704)
Capital gains distributions			—		68,599		—		—
Total realized gains (losses) on investments			1,134		51,869		1,285,718		(704)

Change in net unrealized appreciation (depreciation)
	of investments		12,508		100,412		5,630,180		8,999

Net gains (losses) on investments			16,005		146,775		9,096,061		12,896

Net increase (decrease) in net assets resulting from operations		$	16,005	$	146,775	$	9,096,061	$	12,896


See accompanying notes.

A-15



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Delaware Small Cap Value Service Class Division		Diversified Balanced Class 1 Division		Diversified Balanced Class 2 Division		Diversified Balanced Managed Volatility Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	2,562,571	$	24,944,021	$	988,423,394	$	176,257,628
Total assets			2,562,571		24,944,021		988,423,394		176,257,628
Total liabilities			—		—		—		—
Net assets		$	2,562,571	$	24,944,021	$	988,423,394	$	176,257,628

Net assets
Applicable to accumulation units		$	2,562,571	$	24,944,021	$	988,423,394	$	176,257,628
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	2,562,571	$	24,944,021	$	988,423,394	$	176,257,628

Investments in shares of mutual funds, at cost		$	2,609,175	$	23,500,338	$	818,855,744	$	152,964,814

Shares of mutual funds owned			67,330		1,509,928		59,723,468		13,652,799

Accumulation units outstanding			160,042		2,111,666		55,108,936		13,367,376
Annuitized units outstanding			—		—		—		—
Total units outstanding			160,042		2,111,666		55,108,936		13,367,376


Statements of Operations
Year ended December 31, 2019
		Delaware Small Cap Value Service Class Division		Diversified Balanced Class 1 Division		Diversified Balanced Class 2 Division		Diversified Balanced Managed Volatility Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	19,131	$	511,715	$	18,026,426	$	2,781,663

Expenses:
	Mortality and expense risks		30,358		282,134		12,424,614		2,139,653
	Administrative charges		3,330		10,772		1,491,128		256,524
	Separate account rider charges		1,972		—		376,673		65,584
Net investment income (loss)			(16,529)		218,809		3,734,011		319,902

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(559)		107,604		43,637,197		3,011,773
Capital gains distributions			197,272		1,009,930		40,863,423		2,553,107
Total realized gains (losses) on investments			196,713		1,117,534		84,500,620		5,564,880

Change in net unrealized appreciation (depreciation)
	of investments		359,207		2,439,137		63,569,257		19,144,577

Net gains (losses) on investments			539,391		3,775,480		151,803,888		25,029,359

Net increase (decrease) in net assets resulting from operations		$	539,391	$	3,775,480	$	151,803,888	$	25,029,359


See accompanying notes.

A-16



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Diversified Balanced Volatility Control Class 2 Division		Diversified Growth Class 2 Division		Diversified Growth Managed Volatility Class 2 Division		Diversified Growth Volatility Control Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	145,328,454	$	3,772,917,463	$	353,685,077	$	765,294,482
Total assets			145,328,454		3,772,917,463		353,685,077		765,294,482
Total liabilities			—		—		—		—
Net assets		$	145,328,454	$	3,772,917,463	$	353,685,077	$	765,294,482

Net assets
Applicable to accumulation units		$	145,328,454	$	3,772,917,463	$	353,685,077	$	765,294,482
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	145,328,454	$	3,772,917,463	$	353,685,077	$	765,294,482

Investments in shares of mutual funds, at cost		$	135,353,134	$	2,959,728,131	$	296,217,030	$	701,344,581

Shares of mutual funds owned			12,410,628		201,868,243		26,140,804		63,774,540

Accumulation units outstanding			12,526,691		188,482,525		25,503,108		64,303,186
Annuitized units outstanding			—		—		—		—
Total units outstanding			12,526,691		188,482,525		25,503,108		64,303,186


Statements of Operations
Year ended December 31, 2019
		Diversified Balanced Volatility Control Class 2 Division		Diversified Growth Class 2 Division		Diversified Growth Managed Volatility Class 2 Division		Diversified Growth Volatility Control Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	1,009,551	$	64,821,603	$	5,363,155	$	5,625,531

Expenses:
	Mortality and expense risks		1,273,625		46,308,837		4,298,559		7,022,339
	Administrative charges		152,853		5,557,709		520,251		842,779
	Separate account rider charges		—		996,538		138,311		—
Net investment income (loss)			(416,927)		11,958,519		406,034		(2,239,587)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			336,055		162,444,860		7,070,338		700,021
Capital gains distributions			990,341		133,401,553		5,278,820		4,664,526
Total realized gains (losses) on investments			1,326,396		295,846,413		12,349,158		5,364,547

Change in net unrealized appreciation (depreciation)
	of investments		11,807,300		345,786,028		45,499,580		78,184,013

Net gains (losses) on investments			12,716,769		653,590,960		58,254,772		81,308,973

Net increase (decrease) in net assets resulting from operations		$	12,716,769	$	653,590,960	$	58,254,772	$	81,308,973


See accompanying notes.

A-17



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Diversified Income Class 2 Division		Diversified International Class 1 Division		DWS Alternative Asset Allocation Class B Division		DWS Equity 500 Index Class B2 Division




Assets
Investments in shares of mutual funds, at fair value		$	279,863,718	$	103,483,807	$	44,280	$	2,490,658
Total assets			279,863,718		103,483,807		44,280		2,490,658
Total liabilities			—		—		—		—
Net assets		$	279,863,718	$	103,483,807	$	44,280	$	2,490,658

Net assets
Applicable to accumulation units		$	279,863,718	$	103,483,807	$	44,280	$	2,490,658
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	279,863,718	$	103,483,807	$	44,280	$	2,490,658

Investments in shares of mutual funds, at cost		$	256,121,450	$	82,035,915	$	42,964	$	2,186,197

Shares of mutual funds owned			20,250,631		6,587,129		3,319		107,634

Accumulation units outstanding			20,567,245		3,881,846		4,408		174,629
Annuitized units outstanding			—		—		—		—
Total units outstanding			20,567,245		3,881,846		4,408		174,629


Statements of Operations
Year ended December 31, 2019
		Diversified Income Class 2 Division		Diversified International Class 1 Division		DWS Alternative Asset Allocation Class B Division		DWS Equity 500 Index Class B2 Division




Net investment income (loss)
Investment income:
	Dividends	$	4,384,707	$	1,661,004	$	1,503	$	32,673

Expenses:
	Mortality and expense risks		3,302,783		1,238,188		503		19,958
	Administrative charges		396,380		80,066		65		3,273
	Separate account rider charges		64,204		4,038		—		—
Net investment income (loss)			621,340		338,712		935		9,442

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			5,232,420		4,697,678		(55)		6,313
Capital gains distributions			5,779,031		5,003,662		—		100,999
Total realized gains (losses) on investments			11,011,451		9,701,340		(55)		107,312

Change in net unrealized appreciation (depreciation)
	of investments		21,449,329		9,270,883		4,066		419,422

Net gains (losses) on investments			33,082,120		19,310,935		4,946		536,176

Net increase (decrease) in net assets resulting from operations		$	33,082,120	$	19,310,935	$	4,946	$	536,176


See accompanying notes.

A-18



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		DWS Small Mid Cap Value Class B Division		EQ Convertible Securities Class IB Division (1)		EQ GAMCO Small Company Value Class IB Division (1)		EQ Micro Cap Class IB Division (1)




Assets
Investments in shares of mutual funds, at fair value		$	1,469,414	$	—	$	55,294	$	10,480
Total assets			1,469,414		—		55,294		10,480
Total liabilities			—		—		—		—
Net assets		$	1,469,414	$	—	$	55,294	$	10,480

Net assets
Applicable to accumulation units		$	1,469,414	$	—	$	55,294	$	10,480
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	1,469,414	$	—	$	55,294	$	10,480

Investments in shares of mutual funds, at cost		$	1,588,555	$	—	$	54,354	$	10,889

Shares of mutual funds owned			107,492		—		923		999

Accumulation units outstanding			117,871		—		5,085		958
Annuitized units outstanding			—		—		—		—
Total units outstanding			117,871		—		5,085		958


Statements of Operations
Year ended December 31, 2019
		DWS Small Mid Cap Value Class B Division		EQ Convertible Securities Class IB Division (1)		EQ GAMCO Small Company Value Class IB Division (1)		EQ Micro Cap Class IB Division (1)




Net investment income (loss)
Investment income:
	Dividends	$	4,688	$	—	$	314	$	13

Expenses:
	Mortality and expense risks		14,126		—		88		25
	Administrative charges		1,815		—		22		6
	Separate account rider charges		668		—		—		—
Net investment income (loss)			(11,921)		—		204		(18)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(55,764)		—		2		(3)
Capital gains distributions			93,472		—		1,279		968
Total realized gains (losses) on investments			37,708		—		1,281		965

Change in net unrealized appreciation (depreciation)
	of investments		193,594		—		940		(410)

Net gains (losses) on investments			219,381		—		2,425		537

Net increase (decrease) in net assets resulting from operations		$	219,381	$	—	$	2,425	$	537


(1) Commenced operations June 7, 2019.

See accompanying notes.

A-19



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		EQ SmartBeta Equity Class IB Division (1)		EQ Socially Responsible Class IB Division (1)		Equity Income Class 1 Division		Equity Income Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	62,178	$	16,581	$	229,474,830	$	7,664,804
Total assets			62,178		16,581		229,474,830		7,664,804
Total liabilities			—		—		—		—
Net assets		$	62,178	$	16,581	$	229,474,830	$	7,664,804

Net assets
Applicable to accumulation units		$	62,178	$	16,581	$	229,328,786	$	7,664,804
Applicable to contracts in annuitization period			—		—		146,044		—
Total net assets		$	62,178	$	16,581	$	229,474,830	$	7,664,804

Investments in shares of mutual funds, at cost		$	60,578	$	15,749	$	180,253,125	$	6,878,307

Shares of mutual funds owned			4,312		1,188		8,140,292		274,429

Accumulation units outstanding			5,747		1,475		11,621,816		573,202
Annuitized units outstanding			—		—		12,234		—
Total units outstanding			5,747		1,475		11,634,050		573,202


Statements of Operations
Year ended December 31, 2019
		EQ SmartBeta Equity Class IB Division (1)		EQ Socially Responsible Class IB Division (1)		Equity Income Class 1 Division		Equity Income Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	653	$	130	$	4,268,738	$	101,959

Expenses:
	Mortality and expense risks		230		36		2,802,412		48,229
	Administrative charges		23		9		240,850		8,555
	Separate account rider charges		—		—		17,119		—
Net investment income (loss)			400		85		1,208,357		45,175

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(2)		1		17,099,538		11,995
Capital gains distributions			783		230		5,972,915		162,461
Total realized gains (losses) on investments			781		231		23,072,453		174,456

Change in net unrealized appreciation (depreciation)
	of investments		1,599		832		30,640,488		1,124,305

Net gains (losses) on investments			2,780		1,148		54,921,298		1,343,936

Net increase (decrease) in net assets resulting from operations		$	2,780	$	1,148	$	54,921,298	$	1,343,936


(1) Commenced operations June 7, 2019.

See accompanying notes.

A-20



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Fidelity VIP Contrafund Service Class Division		Fidelity VIP Contrafund Service Class 2 Division		Fidelity VIP Equity-Income Service Class 2 Division		Fidelity VIP Freedom 2020 Service Class 2 Division (1)




Assets
Investments in shares of mutual funds, at fair value		$	35,859,605	$	50,632,508	$	28,580,830	$	142,053
Total assets			35,859,605		50,632,508		28,580,830		142,053
Total liabilities			—		—		—		—
Net assets		$	35,859,605	$	50,632,508	$	28,580,830	$	142,053

Net assets
Applicable to accumulation units		$	35,859,605	$	50,632,508	$	28,580,830	$	142,053
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	35,859,605	$	50,632,508	$	28,580,830	$	142,053

Investments in shares of mutual funds, at cost		$	28,733,382	$	43,710,341	$	25,962,914	$	136,211

Shares of mutual funds owned			970,227		1,402,562		1,237,265		10,205

Accumulation units outstanding			990,426		1,832,502		1,165,471		13,201
Annuitized units outstanding			—		—		—		—
Total units outstanding			990,426		1,832,502		1,165,471		13,201


Statements of Operations
Year ended December 31, 2019
		Fidelity VIP Contrafund Service Class Division		Fidelity VIP Contrafund Service Class 2 Division		Fidelity VIP Equity-Income Service Class 2 Division		Fidelity VIP Freedom 2020 Service Class 2 Division (1)




Net investment income (loss)
Investment income:
	Dividends	$	123,553	$	104,516	$	495,979	$	2,430

Expenses:
	Mortality and expense risks		439,073		585,849		347,045		292
	Administrative charges		17,565		73,155		24,136		73
	Separate account rider charges		—		8,538		4,163		—
Net investment income (loss)			(333,085)		(563,026)		120,635		2,065

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			1,594,806		2,997,343		359,249		15
Capital gains distributions			4,139,903		5,710,060		1,844,605		570
Total realized gains (losses) on investments			5,734,709		8,707,403		2,203,854		585

Change in net unrealized appreciation (depreciation)
	of investments		3,690,848		4,283,215		3,877,696		5,842

Net gains (losses) on investments			9,092,472		12,427,592		6,202,185		8,492

Net increase (decrease) in net assets resulting from operations		$	9,092,472	$	12,427,592	$	6,202,185	$	8,492


(1) Commenced operations June 7, 2019.

See accompanying notes.

A-21



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Fidelity VIP Freedom 2030 Service Class 2 Division (1)		Fidelity VIP Freedom 2040 Service Class 2 Division (1)		Fidelity VIP Freedom 2050 Service Class 2 Division (1)		Fidelity VIP Government Money Market Initial Class Division




Assets
Investments in shares of mutual funds, at fair value		$	298,182	$	719,516	$	177,737	$	31,462,445
Total assets			298,182		719,516		177,737		31,462,445
Total liabilities			—		—		—		—
Net assets		$	298,182	$	719,516	$	177,737	$	31,462,445

Net assets
Applicable to accumulation units		$	298,182	$	719,516	$	177,737	$	31,462,445
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	298,182	$	719,516	$	177,737	$	31,462,445

Investments in shares of mutual funds, at cost		$	294,341	$	693,065	$	172,839	$	31,462,442

Shares of mutual funds owned			19,630		31,351		8,641		31,462,446

Accumulation units outstanding			27,311		64,854		16,013		7,795,418
Annuitized units outstanding			—		—		—		—
Total units outstanding			27,311		64,854		16,013		7,795,418


Statements of Operations
Year ended December 31, 2019
		Fidelity VIP Freedom 2030 Service Class 2 Division (1)		Fidelity VIP Freedom 2040 Service Class 2 Division (1)		Fidelity VIP Freedom 2050 Service Class 2 Division (1)		Fidelity VIP Government Money Market Initial Class Division




Net investment income (loss)
Investment income:
	Dividends	$	4,755	$	9,693	$	1,880	$	697,720

Expenses:
	Mortality and expense risks		339		735		154		386,340
	Administrative charges		85		184		38		30,475
	Separate account rider charges		—		—		—		14,179
Net investment income (loss)			4,331		8,774		1,688		266,726

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			3,685		49		12		—
Capital gains distributions			653		1,118		591		—
Total realized gains (losses) on investments			4,338		1,167		603		—

Change in net unrealized appreciation (depreciation)
	of investments		3,841		26,451		4,898		—

Net gains (losses) on investments			12,510		36,392		7,189		266,726

Net increase (decrease) in net assets resulting from operations		$	12,510	$	36,392	$	7,189	$	266,726


(1) Commenced operations June 7, 2019.

See accompanying notes.

A-22



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		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




Assets
Investments in shares of mutual funds, at fair value		$	8,849,989	$	14,563,181	$	12,286,792	$	95,250
Total assets			8,849,989		14,563,181		12,286,792		95,250
Total liabilities			—		—		—		—
Net assets		$	8,849,989	$	14,563,181	$	12,286,792	$	95,250

Net assets
Applicable to accumulation units		$	8,849,989	$	14,563,181	$	12,286,792	$	95,250
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	8,849,989	$	14,563,181	$	12,286,792	$	95,250

Investments in shares of mutual funds, at cost		$	8,849,990	$	10,244,130	$	9,708,358	$	99,258

Shares of mutual funds owned			8,849,989		185,047		158,683		2,923

Accumulation units outstanding			880,129		544,846		346,351		6,677
Annuitized units outstanding			—		—		—		—
Total units outstanding			880,129		544,846		346,351		6,677


Statements of Operations
Year ended December 31, 2019
		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




Net investment income (loss)
Investment income:
	Dividends	$	143,313	$	23,074	$	6,418	$	718

Expenses:
	Mortality and expense risks		78,143		177,343		145,454		847
	Administrative charges		12,440		7,095		17,456		—
	Separate account rider charges		—		—		6,752		—
Net investment income (loss)			52,730		(161,364)		(163,244)		(129)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			—		1,381,827		496,156		(87)
Capital gains distributions			—		898,813		730,995		9,445
Total realized gains (losses) on investments			—		2,280,640		1,227,151		9,358

Change in net unrealized appreciation (depreciation)
	of investments		—		1,810,114		2,110,429		8,063

Net gains (losses) on investments			52,730		3,929,390		3,174,336		17,292

Net increase (decrease) in net assets resulting from operations		$	52,730	$	3,929,390	$	3,174,336	$	17,292


See accompanying notes.

A-23



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Fidelity VIP Mid Cap Service Class 2 Division		Fidelity VIP Overseas Service Class 2 Division		Franklin Global Real Estate VIP Class 2 Division		Franklin Income VIP Class 4 Division




Assets
Investments in shares of mutual funds, at fair value		$	25,934,340	$	23,490,425	$	1,397,210	$	1,252,718
Total assets			25,934,340		23,490,425		1,397,210		1,252,718
Total liabilities			—		—		—		—
Net assets		$	25,934,340	$	23,490,425	$	1,397,210	$	1,252,718

Net assets
Applicable to accumulation units		$	25,934,340	$	23,490,425	$	1,397,210	$	1,252,718
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	25,934,340	$	23,490,425	$	1,397,210	$	1,252,718

Investments in shares of mutual funds, at cost		$	26,238,919	$	18,724,856	$	1,309,195	$	1,224,636

Shares of mutual funds owned			816,830		1,025,783		79,840		76,760

Accumulation units outstanding			1,168,911		1,179,702		118,101		115,664
Annuitized units outstanding			—		—		—		—
Total units outstanding			1,168,911		1,179,702		118,101		115,664


Statements of Operations
Year ended December 31, 2019
		Fidelity VIP Mid Cap Service Class 2 Division		Fidelity VIP Overseas Service Class 2 Division		Franklin Global Real Estate VIP Class 2 Division		Franklin Income VIP Class 4 Division




Net investment income (loss)
Investment income:
	Dividends	$	167,860	$	342,947	$	23,927	$	29,835

Expenses:
	Mortality and expense risks		282,065		289,481		10,608		4,177
	Administrative charges		36,623		35,091		1,534		1,027
	Separate account rider charges		13,151		2,132		15		—
Net investment income (loss)			(163,979)		16,243		11,770		24,631

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(656,418)		1,867,805		4,757		84
Capital gains distributions			2,699,062		883,229		18,707		9,186
Total realized gains (losses) on investments			2,042,644		2,751,034		23,464		9,270

Change in net unrealized appreciation (depreciation)
	of investments		2,756,548		2,595,098		139,722		30,265

Net gains (losses) on investments			4,635,213		5,362,375		174,956		64,166

Net increase (decrease) in net assets resulting from operations		$	4,635,213	$	5,362,375	$	174,956	$	64,166


See accompanying notes.

A-24



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Franklin Rising Dividends VIP Class 4 Division		Franklin Small Cap Value VIP Class 2 Division		Franklin U.S. Government Fund Class 2 Division (1)		Goldman Sachs VIT Mid Cap Value Institutional Shares Division




Assets
Investments in shares of mutual funds, at fair value		$	2,841,969	$	4,044,350	$	322,631	$	11,835,201
Total assets			2,841,969		4,044,350		322,631		11,835,201
Total liabilities			—		—		—		—
Net assets		$	2,841,969	$	4,044,350	$	322,631	$	11,835,201

Net assets
Applicable to accumulation units		$	2,841,969	$	4,044,350	$	322,631	$	11,835,201
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	2,841,969	$	4,044,350	$	322,631	$	11,835,201

Investments in shares of mutual funds, at cost		$	2,740,682	$	4,522,061	$	322,309	$	11,853,101

Shares of mutual funds owned			104,947		268,727		26,774		729,667

Accumulation units outstanding			206,427		158,456		31,758		389,672
Annuitized units outstanding			—		—		—		—
Total units outstanding			206,427		158,456		31,758		389,672


Statements of Operations
Year ended December 31, 2019
		Franklin Rising Dividends VIP Class 4 Division		Franklin Small Cap Value VIP Class 2 Division		Franklin U.S. Government Fund Class 2 Division (1)		Goldman Sachs VIT Mid Cap Value Institutional Shares Division




Net investment income (loss)
Investment income:
	Dividends	$	23,272	$	41,481	$	—	$	88,993

Expenses:
	Mortality and expense risks		18,317		49,049		258		146,333
	Administrative charges		3,083		5,608		64		17,401
	Separate account rider charges		—		2,811		—		3,538
Net investment income (loss)			1,872		(15,987)		(322)		(78,279)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			6,238		(180,168)		11		(70,839)
Capital gains distributions			301,026		660,818		—		417,406
Total realized gains (losses) on investments			307,264		480,650		11		346,567

Change in net unrealized appreciation (depreciation)
	of investments		163,124		385,729		322		2,732,906

Net gains (losses) on investments			472,260		850,392		11		3,001,194

Net increase (decrease) in net assets resulting from operations		$	472,260	$	850,392	$	11	$	3,001,194


(1) Commenced operations June 7, 2019.

See accompanying notes.

A-25



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		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		$	1,444,925	$	67,712	$	5,915,884	$	626,867
Total assets			1,444,925		67,712		5,915,884		626,867
Total liabilities			—		—		—		—
Net assets		$	1,444,925	$	67,712	$	5,915,884	$	626,867

Net assets
Applicable to accumulation units		$	1,444,925	$	67,712	$	5,915,884	$	626,867
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	1,444,925	$	67,712	$	5,915,884	$	626,867

Investments in shares of mutual funds, at cost		$	1,393,768	$	68,371	$	5,971,554	$	627,249

Shares of mutual funds owned			88,266		7,507		468,770		50,109

Accumulation units outstanding			118,801		6,663		226,447		52,205
Annuitized units outstanding			—		—		—		—
Total units outstanding			118,801		6,663		226,447		52,205


Statements of Operations
Year ended December 31, 2019
		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	$	7,183	$	1,839	$	27,508	$	1,281

Expenses:
	Mortality and expense risks		8,617		417		74,770		3,705
	Administrative charges		1,407		89		8,722		688
	Separate account rider charges		—		—		2,039		—
Net investment income (loss)			(2,841)		1,333		(58,023)		(3,112)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(5,018)		(78)		(271,839)		(7,917)
Capital gains distributions			47,929		—		121,018		12,975
Total realized gains (losses) on investments			42,911		(78)		(150,821)		5,058

Change in net unrealized appreciation (depreciation)
	of investments		190,535		2,912		1,444,467		90,363

Net gains (losses) on investments			230,605		4,167		1,235,623		92,309

Net increase (decrease) in net assets resulting from operations		$	230,605	$	4,167	$	1,235,623	$	92,309


See accompanying notes.

A-26



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Government & High Quality Bond Class 1 Division		Guggenheim Floating Rate Strategies Series F Division		Guggenheim Investments Global Managed Futures Strategy Division		Guggenheim Investments Long Short Equity Division




Assets
Investments in shares of mutual funds, at fair value		$	81,189,558	$	3,212,995	$	178,140	$	144,280
Total assets			81,189,558		3,212,995		178,140		144,280
Total liabilities			—		—		—		—
Net assets		$	81,189,558	$	3,212,995	$	178,140	$	144,280

Net assets
Applicable to accumulation units		$	81,189,558	$	3,212,995	$	178,140	$	144,280
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	81,189,558	$	3,212,995	$	178,140	$	144,280

Investments in shares of mutual funds, at cost		$	84,622,813	$	3,237,651	$	179,982	$	150,377

Shares of mutual funds owned			8,276,203		123,767		10,712		10,425

Accumulation units outstanding			7,169,432		295,316		19,262		14,620
Annuitized units outstanding			—		—		—		—
Total units outstanding			7,169,432		295,316		19,262		14,620


Statements of Operations
Year ended December 31, 2019
		Government & High Quality Bond Class 1 Division		Guggenheim Floating Rate Strategies Series F Division		Guggenheim Investments Global Managed Futures Strategy Division		Guggenheim Investments Long Short Equity Division




Net investment income (loss)
Investment income:
	Dividends	$	2,243,995	$	153,312	$	1,820	$	1,027

Expenses:
	Mortality and expense risks		1,001,324		36,056		1,916		1,594
	Administrative charges		74,130		4,318		268		238
	Separate account rider charges		17,641		1,011		21		20
Net investment income (loss)			1,150,900		111,927		(385)		(825)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(1,262,280)		(22,693)		(4,240)		(16,156)
Capital gains distributions			—		—		—		—
Total realized gains (losses) on investments			(1,262,280)		(22,693)		(4,240)		(16,156)

Change in net unrealized appreciation (depreciation)
	of investments		4,202,128		101,575		18,197		22,140

Net gains (losses) on investments			4,090,748		190,809		13,572		5,159

Net increase (decrease) in net assets resulting from operations		$	4,090,748	$	190,809	$	13,572	$	5,159


See accompanying notes.

A-27



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Guggenheim Investments Multi-Hedge Strategies Division		International Emerging Markets Class 1 Division		Invesco American Franchise Series I Division		Invesco Balanced-Risk Allocation Series II Division




Assets
Investments in shares of mutual funds, at fair value		$	558,944	$	43,067,771	$	4,306,376	$	488,758
Total assets			558,944		43,067,771		4,306,376		488,758
Total liabilities			—		—		—		—
Net assets		$	558,944	$	43,067,771	$	4,306,376	$	488,758

Net assets
Applicable to accumulation units		$	558,944	$	43,067,771	$	4,306,376	$	488,758
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	558,944	$	43,067,771	$	4,306,376	$	488,758

Investments in shares of mutual funds, at cost		$	556,839	$	39,064,171	$	3,349,268	$	498,106

Shares of mutual funds owned			23,135		2,514,172		64,131		45,551

Accumulation units outstanding			56,774		1,427,212		177,893		43,426
Annuitized units outstanding			—		—		—		—
Total units outstanding			56,774		1,427,212		177,893		43,426


Statements of Operations
Year ended December 31, 2019
		Guggenheim Investments Multi-Hedge Strategies Division		International Emerging Markets Class 1 Division		Invesco American Franchise Series I Division		Invesco Balanced-Risk Allocation Series II Division




Net investment income (loss)
Investment income:
	Dividends	$	12,883	$	396,414	$	—	$	—

Expenses:
	Mortality and expense risks		6,158		519,375		54,196		3,784
	Administrative charges		807		45,796		2,168		554
	Separate account rider charges		114		4,066		—		—
Net investment income (loss)			5,804		(172,823)		(56,364)		(4,338)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			225		441,742		390,829		(4,186)
Capital gains distributions			—		1,129,303		584,037		—
Total realized gains (losses) on investments			225		1,571,045		974,866		(4,186)

Change in net unrealized appreciation (depreciation)
	of investments		13,267		4,885,242		326,403		54,256

Net gains (losses) on investments			19,296		6,283,464		1,244,905		45,732

Net increase (decrease) in net assets resulting from operations		$	19,296	$	6,283,464	$	1,244,905	$	45,732


See accompanying notes.

A-28



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Invesco Core Equity Series I Division		Invesco Health Care Series I Division		Invesco Health Care Series II Division		Invesco International Growth Series I Division




Assets
Investments in shares of mutual funds, at fair value		$	13,547,364	$	7,018,218	$	2,876,696	$	6,938,872
Total assets			13,547,364		7,018,218		2,876,696		6,938,872
Total liabilities			—		—		—		—
Net assets		$	13,547,364	$	7,018,218	$	2,876,696	$	6,938,872

Net assets
Applicable to accumulation units		$	13,547,364	$	7,018,218	$	2,876,696	$	6,938,872
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	13,547,364	$	7,018,218	$	2,876,696	$	6,938,872

Investments in shares of mutual funds, at cost		$	12,142,608	$	6,762,340	$	2,532,994	$	6,313,878

Shares of mutual funds owned			387,621		232,161		100,972		177,646

Accumulation units outstanding			670,204		264,181		213,307		515,775
Annuitized units outstanding			—		—		—		—
Total units outstanding			670,204		264,181		213,307		515,775


Statements of Operations
Year ended December 31, 2019
		Invesco Core Equity Series I Division		Invesco Health Care Series I Division		Invesco Health Care Series II Division		Invesco International Growth Series I Division




Net investment income (loss)
Investment income:
	Dividends	$	123,141	$	2,785	$	—	$	105,656

Expenses:
	Mortality and expense risks		167,636		84,252		16,185		87,328
	Administrative charges		6,706		4,067		2,845		10,481
	Separate account rider charges		—		256		—		3,217
Net investment income (loss)			(51,201)		(85,790)		(19,030)		4,630

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			656,662		(223,335)		(16,260)		140,504
Capital gains distributions			1,496,496		154,808		54,436		426,815
Total realized gains (losses) on investments			2,153,158		(68,527)		38,176		567,319

Change in net unrealized appreciation (depreciation)
	of investments		1,103,853		1,930,700		531,392		1,068,605

Net gains (losses) on investments			3,205,810		1,776,383		550,538		1,640,554

Net increase (decrease) in net assets resulting from operations		$	3,205,810	$	1,776,383	$	550,538	$	1,640,554


See accompanying notes.

A-29



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Invesco International Growth Series II Division		Invesco Mid Cap Growth Series I Division		Invesco Oppenheimer V.I. Main Street Small Cap Series II Division (1)		Invesco Small Cap Equity Series I Division




Assets
Investments in shares of mutual funds, at fair value		$	1,691,600	$	1,078,974	$	447,973	$	6,547,810
Total assets			1,691,600		1,078,974		447,973		6,547,810
Total liabilities			—		—		—		—
Net assets		$	1,691,600	$	1,078,974	$	447,973	$	6,547,810

Net assets
Applicable to accumulation units		$	1,691,600	$	1,078,974	$	447,973	$	6,547,810
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	1,691,600	$	1,078,974	$	447,973	$	6,547,810

Investments in shares of mutual funds, at cost		$	1,607,724	$	1,068,424	$	448,294	$	6,968,389

Shares of mutual funds owned			43,961		197,615		19,571		369,307

Accumulation units outstanding			148,528		51,429		26,479		237,044
Annuitized units outstanding			—		—		—		—
Total units outstanding			148,528		51,429		26,479		237,044


Statements of Operations
Year ended December 31, 2019
		Invesco International Growth Series II Division		Invesco Mid Cap Growth Series I Division		Invesco Oppenheimer V.I. Main Street Small Cap Series II Division (1)		Invesco Small Cap Equity Series I Division




Net investment income (loss)
Investment income:
	Dividends	$	16,839	$	—	$	—	$	—

Expenses:
	Mortality and expense risks		10,441		14,133		5,557		78,822
	Administrative charges		1,788		565		222		7,926
	Separate account rider charges		—		—		—		3,536
Net investment income (loss)			4,610		(14,698)		(5,779)		(90,284)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			304		9,667		860		(268,543)
Capital gains distributions			84,638		152,320		41,139		767,392
Total realized gains (losses) on investments			84,942		161,987		41,999		498,849

Change in net unrealized appreciation (depreciation)
	of investments		180,327		171,323		59,327		954,401

Net gains (losses) on investments			269,879		318,612		95,547		1,362,966

Net increase (decrease) in net assets resulting from operations		$	269,879	$	318,612	$	95,547	$	1,362,966


(1) Represented the operations of Oppenheimer Main Street Small Cap Service Shares Division until May 24, 2019.

See accompanying notes.

A-30



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Invesco Technology Series I Division		Invesco Value Opportunities Series I Division		Janus Henderson Enterprise Service Shares Division		Janus Henderson Flexible Bond Service Shares Division




Assets
Investments in shares of mutual funds, at fair value		$	3,038,459	$	3,317,641	$	10,067,295	$	3,115,567
Total assets			3,038,459		3,317,641		10,067,295		3,115,567
Total liabilities			—		—		—		—
Net assets		$	3,038,459	$	3,317,641	$	10,067,295	$	3,115,567

Net assets
Applicable to accumulation units		$	3,038,459	$	3,317,641	$	10,067,295	$	3,115,567
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	3,038,459	$	3,317,641	$	10,067,295	$	3,115,567

Investments in shares of mutual funds, at cost		$	2,424,354	$	3,536,503	$	7,125,436	$	3,073,777

Shares of mutual funds owned			111,585		592,436		125,951		239,844

Accumulation units outstanding			182,286		181,125		365,860		290,302
Annuitized units outstanding			—		—		—		—
Total units outstanding			182,286		181,125		365,860		290,302


Statements of Operations
Year ended December 31, 2019
		Invesco Technology Series I Division		Invesco Value Opportunities Series I Division		Janus Henderson Enterprise Service Shares Division		Janus Henderson Flexible Bond Service Shares Division




Net investment income (loss)
Investment income:
	Dividends	$	—	$	7,643	$	4,945	$	73,012

Expenses:
	Mortality and expense risks		39,347		40,421		124,048		23,972
	Administrative charges		1,574		4,851		4,962		3,327
	Separate account rider charges		—		800		—		795
Net investment income (loss)			(40,921)		(38,429)		(124,065)		44,918

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			281,257		(284,072)		1,072,503		237
Capital gains distributions			251,489		676,206		615,968		—
Total realized gains (losses) on investments			532,746		392,134		1,688,471		237

Change in net unrealized appreciation (depreciation)
	of investments		433,265		448,184		1,213,597		123,943

Net gains (losses) on investments			925,090		801,889		2,778,003		169,098

Net increase (decrease) in net assets resulting from operations		$	925,090	$	801,889	$	2,778,003	$	169,098


See accompanying notes.

A-31



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Janus Henderson Global Technology Service Shares Division (1)		LargeCap Growth I Class 1 Division		LargeCap S&P 500 Index Class 1 Division		LargeCap S&P 500 Index Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	348,192	$	168,969,535	$	99,605,055	$	15,836,448
Total assets			348,192		168,969,535		99,605,055		15,836,448
Total liabilities			—		—		—		—
Net assets		$	348,192	$	168,969,535	$	99,605,055	$	15,836,448

Net assets
Applicable to accumulation units		$	348,192	$	168,969,535	$	99,605,055	$	15,836,448
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	348,192	$	168,969,535	$	99,605,055	$	15,836,448

Investments in shares of mutual funds, at cost		$	323,192	$	136,263,595	$	66,054,252	$	14,463,941

Shares of mutual funds owned			23,166		4,489,095		4,933,386		793,012

Accumulation units outstanding			29,872		3,666,156		4,495,585		1,221,373
Annuitized units outstanding			—		—		—		—
Total units outstanding			29,872		3,666,156		4,495,585		1,221,373


Statements of Operations
Year ended December 31, 2019
		Janus Henderson Global Technology Service Shares Division (1)		LargeCap Growth I Class 1 Division		LargeCap S&P 500 Index Class 1 Division		LargeCap S&P 500 Index Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	—	$	79,527	$	1,770,545	$	236,328

Expenses:
	Mortality and expense risks		508		1,734,085		1,149,560		83,427
	Administrative charges		114		101,259		88,064		16,541
	Separate account rider charges		—		10,401		19,356		—
Net investment income (loss)			(622)		(1,766,218)		513,565		136,360

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			210		10,298,934		8,354,908		57,445
Capital gains distributions			—		11,945,260		4,034,790		570,361
Total realized gains (losses) on investments			210		22,244,194		12,389,698		627,806

Change in net unrealized appreciation (depreciation)
	of investments		25,001		17,797,460		11,618,691		1,957,657

Net gains (losses) on investments			24,589		38,275,436		24,521,954		2,721,823

Net increase (decrease) in net assets resulting from operations		$	24,589	$	38,275,436	$	24,521,954	$	2,721,823


(1) Commenced operations June 7, 2019.

See accompanying notes.

A-32



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		MFS International Intrinsic Value Service Class Division (1)		MFS New Discovery Service Class Division		MFS Utilities Service Class Division		MFS Value Service Class Division




Assets
Investments in shares of mutual funds, at fair value		$	7,484,906	$	4,806,641	$	15,284,102	$	5,292,259
Total assets			7,484,906		4,806,641		15,284,102		5,292,259
Total liabilities			—		—		—		—
Net assets		$	7,484,906	$	4,806,641	$	15,284,102	$	5,292,259

Net assets
Applicable to accumulation units		$	7,484,906	$	4,806,641	$	15,284,102	$	5,292,259
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	7,484,906	$	4,806,641	$	15,284,102	$	5,292,259

Investments in shares of mutual funds, at cost		$	6,685,000	$	4,899,968	$	13,179,423	$	4,778,221

Shares of mutual funds owned			253,984		266,739		442,248		257,907

Accumulation units outstanding			569,058		301,371		708,834		169,977
Annuitized units outstanding			—		—		—		—
Total units outstanding			569,058		301,371		708,834		169,977


Statements of Operations
Year ended December 31, 2019
		MFS International Intrinsic Value Service Class Division (1)		MFS New Discovery Service Class Division		MFS Utilities Service Class Division		MFS Value Service Class Division




Net investment income (loss)
Investment income:
	Dividends	$	100,017	$	—	$	547,492	$	97,134

Expenses:
	Mortality and expense risks		74,216		40,059		167,639		63,998
	Administrative charges		9,252		4,904		21,313		7,681
	Separate account rider charges		625		1,929		6,388		2,014
Net investment income (loss)			15,924		(46,892)		352,152		23,441

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			149,376		145,196		(145,695)		616
Capital gains distributions			209,662		794,745		43,365		233,392
Total realized gains (losses) on investments			359,038		939,941		(102,330)		234,008

Change in net unrealized appreciation (depreciation)
	of investments		1,023,593		250,524		2,611,742		971,917

Net gains (losses) on investments			1,398,555		1,143,573		2,861,564		1,229,366

Net increase (decrease) in net assets resulting from operations		$	1,398,555	$	1,143,573	$	2,861,564	$	1,229,366


(1) Represented the operations of MFS International Value Service Class Division until June 6, 2019.

See accompanying notes.

A-33



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		MidCap Class 1 Division		Neuberger Berman AMT Mid Cap Growth Portfolio Class S Division		Neuberger Berman AMT Sustainable Equity Class I Division		Neuberger Berman AMT Sustainable Equity Class S Division




Assets
Investments in shares of mutual funds, at fair value		$	338,479,545	$	3,506,104	$	6,633,874	$	15,562
Total assets			338,479,545		3,506,104		6,633,874		15,562
Total liabilities			—		—		—		—
Net assets		$	338,479,545	$	3,506,104	$	6,633,874	$	15,562

Net assets
Applicable to accumulation units		$	338,479,545	$	3,506,104	$	6,633,874	$	15,562
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	338,479,545	$	3,506,104	$	6,633,874	$	15,562

Investments in shares of mutual funds, at cost		$	300,946,395	$	3,201,388	$	6,121,853	$	15,257

Shares of mutual funds owned			5,646,973		129,186		246,704		577

Accumulation units outstanding			2,907,972		252,420		220,290		1,408
Annuitized units outstanding			—		—		—		—
Total units outstanding			2,907,972		252,420		220,290		1,408


Statements of Operations
Year ended December 31, 2019
		MidCap Class 1 Division		Neuberger Berman AMT Mid Cap Growth Portfolio Class S Division		Neuberger Berman AMT Sustainable Equity Class I Division		Neuberger Berman AMT Sustainable Equity Class S Division




Net investment income (loss)
Investment income:
	Dividends	$	888,968	$	—	$	26,799	$	37

Expenses:
	Mortality and expense risks		4,005,494		34,517		70,402		24
	Administrative charges		260,970		4,748		8,449		6
	Separate account rider charges		19,603		270		1,554		—
Net investment income (loss)			(3,397,099)		(39,535)		(53,606)		7

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			22,568,551		88,264		471,482		(44)
Capital gains distributions			45,208,818		250,856		356,988		707
Total realized gains (losses) on investments			67,777,369		339,120		828,470		663

Change in net unrealized appreciation (depreciation)
	of investments		45,967,907		464,714		202,087		430

Net gains (losses) on investments			110,348,177		764,299		976,951		1,100

Net increase (decrease) in net assets resulting from operations		$	110,348,177	$	764,299	$	976,951	$	1,100


See accompanying notes.

A-34



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		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




Assets
Investments in shares of mutual funds, at fair value		$	2,418,683	$	112,386	$	51,476	$	19,995,082
Total assets			2,418,683		112,386		51,476		19,995,082
Total liabilities			—		—		—		—
Net assets		$	2,418,683	$	112,386	$	51,476	$	19,995,082

Net assets
Applicable to accumulation units		$	2,418,683	$	112,386	$	51,476	$	19,995,082
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	2,418,683	$	112,386	$	51,476	$	19,995,082

Investments in shares of mutual funds, at cost		$	2,317,622	$	107,993	$	52,451	$	19,406,321

Shares of mutual funds owned			224,159		10,292		8,081		2,515,105

Accumulation units outstanding			146,674		10,170		5,759		1,296,959
Annuitized units outstanding			—		—		—		—
Total units outstanding			146,674		10,170		5,759		1,296,959


Statements of Operations
Year ended December 31, 2019
		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




Net investment income (loss)
Investment income:
	Dividends	$	75,019	$	3,031	$	2,023	$	941,455

Expenses:
	Mortality and expense risks		32,606		1,113		352		225,340
	Administrative charges		3,913		160		73		28,570
	Separate account rider charges		1,045		—		—		4,576
Net investment income (loss)			37,455		1,758		1,598		682,969

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(63,142)		196		(944)		(136,964)
Capital gains distributions			—		—		—		—
Total realized gains (losses) on investments			(63,142)		196		(944)		(136,964)

Change in net unrealized appreciation (depreciation)
	of investments		280,847		8,554		3,743		1,771,178

Net gains (losses) on investments			255,160		10,508		4,397		2,317,183

Net increase (decrease) in net assets resulting from operations		$	255,160	$	10,508	$	4,397	$	2,317,183


See accompanying notes.

A-35



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		PIMCO Low Duration Advisor Class Division		PIMCO Total Return Administrative Class Division		Principal Capital Appreciation Class 1 Division		Principal Capital Appreciation Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	1,525,804	$	22,921,307	$	97,426,768	$	5,277,728
Total assets			1,525,804		22,921,307		97,426,768		5,277,728
Total liabilities			—		—		—		—
Net assets		$	1,525,804	$	22,921,307	$	97,426,768	$	5,277,728

Net assets
Applicable to accumulation units		$	1,525,804	$	22,921,307	$	97,426,768	$	5,277,728
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	1,525,804	$	22,921,307	$	97,426,768	$	5,277,728

Investments in shares of mutual funds, at cost		$	1,522,574	$	22,884,909	$	76,483,076	$	4,942,122

Shares of mutual funds owned			149,589		2,079,974		3,171,444		174,068

Accumulation units outstanding			149,387		1,771,251		4,600,862		396,730
Annuitized units outstanding			—		—		—		—
Total units outstanding			149,387		1,771,251		4,600,862		396,730


Statements of Operations
Year ended December 31, 2019
		PIMCO Low Duration Advisor Class Division		PIMCO Total Return Administrative Class Division		Principal Capital Appreciation Class 1 Division		Principal Capital Appreciation Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	29,222	$	666,027	$	1,524,187	$	54,371

Expenses:
	Mortality and expense risks		10,926		261,720		1,220,327		25,498
	Administrative charges		1,589		33,233		114,170		5,089
	Separate account rider charges		304		4,555		18,541		—
Net investment income (loss)			16,403		366,519		171,149		23,784

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			4,074		(222,581)		4,940,174		8,924
Capital gains distributions			—		—		8,501,132		346,247
Total realized gains (losses) on investments			4,074		(222,581)		13,441,306		355,171

Change in net unrealized appreciation (depreciation)
	of investments		7,635		1,307,644		12,272,884		471,338

Net gains (losses) on investments			28,112		1,451,582		25,885,339		850,293

Net increase (decrease) in net assets resulting from operations		$	28,112	$	1,451,582	$	25,885,339	$	850,293


See accompanying notes.

