497 1 vlvuliii4972014doc.htm VUL III SAI 497 FILING VL-VUL III-497-2014 Combined Document

PART B
STATEMENT OF ADDITIONAL INFORMATION
PRINCIPAL VARIABLE UNIVERSAL LIFE INCOME IIISM 
dated May 1, 2014
This Statement of Additional Information provides information about the Principal Variable Universal Life Income III Insurance Policy (the “Policy”) sponsored by Principal National Life Insurance Company through its Principal National Life Insurance Company Variable Life Separate Account.
This Statement of Additional Information is not a prospectus but does provide information that supplements the Policy’s prospectus dated May 1, 2014. It should be read with that prospectus which is available without charge. To request a copy of the prospectus, please contact us at:
Principal Variable Universal Life Income III
Principal Financial Group
P.O. Box 10431
Des Moines, Iowa 50306-0431
Telephone: 1-800-247-9988
Fax: 1-866-885-0390



TABLE OF CONTENTS

 
Page
GENERAL INFORMATION AND HISTORY
The Company
Principal National Life Insurance Company Variable Life Separate Account
Independent Registered Public Accounting Firm
UNDERWRITERS
UNDERWRITING PROCEDURES
PERFORMANCE DATA
FINANCIAL STATEMENTS



2


GENERAL INFORMATION AND HISTORY
The Company
Principal National Life Insurance Company (the “Company”) is the issuer of the Principal Variable Universal Life Income III Insurance Policy (the “Policy”). The Company is a stock life insurance company with its home office at: Principal Financial Group, 711 High Street, Des Moines, Iowa 50306-0431. It is authorized to transact life insurance business in the District of Columbia and in every state except New York. The Company is a wholly-owned subsidiary of Principal Financial Services, Inc. (“PFS”), which in turn is a wholly owned subsidiary of Principal Financial Group, Inc.
The Progressive Corporation (“Progressive”), an Ohio corporation, organized the Company on November 6, 1967, as an Ohio domiciled life insurance company. PFS acquired control of the Company from Progressive pursuant to a Purchase and Sale Agreement dated August 22, 2003. PFS subsequently redomesticated the Company to Iowa and on October 21, 2003, changed the Company’s name from Progressive American Life Insurance Company to Principal Health Insurance Company. PFS originally intended to use the Company to sell group medical insurance and to provide third party administrative services to self-insured customers. However, PFS never used the Company for these purposes. PFS eventually determined that the best strategic use of the Company would be to offer and sell individual life insurance products. On October 16, 2007, PFS changed the Company’s name to Principal National Life Insurance Company to reflect this change in purpose.
Principal National Life Insurance Company Variable Life Separate Account
The Company’s board of directors established the Variable Life Separate Account (the “Separate Account”) under Iowa law on November 28, 2007. It is registered as a unit investment trust with the U.S. Securities and Exchange Commission (the “SEC”). This registration does not involve SEC supervision of the investments or investment policies of the Separate Account.
All of the units of the Separate Account are owned by the Company. Policy owners may purchase units of the divisions of the Separate Account.
Administrative and Facilities Services
Principal Life Insurance Company (“PLIC”) provides administrative support services and facilities to the Company. PLIC is a wholly-owned subsidiary of Principal Financial Services, Inc. and an affiliate of the Company. PLIC’s address is 711 High Street, Des Moines, Iowa, 50306-0431.
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 the Company.
UNDERWRITERS
The principal underwriter of the Policy is Princor Financial Services Corporation (“Princor”) which is a wholly-owned subsidiary of PFS and an affiliate of the Company. Princor’s address is Princor Financial Services Corporation, 655 9th Street, Des Moines, Iowa, 50392. Princor was incorporated in Iowa in 1968, and is a securities broker-dealer registered with the SEC as well as a member of the Financial Industry Regulatory Authority (“FINRA”). The Policies may also be sold through other broker-dealers authorized by Princor and applicable law to do so.
The Policy’s offering to the public is continuous. As the principal underwriter, Princor is paid for the distribution of the Policy. For the last three fiscal years, Princor has received and retained the following commissions:
2013
received/retained
2012
received/retained
2011
received/retained
$3,648,110/$0
$1,936,888/$0
-
UNDERWRITING PROCEDURES
Guaranteed maximum cost of insurance rates are based on 2001 CSO Unismoke Mortality Table (the prevailing mortality table approved by the National Association of Insurance Commissioners), age nearest birthday, with distinction for the insured's gender.

3


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 Policy was not offered prior to December 13, 2012. The Separate Account may publish advertisements containing information about the hypothetical performance of one or more of its divisions for this Policy as if the Policy had been issued on or after the date the underlying mutual fund in which such division invests was first offered. The hypothetical performance from the date of the inception of the underlying mutual fund is derived by reducing the actual performance of the underlying mutual fund by the fees and charges of the Policy as if it had been in existence. The yield and total return figures described below 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 products. The Separate Account may also quote rankings, yields or returns published by independent statistical services or publishers and information regarding performance of certain market indices. Any performance data quoted for the Separate Account represents historical performance and is not intended to indicate future performance.
From time to time the Principal Variable Contracts Funds, Inc. 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 in the division over a seven day period (the period will be stated in the advertisement). This income is then “annualized.” That is, the amount of income generated during that week is assumed to be generated each week over a 52-week period and is shown as a percentage. The “effective yield” is calculated similarly but, when annualized, the income earned in the division is assumed to be reinvested. The “effective yield” is slightly higher than the “yield” because of the compounding effect of this assumed reinvestment. Neither yield quotation reflects a sales load deducted from purchase payments which, if included, would reduce the “yield” and “effective yield.” For the period ended December 31, 2013, the 7-day annualized and effective yields were 0.00% and 0.00%, respectively.
In addition, the Separate Account advertises the “yield” for certain other divisions. The “yield” of a division 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. This yield quotation does not reflect a contingent deferred sales charge which, if included, would reduce the “yield.” No contingent deferred sales charge is assessed on investments in the Separate Account divisions of the Policy, however, Policies which are fully surrendered within the first fourteen policy years (or within fourteen years of a policy face amount increase) are subject to a surrender charge.
Performance history of the underlying mutual funds is measured by comparing the value of the underlying mutual fund at the beginning of the period to the value of the underlying mutual fund at the end of the period.
The Separate Account also advertises the average annual total return of its various divisions. The average annual total return for any of the divisions is computed by calculating the average annual compounded rate of return over the stated period that would equate an initial premium of $1,000 to the ending redeemable policy value.
The performance information does not include any charges or fees that are deducted from your Policy. These are charges and fees such as the sales charge, charge for taxes, surrender charges, transfer fees (if any), cost of insurance charge, asset based charge, monthly administrative charge, monthly policy issue charge, policy loan interest charge (if any), and charges for optional insurance benefits. Some of these charges vary depending on your age, gender, face amount, underwriting class, premiums, policy duration, and account value. All of these policy charges will have a significant impact on your Policy’s value and overall performance. If these charges and fees were reflected in the performance data, performance would be lower. To see the impact of these charges and fees on your Policy’s performance, you should obtain a personalized illustration based on historical underlying mutual fund performance from your financial adviser.

4


Following are the hypothetical average annual total returns for the periods ended December 31, 2013 assuming the Policy had been offered as of the effective dates of the underlying mutual funds in which the divisions invest:
Division
Effective
Date
One
Year
Five
Years
Ten
Years
Since
Inception
AllianceBernstein International Value
05/10/2001
23.01
 %
9.89
%
4.63
%
 
AllianceBernstein Small Cap Growth
08/05/1996
45.66
 %
27.71
%
10.91
%
 
AllianceBernstein Small/Mid Cap Value
05/02/2001
38.06
 %
22.18
%
10.04
%
 
American Century VP Income & Growth
10/30/1997
35.48
 %
16.42
%
6.69
%
 
American Century VP Inflation Protection
12/31/2002
-8.48
 %
4.94
%
4.11
%
 
American Century VP Mid Cap Value
10/29/2004
29.90
 %
18.25
%
 
10.58
%
American Century VP Value
05/01/1996
31.48
 %
15.51
%
7.29
%
 
American Century VP Vista
04/29/2005
30.00
 %
15.86
%
 
7.52
%
Bond & Mortgage Securities
12/18/1987
-0.86
 %
9.04
%
4.06
%
 
Calvert Income
04/25/2002
-1.23
 %
7.76
%
4.50
%
 
Calvert Russell 2000 Small Cap Index
04/27/2000
37.62
 %
19.00
%
8.05
%
 
Calvert S&P MidCap 400 Index
05/03/1999
32.47
 %
20.92
%
9.58
%
 
Calvert SRI Equity
04/30/2002
31.05
 %
18.74
%
7.47
%
 
Delaware Small Cap Value
05/01/2000
33.17
 %
20.81
%
9.90
%
 
Delaware Smid Cap Growth
05/01/2000
40.97
 %
27.15
%
11.37
%
 
Diversified International
05/02/1994
18.44
 %
12.75
%
8.11
%
 
DWS Small Mid Cap Value
05/01/1996
34.70
 %
17.80
%
10.25
%
 
Equity Income
04/28/1998
27.30
 %
16.16
%
8.60
%
 
Fidelity VIP Contrafund
01/03/1995
30.95
 %
18.55
%
8.95
%
 
Fidelity VIP Equity-Income
11/03/1986
27.83
 %
17.59
%
6.25
%
 
Fidelity VIP High Income
10/01/1985
5.70
 %
15.30
%
6.87
%
 
Fidelity VIP Mid Cap
12/28/1998
35.87
 %
20.05
%
11.13
%
 
Franklin Mutual Global Discovery VIP
11/08/1996
27.61
 %
14.15
%
10.09
%
 
Franklin Rising Dividends VIP
01/27/1992
29.69
 %
16.86
%
7.59
%
 
Franklin Small Cap Value VIP
05/01/1998
36.24
 %
20.78
%
10.22
%
 
Government & High Quality Bond
05/06/1993
-1.03
 %
4.25
%
4.30
%
 
International Emerging Markets
10/24/2000
-4.95
 %
13.81
%
11.01
%
 
Invesco American Franchise
09/18/2000
39.79
 %
24.06
%
7.48
%
 
Invesco Core Equity
05/02/1994
28.93
 %
15.35
%
7.39
%
 
Invesco Global Health Care
05/22/1997
40.54
 %
18.88
%
8.78
%
 
Invesco Mid Cap Core Equity
09/10/2001
28.46
 %
14.44
%
7.54
%
 
Janus Aspen Forty
05/01/1997
30.89
 %
18.59
%
9.97
%
 
LargeCap Blend II
05/01/2002
31.40
 %
17.30
%
7.11
%
 
LargeCap Growth
05/02/1994
33.91
 %
17.64
%
7.84
%
 
LargeCap Growth I
06/01/1994
36.14
 %
23.60
%
8.79
%
 
LargeCap S&P 500 Index
05/03/1999
32.04
 %
17.58
%
7.08
%
 
LargeCap Value
05/13/1970
30.83
 %
15.80
%
6.86
%
 
MFS VIT New Discovery
05/01/1998
41.22
 %
27.61
%
10.18
%
 
MFS VIT Utilities
01/03/1995
20.21
 %
16.93
%
13.14
%
 
MidCap
12/18/1987
33.93
 %
23.52
%
11.81
%
 
Money Market
03/18/1983
0.00
 %
0.04
%
1.57
%
 
Neuberger Berman AMT Large Cap Value
03/22/1994
31.14
 %
19.60
%
7.22
%
 
Oppenheimer Main Street Small Cap
07/16/2001
40.62
 %
22.16
%
9.01
%
 
Principal LifeTime 2010
08/30/2004
10.81
 %
12.36
%
 
5.61
%
Principal LifeTime 2020
08/30/2004
15.97
 %
14.07
%
 
6.58
%
Principal LifeTime 2030
08/30/2004
18.96
 %
14.75
%
 
6.60
%
Principal LifeTime 2040
08/30/2004
22.42
 %
15.72
%
 
7.04
%

5


Division
Effective
Date
One
Year
Five
Years
Ten
Years
Since
Inception
Principal LifeTime 2050
08/30/2004
23.74
 %
16.03
%
 
7.10
%
Principal LifeTime 2060
05/01/2013
 
 
 
15.80
%
Principal LifeTime Strategic Income
08/30/2004
5.11
 %
9.56
%
 
4.65
%
Putnam VT Voyager
02/01/1988
43.72
 %
21.71
%
7.58
%
 
Real Estate Securities
05/01/1998
4.10
 %
16.58
%
9.74
%
 
SAM Balanced
06/03/1997
17.68
 %
13.52
%
6.92
%
 
SAM Conservative Balanced
04/23/1998
11.53
 %
11.44
%
6.28
%
 
SAM Conservative Growth
06/03/1997
23.08
 %
15.17
%
7.12
%
 
SAM Flexible Income
09/09/1997
7.75
 %
10.32
%
5.81
%
 
SAM Strategic Growth
06/03/1997
27.41
 %
16.46
%
7.28
%
 
Short-Term Income
01/12/1994
1.14
 %
4.28
%
3.37
%
 
SmallCap Blend
05/01/1998
47.81
 %
20.46
%
8.96
%
 
SmallCap Growth II
05/01/1998
47.42
 %
22.34
%
8.16
%
 
SmallCap Value I
05/01/1998
39.76
 %
19.15
%
8.67
%
 
Templeton Global Bond VIP
01/24/1989
1.63
 %
9.50
%
8.82
%
 
TOPS Managed Risk Balanced ETF
06/09/2011
7.93
 %
 
 
5.86
%
TOPS Managed Risk Growth ETF
04/26/2011
15.96
 %
 
 
6.43
%
TOPS Managed Risk Moderate Growth ETF
06/09/2011
12.39
 %
 
 
7.41
%
Van Eck Global Hard Assets
05/01/2006
10.30
 %
13.83
%
 
5.37
%
FINANCIAL STATEMENTS


6

 


Report of Independent Registered Public Accounting Firm

The Board of Directors and Participants
Principal National Life Insurance Company

We have audited the accompanying statements of assets and liabilities of Principal National Life Insurance Company Variable Life Separate Account (“Separate Account”), comprised of subaccounts as listed in the accompanying statements of assets and liabilities, as of December 31, 2013, and the related statements of operations for the year or period then ended, and the statements of changes in net assets for the years or periods ended December 31, 2013 and 2012. These financial statements are the responsibility of the Separate Account’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Separate Account’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Separate Account’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of December 31, 2013, by correspondence with the custodian and brokers. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Principal National Life Insurance Company Variable Life Separate Account at December 31, 2013, the results of its operations for the year or period then ended, and the changes in its net assets for the years or periods ended December 31, 2013 and 2012, in conformity with U.S. generally accepted accounting principles.