A-36



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Principal LifeTime 2010 Class 1 Division		Principal LifeTime 2020 Class 1 Division		Principal LifeTime 2030 Class 1 Division		Principal LifeTime 2040 Class 1 Division




Assets
Investments in shares of mutual funds, at fair value		$	16,849,543	$	82,586,232	$	57,570,462	$	15,574,030
Total assets			16,849,543		82,586,232		57,570,462		15,574,030
Total liabilities			—		—		—		—
Net assets		$	16,849,543	$	82,586,232	$	57,570,462	$	15,574,030

Net assets
Applicable to accumulation units		$	16,849,543	$	82,586,232	$	57,570,462	$	15,574,030
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	16,849,543	$	82,586,232	$	57,570,462	$	15,574,030

Investments in shares of mutual funds, at cost		$	16,019,922	$	73,422,199	$	53,685,190	$	13,605,952

Shares of mutual funds owned			1,321,533		5,941,455		4,387,993		960,174

Accumulation units outstanding			934,631		4,011,932		2,723,515		704,945
Annuitized units outstanding			—		—		—		—
Total units outstanding			934,631		4,011,932		2,723,515		704,945


Statements of Operations
Year ended December 31, 2019
		Principal LifeTime 2010 Class 1 Division		Principal LifeTime 2020 Class 1 Division		Principal LifeTime 2030 Class 1 Division		Principal LifeTime 2040 Class 1 Division




Net investment income (loss)
Investment income:
	Dividends	$	485,009	$	2,028,529	$	1,164,425	$	270,134

Expenses:
	Mortality and expense risks		214,965		1,045,048		705,643		179,300
	Administrative charges		23,277		118,022		81,517		20,754
	Separate account rider charges		2,536		9,030		5,954		2,780
Net investment income (loss)			244,231		856,429		371,311		67,300

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			526,211		4,896,631		2,233,247		593,428
Capital gains distributions			916,072		3,596,029		2,932,847		732,830
Total realized gains (losses) on investments			1,442,283		8,492,660		5,166,094		1,326,258

Change in net unrealized appreciation (depreciation)
	of investments		377,927		3,601,273		5,019,700		1,558,385

Net gains (losses) on investments			2,064,441		12,950,362		10,557,105		2,951,943

Net increase (decrease) in net assets resulting from operations		$	2,064,441	$	12,950,362	$	10,557,105	$	2,951,943


See accompanying notes.

A-37



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Principal LifeTime 2050 Class 1 Division		Principal LifeTime Strategic Income Class 1 Division		Real Estate Securities Class 1 Division		Real Estate Securities Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	11,861,338	$	10,633,375	$	67,480,063	$	6,105,983
Total assets			11,861,338		10,633,375		67,480,063		6,105,983
Total liabilities			—		—		—		—
Net assets		$	11,861,338	$	10,633,375	$	67,480,063	$	6,105,983

Net assets
Applicable to accumulation units		$	11,861,338	$	10,633,375	$	67,480,063	$	6,105,983
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	11,861,338	$	10,633,375	$	67,480,063	$	6,105,983

Investments in shares of mutual funds, at cost		$	10,668,518	$	10,248,511	$	61,255,105	$	5,931,794

Shares of mutual funds owned			760,830		892,061		3,138,608		283,209

Accumulation units outstanding			549,476		662,148		977,715		441,130
Annuitized units outstanding			—		—		—		—
Total units outstanding			549,476		662,148		977,715		441,130


Statements of Operations
Year ended December 31, 2019
		Principal LifeTime 2050 Class 1 Division		Principal LifeTime Strategic Income Class 1 Division		Real Estate Securities Class 1 Division		Real Estate Securities Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	219,230	$	265,956	$	1,229,312	$	76,986

Expenses:
	Mortality and expense risks		136,550		140,085		858,214		40,090
	Administrative charges		16,279		14,767		69,633		6,692
	Separate account rider charges		1,050		2,221		20,315		—
Net investment income (loss)			65,351		108,883		281,150		30,204

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			379,376		289,969		5,235,761		(775)
Capital gains distributions			699,559		435,243		4,527,094		312,150
Total realized gains (losses) on investments			1,078,935		725,212		9,762,855		311,375

Change in net unrealized appreciation (depreciation)
	of investments		1,254,271		327,916		7,368,808		675,230

Net gains (losses) on investments			2,398,557		1,162,011		17,412,813		1,016,809

Net increase (decrease) in net assets resulting from operations		$	2,398,557	$	1,162,011	$	17,412,813	$	1,016,809


See accompanying notes.

A-38



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		Rydex Basic Materials Division		Rydex Commodities Strategy Division		Rydex NASDAQ 100 Division		SAM Balanced Portfolio Class 1 Division




Assets
Investments in shares of mutual funds, at fair value		$	606,375	$	499,045	$	3,094,997	$	427,977,306
Total assets			606,375		499,045		3,094,997		427,977,306
Total liabilities			—		—		—		—
Net assets		$	606,375	$	499,045	$	3,094,997	$	427,977,306

Net assets
Applicable to accumulation units		$	606,375	$	499,045	$	3,094,997	$	427,977,306
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	606,375	$	499,045	$	3,094,997	$	427,977,306

Investments in shares of mutual funds, at cost		$	562,747	$	522,561	$	2,508,927	$	426,614,249

Shares of mutual funds owned			7,980		6,132		63,344		27,311,889

Accumulation units outstanding			53,471		68,023		201,423		23,733,630
Annuitized units outstanding			—		—		—		—
Total units outstanding			53,471		68,023		201,423		23,733,630


Statements of Operations
Year ended December 31, 2019
		Rydex Basic Materials Division		Rydex Commodities Strategy Division		Rydex NASDAQ 100 Division		SAM Balanced Portfolio Class 1 Division




Net investment income (loss)
Investment income:
	Dividends	$	—	$	7,609	$	3,051	$	10,612,144

Expenses:
	Mortality and expense risks		5,846		5,093		21,751		5,452,149
	Administrative charges		838		691		3,631		603,843
	Separate account rider charges		—		369		—		54,305
Net investment income (loss)			(6,684)		1,456		(22,331)		4,501,847

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			1,805		(5,564)		27,852		3,304,718
Capital gains distributions			25,583		—		55,162		15,208,949
Total realized gains (losses) on investments			27,388		(5,564)		83,014		18,513,667

Change in net unrealized appreciation (depreciation)
	of investments		78,927		64,075		655,958		50,648,846

Net gains (losses) on investments			99,631		59,967		716,641		73,664,360

Net increase (decrease) in net assets resulting from operations		$	99,631	$	59,967	$	716,641	$	73,664,360


See accompanying notes.

A-39



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		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




Assets
Investments in shares of mutual funds, at fair value		$	22,821,199	$	102,121,678	$	8,927,893	$	89,362,293
Total assets			22,821,199		102,121,678		8,927,893		89,362,293
Total liabilities			—		—		—		—
Net assets		$	22,821,199	$	102,121,678	$	8,927,893	$	89,362,293

Net assets
Applicable to accumulation units		$	22,821,199	$	102,121,678	$	8,927,893	$	89,362,293
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	22,821,199	$	102,121,678	$	8,927,893	$	89,362,293

Investments in shares of mutual funds, at cost		$	22,299,322	$	102,412,755	$	8,756,050	$	82,227,826

Shares of mutual funds owned			1,474,238		8,377,496		742,136		4,481,559

Accumulation units outstanding			1,918,479		6,014,002		773,877		4,770,301
Annuitized units outstanding			—		—		—		—
Total units outstanding			1,918,479		6,014,002		773,877		4,770,301


Statements of Operations
Year ended December 31, 2019
		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




Net investment income (loss)
Investment income:
	Dividends	$	447,715	$	2,892,642	$	213,181	$	1,602,856

Expenses:
	Mortality and expense risks		150,114		1,302,778		62,589		1,104,765
	Administrative charges		26,931		145,804		11,001		119,044
	Separate account rider charges		—		26,267		—		39,529
Net investment income (loss)			270,670		1,417,793		139,591		339,518

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(15,916)		(367,229)		(52,749)		(528,771)
Capital gains distributions			707,372		2,015,406		159,984		3,991,903
Total realized gains (losses) on investments			691,456		1,648,177		107,235		3,463,132

Change in net unrealized appreciation (depreciation)
	of investments		1,939,678		10,844,136		704,735		14,010,768

Net gains (losses) on investments			2,901,804		13,910,106		951,561		17,813,418

Net increase (decrease) in net assets resulting from operations		$	2,901,804	$	13,910,106	$	951,561	$	17,813,418


See accompanying notes.

A-40



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		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




Assets
Investments in shares of mutual funds, at fair value		$	15,671,496	$	121,789,147	$	16,832,897	$	53,899,787
Total assets			15,671,496		121,789,147		16,832,897		53,899,787
Total liabilities			—		—		—		—
Net assets		$	15,671,496	$	121,789,147	$	16,832,897	$	53,899,787

Net assets
Applicable to accumulation units		$	15,671,496	$	121,789,147	$	16,832,897	$	53,899,787
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	15,671,496	$	121,789,147	$	16,832,897	$	53,899,787

Investments in shares of mutual funds, at cost		$	14,744,342	$	124,381,309	$	16,865,706	$	49,377,630

Shares of mutual funds owned			798,344		9,681,172		1,353,127		2,466,809

Accumulation units outstanding			1,277,973		7,363,100		1,491,010		2,857,502
Annuitized units outstanding			—		—		—		—
Total units outstanding			1,277,973		7,363,100		1,491,010		2,857,502


Statements of Operations
Year ended December 31, 2019
		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




Net investment income (loss)
Investment income:
	Dividends	$	207,339	$	4,286,637	$	509,998	$	792,710

Expenses:
	Mortality and expense risks		102,035		1,565,208		119,586		668,710
	Administrative charges		18,301		160,882		21,680		71,926
	Separate account rider charges		—		35,911		—		44,994
Net investment income (loss)			87,003		2,524,636		368,732		7,080

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(197,135)		(1,816,480)		(42,573)		(355,117)
Capital gains distributions			592,642		3,510,843		444,342		2,669,409
Total realized gains (losses) on investments			395,507		1,694,363		401,769		2,314,292

Change in net unrealized appreciation (depreciation)
	of investments		1,980,212		9,732,166		796,351		9,809,596

Net gains (losses) on investments			2,462,722		13,951,165		1,566,852		12,130,968

Net increase (decrease) in net assets resulting from operations		$	2,462,722	$	13,951,165	$	1,566,852	$	12,130,968


See accompanying notes.

A-41



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		SAM Strategic Growth Portfolio Class 2 Division		Short-Term Income Class 1 Division		SmallCap Class 1 Division		SmallCap Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	9,817,608	$	70,426,988	$	94,321,287	$	2,452,075
Total assets			9,817,608		70,426,988		94,321,287		2,452,075
Total liabilities			—		—		—		—
Net assets		$	9,817,608	$	70,426,988	$	94,321,287	$	2,452,075

Net assets
Applicable to accumulation units		$	9,817,608	$	70,426,988	$	94,321,287	$	2,452,075
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	9,817,608	$	70,426,988	$	94,321,287	$	2,452,075

Investments in shares of mutual funds, at cost		$	9,157,976	$	70,318,400	$	91,832,918	$	2,467,316

Shares of mutual funds owned			455,997		27,403,498		6,152,726		160,687

Accumulation units outstanding			772,635		5,888,713		3,367,102		209,817
Annuitized units outstanding			—		—		—		—
Total units outstanding			772,635		5,888,713		3,367,102		209,817


Statements of Operations
Year ended December 31, 2019
		SAM Strategic Growth Portfolio Class 2 Division		Short-Term Income Class 1 Division		SmallCap Class 1 Division		SmallCap Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	116,734	$	1,887,518	$	306,075	$	1,669

Expenses:
	Mortality and expense risks		72,147		885,706		1,173,564		15,018
	Administrative charges		12,144		93,784		84,964		2,676
	Separate account rider charges		—		2,575		13,341		—
Net investment income (loss)			32,443		905,453		(965,794)		(16,025)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			1,693		(209,413)		1,295,263		(10,050)
Capital gains distributions			462,971		—		14,541,856		282,763
Total realized gains (losses) on investments			464,664		(209,413)		15,837,119		272,713

Change in net unrealized appreciation (depreciation)
	of investments		1,256,273		1,637,793		6,475,160		125,227

Net gains (losses) on investments			1,753,380		2,333,833		21,346,485		381,915

Net increase (decrease) in net assets resulting from operations		$	1,753,380	$	2,333,833	$	21,346,485	$	381,915.00


See accompanying notes.

A-42



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		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




Assets
Investments in shares of mutual funds, at fair value		$	25,128,752	$	26,161,281	$	5,135,868	$	661,321
Total assets			25,128,752		26,161,281		5,135,868		661,321
Total liabilities			—		—		—		—
Net assets		$	25,128,752	$	26,161,281	$	5,135,868	$	661,321

Net assets
Applicable to accumulation units		$	25,128,752	$	26,161,281	$	5,135,868	$	661,321
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	25,128,752	$	26,161,281	$	5,135,868	$	661,321

Investments in shares of mutual funds, at cost		$	17,203,293	$	21,750,360	$	5,344,916	$	717,155

Shares of mutual funds owned			671,533		550,996		314,505		60,672

Accumulation units outstanding			750,517		384,143		528,460		27,401
Annuitized units outstanding			—		—		—		—
Total units outstanding			750,517		384,143		528,460		27,401


Statements of Operations
Year ended December 31, 2019
		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




Net investment income (loss)
Investment income:
	Dividends	$	—	$	1	$	341,834	$	19,901

Expenses:
	Mortality and expense risks		295,353		326,716		54,613		6,068
	Administrative charges		35,826		39,211		5,157		—
	Separate account rider charges		16,257		12,266		36		—
Net investment income (loss)			(347,436)		(378,192)		282,028		13,833

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			2,393,150		1,533,158		(4,983)		13,127
Capital gains distributions			656,257		1,152,741		—		136,712
Total realized gains (losses) on investments			3,049,407		2,685,899		(4,983)		149,839

Change in net unrealized appreciation (depreciation)
	of investments		2,988,815		3,884,057		(251,832)		(69,823)

Net gains (losses) on investments			5,690,786		6,191,764		25,213		93,849

Net increase (decrease) in net assets resulting from operations		$	5,690,786	$	6,191,764	$	25,213	$	93,849


See accompanying notes.

A-43



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		The Merger Fund Division		TOPS Aggressive Growth ETF Portfolio Investor Class Division		TOPS Balanced ETF Portfolio Investor Class Division		TOPS Conservative ETF Portfolio Investor Class Division




Assets
Investments in shares of mutual funds, at fair value		$	303,906	$	624,179	$	1,016,846	$	294,919
Total assets			303,906		624,179		1,016,846		294,919
Total liabilities			—		—		—		—
Net assets		$	303,906	$	624,179	$	1,016,846	$	294,919

Net assets
Applicable to accumulation units		$	303,906	$	624,179	$	1,016,846	$	294,919
Applicable to contracts in annuitization period			—		—		—		—
Total net assets		$	303,906	$	624,179	$	1,016,846	$	294,919

Investments in shares of mutual funds, at cost		$	305,498	$	594,406	$	998,637	$	286,879

Shares of mutual funds owned			26,658		38,577		76,743		23,518

Accumulation units outstanding			27,475		58,588		94,938		27,975
Annuitized units outstanding			—		—		—		—
Total units outstanding			27,475		58,588		94,938		27,975


Statements of Operations
Year ended December 31, 2019
		The Merger Fund Division		TOPS Aggressive Growth ETF Portfolio Investor Class Division		TOPS Balanced ETF Portfolio Investor Class Division		TOPS Conservative ETF Portfolio Investor Class Division




Net investment income (loss)
Investment income:
	Dividends	$	3,070	$	7,862	$	7,104	$	36

Expenses:
	Mortality and expense risks		1,731		1,986		1,725		856
	Administrative charges		365		491		425		126
	Separate account rider charges		—		—		—		283
Net investment income (loss)			974		5,385		4,954		(1,229)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			2,557		(227)		(35)		706
Capital gains distributions			13,581		18,463		8,333		20
Total realized gains (losses) on investments			16,138		18,236		8,298		726

Change in net unrealized appreciation (depreciation)
	of investments		(4,844)		32,198		20,850		8,040

Net gains (losses) on investments			12,268		55,819		34,102		7,537

Net increase (decrease) in net assets resulting from operations		$	12,268	$	55,819	$	34,102	$	7,537


See accompanying notes.

A-44



Principal Life Insurance Company
Separate Account B

Statements of Assets and Liabilities
December 31, 2019
		TOPS Growth ETF Portfolio Investor Class Division		TOPS Moderate Growth ETF Portfolio Investor Class Division		VanEck Global Hard Assets Class S Division




Assets
Investments in shares of mutual funds, at fair value		$	1,043,513	$	237,263	$	3,957,008
Total assets			1,043,513		237,263		3,957,008
Total liabilities			—		—		—
Net assets		$	1,043,513	$	237,263	$	3,957,008

Net assets
Applicable to accumulation units		$	1,043,513	$	237,263	$	3,957,008
Applicable to contracts in annuitization period			—		—		—
Total net assets		$	1,043,513	$	237,263	$	3,957,008

Investments in shares of mutual funds, at cost		$	987,148	$	231,789	$	4,394,776

Shares of mutual funds owned			63,282		17,523		216,704

Accumulation units outstanding			97,754		22,031		483,954
Annuitized units outstanding			—		—		—
Total units outstanding			97,754		22,031		483,954


Statements of Operations
Year ended December 31, 2019
		TOPS Growth ETF Portfolio Investor Class Division		TOPS Moderate Growth ETF Portfolio Investor Class Division		VanEck Global Hard Assets Class S Division




Net investment income (loss)
Investment income:
	Dividends	$	12,471	$	713	$	—

Expenses:
	Mortality and expense risks		5,116		350		48,835
	Administrative charges		1,221		77		5,458
	Separate account rider charges		165		—		2,049
Net investment income (loss)			5,969		286		(56,342)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			6,702		1,168		(362,083)
Capital gains distributions			24,166		919		—
Total realized gains (losses) on investments			30,868		2,087		(362,083)

Change in net unrealized appreciation (depreciation)
	of investments		56,486		5,737		802,914

Net gains (losses) on investments			93,323		8,110		384,489

Net increase (decrease) in net assets resulting from operations		$	93,323	$	8,110	$	384,489


See accompanying notes.

A-45



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 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 assets as of January 1, 2018		$	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

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(71,934)		(41,846)		(3,228)		(27,766)
	Total realized gains (losses) on investments		539,459		510,926		6,997		367,894
	Change in net unrealized appreciation (depreciation)
	of investments		981,251		290,994		110,089		244,068
	Net gains (losses) on investments		1,448,776		760,074		113,858		584,196
Net increase (decrease) in net assets resulting from operations			1,448,776		760,074		113,858		584,196
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		587,457		410,219		209,071		161,127
	Administration charges		(155)		—		(975)		(940)
	Contingent sales charges		(5,271)		(923)		(7)		(3,009)
	Contract terminations		(948,997)		(206,957)		(353)		(541,655)
	Death benefit payments		(347,653)		(24,117)		—		(124,660)
	Flexible withdrawal option payments		(42,525)		(30,022)		(1,480)		(25,007)
	Transfers to other contracts		(613,291)		(163,568)		(17,670)		(230,329)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(1,370,435)		(15,368)		188,586		(764,473)
Total increase (decrease)			78,341		744,706		302,444		(180,277)
Net assets as of December 31, 2019		$	4,548,893	$	4,879,162	$	527,254	$	1,666,093

See accompanying notes.

A-46



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 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 assets as of January 1, 2018		$	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

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		84,155		303,127		39,610		(49,626)
	Total realized gains (losses) on investments		1,518,079		(524,818)		913,883		882,150
	Change in net unrealized appreciation (depreciation)
	of investments		331,794		2,697,738		1,096,939		213,258
	Net gains (losses) on investments		1,934,028		2,476,047		2,050,432		1,045,782
Net increase (decrease) in net assets resulting from operations			1,934,028		2,476,047		2,050,432		1,045,782
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		368,576		4,168,207		655,278		309,700
	Administration charges		(580)		(153,408)		(241)		(477)
	Contingent sales charges		(582)		(26,413)		(3,116)		(693)
	Contract terminations		(1,050,910)		(4,794,953)		(659,970)		(823,217)
	Death benefit payments		(69,402)		(302,210)		(47,913)		(1,346)
	Flexible withdrawal option payments		(135,418)		(1,333,078)		(57,763)		(55,232)
	Transfers to other contracts		(257,318)		(1,685,504)		(520,087)		(218,387)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(1,145,634)		(4,127,359)		(633,812)		(789,652)
Total increase (decrease)			788,394		(1,651,312)		1,416,620		256,130
Net assets as of December 31, 2019		$	9,811,230	$	32,718,900	$	9,130,144	$	3,723,090

See accompanying notes.

A-47



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 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 assets as of January 1, 2018		$	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

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(388,001)		87,733		8,156		63,863
	Total realized gains (losses) on investments		6,884,780		1,693,493		155,785		288,485
	Change in net unrealized appreciation (depreciation)
	of investments		1,259,749		1,236,399		304,219		610,593
	Net gains (losses) on investments		7,756,528		3,017,625		468,160		962,941
Net increase (decrease) in net assets resulting from operations			7,756,528		3,017,625		468,160		962,941
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		1,393,845		614,644		319,193		4,418,942
	Administration charges		(109,871)		(4,390)		(392)		(13,660)
	Contingent sales charges		(18,245)		(3,448)		(1,547)		(5,343)
	Contract terminations		(3,284,723)		(1,498,832)		(441,234)		(560,758)
	Death benefit payments		(262,546)		(83,298)		(12,605)		—
	Flexible withdrawal option payments		(1,033,580)		(138,781)		(33,342)		(26,389)
	Transfers to other contracts		(4,020,313)		(604,736)		(34,264)		(270,009)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(7,335,433)		(1,718,841)		(204,191)		3,542,783
Total increase (decrease)			421,095		1,298,784		263,969		4,505,724
Net assets as of December 31, 2019		$	26,467,436	$	14,004,030	$	2,711,263	$	8,179,899

See accompanying notes.

A-48



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018

				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 Blue Chip Income and Growth Class 2 Division



Net assets as of January 1, 2018		$	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

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		15,716		66,132		(18,832)		(9,662)
	Total realized gains (losses) on investments		211,369		360,148		99,806		64,378
	Change in net unrealized appreciation (depreciation)
	of investments		328,167		480,315		300,967		206,083
	Net gains (losses) on investments		555,252		906,595		381,941		260,799
Net increase (decrease) in net assets resulting from operations			555,252		906,595		381,941		260,799
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		558,858		2,457,216		140,546		563,534
	Administration charges		(103)		(11,752)		(85)		(2,737)
	Contingent sales charges		(1,173)		(3,246)		(722)		(241)
	Contract terminations		(328,828)		(135,980)		(171,726)		(13,741)
	Death benefit payments		(14,579)		(2,232)		(3,413)		(3,021)
	Flexible withdrawal option payments		(12,903)		(39,057)		(7,843)		(3,618)
	Transfers to other contracts		(217,453)		(79,824)		(86,731)		(68,471)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(16,181)		2,185,125		(129,974)		471,705
Total increase (decrease)			539,071		3,091,720		251,967		732,504
Net assets as of December 31, 2019		$	3,398,913	$	6,584,481	$	1,573,419	$	1,433,725

See accompanying notes.

A-49



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018

				American Funds Insurance Series Managed Risk Asset Allocation Fund Class P2 Division				American Funds Insurance Series Managed Risk International Fund Class P2 Division
		American Funds Insurance Series High-Income Bond Class 2 Division				American Funds Insurance Series Managed Risk Growth Fund Class P2 Division



Net assets as of January 1, 2018		$	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

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		60,481		19,190		(1,056)		1,056
	Total realized gains (losses) on investments		(13,107)		62,828		127,309		5,460
	Change in net unrealized appreciation (depreciation)
	of investments		84,089		161,896		211,306		18,281
	Net gains (losses) on investments		131,463		243,914		337,559		24,797
Net increase (decrease) in net assets resulting from operations			131,463		243,914		337,559		24,797
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		250,501		853,193		299,248		42,295
	Administration charges		(3)		(3,722)		(4,649)		(541)
	Contingent sales charges		(196)		(193)		(282)		(14)
	Contract terminations		(232,337)		(9,184)		(12,629)		(653)
	Death benefit payments		(10,845)		—		—		—
	Flexible withdrawal option payments		(9,095)		(18,939)		(7,584)		(453)
	Transfers to other contracts		(87,384)		(3,425)		(38,984)		(230)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(89,359)		817,730		235,120		40,404
Total increase (decrease)			42,104		1,061,644		572,679		65,201
Net assets as of December 31, 2019		$	1,237,229	$	2,153,368	$	2,093,014	$	200,535

See accompanying notes.

A-50



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		American Funds Insurance Series New World Fund Class 2 Division		American Funds Insurance Series New World Fund Class 4 Division		BlackRock 60/40 Target Allocation Class III Division (1)		BlackRock Advantage U.S. Total Market Class III Division



Net assets as of January 1, 2018		$	1,737,815	$	703,069	$	266,497	$	150,431

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(11,163)		(2,310)		(762)		8,407
	Total realized gains (losses) on investments		184,807		33,573		9,677		111,334
	Change in net unrealized appreciation (depreciation)
	of investments		(453,843)		(200,737)		(45,856)		(209,290)
	Net gains (losses) on investments		(280,199)		(169,474)		(36,941)		(89,549)
Net increase (decrease) in net assets resulting from operations			(280,199)		(169,474)		(36,941)		(89,549)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		788,003		632,738		336,831		770,857
	Administration charges		(64)		(2,439)		(327)		(1,003)
	Contingent sales charges		(557)		(104)		(46)		—
	Contract terminations		(138,227)		(27,234)		(6,224)		—
	Death benefit payments		—		—		—		—
	Flexible withdrawal option payments		(11,144)		(4,256)		(417)		(7,132)
	Transfers to other contracts		(763,786)		(41,565)		(6,833)		(9,766)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(125,775)		557,140		322,984		752,956
Total increase (decrease)			(405,974)		387,666		286,043		663,407
Net assets as of December 31, 2018			1,331,841		1,090,735		552,540		813,838

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(6,473)		(139)		8,540		12,047
	Total realized gains (losses) on investments		107,055		57,017		17,171		76,132
	Change in net unrealized appreciation (depreciation)
	of investments		271,823		305,814		82,300		132,279
	Net gains (losses) on investments		372,405		362,692		108,011		220,458
Net increase (decrease) in net assets resulting from operations			372,405		362,692		108,011		220,458
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		489,499		820,442		417,085		96,752
	Administration charges		(3)		(3,508)		(774)		(2,119)
	Contingent sales charges		(781)		(1,053)		(339)		(630)
	Contract terminations		(207,476)		(35,746)		(11,806)		(30,590)
	Death benefit payments		—		—		(25,015)		—
	Flexible withdrawal option payments		(9,548)		(5,993)		(1,611)		(7,049)
	Transfers to other contracts		(189,093)		(44,359)		(238,849)		(88,566)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			82,598		729,783		138,691		(32,202)
Total increase (decrease)			455,003		1,092,475		246,702		188,256
Net assets as of December 31, 2019		$	1,786,844	$	2,183,210	$	799,242	$	1,002,094

(1) Represented the operations of BlackRock iShares Dynamic Allocation Class III Division until June 6, 2019.

See accompanying notes.

A-51



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		BlackRock Global Allocation Class III Division		BNY Mellon IP MidCap Stock Service Shares Division (1)		BNY Mellon IP Technology Growth Service Shares Division (2)		Calvert EAFE International Index Class F Division



Net assets as of January 1, 2018		$	1,268,238	$	161,798	$	10,254,227	$	111,229

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(5,449)		(3,045)		(165,256)		16,580
	Total realized gains (losses) on investments		77,927		34,637		1,267,740		1,758
	Change in net unrealized appreciation (depreciation)
	of investments		(222,601)		(107,221)		(1,286,839)		(88,008)
	Net gains (losses) on investments		(150,123)		(75,629)		(184,355)		(69,670)
Net increase (decrease) in net assets resulting from operations			(150,123)		(75,629)		(184,355)		(69,670)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		678,056		352,224		1,865,072		595,203
	Administration charges		(679)		(999)		(1,152)		(1,017)
	Contingent sales charges		(132)		(10)		(6,429)		(22)
	Contract terminations		(19,855)		(271)		(926,678)		(6,360)
	Death benefit payments		—		—		(49,654)		—
	Flexible withdrawal option payments		(16,363)		(5,409)		(74,208)		(470)
	Transfers to other contracts		(141,422)		(3,186)		(2,321,394)		(63,670)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			499,605		342,349		(1,514,443)		523,664
Total increase (decrease)			349,482		266,720		(1,698,798)		453,994
Net assets as of December 31, 2018			1,617,720		428,518		8,555,429		565,223

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		1,739		(3,054)		(133,041)		21,043
	Total realized gains (losses) on investments		80,727		28,863		1,724,860		185
	Change in net unrealized appreciation (depreciation)
	of investments		192,061		56,114		329,247		128,980
	Net gains (losses) on investments		274,527		81,923		1,921,066		150,208
Net increase (decrease) in net assets resulting from operations			274,527		81,923		1,921,066		150,208
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		427,327		88,785		723,074		623,468
	Administration charges		(1,107)		(1,316)		(750)		(2,722)
	Contingent sales charges		(707)		(268)		(7,344)		(444)
	Contract terminations		(129,537)		(9,249)		(1,322,246)		(15,730)
	Death benefit payments		—		(8,269)		(8,311)		—
	Flexible withdrawal option payments		(15,881)		(4,884)		(69,507)		(2,254)
	Transfers to other contracts		(32,546)		(28,358)		(1,153,683)		(9,266)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			247,549		36,441		(1,838,767)		593,052
Total increase (decrease)			522,076		118,364		82,299		743,260
Net assets as of December 31, 2019		$	2,139,796	$	546,882	$	8,637,728	$	1,308,483

(1) Represented the operations of Dreyfus IP MidCap Stock Service Shares Division until June 2, 2019.
(2) Represented the operations of Dreyfus IP Technology Growth Service Shares Division until June 2, 2019.

See accompanying notes.

A-52



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Calvert Investment Grade Bond Portfolio Class F Division (1)		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



Net assets as of January 1, 2018		$	—	$	773,413	$	1,953,709	$	373,254

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		4,260		2,998		4,852		(7,787)
	Total realized gains (losses) on investments		(31)		65,575		164,739		136,440
	Change in net unrealized appreciation (depreciation)
	of investments		(2,423)		(310,205)		(539,742)		(217,942)
	Net gains (losses) on investments		1,806		(241,632)		(370,151)		(89,289)
Net increase (decrease) in net assets resulting from operations			1,806		(241,632)		(370,151)		(89,289)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		162,975		1,238,335		1,098,671		903,008
	Administration charges		(197)		(2,525)		(4,334)		(2,046)
	Contingent sales charges		(2)		(1,531)		(1,594)		(41)
	Contract terminations		(589)		(63,209)		(101,550)		(3,329)
	Death benefit payments		—		(3,997)		—		—
	Flexible withdrawal option payments		—		(5,753)		(14,861)		(8,147)
	Transfers to other contracts		—		(213,932)		(123,555)		(58,654)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			162,187		947,388		852,777		830,791
Total increase (decrease)			163,993		705,756		482,626		741,502
Net assets as of December 31, 2018			163,993		1,479,169		2,436,335		1,114,756

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		20,153		2,736		11,209		(13,436)
	Total realized gains (losses) on investments		1,867		161,988		256,507		187,441
	Change in net unrealized appreciation (depreciation)
	of investments		(4,096)		246,207		420,984		140,223
	Net gains (losses) on investments		17,924		410,931		688,700		314,228
Net increase (decrease) in net assets resulting from operations			17,924		410,931		688,700		314,228
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		779,749		975,240		1,632,441		949,832
	Administration charges		(1,177)		(4,583)		(6,212)		(4,563)
	Contingent sales charges		(294)		(1,344)		(3,003)		(2,563)
	Contract terminations		(9,869)		(82,469)		(163,993)		(90,678)
	Death benefit payments		—		(8,375)		(12,583)		—
	Flexible withdrawal option payments		(6,426)		(9,972)		(29,525)		(8,525)
	Transfers to other contracts		(626)		(50,651)		(53,272)		(254,260)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			761,357		817,846		1,363,853		589,243
Total increase (decrease)			779,281		1,228,777		2,052,553		903,471
Net assets as of December 31, 2019		$	943,274	$	2,707,946	$	4,488,888	$	2,018,227

(1) Commenced operations June 11, 2018.

See accompanying notes.

A-53



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Columbia Limited Duration Credit Class 2 Division		Columbia Small Cap Value Class 2 Division		Core Plus Bond Class 1 Division		Delaware Limited Term Diversified Income Service Class Division



Net assets as of January 1, 2018		$	208,428	$	479,800	$	131,734,442	$	302,233

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		490		(5,602)		2,358,611		3,335
	Total realized gains (losses) on investments		(1,084)		93,416		552,964		(698)
	Change in net unrealized appreciation (depreciation)
	of investments		(1,942)		(222,161)		(6,486,857)		(6,433)
	Net gains (losses) on investments		(2,536)		(134,347)		(3,575,282)		(3,796)
Net increase (decrease) in net assets resulting from operations			(2,536)		(134,347)		(3,575,282)		(3,796)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		52,477		261,646		10,253,071		122,452
	Administration charges		(69)		(844)		(285,535)		(197)
	Contingent sales charges		(54)		(547)		(45,895)		(8)
	Contract terminations		(40,464)		(26,534)		(11,993,079)		(1,716)
	Death benefit payments		—		—		(1,399,374)		—
	Flexible withdrawal option payments		(999)		(1,684)		(3,111,179)		(872)
	Transfers to other contracts		(25,918)		(11,724)		(11,725,301)		(43,615)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(15,027)		220,313		(18,307,292)		76,044
Total increase (decrease)			(17,563)		85,966		(21,882,574)		72,248
Net assets as of December 31, 2018			190,865		565,766		109,851,868		374,481

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		2,363		(5,506)		2,180,163		4,601
	Total realized gains (losses) on investments		1,134		51,869		1,285,718		(704)
	Change in net unrealized appreciation (depreciation)
	of investments		12,508		100,412		5,630,180		8,999
	Net gains (losses) on investments		16,005		146,775		9,096,061		12,896
Net increase (decrease) in net assets resulting from operations			16,005		146,775		9,096,061		12,896
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		254,814		421,412		18,006,353		143,868
	Administration charges		(326)		(1,328)		(195,089)		(518)
	Contingent sales charges		(252)		(753)		(42,409)		(144)
	Contract terminations		(49,699)		(51,826)		(11,878,252)		(24,960)
	Death benefit payments		—		—		(1,499,990)		—
	Flexible withdrawal option payments		(1,196)		(8,787)		(2,839,355)		(2,077)
	Transfers to other contracts		(5,460)		(37,404)		(4,324,992)		(27,670)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			197,881		321,314		(2,773,734)		88,499
Total increase (decrease)			213,886		468,089		6,322,327		101,395
Net assets as of December 31, 2019		$	404,751	$	1,033,855	$	116,174,195	$	475,876

See accompanying notes.

A-54



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Delaware Small Cap Value Service Class Division		Diversified Balanced Class 1 Division		Diversified Balanced Class 2 Division		Diversified Balanced Managed Volatility Class 2 Division



Net assets as of January 1, 2018		$	2,725,902	$	27,196,938	$	1,131,092,101	$	181,076,859

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(24,469)		360,395		9,856,064		3,902,327
	Total realized gains (losses) on investments		244,329		417,059		54,916,102		3,893,627
	Change in net unrealized appreciation (depreciation)
	of investments		(725,239)		(1,819,831)		(114,144,647)		(15,661,168)
	Net gains (losses) on investments		(505,379)		(1,042,377)		(49,372,481)		(7,865,214)
Net increase (decrease) in net assets resulting from operations			(505,379)		(1,042,377)		(49,372,481)		(7,865,214)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		581,237		775,948		62,945,998		12,540,376
	Administration charges		(190)		(9,750)		(13,862,278)		(2,528,722)
	Contingent sales charges		(845)		(1,265)		(498,133)		(60,821)
	Contract terminations		(161,658)		(2,618,551)		(70,241,010)		(8,432,162)
	Death benefit payments		(2,589)		(326,084)		(6,364,296)		(534,125)
	Flexible withdrawal option payments		(23,184)		(472,393)		(24,208,989)		(3,894,633)
	Transfers to other contracts		(446,039)		(604,833)		(61,354,890)		(8,174,282)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(53,268)		(3,256,928)		(113,583,598)		(11,084,369)
Total increase (decrease)			(558,647)		(4,299,305)		(162,956,079)		(18,949,583)
Net assets as of December 31, 2018			2,167,255		22,897,633		968,136,022		162,127,276

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(16,529)		218,809		3,734,011		319,902
	Total realized gains (losses) on investments		196,713		1,117,534		84,500,620		5,564,880
	Change in net unrealized appreciation (depreciation)
	of investments		359,207		2,439,137		63,569,257		19,144,577
	Net gains (losses) on investments		539,391		3,775,480		151,803,888		25,029,359
Net increase (decrease) in net assets resulting from operations			539,391		3,775,480		151,803,888		25,029,359
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		354,337		905,367		46,705,587		13,442,090
	Administration charges		(90)		(8,346)		(10,323,389)		(2,001,598)
	Contingent sales charges		(1,082)		(1,411)		(525,698)		(72,199)
	Contract terminations		(236,671)		(1,855,657)		(90,434,349)		(11,123,886)
	Death benefit payments		—		(165,242)		(5,478,184)		(1,658,860)
	Flexible withdrawal option payments		(18,464)		(364,686)		(24,554,343)		(4,270,586)
	Transfers to other contracts		(242,105)		(239,117)		(46,906,140)		(5,213,968)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(144,075)		(1,729,092)		(131,516,516)		(10,899,007)
Total increase (decrease)			395,316		2,046,388		20,287,372		14,130,352
Net assets as of December 31, 2019		$	2,562,571	$	24,944,021	$	988,423,394	$	176,257,628

See accompanying notes.

A-55



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


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



Net assets as of January 1, 2018		$	36,539,107	$	3,946,890,443	$	354,954,477	$	171,698,770

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(325,117)		40,377,098		9,523,141		(1,814,969)
	Total realized gains (losses) on investments		373,831		161,800,838		8,035,107		1,493,685
	Change in net unrealized appreciation (depreciation)
	of investments		(3,177,655)		(420,217,284)		(36,214,974)		(22,030,674)
	Net gains (losses) on investments		(3,128,941)		(218,039,348)		(18,656,726)		(22,351,958)
Net increase (decrease) in net assets resulting from operations			(3,128,941)		(218,039,348)		(18,656,726)		(22,351,958)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		37,551,545		203,263,067		28,017,728		249,692,004
	Administration charges		(791,968)		(50,091,951)		(4,670,847)		(4,178,100)
	Contingent sales charges		(15,925)		(1,376,847)		(108,184)		(97,789)
	Contract terminations		(492,627)		(197,003,425)		(14,477,632)		(3,024,936)
	Death benefit payments		(397,229)		(11,642,103)		(817,859)		(75,164)
	Flexible withdrawal option payments		(256,219)		(62,366,081)		(4,710,254)		(1,496,426)
	Transfers to other contracts		(2,052,112)		(122,257,591)		(14,273,565)		(5,309,689)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			33,545,465		(241,474,931)		(11,040,613)		235,509,900
Total increase (decrease)			30,416,524		(459,514,279)		(29,697,339)		213,157,942
Net assets as of December 31, 2018			66,955,631		3,487,376,164		325,257,138		384,856,712

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(416,927)		11,958,519		406,034		(2,239,587)
	Total realized gains (losses) on investments		1,326,396		295,846,413		12,349,158		5,364,547
	Change in net unrealized appreciation (depreciation)
	of investments		11,807,300		345,786,028		45,499,580		78,184,013
	Net gains (losses) on investments		12,716,769		653,590,960		58,254,772		81,308,973
Net increase (decrease) in net assets resulting from operations			12,716,769		653,590,960		58,254,772		81,308,973
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		73,949,605		147,282,936		13,726,413		324,911,924
	Administration charges		(1,317,223)		(39,331,937)		(3,749,938)		(7,257,561)
	Contingent sales charges		(21,537)		(1,441,440)		(126,843)		(178,656)
	Contract terminations		(818,931)		(255,966,308)		(21,464,539)		(6,793,358)
	Death benefit payments		(671,614)		(18,529,748)		(1,214,988)		(601,321)
	Flexible withdrawal option payments		(704,342)		(67,759,946)		(5,207,204)		(3,105,045)
	Transfers to other contracts		(4,759,904)		(132,303,218)		(11,789,734)		(7,847,186)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			65,656,054		(368,049,661)		(29,826,833)		299,128,797
Total increase (decrease)			78,372,823		285,541,299		28,427,939		380,437,770
Net assets as of December 31, 2019		$	145,328,454	$	3,772,917,463	$	353,685,077	$	765,294,482

See accompanying notes.

A-56



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Diversified Income Class 2 Division		Diversified International Class 1 Division		DWS Alternative Asset Allocation Class B Division		DWS Equity 500 Index Class B2 Division



Net assets as of January 1, 2018		$	268,176,862	$	131,186,053	$	40,426	$	1,323,534

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		1,600,767		924,639		134		1,373
	Total realized gains (losses) on investments		7,335,342		6,180,082		(207)		141,306
	Change in net unrealized appreciation (depreciation)
	of investments		(18,427,084)		(29,351,372)		(4,324)		(269,733)
	Net gains (losses) on investments		(9,490,975)		(22,246,651)		(4,397)		(127,054)
Net increase (decrease) in net assets resulting from operations			(9,490,975)		(22,246,651)		(4,397)		(127,054)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		58,634,758		7,903,818		9,273		719,978
	Administration charges		(3,427,378)		(85,152)		(82)		(3,028)
	Contingent sales charges		(133,148)		(36,154)		(10)		(861)
	Contract terminations		(17,326,851)		(13,091,919)		(2,990)		(101,759)
	Death benefit payments		(811,018)		(637,061)		—		(3,110)
	Flexible withdrawal option payments		(5,120,142)		(1,375,919)		(1,440)		(12,494)
	Transfers to other contracts		(49,099,798)		(5,815,701)		(3,359)		(104,493)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(17,283,577)		(13,138,088)		1,392		494,233
Total increase (decrease)			(26,774,552)		(35,384,739)		(3,005)		367,179
Net assets as of December 31, 2018			241,402,310		95,801,314		37,421		1,690,713

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		621,340		338,712		935		9,442
	Total realized gains (losses) on investments		11,011,451		9,701,340		(55)		107,312
	Change in net unrealized appreciation (depreciation)
	of investments		21,449,329		9,270,883		4,066		419,422
	Net gains (losses) on investments		33,082,120		19,310,935		4,946		536,176
Net increase (decrease) in net assets resulting from operations			33,082,120		19,310,935		4,946		536,176
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		65,939,995		6,385,097		3,525		374,426
	Administration charges		(2,897,238)		(61,100)		(86)		(3,924)
	Contingent sales charges		(162,331)		(30,172)		—		(640)
	Contract terminations		(26,955,062)		(11,929,073)		—		(40,903)
	Death benefit payments		(2,202,374)		(942,529)		—		—
	Flexible withdrawal option payments		(5,463,588)		(1,205,096)		(1,440)		(14,364)
	Transfers to other contracts		(22,880,114)		(3,845,569)		(86)		(50,826)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			5,379,288		(11,628,442)		1,913		263,769
Total increase (decrease)			38,461,408		7,682,493		6,859		799,945
Net assets as of December 31, 2019		$	279,863,718	$	103,483,807	$	44,280	$	2,490,658

See accompanying notes.