/s/Ernst & Young LLP

Des Moines, Iowa
April 25, 2014





Principal National Life Insurance Company
Variable Life Separate Account
 
 
 
 
 
 
 
Statements of Assets and Liabilities
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein
 
AllianceBernstein
 
 
International
 
Small Cap
 
 
Value Class A
 
Growth Class A
 
 
Division
 
Division
Assets
 
 
 
 
 
Investments in shares of mutual funds, at market
$
 192,798 
 
$
 82,705 
 
 
 
 
 
 
 
Liabilities
 
 - 
 
 
 - 
Net assets
$
 192,798 
 
$
 82,705 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
Variable Universal Life Income III
$
 192,798 
 
$
 82,705 
Total net assets
$
 192,798 
 
$
 82,705 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
 181,441 
 
$
 71,715 
Shares of mutual fund owned
 
 12,862 
 
 
 3,524 
Accumulation units outstanding:
 
 
 
 
 
 
Variable Universal Life Income III
 
 25,463 
 
 
 4,442 
 
 
 
 
 
 
 
Accumulation unit value:
 
 
 
 
 
 
Variable Universal Life Income III
$
 7.57 
 
$
 18.62 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein
 
American Century
 
American Century
 
American Century
 
 
 
 
 
 
 
 
 
Small/Mid Cap
 
VP Income &
 
VP Inflation
 
VP MidCap
 
American Century
American Century
Bond & Mortgage
Value Class A
 
Growth Class II
 
Protection Class II
 
Value Class II
 
VP Value Class II
 
VP Vista Class II
 
Securities Class 1
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 71,909 
 
$
 102,420 
 
$
 90,078 
 
$
 197,517 
 
$
 136,239 
 
$
 1,092 
 
$
 140,593 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
$
 71,909 
 
$
 102,420 
 
$
 90,078 
 
$
 197,517 
 
$
 136,239 
 
$
 1,092 
 
$
 140,593 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 71,909 
 
$
 102,420 
 
$
 90,078 
 
$
 197,517 
 
$
 136,239 
 
$
 1,092 
 
$
 140,593 
$
 71,909 
 
$
 102,420 
 
$
 90,078 
 
$
 197,517 
 
$
 136,239 
 
$
 1,092 
 
$
 140,593 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 66,007 
 
$
 93,462 
 
$
 96,245 
 
$
 187,359 
 
$
 125,886 
 
$
 974 
 
$
 142,493 
 
 3,142 
 
 
 11,169 
 
 
 8,620 
 
 
 10,688 
 
 
 16,104 
 
 
 49 
 
 
 12,508 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 4,111 
 
 
 5,093 
 
 
 7,994 
 
 
 9,420 
 
 
 6,175 
 
 
 66 
 
 
 6,140 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 17.49 
 
$
 20.11 
 
$
 11.27 
 
$
 20.97 
 
$
 22.06 
 
$
 16.44 
 
$
 22.90 




Principal National Life Insurance Company
Variable Life Separate Account
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert Russell
 
 
 
 
2000 Small Cap
 
 
Calvert Income
 
Index Class F
 
 
Division
 
Division
Assets
 
 
 
 
 
Investments in shares of mutual funds, at market
$
 105,706 
 
$
 80,405 
 
 
 
 
 
 
 
Liabilities
 
 - 
 
 
 - 
Net assets
$
 105,706 
 
$
 80,405 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
Variable Universal Life Income III
$
 105,706 
 
$
 80,405 
Total net assets
$
 105,706 
 
$
 80,405 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
 109,880 
 
$
 73,300 
Shares of mutual fund owned
 
 6,673 
 
 
 971 
Accumulation units outstanding:
 
 
 
 
 
 
Variable Universal Life Income III
 
 8,155 
 
 
 4,452 
 
 
 
 
 
 
 
Accumulation unit value:
 
 
 
 
 
 
Variable Universal Life Income III
$
 12.96 
 
$
 18.06 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert S&P
 
 
 
 
Delaware Small
 
Delaware Smid Cap
 
Diversified
 
 
 
 
 
 
MidCap 400
 
 
 
Cap Value
 
Growth
 
International
 
DWS Small Mid
 
Equity Income
Index Class F
 
Calvert SRI Equity
 
Service Class
 
Service Class
 
Class I
 
Cap Value Class B
 
Class 1
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 56,457 
 
$
 35,802 
 
$
 95,898 
 
$
 115,791 
 
$
 253,631 
 
$
 18,897 
 
$
 313,298 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
$
 56,457 
 
$
 35,802 
 
$
 95,898 
 
$
 115,791 
 
$
 253,631 
 
$
 18,897 
 
$
 313,298 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 56,457 
 
$
 35,802 
 
$
 95,898 
 
$
 115,791 
 
$
 253,631 
 
$
 18,897 
 
$
 313,298 
$
 56,457 
 
$
 35,802 
 
$
 95,898 
 
$
 115,791 
 
$
 253,631 
 
$
 18,897 
 
$
 313,298 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 52,090 
 
$
 31,976 
 
$
 84,043 
 
$
 99,890 
 
$
 230,583 
 
$
 16,884 
 
$
 278,701 
 
 580 
 
 
 1,362 
 
 
 2,306 
 
 
 3,696 
 
 
 17,057 
 
 
 1,107 
 
 
 14,919 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 3,425 
 
 
 2,017 
 
 
 5,169 
 
 
 8,001 
 
 
 9,937 
 
 
 1,115 
 
 
 21,343 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 16.49 
 
$
 17.75 
 
$
 18.55 
 
$
 14.47 
 
$
 25.52 
 
$
 16.95 
 
$
 14.68 




Principal National Life Insurance Company
Variable Life Separate Account
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
Fidelity VIP Contrafund
Service Class 2
 
Fidelity VIP Equity-Income Service Class 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
Assets
 
 
 
 
 
Investments in shares of mutual funds, at market
$
 566,849 
 
$
 175,464 
 
 
 
 
 
 
 
Liabilities
 
 - 
 
 
 - 
Net assets
$
 566,849 
 
$
 175,464 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
Variable Universal Life Income III
$
 566,849 
 
$
 175,464 
Total net assets
$
 566,849 
 
$
 175,464 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
 495,082 
 
$
 174,604 
Shares of mutual fund owned
 
 16,786 
 
 
 7,669 
Accumulation units outstanding:
 
 
 
 
 
 
Variable Universal Life Income III
 
 21,752 
 
 
 9,118 
 
 
 
 
 
 
 
Accumulation unit value:
 
 
 
 
 
 
Variable Universal Life Income III
$
 26.06 
 
$
 19.24 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP High Income
Service Class 2
 
Fidelity VIP Mid Cap Service Class 2
 
Franklin Mutual Global
Discovery Class 2
 
Franklin Rising Dividends
Securities Class 2
 
Franklin Small Cap Value
Securities Class 2
 
Government & High Quality
Bond Class 1
 
International Emerging
Markets Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 341,185 
 
$
 318,005 
 
$
 191,573 
 
$
 272,163 
 
$
 71,835 
 
$
 326,879 
 
$
 340,500 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
$
 341,185 
 
$
 318,005 
 
$
 191,573 
 
$
 272,163 
 
$
 71,835 
 
$
 326,879 
 
$
 340,500 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 341,185 
 
$
 318,005 
 
$
 191,573 
 
$
 272,163 
 
$
 71,835 
 
$
 326,879 
 
$
 340,500 
$
 341,185 
 
$
 318,005 
 
$
 191,573 
 
$
 272,163 
 
$
 71,835 
 
$
 326,879 
 
$
 340,500 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 350,113 
 
$
 315,821 
 
$
 183,868 
 
$
 240,275 
 
$
 65,897 
 
$
 329,473 
 
$
 335,207 
 
 60,494 
 
 
 8,933 
 
 
 8,388 
 
 
 9,854 
 
 
 2,984 
 
 
 31,644 
 
 
 21,361 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 13,450 
 
 
 9,380 
 
 
 6,748 
 
 
 12,249 
 
 
 2,561 
 
 
 26,265 
 
 
 9,517 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 25.37 
 
$
 33.91 
 
$
 28.39 
 
$
 22.22 
 
$
 28.05 
 
$
 12.45 
 
$
 35.78 




Principal National Life Insurance Company
Variable Life Separate Account
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
Invesco American Franchise Series II
 
Invesco Core Equity Series II
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
Assets
 
 
 
 
 
Investments in shares of mutual funds, at market
$
 23,514 
 
$
 22,543 
 
 
 
 
 
 
 
Liabilities
 
 - 
 
 
 - 
Net assets
$
 23,514 
 
$
 22,543 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
Variable Universal Life Income III
$
 23,514 
 