A-57



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		DWS Small Mid Cap Value Class B Division		EQ Convertible Securities Class IB Division (1)		EQ GAMCO Small Company Value Class IB Division (1)		EQ Micro Cap Class IB Division (1)



Net assets as of January 1, 2018		$	1,241,886	$	—	$	—	$	—

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(5,145)		—		—		—
	Total realized gains (losses) on investments		188,815		—		—		—
	Change in net unrealized appreciation (depreciation)
	of investments		(416,978)		—		—		—
	Net gains (losses) on investments		(233,308)		—		—		—
Net increase (decrease) in net assets resulting from operations			(233,308)		—		—		—
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		241,345		—		—		—
	Administration charges		(692)		—		—		—
	Contingent sales charges		(852)		—		—		—
	Contract terminations		(43,636)		—		—		—
	Death benefit payments		(28,430)		—		—		—
	Flexible withdrawal option payments		(6,263)		—		—		—
	Transfers to other contracts		(85,836)		—		—		—
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			75,636		—		—		—
Total increase (decrease)			(157,672)		—		—		—
Net assets as of December 31, 2018			1,084,214		—		—		—

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(11,921)		—		204		(18)
	Total realized gains (losses) on investments		37,708		—		1,281		965
	Change in net unrealized appreciation (depreciation)
	of investments		193,594		—		940		(410)
	Net gains (losses) on investments		219,381		—		2,425		537
Net increase (decrease) in net assets resulting from operations			219,381		—		2,425		537
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		336,747		—		52,920		9,962
	Administration charges		(905)		—		(51)		(19)
	Contingent sales charges		(693)		—		—		—
	Contract terminations		(120,429)		—		—		—
	Death benefit payments		—		—		—		—
	Flexible withdrawal option payments		(4,128)		—		—		—
	Transfers to other contracts		(44,773)		—		—		—
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			165,819		—		52,869		9,943
Total increase (decrease)			385,200		—		55,294		10,480
Net assets as of December 31, 2019		$	1,469,414	$	—	$	55,294	$	10,480

(1) Commenced operations June 7, 2019.

See accompanying notes.

A-58



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		EQ SmartBeta Equity Class IB Division (1)		EQ Socially Responsible Class IB Division (1)		Equity Income Class 1 Division		Equity Income Class 2 Division



Net assets as of January 1, 2018		$	—	$	—	$	197,554,008	$	2,508,014

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		—		756,045		21,817
	Total realized gains (losses) on investments		—		—		26,572,416		212,018
	Change in net unrealized appreciation (depreciation)
	of investments		—		—		(41,670,303)		(543,962)
	Net gains (losses) on investments		—		—		(14,341,842)		(310,127)
Net increase (decrease) in net assets resulting from operations			—		—		(14,341,842)		(310,127)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		—		—		78,641,574		2,464,180
	Administration charges		—		—		(619,088)		(7,241)
	Contingent sales charges		—		—		(111,624)		(509)
	Contract terminations		—		—		(21,056,190)		(101,575)
	Death benefit payments		—		—		(2,343,986)		—
	Flexible withdrawal option payments		—		—		(5,311,417)		(23,324)
	Transfers to other contracts		—		—		(16,599,234)		(237,069)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			—		—		32,600,035		2,094,462
Total increase (decrease)			—		—		18,258,193		1,784,335
Net assets as of December 31, 2018			—		—		215,812,201		4,292,349

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		400		85		1,208,357		45,175
	Total realized gains (losses) on investments		781		231		23,072,453		174,456
	Change in net unrealized appreciation (depreciation)
	of investments		1,599		832		30,640,488		1,124,305
	Net gains (losses) on investments		2,780		1,148		54,921,298		1,343,936
Net increase (decrease) in net assets resulting from operations			2,780		1,148		54,921,298		1,343,936
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		59,782		16,214		5,972,692		2,302,515
	Administration charges		(3)		(26)		(446,244)		(11,716)
	Contingent sales charges		—		(22)		(101,083)		(2,315)
	Contract terminations		—		(733)		(26,011,250)		(133,901)
	Death benefit payments		—		—		(2,809,295)		—
	Flexible withdrawal option payments		(381)		—		(5,450,172)		(40,411)
	Transfers to other contracts		—		—		(12,413,317)		(85,653)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			59,398		15,433		(41,258,669)		2,028,519
Total increase (decrease)			62,178		16,581		13,662,629		3,372,455
Net assets as of December 31, 2019		$	62,178	$	16,581	$	229,474,830	$	7,664,804

(1) Commenced operations June 7, 2019.

See accompanying notes.

A-59



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Fidelity VIP Contrafund Service Class Division		Fidelity VIP Contrafund Service Class 2 Division		Fidelity VIP Equity-Income Service Class 2 Division		Fidelity VIP Freedom 2020 Service Class 2 Division (1)



Net assets as of January 1, 2018		$	41,948,958	$	52,562,659	$	31,877,671	$	—

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(284,236)		(501,099)		193,762		—
	Total realized gains (losses) on investments		5,695,764		8,221,063		2,389,268		—
	Change in net unrealized appreciation (depreciation)
	of investments		(7,947,435)		(11,302,296)		(5,446,945)		—
	Net gains (losses) on investments		(2,535,907)		(3,582,332)		(2,863,915)		—
Net increase (decrease) in net assets resulting from operations			(2,535,907)		(3,582,332)		(2,863,915)		—
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		786,614		5,583,081		1,061,271		—
	Administration charges		(6,862)		(98,717)		(5,888)		—
	Contingent sales charges		(3,409)		(38,129)		(7,060)		—
	Contract terminations		(4,883,153)		(5,463,241)		(2,611,169)		—
	Death benefit payments		(388,448)		(271,994)		(166,011)		—
	Flexible withdrawal option payments		(417,666)		(741,536)		(340,129)		—
	Transfers to other contracts		(1,548,346)		(4,025,378)		(1,426,575)		—
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(6,461,270)		(5,055,914)		(3,495,561)		—
Total increase (decrease)			(8,997,177)		(8,638,246)		(6,359,476)		—
Net assets as of December 31, 2018			32,951,781		43,924,413		25,518,195		—

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(333,085)		(563,026)		120,635		2,065
	Total realized gains (losses) on investments		5,734,709		8,707,403		2,203,854		585
	Change in net unrealized appreciation (depreciation)
	of investments		3,690,848		4,283,215		3,877,696		5,842
	Net gains (losses) on investments		9,092,472		12,427,592		6,202,185		8,492
Net increase (decrease) in net assets resulting from operations			9,092,472		12,427,592		6,202,185		8,492
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		357,822		4,257,075		1,142,273		133,714
	Administration charges		(4,743)		(76,806)		(4,853)		(153)
	Contingent sales charges		(3,893)		(31,776)		(7,255)		—
	Contract terminations		(4,621,020)		(5,389,702)		(2,814,749)		—
	Death benefit payments		(278,948)		(492,209)		(136,353)		—
	Flexible withdrawal option payments		(406,941)		(690,728)		(318,062)		—
	Transfers to other contracts		(1,226,925)		(3,295,351)		(1,000,551)		—
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(6,184,648)		(5,719,497)		(3,139,550)		133,561
Total increase (decrease)			2,907,824		6,708,095		3,062,635		142,053
Net assets as of December 31, 2019		$	35,859,605	$	50,632,508	$	28,580,830	$	142,053

(1) Commenced operations June 7, 2019.

See accompanying notes.

A-60



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Fidelity VIP Freedom 2030 Service Class 2 Division (1)		Fidelity VIP Freedom 2040 Service Class 2 Division (1)		Fidelity VIP Freedom 2050 Service Class 2 Division (1)		Fidelity VIP Government Money Market Initial Class Division



Net assets as of January 1, 2018		$	—	$	—	$	—	$	34,519,483

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		—		—		124,989
	Total realized gains (losses) on investments		—		—		—		—
	Change in net unrealized appreciation (depreciation)
	of investments		—		—		—		54
	Net gains (losses) on investments		—		—		—		125,043
Net increase (decrease) in net assets resulting from operations			—		—		—		125,043
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		—		—		—		22,074,734
	Administration charges		—		—		—		(33,590)
	Contingent sales charges		—		—		—		(19,797)
	Contract terminations		—		—		—		(7,322,997)
	Death benefit payments		—		—		—		(75,163)
	Flexible withdrawal option payments		—		—		—		(657,076)
	Transfers to other contracts		—		—		—		(7,491,410)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			—		—		—		6,474,701
Total increase (decrease)			—		—		—		6,599,744
Net assets as of December 31, 2018			—		—		—		41,119,227

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		4,331		8,774		1,688		266,726
	Total realized gains (losses) on investments		4,338		1,167		603		—
	Change in net unrealized appreciation (depreciation)
	of investments		3,841		26,451		4,898		—
	Net gains (losses) on investments		12,510		36,392		7,189		266,726
Net increase (decrease) in net assets resulting from operations			12,510		36,392		7,189		266,726
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		329,174		683,226		170,611		10,155,231
	Administration charges		(163)		(102)		(63)		(25,964)
	Contingent sales charges		(56)		—		—		(41,582)
	Contract terminations		(1,889)		—		—		(11,121,400)
	Death benefit payments		(41,394)		—		—		(965,685)
	Flexible withdrawal option payments		—		—		—		(572,868)
	Transfers to other contracts		—		—		—		(7,351,240)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			285,672		683,124		170,548		(9,923,508)
Total increase (decrease)			298,182		719,516		177,737		(9,656,782)
Net assets as of December 31, 2019		$	298,182	$	719,516	$	177,737	$	31,462,445

(1) Commenced operations June 7, 2019.

See accompanying notes.

A-61



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		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



Net assets as of January 1, 2018		$	3,084,003	$	14,958,345	$	11,548,238	$	673,714

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		12,762		(176,571)		(169,318)		(2,101)
	Total realized gains (losses) on investments		—		3,169,370		2,420,507		170,507
	Change in net unrealized appreciation (depreciation)
	of investments		—		(3,076,834)		(2,366,458)		(151,615)
	Net gains (losses) on investments		12,762		(84,035)		(115,269)		16,791
Net increase (decrease) in net assets resulting from operations			12,762		(84,035)		(115,269)		16,791
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		15,428,018		835,366		831,167		—
	Administration charges		(32,635)		(3,917)		(1,603)		—
	Contingent sales charges		(6,963)		(928)		(7,151)		—
	Contract terminations		(247,160)		(1,329,959)		(1,030,734)		—
	Death benefit payments		—		(102,219)		(19,460)		—
	Flexible withdrawal option payments		(16,514)		(141,700)		(100,754)		—
	Transfers to other contracts		(10,582,431)		(1,143,805)		(802,048)		(612,547)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			4,542,315		(1,887,162)		(1,130,583)		(612,547)
Total increase (decrease)			4,555,077		(1,971,197)		(1,245,852)		(595,756)
Net assets as of December 31, 2018			7,639,080		12,987,148		10,302,386		77,958

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		52,730		(161,364)		(163,244)		(129)
	Total realized gains (losses) on investments		—		2,280,640		1,227,151		9,358
	Change in net unrealized appreciation (depreciation)
	of investments		—		1,810,114		2,110,429		8,063
	Net gains (losses) on investments		52,730		3,929,390		3,174,336		17,292
Net increase (decrease) in net assets resulting from operations			52,730		3,929,390		3,174,336		17,292
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		15,455,294		306,636		714,669		—
	Administration charges		(44,757)		(2,752)		(1,329)		—
	Contingent sales charges		(9,634)		(1,732)		(6,081)		—
	Contract terminations		(555,702)		(2,056,424)		(1,094,877)		—
	Death benefit payments		—		(52,466)		(203,412)		—
	Flexible withdrawal option payments		(22,259)		(118,771)		(101,295)		—
	Transfers to other contracts		(13,664,763)		(427,848)		(497,605)		—
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			1,158,179		(2,353,357)		(1,189,930)		—
Total increase (decrease)			1,210,909		1,576,033		1,984,406		17,292
Net assets as of December 31, 2019		$	8,849,989	$	14,563,181	$	12,286,792	$	95,250

See accompanying notes.

A-62



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Fidelity VIP Mid Cap Service Class 2 Division		Fidelity VIP Overseas Service Class 2 Division		Franklin Global Real Estate VIP Class 2 Division		Franklin Income VIP Class 4 Division (1)



Net assets as of January 1, 2018		$	25,997,638	$	28,448,188	$	715,228	$	—

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(267,608)		(33,996)		11,912		(98)
	Total realized gains (losses) on investments		2,638,505		1,504,811		32		(536)
	Change in net unrealized appreciation (depreciation)
	of investments		(6,524,536)		(5,715,975)		(72,281)		(2,184)
	Net gains (losses) on investments		(4,153,639)		(4,245,160)		(60,337)		(2,818)
Net increase (decrease) in net assets resulting from operations			(4,153,639)		(4,245,160)		(60,337)		(2,818)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		3,931,897		3,071,886		222,863		89,411
	Administration charges		(9,728)		(99,723)		(946)		(72)
	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		(1,724,608)		(1,732,508)		(50,582)		—
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(51,512)		(1,826,260)		135,559		89,339
Total increase (decrease)			(4,205,151)		(6,071,420)		75,222		86,521
Net assets as of December 31, 2018			21,792,487		22,376,768		790,450		86,521

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(163,979)		16,243		11,770		24,631
	Total realized gains (losses) on investments		2,042,644		2,751,034		23,464		9,270
	Change in net unrealized appreciation (depreciation)
	of investments		2,756,548		2,595,098		139,722		30,265
	Net gains (losses) on investments		4,635,213		5,362,375		174,956		64,166
Net increase (decrease) in net assets resulting from operations			4,635,213		5,362,375		174,956		64,166
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		4,304,734		1,292,158		509,082		1,113,017
	Administration charges		(14,225)		(67,975)		(1,215)		(944)
	Contingent sales charges		(15,338)		(17,299)		(246)		(153)
	Contract terminations		(2,209,487)		(3,072,700)		(46,102)		(5,137)
	Death benefit payments		(85,925)		(179,895)		—		—
	Flexible withdrawal option payments		(166,826)		(599,556)		(1,508)		(4,745)
	Transfers to other contracts		(2,306,293)		(1,603,451)		(28,207)		(7)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(493,360)		(4,248,718)		431,804		1,102,031
Total increase (decrease)			4,141,853		1,113,657		606,760		1,166,197
Net assets as of December 31, 2019		$	25,934,340	$	23,490,425	$	1,397,210	$	1,252,718

(1) Commenced operations June 11, 2018.

See accompanying notes.

A-63



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Franklin Rising Dividends VIP Class 4 Division		Franklin Small Cap Value VIP Class 2 Division		Franklin U.S. Government Fund Class 2 Division (1)		Goldman Sachs VIT Mid Cap Value Institutional Shares Division



Net assets as of January 1, 2018		$	1,338,635	$	4,897,184	$	—	$	13,513,944

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		908		(27,023)		—		(20,462)
	Total realized gains (losses) on investments		84,938		521,084		—		1,699,111
	Change in net unrealized appreciation (depreciation)
	of investments		(192,704)		(1,092,891)		—		(3,099,240)
	Net gains (losses) on investments		(106,858)		(598,830)		—		(1,420,591)
Net increase (decrease) in net assets resulting from operations			(106,858)		(598,830)		—		(1,420,591)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		516,561		302,662		—		329,950
	Administration charges		(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			247,746		(651,389)		—		(1,415,423)
Total increase (decrease)			140,888		(1,250,219)		—		(2,836,014)
Net assets as of December 31, 2018			1,479,523		3,646,965		—		10,677,930

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		1,872		(15,987)		(322)		(78,279)
	Total realized gains (losses) on investments		307,264		480,650		11		346,567
	Change in net unrealized appreciation (depreciation)
	of investments		163,124		385,729		322		2,732,906
	Net gains (losses) on investments		472,260		850,392		11		3,001,194
Net increase (decrease) in net assets resulting from operations			472,260		850,392		11		3,001,194
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		1,072,683		341,987		323,162		386,727
	Administration charges		(5,237)		(35)		(168)		(532)
	Contingent sales charges		(864)		(2,441)		—		(7,948)
	Contract terminations		(54,838)		(457,557)		—		(1,444,623)
	Death benefit payments		(11,828)		(64,713)		—		(309,879)
	Flexible withdrawal option payments		(7,351)		(19,302)		—		(76,807)
	Transfers to other contracts		(102,379)		(250,946)		(374)		(390,861)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			890,186		(453,007)		322,620		(1,843,923)
Total increase (decrease)			1,362,446		397,385		322,631		1,157,271
Net assets as of December 31, 2019		$	2,841,969	$	4,044,350	$	322,631	$	11,835,201

(1) Commenced operations June 7, 2019.

See accompanying notes.

A-64



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018

				Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares Division
		Goldman Sachs VIT Mid Cap Value 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, 2018		$	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

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(2,841)		1,333		(58,023)		(3,112)
	Total realized gains (losses) on investments		42,911		(78)		(150,821)		5,058
	Change in net unrealized appreciation (depreciation)
	of investments		190,535		2,912		1,444,467		90,363
	Net gains (losses) on investments		230,605		4,167		1,235,623		92,309
Net increase (decrease) in net assets resulting from operations			230,605		4,167		1,235,623		92,309
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		587,437		18,252		288,382		221,981
	Administration charges		(1,926)		(211)		(122)		(999)
	Contingent sales charges		(289)		(6)		(4,596)		(446)
	Contract terminations		(17,974)		(265)		(827,900)		(14,963)
	Death benefit payments		—		—		(21,182)		—
	Flexible withdrawal option payments		(3,986)		(50)		(53,911)		(2,671)
	Transfers to other contracts		(6,968)		(582)		(428,094)		(5,344)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			556,294		17,138		(1,047,423)		197,558
Total increase (decrease)			786,899		21,305		188,200		289,867
Net assets as of December 31, 2019		$	1,444,925	$	67,712	$	5,915,884	$	626,867

See accompanying notes.

A-65



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Guggenheim Investments Multi-Hedge Strategies Division		International Emerging Markets Class 1 Division		Invesco American Franchise Series I Division		Invesco Balanced-Risk Allocation Series II Division



Net assets as of January 1, 2018		$	536,633	$	59,752,743	$	4,467,834	$	266,272

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(7,748)		(106,366)		(59,058)		314
	Total realized gains (losses) on investments		(520)		2,311,424		551,578		28,526
	Change in net unrealized appreciation (depreciation)
	of investments		(28,353)		(14,162,851)		(664,227)		(55,192)
	Net gains (losses) on investments		(36,621)		(11,957,793)		(171,707)		(26,352)
Net increase (decrease) in net assets resulting from operations			(36,621)		(11,957,793)		(171,707)		(26,352)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		131,013		6,804,940		130,090		72,148
	Administration charges		(388)		(8,244)		(1,089)		(690)
	Contingent sales charges		(48)		(32,870)		(198)		(19)
	Contract terminations		(15,525)		(7,126,409)		(283,858)		(531)
	Death benefit payments		—		(173,259)		(49,495)		—
	Flexible withdrawal option payments		(410)		(375,517)		(62,821)		—
	Transfers to other contracts		(75,997)		(5,884,760)		(203,236)		(748)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			38,645		(6,796,119)		(470,607)		70,160
Total increase (decrease)			2,024		(18,753,912)		(642,314)		43,808
Net assets as of December 31, 2018			538,657		40,998,831		3,825,520		310,080

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		5,804		(172,823)		(56,364)		(4,338)
	Total realized gains (losses) on investments		225		1,571,045		974,866		(4,186)
	Change in net unrealized appreciation (depreciation)
	of investments		13,267		4,885,242		326,403		54,256
	Net gains (losses) on investments		19,296		6,283,464		1,244,905		45,732
Net increase (decrease) in net assets resulting from operations			19,296		6,283,464		1,244,905		45,732
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		27,174		5,325,030		92,009		155,166
	Administration charges		(367)		(9,248)		(851)		(779)
	Contingent sales charges		(69)		(21,911)		(521)		(296)
	Contract terminations		(12,337)		(5,806,117)		(618,229)		(20,201)
	Death benefit payments		—		(394,153)		(61,321)		—
	Flexible withdrawal option payments		(391)		(339,007)		(53,990)		—
	Transfers to other contracts		(13,019)		(2,969,118)		(121,146)		(944)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			991		(4,214,524)		(764,049)		132,946
Total increase (decrease)			20,287		2,068,940		480,856		178,678
Net assets as of December 31, 2019		$	558,944	$	43,067,771	$	4,306,376	$	488,758

See accompanying notes.

A-66



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Invesco Core Equity Series I Division		Invesco Health Care Series I Division		Invesco Health Care Series II Division		Invesco International Growth Series I Division



Net assets as of January 1, 2018		$	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

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(51,201)		(85,790)		(19,030)		4,630
	Total realized gains (losses) on investments		2,153,158		(68,527)		38,176		567,319
	Change in net unrealized appreciation (depreciation)
	of investments		1,103,853		1,930,700		531,392		1,068,605
	Net gains (losses) on investments		3,205,810		1,776,383		550,538		1,640,554
Net increase (decrease) in net assets resulting from operations			3,205,810		1,776,383		550,538		1,640,554
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		170,629		249,595		1,206,134		378,967
	Administration charges		(1,855)		(938)		(5,211)		(11,682)
	Contingent sales charges		(1,273)		(963)		(1,140)		(4,184)
	Contract terminations		(1,511,228)		(943,217)		(85,174)		(753,222)
	Death benefit payments		(200,210)		(5,452)		(11,396)		(28,283)
	Flexible withdrawal option payments		(192,850)		(76,772)		(10,063)		(77,387)
	Transfers to other contracts		(439,309)		(449,715)		(80,198)		(798,094)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(2,176,096)		(1,227,462)		1,012,952		(1,293,885)
Total increase (decrease)			1,029,714		548,921		1,563,490		346,669
Net assets as of December 31, 2019		$	13,547,364	$	7,018,218	$	2,876,696	$	6,938,872

See accompanying notes.

A-67



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Invesco International Growth Series II Division		Invesco Mid Cap Growth Series I Division		Invesco Oppenheimer V.I. Main Street Small Cap Series II Division (1)		Invesco Small Cap Equity Series I Division



Net assets as of January 1, 2018		$	665,216	$	1,208,884	$	602,127	$	7,854,544

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		6,665		(16,213)		(6,339)		(102,512)
	Total realized gains (losses) on investments		7,195		156,424		67,785		557,254
	Change in net unrealized appreciation (depreciation)
	of investments		(158,987)		(207,235)		(112,224)		(1,481,969)
	Net gains (losses) on investments		(145,127)		(67,024)		(50,778)		(1,027,227)
Net increase (decrease) in net assets resulting from operations			(145,127)		(67,024)		(50,778)		(1,027,227)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		377,429		191,886		92,167		472,452
	Administration charges		(1,282)		(238)		(66)		(10,396)
	Contingent sales charges		(113)		(118)		(16)		(4,757)
	Contract terminations		(15,431)		(168,998)		(22,637)		(838,885)
	Death benefit payments		—		—		(600)		(140,436)
	Flexible withdrawal option payments		(9,766)		(19,171)		(1,196)		(90,627)
	Transfers to other contracts		(9,977)		(103,450)		(217,286)		(623,190)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			340,860		(100,089)		(149,634)		(1,235,839)
Total increase (decrease)			195,733		(167,113)		(200,412)		(2,263,066)
Net assets as of December 31, 2018			860,949		1,041,771		401,715		5,591,478

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		4,610		(14,698)		(5,779)		(90,284)
	Total realized gains (losses) on investments		84,942		161,987		41,999		498,849
	Change in net unrealized appreciation (depreciation)
	of investments		180,327		171,323		59,327		954,401
	Net gains (losses) on investments		269,879		318,612		95,547		1,362,966
Net increase (decrease) in net assets resulting from operations			269,879		318,612		95,547		1,362,966
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		638,020		28,222		37,485		522,309
	Administration charges		(2,536)		(178)		(82)		(7,849)
	Contingent sales charges		(228)		(210)		(29)		(1,893)
	Contract terminations		(8,255)		(249,249)		(33,883)		(491,151)
	Death benefit payments		—		—		—		(4,012)
	Flexible withdrawal option payments		(16,431)		(15,061)		(1,232)		(78,722)
	Transfers to other contracts		(49,798)		(44,933)		(51,548)		(345,316)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			560,772		(281,409)		(49,289)		(406,634)
Total increase (decrease)			830,651		37,203		46,258		956,332
Net assets as of December 31, 2019		$	1,691,600	$	1,078,974	$	447,973	$	6,547,810

(1) Represented the operations of Oppenheimer Main Street Small Cap Service Shares Division until May 24, 2019.

See accompanying notes.

A-68



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Invesco Technology Series I Division		Invesco Value Opportunities Series I Division		Janus Henderson Enterprise Service Shares Division		Janus Henderson Flexible Bond Service Shares Division



Net assets as of January 1, 2018		$	3,692,255	$	4,384,879	$	9,775,296	$	2,164,643

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(47,841)		(43,538)		(114,024)		25,024
	Total realized gains (losses) on investments		408,230		222,283		1,519,276		(33,900)
	Change in net unrealized appreciation (depreciation)
	of investments		(351,387)		(911,597)		(1,513,581)		(42,489)
	Net gains (losses) on investments		9,002		(732,852)		(108,329)		(51,365)
Net increase (decrease) in net assets resulting from operations			9,002		(732,852)		(108,329)		(51,365)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		475,208		325,699		557,824		535,559
	Administration charges		(324)		(14,723)		(2,220)		(2,108)
	Contingent sales charges		(285)		(3,429)		(668)		(403)
	Contract terminations		(407,825)		(494,217)		(956,326)		(74,459)
	Death benefit payments		(95,803)		(8,717)		(35,632)		(3,417)
	Flexible withdrawal option payments		(44,855)		(67,899)		(63,139)		(25,228)
	Transfers to other contracts		(580,803)		(483,263)		(574,526)		(685,266)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(654,687)		(746,549)		(1,074,687)		(255,322)
Total increase (decrease)			(645,685)		(1,479,401)		(1,183,016)		(306,687)
Net assets as of December 31, 2018			3,046,570		2,905,478		8,592,280		1,857,956

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(40,921)		(38,429)		(124,065)		44,918
	Total realized gains (losses) on investments		532,746		392,134		1,688,471		237
	Change in net unrealized appreciation (depreciation)
	of investments		433,265		448,184		1,213,597		123,943
	Net gains (losses) on investments		925,090		801,889		2,778,003		169,098
Net increase (decrease) in net assets resulting from operations			925,090		801,889		2,778,003		169,098
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		147,274		340,357		457,116		1,321,164
	Administration charges		(286)		(10,277)		(1,754)		(2,334)
	Contingent sales charges		(489)		(2,066)		(992)		(682)
	Contract terminations		(580,088)		(371,928)		(1,177,694)		(83,777)
	Death benefit payments		(8,570)		—		(18,949)		(20,635)
	Flexible withdrawal option payments		(28,702)		(58,128)		(53,542)		(20,194)
	Transfers to other contracts		(462,340)		(287,684)		(507,173)		(105,029)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(933,201)		(389,726)		(1,302,988)		1,088,513
Total increase (decrease)			(8,111)		412,163		1,475,015		1,257,611
Net assets as of December 31, 2019		$	3,038,459	$	3,317,641	$	10,067,295	$	3,115,567

See accompanying notes.

A-69



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Janus Henderson Global Technology Service Shares Division (1)		LargeCap Growth I Class 1 Division		LargeCap S&P 500 Index Class 1 Division		LargeCap S&P 500 Index Class 2 Division



Net assets as of January 1, 2018		$	—	$	112,163,935	$	104,390,822	$	3,235,043

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		(1,498,505)		365,098		45,158
	Total realized gains (losses) on investments		—		15,783,396		12,383,458		250,771
	Change in net unrealized appreciation (depreciation)
	of investments		—		(10,937,857)		(18,120,279)		(859,123)
	Net gains (losses) on investments		—		3,347,034		(5,371,723)		(563,194)
Net increase (decrease) in net assets resulting from operations			—		3,347,034		(5,371,723)		(563,194)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		—		6,084,659		8,724,026		4,730,271
	Administration charges		—		(33,196)		(57,937)		(10,660)
	Contingent sales charges		—		(22,493)		(33,286)		(2,648)
	Contract terminations		—		(10,253,450)		(9,612,324)		(108,386)
	Death benefit payments		—		(822,050)		(641,672)		—
	Flexible withdrawal option payments		—		(1,131,561)		(1,358,328)		(28,844)
	Transfers to other contracts		—		(6,530,248)		(7,492,770)		(171,635)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			—		(12,708,339)		(10,472,291)		4,408,098
Total increase (decrease)			—		(9,361,305)		(15,844,014)		3,844,904
Net assets as of December 31, 2018			—		102,802,630		88,546,808		7,079,947

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(622)		(1,766,218)		513,565		136,360
	Total realized gains (losses) on investments		210		22,244,194		12,389,698		627,806
	Change in net unrealized appreciation (depreciation)
	of investments		25,001		17,797,460		11,618,691		1,957,657
	Net gains (losses) on investments		24,589		38,275,436		24,521,954		2,721,823
Net increase (decrease) in net assets resulting from operations			24,589		38,275,436		24,521,954		2,721,823
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		325,614		55,899,675		3,993,973		6,991,181
	Administration charges		(197)		(61,439)		(42,196)		(24,142)
	Contingent sales charges		—		(31,815)		(30,388)		(4,456)
	Contract terminations		—		(16,081,195)		(11,209,850)		(193,704)
	Death benefit payments		—		(1,750,829)		(705,983)		(43,155)
	Flexible withdrawal option payments		—		(1,475,175)		(1,336,707)		(53,185)
	Transfers to other contracts		(1,814)		(8,607,753)		(4,132,556)		(637,861)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			323,603		27,891,469		(13,463,707)		6,034,678
Total increase (decrease)			348,192		66,166,905		11,058,247		8,756,501
Net assets as of December 31, 2019		$	348,192	$	168,969,535	$	99,605,055	$	15,836,448

(1) Commenced operations June 7, 2019.

See accompanying notes.

A-70



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		MFS International Intrinsic Value Service Class Division (1)		MFS New Discovery Service Class Division		MFS Utilities Service Class Division		MFS Value Service Class Division



Net assets as of January 1, 2018		$	6,697,734	$	1,497,048	$	13,276,004	$	6,238,908

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(25,406)		(28,928)		(75,014)		(10,467)
	Total realized gains (losses) on investments		332,315		390,401		(193,173)		505,489
	Change in net unrealized appreciation (depreciation)
	of investments		(1,068,216)		(584,728)		163,854		(1,119,990)
	Net gains (losses) on investments		(761,307)		(223,255)		(104,333)		(624,968)
Net increase (decrease) in net assets resulting from operations			(761,307)		(223,255)		(104,333)		(624,968)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		2,015,034		1,759,138		1,532,777		573,815
	Administration charges		(4,371)		(1,419)		(3,926)		(277)
	Contingent sales charges		(3,080)		(733)		(7,205)		(5,560)
	Contract terminations		(501,821)		(52,778)		(1,072,991)		(801,478)
	Death benefit payments		(4,312)		(33,614)		(77,647)		(724)
	Flexible withdrawal option payments		(42,866)		(30,782)		(104,941)		(53,233)
	Transfers to other contracts		(1,677,728)		(450,301)		(1,049,320)		(645,530)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(219,144)		1,189,511		(783,253)		(932,987)
Total increase (decrease)			(980,451)		966,256		(887,586)		(1,557,955)
Net assets as of December 31, 2018			5,717,283		2,463,304		12,388,418		4,680,953

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		15,924		(46,892)		352,152		23,441
	Total realized gains (losses) on investments		359,038		939,941		(102,330)		234,008
	Change in net unrealized appreciation (depreciation)
	of investments		1,023,593		250,524		2,611,742		971,917
	Net gains (losses) on investments		1,398,555		1,143,573		2,861,564		1,229,366
Net increase (decrease) in net assets resulting from operations			1,398,555		1,143,573		2,861,564		1,229,366
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		1,614,093		2,204,502		2,913,777		669,885
	Administration charges		(4,680)		(4,190)		(6,580)		(229)
	Contingent sales charges		(2,826)		(2,510)		(7,674)		(3,033)
	Contract terminations		(503,270)		(370,555)		(1,212,561)		(546,096)
	Death benefit payments		(3,378)		—		(400,308)		(51,676)
	Flexible withdrawal option payments		(35,728)		(45,400)		(149,056)		(48,465)
	Transfers to other contracts		(695,143)		(582,083)		(1,103,478)		(638,446)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			369,068		1,199,764		34,120		(618,060)
Total increase (decrease)			1,767,623		2,343,337		2,895,684		611,306
Net assets as of December 31, 2019		$	7,484,906	$	4,806,641	$	15,284,102	$	5,292,259

(1) Represented the operations of MFS International Value Service Class Division until June 6, 2019.

See accompanying notes.

A-71



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		MidCap Class 1 Division		Neuberger Berman AMT Mid Cap Growth Portfolio Class S Division		Neuberger Berman AMT Sustainable Equity Class I Division		Neuberger Berman AMT Sustainable Equity Class S Division (1)



Net assets as of January 1, 2018		$	351,847,210	$	2,598,506	$	4,355,135	$	—

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(3,470,289)		(38,099)		(37,130)		2
	Total realized gains (losses) on investments		64,398,236		318,504		730,145		(286)
	Change in net unrealized appreciation (depreciation)
	of investments		(84,185,785)		(507,941)		(893,064)		(126)
	Net gains (losses) on investments		(23,257,838)		(227,536)		(200,049)		(410)
Net increase (decrease) in net assets resulting from operations			(23,257,838)		(227,536)		(200,049)		(410)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		11,081,798		750,610		321,603		10,781
	Administration charges		(304,557)		(4,337)		(19,485)		(1)
	Contingent sales charges		(100,029)		(1,648)		(3,865)		(1)
	Contract terminations		(33,444,054)		(233,406)		(557,164)		(181)
	Death benefit payments		(2,413,752)		(4,809)		(16,195)		—
	Flexible withdrawal option payments		(4,551,400)		(22,313)		(88,288)		—
	Transfers to other contracts		(15,350,029)		(401,798)		(586,949)		(8,682)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(45,082,023)		82,299		(950,343)		1,916
Total increase (decrease)			(68,339,861)		(145,237)		(1,150,392)		1,506
Net assets as of December 31, 2018			283,507,349		2,453,269		3,204,743		1,506

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(3,397,099)		(39,535)		(53,606)		7
	Total realized gains (losses) on investments		67,777,369		339,120		828,470		663
	Change in net unrealized appreciation (depreciation)
	of investments		45,967,907		464,714		202,087		430
	Net gains (losses) on investments		110,348,177		764,299		976,951		1,100
Net increase (decrease) in net assets resulting from operations			110,348,177		764,299		976,951		1,100
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		9,681,901		989,491		3,972,039		14,856
	Administration charges		(222,347)		(5,278)		(13,400)		(14)
	Contingent sales charges		(99,038)		(2,172)		(5,994)		—
	Contract terminations		(36,849,537)		(304,518)		(1,079,093)		—
	Death benefit payments		(3,673,104)		(12,863)		(137,595)		—
	Flexible withdrawal option payments		(4,328,708)		(24,535)		(81,785)		—
	Transfers to other contracts		(19,885,148)		(351,589)		(201,992)		(1,886)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(55,375,981)		288,536		2,452,180		12,956
Total increase (decrease)			54,972,196		1,052,835		3,429,131		14,056
Net assets as of December 31, 2019		$	338,479,545	$	3,506,104	$	6,633,874	$	15,562

(1) Commenced operations June 11, 2018.

See accompanying notes.

A-72



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		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



Net assets as of January 1, 2018		$	3,688,301	$	97,812	$	10,627	$	21,731,394

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		52,643		1,859		57		724,718
	Total realized gains (losses) on investments		(30,509)		1,167		(176)		(240,898)
	Change in net unrealized appreciation (depreciation)
	of investments		(237,187)		(9,885)		(3,877)		(1,268,626)
	Net gains (losses) on investments		(215,053)		(6,859)		(3,996)		(784,806)
Net increase (decrease) in net assets resulting from operations			(215,053)		(6,859)		(3,996)		(784,806)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		352,284		16,377		38,424		2,435,213
	Administration charges		(42)		(193)		(20)		(5,316)
	Contingent sales charges		(3,428)		—		(5)		(16,128)
	Contract terminations		(494,108)		—		(153)		(2,043,898)
	Death benefit payments		(22,093)		—		—		(204,632)
	Flexible withdrawal option payments		(61,090)		—		—		(255,623)
	Transfers to other contracts		(497,332)		(6,691)		(1,069)		(2,932,830)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(725,809)		9,493		37,177		(3,023,214)
Total increase (decrease)			(940,862)		2,634		33,181		(3,808,020)
Net assets as of December 31, 2018			2,747,439		100,446		43,808		17,923,374

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		37,455		1,758		1,598		682,969
	Total realized gains (losses) on investments		(63,142)		196		(944)		(136,964)
	Change in net unrealized appreciation (depreciation)
	of investments		280,847		8,554		3,743		1,771,178
	Net gains (losses) on investments		255,160		10,508		4,397		2,317,183
Net increase (decrease) in net assets resulting from operations			255,160		10,508		4,397		2,317,183
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		161,892		2,418		7,213		3,214,331
	Administration charges		—		(201)		(168)		(7,127)
	Contingent sales charges		(2,063)		—		(4)		(10,395)
	Contract terminations		(371,482)		—		(176)		(1,781,490)
	Death benefit payments		(39,518)		—		—		(339,641)
	Flexible withdrawal option payments		(52,877)		—		(903)		(258,862)
	Transfers to other contracts		(279,868)		(785)		(2,691)		(1,062,291)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(583,916)		1,432		3,271		(245,475)
Total increase (decrease)			(328,756)		11,940		7,668		2,071,708
Net assets as of December 31, 2019		$	2,418,683	$	112,386	$	51,476	$	19,995,082

See accompanying notes.

A-73



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		PIMCO Low Duration Advisor Class Division		PIMCO Total Return Administrative Class Division		Principal Capital Appreciation Class 1 Division		Principal Capital Appreciation Class 2 Division



Net assets as of January 1, 2018		$	392,470	$	26,016,136	$	112,554,315	$	999,171

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		3,647		257,756		(286,518)		628
	Total realized gains (losses) on investments		(4,692)		(322,664)		9,885,087		117,597
	Change in net unrealized appreciation (depreciation)
	of investments		(3,712)		(446,136)		(13,540,449)		(269,776)
	Net gains (losses) on investments		(4,757)		(511,044)		(3,941,880)		(151,551)
Net increase (decrease) in net assets resulting from operations			(4,757)		(511,044)		(3,941,880)		(151,551)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		1,182,756		2,922,114		4,553,932		1,558,678
	Administration charges		(365)		(4,057)		(223,855)		(4,908)
	Contingent sales charges		(178)		(26,132)		(51,549)		(1,517)
	Contract terminations		(33,689)		(3,785,673)		(10,083,321)		(65,659)
	Death benefit payments		—		(102,824)		(903,342)		(5,425)
	Flexible withdrawal option payments		(3,732)		(400,204)		(2,187,907)		(9,347)
	Transfers to other contracts		(504,005)		(2,485,192)		(8,287,659)		(174,980)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			640,787		(3,881,968)		(17,183,701)		1,296,842
Total increase (decrease)			636,030		(4,393,012)		(21,125,581)		1,145,291
Net assets as of December 31, 2018			1,028,500		21,623,124		91,428,734		2,144,462

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		16,403		366,519		171,149		23,784
	Total realized gains (losses) on investments		4,074		(222,581)		13,441,306		355,171
	Change in net unrealized appreciation (depreciation)
	of investments		7,635		1,307,644		12,272,884		471,338
	Net gains (losses) on investments		28,112		1,451,582		25,885,339		850,293
Net increase (decrease) in net assets resulting from operations			28,112		1,451,582		25,885,339		850,293
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		1,230,075		4,521,241		2,265,862		2,604,147
	Administration charges		(973)		(6,739)		(150,636)		(9,157)
	Contingent sales charges		(1,730)		(15,489)		(47,216)		(3,951)
	Contract terminations		(198,730)		(2,573,947)		(11,933,726)		(152,931)
	Death benefit payments		—		(208,832)		(1,369,645)		—
	Flexible withdrawal option payments		(13,518)		(352,498)		(1,943,632)		(22,167)
	Transfers to other contracts		(545,932)		(1,517,135)		(6,708,312)		(132,968)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			469,192		(153,399)		(19,887,305)		2,282,973
Total increase (decrease)			497,304		1,298,183		5,998,034		3,133,266
Net assets as of December 31, 2019		$	1,525,804	$	22,921,307	$	97,426,768	$	5,277,728

See accompanying notes.

A-74



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Principal LifeTime 2010 Class 1 Division		Principal LifeTime 2020 Class 1 Division		Principal LifeTime 2030 Class 1 Division		Principal LifeTime 2040 Class 1 Division



Net assets as of January 1, 2018		$	24,297,433	$	104,894,330	$	68,464,637	$	15,164,087

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		311,111		1,168,395		577,821		93,252
	Total realized gains (losses) on investments		2,257,576		10,042,987		4,974,375		959,741
	Change in net unrealized appreciation (depreciation)
	of investments		(3,578,113)		(17,238,827)		(10,456,268)		(2,363,896)
	Net gains (losses) on investments		(1,009,426)		(6,027,445)		(4,904,072)		(1,310,903)
Net increase (decrease) in net assets resulting from operations			(1,009,426)		(6,027,445)		(4,904,072)		(1,310,903)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		628,286		2,887,583		3,200,586		510,792
	Administration charges		(82,130)		(532,118)		(384,195)		(5,043)
	Contingent sales charges		(18,046)		(61,413)		(65,150)		(5,660)
	Contract terminations		(2,668,055)		(9,516,705)		(9,566,699)		(860,788)
	Death benefit payments		(1,253,029)		(671,767)		—		—
	Flexible withdrawal option payments		(954,790)		(3,248,295)		(1,332,083)		(29,193)
	Transfers to other contracts		(1,380,883)		(4,720,580)		(817,854)		(493,219)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(5,728,647)		(15,863,295)		(8,965,395)		(883,111)
Total increase (decrease)			(6,738,073)		(21,890,740)		(13,869,467)		(2,194,014)
Net assets as of December 31, 2018			17,559,360		83,003,590		54,595,170		12,970,073

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		244,231		856,429		371,311		67,300
	Total realized gains (losses) on investments		1,442,283		8,492,660		5,166,094		1,326,258
	Change in net unrealized appreciation (depreciation)
	of investments		377,927		3,601,273		5,019,700		1,558,385
	Net gains (losses) on investments		2,064,441		12,950,362		10,557,105		2,951,943
Net increase (decrease) in net assets resulting from operations			2,064,441		12,950,362		10,557,105		2,951,943
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		238,748		3,017,400		3,741,072		1,757,962
	Administration charges		(48,778)		(363,074)		(249,778)		(7,110)
	Contingent sales charges		(6,545)		(41,722)		(41,129)		(10,156)
	Contract terminations		(1,212,259)		(8,586,008)		(7,647,216)		(1,807,050)
	Death benefit payments		(525,439)		(1,589,979)		(356,024)		(25,046)
	Flexible withdrawal option payments		(848,098)		(3,071,940)		(1,205,431)		(32,715)
	Transfers to other contracts		(371,887)		(2,732,397)		(1,823,307)		(223,871)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(2,774,258)		(13,367,720)		(7,581,813)		(347,986)
Total increase (decrease)			(709,817)		(417,358)		2,975,292		2,603,957
Net assets as of December 31, 2019		$	16,849,543	$	82,586,232	$	57,570,462	$	15,574,030

See accompanying notes.

A-75



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Principal LifeTime 2050 Class 1 Division		Principal LifeTime Strategic Income Class 1 Division		Real Estate Securities Class 1 Division		Real Estate Securities Class 2 Division



Net assets as of January 1, 2018		$	11,286,978	$	15,183,765	$	75,317,625	$	2,536,776

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		71,952		152,873		279,047		17,956
	Total realized gains (losses) on investments		805,456		640,078		8,547,778		227,215
	Change in net unrealized appreciation (depreciation)
	of investments		(1,948,794)		(1,344,295)		(12,652,684)		(402,912)
	Net gains (losses) on investments		(1,071,386)		(551,344)		(3,825,859)		(157,741)
Net increase (decrease) in net assets resulting from operations			(1,071,386)		(551,344)		(3,825,859)		(157,741)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		759,700		585,659		3,833,843		1,216,004
	Administration charges		(4,077)		(43,259)		(15,931)		(5,729)
	Contingent sales charges		(3,669)		(9,056)		(24,380)		(490)
	Contract terminations		(548,824)		(1,630,543)		(6,488,601)		(107,735)
	Death benefit payments		(4,024)		(290,478)		(403,096)		—
	Flexible withdrawal option payments		(40,799)		(595,137)		(780,979)		(19,717)
	Transfers to other contracts		(654,039)		(1,248,458)		(6,112,221)		(190,829)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(495,732)		(3,231,272)		(9,991,365)		891,504
Total increase (decrease)			(1,567,118)		(3,782,616)		(13,817,224)		733,763
Net assets as of December 31, 2018			9,719,860		11,401,149		61,500,401		3,270,539

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		65,351		108,883		281,150		30,204
	Total realized gains (losses) on investments		1,078,935		725,212		9,762,855		311,375
	Change in net unrealized appreciation (depreciation)
	of investments		1,254,271		327,916		7,368,808		675,230
	Net gains (losses) on investments		2,398,557		1,162,011		17,412,813		1,016,809
Net increase (decrease) in net assets resulting from operations			2,398,557		1,162,011		17,412,813		1,016,809
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		1,546,017		758,056		3,443,526		2,453,536
	Administration charges		(7,149)		(29,568)		(13,915)		(9,021)
	Contingent sales charges		(8,301)		(6,695)		(25,495)		(2,890)
	Contract terminations		(1,374,136)		(1,619,389)		(7,827,368)		(144,613)
	Death benefit payments		—		(147,537)		(1,387,136)		(22,707)
	Flexible withdrawal option payments		(37,223)		(526,867)		(757,886)		(19,470)
	Transfers to other contracts		(376,287)		(357,785)		(4,864,877)		(436,200)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(257,079)		(1,929,785)		(11,433,151)		1,818,635
Total increase (decrease)			2,141,478		(767,774)		5,979,662		2,835,444
Net assets as of December 31, 2019		$	11,861,338	$	10,633,375	$	67,480,063	$	6,105,983

See accompanying notes.

A-76



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Rydex Basic Materials Division		Rydex Commodities Strategy Division		Rydex NASDAQ 100 Division		SAM Balanced Portfolio Class 1 Division



Net assets as of January 1, 2018		$	439,801	$	271,312	$	1,358,604	$	536,023,423

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(3,555)		9,888		(20,910)		8,073,899
	Total realized gains (losses) on investments		12,146		10,247		101,008		30,909,114
	Change in net unrealized appreciation (depreciation)
	of investments		(113,786)		(108,846)		(186,449)		(68,888,685)
	Net gains (losses) on investments		(105,195)		(88,711)		(106,351)		(29,905,672)
Net increase (decrease) in net assets resulting from operations			(105,195)		(88,711)		(106,351)		(29,905,672)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		161,093		309,624		954,303		19,032,622
	Administration charges		(434)		(253)		(5,637)		(3,360,590)
	Contingent sales charges		(79)		(117)		(1,331)		(314,852)
	Contract terminations		(2,670)		(23,285)		(103,095)		(51,825,702)
	Death benefit payments		—		(1,198)		(2,542)		(4,527,129)
	Flexible withdrawal option payments		(365)		(2,362)		(3,704)		(13,334,965)
	Transfers to other contracts		(1,708)		(41,430)		(265,364)		(19,578,439)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			155,837		240,979		572,630		(73,909,055)
Total increase (decrease)			50,642		152,268		466,279		(103,814,727)
Net assets as of December 31, 2018			490,443		423,580		1,824,883		432,208,696

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(6,684)		1,456		(22,331)		4,501,847
	Total realized gains (losses) on investments		27,388		(5,564)		83,014		18,513,667
	Change in net unrealized appreciation (depreciation)
	of investments		78,927		64,075		655,958		50,648,846
	Net gains (losses) on investments		99,631		59,967		716,641		73,664,360
Net increase (decrease) in net assets resulting from operations			99,631		59,967		716,641		73,664,360
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		29,495		64,522		753,174		7,644,958
	Administration charges		(563)		(482)		(6,359)		(2,314,355)
	Contingent sales charges		(75)		(482)		(810)		(271,690)
	Contract terminations		(9,756)		(27,286)		(72,927)		(52,764,065)
	Death benefit payments		—		—		(2,444)		(5,599,660)
	Flexible withdrawal option payments		(1,343)		(2,028)		(8,066)		(12,303,301)
	Transfers to other contracts		(1,457)		(18,746)		(109,095)		(12,287,637)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			16,301		15,498		553,473		(77,895,750)
Total increase (decrease)			115,932		75,465		1,270,114		(4,231,390)
Net assets as of December 31, 2019		$	606,375	$	499,045	$	3,094,997	$	427,977,306

See accompanying notes.

A-77



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		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



Net assets as of January 1, 2018		$	9,147,273	$	128,349,159	$	5,203,713	$	106,720,296

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		253,956		2,170,636		125,568		1,245,341
	Total realized gains (losses) on investments		673,443		4,847,423		206,670		8,374,957
	Change in net unrealized appreciation (depreciation)
	of investments		(1,809,015)		(12,400,624)		(621,650)		(17,095,687)
	Net gains (losses) on investments		(881,616)		(5,382,565)		(289,412)		(7,475,389)
Net increase (decrease) in net assets resulting from operations			(881,616)		(5,382,565)		(289,412)		(7,475,389)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		5,858,093		5,631,596		2,147,675		10,713,365
	Administration charges		(28,936)		(452,025)		(18,351)		(10,820)
	Contingent sales charges		(6,747)		(89,809)		(1,853)		(117,897)
	Contract terminations		(636,550)		(15,336,465)		(300,532)		(18,239,752)
	Death benefit payments		—		(999,078)		(13,800)		(604,715)
	Flexible withdrawal option payments		(226,862)		(3,390,344)		(50,317)		(988,809)
	Transfers to other contracts		(127,888)		(5,362,607)		(673,142)		(4,209,807)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			4,831,110		(19,998,732)		1,089,680		(13,458,435)
Total increase (decrease)			3,949,494		(25,381,297)		800,268		(20,933,824)
Net assets as of December 31, 2018			13,096,767		102,967,862		6,003,981		85,786,472

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		270,670		1,417,793		139,591		339,518
	Total realized gains (losses) on investments		691,456		1,648,177		107,235		3,463,132
	Change in net unrealized appreciation (depreciation)
	of investments		1,939,678		10,844,136		704,735		14,010,768
	Net gains (losses) on investments		2,901,804		13,910,106		951,561		17,813,418
Net increase (decrease) in net assets resulting from operations			2,901,804		13,910,106		951,561		17,813,418
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		8,382,193		3,039,184		2,936,995		4,038,413
	Administration charges		(39,690)		(319,597)		(17,741)		(9,452)
	Contingent sales charges		(7,386)		(50,414)		(2,800)		(64,498)
	Contract terminations		(397,706)		(10,153,043)		(259,596)		(13,152,309)
	Death benefit payments		(25,142)		(1,891,987)		(66,341)		(284,300)
	Flexible withdrawal option payments		(274,825)		(3,014,496)		(78,341)		(896,275)
	Transfers to other contracts		(814,816)		(2,365,937)		(539,825)		(3,869,176)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			6,822,628		(14,756,290)		1,972,351		(14,237,597)
Total increase (decrease)			9,724,432		(846,184)		2,923,912		3,575,821
Net assets as of December 31, 2019		$	22,821,199	$	102,121,678	$	8,927,893	$	89,362,293

See accompanying notes.

A-78



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		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



Net assets as of January 1, 2018		$	8,478,538	$	159,705,243	$	8,096,190	$	66,383,041

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		163,025		3,635,657		323,777		499,548
	Total realized gains (losses) on investments		522,418		3,301,827		244,072		4,338,854
	Change in net unrealized appreciation (depreciation)
	of investments		(1,585,855)		(11,650,339)		(952,659)		(10,566,310)
	Net gains (losses) on investments		(900,412)		(4,712,855)		(384,810)		(5,727,908)
Net increase (decrease) in net assets resulting from operations			(900,412)		(4,712,855)		(384,810)		(5,727,908)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		3,712,822		7,441,334		7,557,241		3,485,914
	Administration charges		(39,418)		(268,839)		(30,683)		(9,084)
	Contingent sales charges		(1,423)		(89,915)		(3,465)		(57,502)
	Contract terminations		(368,326)		(15,598,980)		(332,473)		(8,698,002)
	Death benefit payments		—		(1,753,851)		(4,891)		(238,987)
	Flexible withdrawal option payments		(70,330)		(3,888,060)		(194,691)		(460,126)
	Transfers to other contracts		(62,565)		(13,987,368)		(2,190,264)		(3,728,822)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			3,170,760		(28,145,679)		4,800,774		(9,706,609)
Total increase (decrease)			2,270,348		(32,858,534)		4,415,964		(15,434,517)
Net assets as of December 31, 2018			10,748,886		126,846,709		12,512,154		50,948,524

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		87,003		2,524,636		368,732		7,080
	Total realized gains (losses) on investments		395,507		1,694,363		401,769		2,314,292
	Change in net unrealized appreciation (depreciation)
	of investments		1,980,212		9,732,166		796,351		9,809,596
	Net gains (losses) on investments		2,462,722		13,951,165		1,566,852		12,130,968
Net increase (decrease) in net assets resulting from operations			2,462,722		13,951,165		1,566,852		12,130,968
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		6,293,800		10,702,178		4,999,435		2,059,750
	Administration charges		(39,039)		(183,686)		(37,255)		(7,806)
	Contingent sales charges		(16,459)		(64,191)		(7,084)		(42,933)
	Contract terminations		(1,212,642)		(13,396,036)		(483,842)		(8,696,828)
	Death benefit payments		(2,298,694)		(5,832,018)		(25,237)		(24,109)
	Flexible withdrawal option payments		(82,063)		(3,713,775)		(234,151)		(441,551)
	Transfers to other contracts		(185,015)		(6,521,199)		(1,457,975)		(2,026,228)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			2,459,888		(19,008,727)		2,753,891		(9,179,705)
Total increase (decrease)			4,922,610		(5,057,562)		4,320,743		2,951,263
Net assets as of December 31, 2019		$	15,671,496	$	121,789,147	$	16,832,897	$	53,899,787

See accompanying notes.

A-79



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		SAM Strategic Growth Portfolio Class 2 Division		Short-Term Income Class 1 Division		SmallCap Class 1 Division		SmallCap Class 2 Division



Net assets as of January 1, 2018		$	5,077,915	$	87,366,110	$	112,085,132	$	1,013,662

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		70,988		573,009		(1,140,623)		(12,575)
	Total realized gains (losses) on investments		366,931		(603,743)		9,745,347		110,830
	Change in net unrealized appreciation (depreciation)
	of investments		(1,091,961)		(333,574)		(19,692,302)		(307,735)
	Net gains (losses) on investments		(654,042)		(364,308)		(11,087,578)		(209,480)
Net increase (decrease) in net assets resulting from operations			(654,042)		(364,308)		(11,087,578)		(209,480)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		1,916,670		11,769,693		5,763,689		757,553
	Administration charges		(17,772)		(351,958)		(112,344)		(2,935)
	Contingent sales charges		(1,161)		(46,233)		(31,560)		(147)
	Contract terminations		(205,718)		(8,040,179)		(10,348,221)		(38,676)
	Death benefit payments		(3,917)		(930,051)		(734,469)		—
	Flexible withdrawal option payments		(31,603)		(3,064,803)		(1,517,808)		(18,943)
	Transfers to other contracts		(61,763)		(12,569,782)		(7,136,275)		(208,655)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			1,594,736		(13,233,313)		(14,116,988)		488,197
Total increase (decrease)			940,694		(13,597,621)		(25,204,566)		278,717
Net assets as of December 31, 2018			6,018,609		73,768,489		86,880,566		1,292,379

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		32,443		905,453		(965,794)		(16,025)
	Total realized gains (losses) on investments		464,664		(209,413)		15,837,119		272,713
	Change in net unrealized appreciation (depreciation)
	of investments		1,256,273		1,637,793		6,475,160		125,227
	Net gains (losses) on investments		1,753,380		2,333,833		21,346,485		381,915
Net increase (decrease) in net assets resulting from operations			1,753,380		2,333,833		21,346,485		381,915
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		2,783,131		14,314,980		3,630,644		991,722
	Administration charges		(20,995)		(240,542)		(73,134)		(4,519)
	Contingent sales charges		(4,826)		(60,793)		(31,927)		(2,011)
	Contract terminations		(267,362)		(11,457,382)		(11,455,738)		(82,110)
	Death benefit payments		(2,241)		(558,871)		(674,467)		(7,419)
	Flexible withdrawal option payments		(42,900)		(2,799,102)		(1,383,747)		(23,634)
	Transfers to other contracts		(399,188)		(4,873,624)		(3,917,395)		(94,248)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			2,045,619		(5,675,334)		(13,905,764)		777,781
Total increase (decrease)			3,798,999		(3,341,501)		7,440,721		1,159,696
Net assets as of December 31, 2019		$	9,817,608	$	70,426,988	$	94,321,287	$	2,452,075

See accompanying notes.

A-80



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		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



Net assets as of January 1, 2018		$	21,628,237	$	28,306,947	$	2,026,380	$	890,640

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(341,594)		(413,796)		(28,724)		9,783
	Total realized gains (losses) on investments		3,202,377		3,225,538		2,201		76,460
	Change in net unrealized appreciation (depreciation)
	of investments		(2,838,061)		(2,779,049)		35,555		(222,995)
	Net gains (losses) on investments		22,722		32,693		9,032		(136,752)
Net increase (decrease) in net assets resulting from operations			22,722		32,693		9,032		(136,752)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		4,530,216		3,041,982		2,819,252		12,661
	Administration charges		(21,089)		(12,909)		(2,746)		—
	Contingent sales charges		(13,108)		(19,150)		(517)		(1)
	Contract terminations		(1,889,447)		(2,760,346)		(124,566)		(15,060)
	Death benefit payments		(153,394)		(128,291)		—		(4,504)
	Flexible withdrawal option payments		(228,100)		(279,887)		(23,698)		(9,138)
	Transfers to other contracts		(2,929,579)		(3,101,664)		(197,783)		(1,222)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(704,501)		(3,260,265)		2,469,942		(17,264)
Total increase (decrease)			(681,779)		(3,227,572)		2,478,974		(154,016)
Net assets as of December 31, 2018			20,946,458		25,079,375		4,505,354		736,624

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(347,436)		(378,192)		282,028		13,833
	Total realized gains (losses) on investments		3,049,407		2,685,899		(4,983)		149,839
	Change in net unrealized appreciation (depreciation)
	of investments		2,988,815		3,884,057		(251,832)		(69,823)
	Net gains (losses) on investments		5,690,786		6,191,764		25,213		93,849
Net increase (decrease) in net assets resulting from operations			5,690,786		6,191,764		25,213		93,849
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		4,514,062		2,092,269		941,071		17,446
	Administration charges		(16,406)		(8,989)		(3,464)		—
	Contingent sales charges		(13,362)		(22,312)		(864)		(2)
	Contract terminations		(2,385,049)		(4,017,051)		(100,936)		(159,066)
	Death benefit payments		(346,647)		(473,952)		—		(4,129)
	Flexible withdrawal option payments		(274,090)		(232,787)		(21,807)		(6,975)
	Transfers to other contracts		(2,987,000)		(2,447,036)		(208,699)		(16,426)
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			(1,508,492)		(5,109,858)		605,301		(169,152)
Total increase (decrease)			4,182,294		1,081,906		630,514		(75,303)
Net assets as of December 31, 2019		$	25,128,752	$	26,161,281	$	5,135,868	$	661,321

See accompanying notes.

A-81



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		The Merger Fund Division		TOPS Aggressive Growth ETF Portfolio Investor Class Division (1)		TOPS Balanced ETF Portfolio Investor Class Division (1)		TOPS Conservative ETF Portfolio Investor Class Division (1)



Net assets as of January 1, 2018		$	5,999	$	—	$	—	$	—

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		238		54		245		—
	Total realized gains (losses) on investments		2,026		311		471		—
	Change in net unrealized appreciation (depreciation)
	of investments		3,223		(2,425)		(2,641)		—
	Net gains (losses) on investments		5,487		(2,060)		(1,925)		—
Net increase (decrease) in net assets resulting from operations			5,487		(2,060)		(1,925)		—
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		168,653		21,774		28,260		—
	Administration charges		(305)		(13)		—		—
	Contingent sales charges		—		—		—		—
	Contract terminations		—		—		—		—
	Death benefit payments		—		—		—		—
	Flexible withdrawal option payments		(160)		—		—		—
	Transfers to other contracts		(135)		—		(78)		—
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			168,053		21,761		28,182		—
Total increase (decrease)			173,540		19,701		26,257		—
Net assets as of December 31, 2018			179,539		19,701		26,257		—

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		974		5,385		4,954		(1,229)
	Total realized gains (losses) on investments		16,138		18,236		8,298		726
	Change in net unrealized appreciation (depreciation)
	of investments		(4,844)		32,198		20,850		8,040
	Net gains (losses) on investments		12,268		55,819		34,102		7,537
Net increase (decrease) in net assets resulting from operations			12,268		55,819		34,102		7,537
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		162,285		550,310		956,931		300,734
	Administration charges		(795)		(1,271)		(13)		(131)
	Contingent sales charges		(408)		—		—		(73)
	Contract terminations		(17,843)		—		—		(13,148)
	Death benefit payments		—		—		—		—
	Flexible withdrawal option payments		(827)		—		—		—
	Transfers to other contracts		(30,313)		(380)		(431)		—
	Annuity payments		—		—		—		—
Increase (decrease) in net assets from policy related transactions			112,099		548,659		956,487		287,382
Total increase (decrease)			124,367		604,478		990,589		294,919
Net assets as of December 31, 2019		$	303,906	$	624,179	$	1,016,846	$	294,919

(1) Commenced operations June 11, 2018.

See accompanying notes.

A-82



Principal Life Insurance Company
Separate Account B

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		TOPS Growth ETF Portfolio Investor Class Division (1)		TOPS Moderate Growth ETF Portfolio Investor Class Division (1)		VanEck Global Hard Assets Class S Division



Net assets as of January 1, 2018		$	—	$	—	$	5,837,935

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		31		(15)		(74,948)
	Total realized gains (losses) on investments		(246)		—		(314,443)
	Change in net unrealized appreciation (depreciation)
	of investments		(121)		(263)		(1,227,029)
	Net gains (losses) on investments		(336)		(278)		(1,616,420)
Net increase (decrease) in net assets resulting from operations			(336)		(278)		(1,616,420)
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		42,867		11,418		822,000
	Administration charges		(4)		—		(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		(8,728)		—		(545,173)
	Annuity payments		—		—		—
Increase (decrease) in net assets from policy related transactions			34,135		11,418		(325,643)
Total increase (decrease)			33,799		11,140		(1,942,063)
Net assets as of December 31, 2018			33,799		11,140		3,895,872

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		5,969		286		(56,342)
	Total realized gains (losses) on investments		30,868		2,087		(362,083)
	Change in net unrealized appreciation (depreciation)
	of investments		56,486		5,737		802,914
	Net gains (losses) on investments		93,323		8,110		384,489
Net increase (decrease) in net assets resulting from operations			93,323		8,110		384,489
Policy related transactions:
	Purchase payments, less sales charges, per payment fees and
	applicable premium taxes		1,421,161		363,477		668,767
	Administration charges		(707)		(83)		(721)
	Contingent sales charges		—		(4,209)		(2,958)
	Contract terminations		—		(141,168)		(500,183)
	Death benefit payments		—		—		(15,067)
	Flexible withdrawal option payments		(1,528)		—		(30,310)
	Transfers to other contracts		(502,535)		(4)		(442,881)
	Annuity payments		—		—		—
Increase (decrease) in net assets from policy related transactions			916,391		218,013		(323,353)
Total increase (decrease)			1,009,714		226,123		61,136
Net assets as of December 31, 2019		$	1,043,513	$	237,263	$	3,957,008

(1) Commenced operations June 11, 2018.

See accompanying notes.

A-83

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019

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, 2019, 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 (7)

Diversified International Account

Equity Income Account

Government & High Quality Bond Account

International Emerging Markets Account

LargeCap Growth Account I

LargeCap S&P 500 Index Account

MidCap Account

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)

Diversified Balanced Account

Diversified Balanced Managed Volatility Account

Diversified Balanced Volatility Control Account (6)

Diversified Growth Account

Diversified Growth Managed Volatility Account

Diversified Growth Volatility Control Account (6)

Diversified Income Account

Equity Income Account

LargeCap S&P 500 Index Account (3)

Principal Capital Appreciation Account

Real Estate Securities Account

SmallCap Account (2)

A-84

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019

SAM Portfolios:

Balanced Portfolio

Conservative Balanced Portfolio

Conservative Growth Portfolio

Flexible Income Portfolio

Strategic Growth Portfolio

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 (3)

American Century Investments®:

VP Capital Appreciation Fund – Class I

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 (5)

Asset Allocation Fund – Class 4 (3)

Blue Chip Income and Growth Fund – Class 2 (5)

Blue Chip Income and Growth Fund – Class 4

Global Small Capitalization Fund – Class 2

Global Small Capitalization Fund – Class 4

High-Income Bond Fund – Class 2

Managed Risk Asset Allocation Fund – Class P2

Managed Risk Growth Fund – Class P2

Managed Risk International Fund – Class P2

New World Fund – Class 2

New World Fund – Class 4

BlackRock Variable Insurance Funds:

60/40 Target Allocation ETF V.I. Fund – Class III (3) (10)

Advantage U.S. Total Market V.I. Fund – Class III (3)

Global Allocation V.I. Fund – Class III (3)

BNY Mellon IP:

MidCap Stock Portfolio – Service Shares (3) (11)

Technology Growth Portfolio – Service Shares (12)

Calvert VP Portfolio:

EAFE International Index – Class F

Investment Grade Bond – Class F (8)

Russell 2000 Small Cap Index – Class F

S&P MidCap 400 Index – Class F

ClearBridge Variable Small Cap Growth Portfolio – Class II (3)

Columbia Variable Portfolio:

Limited Duration Credit – Class 2 (3)

Small Cap Value – Class 2 (3)

Delaware VIP® Trust Series:

Limited Term Diversified Income – Service Class (3)

Small Cap Value – Service Class

DWS Variable Series II:

Alternative Asset Allocation VIP – Class B

Equity 500 Index VIP – Class B2

Small Mid Cap Value VIP – Class B

A-85

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019

EQ Advisors Trust:^(SM)

1290 VT Convertible Securities Portfolio – Class IB (9)

1290 VT GAMCO Small Company Value Portfolio – Class IB (9)

1290 VT Micro Cap Portfolio – Class IB (9)

1290 VT SmartBeta Equity Portfolio – Class IB (9)

1290 VT Socially Responsible Portfolio – Class IB (9)

Fidelity® Variable Insurance Products:

Contrafund® Portfolio – Service Class

Contrafund® Portfolio – Service Class 2

Equity-Income Portfolio – Service Class 2

Freedom 2020 – Service Class 2 (9)

Freedom 2030 – Service Class 2 (9)

Freedom 2040 – Service Class 2 (9)

Freedom 2050 – Service Class 2 (9)

Government Money Market Portfolio – Initial Class (4)

Government Money Market Portfolio – Service Class 2 (4)

Growth Portfolio – Service Class

Growth Portfolio – Service Class 2

Mid Cap Portfolio – Service Class

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

Franklin Income VIP – Class 4 (8)

Franklin Rising Dividends VIP Fund – Class 4

Franklin Small Cap Value VIP Fund – Class 2

Franklin U.S. Government Securities VIP Fund – Class 2 (9)

Templeton Global Bond VIP Fund – Class 4

Templeton Growth VIP Fund – Class 2

Goldman Sachs Variable Insurance Trust:

Mid Cap Value Fund – Institutional Shares

Mid Cap Value Fund – Service Shares

Multi-Strategy Alternatives Portfolio – Service Shares (3)

Small Cap Equity Insights Fund – Institutional Shares

Small Cap Equity Insights Fund – Service Shares

Guggenheim Investments Variable Insurance Funds:

Floating Rate Strategies – Series F

Global Managed Futures Strategy Fund

Long Short Equity Fund

Multi-Hedge Strategies Fund

Invesco V.I. Fund:

American Franchise Fund – Series I Shares

Balanced-Risk Allocation Fund – Series II Shares

Core Equity Fund – Series I Shares

Health Care Fund – Series I Shares

Health Care Fund – Series II Shares

International Growth Fund – Series I Shares

International Growth Fund – Series II Shares

Mid Cap Growth Fund – Series I Shares

Oppenheimer Main Street Small Cap Fund – Series II Shares (13)

Small Cap Equity Fund – Series I Shares

Technology Fund – Series I Shares

Value Opportunities Fund – Series I Shares

A-86

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019

Janus Henderson Series:

Enterprise Portfolio – Service Shares

Flexible Bond Portfolio – Service Shares

Global Technology Portfolio – Service Shares (9)

MFS®:

International Intrinsic Value Portfolio – Service Class (14)

New Discovery Portfolio – Service Class

Utilities Series – Service Class

Value Series – Service Class

Neuberger Berman Advisors Management Trust:

Mid Cap Growth Portfolio – Class S (3)

Sustainable Equity Portfolio – Class I

Sustainable Equity Portfolio – Class S (8)

PIMCO Variable Insurance Trust:

All Asset Portfolio – Administrative Class

All Asset Portfolio – Advisor Class (3)

Commodity Real Return Strategy Portfolio – Class M (3)

High Yield Portfolio – Administrative Class

Low Duration Portfolio – Advisor Class (3)

Total Return Portfolio – Administrative Class

Rydex V.I. Fund:

Basic Materials Fund (3)

Commodities Strategy Fund

NASDAQ 100 Fund

T. Rowe Price Equity Series, Inc.:

Blue Chip Growth Portfolio – II

Health Sciences Portfolio – II

The Merger Fund VL (3)

TOPS Managed Risk Series:

Aggressive Growth ETF Portfolio Investor Class (8)

Balanced ETF Portfolio Investor Class (8)

Conservative ETF Portfolio Investor Class (8)

Growth ETF Portfolio Investor Class (8)

Moderate Growth ETF Portfolio Investor Class (8)

VanEck VIP Global Hard Assets Fund – Class S Shares

(1) Organized by Principal Life.


(2)	Commenced operations April 17, 2015.


(3)	Commenced operations May 18, 2015.


(4)	Commenced operations February 8, 2016.


(5)	Commenced operations May 23, 2016.


(6)	Commenced operations April 6, 2017.


(7)	Commenced operations May 26, 2017.


(8)	Commenced operations June 11, 2018.


(9)	Commenced operations June 7, 2019.

(10) Represented the operations of BlackRock iShares Dynamic Allocation Class III Division until June 6, 2019.

(11) Represented the operations of Dreyfus IP MidCap Stock Service Shares Division until June 2, 2019.

(12) Represented the operations of Dreyfus IP Technology Growth Service Shares Division until June 2, 2019.

(13) Represented the operations of Oppenheimer Main Street Small Cap Service Shares Division until May 24, 2019.

(14) Represented the operations of MFS International Value Service Class Division until June 6, 2019.

Commenced operations date is the date the division became available to contractholders.

A-87

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019

During 2019, the following divisions were liquidated and subsequently reinvested:



Date	Liquidation Division	Reinvested Division	Transferred Assets
June 15, 2019	Core Plus Bond Class 2	Core Plus Bond Class 1	$	1,463,847
June 15, 2019	Diversified International Class 2	Diversified Balanced Class 1		1,211,840
June 15, 2019	Government & High Quality Bond Class 2	Government & High Quality Bond Class 1		1,901,868
June 8, 2019	Income Class 1	Core Plus Bond Class 1		5,498,449
June 8, 2019	Income Class 2	Core Plus Bond Class 1		1,546,746
June 15, 2019	International Emerging Markets Class 2	International Emerging Markets Class 1		1,850,923
June 8, 2019	LargeCap Growth Class 1	LargeCap Growth I Class 1		5,162,773
June 8, 2019	LargeCap Growth Class 2	LargeCap Growth I Class 1		37,055,405
June 15, 2019	LargeCap Growth I Class 2	LargeCap Growth I Class 1		1,093,008
June 8, 2019	Multi-Asset Income Class 1	SAM Flexible Income Portfolio Class 1		217,339
June 8, 2019	Multi-Asset Income Class 2	SAM Flexible Income Portfolio Class 2		94,698
April 30, 2019	Neuberger Berman AMT Large Cap Value I Class	Neuberger Berman AMT Sustainable Equity Class I		3,860,049
June 15, 2019	Principal LifeTime 2020 Class 2	Principal LifeTime 2020 Class 1		1,446,974
June 15, 2019	Principal LifeTime 2030 Class 2	Principal LifeTime 2030 Class 1		2,144,829
June 15, 2019	Principal LifeTime 2040 Class 2	Principal LifeTime 2040 Class 1		895,545
June 15, 2019	Principal LifeTime 2050 Class 2	Principal LifeTime 2050 Class 1		1,138,306
June 15, 2019	Short-Term Income Class 2	Short-Term Income Class 1		3,619,597

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^® Variable Annuity and


•	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.

A-88

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019

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, 2019. 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.

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.

A-89

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019

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 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.

A-90

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019

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.

Principal^® Variable Annuity – Mortality and expense risks assumed by Principal Life are compensated for by a daily charge resulting in a reduction of the unit value equivalent to an annual rate of 1.25% of the asset value of each contract. A surrender charge of up to 6.00% may be deducted from the withdrawals made during the first six years of a contract, except for death, annuitization, permanent disability, confinement in a health care facility or terminal illness. Principal Life reserves the right to charge an additional administrative fee of up to 0.15% of the asset value of each division. Currently, Principal Life is charging an annual rate of 0.05% of the asset value of each contract. This charge is deducted from the daily unit value. The product also contains an optional purchase payment credit rider, which charges an annual rate of 0.60%. For electing participants, the rider is deducted from the daily unit value. For contracts with the purchase payment credit rider, the maximum surrender charge is 8.00% from withdrawals made during the first eight years.

A-91

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019

During the year ended December 31, 2019, 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
	(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%

A-92

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



	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

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 expenses borne by the Manager are subject to reimbursement by the divisions through the fiscal year end, provided no reimbursement will be made if it would result in the divisions exceeding the total operating expense limits. Any amounts outstanding at the end of the year are shown as an expense reimbursement from Manager or expense reimbursement to Manager on the statements of assets and liabilities. The operating expense limits, were as follows:



	From January 1, 2019 through April 30, 2019
	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, 2020
Real Estate Securities Account	0.020	April 30, 2020

A-93

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019

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, 2019 through December 31, 2019
	Class 1	Class 2	Expiration
Diversified Balanced Managed Volatility Account	N/A	0.31%	April 30, 2020
Diversified Balanced Volatility Control Account	N/A	0.39	April 30, 2020
Diversified Growth Managed Volatility Account	N/A	0.31	April 30, 2020
Diversified Growth Volatility Control Account	N/A	0.39	April 30, 2020
International Emerging Markets Account	1.20%	N/A	April 30, 2020
LargeCap Growth Account I	0.69^	N/A	April 30, 2021

^Period from June 10, 2019 to December 31, 2019. Prior to June 10, 2019, there was no contractual limit.

The Manager has contractually agreed to reduce the Short-Term Income Account’s expenses by 0.01% through the period ended April 30, 2020.

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.

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, 2019:



Division	Purchases		Sales

AllianceBernstein Small Cap Growth Class A	$	1,193,457	$	2,029,826

AllianceBernstein Small/Mid Cap Value Class A	$	947,238	$	494,748

Alps/Red Rocks Listed Private Equity Class III	$	214,726	$	23,713

American Century VP Capital Appreciation Class I	$	521,766	$	953,367

A-94

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



Division	Purchases		Sales


American Century VP Income & Growth Class I	$	1,399,378	$	1,628,172

American Century VP Inflation Protection Class II	$	4,946,963	$	8,771,195

American Century VP Mid Cap Value Class II	$	1,739,535	$	1,415,486

American Century VP Ultra Class I	$	719,789	$	1,148,978

American Century VP Ultra Class II	$	4,545,791	$	9,117,278

American Century VP Value Class II	$	1,655,027	$	2,506,456

American Funds Insurance Series Asset Allocation Fund Class 2	$	507,976	$	566,330

American Funds Insurance Series Asset Allocation Fund Class 4	$	4,771,991	$	928,471

American Funds Insurance Series Blue Chip Income and Growth Class 2	$	877,139	$	623,263

American Funds Insurance Series Blue Chip Income and Growth Class 4	$	2,950,206	$	318,362

American Funds Insurance Series Global Small Capitalization Fund Class 2	$	239,487	$	291,684

American Funds Insurance Series Global Small Capitalization Fund Class 4	$	626,234	$	101,574

American Funds Insurance Series High-Income Bond Class 2	$	327,543	$	356,421

American Funds Insurance Series Managed Risk Asset Allocation Fund Class P2	$	950,912	$	50,749

American Funds Insurance Series Managed Risk Growth Fund Class P2	$	440,353	$	81,058

American Funds Insurance Series Managed Risk International Fund Class P2	$	50,464	$	3,646

American Funds Insurance Series New World Fund Class 2	$	565,911	$	428,923

American Funds Insurance Series New World Fund Class 4	$	888,775	$	105,199

BlackRock 60/40 Target Allocation Class III	$	438,583	$	284,131

BlackRock Advantage U.S. Total Market Class III	$	230,907	$	138,023

BlackRock Global Allocation Class III	$	532,951	$	204,075

BNY Mellon IP MidCap Stock Service Shares	$	125,907	$	57,338

BNY Mellon IP Technology Growth Service Shares	$	1,891,128	$	2,694,883

Calvert EAFE International Index Class F	$	651,199	$	37,104

Calvert Investment Grade Bond Portfolio Class F	$	803,283	$	21,773

Calvert Russell 2000 Small Cap Index Class F	$	1,172,079	$	175,916

Calvert S&P MidCap 400 Index Class F	$	1,940,737	$	301,454

A-95

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



Division	Purchases		Sales

ClearBridge Small Cap Growth Class II	$	1,128,531	$	374,024

Columbia Limited Duration Credit Class 2	$	260,439	$	60,195

Columbia Small Cap Value Class 2	$	492,110	$	107,704

Core Plus Bond Class 1	$	21,700,699	$	22,294,268

Delaware Limited Term Diversified Income Service Class	$	153,136	$	60,037

Delaware Small Cap Value Service Class	$	570,740	$	534,072

Diversified Balanced Class 1	$	2,427,012	$	2,927,364

Diversified Balanced Class 2	$	105,595,435	$	192,514,518

Diversified Balanced Managed Volatility Class 2	$	18,776,860	$	26,802,857

Diversified Balanced Volatility Control Class 2	$	75,949,496	$	9,720,028

Diversified Growth Class 2	$	345,506,091	$	568,195,682

Diversified Growth Managed Volatility Class 2	$	24,368,388	$	48,510,366

Diversified Growth Volatility Control Class 2	$	335,201,980	$	33,648,245

Diversified Income Class 2	$	76,103,732	$	64,324,073

Diversified International Class 1	$	13,049,763	$	19,335,832

DWS Alternative Asset Allocation Class B	$	5,028	$	2,179

DWS Equity 500 Index Class B2	$	508,097	$	133,887

DWS Small Mid Cap Value Class B	$	434,907	$	187,537

EQ Convertible Securities Class IB	$	—	$	—

EQ GAMCO Small Company Value Class IB	$	54,513	$	161

EQ Micro Cap Class IB Division	$	10,943	$	51

EQ SmartBeta Equity Class IB	$	61,217	$	636

EQ Socially Responsible Class IB	$	16,574	$	826

Equity Income Class 1	$	16,214,344	$	50,291,741

Equity Income Class 2	$	2,566,935	$	330,780

Fidelity VIP Contrafund Service Class	$	4,621,278	$	6,999,108

Fidelity VIP Contrafund Service Class 2	$	10,071,650	$	10,644,114

A-96

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



Division	Purchases		Sales

Fidelity VIP Equity-Income Service Class 2	$	3,482,856	$	4,657,167

Fidelity VIP Freedom 2020 Service Class 2	$	136,713	$	518

Fidelity VIP Freedom 2030 Service Class 2	$	334,582	$	43,925

Fidelity VIP Freedom 2040 Service Class 2	$	694,037	$	1,020

Fidelity VIP Freedom 2050 Service Class 2	$	173,082	$	255

Fidelity VIP Government Money Market Initial Class	$	10,852,951	$	20,509,733

Fidelity VIP Government Money Market Service Class 2	$	15,598,607	$	14,387,697

Fidelity VIP Growth Service Class	$	1,228,524	$	2,844,431

Fidelity VIP Growth Service Class 2	$	1,452,082	$	2,074,261

Fidelity VIP Mid Cap Service Class	$	10,163	$	847

Fidelity VIP Mid Cap Service Class 2	$	7,171,657	$	5,129,933

Fidelity VIP Overseas Service Class 2	$	2,518,334	$	5,867,580

Franklin Global Real Estate VIP Class 2	$	551,715	$	89,434

Franklin Income VIP Class 4	$	1,152,038	$	16,191

Franklin Rising Dividends VIP Class 4	$	1,396,980	$	203,896

Franklin Small Cap Value VIP Class 2	$	1,044,286	$	852,462

Franklin U.S. Government Fund Class 2	$	323,162	$	863

Goldman Sachs VIT Mid Cap Value Institutional Shares	$	893,127	$	2,397,923

Goldman Sachs VIT Mid Cap Value Service Shares	$	642,549	$	41,167

Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares	$	20,091	$	1,620

Goldman Sachs VIT Small Cap Equity Insights Institutional Shares	$	436,908	$	1,421,336

Goldman Sachs VIT Small Cap Equity Insights Service Shares	$	236,236	$	28,815

Government & High Quality Bond Class 1	$	11,095,132	$	16,635,798

Guggenheim Floating Rate Strategies Series F	$	907,184	$	1,203,645

Guggenheim Investments Global Managed Futures Strategy	$	26,510	$	44,166

Guggenheim Investments Long Short Equity	$	22,472	$	87,115

Guggenheim Investments Multi-Hedge Strategies	$	40,057	$	33,262

A-97

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



Division	Purchases		Sales

International Emerging Markets Class 1	$	6,850,747	$	10,108,791

Invesco American Franchise Series I	$	676,046	$	912,422

Invesco Balanced-Risk Allocation Series II	$	155,166	$	26,558

Invesco Core Equity Series I	$	1,790,266	$	2,521,067

Invesco Health Care Series I	$	407,188	$	1,565,631

Invesco Health Care Series II	$	1,260,570	$	212,212

Invesco International Growth Series I	$	911,438	$	1,773,878

Invesco International Growth Series II	$	739,497	$	89,477

Invesco Mid Cap Growth Series I	$	180,542	$	324,329

Invesco Oppenheimer V.I. Main Street Small Cap Series II	$	78,624	$	92,553

Invesco Small Cap Equity Series I	$	1,289,701	$	1,019,227

Invesco Technology Series I	$	398,763	$	1,121,396
Invesco Value Opportunities Series I	$	1,024,205	$	776,154

Janus Henderson Enterprise Service Shares	$	1,078,029	$	1,889,115

Janus Henderson Flexible Bond Service Shares	$	1,394,176	$	260,745

Janus Henderson Global Technology Service Shares	$	325,613	$	2,632

LargeCap Growth I Class 1	$	67,924,461	$	29,853,951

LargeCap S&P 500 Index Class 1	$	9,799,307	$	18,714,658

LargeCap S&P 500 Index Class 2	$	7,797,870	$	1,056,470

MFS International Intrinsic Value Service Class	$	1,923,772	$	1,329,118

MFS New Discovery Service Class	$	2,999,247	$	1,051,630

MFS Utilities Service Class	$	3,504,633	$	3,074,996

MFS Value Service Class	$	1,000,410	$	1,361,637

MidCap Class 1	$	55,779,687	$	69,343,940

Neuberger Berman AMT Mid Cap Growth Portfolio Class S	$	1,240,346	$	740,490

Neuberger Berman AMT Sustainable Equity Class I	$	4,355,826	$	1,600,265

Neuberger Berman AMT Sustainable Equity Class S	$	15,600	$	1,930

A-98

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



Division	Purchases		Sales

PIMCO All Asset Administrative Class	$	236,911	$	783,372

PIMCO All Asset Advisor Class	$	5,449	$	2,259

PIMCO Commodity Real Return Strategy M Class	$	9,236	$	4,368

PIMCO High Yield Administrative Class	$	4,155,783	$	3,718,290

PIMCO Low Duration Advisor Class	$	1,259,296	$	773,701

PIMCO Total Return Administrative Class	$	5,187,267	$	4,974,148

Principal Capital Appreciation Class 1	$	12,291,180	$	23,506,204

Principal Capital Appreciation Class 2	$	3,004,764	$	351,760

Principal LifeTime 2010 Class 1	$	1,639,828	$	3,253,785

Principal LifeTime 2020 Class 1	$	8,641,957	$	17,557,220

Principal LifeTime 2030 Class 1	$	7,838,344	$	12,115,999

Principal LifeTime 2040 Class 1	$	2,760,925	$	2,308,782

Principal LifeTime 2050 Class 1	$	2,464,806	$	1,956,975

Principal LifeTime Strategic Income Class 1	$	1,459,255	$	2,844,915

Real Estate Securities Class 1	$	9,199,932	$	15,824,839

Real Estate Securities Class 2	$	2,842,672	$	681,684

Rydex Basic Materials	$	55,078	$	19,879

Rydex Commodities Strategy	$	72,130	$	55,176

Rydex NASDAQ 100	$	811,386	$	225,082

SAM Balanced Portfolio Class 1	$	33,466,051	$	91,651,012

SAM Balanced Portfolio Class 2	$	9,537,280	$	1,736,610

SAM Conservative Balanced Portfolio Class 1	$	7,947,232	$	19,270,322

SAM Conservative Balanced Portfolio Class 2	$	3,310,160	$	1,038,233

SAM Conservative Growth Portfolio Class 1	$	9,633,172	$	19,539,348

SAM Conservative Growth Portfolio Class 2	$	7,093,781	$	3,954,249

SAM Flexible Income Portfolio Class 1	$	18,499,657	$	31,472,906

SAM Flexible Income Portfolio Class 2	$	5,953,775	$	2,386,810

A-99

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



Division	Purchases		Sales

SAM Strategic Growth Portfolio Class 1	$	5,521,869	$	12,025,084

SAM Strategic Growth Portfolio Class 2	$	3,362,836	$	821,803

Short-Term Income Class 1	$	16,202,498	$	20,972,379

SmallCap Class 1	$	18,478,574	$	18,808,285

SmallCap Class 2	$	1,276,154	$	231,634

T. Rowe Price Blue Chip Growth Portfolio II	$	5,170,319	$	6,369,989

T. Rowe Price Health Sciences Portfolio II	$	3,245,009	$	7,580,318

Templeton Global Bond VIP Class 4	$	1,282,905	$	395,576

Templeton Growth VIP Class 2	$	174,059	$	192,666

The Merger Fund	$	178,937	$	52,283

TOPS Aggressive Growth ETF Portfolio Investor Class	$	576,635	$	4,128

TOPS Balanced ETF Portfolio Investor Class	$	972,368	$	2,594

TOPS Conservative ETF Portfolio Investor Class	$	300,789	$	14,617

TOPS Growth ETF Portfolio Investor Class	$	1,457,798	$	511,272

TOPS Moderate Growth ETF Portfolio Investor Class	$	365,109	$	145,891

VanEck Global Hard Assets Class S	$	668,767	$	1,048,462

A-100

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019

5. Changes in Units Outstanding

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



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

AllianceBernstein Small Cap Growth Class A	13,845	46,565	(32,720)	27,727	33,601	(5,874)

AllianceBernstein Small/Mid Cap Value Class A	28,151	28,919	(768)	38,534	54,586	(16,052)

Alps/Red Rocks Listed Private Equity Class III	19,277	1,711	17,566	15,965	1,634	14,331

American Century VP Capital Appreciation Class I	10,606	59,031	(48,425)	9,115	36,957	(27,842)

American Century VP Income & Growth Class I	16,218	65,666	(49,448)	7,302	63,857	(56,555)

American Century VP Inflation Protection Class II	318,547	623,884	(305,337)	354,281	854,691	(500,410)

American Century VP Mid Cap Value Class II	27,319	52,492	(25,173)	43,799	84,707	(40,908)

American Century VP Ultra Class I	12,321	42,433	(30,112)	14,618	27,962	(13,344)

American Century VP Ultra Class II	48,215	285,743	(237,528)	121,904	389,622	(267,718)

American Century VP Value Class II	39,808	103,608	(63,800)	49,790	104,982	(55,192)

American Funds Insurance Series Asset Allocation Fund Class 2	25,221	40,421	(15,201)	99,215	34,950	64,265

American Funds Insurance Series Asset Allocation Fund Class 4	409,258	75,417	333,841	196,917	5,781	191,136

American Funds Insurance Series Blue Chip Income and Growth Class 2	43,586	44,977	(1,392)	75,243	62,571	12,672