$
 22,543 
Total net assets
$
 23,514 
 
$
 22,543 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
 20,067 
 
$
 20,958 
Shares of mutual fund owned
 
 474 
 
 
 593 
Accumulation units outstanding:
 
 
 
 
 
 
Variable Universal Life Income III
 
 1,727 
 
 
 853 
 
 
 
 
 
 
 
Accumulation unit value:
 
 
 
 
 
 
Variable Universal Life Income III
$
 13.62 
 
$
 26.44 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Global Health Care
Series I
 
Invesco Mid Cap Core Equity
Series II
 
Janus Aspen
Forty
Service Shares
 
LargeCap
Blend II Class 1
 
LargeCap
Growth Class 1
 
LargeCap
Growth I Class 1
 
LargeCap S&P 500 Index Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 236,841 
 
$
 133,703 
 
$
 166,486 
 
$
 26,300 
 
$
 186,044 
 
$
 248,846 
 
$
 2,189,782 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
$
 236,841 
 
$
 133,703 
 
$
 166,486 
 
$
 26,300 
 
$
 186,044 
 
$
 248,846 
 
$
 2,189,782 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 236,841 
 
$
 133,703 
 
$
 166,486 
 
$
 26,300 
 
$
 186,044 
 
$
 248,846 
 
$
 2,189,782 
$
 236,841 
 
$
 133,703 
 
$
 166,486 
 
$
 26,300 
 
$
 186,044 
 
$
 248,846 
 
$
 2,189,782 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 211,016 
 
$
 128,733 
 
$
 147,966 
 
$
 22,948 
 
$
 163,937 
 
$
 224,407 
 
$
 1,841,344 
 
 8,078 
 
 
 8,943 
 
 
 3,177 
 
 
 2,607 
 
 
 8,358 
 
 
 7,638 
 
 
 163,661 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 10,611 
 
 
 7,763 
 
 
 12,138 
 
 
 1,285 
 
 
 8,501 
 
 
 7,614 
 
 
 126,594 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 22.32 
 
$
 17.22 
 
$
 13.72 
 
$
 20.46 
 
$
 21.89 
 
$
 32.68 
 
$
 17.30 




Principal National Life Insurance Company
Variable Life Separate Account
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
LargeCap Value Class 1
 
MFS VIT New Discovery
Service Class
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
Assets
 
 
 
 
 
Investments in shares of mutual funds, at market
$
 156,317 
 
$
 57,274 
 
 
 
 
 
 
 
Liabilities
 
 - 
 
 
 - 
Net assets
$
 156,317 
 
$
 57,274 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
Variable Universal Life Income III
$
 156,317 
 
$
 57,274 
Total net assets
$
 156,317 
 
$
 57,274 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
 133,647 
 
$
 50,141 
Shares of mutual fund owned
 
 4,327 
 
 
 2,725 
Accumulation units outstanding:
 
 
 
 
 
 
Variable Universal Life Income III
 
 5,812 
 
 
 2,146 
 
 
 
 
 
 
 
Accumulation unit value:
 
 
 
 
 
 
Variable Universal Life Income III
$
 26.90 
 
$
 26.69 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT Utilities Service Class
 
MidCap Class 1
 
Money Market Class 1
 
Neuberger Berman AMT Large Cap
Value I Class
 
Oppenheimer Main Street Small Cap Service Shares
 
Principal LifeTime Strategic
Income Class 1
 
Principal LifeTime 2010 Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 187,834 
 
$
 996,109 
 
$
 2,292,076 
 
$
 50,793 
 
$
 48,099 
 
$
 1,014 
 
$
 3,158 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
$
 187,834 
 
$
 996,109 
 
$
 2,292,076 
 
$
 50,793 
 
$
 48,099 
 
$
 1,014 
 
$
 3,158 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 187,834 
 
$
 996,109 
 
$
 2,292,076 
 
$
 50,793 
 
$
 48,099 
 
$
 1,014 
 
$
 3,158 
$
 187,834 
 
$
 996,109 
 
$
 2,292,076 
 
$
 50,793 
 
$
 48,099 
 
$
 1,014 
 
$
 3,158 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 176,632 
 
$
 887,794 
 
$
 2,292,076 
 
$
 48,123 
 
$
 41,757 
 
$
 1,012 
 
$
 3,017 
 
 5,969 
 
 
 16,778 
 
 
 2,292,076 
 
 
 3,377 
 
 
 1,747 
 
 
 90 
 
 
 257 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 13,556 
 
 
 17,299 
 
 
 150,797 
 
 
 3,492 
 
 
 2,528 
 
 
 66 
 
 
 190 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 13.86 
 
$
 57.58 
 
$
 15.20 
 
$
 14.55 
 
$
 19.03 
 
$
 15.29 
 
$
 16.65 




Principal National Life Insurance Company
Variable Life Separate Account
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
Principal LifeTime 2020 Class 1
 
Principal LifeTime 2030 Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
Assets
 
 
 
 
 
Investments in shares of mutual funds, at market
$
 261,472 
 
$
 456,947 
 
 
 
 
 
 
 
Liabilities
 
 - 
 
 
 - 
Net assets
$
 261,472 
 
$
 456,947 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
Variable Universal Life Income III
$
 261,472 
 
$
 456,947 
Total net assets
$
 261,472 
 
$
 456,947 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
 245,954 
 
$
 417,029 
Shares of mutual fund owned
 
 19,198 
 
 
 32,523 
Accumulation units outstanding:
 
 
 
 
 
 
Variable Universal Life Income III
 
 14,417 
 
 
 25,149 
 
 
 
 
 
 
 
Accumulation unit value:
 
 
 
 
 
 
Variable Universal Life Income III
$
 18.14 
 
$
 18.17 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 1
 
Principal LifeTime 2050 Class 1
 
Principal LifeTime 2060 Class 1
 
Putnam VT Voyager Class IB
 
Real Estate Securities Class 1
 
SAM Balanced Portfolio Class 1
 
SAM Conservative Balanced
Portfolio Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 356,582 
 
$
 274,768 
 
$
 15,502 
 
$
 52,311 
 
$
 320,142 
 
$
 1,879,422 
 
$
 967,266 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
$
 356,582 
 
$
 274,768 
 
$
 15,502 
 
$
 52,311 
 
$
 320,142 
 
$
 1,879,422 
 
$
 967,266 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 356,582 
 
$
 274,768 
 
$
 15,502 
 
$
 52,311 
 
$
 320,142 
 
$
 1,879,422 
 
$
 967,266 
$
 356,582 
 
$
 274,768 
 
$
 15,502 
 
$
 52,311 
 
$
 320,142 
 
$
 1,879,422 
 
$
 967,266 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 324,968 
 
$
 245,672 
 
$
 14,181 
 
$
 45,261 
 
$
 325,014 
 
$
 1,762,668 
 
$
 940,219 
 
 23,868 
 
 
 18,367 
 
 
 1,339 
 
 
 1,015 
 
 
 18,744 
 
 
 101,426 
 
 
 72,238 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 18,890 
 
 
 14,486 
 
 
 1,395 
 
 
 2,474 
 
 
 6,636 
 
 
 129,844 
 
 
 67,160 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 18.88 
 
$
 18.97 
 
$
 11.11 
 
$
 21.14 
 
$
 48.25 
 
$
 14.47 
 
$
 14.40 




Principal National Life Insurance Company
Variable Life Separate Account
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
SAM Conservative Growth
Portfolio Class 1
 
SAM Flexible Income
Portfolio Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
Assets
 
 
 
 
 
Investments in shares of mutual funds, at market
$
 2,982,931 
 
$
 1,264,686 
 
 
 
 
 
 
 
Liabilities
 
 - 
 
 
 - 
Net assets
$
 2,982,931 
 
$
 1,264,686 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
Variable Universal Life Income III
$
 2,982,931 
 
$
 1,264,686 
Total net assets
$
 2,982,931 
 
$
 1,264,686 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
 2,613,148 
 
$
 1,246,554 
Shares of mutual fund owned
 
 144,802 
 
 
 92,178 
Accumulation units outstanding:
 
 
 
 
 
 
Variable Universal Life Income III
 
 211,624 
 
 
 87,073 
 
 
 
 
 
 
 
Accumulation unit value:
 
 
 
 
 
 
Variable Universal Life Income III
$
 14.10 
 
$
 14.52 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Strategic Growth
Portfolio Class 1
 
Short-Term
Income Class 1
 
SmallCap
Blend Class 1
 
SmallCap
Growth II Class 1
 
SmallCap
Value I Class 1
 
Templeton
Global Bond
Securities Class 2
 
TOPS
Managed Risk
Balanced
ETF Class 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 3,477,307 
 
$
 468,872 
 
$
 212,009 
 
$
 105,422 
 
$
 86,602 
 
$
 341,942 
 
$
 79,305 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
$
 3,477,307 
 
$
 468,872 
 
$
 212,009 
 
$
 105,422 
 
$
 86,602 
 
$
 341,942 
 
$
 79,305 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 3,477,307 
 
$
 468,872 
 
$
 212,009 
 
$
 105,422 
 
$
 86,602 
 
$
 341,942 
 
$
 79,305 
$
 3,477,307 
 
$
 468,872 
 
$
 212,009 
 
$
 105,422 
 
$
 86,602 
 
$
 341,942 
 
$
 79,305 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 2,897,122 
 
$
 470,896 
 
$
 189,266 
 
$
 94,740 
 
$
 68,837 
 
$
 350,922 
 
$
 77,500 
 
 147,656 
 
 
 181,032 
 
 
 15,374 
 
 
 5,758 
 
 
 3,984 
 
 
 18,384 
 
 
 6,914 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 249,528 
 
 
 38,022 
 
 
 8,703 
 
 
 5,191 
 
 
 2,019 
 
 
 21,792 
 
 
 6,841 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 13.94 
 
$
 12.33 
 
$
 24.36 
 
$
 20.31 
 
$
 42.90 
 
$
 15.69 
 
$
 11.59 




Principal National Life Insurance Company
Variable Life Separate Account
 
 
 
 
 
 
 
Statements of Assets and Liabilities (continued)
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
TOPS Managed Risk Growth
ETF Class 2
 
TOPS Managed Risk Moderate Growth
ETF Class 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
Assets
 
 
 
 
 
Investments in shares of mutual funds, at market
$
 381,645 
 
$
 62,687 
 
 
 
 
 
 
 
Liabilities
 
 - 
 
 
 - 
Net assets
$
 381,645 
 
$
 62,687 
 
 
 
 
 
 
 
Net assets
 
 
 
 
 
Applicable to accumulation units:
 
 
 
 
 
 
Variable Universal Life Income III
$
 381,645 
 
$
 62,687 
Total net assets
$
 381,645 
 
$
 62,687 
 
 
 
 
 
 
 
Investments in shares of mutual funds, at cost
$
 344,179 
 
$
 60,673 
Shares of mutual fund owned
 
 32,591 
 
 
 5,268 
Accumulation units outstanding:
 
 
 
 
 
 
Variable Universal Life Income III
 
 30,321 
 
 
 5,147 
 
 
 
 
 
 
 
Accumulation unit value:
 
 
 
 
 
 
Variable Universal Life Income III
$
 12.59 
 
$
 12.18 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Van Eck Global Hard Assets
Service Class
 
 
 
 
 
 
Division
 
 
 
 
$
 120,103 
 
 
 
 
 
 - 
 
$
 120,103 
 
 
 
 
 
 
 
 
 
 
$
 120,103 
 
$
 120,103 
 
 
 
 
$
 113,796 
 
 
 3,931 
 
 
 
 
 
 12,789 
 
 
 
 
 
 
 
$
 9.39 





















 
Principal National Life Insurance Company
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
Statements of Operations
 
 
 
 
 
 
 
 
Year ended December 31, 2013
 
 
 
 
 
 
 
 
 
AllianceBernstein International
Value Class A
 
AllianceBernstein Small Cap
Growth Class A
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
Investment income (loss)
 
 
 
 
 
Income:
 
 
 
 
 
 
Dividends
$
 7,668 
 
$
 - 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
Mortality and expense risks
 
 - 
 
 
 - 
Net investment income (loss)
 
 7,668 
 
 
 - 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
 2,377 
 
 
 436 
Capital gains distributions
 
 - 
 
 
 10,166 
Total realized gains (losses) on investments
 
 2,377 
 
 
 10,602 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
 10,829 
 
 
 10,809 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
 20,874 
 
 
 21,411 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
 20,874 
 
$
 21,411 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein Small/Mid Cap Value Class A
 
American Century VP Income & Growth Class II
 
American Century VP Inflation Protection Class II
 
American Century VP MidCap
Value Class II
 
American Century VP Value Class II
 
American Century VP Vista Class II
 
Bond & Mortgage Securities Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 187 
 
$
 797 
 
$
 988 
 
$
 623 
 
$
 869 
 
$
 - 
 
$
 2,639 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 187 
 
 
 797 
 
 
 988 
 
 
 623 
 
 
 869 
 
 
 - 
 
 
 2,639 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1,218 
 
 
 424 
 
 
 (2,671)
 
 
 189 
 
 
 413 
 
 
 66 
 
 
 (1,040)
 
 1,734 
 
 
 - 
 
 
 2,370 
 
 
 264 
 
 
 - 
 
 
 - 
 
 
 - 
 
 2,952 
 
 
 424 
 
 
 (301)
 
 
 453 
 
 
 413 
 
 
 66 
 
 
 (1,040)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 5,477 
 
 
 8,882 
 
 
 (6,146)
 
 
 9,781 
 
 
 10,238 
 
 
 116 
 
 
 (2,102)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 8,616 
 
 
 10,103 
 
 
 (5,459)
 
 
 10,857 
 
 
 11,520 
 
 
 182 
 
 
 (503)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 8,616 
 
$
 10,103 
 
$
 (5,459)
 
$
 10,857 
 
$
 11,520 
 
$
 182 
 
$
 (503)




 
Principal National Life Insurance Company
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
Year ended December 31, 2013
 
 
 
 
 
 
 
 
Calvert Income
 
Calvert Russell 2000 Small Cap Index Class F
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
Investment income (loss)
 
 
 
 
 
Income:
 
 
 
 
 
 
Dividends
$
 2,536 
 
$
 333 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
Mortality and expense risks
 
 - 
 
 
 - 
Net investment income (loss)
 
 2,536 
 
 
 333 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
 (47)
 
 
 611 
Capital gains distributions
 
 - 
 
 
 2,724 
Total realized gains (losses) on investments
 
 (47)
 
 
 3,335 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
 (3,544)
 
 
 7,146 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
 (1,055)
 
 
 10,814 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
 (1,055)
 
$
 10,814 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of DWS Dreman Small Mid Cap Value Class B Division until May 20, 2013.
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert S&P MidCap 400
Index Class F
 
Calvert SRI Equity
 
Delaware Small Cap Value
Service Class
 
Delaware Smid Cap Growth
Service Class
 
Diversified International
Class 1
 
DWS Small Mid Cap Value Class B
 
Equity Income Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division (1)
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 236 
 