American Funds Insurance Series Blue Chip Income and Growth Class 4	237,613	25,307	212,306	214,908	41,342	173,566

American Funds Insurance Series Global Small Capitalization Fund Class 2	12,335	23,262	(10,927)	48,592	22,228	26,364

American Funds Insurance Series Global Small Capitalization Fund Class 4	53,683	8,362	45,321	63,800	23,377	40,423

American Funds Insurance Series High-Income Bond Class 2	22,100	29,878	(7,778)	12,414	30,738	(18,324)

American Funds Insurance Series Managed Risk Asset Allocation Fund Class P2	80,862	3,225	77,637	41,912	6,413	35,499

American Funds Insurance Series Managed Risk Growth Fund Class P2	27,657	5,386	22,271	90,324	6,006	84,318

A-101

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

American Funds Insurance Series Managed Risk International Fund Class P2	4,205	169	4,036	4,164	1,426	2,738

American Funds Insurance Series New World Fund Class 2	42,137	35,160	6,977	69,274	83,542	(14,268)

American Funds Insurance Series New World Fund Class 4	81,574	8,909	72,665	62,016	6,812	55,204
BlackRock 60/40 Target Allocation Class III	38,466	24,928	13,538	31,619	1,314	30,305

BlackRock Advantage U.S. Total Market Class III	8,948	11,043	(2,095)	67,249	1,522	65,727

BlackRock Global Allocation Class III	41,690	17,131	24,559	65,907	17,748	48,159

BNY Mellon IP MidCap Stock Service Shares	8,879	4,959	3,920	32,872	884	31,988

BNY Mellon IP Technology Growth Service Shares	19,105	67,060	(47,955)	50,212	94,945	(44,733)

Calvert EAFE International Index Class F	64,496	2,993	61,503	61,633	6,657	54,976

Calvert Investment Grade Bond Portfolio Class F	72,301	1,703	70,598	16,274	78	16,196

Calvert Russell 2000 Small Cap Index Class F	94,835	13,915	80,920	114,434	25,804	88,630

Calvert S&P MidCap 400 Index Class F	155,875	23,704	132,171	102,055	21,207	80,848

ClearBridge Small Cap Growth Class II	83,277	28,134	55,143	76,198	5,479	70,719

Columbia Limited Duration Credit Class 2	24,724	5,531	19,193	5,312	6,833	(1,521)

Columbia Small Cap Value Class 2	45,601	9,707	35,894	23,883	3,234	20,649

Core Plus Bond Class 1	1,061,606	965,007	96,599	539,428	1,495,185	(955,757)

Delaware Limited Term Diversified Income Service Class	14,056	5,541	8,515	12,357	4,706	7,651

Delaware Small Cap Value Service Class	24,139	34,516	(10,377)	37,484	42,928	(5,444)

Diversified Balanced Class 1	80,379	237,846	(157,467)	73,569	382,976	(309,407)

Diversified Balanced Class 2	2,846,726	10,554,591	(7,707,865)	4,073,739	10,983,563	(6,909,824)

Diversified Balanced Managed Volatility Class 2	1,097,638	1,947,231	(849,593)	1,082,294	1,983,481	(901,187)

Diversified Balanced Volatility Control Class 2	6,707,995	752,999	5,954,996	3,547,673	380,896	3,166,777

Diversified Growth Class 2	8,812,926	27,845,821	(19,032,895)	12,603,978	24,837,993	(12,234,015)

Diversified Growth Managed Volatility Class 2	1,131,518	3,329,166	(2,197,648)	2,336,979	3,146,509	(809,530)

A-102

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

Diversified Growth Volatility Control Class 2	29,097,937	2,287,791	26,810,146	23,077,047	1,318,867	21,758,180

Diversified Income Class 2	5,386,850	4,535,995	850,855	4,880,487	5,938,035	(1,057,548)

Diversified International Class 1	373,209	697,146	(323,937)	332,062	846,623	(514,561)

DWS Alternative Asset Allocation Class B	352	168	184	966	831	135

DWS Equity 500 Index Class B2	34,030	8,618	25,412	64,322	17,668	46,654

DWS Small Mid Cap Value Class B	32,483	14,486	17,997	22,800	14,586	8,214

EQ Convertible Securities Class IB	—	—	—	—	—	—

EQ GAMCO Small Company Value Class IB	5,090	5	5,085	—	—	—

EQ Micro Cap Class IB	960	2	958	—	—	—

EQ SmartBeta Equity Class IB	5,785	38	5,747	—	—	—

EQ Socially Responsible Class IB	1,545	70	1,475	—	—	—

Equity Income Class 1	484,508	2,551,268	(2,066,760)	5,847,245	2,445,486	3,401,759

Equity Income Class 2	199,840	22,240	177,600	224,975	30,836	194,139

Fidelity VIP Contrafund Service Class	11,018	201,478	(190,460)	26,038	232,700	(206,662)

Fidelity VIP Contrafund Service Class 2	281,140	345,353	(64,213)	316,744	387,259	(70,515)

Fidelity VIP Equity-Income Service Class 2	51,344	192,009	(140,665)	49,384	215,536	(166,152)

Fidelity VIP Freedom 2020 Service Class 2	13,216	15	13,201	—	—	—

Fidelity VIP Freedom 2030 Service Class 2	31,550	4,239	27,311	—	—	—

Fidelity VIP Freedom 2040 Service Class 2	64,863	9	64,854	—	—	—

Fidelity VIP Freedom 2050 Service Class 2	16,019	6	16,013	—	—	—

Fidelity VIP Government Money Market Initial Class	2,252,047	3,101,091	(849,044)	3,772,185	2,410,438	1,361,747

Fidelity VIP Government Money Market Service Class 2	1,541,530	1,429,186	112,344	1,551,368	1,093,890	457,478

Fidelity VIP Growth Service Class	12,845	111,558	(98,713)	37,928	123,971	(86,043)

Fidelity VIP Growth Service Class 2	22,427	59,419	(36,992)	28,077	66,183	(38,106)

A-103

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

Fidelity VIP Mid Cap Service Class	—	—	—	—	42,102	(42,102)

Fidelity VIP Mid Cap Service Class 2	314,981	193,070	121,911	277,856	145,348	132,508

Fidelity VIP Overseas Service Class 2	78,454	296,873	(218,419)	189,310	277,867	(88,557)

Franklin Global Real Estate VIP Class 2	45,311	6,707	38,604	22,078	8,326	13,752

Franklin Income VIP Class 4	107,500	1,040	106,460	9,212	8	9,204

Franklin Rising Dividends VIP Class 4	90,350	14,734	75,616	48,428	21,970	26,458

Franklin Small Cap Value VIP Class 2	14,954	34,489	(19,535)	12,826	40,346	(27,520)

Franklin U.S. Government Fund Class 2	31,811	53	31,758	—	—	—

Goldman Sachs VIT Mid Cap Value Institutional Shares	13,807	79,794	(65,987)	12,642	65,974	(53,332)

Goldman Sachs VIT Mid Cap Value Service Shares	53,117	2,835	50,282	23,800	5,482	18,318

Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares	1,848	114	1,734	4,867	89	4,778

Goldman Sachs VIT Small Cap Equity Insights Institutional Shares	12,160	55,515	(43,355)	23,594	44,388	(20,794)

Goldman Sachs VIT Small Cap Equity Insights Service Shares	21,651	2,367	19,284	18,834	914	17,920

Government & High Quality Bond Class 1	942,270	1,389,153	(446,883)	688,459	2,143,548	(1,455,089)

Guggenheim Floating Rate Strategies Series F	72,418	110,098	(37,680)	235,390	74,547	160,843

Guggenheim Investments Global Managed Futures Strategy	2,685	4,600	(1,915)	9,416	1,411	8,005

Guggenheim Investments Long Short Equity	2,244	8,749	(6,505)	10,725	1,857	8,868

Guggenheim Investments Multi-Hedge Strategies	2,714	2,737	(23)	13,159	9,654	3,505

International Emerging Markets Class 1	325,485	311,986	13,499	193,750	389,267	(195,517)

Invesco American Franchise Series I	4,232	39,590	(35,358)	6,403	30,078	(23,675)

Invesco Balanced-Risk Allocation Series II	15,046	2,015	13,031	6,827	187	6,640

Invesco Core Equity Series I	9,511	127,626	(118,115)	17,905	173,727	(155,822)

Invesco Health Care Series I	11,623	59,732	(48,109)	26,228	67,263	(41,035)

A-104

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

Invesco Health Care Series II	103,394	16,628	86,766	58,767	30,504	28,263

Invesco International Growth Series I	31,547	136,646	(105,100)	58,874	189,868	(130,994)

Invesco International Growth Series II	62,184	7,385	54,799	36,985	3,445	33,540

Invesco Mid Cap Growth Series I	1,568	15,989	(14,421)	10,583	15,944	(5,361)

Invesco Oppenheimer V.I. Main Street Small Cap Series II	2,433	5,517	(3,084)	5,649	15,213	(9,564)

Invesco Small Cap Equity Series I	20,587	36,087	(15,500)	18,517	62,959	(44,442)

Invesco Technology Series I	10,309	73,182	(62,873)	33,902	80,684	(46,782)

Invesco Value Opportunities Series I	20,278	43,542	(23,264)	20,579	62,889	(42,310)

Janus Henderson Enterprise Service Shares	18,550	69,274	(50,724)	24,937	73,028	(48,091)

Janus Henderson Flexible Bond Service Shares	124,808	22,381	102,427	54,395	80,005	(25,610)

Janus Henderson Global Technology Service Shares	30,047	175	29,872	—	—	—

LargeCap Growth I Class 1	2,647,283	563,086	2,084,197	157,788	353,828	(196,040)

LargeCap S&P 500 Index Class 1	342,465	922,182	(579,717)	849,027	934,111	(85,084)

LargeCap S&P 500 Index Class 2	623,913	80,605	543,308	430,978	27,790	403,188

MFS International Intrinsic Value Service Class	140,876	102,545	38,331	174,797	191,861	(17,064)

MFS New Discovery Service Class	167,147	62,731	104,416	126,143	39,654	86,489

MFS Utilities Service Class	193,311	117,882	75,429	102,473	112,232	(9,759)

MFS Value Service Class	23,427	45,622	(22,195)	21,131	55,313	(34,182)

MidCap Class 1	118,165	571,198	(453,033)	153,342	662,883	(509,541)

Neuberger Berman AMT Mid Cap Growth Portfolio Class S	82,298	52,937	29,361	61,572	53,913	7,659

Neuberger Berman AMT Sustainable Equity Class I	143,376	54,631	88,745	12,391	47,569	(35,178)

Neuberger Berman AMT Sustainable Equity Class S	1,437	199	1,238	1,057	887	170

PIMCO All Asset Administrative Class	10,173	47,312	(37,139)	22,339	68,731	(46,392)

PIMCO All Asset Advisor Class	231	97	134	1,662	657	1,005

A-105

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

PIMCO Commodity Real Return Strategy M Class	817	507	310	4,309	151	4,158

PIMCO High Yield Administrative Class	253,134	220,105	33,029	191,642	368,314	(176,672)

PIMCO Low Duration Advisor Class	121,551	77,323	44,228	120,614	55,072	65,542

PIMCO Total Return Administrative Class	388,149	357,443	30,706	255,816	541,916	(286,100)

Principal Capital Appreciation Class 1	108,630	1,123,455	(1,014,825)	244,002	1,174,693	(930,691)

Principal Capital Appreciation Class 2	222,630	26,922	195,708	141,881	23,117	118,764

Principal LifeTime 2010 Class 1	13,713	175,165	(161,452)	37,289	378,230	(340,941)

Principal LifeTime 2020 Class 1	223,220	830,746	(607,526)	150,861	976,643	(825,782)

Principal LifeTime 2030 Class 1	292,153	553,559	(261,406)	160,056	605,549	(445,493)

Principal LifeTime 2040 Class 1	129,564	100,258	29,306	23,920	66,369	(42,449)

Principal LifeTime 2050 Class 1	133,582	84,085	49,497	34,681	58,155	(23,474)

Principal LifeTime Strategic Income Class 1	48,541	173,995	(125,454)	38,804	254,996	(216,192)

Real Estate Securities Class 1	84,135	244,287	(160,152)	70,739	245,004	(174,265)

Real Estate Securities Class 2	196,874	50,839	146,035	118,003	28,457	89,546

Rydex Basic Materials	2,958	1,210	1,748	15,080	476	14,604

Rydex Commodities Strategy	8,968	6,863	2,105	32,299	9,919	22,380

Rydex NASDAQ 100	61,904	13,671	48,233	79,782	29,095	50,687

SAM Balanced Portfolio Class 1	509,119	5,064,445	(4,555,327)	1,586,219	6,221,863	(4,635,644)

SAM Balanced Portfolio Class 2	792,463	139,595	652,868	550,386	91,386	459,000

SAM Conservative Balanced Portfolio Class 1	189,212	1,109,284	(920,072)	363,421	1,653,935	(1,290,514)

SAM Conservative Balanced Portfolio Class 2	276,384	86,165	190,219	207,828	97,407	110,421

SAM Conservative Growth Portfolio Class 1	231,621	1,068,309	(836,688)	651,760	1,474,455	(822,695)

SAM Conservative Growth Portfolio Class 2	590,332	327,537	262,795	353,151	44,772	308,379

SAM Flexible Income Portfolio Class 1	671,979	1,892,646	(1,220,668)	490,080	2,356,674	(1,866,594)

SAM Flexible Income Portfolio Class 2	468,956	208,984	259,972	739,877	266,235	473,642

A-106

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

SAM Strategic Growth Portfolio Class 1	120,016	653,275	(533,259)	204,128	801,230	(597,102)

SAM Strategic Growth Portfolio Class 2	263,801	63,719	200,082	174,763	26,720	148,043

Short-Term Income Class 1	1,259,346	1,685,971	(426,625)	1,010,594	2,149,598	(1,139,004)

SmallCap Class 1	158,432	678,861	(520,429)	294,167	800,961	(506,794)

SmallCap Class 2	96,694	20,065	76,629	69,957	24,281	45,676

T. Rowe Price Blue Chip Growth Portfolio II	254,469	167,817	86,652	132,082	153,472	(21,390)

T. Rowe Price Health Sciences Portfolio II	35,246	117,903	(82,657)	52,753	110,039	(57,286)

Templeton Global Bond VIP Class 4	95,000	34,210	60,790	291,506	36,514	254,992

Templeton Growth VIP Class 2	834	8,283	(7,449)	526	1,250	(724)

The Merger Fund	15,125	4,625	10,500	16,436	57	16,379

TOPS Aggressive Growth ETF Portfolio Investor Class	56,472	161	56,311	2,279	2	2,277

TOPS Balanced ETF Portfolio Investor Class	92,165	45	92,120	2,827	9	2,818

TOPS Conservative ETF Portfolio Investor Class	29,303	1,328	27,975	—	—	—

TOPS Growth ETF Portfolio Investor Class	146,243	52,311	93,932	4,715	893	3,822

TOPS Moderate Growth ETF Portfolio Investor Class	35,161	14,346	20,815	1,216	—	1,216

VanEck Global Hard Assets Class S	85,122	123,843	(38,721)	86,085	113,585	(27,500)

A-107

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019

6. Financial Highlights

Principal Life sells a number of variable annuity products, which have unique combinations of features and fees that are charged against the contractholder’s account balance. Differences in the fee structures result in a variety of unit values, expense ratios and total returns.

Separate Account B has presented the following disclosures for 2019, 2018, 2017, 2016 and 2015 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.



		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:
	2019	100	$	45.81	to	$	41.78	$	4,549	—%		1.40% to 2.00%	34.50	%	to	33.70	%
	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)	%

AllianceBernstein Small/Mid Cap Value Class A:
	2019	315	$	15.68	to	$	14.97	$	4,879	0.58	%	1.30% to 2.00%	18.52	%	to	17.69	%
	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)	%

Alps/Red Rocks Listed Private Equity Class III:
	2019	42	$	11.96	to	$	13.99	$	527	—%		0.75% to 1.40%	38.75	%	to	37.83	%
	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 (5)	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:
	2019	100	$	16.58	to	$	16.02	$	1,666	—%		1.40% to 2.00%	33.71	%	to	32.84	%
	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)	%

A-108

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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:
	2019	394	$	16.58	to	$	21.86	$	9,811	2.06	%	0.85% to 1.90%	22.90	%	to	21.65	%
	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)	%

American Century VP Inflation Protection Class II:
	2019	2,414	$	10.62	to	$	12.45	$	32,719	2.29	%	0.75% to 2.00%	8.04	%	to	6.78	%
	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)	%

American Century VP Mid Cap Value Class II:
	2019	341	$	27.13	to	$	25.44	$	9,130	1.90	%	1.30% to 2.00%	27.37	%	to	26.44	%
	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)	%

American Century VP Ultra Class I:
	2019	127	$	29.27	to	$	26.17	$	3,723	—%		1.30% to 1.90%	32.86	%	to	32.04	%
	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	%

American Century VP Ultra Class II:
	2019	780	$	33.99	to	$	31.00	$	26,467	—%		1.40% to 2.00%	32.57	%	to	31.80	%
	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	%

A-109

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 Value Class II:
	2019	544	$	11.54	to	$	25.86	$	14,004	1.95	%	0.75% to 1.90%	25.98	%	to	24.57	%
	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)	%

American Funds Insurance Series Asset Allocation Fund Class 2:
	2019	199	$	13.77	to	$	13.42	$	2,711	1.88	%	1.30% to 2.00%	19.64	%	to	18.76	%
	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 (7)	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:
	2019	687	$	11.45	to	$	13.34	$	8,180	2.04	%	0.75% to 1.40%	20.02	%	to	19.21	%
	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 (5)	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:
	2019	246	$	13.96	to	$	13.61	$	3,399	2.03	%	1.30% to 2.00%	19.83	%	to	18.97	%
	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 (7)	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:
	2019	554	$	11.23	to	$	14.06	$	6,584	2.23	%	0.75% to 1.40%	20.11	%	to	19.35	%
	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)	%

American Funds Insurance Series Global Small Capitalization Fund Class 2:
	2019	121	$	14.54	to	$	12.15	$	1,573	0.16	%	1.30% to 2.00%	29.82	%	to	28.84	%
	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)	%

A-110

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 Global Small Capitalization Fund Class 4:
	2019	117	$	11.39	to	$	13.76	$	1,434	0.01	%	0.75% to 1.40%	30.32	%	to	29.44	%
	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)	%

American Funds Insurance Series High-Income Bond Class 2:
	2019	106	$	11.64	to	$	11.25	$	1,237	6.05	%	1.30% to 1.90%	11.07	%	to	10.40	%
	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)	%

American Funds Insurance Series Managed Risk Asset Allocation Fund Class P2:
	2019	184	$	11.29	to	$	12.62	$	2,153	2.10	%	0.75% to 1.40%	17.12	%	to	16.31	%
	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)	%

American Funds Insurance Series Managed Risk Growth Fund Class P2:
	2019	163	$	11.78	to	$	14.38	$	2,093	0.86	%	0.75% to 1.40%	20.82	%	to	20.03	%
	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)	%

American Funds Insurance Series Managed Risk International Fund Class P2:
	2019	17	$	10.33	to	$	10.79	$	201	1.65	%	0.75% to 1.40%	16.72	%	to	16.02	%
	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)	%

A-111

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 New World Fund Class 2:
	2019	141	$	12.48	to	$	12.42	$	1,787	0.98	%	1.30% to 2.00%	27.48	%	to	26.61	%
	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)	%

American Funds Insurance Series New World Fund Class 4:
	2019	189	$	10.90	to	$	12.14	$	2,183	0.92	%	0.75% to 1.40%	27.93	%	to	26.99	%
	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)	%

BlackRock 60/40 Target Allocation Class III:
	2019 (12)	68	$	11.46	to	$	11.76	$	799	2.53	%	0.75% to 2.00%	20.25	%	to	18.79	%
	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 (5)	7	$	9.15	to	$	9.10	$	60	6.90	%	1.15% to 2.00%	(8.32)	%	to	(8.82)	%

BlackRock Advantage U.S. Total Market Class III:
	2019	76	$	11.98	to	$	14.34	$	1,002	2.17	%	0.75% to 1.40%	27.72	%	to	26.90	%
	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 (5)	—	$	9.00	to	$	8.99	$	1	0.94	%	1.15% to 1.40%	(10.89)	%	to	(10.99)	%

BlackRock Global Allocation Class III:
	2019	192	$	10.84	to	$	10.97	$	2,140	1.39	%	0.75% to 2.00%	16.81	%	to	15.35	%
	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 (5)	56	$	9.30	to	$	9.25	$	522	1.85	%	1.15% to 2.00%	(7.00)	%	to	(7.50)	%

A-112

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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

BNY Mellon IP MidCap Stock Service Shares:
	2019 (13)	50	$	10.32	to	$	11.73	$	547	0.38	%	0.75% to 1.40%	18.89	%	to	18.25	%
	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 (5)	5	$	9.27	to	$	9.26	$	44	—%		1.15% to 1.40%	(8.13)	%	to	(8.23)	%

BNY Mellon IP Technology Growth Service Shares:
	2019 (14)	213	$	41.00	to	$	37.39	$	8,638	—%		1.40% to 2.00%	23.75	%	to	23.03	%
	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	%

Calvert EAFE International Index Class F:
	2019	126	$	10.23	to	$	11.01	$	1,308	3.18	%	0.75% to 1.40%	20.07	%	to	19.28	%
	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)	%

Calvert Investment Grade Bond Portfolio Class F:
	2019	87	$	10.87	to	$	10.76	$	943	5.01	%	0.75% to 1.40%	7.31	%	to	6.64	%
	2018 (10)	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:
	2019	236	$	10.85	to	$	14.05	$	2,708	1.01	%	0.75% to 1.40%	23.86	%	to	23.14	%
	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)	%

Calvert S&P MidCap 400 Index Class F:
	2019	376	$	11.10	to	$	14.25	$	4,489	1.26	%	0.75% to 1.40%	24.58	%	to	23.81	%
	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)	%

A-113

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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

ClearBridge Small Cap Growth Class II:
	2019	157	$	12.02	to	$	15.29	$	2,018	—%		0.75% to 1.40%	25.60	%	to	24.82	%
	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 (5)	1	$	9.48	to	$	9.47	$	9	—%		1.15% to 1.40%	(6.51)	%	to	(6.61)	%

Columbia Limited Duration Credit Class 2:
	2019	39	$	10.71	to	$	10.13	$	405	1.97	%	0.75% to 2.00%	6.67	%	to	5.41	%
	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 (5)	15	$	9.58	to	$	9.52	$	140	—%		1.15% to 2.00%	(4.20)	%	to	(4.80)	%

Columbia Small Cap Value Class 2:
	2019	95	$	10.05	to	$	12.87	$	1,034	0.27	%	0.75% to 1.40%	20.07	%	to	19.28	%
	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 (5)	8	$	9.10	to	$	9.09	$	75	0.73	%	1.15% to 1.40%	(9.90)	%	to	(9.91)	%

Core Plus Bond Class 1:
	2019	5,337	$	3.26	to	$	23.21	$	116,174	3.25	%	0.42% to 2.00%	9.35	%	to	7.65	%
	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)	%

Delaware Limited Term Diversified Income Service Class:
	2019	47	$	10.45	to	$	9.86	$	476	2.36	%	0.75% to 2.00%	3.98	%	to	2.71	%
	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 (5)	23	$	9.88	to	$	9.82	$	227	1.11	%	1.15% to 2.00%	(1.00)	%	to	(1.60)	%

A-114

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 Small Cap Value Service Class:
	2019	160	$	16.19	to	$	15.45	$	2,563	0.78	%	1.30% to 2.00%		26.09	%	to	25.20	%
	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)	%

Diversified Balanced Class 1:
	2019	2,112	$	12.06	to	$	11.60	$	24,944	2.12	%	0.46% to 1.90%		17.93	%	to	16.23	%
	2018	2,269	$	10.23	to	$	9.98	$	22,898	2.73	%	0.59% to 1.90%		(3.55)	%	to	(4.95)	%
	2017 (9)	2,579	$	10.60	to	$	10.50	$	27,197	2.43	%	0.53% to 1.90%		—	%	to	5.00	%

Diversified Balanced Class 2:
	2019	55,109	$	18.10	to	$	17.05	$	988,423	1.81	%	1.40% to 2.00%		16.55	%	to	15.91	%
	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)	%

Diversified Balanced Managed Volatility Class 2:
	2019	13,367	$	11.37	to	$	12.81	$	176,258	1.61	%	0.75% to 2.00%		16.62	%	to	15.20	%
	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)	%

Diversified Balanced Volatility Control Class 2:
	2019	12,527				$	11.60	$	145,328	0.95	%	1.40	%				13.84	%
	2018	6,572				$	10.19	$	66,956	0.77	%	1.40	%				(5.03)	%
	2017 (8)	3,405				$	10.73	$	36,539	—%		1.40	%				7.09	%

Diversified Growth Class 2:
	2019	188,483	$	12.30	to	$	19.12	$	3,772,917	1.74	%	1.40% to 2.00%		19.53	%	to	18.83	%
	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)	%

A-115

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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:
	2019	25,503	$	11.48	to	$	13.50	$	353,685	1.54	%	0.75% to 2.00%		19.33	%	to	17.80	%
	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)	%

Diversified Growth Volatility Control Class 2:
	2019	64,303				$	11.90	$	765,294	0.97	%	1.40	%				15.87	%
	2018	37,493				$	10.27	$	384,857	0.75	%	1.40	%				(5.87)	%
	2017 (8)	15,735				$	10.91	$	171,699	—%		1.40	%				8.77	%

Diversified Income Class 2:
	2019	20,567	$	11.52	to	$	13.59	$	279,864	1.65	%	1.40% to 2.00%		13.50	%	to	12.87	%
	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)	%

Diversified International Class 1:
	2019	3,882	$	4.09	to	$	29.45	$	103,484	1.63	%	0.40% to 2.00%		22.17	%	to	20.25	%
	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)	%

DWS Alternative Asset Allocation Class B:
	2019	4	$	10.72	to	$	9.96	$	44	3.51	%	0.75% to 1.40%		13.56	%	to	12.67	%
	2018	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)	%

DWS Equity 500 Index Class B2:
	2019	175	$	12.33	to	$	16.07	$	2,491	1.48	%	0.75% to 1.40%		29.65	%	to	28.77	%
	2018	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)	%

A-116

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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

DWS Small Mid Cap Value Class B:
	2019	118	$	10.23	to	$	13.42	$	1,469	0.36	%	0.75% to 2.00%	20.07	%	to	18.55	%
	2018	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)	%

EQ Convertible Securities Class IB:
	2019 (11)	—	$	10.93	to	$	10.85	$	—	—%		0.75% to 2.00%	9.30	%	to	8.50	%

EQ GAMCO Small Company Value Class IB:
	2019 (11)	5	$	10.87	to	$	10.80	$	55	1.76	%	0.75% to 2.00%	8.70	%	to	8.00	%

EQ Micro Cap Class IB:
	2019 (11)	1	$	10.94	to	$	10.86	$	10	0.27	%	0.75% to 2.00%	9.40	%	to	8.60	%

EQ SmartBeta Equity Class IB:
	2019 (11)	6	$	10.86	to	$	10.78	$	62	3.05	%	0.75% to 2.00%	8.60	%	to	7.80	%

EQ Socially Responsible Class IB:
	2019 (11)	1	$	11.24	to	$	11.16	$	17	1.95	%	0.75% to 2.00%	12.40	%	to	11.60	%

Equity Income Class 1:
	2019	11,634	$	89.57	to	$	21.28	$	229,475	1.88	%	0.56% to 2.00%	28.47	%	to	26.52	%
	2018	13,701	$	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)	%

Equity Income Class 2:
	2019	573	$	12.28	to	$	15.54	$	7,665	1.75	%	0.75% to 1.40%	27.78	%	to	26.96	%
	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)	%

A-117

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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:
	2019	990	$	36.21	to	$	32.28	$	35,860	0.35	%	1.30% to 1.90%	29.78	%	to	28.97	%
	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)	%

Fidelity VIP Contrafund Service Class 2:
	2019	1,833	$	12.00	to	$	31.35	$	50,633	0.21	%	0.75% to 2.00%	30.29	%	to	28.64	%
	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)	%

Fidelity VIP Equity-Income Service Class 2:
	2019	1,165	$	24.64	to	$	22.02	$	28,581	1.78	%	1.30% to 2.00%	25.46	%	to	24.55	%
	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)	%

Fidelity VIP Freedom 2020 Service Class 2:
	2019 (11)	13	$	10.76	to	$	10.72	$	142	4.55	%	0.75% to 1.40%	7.60	%	to	7.20	%

Fidelity VIP Freedom 2030 Service Class 2:
	2019 (11)	27	$	10.92	to	$	10.88	$	298	7.14	%	0.75% to 1.40%	9.20	%	to	8.80	%

Fidelity VIP Freedom 2040 Service Class 2:
	2019 (11)	65	$	11.09	to	$	11.05	$	720	6.44	%	0.75% to 1.40%	10.90	%	to	10.50	%

Fidelity VIP Freedom 2050 Service Class 2:
	2019 (11)	16	$	11.10	to	$	11.06	$	178	5.99	%	0.75% to 1.40%	11.00	%	to	10.60	%

Fidelity VIP Government Money Market Initial Class:
	2019	7,795	$	1.03	to	$	9.68	$	31,462	2.04	%	0.44% to 2.00%	1.59	%	to	—	%
	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 (6)	8,827	$	1.00	to	$	0.99	$	47,450	0.22	%	0.59% to 2.19%	—	%	to	—	%

A-118

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 Government Money Market Service Class 2:
	2019	880	$	10.16	to	$	9.97	$	8,850	1.70	%	0.75% to 1.40%		1.09	%	to	0.40	%
	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 (6)	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:
	2019	545	$	26.73	to	$	23.83	$	14,563	0.16	%	1.30% to 1.90%		32.46	%	to	31.66	%
	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	%

Fidelity VIP Growth Service Class 2:
	2019	346	$	35.81	to	$	32.65	$	12,287	0.05	%	1.40% to 2.00%		32.14	%	to	31.34	%
	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	%

Fidelity VIP Mid Cap Service Class:
	2019	7				$	14.27	$	95	0.80	%	0.95	%				22.17	%
	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)	%

Fidelity VIP Mid Cap Service Class 2:
	2019	1,169	$	10.30	to	$	30.72	$	25,934	0.68	%	0.75% to 2.00%		22.33	%	to	20.75	%
	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)	%

Fidelity VIP Overseas Service Class 2:
	2019	1,180	$	10.72	to	$	18.84	$	23,490	1.46	%	0.75% to 2.00%		26.56	%	to	25.02	%
	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	%

A-119

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 Global Real Estate VIP Class 2:
	2019	118	$	11.53	to	$	11.15	$	1,397	2.23	%	0.75% to 2.00%	21.50	%	to	19.89	%
	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)	%

Franklin Income VIP Class 4:
	2019	116	$	10.83	to	$	10.72	$	1,253	4.07	%	0.75% to 1.40%	15.21	%	to	14.41	%
	2018 (10)	9	$	9.40	to	$	9.37	$	87	—%		0.75% to 1.40%	(6.37)	%	to	(6.58)	%

Franklin Rising Dividends VIP Class 4:
	2019	206	$	12.38	to	$	15.86	$	2,842	1.10	%	0.75% to 1.40%	28.16	%	to	27.39	%
	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)	%

Franklin Small Cap Value VIP Class 2:
	2019	158	$	25.86	to	$	24.20	$	4,044	1.05	%	1.30% to 2.00%	24.75	%	to	23.85	%
	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)	%

Franklin U.S. Government Fund Class 2:
	2019 (11)	32	$	10.16	to	$	10.12	$	323	—%		0.75% to 1.40%	1.40	%	to	1.00	%

Goldman Sachs VIT Mid Cap Value Institutional Shares:
	2019	390	$	30.72	to	$	27.83	$	11,835	0.76	%	1.30% to 2.00%	29.84	%	to	28.90	%
	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)	%

A-120

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 Mid Cap Value Service Shares:
	2019	119	$	11.74	to	$	12.71	$	1,445	0.74	%	0.75% to 1.40%	30.16	%	to	29.43	%
	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)	%

Goldman Sachs VIT Multi-Strategy Alternatives Portfolio Service Shares:
	2019	7	$	10.19	to	$	9.44	$	68	3.05	%	0.75% to 1.40%	8.06	%	to	7.39	%
	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 (5)	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:
	2019	226	$	26.43	to	$	23.95	$	5,916	0.46	%	1.30% to 2.00%	23.22	%	to	22.38	%
	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)	%

Goldman Sachs VIT Small Cap Equity Insights Service Shares:
	2019	52	$	10.93	to	$	14.98	$	627	0.27	%	0.75% to 1.40%	23.64	%	to	22.79	%
	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)	%

Government & High Quality Bond Class 1:
	2019	7,169	$	3.06	to	$	11.84	$	81,190	2.72	%	0.40% to 2.00%	6.01	%	to	4.32	%
	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)	%

A-121

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 Floating Rate Strategies Series F:
	2019	295	$	10.41	to	$	10.71	$	3,213	4.81	%	0.75% to 2.00%	6.77	%	to	5.52	%
	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)	%

Guggenheim Investments Global Managed Futures Strategy:
	2019	19	$	9.76	to	$	8.09	$	178	0.98	%	0.75% to 2.00%	7.37	%	to	6.03	%
	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)	%

Guggenheim Investments Long Short Equity:
	2019	15	$	9.63	to	$	9.65	$	144	0.61	%	0.75% to 2.00%	4.79	%	to	3.43	%
	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)	%

Guggenheim Investments Multi-Hedge Strategies:
	2019	57	$	10.16	to	$	9.45	$	559	2.35	%	0.75% to 2.00%	4.21	%	to	2.94	%
	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)	%

International Emerging Markets Class 1:
	2019	1,427	$	4.37	to	$	32.59	$	43,068	0.95	%	0.41% to 2.00%	17.11	%	to	15.28	%
	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)	%

A-122

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 American Franchise Series I:
	2019	178	$	24.21	to	$	23.12	$	4,306	—%		1.30% to 1.90%	35.03	%	to	34.18	%
	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	%

Invesco Balanced-Risk Allocation Series II:
	2019	43	$	10.61	to	$	11.79	$	489	—%		0.75% to 1.40%	13.96	%	to	13.26	%
	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)	%

Invesco Core Equity Series I:
	2019	670	$	20.21	to	$	18.02	$	13,547	0.92	%	1.30% to 1.90%	27.27	%	to	26.54	%
	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)	%

Invesco Health Care Series I:
	2019	264	$	29.84	to	$	14.18	$	7,018	0.04	%	1.30% to 2.00%	30.82	%	to	29.85	%
	2018	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	%

Invesco Health Care Series II:
	2019	213	$	13.37	to	$	13.45	$	2,877	—%		0.75% to 1.40%	31.21	%	to	30.33	%
	2018	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	%

A-123

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 International Growth Series I:
	2019	516	$	13.53	to	$	12.62	$	6,939	1.51	%	1.40% to 2.00%	26.80	%	to	26.07	%
	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)	%

Invesco International Growth Series II:
	2019	149	$	10.94	to	$	11.56	$	1,692	1.37	%	0.75% to 1.40%	27.21	%	to	26.48	%
	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)	%

Invesco Mid Cap Growth Series I:
	2019	51	$	20.97	to	$	20.03	$	1,079	—%		1.30% to 1.90%	32.55	%	to	31.78	%
	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)	%

Invesco Oppenheimer V.I. Main Street Small Cap Series II:
	2019 (15)	26	$	16.92	to	$	16.26	$	448	—%		1.30% to 1.90%	24.50	%	to	23.74	%
	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)	%

Invesco Small Cap Equity Series I:
	2019	237	$	28.01	to	$	25.38	$	6,548	—%		1.30% to 2.00%	24.93	%	to	24.11	%
	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)	%

A-124

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 Technology Series I:
	2019	182	$	16.66	to	$	14.90	$	3,038	—%		1.30% to 1.90%	34.14	%	to	33.27	%
	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	%

Invesco Value Opportunities Series I:
	2019	181	$	18.38	to	$	16.76	$	3,318	0.24	%	1.40% to 2.00%	28.80	%	to	28.04	%
	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)	%

Janus Henderson Enterprise Service Shares:
	2019	366	$	27.52	to	$	24.53	$	10,067	0.05	%	1.30% to 1.90%	33.40	%	to	32.59	%
	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	%

Janus Henderson Flexible Bond Service Shares:
	2019	290	$	10.90	to	$	10.35	$	3,116	3.03	%	0.75% to 2.00%	8.46	%	to	7.14	%
	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)	%

Janus Henderson Global Technology Service Shares:
	2019 (11)	30	$	11.66	to	$	11.62	$	348	—%		0.75% to 1.40%	16.60	%	to	16.20	%

LargeCap Growth I Class 1:
	2019	3,666	$	4.13	to	$	92.86	$	168,970	0.06	%	0.47% to 2.00%	34.35	%	to	32.24	%
	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	%

A-125

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 1:
	2019	4,496	$	3.34	to	$	22.92	$	99,605	1.84	%	0.51% to 2.00%	30.55	%	to	28.48	%
	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)	%

LargeCap S&P 500 Index Class 2:
	2019	1,221	$	12.35	to	$	15.30	$	15,836	2.08	%	0.75% to 1.40%	29.73	%	to	29.01	%
	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 (5)	16	$	9.66	to	$	9.64	$	151	2.15	%	1.15% to 1.40%	(3.69)	%	to	(3.89)	%

MFS International Intrinsic Value Service Class:
	2019 (16)	569	$	11.33	to	$	13.02	$	7,485	1.49	%	0.75% to 2.00%	24.78	%	to	23.06	%
	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)	%

MFS New Discovery Service Class:
	2019	301	$	12.99	to	$	18.06	$	4,807	—%		0.75% to 2.00%	40.13	%	to	38.39	%
	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)	%

MFS Utilities Service Class:
	2019	709	$	12.38	to	$	27.00	$	15,284	3.83	%	0.75% to 2.00%	23.92	%	to	22.34	%
	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)	%

A-126

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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

MFS Value Service Class:
	2019	170	$	31.25	to	$	29.32	$	5,292	1.89	%	1.40% to 2.00%	27.71	%	to	26.93	%
	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)	%

MidCap Class 1:
	2019	2,908	$	17.45	to	$	127.60	$	338,480	0.27	%	0.42% to 2.00%	42.50	%	to	40.27	%
	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)	%

Neuberger Berman AMT Mid Cap Growth Portfolio Class S:
	2019	252	$	12.02	to	$	14.21	$	3,506	—%		0.75% to 2.00%	31.51	%	to	29.89	%
	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 (5)	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:
	2019	220	$	30.28	to	$	27.61	$	6,634	0.45	%	1.40% to 2.00%	24.10	%	to	23.37	%
	2018	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)	%

Neuberger Berman AMT Sustainable Equity Class S:
	2019	1	$	11.05	to	$	10.94	$	16	0.77	%	0.75% to 1.40%	24.58	%	to	23.76	%
	2018 (10)	—	$	8.87	to	$	8.84	$	2	0.97	%	0.75% to 1.40%	(11.48)	%	to	(11.78)	%

PIMCO All Asset Administrative Class:
	2019	147	$	16.56	to	$	15.54	$	2,419	2.89	%	1.40% to 2.00%	10.33	%	to	9.67	%
	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)	%

A-127

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 Advisor Class:
	2019	10	$	10.41	to	$	11.19	$	112	2.83	%	0.75% to 1.40%	10.86	%	to	10.14	%
	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 (5)	—	$	8.77	to	$	8.75	$	—	—%		1.15% to 1.40%	(12.12)	%	to	(12.32)	%

PIMCO Commodity Real Return Strategy M Class:
	2019	6	$	9.23	to	$	7.59	$	51	4.14	%	0.75% to 1.40%	10.14	%	to	9.52	%
	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 (5)	2	$	7.24	to	$	7.22	$	13	—%		1.15% to 1.40%	(27.45)	%	to	(27.66)	%

PIMCO High Yield Administrative Class:
	2019	1,297	$	11.13	to	$	16.03	$	19,995	4.92	%	0.75% to 2.00%	13.92	%	to	12.41	%
	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)	%

PIMCO Low Duration Advisor Class:
	2019	149	$	10.35	to	$	9.70	$	1,526	2.58	%	0.75% to 2.00%	3.19	%	to	1.89	%
	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 (5)	37	$	9.89	to	$	9.84	$	361	11.09	%	1.15% to 2.00%	(1.10)	%	to	(1.60)	%

PIMCO Total Return Administrative Class:
	2019	1,771	$	10.87	to	$	12.80	$	22,921	2.99	%	0.75% to 2.00%	7.62	%	to	6.22	%
	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)	%

A-128

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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:
	2019	4,601	$	27.08	to	$	23.93	$	97,427	1.56	%	0.95% to 2.00%	31.27	%	to	29.91	%
	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	%

Principal Capital Appreciation Class 2:
	2019	397	$	12.67	to	$	16.36	$	5,278	1.55	%	0.75% to 1.40%	31.16	%	to	30.25	%
	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	%

Principal LifeTime 2010 Class 1:
	2019	935	$	16.41	to	$	16.55	$	16,850	2.80	%	0.95% to 2.00%	13.02	%	to	11.82	%
	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)	%

Principal LifeTime 2020 Class 1:
	2019	4,012	$	10.72	to	$	19.22	$	82,586	2.41	%	0.75% to 2.00%	6.56	%	to	15.78	%
	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)	%

Principal LifeTime 2030 Class 1:
	2019	2,724	$	10.91	to	$	20.19	$	57,570	2.05	%	0.75% to 2.00%	8.13	%	to	19.61	%
	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)	%

A-129

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 2040 Class 1:
	2019	705	$	11.04	to	$	21.69	$	15,574	1.87	%	0.75% to 2.00%	9.42	%	to	22.27	%
	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)	%

Principal LifeTime 2050 Class 1:
	2019	549	$	11.11	to	$	22.22	$	11,861	1.99	%	0.75% to 2.00%	10.00	%	to	23.86	%
	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)	%

Principal LifeTime Strategic Income Class 1:
	2019	662	$	14.96	to	$	14.68	$	10,633	2.38	%	0.95% to 2.00%	11.39	%	to	10.21	%
	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)	%

Real Estate Securities Class 1:
	2019	978	$	7.21	to	$	65.35	$	67,480	1.78	%	0.45% to 2.00%	30.71	%	to	28.67	%
	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	%

Real Estate Securities Class 2:
	2019	441	$	12.94	to	$	15.87	$	6,106	1.68	%	0.75% to 1.40%	29.92	%	to	29.13	%
	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	%

A-130

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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

Rydex Basic Materials:
	2019	53	$	10.32	to	$	11.60	$	606	—%		0.75% to 1.40%	20.42	%	to	19.71	%
	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 (5)	—	$	7.71	to	$	7.70	$	—	—%		1.15% to 1.40%	(22.75)	%	to	(22.85)	%

Rydex Commodities Strategy:
	2019	68	$	9.04	to	$	6.67	$	499	1.54	%	0.75% to 2.00%	14.43	%	to	13.05	%
	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)	%

Rydex NASDAQ 100:
	2019	201	$	12.88	to	$	19.37	$	3,095	0.12	%	0.75% to 1.40%	35.86	%	to	34.98	%
	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	%

SAM Balanced Portfolio Class 1:
	2019	23,734	$	2.75	to	$	16.85	$	427,977	2.43	%	0.39% to 2.00%	19.50	%	to	17.59	%
	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)	%

SAM Balanced Portfolio Class 2:
	2019	1,918	$	11.26	to	$	12.86	$	22,821	2.44	%	0.75% to 1.40%	18.78	%	to	18.09	%
	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)	%

A-131

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 Conservative Balanced Portfolio Class 1:
	2019	6,014	$	17.84	to	$	15.77	$	102,122	2.77	%	0.95% to 2.00%	14.73	%	to	13.62	%
	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)	%

SAM Conservative Balanced Portfolio Class 2:
	2019	774	$	11.07	to	$	12.16	$	8,928	2.86	%	0.75% to 1.40%	14.83	%	to	14.07	%
	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)	%

SAM Conservative Growth Portfolio Class 1:
	2019	4,770	$	19.72	to	$	17.42	$	89,362	1.80	%	0.95% to 2.00%	22.87	%	to	21.56	%
	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)	%

SAM Conservative Growth Portfolio Class 2:
	2019	1,278	$	11.40	to	$	13.58	$	15,671	1.68	%	0.75% to 1.40%	22.71	%	to	21.90	%
	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)	%

SAM Flexible Income Portfolio Class 1:
	2019	7,363	$	17.36	to	$	15.34	$	121,789	3.41	%	0.95% to 2.00%	12.14	%	to	11.00	%
	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)	%

A-132

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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:
	2019	1,491	$	11.02	to	$	11.73	$	16,833	3.49	%	0.75% to 1.40%	12.11	%	to	11.40	%
	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)	%

SAM Strategic Growth Portfolio Class 1:
	2019	2,858	$	19.97	to	$	17.64	$	53,900	1.47	%	0.95% to 2.00%	26.23	%	to	24.93	%
	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)	%

SAM Strategic Growth Portfolio Class 2:
	2019	773	$	11.47	to	$	13.80	$	9,818	1.41	%	0.75% to 1.40%	26.18	%	to	25.34	%
	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)	%

Short-Term Income Class 1:
	2019	5,889	$	10.14	to	$	11.27	$	70,427	2.66	%	0.75% to 2.00%	1.40	%	to	2.64	%
	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)	%

SmallCap Class 1:
	2019	3,367	$	3.20	to	$	25.86	$	94,321	0.32	%	0.43% to 2.00%	26.87	%	to	24.87	%
	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)	%

A-133

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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 2:
	2019	210	$	10.86	to	$	12.84	$	2,452	0.09	%	0.75% to 1.40%		26.13	%	to	25.39	%
	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 (4)	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:
	2019	751	$	11.18	to	$	37.15	$	25,129	—%		0.75% to 2.00%		9.93	%	to	27.01	%
	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	%

T. Rowe Price Health Sciences Portfolio II:
	2019	384	$	68.59	to	$	62.54	$	26,161	—%		1.40% to 2.00%		26.85	%	to	26.06	%
	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	%

Templeton Global Bond VIP Class 4:
	2019	528	$	10.02	to	$	9.37	$	5,136	6.90	%	0.75% to 2.00%		1.11	%	to	(0.11)	%
	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)	%

Templeton Growth VIP Class 2:
	2019	27				$	24.13	$	661	2.81	%	0.85	%				14.14	%
	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)	%

A-134

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



		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:
	2019	27	$	10.98	to	$	10.88	$	304	1.23	%	0.75% to 1.40%	5.37	%	to	4.62	%
	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 (5)	—	$	9.65	to	$	9.64	$	—	—%		1.15% to 1.40%	(3.50)	%	to	(3.60)	%

TOPS Aggressive Growth ETF Portfolio Investor Class:
	2019	59	$	10.66	to	$	10.45	$	624	2.32	%	0.75% to 2.00%	23.24	%	to	21.65	%
	2018 (10)	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:
	2019	95	$	10.71	to	$	10.50	$	1,017	2.16	%	0.75% to 2.00%	14.91	%	to	13.39	%
	2018 (10)	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:
	2019	28	$	10.67	to	$	10.46	$	295	0.04	%	0.75% to 2.00%	10.57	%	to	9.19	%
	2018 (10)	—	$	9.65	to	$	9.58	$	—	—%		0.75% to 2.00%	(3.50)	%	to	(4.20)	%

TOPS Growth ETF Portfolio Investor Class:
	2019	98	$	10.68	to	$	10.48	$	1,044	1.49	%	0.75% to 2.00%	20.81	%	to	19.36	%
	2018 (10)	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:
	2019	22	$	10.77	to	$	10.56	$	237	1.29	%	0.75% to 2.00%	17.58	%	to	16.17	%
	2018 (10)	1	$	9.16	to	$	9.09	$	11	—%		0.75% to 2.00%	(8.49)	%	to	(9.19)	%

VanEck Global Hard Assets Class S:
	2019	484	$	7.84	to	$	7.91	$	3,957	—%		0.75% to 2.00%	10.73	%	to	9.25	%
	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)	%



(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.