$
 26 
 
$
 145 
 
$
 - 
 
$
 2,858 
 
$
 36 
 
$
 7,345 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 236 
 
 
 26 
 
 
 145 
 
 
 - 
 
 
 2,858 
 
 
 36 
 
 
 7,345 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1,028 
 
 
 774 
 
 
 261 
 
 
 3,112 
 
 
 807 
 
 
 645 
 
 
 2,447 
 
 1,561 
 
 
 2,129 
 
 
 1,302 
 
 
 2,649 
 
 
 - 
 
 
 - 
 
 
 - 
 
 2,589 
 
 
 2,903 
 
 
 1,563 
 
 
 5,761 
 
 
 807 
 
 
 645 
 
 
 2,447 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 4,178 
 
 
 3,608 
 
 
 10,993 
 
 
 15,538 
 
 
 19,899 
 
 
 1,954 
 
 
 32,577 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 7,003 
 
 
 6,537 
 
 
 12,701 
 
 
 21,299 
 
 
 23,564 
 
 
 2,635 
 
 
 42,369 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 7,003 
 
$
 6,537 
 
$
 12,701 
 
$
 21,299 
 
$
 23,564 
 
$
 2,635 
 
$
 42,369 





 
Principal National Life Insurance Company
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
Year ended December 31, 2013
 
 
 
 
 
 
 
 
 
Fidelity VIP Contrafund
Service Class 2
 
Fidelity VIP Equity-Income Service Class 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
Investment income (loss)
 
 
 
 
 
Income:
 
 
 
 
 
 
Dividends
$
 4,126 
 
$
 3,590 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
Mortality and expense risks
 
 - 
 
 
 - 
Net investment income (loss)
 
 4,126 
 
 
 3,590 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
 4,315 
 
 
 1,858 
Capital gains distributions
 
 144 
 
 
 10,214 
Total realized gains (losses) on investments
 
 4,459 
 
 
 12,072 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
 70,168 
 
 
 1,368 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
 78,753 
 
 
 17,030 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
 78,753 
 
$
 17,030 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP High Income Service Class 2
 
Fidelity VIP Mid Cap Service Class 2
 
Franklin
Mutual Global
Discovery Class 2
 
Franklin Rising Dividends
Securities Class 2
 
Franklin Small
Cap Value
Securities Class 2
 
Government & High Quality
Bond Class 1
 
International Emerging
Markets Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 18,080 
 
$
 742 
 
$
 1,971 
 
$
 1,758 
 
$
 39 
 
$
 8,775 
 
$
 4,204 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 18,080 
 
 
 742 
 
 
 1,971 
 
 
 1,758 
 
 
 39 
 
 
 8,775 
 
 
 4,204 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1,129 
 
 
 3,352 
 
 
 368 
 
 
 2,257 
 
 
 1,220 
 
 
 (10,371)
 
 
 2,713 
 
 - 
 
 
 33,341 
 
 
 8,192 
 
 
 - 
 
 
 50 
 
 
 - 
 
 
 - 
 
 1,129 
 
 
 36,693 
 
 
 8,560 
 
 
 2,257 
 
 
 1,270 
 
 
 (10,371)
 
 
 2,713 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (6,650)
 
 
 4,133 
 
 
 7,547 
 
 
 30,165 
 
 
 5,821 
 
 
 (872)
 
 
 (5,750)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 12,559 
 
 
 41,568 
 
 
 18,078 
 
 
 34,180 
 
 
 7,130 
 
 
 (2,468)
 
 
 1,167 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 12,559 
 
$
 41,568 
 
$
 18,078 
 
$
 34,180 
 
$
 7,130 
 
$
 (2,468)
 
$
 1,167 





 
Principal National Life Insurance Company
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
Year ended December 31, 2013
 
 
 
 
 
 
 
 
 
Invesco American Franchise Series II
 
Invesco Core Equity Series II
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division (1)
 
Division
Investment income (loss)
 
 
 
 
 
Income:
 
 
 
 
 
 
Dividends
$
 25 
 
$
 95 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
Mortality and expense risks
 
 - 
 
 
 - 
Net investment income (loss)
 
 25 
 
 
 95 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
 126 
 
 
 151 
Capital gains distributions
 
 - 
 
 
 - 
Total realized gains (losses) on investments
 
 126 
 
 
 151 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
 3,328 
 
 
 1,568 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
 3,479 
 
 
 1,814 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
 3,479 
 
$
 1,814 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of Invesco Van Kampen American Franchise Series II Division until May 20, 2013.
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Global Health Care Series I
 
Invesco Mid Cap Core Equity
Series II
 
Janus Aspen Forty Service Shares
 
LargeCap
Blend II Class 1
 
LargeCap
Growth Class 1
 
LargeCap
Growth I Class 1
 
LargeCap S&P 500 Index Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 678 
 
$
 59 
 
$
 406 
 
$
 207 
 
$
 633 
 
$
 282 
 
$
 19,140 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 678 
 
 
 59 
 
 
 406 
 
 
 207 
 
 
 633 
 
 
 282 
 
 
 19,140 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 3,992 
 
 
 450 
 
 
 3,347 
 
 
 157 
 
 
 4,843 
 
 
 1,289 
 
 
 5,330 
 
 - 
 
 
 824 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 2,219 
 
 
 12,216 
 
 3,992 
 
 
 1,274 
 
 
 3,347 
 
 
 157 
 
 
 4,843 
 
 
 3,508 
 
 
 17,546 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 24,149 
 
 
 4,605 
 
 
 17,469 
 
 
 3,135 
 
 
 21,127 
 
 
 23,501 
 
 
 348,790 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 28,819 
 
 
 5,938 
 
 
 21,222 
 
 
 3,499 
 
 
 26,603 
 
 
 27,291 
 
 
 385,476 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 28,819 
 
$
 5,938 
 
$
 21,222 
 
$
 3,499 
 
$
 26,603 
 
$
 27,291 
 
$
 385,476 





 
Principal National Life Insurance Company
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
Year ended December 31, 2013
 
 
 
 
 
 
 
 
LargeCap
Value Class 1
 
MFS VIT New Discovery
Service Class
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
Investment income (loss)
 
 
 
 
 
Income:
 
 
 
 
 
 
Dividends
$
 2,435 
 
$
 - 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
Mortality and expense risks
 
 - 
 
 
 - 
Net investment income (loss)
 
 2,435 
 
 
 - 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
 1,409 
 
 
 225 
Capital gains distributions
 
 - 
 
 
 179 
Total realized gains (losses) on investments
 
 1,409 
 
 
 404 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
 20,455 
 
 
 6,980 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
 24,299 
 
 
 7,384 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
 24,299 
 
$
 7,384 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of MidCap Blend Class 1 Division until May 20, 2013.
 
 
 
 
 
(2) Represented the operations of Oppenheimer Main Street Small & Mid Cap Service Shares Division until May 20, 2013.
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT Utilities Service Class
 
MidCap Class 1
 
Money Market Class 1
 
Neuberger Berman AMT Large Cap Value I Class
 
Oppenheimer Main Street Small Cap Service Shares
 
Principal LifeTime Strategic
Income Class 1
 
Principal LifeTime 2010 Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division (1)
 
Division
 
Division
 
Division (2)
 
Division
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 2,199 
 
$
 10,335 
 
$
 - 
 
$
 319 
 
$
 120 
 
$
 22 
 
$
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 2,199 
 
 
 10,335 
 
 
 - 
 
 
 319 
 
 
 120 
 
 
 22 
 
 
 1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1,691 
 
 
 15,777 
 
 
 - 
 
 
 547 
 
 
 174 
 
 
 - 
 
 
 - 
 
 1,957 
 
 
 32,958 
 
 
 - 
 
 
 - 
 
 
 206 
 
 
 - 
 
 
 - 
 
 3,648 
 
 
 48,735 
 
 
 - 
 
 
 547 
 
 
 380 
 
 
 - 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 10,172 
 
 
 99,314 
 
 
 - 
 
 
 2,581 
 
 
 6,066 
 
 
 2 
 
 
 141 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 16,019 
 
 
 158,384 
 
 
 - 
 
 
 3,447 
 
 
 6,566 
 
 
 24 
 
 
 142 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 16,019 
 
$
 158,384 
 
$
 - 
 
$
 3,447 
 
$
 6,566 
 
$
 24 
 
$
 142 





 
Principal National Life Insurance Company
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
Year ended December 31, 2013
 
 
 
 
 
 
 