A-135

Principal Life Insurance Company

Separate Account B

Notes to Financial Statements

December 31, 2019



(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)	Commenced operations April 17, 2015. Investment income ratios have been annualized for the year ended December 31, 2015.
(5)	Commenced operations May 18, 2015. Investment income ratios have been annualized for the year ended December 31, 2015.
(6)	Commenced operations February 8, 2016. Investment income ratios have been annualized for the year ended December 31, 2016.
(7)	Commenced operations May 23, 2016. Investment income ratios have been annualized for the year ended December 31, 2016.
(8)	Commenced operations April 6, 2017. Investment income ratios have been annualized for the year ended December 31, 2017.
(9)	Commenced operations May 26, 2017. Investment income ratios have been annualized for the year ended December 31, 2017.
(10)	Commenced operations June 11, 2018. Investment income ratios have been annualized for the year ended December 31, 2018.
(11)	Commenced operations June 7, 2019. Investment income ratios have been annualized for the year ended December 31, 2019.
(12)	Represented the operations of BlackRock iShares Dynamic Allocation Class III Division until June 6, 2019.
(13)	Represented the operations of Dreyfus IP MidCap Stock Service Shares Division until June 2, 2019.
(14)	Represented the operations of Dreyfus IP Technology Growth Service Shares Division until June 2, 2019.
(15)	Represented the operations of Oppenheimer Main Street Small Cap Service Shares Division until May 24, 2019.
(16)	Represented the operations of MFS International Value Service Class Division until June 6, 2019.

Following is a list of divisions and corresponding unit values and total return for divisions that had unit values and/or total return outside those corresponding to the lowest to highest expense ratio indicated above for applicable years.



Division		2019 Unit Value ($)

Alps/Red Rocks Listed Private Equity Class III		14.16
American Century VP Inflation Protection Class II		10.19, 10.35, 10.48, 10.51 and 13.65
American Century VP Value Class II		28.75
American Funds Insurance Series Asset Allocation Fund Class 4		13.50
American Funds Insurance Series Blue Chip Income and Growth Fund Class 4		14.25

Division		2019 Unit Value ($)

American Funds Insurance Series Global Small Capitalization Fund Class 4		13.94
American Funds Insurance Series Managed Risk Asset Allocation Fund Class P2		12.79
American Funds Insurance Series Managed Risk Growth Fund Class P2		14.57
American Funds Insurance Series Managed Risk International Fund Class P2		10.94 and 12.15
American Funds Insurance Series New World Fund Class 2		12.07 and 12.77
American Funds Insurance Series New World Fund Class 4		12.30 and 12.61
BlackRock Advantage U.S. Total Market Class III		14.50
BlackRock Global Allocation Class III		11.02, 11.28, 11.33, 11.41 and 11.55
BlackRock 60/40 Target Allocation Class III		11.81, 12.09, 12.15, 12.23 and 12.39
BNY Mellon IP MidCap Stock Service Shares		11.86
Calvert EAFE International Index Class F		11.16 and 11.82
Calvert Russell 2000 Small Cap Index Class F		14.24
Calvert S&P MidCap 400 Index Class F		14.44
ClearBridge Small Cap Growth Series II		15.46
Columbia Small Cap Value Class 2		13.02
Core Plus Bond Class 1		3.08, 23.36, 26.03 and 26.20
Diversified Balanced Class 2		11.91
Diversified Balanced Managed Volatility Class 2		12.88 and 13.29
Diversified Growth Class 2		20.30
Diversified Growth Managed Volatility Class 2		14.01
Diversified International Class 1		3.87, 29.64, 33.02 and 33.24
DWS Equity 500 Index Class B2		16.29
DWS Small Mid Cap Value Class B		13.51, 13.97 and 14.06
Equity Income Class 1		3.18, 11.87, 11.94, 11.99, 12.01 and 12.02
Equity Income Class 2		15.75
Fidelity VIP Contrafund Service Class 2		34.38
Fidelity VIP Government Money Market Initial Class		0.99, 1.02, 9.71, 9.91, 9.94, 10.08 and 10.12
Fidelity VIP Government Money Market Service Class 2		9.81
Fidelity VIP Mid Cap Service Class 2		33.69
Fidelity VIP Overseas Service Class 2		20.66
Franklin Global Real Estate VIP Class 2		11.96, 12.53 and 12.70
Franklin Rising Dividends VIP Class 4		16.07
Goldman Sachs VIT Mid Cap Value Service Class S		12.88
Goldman Sachs VIT Small Cap Equity Insights Service Class S		15.18
Government & High Quality Bond Class 1		2.88, 11.92, 12.74, 13.21, 13.36 and 12.66
Guggenheim Floating Rate Strategies Series F		10.76, 11.01, 11.06, 11.18 and 11.33
Guggenheim Investments Global Managed Futures Strategy		10.23
Guggenheim Investments Long Short Equity		9.70, 9.92, 9.97, 10.40, 10.47 and 10.61
International Emerging Markets Class 1		32.80, 36.55 and 36.78
Invesco Balanced-Risk Allocation Series II		11.94
Invesco Health Care Series II		13.63 and 13.83
Division		2019 Unit Value ($)

Invesco International Growth Series II		11.71 and 12.06
LargeCap Growth I Class 1		93.46, 104.14 and 104.81
LargeCap S&P 500 Index Class 1		23.07, 25.71, 25.87, 28.19 and 28.30
LargeCap S&P 500 Index Class 2		15.48
MFS International Intrinsic Value Service Class		13.08, 13.09, 13.39, 13.45, 14.55 and 14.75
MFS New Discovery Service Class		18.18, 18.80 and 18.92
MFS Utilities Service Class		28.78
MidCap Class 1		16.51, 128.42, 143.10 and 144.02
Neuberger Berman AMT Mid-Cap Growth Portfolio S Class		14.28 and 14.57
PIMCO All Asset Advisor Class		11.32
PIMCO Commodity Real Return Strategy M Class		9.55
PIMCO High Yield Administrative Class		17.03
PIMCO Total Return Administrative Class		10.80 and 13.65
Principal Capital Appreciation Class 1		15.21 and 15.64
Principal Capital Appreciation Class 2		16.57
Principal LifeTime Strategic Income Class 1		16.09 and 16.20
Principal LifeTime 2010 Class 1		16.66, 18.14 and 18.26
Principal LifeTime 2020 Class 1		10.68, 10.70, 10.71, 19.35, 21.08 and 21.21
Principal LifeTime 2030 Class 1		10.87, 10.89, 10.90, 20.32, 22.14 and 22.28
Principal LifeTime 2040 Class 1		11.00, 11.02, 11.03, 21.83, 23.79 and 23.94
Principal LifeTime 2050 Class 1		11.07, 11.09, 11.10, 22.37, 24.37 and 24.52
Real Estate Securities Class 1		65.77, 73.29 and 73.76
Real Estate Securities Class 2		16.08
Rydex Basic Materials		11.74
Rydex Commodities Strategy		4.92, 4.99 and 10.44
Rydex NASDAQ 100		19.63
SAM Balanced Portfolio Class 1		16.96, 18.18, 18.30 and 19.07
SAM Balanced Portfolio Class 2		13.03
SAM Conservative Balanced Portfolio Class 2		12.32
SAM Conservative Growth Portfolio Class 2		13.76
SAM Flexible Income Portfolio Class 2		11.89
SAM Strategic Growth Portfolio Class 2		13.99
Short-Term Income Class 1		10.11, 10.12, 10.13, 11.34, 12.12, 12.57, 12.71 and 12.04
SmallCap Class 1		26.02, 29.00, 29.19 and 38.91
SmallCap Class 2		12.99
T. Rowe Price Blue Chip Growth Portfolio II		11.14, 11.15, 11.16 and 40.74
The Merger Fund		11.01 and 11.22
VanEck Global Hard Assets Class S		5.28, 5.35, 7.96, 8.43 and 8.49






Division		2019 Total Return (%)

Columbia Limited Duration Credit Class 2		5.39
Core Plus Bond Class 1		2.69, 2.89, 2.99, and 3.09
Diversified Balanced Class 2		16.65
Diversified Growth Class 2		19.55
Diversified Income Class 2		13.57
Diversified International Class 1		8.79, 8.89, 8.99 and 9.19
Equity Income Class 1		28.55
Fidelity VIP Government Money Market Service Class 2		0.31
Government & High Quality Bond Class 1		1.60, 1.80, 1.90 and 2.00
International Emerging Markets Class 1		11.21, 11.31, 11.41 and 11.61
LargeCap Growth I Class 1		12.50, 12.60, 12.70 and 12.89
Principal LifeTime 2020 Class 1		6.16, 6.36, 6.46, 15.94, 16.46, 16.54 and 17.01
Principal LifeTime 2030 Class 1		7.84, 7.93, 8.03, 19.67, 20.33, 20.43 and 20.83
Principal LifeTime 2040 Class 1		9.02, 9.22, 9.32, 22.37, 23.01, 23.15 and 23.55
Principal LifeTime 2050 Class 1		9.60, 9.80, 9.90, 24.07, 24.65, 24.72 and 25.13
Short-Term Income Class 1		1.10, 1.20, 1.30, 2.72, 3.32, 3.71, 3.76 and 3.17
T. Rowe Price Blue Chip Growth Portfolio II		9.54, 9.64, 9.73 and 27.75
TOPS Growth ETF Portfolio Investor Class		19.34

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
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
Division		2018 Unit Value ($)

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
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
Division		2018 Unit Value ($)

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 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
Division		2018 Total Return (%)

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

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
Division		2017 Unit Value ($)

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
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
Division		2017 Unit Value ($)

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
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
Division		2017 Total Return (%)

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
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-Strategy 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
Division		2017 Total Return (%)

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
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
Division		2016 Unit Value ($)

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 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
Division		2015 Unit Value ($)

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
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)

7. Subsequent Events

The Separate Account performed an evaluation of subsequent events through March 27, 2020.

The outbreak of the novel coronavirus (“COVID-19”) in many countries continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. The global impact of the outbreak has been rapidly evolving and many countries have reacted by instituting quarantines and restrictions on travel. Such measures, as well as the general uncertainty surrounding the dangers and impact of COVID-19, are creating significant disruption in supply chains and economic activity. As COVID-19 continues to spread, the potential impacts, including a global, regional or other economic recession, are increasingly difficult to assess. These events, or fear of such an event, present material uncertainty and risk with respect to the Separate Account performance and financial results.

A-136

APPENDIX B - Principal Life Insurance Company Financials

B-1

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, 2019 and 2018, 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, 2019, 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, 2019 and 2018, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, 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 55-59 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 13, 2020

B-2



Principal Life Insurance Company
Consolidated Statements of Financial Position
		December 31, 2019		December 31, 2018
		(in millions)
Assets
Fixed maturities, available-for-sale (2019 and 2018 include $99.4 million and $94.5 million related to
	consolidated variable interest entities)	$	65,983.4	$	56,275.3
Fixed maturities, trading			237.6		165.5
Equity securities			69.9		84.8
Mortgage loans			15,820.3		14,662.2
Real estate (2019 and 2018 include $457.6 million and $364.0 million related to consolidated variable
	interest entities)		1,713.5		1,726.3
Policy loans			742.2		755.9
Other investments (2019 and 2018 include $19.9 million and $44.1 million related to consolidated variable
	interest entities and $22.8 million and $23.6 million measured at fair value under the fair value option)		2,133.2		1,752.5
	Total investments		86,700.1		75,422.5
Cash and cash equivalents			1,525.0		1,806.3
Accrued investment income			666.5		615.5
Premiums due and other receivables			1,734.2		1,618.2
Deferred acquisition costs			3,509.9		3,680.4
Property and equipment			763.1		692.9
Goodwill			75.1		75.1
Other intangibles			19.6		22.2
Separate account assets			125,801.7		107,343.0
Other assets			1,119.5		1,135.9
	Total assets	$	221,914.7	$	192,412.0

Liabilities
Contractholder funds		$	38,334.6	$	36,861.7
Future policy benefits and claims			35,333.8		30,565.5
Other policyholder funds			791.8		727.2
Long-term debt (2019 and 2018 include $64.2 million and $58.4 million related to consolidated variable
	interest entities)		108.7		129.1
Deferred income taxes			1,823.9		1,029.4
Separate account liabilities			125,801.7		107,343.0
Other liabilities (2019 and 2018 include $122.2 million and $101.3 million related to consolidated variable
	interest entities)		8,331.5		6,904.9
Total liabilities			210,526.0		183,560.8

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			6,331.5		6,331.6
Retained earnings			2,410.8		2,441.2
Accumulated other comprehensive income			2,620.7		55.5
	Total stockholder's equity attributable to Principal Life Insurance Company		11,365.5		8,830.8
Noncontrolling interest			23.2		20.4
	Total stockholder's equity		11,388.7		8,851.2
	Total liabilities and stockholder's equity	$	221,914.7	$	192,412.0

See accompanying notes.

B-3



Principal Life Insurance Company
Consolidated Statements of Operations

		For the year ended December 31,
		2019		2018		2017
		(in millions)
Revenues
Premiums and other considerations		$	7,473.3	$	6,092.4	$	5,999.4
Fees and other revenues			2,396.7		2,222.2		2,182.1
Net investment income			3,293.9		3,022.9		2,833.7
Net realized capital gains (losses), excluding impairment losses on
	available-for-sale securities		(68.7)		121.8		451.7
Net other-than-temporary impairment (losses) recoveries on available-
	for-sale securities		(38.3)		10.6		(30.0)
Other-than-temporary impairment losses on fixed maturities, available-
	for-sale reclassified from other comprehensive income		(5.2)		(39.7)		(49.7)
Net impairment losses on available-for-sale securities			(43.5)		(29.1)		(79.7)
Net realized capital gains (losses)			(112.2)		92.7		372.0
	Total revenues		13,051.7		11,430.2		11,387.2
Expenses
Benefits, claims and settlement expenses			9,167.5		7,542.0		7,317.9
Dividends to policyholders			119.1		123.6		124.6
Operating expenses			2,502.3		2,363.5		2,226.7
	Total expenses		11,788.9		10,029.1		9,669.2
Income from continuing operations before income taxes			1,262.8		1,401.1		1,718.0
Income taxes (benefits)			140.2		146.8		(518.40)
Income from continuing operations, net of related income taxes			1,122.6		1,254.3		2,236.4
Income from discontinued operations, net of related income taxes			—		—		37.0
Net income			1,122.6		1,254.3		2,273.4
Net income attributable to noncontrolling interest			9.7		3.3		2.4
Net income attributable to Principal Life Insurance Company		$	1,112.9	$	1,251.0	$	2,271.0

See accompanying notes.

B-4



Principal Life Insurance Company
Consolidated Statements of Comprehensive Income

		For the year ended December 31,
		2019		2018		2017
		(in millions)
Net income		$	1,122.6	$	1,254.3	$	2,273.4
Other comprehensive income (loss), net:
	Net unrealized gains (losses) on available-for-sale securities		2,533.7		(1,513.3)		619.9
	Noncredit component of impairment losses on fixed maturities, available-for-sale		3.0		26.5		27.4
	Net unrealized gains (losses) on derivative instruments		(14.6)		8.0		(49.1)
	Net unrecognized postretirement benefit obligation		43.1		(67.6)		13.3
Other comprehensive income (loss)			2,565.2		(1,546.4)		611.5
Comprehensive income (loss)			3,687.8		(292.1)		2,884.9
Comprehensive income attributable to noncontrolling interest			9.7		3.3		2.4
Comprehensive income (loss) attributable to Principal Life Insurance Company		$	3,678.1	$	(295.4)	$	2,882.5

See accompanying notes.

B-5



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, 2017		$	2.5	$	5,305.6	$	2,139.9	$	748.4	$	42.9	$	8,239.3
Capital distributions to parent			—		(27.5)		—		—		—		(27.5)
Stock-based compensation			—		41.9		(3.0)		—		0.1		39.0
Net true-up of tax asset transferred to affiliate due
	to prior year change in benefit plan sponsorship		—		(3.0)		—		—		—		(3.0)
Dividends to parent			—		—		(1,818.4)		—		—		(1,818.4)
Distributions to noncontrolling interest			—		—		—		—		(3.1)		(3.1)
Contributions from noncontrolling interest			—		—		—		—		6.0		6.0
Purchase of subsidiary shares from noncontrolling
	interest		—		(5.1)		—		—		(1.3)		(6.4)
Sale of subsidiary to parent, net of related income
	taxes, as part of a common control transaction		—		1,034.1		(351.4)		(0.1)		(23.0)		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			—		(21.6)		—		—		—		(21.6)
Stock-based compensation			—		28.6		(2.2)		—		—		26.4
Dividends to parent			—		—		(840.0)		—		—		(840.0)
Distributions to noncontrolling interest			—		—		—		—		(8.3)		(8.3)
Contributions from noncontrolling interest			—		—		—		—		3.0		3.0
Purchase of subsidiary shares from noncontrolling
	interest		—		(21.4)		—		—		(1.6)		(23.0)
Effects of implementation of accounting change
	related to equity investments, net		—		—		(0.1)		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		—		—		(242.0)		242.0		—		—
Net income			—		—		1,251.0		—		3.3		1,254.3
Other comprehensive loss			—		—		—		(1,546.4)		—		(1,546.4)
Balances as of December 31, 2018			2.5		6,331.6		2,441.2		55.5		20.4		8,851.2
Capital distributions to parent			—		(24.2)		—		—		—		(24.2)
Stock-based compensation			—		24.1		(2.3)		—		—		21.8
Dividends to parent			—		—		(1,145.0)		—		—		(1,145.0)
Distributions to noncontrolling interest			—		—		—		—		(14.0)		(14.0)
Contributions from noncontrolling interest			—		—		—		—		7.1		7.1
Effects of implementation of accounting change
	related to leases, net		—		—		4.0		—		—		4.0
Net income			—		—		1,112.9		—		9.7		1,122.6
Other comprehensive income			—		—		—		2,565.2		—		2,565.2
Balances as of December 31, 2019		$	2.5	$	6,331.5	$	2,410.8	$	2,620.7	$	23.2	$	11,388.7

See accompanying notes.

B-6



Principal Life Insurance Company
Consolidated Statements of Cash Flows

		For the year ended December 31,
		2019		2018		2017
		(in millions)
Operating activities
Net income		$	1,122.6	$	1,254.3	$	2,273.4
Adjustments to reconcile net income to net cash provided by operating activities:
	Income from discontinued operations, net of related income taxes		—		—		(37.0)
	Net realized capital (gains) losses		112.2		(92.7)		(372.0)
	Depreciation and amortization expense		121.5		111.6		112.2
	Amortization of deferred acquisition costs and contract costs		353.3		260.6		212.1
	Additions to deferred acquisition costs and contract costs		(480.1)		(419.2)		(397.8)
	Stock-based compensation		22.7		26.6		39.3
	(Income) loss from equity method investments, net of dividends received		(40.6)		(32.5)		9.7
Changes in:
	Accrued investment income		(51.0)		(24.5)		(27.3)
	Net cash flows for trading securities and equity securities with operating intent		(58.6)		(124.8)		171.3
	Premiums due and other receivables		(113.3)		62.2		(360.1)
	Contractholder and policyholder liabilities and dividends		3,287.2		3,324.8		3,251.9
	Current and deferred income taxes (benefits)		187.1		253.0		(616.4)
	Real estate acquired through operating activities		(64.7)		(89.2)		(82.5)
	Real estate sold through operating activities		134.9		133.5		1.2
	Other assets and liabilities		522.4		244.3		(212.8)
Other			398.9		266.5		983.3
Net adjustments			4,331.9		3,900.2		2,675.1
Net cash provided by operating activities			5,454.5		5,154.5		4,948.5
Investing activities
Fixed maturities available-for-sale and equity securities with intent to hold:
	Purchases		(12,781.4)		(12,392.8)		(12,878.8)
	Sales		1,509.6		2,701.9		1,142.6
	Maturities		6,587.1		6,008.4		8,407.5
Mortgage loans acquired or originated			(3,366.5)		(3,299.5)		(2,594.0)
Mortgage loans sold or repaid			2,205.4		2,085.6		1,724.0
Real estate acquired			(127.4)		(88.1)		(200.5)
Real estate sold			94.9		63.5		481.9
Net purchases of property and equipment			(51.3)		(48.1)		(105.7)
Net change in other investments			(237.5)		(355.3)		(127.9)
Net cash used in investing activities			(6,167.1)		(5,324.4)		(4,150.9)
Financing activities
Proceeds from financing element derivatives			—		—		0.1
Payments for financing element derivatives			(26.9)		(65.9)		(77.6)
Purchase of subsidiary shares from noncontrolling interest			—		(23.0)		(6.4)
Dividends paid to parent			(1,145.0)		(840.0)		(1,818.4)
Capital contributions from (distributions to) parent			(24.2)		(21.6)		1,006.6
Issuance of long-term debt			12.0		80.2		2.8
Principal repayments of long-term debt			(32.2)		(1.3)		(56.5)
Net repayments of short-term borrowings			—		—		(76.5)
Investment contract deposits			8,727.6		7,896.0		9,760.5
Investment contract withdrawals			(7,709.4)		(6,520.1)		(9,889.9)
Net increase in banking operation deposits			623.4		553.0		136.6
Other			6.0		(4.5)		(2.5)
Net cash provided by (used in) financing activities			431.3		1,052.8		(1,021.2)
Net increase (decrease) in cash and cash equivalents			(281.3)		882.9		(223.6)
Cash and cash equivalents from continuing operations at beginning of period			1,806.3		923.4		1,147.0
Cash and cash equivalents from continuing operations at end of period		$	1,525.0	$	1,806.3	$	923.4

Discontinued operations (excluded from amounts above):
Net cash provided by operating activities		$	—	$	—	$	47.7
Net cash used in investing activities			—		—		(0.6)
Net cash used in financing activities			—		—		(44.7)
Net cash and cash equivalents provided by discontinued operations		$	—	$	—	$	2.4

Supplemental information:
Cash paid for interest		$	6.1	$	3.1	$	3.9
Cash paid for (received from) income taxes		$	(62.9)	$	(91.2)	$	91.0

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		$	1,225.8	$	—	$	—
Lease assets established upon adoption of accounting guidance		$	102.2	$	—	$	—
Lease liabilities established upon adoption of accounting guidance		$	97.2	$	—	$	—
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.

B-7

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2019

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 13, 2020, 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.

B-8

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2022	Our implementation and evaluation process to date includes, but is not limited to the following: • identifying and documenting contracts and contract features in scope of the guidance; • identifying the actuarial models, systems and processes to be updated; • evaluating and selecting our systems solutions for implementing the new guidance; • beginning to build key models; • evaluating our key accounting policies; • assessing the impact to our chart of accounts; • developing format and content of new disclosures and • evaluating transition requirements and impacts. 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.
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 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 of eliminating the Step 2 test from any such future impairment assessment will be dependent on modeling factors that are not currently determinable. We do not expect this guidance to have a material impact on our consolidated financial statements.

B-9

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
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	The guidance will be adopted using the modified retrospective approach. Our evaluation process is complete and included, but was not limited to, identifying financial assets within scope of the guidance, developing and refining CECL models for the relevant assets, preparing quarterly estimates of the cumulative effect of adoption, developing and refining necessary internal controls and preparing the required financial statement disclosures. The financial statement changes are not material and will result in an immaterial reduction to stockholder’s equity.
Standards adopted:
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 elected to early-adopt this guidance on a prospective basis, effective January 1, 2019. This guidance did 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 previously the measurement was 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 did not have a material impact on our consolidated financial statements.

B-10

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
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	We adopted the guidance using the modified retrospective approach and comparative periods were not restated. Further details are included under the caption “Adoption of Lease Guidance” and in Note 14, Contingencies, Guarantees, Indemnifications and Leases.
Targeted improvements to accounting for hedging activities This authoritative guidance updated 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 included 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 included new disclosures.	January 1, 2019	This guidance did not have a material impact on our consolidated financial statements. See Note 7, Derivative Financial Instruments, for further details.
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.	January 1, 2019	This guidance did not have a material impact on our consolidated financial statements.

B-11

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
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. A cumulative effect adjustment of $36.4 million was recorded as an increase to total stockholder’s equity. See Note 18, Revenues from Contracts with Customers, for further details.
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.

B-12

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



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. 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.
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.

B-13

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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 Lease Guidance

On January 1, 2019, we adopted the guidance using the modified retrospective approach with the cumulative effect of initially applying the standard recognized at the date of adoption. We elected the package of practical expedients permitted under the transition guidance. In addition, we elected the hindsight practical expedient to determine the lease term for existing leases. We have agreements with lease and non-lease components, which we account for as a combined unit of account for all classes.

The impact of the guidance to our consolidated financial statements primarily related to the establishment of additional assets and liabilities of $102.2 million and $97.2 million, respectively. The difference between the additional assets and liabilities, net of deferred tax impacts, was recorded as a cumulative effect adjustment to retained earnings and increased total stockholder’s equity by $4.0 million.

Results of reporting periods beginning January 1, 2019, are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with our prior accounting. The guidance did not have a material impact on our consolidated statements of operations.

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 (“EGPs”);


•	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.

B-14

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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 prior to 2019 and mark-to-market adjustments on fixed maturities, trading are reflected in net realized capital gains (losses). Beginning in 2019, unrealized gains and losses related to hedged portions of fixed maturities, available-for-sale in fair value hedging relationships are reflected in net investment income. 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 amortized cost of fixed maturities includes cost adjusted for amortization of premiums and discounts, computed using the interest method. The amortized cost of fixed maturities classified as available-for-sale is adjusted for changes in fair value of hedged portions of securities in fair value hedging relationships and 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 $169.0 million and $207.7 million as of December 31, 2019 and 2018, 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, mark-to-market adjustments on derivatives not designated as hedges, cash flow hedge gains (losses) when the hedged item impacts realized capital gains (losses), 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).

B-15

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Policy loans and certain other investments are reported at cost. Interests in unconsolidated entities, joint ventures and partnerships are generally accounted for using the equity method. We have other investments reported at fair value or for which the fair value option has been elected 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 the same income statement line item that is used to report the earnings effect of the hedged item. For fair value hedges of fixed maturities, available-for-sale, these changes in fair value are reported in net investment income. Prior to 2019, these changes in fair value were recorded in net realized capital gains (losses). A fair value hedge determined to be highly effective may still result in a mismatch between the change in the fair value of the hedging instrument and the change in the fair value of the hedged item attributable to the hedged risk.

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. 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 hedge is determined to be highly effective, the hedge may still result in a mismatch between the change in the fair value of the hedging instrument and the change in the fair value of the hedged item attributable to the hedged risk.

B-16

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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

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

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

B-17

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Participating business represented approximately 6%, 7% and 8% of our life insurance in force and 23%, 26% and 29% of the number of life insurance policies in force as of December 31, 2019, 2018 and 2017, respectively. Participating business represented approximately 31%, 34% and 39% of life insurance premiums for the years ended December 31, 2019, 2018 and 2017, respectively. The amount of dividends to policyholders is declared annually by our Board of Directors. The amount of dividends to be paid to policyholders is determined after consideration of several factors including interest, mortality, morbidity and other expense experience for the year and judgment as to the appropriate level of statutory surplus to be retained by us. At the end of the reporting period, we establish 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 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 2019.

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.

B-18

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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.

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, critical illness, accident 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, insurance companies, endowments and other financial institutions 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.

B-19

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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.

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.

DAC on short-duration group benefits policies are amortized over the estimated term of the underlying contracts.

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, 2019 and 2018, we had $465.3 million and $450.4 million of net ceded reinsurance recoverables related to claims that have been received, respectively. As of December 31, 2019 and 2018, $457.2 million, or 98%, and $435.6 million, or 97%, 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, 2019 and 2018, the total amount recoverable from reinsurers was $961.4 million and $920.8 million, respectively, and is recognized in premiums due and other receivables.

B-20

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Premiums and other considerations:
	Direct	$	7,656.0	$	6,284.8	$	6,202.7
	Assumed		379.7		327.1		279.8
	Ceded		(562.4)		(519.5)		(483.1)
Net premiums and other considerations		$	7,473.3	$	6,092.4	$	5,999.4

Benefits, claims and settlement expenses:
	Direct	$	9,162.3	$	7,528.2	$	7,296.3
	Assumed		581.6		509.8		441.1
	Ceded		(576.4)		(496.0)		(419.5)
Net benefits, claims and settlement expenses		$	9,167.5	$	7,542.0	$	7,317.9

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, 2019 and 2018, the separate accounts included a separate account valued at $100.4 million and $94.9 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. 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.”

B-21

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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
		(in millions)
Revenues
Fees and other revenues		$	155.9
Net investment income			42.7
Net realized capital gains			1.8
	Total revenues		200.4
Expenses
Operating expenses			148.5
	Total expenses		148.5
Income before income taxes			51.9
Income taxes			14.9
Income from discontinued operations			37.0
Income from discontinued operations attributable to
	noncontrolling interest		1.5
Income from discontinued operations attributable to parent		$	35.5

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, 2019, 2018 and 2017, we received $607.1 million, $520.7 million and $431.9 million, respectively, of expense reimbursements from affiliated entities.

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/(payable to) PFS of $(52.9) million and $64.2 million as of December 31, 2019 and 2018, respectively, and earned interest of $4.3 million, $4.9 million and $1.7 million during 2019, 2018 and 2017, respectively.

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 $3,958.9 million and $3,399.2 million as of December 31, 2019 and 2018, respectively. In addition, we recognized premiums and other fees of $672.3 million, $555.4 million and $498.9 million for the years ended December 31, 2019, 2018 and 2017, respectively, associated with this agreement. Furthermore, we recognized expenses of $869.1 million, $776.1 million and $700.3 million for the years ended December 31, 2019, 2018 and 2017, respectively, associated with this agreement.

B-22

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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 $100.1 million, $103.6 million and $65.7 million of asset management fee expense for the years ended December 31, 2019, 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 $9.8 million, $11.1 million and $9.4 million for the years ended December 31, 2019, 2018 and 2017, 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 were $392.7 million, $412.0 million and $433.8 million for the years ended December 31, 2019, 2018 and 2017, respectively. In addition, we pay commission expense to affiliated registered representatives within Principal Securities, Inc. to sell proprietary products. Commission expense was $88.7 million, $82.6 million and $84.8 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Benefit Plans

PFG is the sponsor of the qualified defined contribution plans for both employees and individual field agents. We were allocated plan expenses from PFG of $32.9 million, $32.1 million and $31.6 million during 2019, 2018 and 2017, respectively.

PFG is also the sponsor of the nonqualified deferred compensation plans for select employees and individual field agents. We were allocated plan expenses from PFG of $1.9 million, $2.0 million and $2.4 million during 2019, 2018 and 2017, respectively.

PFG is the sponsor of the defined benefit pension plans for both employees and individual field agents. We were allocated $46.7 million, $51.2 million and $48.4 million of pension expense from PFG during 2019, 2018 and 2017, respectively.

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.

B-23

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

4. Goodwill and Other Intangible Assets

Goodwill

The carrying amount of goodwill did not change during 2019 and 2018.

Finite Lived Intangible Assets

Amortized intangible assets that continue to be subject to amortization over a weighted average remaining expected life of 14 years were as follows:



	December 31,
	2019		2018
	(in millions)
Gross carrying value	$	41.4	$	41.4
Accumulated amortization		21.8		19.2
Net carrying value	$	19.6	$	22.2

The amortization expense for intangible assets with finite useful lives was $2.6 million, $2.6 million and $2.6 million for 2019, 2018 and 2017, respectively. As of December 31, 2019, the estimated amortization expense for the next five years is as follows (in millions):



Year ending December 31:
	2020	$	2.4
	2021		2.2
	2022		2.0
	2023		1.2
	2024		1.1

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, 2019 and December 31, 2018.

Consolidated Variable Interest Entities

Grantor Trust

We contributed undated subordinated floating rate notes to a grantor trust. The trust separated its cash flows by issuing an interest-only certificate and a residual certificate related to each note contributed. Each interest-only certificate entitles the holder to interest on the stated note for a specified term, while the residual certificate entitles the holder to interest payments subsequent to the term of the interest-only certificate and to all principal payments. We retained the interest-only certificates and the residual certificates were subsequently sold to third parties. We determined the grantor trust is a VIE due to insufficient equity to sustain it. We determined we are the primary beneficiary as a result of our contribution of securities into the trust and our significant continuing interest in the trust.

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 was considered a VIE due to insufficient equity to sustain itself. We determined we were 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. The trust was unwound in the third quarter of 2019.

B-24

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019				December 31, 2018
	Total		Total		Total		Total
	assets		liabilities		assets		liabilities
	(in millions)
Grantor trust (1)	$	99.9	$	98.6	$	95.0	$	89.4
CMBS		—		—		6.4		—
Real estate (2)		479.7		88.0		379.2		70.6
Sponsored investment fund (3)		19.9		—		37.7		—
Total	$	599.5	$	186.6	$	518.3	$	160.0


(1)	The assets of the grantor trust 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.

Unconsolidated VIEs include certain CMBS, residential mortgage-backed pass-through securities ("RMBS") and other ABS. All of these entities were deemed VIEs because the equity within these entities is insufficient to sustain them. We determined we are not the primary beneficiary in the entities within these categories of investments. This determination was based primarily on the fact we do not own the class of security that controls the unilateral right to replace the special servicer or equivalent function.

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.

B-25

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, invest in and have other interests 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.

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, 2019
Fixed maturities, available-for-sale:
	Corporate	$	238.2	$	225.7
	Residential mortgage-backed pass-through securities		2,844.2		2,777.5
	Commercial mortgage-backed securities		4,802.7		4,700.8
	Collateralized debt obligations (2)		3,211.2		3,222.6
	Other debt obligations		8,075.4		7,961.4
Fixed maturities, trading:
	Residential mortgage-backed pass-through securities		14.1		14.1
	Commercial mortgage-backed securities		28.1		28.1
	Collateralized debt obligations (2)		20.9		20.9
	Other debt obligations		13.3		13.3
Other investments:
	Other limited partnership and fund interests		635.2		899.1

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)		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

(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 and similar provisions 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.

B-26

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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:



										Other-than-
				Gross		Gross				temporary
		Amortized		unrealized		unrealized				impairments in
		cost		gains		losses		Fair value		AOCI (1)
		(in millions)
December 31, 2019
Fixed maturities, available-for-sale:
	U.S. government and agencies	$	1,562.7	$	97.2	$	3.0	$	1,656.9	$	—
	Non-U.S. governments		724.6		128.4		—		853.0		—
	States and political subdivisions		6,791.7		639.2		11.5		7,419.4		—
	Corporate		34,057.5		3,086.3		32.7		37,111.1		—
	Residential mortgage-backed pass-through securities		2,777.5		70.5		3.8		2,844.2		—
	Commercial mortgage-backed securities		4,700.8		125.7		23.8		4,802.7		15.8
	Collateralized debt obligations (2)		3,222.6		2.8		14.2		3,211.2		0.9
	Other debt obligations		7,970.8		129.0		14.9		8,084.9		31.8
Total fixed maturities, available-for-sale		$	61,808.2	$	4,279.1	$	103.9	$	65,983.4	$	48.5

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


(1)	Excludes $62.3 million and $64.2 million as of December 31, 2019 and December 31, 2018, 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, 2019, by expected maturity, were as follows:



	Amortized cost		Fair value
	(in millions)
Due in one year or less	$	2,052.0	$	2,063.8
Due after one year through five years		9,590.6		9,931.5
Due after five years through ten years		11,538.3		12,270.5
Due after ten years		19,955.6		22,774.6
Subtotal		43,136.5		47,040.4
Mortgage-backed and other asset-backed securities		18,671.7		18,943.0
Total	$	61,808.2	$	65,983.4

Actual maturities may differ because borrowers may have the right to call or prepay obligations. Our portfolio is diversified by industry, issuer and asset class. Credit concentrations are managed to established limits.

B-27

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Net Investment Income

Major components of net investment income were as follows:



	For the year ended December 31,
	2019		2018		2017
	(in millions)
Fixed maturities, available-for-sale (1)	$	2,406.5	$	2,249.8	$	2,143.2
Fixed maturities, trading		9.1		6.5		4.3
Equity securities, available-for-sale		—		—		5.4
Equity securities		4.7		4.6		—
Mortgage loans		651.3		587.8		563.5
Real estate		191.0		158.4		129.1
Policy loans		39.7		39.9		40.5
Cash and cash equivalents		39.5		33.5		12.0
Derivatives (1)		(2.0)		0.1		(3.2)
Other		106.0		83.6		96.6
Total		3,445.8		3,164.2		2,991.4
Investment expenses		(151.9)		(141.3)		(157.7)
Net investment income	$	3,293.9	$	3,022.9	$	2,833.7

(1)

Upon adoption of authoritative guidance effective January 1, 2019, the change in fair value of fixed maturities, available-for-sale and the change in fair value of derivative hedging instruments in fair value hedging relationships are reported in net investment income with the earnings effect of fixed maturities, available-for-sale. Prior to 2019, the change in fair value of fixed maturities, available-for-sale and the change in fair value of derivative hedging instruments in fair value hedging relationships were reported in net realized capital gains (losses). See Note 7, Derivative Financial Instruments, for further details.

B-28

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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,
		2019		2018		2017
		(in millions)
Fixed maturities, available-for-sale:
	Gross gains	$	7.9	$	6.8	$	10.3
	Gross losses		(11.4)		(68.8)		(22.7)
	Net impairment losses		(43.5)		(29.1)		(79.6)
	Hedging, net (1)		(9.3)		(39.6)		(28.5)
Fixed maturities, trading (2)			14.4		(7.7)		1.4
Equity securities, available-for-sale:
	Net impairment losses		—		—		(0.1)
Equity securities, trading (3)			—		—		(1.3)
Equity securities (4)			8.2		0.8		—
Mortgage loans			3.3		6.4		9.2
Derivatives (1)			(58.2)		79.2		(195.8)
Other (5)			(23.6)		144.7		679.1
Net realized capital gains (losses)		$	(112.2)	$	92.7	$	372.0

(1)


(2)	Unrealized gains (losses) on fixed maturities, trading still held at the reporting date were $14.1 million, $(7.6) million and $2.7 million for the years ended December 31, 2019, 2018 and 2017, respectively.


(3)	Unrealized losses on equity securities, trading still held at the reporting date were $1.2 million for the year ended December 31, 2017.


(4)	Unrealized gains (losses) on equity securities still held at the reporting date were $7.6 million and $(12.5) million for the years ended December 31, 2019 and 2018, respectively.


(5)	Other gains in 2018 primarily include a gain from the sale of an equity method investment. Further details relating to other gains in 2017 are included under the caption “Real Estate Transactions.”

Proceeds from sales of investments (excluding call and maturity proceeds) in fixed maturities, available-for-sale were $1,489.3 million, $2,658.1 million and $1,149.8 million in 2019, 2018 and 2017, 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.

B-29

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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) 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.

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,
		2019		2018		2017
		(in millions)
Fixed maturities, available-for-sale		$	(38.3)	$	10.6	$	(29.9)
Equity securities, available-for-sale			—		—		(0.1)
Total other-than-temporary impairment losses, net of recoveries from
	the sale of previously impaired securities		(38.3)		10.6		(30.0)
Other-than-temporary impairment losses on fixed maturities,
	available-for-sale reclassified from OCI (1)		(5.2)		(39.7)		(49.7)
Net impairment losses on available-for-sale securities		$	(43.5)	$	(29.1)	$	(79.7)

(1) Represents the net impact of (a) gains resulting from reclassification of noncredit impairment losses for fixed maturities

with bifurcated OTTI from net realized capital gains (losses) to OCI and (b) losses resulting from reclassification of

previously recognized noncredit impairment losses from OCI to net realized capital gains (losses) for fixed maturities

with bifurcated OTTI that had additional credit losses or fixed maturities that previously had bifurcated OTTI that have

now been sold or are intended to be sold.

We estimate the amount of the credit loss component of a fixed maturity security impairment as the difference between amortized cost and the present value of the expected cash flows of the security. The present value is determined using the best estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. The ABS cash flow estimates are based on security specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds and structural support, including subordination and guarantees. The corporate security cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or liquidations using bond specific facts and circumstances including timing, security interests and loss severity.

B-30

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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,
		2019		2018		2017
		(in millions)
Beginning balance		$	(117.5)	$	(124.3)	$	(134.7)
Credit losses for which an other-than-temporary impairment was
	not previously recognized		(6.8)		(11.3)		(15.0)
Credit losses for which an other-than-temporary impairment was
	previously recognized		(11.8)		(20.0)		(42.5)
Reduction for credit losses previously recognized on fixed maturities
	now sold, paid down or intended to be sold		54.3		29.5		57.9
Net reduction for positive changes in cash flows expected
	to be collected and amortization (1)		0.8		8.6		10.0
Ending balance		$	(81.0)	$	(117.5)	$	(124.3)

(1) Amounts are recognized in net investment income.

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, 2019
			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		$	100.0	$	1.9	$	74.2	$	1.1	$	174.2	$	3.0
	Non-U.S. governments			1.3		—		—		—		1.3		—
	States and political subdivisions			557.6		11.1		86.3		0.4		643.9		11.5
	Corporate			985.5		9.1		360.7		23.6		1,346.2		32.7
	Residential mortgage-backed pass-
		through securities		416.8		1.4		237.4		2.4		654.2		3.8
	Commercial mortgage-backed
		securities		829.3		9.2		260.4		14.6		1,089.7		23.8
	Collateralized debt obligations (1)			639.4		1.8		1,445.3		12.4		2,084.7		14.2
	Other debt obligations			1,772.8		9.5		613.7		5.4		2,386.5		14.9
Total fixed maturities, available-for-sale			$	5,302.7	$	44.0	$	3,078.0	$	59.9	$	8,380.7	$	103.9


(1)	Primarily consists of collateralized loan obligations backed by secured corporate loans.

B-31

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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 99 (carrying value/amortized cost) as of December 31, 2019. Gross unrealized losses in our fixed maturities portfolio decreased during the year ended December 31, 2019, primarily due to a decrease in interest rates and 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 882 securities reflecting an average price of 99 as of December 31, 2019. Of this portfolio, 98% was investment grade (rated AAA through BBB-) as of December 31, 2019, with associated unrealized losses of $43.1 million. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.

For those securities that had been in a continuous unrealized loss position greater than or equal to twelve months, our consolidated portfolio held 502 securities reflecting an average price of 98 and an average credit rating of AA+ as of December 31, 2019. Corporate securities with unrealized losses had an average price of 94 and an average credit rating of BBB-. Commercial mortgage-backed securities with unrealized losses had an average price of 95 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, 2019.



			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.

B-32

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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.

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, 2019		December 31, 2018
		(in millions)
Net unrealized gains on fixed maturities, available-for-sale (1)		$	4,205.7	$	37.8
Noncredit component of impairment losses on fixed maturities, available-for-sale			(48.5)		(53.7)
Net unrealized gains on derivative instruments			94.1		123.3
Adjustments for assumed changes in amortization patterns			(261.0)		30.3
Adjustments for assumed changes in policyholder liabilities			(687.7)		(41.2)
Net unrealized gains on other investments and noncontrolling interest
	adjustments		5.9		15.8
Provision for deferred income taxes			(696.0)		(21.9)
Net unrealized gains on available-for-sale securities and derivative instruments		$	2,612.5	$	90.4


(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, 2019		December 31, 2018
		(in millions)
Commercial mortgage loans		$	14,758.4	$	13,780.7
Residential mortgage loans			1,088.2		908.3
	Total amortized cost		15,846.6		14,689.0

Valuation allowance			(26.3)		(26.8)
Total carrying value		$	15,820.3	$	14,662.2

B-33

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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,
		2019		2018		2017
		(in millions)
Commercial mortgage loans:
	Purchased	$	133.9	$	24.7	$	44.4
Residential mortgage loans:
	Purchased		422.8		337.5		276.5
	Sold		—		—		89.3

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, 2019					December 31, 2018
	Amortized		Percent			Amortized		Percent
	cost		of total			cost		of total
	($ in millions)
Geographic distribution
New England	$	615.0		4.2	%	$	642.2		4.7	%
Middle Atlantic		4,151.7		28.2			3,937.9		28.6
East North Central		626.2		4.2			594.7		4.3
West North Central		237.7		1.6			206.2		1.5
South Atlantic		2,324.4		15.7			2,211.9		16.1
East South Central		439.4		3.0			423.3		3.1
West South Central		1,454.7		9.9			1,216.8		8.8
Mountain		934.4		6.3			970.8		7.0
Pacific		3,974.9		26.9			3,576.9		25.9
Total	$	14,758.4		100.0	%	$	13,780.7		100.0	%

Property type distribution
Office	$	4,899.9		33.2	%	$	4,637.6		33.7	%
Retail		2,056.9		13.9			2,310.0		16.8
Industrial		2,274.5		15.4			2,319.1		16.8
Apartments		5,263.6		35.7			4,262.5		30.9
Hotel		91.2		0.6			100.1		0.7
Mixed use/other		172.3		1.2			151.4		1.1
Total	$	14,758.4		100.0	%	$	13,780.7		100.0	%

Our residential mortgage loan portfolio is composed of first lien mortgages with an amortized cost of $1,077.2 million and $893.2 million and home equity mortgages with an amortized cost of $11.0 million and $15.1 million as of December 31, 2019 and December 31, 2018, respectively. Our residential home equity mortgages are generally second lien mortgages comprised of closed-end loans and lines of credit.

B-34

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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.

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, 2019
	Brick and mortar		CTL		Total
	(in millions)
A- and above	$	13,698.0	$	76.9	$	13,774.9
BBB+ thru BBB-		877.8		83.8		961.6
BB+ thru BB-		21.9		—		21.9
Total	$	14,597.7	$	160.7	$	14,758.4

	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

B-35

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019
	First liens		Home equity		Total
	(in millions)
Performing	$	1,074.7	$	8.0	$	1,082.7
Non-performing		2.5		3.0		5.5
Total	$	1,077.2	$	11.0	$	1,088.2

	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

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.

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



		December 31, 2019		December 31, 2018
		(in millions)
Residential:
	First liens	$	2.5	$	2.9
	Home equity		3.0		4.3
Total		$	5.5	$	7.2

B-36

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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



	December 31, 2019
					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	$	—	$	—	$	—	$	—	$	14,597.7	$	14,597.7
Commercial-CTL		—		—		—		—		160.7		160.7
Residential-first liens		8.5		0.3		2.1		10.9		1,066.3		1,077.2
Residential-home equity		0.8		—		0.3		1.1		9.9		11.0
Total	$	9.3	$	0.3	$	2.4	$	12.0	$	15,834.6	$	15,846.6

	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

We did not have any mortgage loans that were 90 days or more past due and still accruing interest as of either December 31, 2019 or December 31, 2018.

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.

B-37

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

The valuation allowance is maintained at a level believed adequate by management to absorb estimated probable credit losses. Management's periodic evaluation and assessment of the valuation allowance adequacy is based on known and inherent risks in the portfolio, adverse situations that may affect a borrower's ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, portfolio delinquency information, underwriting standards, peer group information, current economic conditions, loss experience and other relevant factors. The evaluation of our impaired loan component is subjective, as it requires the estimation of timing and amount of future cash flows expected to be received on impaired loans.

We review our commercial mortgage loan portfolio and analyze the need for a valuation allowance for any loan that is delinquent for 60 days or more, in process of foreclosure, restructured, on the internal “watch list” or that currently has a valuation allowance. In addition to establishing allowance levels for specifically identified impaired commercial mortgage loans, management determines an allowance for all other loans in the portfolio for which historical experience and current economic conditions indicate certain losses exist. These loans are segregated by risk rating level with an estimated loss ratio applied against each risk rating level. The loss ratio is generally based upon historical loss experience for each risk rating level as adjusted for certain current environmental factors management believes to be relevant.

For our residential mortgage loan portfolio, we separate the loans into several homogeneous pools, each of which consist of loans of a similar nature including but not limited to loans similar in collateral, term and structure and loan purpose or type. We evaluate loan pools based on aggregated risk ratings, estimated specific loss potential in the different classes of credits, and historical loss experience by pool type. We adjust these quantitative factors for qualitative factors of present conditions. Qualitative factors include items such as economic and business conditions, changes in the portfolio, value of underlying collateral and concentrations. Residential mortgage loan pools exclude loans that have been restructured or impaired, as those loans are evaluated individually.

B-38

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019
Beginning balance		$	24.3	$	2.5	$	26.8
	Provision		0.2		(3.4)		(3.2)
	Charge-offs		—		(0.5)		(0.5)
	Recoveries		—		3.2		3.2
Ending balance		$	24.5	$	1.8	$	26.3
Allowance ending balance by basis of impairment method:
	Individually evaluated for impairment	$	—	$	1.2	$	1.2
	Collectively evaluated for impairment		24.5		0.6		25.1
Allowance ending balance		$	24.5	$	1.8	$	26.3
Loan balance by basis of impairment method:
	Individually evaluated for impairment	$	—	$	6.3	$	6.3
	Collectively evaluated for impairment		14,758.4		1,081.9		15,840.3
Loan ending balance		$	14,758.4	$	1,088.2	$	15,846.6

For the year ended December 31, 2018
Beginning balance		$	25.8	$	6.4	$	32.2
	Provision		(1.5)		(4.6)		(6.1)
	Charge-offs		—		(2.4)		(2.4)
	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		(1.6)		(10.5)		(12.1)
	Charge-offs		—		(5.0)		(5.0)
	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

B-39

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019
				Unpaid
		Recorded		principal		Related
		investment		balance		allowance
		(in millions)
With no related allowance recorded:
	Residential-first liens	$	0.8	$	—	$	—
With an allowance recorded:
	Residential-first liens		1.7		—		—
	Residential-home equity		3.8		5.0		1.2
Total:
	Residential	$	6.3	$	5.0	$	1.2

		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

B-40

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



		Average
		recorded		Interest income
		investment		recognized
		(in millions)
For the year ended December 31, 2019
With no related allowance recorded:
	Residential-first liens	$	1.2	$	—
With an allowance recorded:
	Residential-first liens		1.9		—
	Residential-home equity		4.6		0.1
Total:
	Residential	$	7.7	$	0.1

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

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 2019, 2018 and 2017.

B-41

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Real Estate

Depreciation expense on invested real estate was $60.3 million, $54.1 million and $55.9 million in 2019, 2018 and 2017, respectively. Accumulated depreciation was $525.9 million and $487.0 million as of December 31, 2019 and 2018, 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, and resulted in a net pre-tax realized capital gain of $690.9 million (net after-tax realized capital gain of $410.8 million).

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,
			2019		2018
			(in millions)
Total assets			$	73,594.5	$	61,696.6
Total liabilities				11,862.4		11,589.8
Total equity			$	61,732.1	$	50,106.8
Net investment in unconsolidated entities			$	756.3	$	744.6

	For the year ended December 31,
	2019		2018		2017
	(in millions)
Total revenues	$	10,548.6	$	8,968.6	$	6,561.9
Net income		6,991.8		5,491.6		3,319.6
Our share of net income of unconsolidated entities		55.3		57.7		83.3

In addition, other investments include $734.1 million and $502.6 million of cash surrender value of company owned life insurance as of December 31, 2019 and 2018, 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.

Securities Posted as Collateral

As of December 31, 2019 and 2018, we posted $4,062.0 million and $3,761.3 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, 2019 and 2018, we posted $2,633.2 million and $2,383.0 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, 2019 and 2018, $163.9 million and $124.2 million, respectively, could be sold or repledged by the secured party.

B-42

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019
Derivative assets	$	279.6	$	(80.2)	$	(197.6)	$	1.8
December 31, 2018
Derivative assets	$	172.6	$	(63.7)	$	(101.6)	$	7.3


(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.

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, 2019
Derivative liabilities	$	147.0	$	(80.2)	$	(57.5)	$	9.3
December 31, 2018
Derivative liabilities	$	104.4	$	(63.7)	$	(34.3)	$	6.4

(1)

The gross amount of recognized derivative liabilities is reported with other liabilities on the consolidated statements of financial position. The above excludes $249.9 million and $94.6 million of derivative liabilities as of December 31, 2019 and December 31, 2018, 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.

B-43

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019 and December 31, 2018.

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.

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 purchase swaptions to hedge interest rate exposure for certain assets and liabilities. 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 issued to nonqualified institutional investors in the international market and foreign currency-denominated fixed maturities we invest in. We use currency swaps to manage our exposure to fluctuations in foreign currency exchange rates.

B-44

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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.

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.

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 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.

B-45

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Exposure

Our risk of loss is typically limited to the fair value of our derivative instruments and not to the notional or contractual amounts of these derivatives. We are also exposed to credit losses in the event of nonperformance of the counterparties. Our current credit exposure is limited to the value of derivatives that have become favorable to us. This credit risk is minimized by purchasing such agreements from financial institutions with high credit ratings and by establishing and monitoring exposure limits. We also utilize various credit enhancements, including collateral and credit triggers to reduce the credit exposure to our derivative instruments.

Derivatives may be exchange-traded or they may be privately negotiated contracts, which are usually referred to as over-the-counter (“OTC”) derivatives. Certain of our OTC derivatives are cleared and settled through central clearing counterparties (“OTC cleared”), while others are bilateral contracts between two counterparties (“bilateral OTC”). Our derivative transactions are generally documented under International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements. Management believes that such agreements provide for legally enforceable set-off and close-out netting of exposures to specific counterparties. Under such agreements, in connection with an early termination of a transaction, we are permitted to set off our receivable from a counterparty against our payables to the same counterparty arising out of all included transactions. For reporting purposes, we do not offset fair value amounts 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 $148.9 million and $88.7 million in cash and securities under collateral arrangements as of December 31, 2019 and December 31, 2018, 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, 2019 and December 31, 2018, was $151.1 million and $108.7 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 $148.9 million and $88.7 million as of December 31, 2019 and December 31, 2018, 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, 2019, we would be required to post an additional $42.5 million of collateral to our counterparties.

As of December 31, 2019 and December 31, 2018, we had received $156.8 million and $70.1 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.

B-46

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019		December 31, 2018
		(in millions)
Notional amounts of derivative instruments
Interest rate contracts:
	Interest rate swaps	$	35,173.6	$	34,393.7
	Interest rate options		1,416.9		1,126.9
	Interest rate futures		142.5		260.0
	Swaptions		62.0		—
Foreign exchange contracts:
	Currency swaps		784.0		697.7
Equity contracts:
	Equity options		1,672.8		1,522.5
	Equity futures		149.5		491.7
Credit contracts:
	Credit default swaps		165.0		420.0
Other contracts:
	Embedded derivatives		8,869.5		8,793.9
Total notional amounts at end of period		$	48,435.8	$	47,706.4

Credit exposure of derivative instruments
Interest rate contracts:
	Interest rate swaps	$	181.9	$	95.4
	Interest rate options		28.3		16.3
Foreign exchange contracts:
	Currency swaps		45.2		54.4
Equity contracts:
	Equity options		30.5		7.7
Credit contracts:
	Credit default swaps		0.5		2.4
Total gross credit exposure			286.4		176.2
Less: collateral received			208.3		104.6
Net credit exposure		$	78.1	$	71.6

B-47

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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



		Derivative assets (1)				Derivative liabilities (2)
		December 31, 2019		December 31, 2018		December 31, 2019		December 31, 2018
		(in millions)
Derivatives designated as hedging
	instruments
Interest rate contracts		$	—	$	—	$	21.3	$	16.1
Foreign exchange contracts			30.0		37.6		15.2		13.5
Total derivatives designated as hedging
	instruments	$	30.0	$	37.6	$	36.5	$	29.6

Derivatives not designated as hedging
	instruments
Interest rate contracts		$	204.2	$	108.0	$	16.7	$	22.6
Foreign exchange contracts			14.4		17.0		29.5		20.2
Equity contracts			30.5		7.7		63.1		27.6
Credit contracts			0.5		2.3		1.2		4.4
Other contracts			—		—		249.9		94.6
Total derivatives not designated as hedging
	instruments		249.6		135.0		360.4		169.4

Total derivative instruments		$	279.6	$	172.6	$	396.9	$	199.0

(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 $151.2 million and $5.3 million as of December 31, 2019 and December 31, 2018, 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, 2019 and December 31, 2018, 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.

B-48

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019
									Weighted
							Maximum		average
			Notional		Fair		future		expected life
			amount		value		payments		(in years)
			(in millions)
Single name credit default swaps
	Corporate debt
		A	$	5.0	$	—	$	5.0		0.5
		BBB		70.0		0.2		70.0		2.6
	Sovereign
		BBB		15.0		0.3		15.0		2.0
Total credit default swap protection sold			$	90.0	$	0.5	$	90.0		2.4



			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		(3.6)		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	$	(2.3)	$	325.0		1.4

Fair Value and Cash Flow Hedges

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.

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.

B-49

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

The following amounts were recorded on the consolidated statements of financial position related to cumulative basis adjustments for fair value hedges. The amortized cost includes the amortized cost basis and the fair value hedging basis adjustment.



						Cumulative amount of fair
						value hedging basis adjustment
Line item in the consolidated statements						included in the amortized cost
of financial position in which the		Amortized cost of hedged item				of the hedged item
hedged item is included		December 31, 2019		December 31, 2018		December 31, 2019		December 31, 2018
		(in millions)
Fixed maturities, available-for-sale:
	Active hedging relationships	$	142.0	$	137.0	$	18.1	$	12.4
	Discontinued hedging relationships		159.3		298.9		7.7		13.3
Total fixed maturities, available-for-sale in
	active or discontinued hedging relationships	$	301.3	$	435.9	$	25.8	$	25.7

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.

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 0.5 years. As of December 31, 2019, 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.

The following table shows the effect of derivatives in cash flow hedging relationships on the consolidated statements of financial position.



		Amount of gain (loss) recognized in AOCI on derivatives
Derivatives in cash flow		for the year ended December 31,
hedging relationships	Related hedged item	2019		2018		2017
		(in millions)
Interest rate contracts	Fixed maturities, available-for-sale	$	(9.9)	$	36.7	$	(51.7)
Foreign exchange contracts	Fixed maturities, available-for-sale		(9.4)		20.8		(68.5)
Foreign exchange contracts	Investment contracts		—		(0.1)		—
Total		$	(19.3)	$	57.4	$	(120.2)

We expect to reclassify net gains of $24.3 million from AOCI into net income in the next 12 months, which includes both net deferred gains on discontinued hedges and net losses on periodic settlements of active hedges. Actual amounts may vary from this amount as a result of market conditions.

B-50

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations

The following tables show the effect of derivatives in fair value and cash flow hedging relationships and the related hedged items on the consolidated statements of operations.



			For the year ended December 31, 2019
							Benefits,
			Net investment		Net realized		claims and
			income related		capital gains		settlement
			to hedges		(losses) related to		expenses
			of fixed		hedges of fixed		related to
			maturities,		maturities,		hedges of
			available-		available-		investment
			for-sale		for-sale		contracts
			(in millions)
Total amounts of consolidated statement of operations line items in
	which the effects of fair value and cash flow hedges are reported		$	3,293.9	$	(112.2)	$	9,167.5


Losses on fair value hedging relationships:
Interest rate contracts:
	Gain recognized on hedged item		$	5.7	$	—	$	—
	Loss recognized on derivatives			(6.0)		—		—
	Amortization of hedged item basis adjustments			(4.2)		—		—
	Amounts related to periodic settlements on derivatives			(3.4)		—		—
Total loss recognized for fair value hedging relationships			$	(7.9)	$	—	$	—

Gains (losses) on cash flow hedging relationships:
Interest rate contracts:
	Gain (loss) reclassified from AOCI on derivatives		$	19.8	$	(0.6)	$	(0.1)
	Gain reclassified from AOCI into net income as a result that a
		forecasted transaction is no longer probable of occurring		—		0.1		—

Foreign exchange contracts:
	Gain reclassified from AOCI on derivatives			—		9.5		—
	Amounts related to periodic settlements on derivatives			7.4		—		—
Total gain (loss) recognized for cash flow hedging relationships			$	27.2	$	9.0	$	(0.1)

B-51

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



			For the year ended December 31, 2018
							Benefits,
			Net investment		Net realized		claims and
			income related		capital gains		settlement
			to hedges		(losses) related to		expenses
			of fixed		hedges of fixed		related to
			maturities,		maturities,		hedges of
			available-		available-		investment
			for-sale		for-sale		contracts
			(in millions)
Total amounts of consolidated statement of operations line items in
	which the effects of fair value and cash flow hedges are reported		$	3,022.9	$	92.7	$	7,542.0


Losses on fair value hedging relationships:
Interest rate contracts:
	Loss recognized on hedged item		$	—	$	(6.6)	$	—
	Gain recognized on derivatives			—		6.2		—
	Amortization of hedged item basis adjustments			(6.7)		—		—
	Amounts related to periodic settlements on derivatives			(5.9)		—		—
Total loss recognized for fair value hedging relationships			$	(12.6)	$	(0.4)	$	—

Gains (losses) on cash flow hedging relationships:
Interest rate contracts:
	Gain (loss) reclassified from AOCI on derivatives		$	20.9	$	17.0	$	(0.1)
	Gain reclassified from AOCI as a result that a forecasted
		transaction is no longer probable of occurring		—		0.3		—

Foreign exchange contracts:
	Gain reclassified from AOCI on derivatives			—		12.7		—
	Amounts related to periodic settlements on derivatives			6.0		—		(0.1)
Total gain (loss) recognized for cash flow hedging relationships			$	26.9	$	30.0	$	(0.2)

B-52

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



			For the year ended December 31, 2017
			Net
			investment								Benefits,
			income		Net realized capital gains (losses)						claims and
			related		Related to						settlement
			to hedges		hedges						expenses
			of fixed		fixed		Related to				related to
			maturities,		maturities,		hedges of				hedges of
			available-		available-		investment				investment
			for-sale		for-sale		contracts		Total		contracts
			(in millions)
Total amounts of consolidated statement of operations line
	items in which the effects of fair value and cash flow
	hedges are reported		$	2,833.7					$	372.0	$	7,317.9


Gains (losses) on fair value hedging relationships:
Interest rate contracts:
	Gain (loss) recognized on hedged item		$	—	$	(5.2)	$	0.6	$	(4.6)	$	—
	Gain (loss) recognized on derivatives			—		4.7		(0.6)		4.1		—
	Amortization of hedged item basis adjustments			(11.6)		—		—		—		(0.5)
	Amounts related to periodic settlements on derivatives			(10.3)		—		—		—		0.9
Total gain (loss) recognized for fair value hedging
	relationships		$	(21.9)	$	(0.5)	$	—	$	(0.5)	$	0.4


Gains (losses) on cash flow hedging relationships:
Interest rate contracts:
	Gain (loss) reclassified from AOCI on derivatives		$	21.0	$	(0.7)	$	—	$	(0.7)	$	—
	Gain reclassified from AOCI as a result that a forecasted
		transaction is no longer probable of occurring		—		0.2		—		0.2		—

Foreign exchange contracts:
	Gain reclassified from AOCI on derivatives			—		21.9		—		21.9		—
	Amounts related to periodic settlements on derivatives			7.1		—		—		—		(1.2)
Total gain (loss) recognized for cash flow hedging
	relationships		$	28.1	$	21.4	$	—	$	21.4	$	(1.2)

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.

B-53

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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	2019		2018		2017
	(in millions)
Interest rate contracts	$	218.0	$	(27.6)	$	(26.9)
Foreign exchange contracts		(1.3)		4.1		18.1
Equity contracts		(132.9)		(31.0)		(181.3)
Credit contracts		(3.6)		(1.6)		(15.9)
Other contracts		(145.3)		107.9		6.8
Total	$	(65.1)	$	51.8	$	(199.2)

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 higher than expected earnings in the Closed Block that will need to be paid as dividends unless future performance of the Closed Block is less favorable than originally expected. A model of the Closed Block was established to produce the pattern of expected earnings, assets and liabilities in the Closed Block. These projections are utilized to determine ratios that will allow us to compare actual cumulative earnings to expected cumulative earnings and determine the amount of the PDO. As of December 31, 2019 and 2018, the PDO was $202.7 million and $36.6 million, respectively.

B-54

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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



		December 31, 2019		December 31, 2018
		(in millions)
Closed Block liabilities
Future policy benefits and claims		$	3,563.1	$	3,732.5
Other policyholder funds			6.6		6.5
Policyholder dividends payable			199.1		211.3
Policyholder dividends obligation			202.7		36.6
Other liabilities			7.8		9.5
	Total Closed Block liabilities		3,979.3		3,996.4

Assets designated to the Closed Block
Fixed maturities, available-for-sale			2,269.6		2,176.4
Fixed maturities, trading			2.6		2.5
Equity securities			1.1		1.0
Mortgage loans			622.8		678.5
Policy loans			486.0		510.5
Other investments			46.4		33.8
	Total investments		3,428.5		3,402.7
Cash and cash equivalents			47.5		42.1
Accrued investment income			38.1		39.5
Premiums due and other receivables			9.7		10.0
Deferred tax asset			29.5		30.5
	Total assets designated to the Closed Block		3,553.3		3,524.8
Excess of Closed Block liabilities over assets designated to the Closed Block			426.0		471.6
Amounts included in accumulated other comprehensive income			0.9		5.2
Maximum future earnings to be recognized from Closed Block assets and
	liabilities	$	426.9	$	476.8

Closed Block revenues and expenses were as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Revenues
Premiums and other considerations		$	227.6	$	244.2	$	275.6
Net investment income			154.4		160.5		169.4
Net realized capital gains (losses)			7.4		(3.4)		(5.8)
	Total revenues		389.4		401.3		439.2

Expenses
Benefits, claims and settlement expenses			204.4		211.5		245.6
Dividends to policyholders			116.3		120.9		122.0
Operating expenses			2.9		3.3		3.5
	Total expenses		323.6		335.7		371.1
Closed Block revenues, net of Closed Block expenses, before income taxes			65.8		65.6		68.1
Income taxes			12.9		11.1		46.0
Closed Block revenues, net of Closed Block expenses and income taxes			52.9		54.5		22.1
Funding adjustments			(3.0)		(0.5)		(4.4)
Closed Block revenues, net of Closed Block expenses, income taxes and
	funding adjustments	$	49.9	$	54.0	$	17.7

B-55

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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



	For the year ended December 31,
	2019		2018		2017
	(in millions)
Beginning of year	$	476.8	$	532.1	$	549.8
Effects of implementation of accounting changes (1)		—		1.3		—
End of year		426.9		476.8		532.1
Change in maximum future earnings	$	(49.9)	$	(54.0)	$	(17.7)


(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.

9. Deferred Acquisition Costs

Acquisition costs deferred and amortized were as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Balance at beginning of year		$	3,680.4	$	3,331.7	$	3,184.2
Costs deferred during the year			473.0		414.2		397.8
Amortized to expense during the year (1)			(345.8)		(252.2)		(212.1)
Adjustment related to unrealized (gains) losses on available-for-sale
	securities and derivative instruments		(297.7)		186.7		(38.2)
Balance at end of year		$	3,509.9	$	3,680.4	$	3,331.7

(1) Includes adjustments for revisions to EGPs.

10. Insurance Liabilities

Contractholder Funds

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



		December 31,
		2019		2018
		(in millions)
Liabilities for investment contracts:
	Liabilities for individual annuities	$	13,457.5	$	12,913.9
	GICs		10,423.5		10,321.7
	Funding agreements		8,640.6		7,729.5
	Other investment contracts		893.6		907.3
Total liabilities for investment contracts			33,415.2		31,872.4
Universal life and other reserves			4,919.4		4,989.3
Total contractholder funds		$	38,334.6	$	36,861.7

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.

B-56

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019 and 2018, $4,010.9 million and $3,512.2 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, 2019 and 2018, $75.2 million and $109.6 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, 2019 and 2018, $112.2 million and $114.4 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.

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, 2019 and 2018, $201.7 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 both December 31, 2019 and 2018, $26.2 million 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, 2019 and 2018, $4,214.3 million and $3,765.3 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.

B-57

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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,
		2019		2018		2017

		(in millions)
Balance at beginning of year		$	2,252.7	$	2,130.5	$	2,001.3
Less: reinsurance recoverable			404.3		375.8		340.3
Net balance at beginning of year			1,848.4		1,754.7		1,661.0
Incurred:
	Current year		1,361.3		1,268.8		1,196.6
	Prior years		0.8		0.3		18.2
Total incurred			1,362.1		1,269.1		1,214.8
Payments:
	Current year		869.4		815.7		767.2
	Prior years		379.4		359.7		353.9
Total payments			1,248.8		1,175.4		1,121.1
Net balance at end of year			1,961.7		1,848.4		1,754.7
Plus: reinsurance recoverable			403.8		404.3		375.8
Balance at end of year		$	2,365.5	$	2,252.7	$	2,130.5

Amounts not included in the rollforward above:
	Claim adjustment expense liabilities	$	57.9	$	54.6	$	50.7

Incurred liability adjustments relating to prior years, which affected current operations during 2019, 2018 and 2017, 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.

B-58

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

LTD and Group Life Waiver Claims



																							Incurred		Cumulative
																							but not		number of
																							reported		reported
			Net incurred claims (1)																				claims		claims
			December 31,
			2010		2011		2012		2013		2014		2015		2016		2017		2018		2019		2019		2019
			($ in millions)
Incurral
	year
	2010		$	184.1	$	176.7	$	176.2	$	172.0	$	162.7	$	155.7	$	154.1	$	153.4	$	152.1	$	151.8	$	0.1	5,649
	2011					203.7		192.6		185.4		184.8		178.4		172.3		169.6		167.6		166.5		0.1	6,290
	2012							217.9		200.0		191.1		189.5		181.8		174.8		173.3		171.9		0.1	6,444
	2013									219.3		203.3		188.4		190.7		182.3		179.5		177.1		0.1	7,050
	2014											242.2		231.4		214.4		218.1		206.2		201.9		0.1	7,596
	2015													231.0		227.2		217.2		215.3		208.2		0.1	7,174
	2016															229.8		228.4		219.4		219.5		5.4	6,161
	2017																	238.4		239.7		243.1		8.0	6,053
	2018																			239.4		245.1		3.8	5,668
	2019																					255.2		104.6	3,472
	Total net incurred claims																				$	2,040.3

			Net cumulative paid claims (1)
			December 31,
			2010		2011		2012		2013		2014		2015		2016		2017		2018		2019
			(in millions)
Incurral
	year
	2010		$	10.4	$	46.5	$	67.1	$	78.4	$	85.9	$	94.2	$	100.9	$	107.2	$	112.1	$	116.7
	2011					11.2		50.0		72.5		85.7		95.4		105.2		112.6		119.3		125.4
	2012							13.8		55.1		80.8		93.7		104.6		112.9		120.0		126.1
	2013									12.5		55.0		81.4		97.0		106.4		116.4		123.2
	2014											16.1		66.0		96.3		111.8		122.3		132.4
	2015													16.9		67.0		98.0		114.6		126.8
	2016															16.2		70.6		105.6		124.9
	2017																	17.8		76.5		115.0
	2018																			20.1		79.9
	2019																					19.2
	Total net paid claims																					1,089.6
	All outstanding liabilities for unpaid claims prior to 2010 net of reinsurance																					237.8
	Total outstanding liabilities for unpaid claims net of reinsurance																				$	1,188.5

		(1) 2010-2018 unaudited.

B-59

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Dental, Vision, STD, Critical Illness and Accident Claims



								Incurred	Cumulative
								but not	number of
								reported	reported
			Net incurred claims (1)					claims	claims
			December 31,
			2018		2019		2019		2019
			($ in millions)
Incurral year
	2018		$	648.3	$	640.0	$	—	3,032,617
	2019					724.7		45.0	3,184,519
	Total net incurred claims				$	1,364.7

			Net cumulative
			paid claims (1)
			December 31,
			2018		2019
			(in millions)
Incurral year
	2018		$	589.1	$	640.0
	2019					653.5
	Total net paid claims					1,293.5
	All outstanding liabilities for unpaid claims prior to 2018 net of
		reinsurance				—
	Total outstanding liabilities for unpaid claims net of reinsurance				$	71.2

	(1) 2018 unaudited.

Group Life Claims



								Incurred	Cumulative
								but not	number of
								reported	reported
			Net incurred claims (1)					claims	claims
			December 31,
			2018		2019		2019		2019
			($ in millions)
Incurral year
	2018		$	239.6	$	238.4	$	0.7	5,220
	2019					228.3		23.0	4,625
	Total net incurred claims				$	466.7

			Net cumulative
			paid claims (1)
			December 31,
			2018		2019
			(in millions)
Incurral year
	2018		$	193.9	$	236.5
	2019					181.7
	Total net paid claims					418.2
	All outstanding liabilities for unpaid claims prior to 2018 net of
		reinsurance				1.0
	Total outstanding liabilities for unpaid claims net of reinsurance				$	49.5

	(1) 2018 unaudited.

B-60

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019
				Dental, Vision, STD,
		LTD and Group		Critical Illness and
		Life Waiver		Accident		Group Life		Consolidated
		(in millions)
Net outstanding liabilities for unpaid claims		$	1,188.5	$	71.2	$	49.5	$	1,309.2

Reconciling items:
	Reinsurance recoverable on unpaid claims		56.4		—		0.9		57.3
	Impact of discounting		(215.00)		—		—		(215.0)
Liability for unpaid claims - short-duration
	contracts	$	1,029.9	$	71.2	$	50.4		1,151.5
Insurance contracts other than short-duration									1,214.0
Liability for unpaid claims								$	2,365.5

Claim Duration and Payout

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



	December 31, 2019 (1)
			Dental, Vision, STD,
	LTD and Group Life		Critical Illness and
Year	Waiver		Accident		Group Life
1	7.6	%	91.7	%	81.7	%
2	24.2		8.0		17.0
3	14.9
4	8.1
5	5.6
6	5.3
7	4.2
8	3.9
9	3.5
10	3.1

(1) Unaudited.

B-61

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019		$	1,029.9				$	71.2				$	50.4
	December 31, 2018			1,020.0					59.3					49.7
Range of discount rates
	December 31, 2019			3.3	-	7.0	%		—	-	—	%		—	-	—	%
	December 31, 2018			3.3	-	7.0			—	-	—			—	-	—
Aggregate amount of discount
	December 31, 2019		$	215.0				$	—				$	—
	December 31, 2018			217.7					—					—
Interest accretion
	For the year ended:
		December 31, 2019	$	34.2				$	—				$	—
		December 31, 2018		34.5					—					—
		December 31, 2017		35.0					—					—

11. Debt

Short-Term Debt

The components of short-term debt were as follows:

December 31, 2019

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 2020

60.0

—

Total

860.0

—

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

—

B-62

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Our revolving credit facilities are committed and available for general corporate purposes. These credit facilities also provide 100% back-stop support for our commercial paper program, of which we had no outstanding balances as of both December 31, 2019 and 2018.

Interest expense on intercompany debt was $0.0 million, $0.0 million and $0.6 million during 2019, 2018 and 2017, respectively.

Long-Term Debt

The components of long-term debt were as follows:



	December 31, 2019
			Net unamortized
				discount,
				premium and
				debt issuance		Carrying
	Principal			costs		amount
	(in millions)
Non-recourse mortgages and notes payable	$	107.7		$	1.0	$	108.7
Total long-term debt	$	107.7		$	1.0	$	108.7

	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

The non-recourse mortgages and notes payable are primarily financings for real estate developments. Outstanding principal balances as of December 31, 2019, ranged from $3.7 million to $64.2 million per development with interest rates ranging from 3.9% to 4.8%. 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 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 $238.2 million and $307.3 million as of December 31, 2019 and 2018, respectively.

As of December 31, 2019, future annual maturities of long-term debt were as follows (in millions):



Year ending December 31:
	2020	$	65.9
	2021		1.8
	2022		1.8
	2023		14.9
	2024		17.5
	Thereafter		6.8
	Total future maturities of long-term debt	$	108.7

B-63

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

12. Income Taxes

Income Taxes (Benefits)

Our income taxes (benefit) were as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Current income taxes (benefits):
	U.S. federal	$	24.5	$	(29.7)	$	(36.8)
	State		8.0		2.0		45.7
	Foreign		—		(0.1)		0.1
	Tax benefit of operating loss carryforward		(0.3)		(0.2)		(0.1)
Total current income taxes (benefits)			32.2		(28.0)		8.9
Deferred income taxes (benefits):
	U.S. federal		113.2		174.8		(551.3)
	State		(5.2)		—		24.0
Total deferred income taxes (benefits)			108.0		174.8		(527.3)
Income taxes (benefits)		$	140.2	$	146.8	$	(518.4)

Our income before income taxes was as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Domestic		$	1,262.8	$	1,398.7	$	1,717.7
Foreign			—		2.4		0.3
	Total income before income taxes	$	1,262.8	$	1,401.1	$	1,718.0

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,
	2019		2018		2017
U.S. corporate income tax rate	21	%	21	%	35	%
Dividends received deduction	(6)		(5)		(10)
Tax credits	(4)		(3)		(3)
Interest exclusion from taxable income	(1)		(1)		(1)
Impact of the Tax Cuts and Jobs Act	—		(2)		(54)
Low income housing tax credit amortization	1		1		—
State income taxes	—		—		3
Other	—		(1)		—
Effective income tax rate	11	%	10	%	(30)	%

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.

B-64

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Unrecognized Tax Benefits

Our changes in unrecognized tax benefits were as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Balance at beginning of period		$	37.2	$	188.5	$	202.6
	Additions based on tax positions related to the current year		0.1		—		7.2
	Additions for tax positions of prior years		23.1		43.1		19.3
	Reductions for tax positions related to the current year		(3.2)		(10.6)		(3.4)
	Reductions for tax positions of prior years		—		(23.2)		(0.5)
	Settlements		—		(160.6)		(36.7)
Balance at end of period (1)		$	57.2	$	37.2	$	188.5

(1) There would be no impact to the effective income tax rate if the 2019 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, 2019, 2018 and 2017, we had recognized $0.8 million, $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. In 2019, an IRS 30-day letter on examination of tax years 2009 through 2012 was received, and the IRS began its examination of tax years 2015 through 2017.

B-65

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Net Deferred Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Our significant components of net deferred income taxes were as follows:



			December 31,
			2019		2018
			(in millions)
Deferred income tax assets:
	Investments, including derivatives		$	190.9	$	122.6
	Insurance liabilities			62.9		—
	Net unrealized losses on available-for-sale securities			—		1.5
	Net operating and capital loss carryforwards			0.1		13.7
	Tax credit carryforwards			106.0		163.2
	Employee benefits			—		10.7
		Total deferred income tax assets		359.9		311.7
Deferred income tax liabilities:
	Deferred acquisition costs			(562.8)		(615.9)
	Investments, including derivatives			(362.0)		(238.3)
	Net unrealized gains on available-for-sale securities			(874.7)		—
	Real estate			(146.7)		(144.5)
	Insurance liabilities			—		(87.9)
	Intangible assets			(9.6)		(7.6)
	Gain on sale of discontinued operations (1)			(203.2)		(209.2)
	Employee benefits			(3.4)		—
	Other deferred income tax liabilities			(21.4)		(37.7)
		Total deferred income tax liabilities		(2,183.8)		(1,341.1)
		Total net deferred income tax liabilities	$	(1,823.9)	$	(1,029.4)


(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,
		2019		2018
		(in millions)
Deferred income tax liabilities:
	U.S. federal	$	(1,795.2)	$	(999.1)
	State		(28.7)		(30.3)
Total net deferred income tax liabilities		$	(1,823.9)	$	(1,029.4)

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, 2019 and 2018, we had tax credit carryforwards for U.S. federal income tax purposes of $106.0 million and $163.2 million, respectively. Alternative minimum and 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. 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 2028 if unused. As of December 31, 2019, 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.

B-66

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

As of December 31, 2019 and 2018, domestic state net operating loss carryforwards were $1.0 million and $4.7 million, respectively, and will expire between 2026 and 2036. As of December 31, 2019, 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 2008, following settlement of a partnership matter with the Department of Justice in March 2019, are expected to be finalized in 2020 following review by the Joint Committee of Taxation. As of December 31, 2019 and 2018, we had $196.6 million and $195.7 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, 2012 in the third quarter of 2015 and 2015 through 2017 in the first quarter of 2019. The U.S. federal statute of limitations expired for years prior to 2009, except for pending audit issues. The statute was extended until December 31, 2020, for 2009 through 2012, has expired for 2013 and 2014, and was extended or remains open for tax years 2015 through 2017 through October 15, 2021. 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 provides a U.S. qualified defined benefit pension plan, covering U.S. employees that meet certain eligibility requirements and certain agents contracted on or before December 31, 2018. A final average pay benefit formula has been in place for plan participants employed prior to January 1, 2002. For agents, this formula ended on December 31, 2018, and for employees the formula will end on December 31, 2022. 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 prior to the earliest of termination, retirement or the formula end date. A cash balance benefit was added on January 1, 2002. A participant's cash balance account is credited with an amount based on the participant’s salary, age and service. These credits accrue with interest. For plan participants hired on and after January 1, 2002, only the cash balance benefit applies. For pre-2002 participants, the pension benefit earned prior to the final average pay formula end date is the greater of the final average pay benefit or the cash balance benefit earned before the end date. They will also earn a new cash balance benefit for service after the formula end date. We reflect pension expense through our expense allocation agreement with PFG.

In addition, PFG sponsors non-qualified defined benefit plans subject to Section 409A of the Internal Revenue Code. This plan is for certain highly compensated employees and agents to replace the benefit that cannot be provided by the qualified defined benefit pension plan due to IRS limits. These nonqualified plans generally parallel the qualified plan but offer different payment options. No agent will become a new participant in the nonqualified plan after December 31, 2018.

B-67

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

We provide certain health care, life insurance and long-term care benefits for retired employees, their beneficiaries and covered dependents ("other postretirement benefits"). While virtually all U.S. employees continue to have access to the post-retirement health care and life insurance benefits, only those U.S. employees that were hired prior to January 1, 2002, and retired prior to January 1, 2011, (post-65 medical) or January 1, 2020, (life insurance and pre-65 medical) were eligible to receive subsidized benefits. All others pay the full cost of coverage. The long-term care plan was subsidized only for those who retired prior to January 1, 2000, and is no longer accessible. The subsidy level for all benefits varies by plan, age, service and retirement date. 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. PFG is the sponsor of the post-65 retiree medical plan for both employees and individual field agents.

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:



	December 31,
	2019		2018
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	(83.8)	$	(91.8)
Service cost		—		(0.1)
Interest cost		(3.2)		(2.9)
Actuarial gain (loss)		(3.6)		6.6
Participant contributions		(4.4)		(3.8)
Benefits paid		10.4		8.2
Plan amendments		(1.7)		—
Benefit obligation at end of year	$	(86.3)	$	(83.8)

Change in plan assets
Fair value of plan assets at beginning of year	$	618.7	$	668.3
Actual return on plan assets		91.6		(46.0)
Employer contribution		1.0		0.8
Participant contributions		4.4		3.8
Benefits paid		(10.4)		(8.2)
Fair value of plan assets at end of year	$	705.3	$	618.7

Amount recognized in statement of financial position
Other assets	$	622.8	$	536.8
Other liabilities		(3.8)		(1.9)
Total	$	619.0	$	534.9

Amount recognized in accumulated other comprehensive (income) loss
Total net actuarial (gain) loss	$	(12.0)	$	44.3
Prior service benefit		1.8		—
Pre-tax accumulated other comprehensive (income) loss	$	(10.2)	$	44.3

Other Postretirement Plan Changes and Plan Gains/Losses

For the year ended December 31, 2019, the other postretirement benefit plans had an actuarial loss primarily due to a decrease in the discount rate and a gain from actual and projected medical claims cost being lower than expected. For the year ended December 31, 2018, 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.

B-68

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



Information for Other Postretirement Benefit Plans With an Accumulated Postretirement Benefit Obligation
in Excess of Plan Assets

	December 31,
	2019		2018
	(in millions)
Accumulated postretirement benefit obligation	$	3.8	$	2.1
Fair value of plan assets		—		0.2



Components of Other Postretirement Benefits Net Periodic Benefit Cost

	For the year ended December 31,
	2019		2018		2017
	(in millions)
Service cost	$	—	$	0.1	$	0.1
Interest cost		3.2		2.9		3.3
Expected return on plan assets		(32.0)		(32.2)		(26.2)
Amortization of prior service benefit		(0.1)		(12.8)		(33.4)
Recognized net actuarial (gain) loss		0.3		(1.2)		0.1
Net periodic benefit income	$	(28.6)	$	(43.2)	$	(56.1)

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,
			2019		2018
		(in millions)
Other changes recognized in accumulated other comprehensive (income) loss
Net actuarial (gain) loss			$	(56.0)	$	71.6
Prior service cost				1.7		—
Amortization of gain (loss)				(0.3)		1.2
Amortization of prior service benefit				0.1		12.8
Total recognized in pre-tax accumulated other comprehensive (income) loss			$	(54.5)	$	85.6
Total recognized in net periodic benefit cost and pre-tax accumulated
	other comprehensive (income) loss		$	(83.1)	$	42.4

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 2020 fiscal year are $(0.1) million and $(0.9) 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

B-69

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



Weighted average assumptions used for other postretirement benefit plans to determine net periodic benefit cost

	For the year ended December 31,
	2019		2018		2017
Discount rate	3.95	%	3.35	%	3.75	%
Expected long-term return on plan assets	5.20	%	4.85	%	4.40	%
Rate of compensation increase	N/A		2.39	%	2.44	%

For other postretirement benefits, the discount rate is determined by projecting future benefit payments inherent in the accumulated postretirement benefit obligation, and discounting those cash flows using a spot yield curve for high quality corporate bonds. The plans’ expected benefit payments are discounted to determine a present value using the yield curve and the discount rate is the level rate that produces the same present value. The 5.20% expected long-term return on plan assets for 2019 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 and long-term care plans were 5.25%, 4.95% and 4.35%, respectively.