 
Principal LifeTime 2020 Class 1
 
Principal LifeTime 2030 Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
Investment income (loss)
 
 
 
 
 
Income:
 
 
 
 
 
 
Dividends
$
 4,422 
 
$
 6,232 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
Mortality and expense risks
 
 - 
 
 
 - 
Net investment income (loss)
 
 4,422 
 
 
 6,232 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
 232 
 
 
 19,495 
Capital gains distributions
 
 - 
 
 
 1,617 
Total realized gains (losses) on investments
 
 232 
 
 
 21,112 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
 15,491 
 
 
 35,807 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
 20,145 
 
 
 63,151 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
 20,145 
 
$
 63,151 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations May 20, 2013.
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 1
 
Principal LifeTime 2050 Class 1
 
Principal LifeTime 2060 Class 1
 
Putnam VT Voyager Class IB
 
Real Estate Securities Class 1
 
SAM Balanced Portfolio Class 1
 
SAM Conservative Balanced
Portfolio Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
 
Division (1)
 
Division
 
Division
 
Division
 
Division
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 2,329 
 
$
 2,192 
 
$
 - 
 
$
 69 
 
$
 2,253 
 
$
 30,159 
 
$
 15,098 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 2,329 
 
 
 2,192 
 
 
 - 
 
 
 69 
 
 
 2,253 
 
 
 30,159 
 
 
 15,098 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1,296 
 
 
 1,159 
 
 
 40 
 
 
 866 
 
 
 961 
 
 
 36,857 
 
 
 13,305 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 14,864 
 
 
 5,433 
 
 1,296 
 
 
 1,159 
 
 
 40 
 
 
 866 
 
 
 961 
 
 
 51,721 
 
 
 18,738 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 29,764 
 
 
 26,021 
 
 
 1,321 
 
 
 6,886 
 
 
 (6,455)
 
 
 106,578 
 
 
 23,619 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 33,389 
 
 
 29,372 
 
 
 1,361 
 
 
 7,821 
 
 
 (3,241)
 
 
 188,458 
 
 
 57,455 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 33,389 
 
$
 29,372 
 
$
 1,361 
 
$
 7,821 
 
$
 (3,241)
 
$
 188,458 
 
$
 57,455 





 
Principal National Life Insurance Company
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
Year ended December 31, 2013
 
 
 
 
 
 
 
 
SAM Conservative Growth
Portfolio Class 1
 
SAM Flexible Income
Portfolio Class 1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
Investment income (loss)
 
 
 
 
 
Income:
 
 
 
 
 
 
Dividends
$
 36,897 
 
$
 21,175 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
Mortality and expense risks
 
 - 
 
 
 - 
Net investment income (loss)
 
 36,897 
 
 
 21,175 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
 2,635 
 
 
 1,670 
Capital gains distributions
 
 - 
 
 
 7,994 
Total realized gains (losses) on investments
 
 2,635 
 
 
 9,664 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
 332,076 
 
 
 16,337 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
 371,608 
 
 
 47,176 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
 371,608 
 
$
 47,176 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of TOPS Protected Balanced ETF Class 2 Division until May 20, 2013.
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Strategic Growth
Portfolio Class 1
 
Short-Term
Income Class 1
 
SmallCap
Blend Class 1
 
SmallCap
Growth II Class 1
 
SmallCap
Value I Class 1
 
Templeton
Global Bond
Securities Class 2
 
TOPS Managed Risk Balanced
ETF Class 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division
 
Division (1)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 34,590 
 
$
 6,616 
 
$
 160 
 
$
 - 
 
$
 716 
 
$
 11,536 
 
$
 309 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 34,590 
 
 
 6,616 
 
 
 160 
 
 
 - 
 
 
 716 
 
 
 11,536 
 
 
 309 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 26,566 
 
 
 (215)
 
 
 1,393 
 
 
 2,153 
 
 
 2,096 
 
 
 (615)
 
 
 130 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 2,976 
 
 
 - 
 
 26,566 
 
 
 (215)
 
 
 1,393 
 
 
 2,153 
 
 
 2,096 
 
 
 2,361 
 
 
 130 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 511,724 
 
 
 (2,752)
 
 
 22,032 
 
 
 10,357 
 
 
 15,703 
 
 
 (11,228)
 
 
 1,803 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 572,880 
 
 
 3,649 
 
 
 23,585 
 
 
 12,510 
 
 
 18,515 
 
 
 2,669 
 
 
 2,242 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 572,880 
 
$
 3,649 
 
$
 23,585 
 
$
 12,510 
 
$
 18,515 
 
$
 2,669 
 
$
 2,242 





 
Principal National Life Insurance Company
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
Statements of Operations (continued)
 
 
 
 
 
 
 
 
Year ended December 31, 2013
 
 
 
 
 
 
 
 
TOPS Managed Risk Growth
ETF Class 2
 
TOPS Managed Risk Moderate Growth
ETF Class 2
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Division (1)
 
Division (2)
Investment income (loss)
 
 
 
 
 
Income:
 
 
 
 
 
 
Dividends
$
 3,024 
 
$
 110 
 
 
 
 
 
 
 
Expenses:
 
 
 
 
 
 
Mortality and expense risks
 
 - 
 
 
 - 
Net investment income (loss)
 
 3,024 
 
 
 110 
 
 
 
 
 
 
 
Realized gains (losses) on investments
 
 
 
 
 
Realized gains (losses) on sale of fund shares
 
 8,644 
 
 
 116 
Capital gains distributions
 
 - 
 
 
 - 
Total realized gains (losses) on investments
 
 8,644 
 
 
 116 
 
 
 
 
 
 
 
Change in net unrealized appreciation or depreciation of investments
 
 30,141 
 
 
 1,958 
 
 
 
 
 
 
 
Net gains (losses) on investments
 
 41,809 
 
 
 2,184 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
$
 41,809 
 
$
 2,184 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of TOPS Protected Growth ETF Class 2 Division until May 20, 2013.
 
 
 
 
 
(2) Represented the operations of TOPS Protected Moderate Growth ETF Class 2 Division until May 20, 2013.
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Van Eck Global Hard Assets
Service Class
 
 
 
 
 
 
Division
 
 
 
 
 
 
 
$
 123 
 
 
 
 
 
 
 
 
 - 
 
 
 123 
 
 
 
 
 
 
 
 
 1,231 
 
 
 478 
 
 
 1,709 
 
 
 
 
 
 5,705 
 
 
 
 
 
 7,537 
 
 
 
 
 
 - 
 
 
 
 
$
 7,537 









 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein
International
Value Class A
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 7,668 
$
 85 
 
Total realized gains (losses) on investments
 
 2,377 
 
 (68)
 
Change in net unrealized appreciation or depreciation of investments
 
 10,829 
 
 529 
 
Net gains (losses) from investments
 
 20,874 
 
 546 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 20,874 
 
 546 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 176,441 
 
 8,986 
 
Contract terminations and surrenders
 
 (843)
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 - 
 
 - 
 
Transfers to other contracts
 
 (4,908)
 
 (16)
 
Cost of insurance and administration charges
 
 (6,295)
 
 (1,921)
 
Mortality and expenses charges
 
 (56)
 
 (10)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 164,339 
 
 7,039 
Total increase (decrease)
 
 185,213 
 
 7,585 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 7,585 
 
 - 
Net assets at end of period
$
 192,798 
$
 7,585 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
AllianceBernstein
Small Cap
Growth Class A
 
AllianceBernstein
Small/Mid Cap
Value Class A
 
American Century VP
Income & Growth Class II
 
 
 
 
 
 
Division
 
Division
 
Division
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 - 
$
 - 
 
$
 187 
$
 23 
 
$
 797 
$
 89 
 
 10,602 
 
 212 
 
 
 2,952 
 
 (69)
 