Assumed Health Care Cost Trend Rates Used to Determine Net Periodic Benefit Cost



	December 31,
	2019		2018
Health care cost trend rate assumed for next year under age 65	6.75	%	7.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	4.50	%	4.50	%
Year that the rate reaches the ultimate trend rate (under age 65)	2029		2026

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	$	—	$	—
Effect on accumulated postretirement benefit obligation		(1.20)		1.1

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.


•	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.


•	Level 3 – Fair values are based on significant unobservable inputs for the asset.

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.

B-70

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019
		Assets		Fair value hierarchy level
		measured at
		fair value		Level 1		Level 2		Level 3
		(in millions)
Asset category
Cash and cash equivalents		$	0.6	$	0.6	$	—	$	—
Fixed income security portfolios:
	Fixed income investment funds (1)		355.8		316.4		39.4		—
U.S. equity portfolios (2)			245.6		201.4		44.2		—
International equity portfolios (3)			103.3		85.0		18.3		—
Total		$	705.3	$	603.4	$	101.9	$	—

		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	$	—


(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, 2019 and 2018, $101.8 million and $86.1 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.

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.

B-71

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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



Asset category	Target allocation
U.S. equity portfolios	35	%
International equity portfolios	15	%
Fixed income security portfolios	50	%

Estimated Future Benefit Payments

The estimated future benefit payments, which reflect expected future service are:



		Other postretirement
		benefits (gross benefit
		payments, including
		prescription drug benefits)
	(in millions)
Year ending December 31:
2020	$	11.4
2021		10.6
2022		10.0
2023		9.2
2024		8.5
2025-2029		25.4

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, 2019.

14. Contingencies, Guarantees, Indemnifications and Leases

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, Employee Retirement Income Security Act (“ERISA”) and laws governing the activities of broker-dealers. We receive requests from regulators and other governmental authorities relating to industry issues and may receive additional requests, including subpoenas and interrogatories, in the future.

B-72

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

On November 12, 2014, Frederick Rozo filed a class action lawsuit in the United States District Court for the Southern District of Iowa against us and PFG. PFG was later dismissed as a defendant. The Plaintiff alleged that defendants breached fiduciary duties and engaged in prohibited transactions under ERISA in connection with a general account guaranteed product known as the Principal Fixed Income Option (“PFIO”). On May 12, 2017, the district court certified a nationwide class of participants and beneficiaries who had funds invested in one of the PFIO contracts. On September 25, 2018, the district court granted our motion for summary judgment. On February 3, 2020, the Eighth Circuit Court of Appeals reversed that ruling and remanded the case back to the district court. We will continue to aggressively defend the case.

While the outcome of any pending or future litigation or regulatory matter cannot be predicted, management does not believe any such matter will have a material adverse effect on our business or financial position. As of December 31, 2019, we had no estimated loss accrued related to the legal matter discussed above because we believe the chance of loss from this matter is not probable and the amount of loss cannot be reasonably estimated.

To the extent such matters present a reasonably possible chance of loss, we are generally not able to estimate the possible loss or range of loss associated therewith. The outcome of such matters is always uncertain and unforeseen results can occur. It is possible that such outcomes could require us to pay damages or make other expenditures or establish accruals in amounts that we could not estimate at December 31, 2019.

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, 2019, was approximately $258.0 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 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, 2019 and 2018, the liability balance for guaranty fund assessments, which is not discounted, was $21.7 million and $22.2 million, respectively, and was reported within other liabilities in the consolidated statements of financial position. As of December 31, 2019 and 2018, $10.0 million and $10.4 million, respectively, related to premium tax offsets were included in premiums due and other receivables in the consolidated statements of financial position.

B-73

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Leases

As a lessee, we lease office space, data processing equipment, office furniture and office equipment under various operating leases. We also lease buildings and hardware storage equipment under finance leases. Lease assets and liabilities are recognized at the commencement of a lease based on the present value of lease payments over the lease term. We generally use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments. Lease term may include options to extend or terminate the lease when it is reasonably certain we will exercise the option. Leases with an initial term of twelve months or less are not recorded on the consolidated statements of financial position. We recognize lease expense for leases on a straight-line basis over the lease term. Some of our lease agreements include payments for property taxes, insurance, utilities or common area maintenance, which are not based on an index or rate. These payments are recognized in net income in the period in which the obligation has occurred.

We sublease certain office space to third parties, which are primarily operating leases. We record sublease income on a straight-line basis over the lease term.

The lease assets and liabilities were as follows:



	December 31, 2019
	(in millions)
Assets
Operating lease assets (1)	$	92.9
Finance lease assets (1)		31.0
Total lease assets	$	123.9

Liabilities
Operating lease liabilities (2)	$	94.0
Finance lease liabilities (2)		31.4
Total lease liabilities	$	125.4


(1)	Operating and finance lease assets are primarily reported within property and equipment on the consolidated statements of financial position.


(2)	Operating and finance lease liabilities are reported within other liabilities on the consolidated statements of

financial position.

As of December 31, 2018, we had capital lease assets of $31.9 million.

The lease cost was as follows:



		For the year ended
		December 31, 2019
		(in millions)
Finance lease cost (1):
	Amortization of right-of-use assets	$	14.5
	Interest on lease liabilities		1.0
Operating lease cost (1)			29.4
Other lease cost (1) (2)			5.0
Sublease income (3)			(1.7)
Total lease cost		$	48.2


(1)	Finance, operating and other lease costs are primarily included in operating expenses on the consolidated statements of operations.


(2)	Other lease cost primarily reflects variable and short-term lease costs.


(3)	Sublease income is included in fees and other revenues on the consolidated statements of operations.

B-74

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Rental expense for operating leases for the years ended December 31, 2018 and 2017, was $17.1 million and $23.0 million, respectively. Depreciation expense for capital leases for both the years ended December 31, 2018 and 2017, was $9.9 million.

Payments for operating leases and finance leases for the year ended December 31, 2019, were $31.6 million and $15.1 million, respectively. The following represents future payments due by period for lease obligations:



		Operating leases		Finance leases			Total
		(in millions)
For the twelve months ending December 31:
2020		$	27.5	$	14.7	$	42.2
2021			22.5		11.6		34.1
2022			16.1		3.8		19.9
2023			10.5		1.9		12.4
2024			6.6		0.5		7.1
2025 and thereafter			24.7		—		24.7
	Total lease payments		107.9		32.5		140.4
	Less: interest		13.9		1.1		15.0
	Present value of lease liabilities	$	94.0	$	31.4	$	125.4

The weighted-average remaining lease term and weighted-average discount rates were as follows:



		For the year ended
		December 31, 2019
Weighted-average remaining lease term (in years):
	Operating leases	7.6
	Finance leases	2.6

Weighted-average discount rate:
	Operating leases	3.1	%
	Finance leases	2.7	%

B-75

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

15. Stockholder's Equity



Other Comprehensive Income (Loss)

		For the year ended December 31, 2019
		Pre-Tax		Tax		After-Tax
		(in millions)
Net unrealized gains on available-for-sale securities during the period		$	4,107.0	$	(865.2)	$	3,241.8
Reclassification adjustment for losses included in net income (1)			51.0		(10.6)		40.4
Adjustments for assumed changes in amortization patterns			(293.0)		61.5		(231.5)
Adjustments for assumed changes in policyholder liabilities			(654.4)		137.4		(517.0)
Net unrealized gains on available-for-sale securities			3,210.6		(676.9)		2,533.7

Noncredit component of impairment losses on fixed maturities,
	available-for-sale during the period		5.2		(1.1)		4.1
Adjustments for assumed changes in amortization patterns			(1.4)		0.3		(1.1)
Noncredit component of impairment losses on fixed maturities,
	available-for-sale (2)		3.8		(0.8)		3.0

Net unrealized losses on derivative instruments during the period			(0.5)		—		(0.5)
Reclassification adjustment for gains included in net income (3)			(28.7)		6.1		(22.6)
Adjustments for assumed changes in amortization patterns			3.1		(0.6)		2.5
Adjustments for assumed changes in policyholder liabilities			7.9		(1.9)		6.0
Net unrealized losses on derivative instruments			(18.2)		3.6		(14.6)

Unrecognized postretirement benefit obligation during the period			54.3		(11.4)		42.9
Amortization of amounts included in net periodic benefit cost (4)			0.2		—		0.2
Net unrecognized postretirement benefit obligation			54.5		(11.4)		43.1

Other comprehensive income		$	3,250.7	$	(685.5)	$	2,565.2

B-76

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



		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		$	(2,534.3)	$	526.0	$	(2,008.3)
Reclassification adjustment for losses included in net income (1)			84.4		(13.6)		70.8
Adjustments for assumed changes in amortization patterns			185.9		(39.1)		146.8
Adjustments for assumed changes in policyholder liabilities			351.1		(73.7)		277.4
Net unrealized losses on available-for-sale securities			(1,912.9)		399.6		(1,513.3)

Noncredit component of impairment losses on fixed maturities,
	available-for-sale during the period		39.7		(8.3)		31.4
Adjustments for assumed changes in amortization patterns			(5.3)		1.1		(4.2)
Adjustments for assumed changes in policyholder liabilities			(0.8)		0.1		(0.7)
Noncredit component of impairment losses on fixed maturities,
	available-for-sale (2)		33.6		(7.1)		26.5

Net unrealized gains on derivative instruments during the period			50.4		(3.6)		46.8
Reclassification adjustment for gains included in net income (3)			(50.8)		7.1		(43.7)
Adjustments for assumed changes in amortization patterns			0.3		(0.1)		0.2
Adjustments for assumed changes in policyholder liabilities			5.7		(1.0)		4.7
Net unrealized gains on derivative instruments			5.6		2.4		8.0

Unrecognized postretirement benefit obligation during the period			(71.6)		15.1		(56.5)
Amortization of amounts included in net periodic benefit cost (4)			(14.0)		2.9		(11.1)
Net unrecognized postretirement benefit obligation			(85.6)		18.0		(67.6)

Other comprehensive loss		$	(1,959.3)	$	412.9	$	(1,546.4)

		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	$	(325.0)	$	703.5
Reclassification adjustment for losses included in net income (1)			65.6		(22.8)		42.8
Adjustments for assumed changes in amortization patterns			(26.2)		9.3		(16.9)
Adjustments for assumed changes in policyholder liabilities			(168.5)		59.0		(109.5)
Net unrealized gains on available-for-sale securities			899.4		(279.5)		619.9

Noncredit component of impairment losses on fixed maturities,
	available-for-sale during the period		49.7		(17.4)		32.3
Adjustments for assumed changes in amortization patterns			(6.4)		2.3		(4.1)
Adjustments for assumed changes in policyholder liabilities			(1.3)		0.5		(0.8)
Noncredit component of impairment losses on fixed maturities,
	available-for-sale (2)		42.0		(14.6)		27.4

Net unrealized losses on derivative instruments during the period			(46.7)		16.0		(30.7)
Reclassification adjustment for gains included in net income (3)			(42.4)		15.1		(27.3)
Adjustments for assumed changes in amortization patterns			3.9		(1.3)		2.6
Adjustments for assumed changes in policyholder liabilities			9.6		(3.3)		6.3
Net unrealized losses on derivative instruments			(75.6)		26.5		(49.1)

Unrecognized postretirement benefit obligation during the period			44.2		(9.2)		35.0
Amortization of amounts included in net periodic benefit cost (4)			(33.3)		11.6		(21.7)
Net unrecognized postretirement benefit obligation			10.9		2.4		13.3

Other comprehensive income		$	876.7	$	(265.2)	$	611.5

B-77

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019


(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, under the caption “Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations” 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, under the caption “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, 2017		$	713.6	$	(85.8)	$	101.7	$	(0.9)	$	19.8	$	748.4
Other comprehensive income
	during the period, net of
	adjustments		577.1		—		(21.8)		—		35.0		590.3
Amounts reclassified from AOCI			42.8		27.4		(27.3)		—		(21.7)		21.2
Other comprehensive income			619.9		27.4		(49.1)		—		13.3		611.5
Sale of subsidiary to parent, net of
	related income taxes, as part of a
	common control transaction		—		—		—		(0.1)		—		(0.1)
Balances as of December 31, 2017			1,333.5		(58.4)		52.6		(1.0)		33.1		1,359.8
Other comprehensive loss
	during the period, net of
	adjustments		(1,584.1)		—		51.7		—		(56.5)		(1,588.9)
Amounts reclassified from AOCI			70.8		26.5		(43.7)		—		(11.1)		42.5
Other comprehensive loss			(1,513.3)		26.5		8.0		—		(67.6)		(1,546.4)
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		(15.2)		7.7		1.0		(0.4)		242.0
Balances as of December 31, 2018			69.2		(47.1)		68.3		—		(34.9)		55.5
Other comprehensive income
	during the period, net of
	adjustments		2,493.3		—		8.0		—		42.9		2,544.2
Amounts reclassified from AOCI			40.4		3.0		(22.6)		—		0.2		21.0
Other comprehensive income			2,533.7		3.0		(14.6)		—		43.1		2,565.2
Balances as of December 31, 2019		$	2,602.9	$	(44.1)	$	53.7	$	—	$	8.2	$	2,620.7

B-78

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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 2019 statutory results, our dividend limitation is approximately $1,060.3 million in ordinary stockholder dividends in 2020 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 2020, 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.


•	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.

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 2019.

B-79

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019, 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.

B-80

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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 and swaptions 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 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 and nonredeemable 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 a consolidated VIE were valued using the more observable fair value of the liabilities of the consolidated collateralized financing entity (“CCFE”) under the measurement alternative guidance and were reflected in Level 2. The liabilities were affiliated so were not reflected in our consolidated results. The trust was unwound in the third quarter of 2019.

B-81

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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 and nonredeemable preferred stock is based on an internal model using unobservable inputs, which is reflected in Level 3. In 2018, the fair value of redeemable preferred stock was based on observable inputs and was reflected 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 and Universal Life Contracts

Certain universal life, annuity 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 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 universal life, 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.

B-82

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019
	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	$	1,656.9	$	—	$	1,277.4	$	379.5	$	—
Non-U.S. governments		853.0		—		—		853.0		—
States and political subdivisions		7,419.4		—		—		7,419.4		—
Corporate		37,111.1		—		18.5		37,010.9		81.7
Residential mortgage-backed securities		2,844.2		—		—		2,844.2		—
Commercial mortgage-backed securities		4,802.7		—		—		4,789.8		12.9
Collateralized debt obligations (1)		3,211.2		—		—		3,012.2		199.0
Other debt obligations		8,084.9		—		—		7,993.6		91.3
Total fixed maturities, available-for-sale		65,983.4		—		1,295.9		64,302.6		384.9
Fixed maturities, trading		237.6		—		0.5		236.8		0.3
Equity securities		69.9		—		26.5		43.4		—
Derivative assets (2)		279.6		—		—		251.7		27.9
Other investments		112.5		78.3		—		—		34.2
Cash equivalents		729.3		—		—		729.3		—
Sub-total excluding separate account
assets		67,412.3		78.3		1,322.9		65,563.8		447.3

Separate account assets		125,801.7		129.0		95,419.5		21,286.5		8,966.7
Total assets	$	193,214.0	$	207.3	$	96,742.4	$	86,850.3	$	9,414.0

Liabilities
Investment and universal life contracts (3)	$	(151.2)	$	—	$	—	$	—	$	(151.2)
Derivative liabilities (2)		(147.0)		—		—		(130.7)		(16.3)
Other liabilities (3)		(98.7)		—		—		(98.7)		—
Total liabilities	$	(396.9)	$	—	$	—	$	(229.4)	$	(167.5)

Net assets	$	192,817.1	$	207.3	$	96,742.4	$	86,620.9	$	9,246.5

B-83

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



	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 and universal life contracts (3)	$	(5.3)	$	—	$	—	$	—	$	(5.3)
Derivative liabilities (2)		(104.4)		—		—		(89.3)		(15.1)
Other liabilities (3)		(89.3)		—		—		(89.3)		—
Total liabilities	$	(199.0)	$	—	$	—	$	(178.6)	$	(20.4)

Net assets	$	164,897.0	$	200.0	$	80,362.0	$	75,736.8	$	8,598.2


(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 $19.9 million and $32.0 million as of December 31, 2019 and December 31, 2018, 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.

B-84

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019
																	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
			January 1,		income		comprehensive		settlements		into		out of		December 31,		positions still
			2019		(1)		income		(3)		Level 3		Level 3		2019		held (1)
			(in millions)
Assets
Fixed maturities,
	available-for-sale:
	Non-U.S.
		governments	$	4.6	$	—	$	—	$	(4.6)	$	—	$	—	$	—	$	—
	Corporate			57.9		—		2.5		17.2		4.1		—		81.7		—
	Commercial
		mortgage-backed
		securities		9.5		(3.8)		3.4		2.4		3.7		(2.3)		12.9		(2.9)
	Collateralized
		debt obligations		8.3		(2.6)		0.9		122.5		69.9		—		199.0		(2.6)
	Other debt
		obligations		58.5		—		0.8		100.0		8.3		(76.3)		91.3		—
Total fixed
	maturities,
	available-for-sale			138.8		(6.4)		7.6		237.5		86.0		(78.6)		384.9		(5.5)
Fixed maturities,
	trading			—		—		—		0.3		—		—		0.3		—
Other investments				17.2		5.9		—		1.1		10.0		—		34.2		6.0
Separate account
	assets (2)			8,444.0		735.5		—		(212.1)		—		(0.7)		8,966.7		697.1

Liabilities
Investment and
	universal life
	contracts			(5.3)		(132.9)		—		(13.0)		—		—		(151.2)		(134.0)

Derivatives
Net derivative assets
	(liabilities)			3.5		(0.2)		—		8.3		—		—		11.6		3.9

B-85

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



			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
			January 1,		income		comprehensive		settlements		into		out of		December 31,		positions still
			2018		(1)		income		(3)		Level 3		Level 3		2018		held (1)
			(in millions)
Assets
Fixed maturities,
	available-for-sale:
	Non-U.S.
		governments	$	6.1	$	—	$	(0.1)	$	(1.4)	$	—	$	—	$	4.6	$	—
	Corporate			100.6		(1.0)		0.3		(22.0)		—		(20.0)		57.9		—
	Commercial
		mortgage-backed
		securities		10.6		(3.5)		0.2		0.1		3.6		(1.5)		9.5		(1.9)
	Collateralized
		debt obligations		125.0		(0.9)		0.2		64.4		54.7		(235.1)		8.3		(0.9)
	Other debt
		obligations		2.3		—		(0.2)		147.4		—		(91.0)		58.5		—
Total fixed
	maturities,
	available-for-sale			244.6		(5.4)		0.4		188.5		58.3		(347.6)		138.8		(2.8)
Fixed maturities,
	trading			—		—		—		3.7		—		(3.7)		—		—
Equity securities				2.7		12.9		—		(15.6)		—		—		—		—
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		(41.1)		8,444.0		829.8

Liabilities
Investment and
	universal life
	contracts			(119.6)		107.9		—		6.4		—		—		(5.3)		110.3

Derivatives
Net derivative assets
	(liabilities)			19.6		(18.6)		—		2.5		—		—		3.5		(17.1)

B-86

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



			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
			January 1,		income		comprehensive		settlements		into		out of		December 31,		positions still
			2017		(1)		income		(3)		Level 3		Level 3		2017		held (1)
			(in millions)
Assets
Fixed maturities,
	available-for-sale:
	Non-U.S.
		governments	$	7.6	$	—	$	(0.1)	$	(1.4)	$	—	$	—	$	6.1	$	—
	Corporate			145.6		(1.5)		4.4		(32.8)		22.2		(37.3)		100.6		—
	Commercial
		mortgage-backed
		securities		71.1		(12.7)		11.1		(0.7)		26.3		(84.5)		10.6		(4.0)
	Collateralized
		debt obligations		33.6		—		1.7		7.3		183.7		(101.3)		125.0		—
	Other debt
		obligations		91.5		—		(0.2)		(0.8)		0.1		(88.3)		2.3		—
Total fixed
	maturities,
	available-for-sale			349.4		(14.2)		16.9		(28.4)		232.3		(311.4)		244.6		(4.0)
Fixed maturities,
	trading			92.9		(0.5)		—		(92.4)		—		—		—		—
Equity securities,
	available-for-sale			2.7		—		—		—		—		—		2.7		—
Equity securities,
	trading			—		—		—		(0.7)		0.7		—		—		—
Other investments				36.9		3.9		—		(34.3)		—		—		6.5		3.8
Separate account
	assets (2)			7,226.3		788.8		—		(493.2)		3.1		(38.7)		7,486.3		696.0

Liabilities
Investment and
	universal life
	contracts			(130.8)		6.8		—		4.4		—		—		(119.6)		4.0
Other liabilities				(59.9)		(0.1)		—		60.0		—		—		—		—

Derivatives
Net derivative assets
	(liabilities)			11.8		7.5		—		0.3		—		—		19.6		6.7

(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:

B-87

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



		For the year ended December 31, 2019
										Net purchases,
										sales, issuances
		Purchases		Sales		Issuances		Settlements		and settlements
		(in millions)
Assets
Fixed maturities, available-for-sale:
	Non-U.S. governments	$	—	$	—	$	—	$	(4.6)	$	(4.6)
	Corporate		41.9		(1.4)		—		(23.3)		17.2
	Commercial mortgage-backed securities		2.4		—		—		—		2.4
	Collateralized debt obligations		124.7		—		—		(2.2)		122.5
	Other debt obligations		107.7		—		—		(7.7)		100.0
Total fixed maturities, available-for-sale			276.7		(1.4)		—		(37.8)		237.5
Fixed maturities, trading			0.5		—		—		(0.2)		0.3
Other investments			6.0		(4.9)		—		—		1.1
Separate account assets (4)			279.2		(524.4)		(280.4)		313.5		(212.1)

Liabilities
Investment and universal life contracts			—		—		(17.8)		4.8		(13.0)

Derivatives
Net derivative assets (liabilities)			1.9		6.4		—		—		8.3



		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	$	—	$	—	$	—	$	(1.4)	$	(1.4)
	Corporate		2.3		(6.3)		—		(18.0)		(22.0)
	Commercial mortgage-backed securities		—		—		—		0.1		0.1
	Collateralized debt obligations		91.7		—		—		(27.3)		64.4
	Other debt obligations		152.0		—		—		(4.6)		147.4
Total fixed maturities, available-for-sale			246.0		(6.3)		—		(51.2)		188.5
Fixed maturities, trading			3.7		—		—		—		3.7
Equity securities			—		(15.6)		—		—		(15.6)
Other investments			9.0		—		—		—		9.0
Separate account assets (4)			627.1		(519.4)		(206.5)		205.6		106.8

Liabilities
Investment and universal life contracts			—		—		2.8		3.6		6.4

Derivatives
Net derivative assets (liabilities)			1.8		0.7		—		—		2.5

B-88

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



		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	$	—	$	—	$	—	$	(1.4)	$	(1.4)
	Corporate		20.9		(1.6)		—		(52.1)		(32.8)
	Commercial mortgage-backed securities		—		—		—		(0.7)		(0.7)
	Collateralized debt obligations		22.9		—		—		(15.6)		7.3
	Other debt obligations		—		—		—		(0.8)		(0.8)
Total fixed maturities, available-for-sale			43.8		(1.6)		—		(70.6)		(28.4)
Fixed maturities, trading			—		—		—		(92.4)		(92.4)
Equity securities, trading			—		—		—		(0.7)		(0.7)
Other investments			2.4		(36.7)		—		—		(34.3)
Separate account assets (4)			302.2		(580.6)		(284.6)		69.8		(493.2)

Liabilities
Investment and universal life contracts			—		—		—		4.4		4.4
Other liabilities			—		—		—		60.0		60.0

Derivatives
Net derivative assets (liabilities)			0.8		(0.5)		—		—		0.3


(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, 2019
			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		$	—	$	—	$	—	$	4.1	$	—	$	—
	Commercial mortgage-backed
		securities		—		—		—		3.7		—		2.3
	Collateralized debt obligations			—		—		—		69.9		—		—
	Other debt obligations			—		—		—		8.3		—		76.3
Total fixed maturities,
	available-for-sale			—		—		—		86.0		—		78.6
Other investments				—		—		—		10.0		—		—
Separate account assets				—		—		—		—		—		0.7

B-89

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



			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



			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

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 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 2019, 2018 and 2017, 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 2019, 2018 and 2017, 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.

B-90

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Quantitative Information about Level 3 Fair Value Measurements

The following table provides quantitative information about the significant unobservable inputs used for recurring fair value measurements categorized within Level 3, excluding assets and liabilities for which significant quantitative unobservable inputs are not developed internally, which primarily consists of those valued using broker quotes or the measurement alternative for CCFEs. Refer to “Assets and liabilities measured at fair value on a recurring basis” for a complete valuation hierarchy summary.



		December 31, 2019
		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:
	Corporate	$	72.5	Discounted cash flow	Discount rate (1)	1.9%-5.1%		3.8	%
					Illiquidity premium	0 basis points ("bps")-410bps		152bps
	Commercial mortgage-backed securities		2.4	Discounted cash flow	Probability of default	100.0	%	100.0	%
					Potential loss severity	53.1	%	53.1	%
	Collateralized debt obligations		108.7	Discounted cash flow	Discount rate (1)	2.9%-10.0%		3.4	%
					Potential loss severity	23.0	%	23.0	%
					Probability of default	100.0	%	100.0	%
	Other debt obligations		1.2	Discounted cash flow	Discount rate (1)	5.0	%	5.0	%
					Illiquidity premium	500bps		500bps
Other investments			10.0	Market comparables	Revenue multiples (2)	0.8x-5.0x		3.2x
Separate account assets			8,966.2	Discounted cash flow - mortgage loans	Discount rate (1)	2.8	%	2.8	%
					Illiquidity premium	60bps		60bps
					Credit spread rate	120bps		120bps
				Discounted cash flow - real estate	Discount rate (1)	5.5%-11.8%		6.7	%
					Terminal capitalization rate	4.5%-9.3%		5.7%
					Average market rent growth rate	2.0%-4.7%		3.0%
				Discounted cash flow - real estate debt	Loan to value	8.0%-80.4%		45.9	%
					Market interest rate	3.2%-5.8%		3.6	%

B-91

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

December 31, 2019

Assets /

(liabilities)

measured at

Valuation

Unobservable

Input/range

Weighted

fair value

technique(s)

input description

of inputs

average

(in millions)

Liabilities

Investment and universal life

contracts (6)

(151.2)

Discounted cash

flow

Long duration

interest rate

2.1% (3)

Long-term equity

market volatility

16.9%-26.9%

Non-performance risk

0.2%-1.3%

Utilization rate

See note (4)

Lapse rate

0.0%-9.3%

Mortality rate

See note (5)

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

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

B-92

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

December 31, 2018

Assets /

(liabilities)

measured at

Valuation

Unobservable

Input/range

Weighted

fair value

technique(s)

input description

of inputs

average

(in millions)

Liabilities

Investment and universal life

contracts (6)

(5.3)

Discounted cash

flow

Long duration

interest rate

2.8% (3)

Long-term equity

market volatility

16.7%-27.8%

Non-performance risk

0.6%-1.6%

Utilization rate

See note (4)

Lapse rate

1.3%-9.3%

Mortality rate

See note (5)


(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.


(2)	Revenue multiples are amounts used when we have determined market participants would use such multiples to value the investments.


(3)	Represents the range of rate curves used in the valuation analysis that we have determined market participants would use when pricing the instrument. Derived from interpolation between various observable swap rates.


(4)	This input factor is the number of contractholders taking withdrawals as well as the amount and timing of the withdrawals and a range does not provide a meaningful presentation.


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


(6)	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 and universal life 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 and universal life 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 may vary 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.

B-93

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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, 2019, 2018 and 2017.

Fair Value Option

We elected fair value accounting for:

•

Certain commercial mortgage loans of a consolidated VIE for which it was not practicable for us to determine the carrying value. The consolidated VIE was unwound in the third quarter of 2019. 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.

The following tables present information regarding the assets and liabilities for which the fair value option was elected.



		December 31, 2019		December 31, 2018
		(in millions)
Commercial mortgage loans of consolidated VIEs (1) (2)
	Fair value	$	—	$	6.4
	Aggregate contractual principal		—		6.5

Real estate ventures (1)
	Fair value		22.8		17.2


(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.

B-94

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Commercial mortgage loans of consolidated VIEs
	Change in fair value pre-tax gain (loss) (1) (2)	$	0.1	$	(0.2)	$	(0.4)
	Interest income (3)		0.3		0.7		0.9

Obligations of consolidated VIEs
	Change in fair value pre-tax loss - instrument-specific credit risk (2) (4)		—		—		(0.1)
	Change in fair value pre-tax loss (2)		—		—		(0.1)
	Interest expense (5)		—		—		0.3

Real estate ventures
	Change in fair value pre-tax gain (6)		6.0		1.7		3.8

Investment funds
	Change in fair value pre-tax gain (6) (7)		—		—		1.7
	Dividend income (6)		—		—		1.9


(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.

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, 2019
					Fair value hierarchy level
	Carrying amount		Fair value		Level 1		Level 2		Level 3
	(in millions)
Assets (liabilities)
Mortgage loans	$	15,820.3	$	16,548.0	$	—	$	—	$	16,548.0
Policy loans		742.2		966.3		—		—		966.3
Other investments		273.5		267.8		—		175.0		92.8
Cash and cash equivalents		795.7		795.7		795.7		—		—
Investment contracts		(33,264.0)		(33,358.2)		—		(4,304.5)		(29,053.7)
Long-term debt		(108.7)		(107.6)		—		—		(107.6)
Separate account liabilities		(111,959.7)		(110,964.9)		—		—		(110,964.9)
Bank deposits (1)		(469.6)		(468.3)		—		(468.3)		—
Cash collateral payable		(156.8)		(156.8)		(156.8)		—		—

B-95

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



	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		(31,867.1)		(30,739.2)		—		(4,085.7)		(26,653.5)
Long-term debt		(129.1)		(127.8)		—		—		(127.8)
Separate account liabilities		(95,341.6)		(94,488.7)		—		—		(94,488.7)
Bank deposits (1)		(500.0)		(489.1)		—		(489.1)		—
Cash collateral payable		(70.1)		(70.1)		(70.1)		—		—


(1)	Excludes deposit liabilities without defined or contractual maturities.

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 “Iowa Insurance Division”). The Iowa Insurance Division 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. Statutory accounting practices differ from U.S. GAAP primarily due to charging policy acquisition costs to expense as incurred, establishing reserves using different actuarial assumptions, valuing investments on a different basis and not admitting certain assets, including certain net deferred income tax assets.

For the years ended, December 31, 2019 and 2018, our use of prescribed statutory accounting practices resulted in higher statutory surplus of $862.1 million and $546.3 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, 2019 and 2018, our permitted statutory accounting practice relating to variable annuities with a guaranteed living benefit rider resulted in lower statutory surplus of $151.3 million and $69.9 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. Effective January 1, 2020, the Iowa Insurance Division approved our request to discontinue the use of this permitted practice due to changes in the practices and procedures of the NAIC. The discontinuance of the permitted practice will create a one-time increase to surplus.

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, 2019 and 2018, our affiliated reinsurance subsidiaries assumed statutory reserves of $7,902.3 million and $6,850.3 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, 2019 and 2018, assets admitted under these practices totaled $3,358.0 million and $2,852.0 million, respectively.

Life and health insurance companies are subject to certain risk-based capital (“RBC”) requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life and health insurance company is to be determined based on the various risk factors related to it. As of December 31, 2019, we met the minimum RBC requirements.

B-96

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Our statutory net income and statutory capital and surplus were as follows:



	As of or for the year ended December 31,
	2019		2018		2017
	(in millions)
Statutory net income	$	989.3	$	1,017.6	$	1,976.7
Statutory capital and surplus		5,193.4		5,319.6		4,946.8

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.

Deposit Account Fee Revenue

We offer individual retirement accounts (“IRAs”) through 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.

B-97

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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,
		2019		2018		2017

		(in millions)
Administrative service fee revenue		$	283.2	$	284.1	$	288.0
Deposit account fee revenue			9.3		10.5		10.2
Commission income			26.9		19.6		14.9
Other fee revenue			2.5		2.3		2.1
	Total revenues from contracts with customers		321.9		316.5		315.2
Fees and other revenues not within the scope of revenue
	recognition guidance (1)		2,074.8		1,905.7		1,866.9
Total fees and other revenues per consolidated statements of
	operations	$	2,396.7	$	2,222.2	$	2,182.1


(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 $42.1 million and $42.5 million as of December 31, 2019 and December 31, 2018, respectively.

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 are subject to impairment testing on an annual basis, or when a triggering event occurs that could warrant 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 years ended December 31, 2019 and 2018, $7.5 million and $8.4 million, respectively, 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, 2019, 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.

B-98

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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,
	2019		2018		2017
	(in millions)
Compensation cost	$	21.9	$	26.4	$	28.4
Related income tax benefit		4.1		5.2		9.8
Capitalized as part of an asset		1.7		1.9		2.5

Nonqualified Stock Options

Nonqualified stock options were granted to certain employees under the 2014 Stock Incentive Plan, the Amended and Restated 2010 Stock Incentive Plan and the Stock Incentive Plan. Options outstanding were granted at an exercise price equal to the fair market value of PFG common stock on the date of grant and expire ten years after the grant date. These options have graded vesting over a three-year period, except in the case of specific types of terminations.

The fair value of stock options is estimated using the Black‑Scholes option pricing model. The following is a summary of the assumptions used in this model for the stock options granted during the period:



	For the year ended December 31,
Options	2019			2018			2017
Expected volatility		23.3	%		26.0	%		27.6	%
Expected term (in years)		7.0			7.0			7.0
Risk-free interest rate		2.6	%		2.8	%		2.2	%
Expected dividend yield		4.07	%		3.19	%		2.87	%
Weighted average estimated fair value	$	10.00		$	14.85		$	15.31

We determine expected volatility based on a combination of historical volatility using daily price observations and implied volatility from traded options on PFG common stock. We believe that incorporating both historical and implied volatility into our expected volatility assumption calculation better reflects market expectations. The expected term represents the period of time that options granted are expected to be outstanding. We determine expected term using historical exercise and employee termination data. The risk-free rate for periods within the expected term of the option is based on the U.S. Treasury risk-free interest rate in effect at the time of grant. The dividend yield is based on historical dividend distributions compared to the closing price of PFG common shares on the grant date.

As of December 31, 2019, we had $1.5 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 2019, 2018 and 2017 was $53.09, $63.98 and $62.78, respectively.

B-99

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

As of December 31, 2019, we had $1.9 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 2019, 2018 and 2017 was $53.19, $63.77 and $62.80, respectively.

As of December 31, 2019, we had $18.1 million of total unrecognized compensation cost related to nonvested restricted stock unit awards granted under these plans. The cost is expected to be recognized over a weighted‑average period of approximately 1.7 years.

Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, participating employees 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 PFG common stock on a quarterly basis. Employees may purchase up to $25,000 in PFG stock value annually. 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 $11.37, $9.27 and $14.72 during 2019, 2018 and 2017, respectively.

B-100

PART C

OTHER INFORMATION

Item 24. Financial Statements and Exhibits

Unless otherwise noted, documents containing Accession Numbers below have previously been filed with the Securities and Exchange Commission and are incorporated herein by reference.


(a)	Financial Statements included in the Registration Statement


(1)	Part A:

Condensed Financial Information for the 10 years ended December 31, 2019


(2)	Part B:

Principal Life Insurance Company Separate Account B:

Report of Independent Registered Public Accounting Firm

Statements of Assets and Liabilities, December 31, 2019

Statements of Operations for the year ended December 31, 2019

Statements of Changes in Net Assets for the years ended December 31, 2019 and 2018

Notes to Financial Statements.

Principal Life Insurance Company:

Report of Independent Registered Public Accounting Firm

Consolidated Statements of Financial Position at December 31, 2019 and 2018

Consolidated Statements of Operations for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Stockholder's Equity for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017

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, 2019 *

Schedule III - Supplementary Insurance Information as of December 31, 2019, 2018 and 2017 and for each of the years then ended *

Schedule IV - Reinsurance as of December 31, 2019, 2018 and 2017 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 (Exhibits (b)(1) - (6b) were originally filed in paper format. Accordingly, a hyperlink has not been provided.)
	(1)	Resolution of Board of Directors of the Depositor - (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 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. 0000009713-15-000054)
		(7)	Participation Agreement Amendment No. 6 dated 08/10/2016 (filed with the Commission on 04/28/2017 Accession No. 0000009713-17-000046)
		(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 *
	(10a)	Consent of Ernst & Young LLP *
	(10b)	Powers of Attorney (filed with the Commission on 04/27/2018 Accession No. 0000009713-18-000048) and filed herein *
	(10c)	Consent of Counsel *
	(11)	Financial Statement Schedules *
	(13a)	Total Return Calculation - (Exhibit was filed on 03/01/1996 and was originally filed in paper format. Accordingly, a hyperlink has not been provided.)
	(13b)	Annualized Yield for Separate Account B - (Exhibit was filed on 03/01/1996 and was originally filed in paper format. Accordingly, a hyperlink has not been provided.)

* 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
JONATHAN S. AUERBACH PayPal 2211 North First Street San Jose, CA 95131	Director Member, Nominating and Governance Committee
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 563 Love Road Lyndhurst, VA 22952	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 Chair, Nominating and Governance 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 1515 Broadway, 22^nd Floor New York, NY 10036	Director Member, Audit and Human Resources Committees
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 BORDA⁽¹⁾	Senior Vice President and Chief Operating Officer - Principal International
NICHOLAS M. CECERE⁽¹⁾	Senior Vice President - USIS Distribution
WEE YEE (THOMAS) CHEONG⁽³⁾	Senior Vice President - President, Principal Asia
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
KARA M. HOOGENSEN⁽¹⁾	Senior Vice President Specialty Benefits
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
CHRISTOPHER J. LITTLEFIELD⁽¹⁾	Executive Vice President, General Counsel and Secretary
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 and Chief Legal Officer
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
BETHANY A. WOOD⁽¹⁾	Senior Vice President and Chief Marketing Officer

⁽¹⁾	711 High Street
	Des Moines, IA 50392

⁽²⁾	Principal Vida Chile
	Av Apoquindo 3600
	Las Condes
	Santiago, Chile

⁽³⁾	Unit 1001-2 Central Plaza
	18 Harbour Road
	Wan Chai, Hong Kong

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, 2019 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, 2019)

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 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

-->Principal Asset Management Berhad*

Malaysia

-->CIMB Wealth Advisors Berhad*

Malaysia

100

-->PT Principal Asset Management

Indonesia

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

Singapore

100

-->Principal Asset Management Company Limited*

Thailand

100

-->PT 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

85.52

-->PGI Finisterre Holding Company LTD*

Wales/United Kingdom

100

-->Finisterre Holdings Limited*

Malta

95.8

-->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 Corporate Secretarial Services Limited

Wales/United Kingdom

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

78.25

--> 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

-->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, LLC*#<

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 International Holding Company, LLC*#

Delaware

100

-->Principal Global Services Private Limited*#

India

100

-->Principal Global Services (Philippines) LLC

Philippines

100

-->Veloxiti Commercial Contracting, Inc.

Delaware

-->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 (UK) LTD*#

United Kingdom

100

-->Principal Global Investors Asia (UK) Ltd

United Kingdom

100

-->Principal International Asia (UK) Ltd

United Kingdom

100

-->Principal Global Investors (Australia) Service Company Pty Limited*#

Australia

100

-->Principal Global Investors (Australia) Limited*#

Australia

100

-->Principal Global Investors (Japan) Limited*#

Japan

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 (Cayman) Limited*

Cayman Islands

100

-->Liongate Capital Management LLP*

Wales/United Kingdom

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 Enterprise Services (India) LLP

India

100

-->Principal Securities, Inc.

Iowa

100

-->Diversified Dental Services, Inc.*#

Nevada

100

-->Principal Investors Corporation*#

New Jersey

100

-->Principal Innovations, Inc.

Delaware

90.24

-->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, 2020



(1)	(2)
	Number of
Title of Class	Contractowners
BFA Variable Annuity Contracts	6
Pension Builder Plus Contracts	51
Personal Variable Contracts	2
Premier Variable Contracts	7
Flexible Variable Annuity Contract	15,144
Freedom Variable Annuity Contract	620
Freedom 2 Variable Annuity Contract	209
Investment Plus Variable Annuity Contract	55,765
Principal Lifetime Income Solutions	925
Principal Pivot Series Variable Annuity	2,638
Principal Lifetime Income Solutions II	8,207

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. 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

Meaghan Alvarez	Vice President/Chief Compliance Officer
Principal Financial Group⁽¹⁾

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⁾

Chad Claire	Chief Information Officer
Principal Financial Group⁽¹⁾

Amy C. Friedrich	Director
Principal Financial Group⁽¹⁾

Bill Froehlich	Vice President, Operations
Principal Financial Group⁽¹⁾

Gina L. Graham	Vice President and Treasurer
Principal Financial Group⁽¹⁾

Doug Hodgson	Counsel
Principal Financial Group⁽¹⁾

Grady Holt	Vice President - Advisory Services
Principal Financial Group⁽¹⁾

Chantel M. Kramme	Counsel
Principal Financial Group⁽¹⁾

Julia M. Lawler	Director
Principal Financial Group⁽¹⁾

Julie LeClere	Chief Operating Officer
Principal Financial Group⁽¹⁾

Casey Mathias	Vice President
Principal Financial Group⁽¹⁾



Michael F. Murray	Chairman, President and Chief Executive Officer
Principal Financial Group⁽¹⁾

Doug Rants	Chief Information Security Officer
Principal Financial Group⁽¹⁾

Karen E. Shaff	Executive Vice President/General Counsel/Corporate Secretary
Principal Financial Group⁽¹⁾

Craig Spadafora	Senior Vice President
Principal Financial Group⁽¹⁾

Deanna D. Strable-Soethout	Director
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⁾

Clint L. Woods	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.	$39,265,417.97	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 59½, 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 28th day of April, 2020.



	PRINCIPAL LIFE INSURANCE COMPANY
	SEPARATE ACCOUNT B
	(Registrant)


	By :	/s/ D. J. Houston
		D. J. Houston
		Chairman, President and Chief Executive Officer


	PRINCIPAL LIFE INSURANCE COMPANY
	(Depositor)


	By :	/s/ D. J. Houston
		D. J. Houston
		Chairman of the Board
		Director, Chairman, President and Chief Executive Officer

Attest:


/s/ Clint Woods
Clint Woods
Assistant Corporate Secretary and Governance Officer

Pursuant to the requirements of the Securities Act, this amendment to the registration statement has been signed by the following persons in the capacities and on the date indicated.



Signature	Title	Date

/s/ D. J. Houston	Director, Chairman of the Board	April 28, 2020
D. J. Houston	Chairman, President, and Chief Executive Officer

/s/ A. R. Sanders	Senior Vice President and Controller	April 28, 2020
A. R. Sanders	(Principal Accounting Officer)

/s/ D. D. Strable-Soethout	Executive Vice President and	April 28, 2020
D. D. Strable-Soethout	Chief Financial Officer
	(Principal Financial Officer)

(J. S. Auerbach)*	Director	April 28, 2020
J. S. Auerbach

(B. J. Bernard)*	Director	April 28, 2020
B. J. Bernard

(J. Carter-Miller)*	Director	April 28, 2020
J. Carter-Miller

(M. T. Dan)*	Director	April 28, 2020
M. T. Dan

(C. D. Gelatt, Jr.)*	Director	April 28, 2020
C. D. Gelatt, Jr.

(S. L. Helton)*	Director	April 28, 2020
S. L. Helton

(R. C. Hochschild)*	Director	April 28, 2020
R. C. Hochschild

(S. M. Mills)*	Director	April 28, 2020
S. M. Mills

(D. C. Nordin)*	Director	April 28, 2020
D. C. Nordin

(B. C. Pickerell)*	Director	April 28, 2020
B. C. Pickerell

(E. E. Tallett)*	Director	April 28, 2020
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 and Filed Herein