 
 424 
 
 1 
 
 10,809 
 
 181 
 
 
 5,477 
 
 425 
 
 
 8,882 
 
 76 
 
 21,411 
 
 393 
 
 
 8,616 
 
 379 
 
 
 10,103 
 
 166 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 21,411 
 
 393 
 
 
 8,616 
 
 379 
 
 
 10,103 
 
 166 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 56,291 
 
 14,289 
 
 
 62,902 
 
 9,997 
 
 
 91,374 
 
 11,447 
 
 - 
 
 - 
 
 
 (293)
 
 - 
 
 
 (446)
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (665)
 
 (938)
 
 
 (485)
 
 (150)
 
 
 (744)
 
 (10)
 
 (6,429)
 
 (1,581)
 
 
 (6,761)
 
 (2,224)
 
 
 (7,638)
 
 (1,754)
 
 (57)
 
 (9)
 
 
 (60)
 
 (12)
 
 
 (68)
 
 (10)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 49,140 
 
 11,761 
 
 
 55,303 
 
 7,611 
 
 
 82,478 
 
 9,673 
 
 70,551 
 
 12,154 
 
 
 63,919 
 
 7,990 
 
 
 92,581 
 
 9,839 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 12,154 
 
 - 
 
 
 7,990 
 
 - 
 
 
 9,839 
 
 - 
$
 82,705 
$
 12,154 
 
$
 71,909 
$
 7,990 
 
$
 102,420 
$
 9,839 




 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP Inflation
Protection Class II
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 988 
$
 429 
 
Total realized gains (losses) on investments
 
 (301)
 
 161 
 
Change in net unrealized appreciation or depreciation of investments
 
 (6,146)
 
 (21)
 
Net gains (losses) from investments
 
 (5,459)
 
 569 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 (5,459)
 
 569 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 104,075 
 
 48,073 
 
Contract terminations and surrenders
 
 - 
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 - 
 
 - 
 
Transfers to other contracts
 
 (35,196)
 
 (6,415)
 
Cost of insurance and administration charges
 
 (12,717)
 
 (2,723)
 
Mortality and expenses charges
 
 (114)
 
 (15)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 56,048 
 
 38,920 
Total increase (decrease)
 
 50,589 
 
 39,489 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 39,489 
 
 - 
Net assets at end of period
$
 90,078 
$
 39,489 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
American Century VP MidCap
Value Class II
 
American Century VP
Value Class II
 
American Century VP
Vista Class II
 
 
 
 
 
 
Division
 
Division
 
Division
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 623 
$
 79 
 
$
 869 
$
 47 
 
$
 - 
$
 - 
 
 453 
 
 23 
 
 
 413 
 
 3 
 
 
 66 
 
 15 
 
 9,781 
 
 377 
 
 
 10,238 
 
 114 
 
 
 116 
 
 2 
 
 10,857 
 
 479 
 
 
 11,520 
 
 164 
 
 
 182 
 
 17 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 10,857 
 
 479 
 
 
 11,520 
 
 164 
 
 
 182 
 
 17 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 181,734 
 
 12,886 
 
 
 128,995 
 
 6,736 
 
 
 1,162 
 
 579 
 
 - 
 
 - 
 
 
 (89)
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (182)
 
 (1)
 
 
 (396)
 
 - 
 
 
 - 
 
 - 
 
 (6,752)
 
 (1,436)
 
 
 (9,672)
 
 (928)
 
 
 (588)
 
 (254)
 
 (60)
 
 (8)
 
 
 (86)
 
 (5)
 
 
 (5)
 
 (1)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 174,740 
 
 11,441 
 
 
 118,752 
 
 5,803 
 
 
 569 
 
 324 
 
 185,597 
 
 11,920 
 
 
 130,272 
 
 5,967 
 
 
 751 
 
 341 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 11,920 
 
 - 
 
 
 5,967 
 
 - 
 
 
 341 
 
 - 
$
 197,517 
$
 11,920 
 
$
 136,239 
$
 5,967 
 
$
 1,092 
$
 341 





 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Bond & Mortgage
Securities Class 1
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 2,639 
$
 811 
 
Total realized gains (losses) on investments
 
 (1,040)
 
 (3)
 
Change in net unrealized appreciation or depreciation of investments
 
 (2,102)
 
 202 
 
Net gains (losses) from investments
 
 (503)
 
 1,010 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 (503)
 
 1,010 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 128,022 
 
 68,337 
 
Contract terminations and surrenders
 
 - 
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 - 
 
 - 
 
Transfers to other contracts
 
 (39,941)
 
 (2,871)
 
Cost of insurance and administration charges
 
 (10,969)
 
 (2,381)
 
Mortality and expenses charges
 
 (98)
 
 (13)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 77,014 
 
 63,072 
Total increase (decrease)
 
 76,511 
 
 64,082 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 64,082 
 
 - 
Net assets at end of period
$
 140,593 
$
 64,082 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert Income
 
Calvert Russell 2000
Small Cap Index Class F
 
Calvert S&P
MidCap 400 Index Class F
 
 
 
 
 
 
Division
 
Division
 
Division
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 2,536 
$
 1,900 
 
$
 333 
$
 80 
 
$
 236 
$
 59 
 
 (47)
 
 23 
 
 
 3,335 
 
 538 
 
 
 2,589 
 
 242 
 
 (3,544)
 
 (630)
 
 
 7,146 
 
 (41)
 
 
 4,178 
 
 188 
 
 (1,055)
 
 1,293 
 
 
 10,814 
 
 577 
 
 
 7,003 
 
 489 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (1,055)
 
 1,293 
 
 
 10,814 
 
 577 
 
 
 7,003 
 
 489 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 83,429 
 
 57,544 
 
 
 71,259 
 
 12,725 
 
 
 43,569 
 
 10,134 
 
 - 
 
 - 
 
 
 (2,636)
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (21,130)
 
 - 
 
 
 (1,422)
 
 (5)
 
 
 (186)
 
 - 
 
 (11,711)
 
 (2,545)
 
 
 (8,737)
 
 (2,081)
 
 
 (4,025)
 
 (488)
 
 (105)
 
 (14)
 
 
 (78)
 
 (11)
 
 
 (36)
 
 (3)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 50,483 
 
 54,985 
 
 
 58,386 
 
 10,628 
 
 
 39,322 
 
 9,643 
 
 49,428 
 
 56,278 
 
 
 69,200 
 
 11,205 
 
 
 46,325 
 
 10,132 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 56,278 
 
 - 
 
 
 11,205 
 
 - 
 
 
 10,132 
 
 - 
$
 105,706 
$
 56,278 
 
$
 80,405 
$
 11,205 
 
$
 56,457 
$
 10,132 




 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Calvert SRI Equity
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 26 
$
 14 
 
Total realized gains (losses) on investments
 
 2,903 
 
 489 
 
Change in net unrealized appreciation or depreciation of investments
 
 3,608 
 
 218 
 
Net gains (losses) from investments
 
 6,537 
 
 721 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 6,537 
 
 721 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 17,309 
 
 14,870 
 
Contract terminations and surrenders
 
 - 
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 - 
 
 - 
 
Transfers to other contracts
 
 (42)
 
 - 
 
Cost of insurance and administration charges
 
 (2,507)
 
 (1,058)
 
Mortality and expenses charges
 
 (22)
 
 (6)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 14,738 
 
 13,806 
Total increase (decrease)
 
 21,275 
 
 14,527 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 14,527 
 
 - 
Net assets at end of period
$
 35,802 
$
 14,527 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Delaware Small Cap Value
Service Class
 
Delaware Smid Cap Growth
Service Class
 
Diversified
International Class 1
 
 
 
 
 
 
Division
 
Division
 
Division
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 145 
$
 6 
 
$
 - 
$
 - 
 
$
 2,858 
$
 485 
 
 1,563 
 
 84 
 
 
 5,761 
 
 (21)
 
 
 807 
 
 (11)
 
 10,993 
 
 862 
 
 
 15,538 
 
 363 
 
 
 19,899 
 
 3,149 
 
 12,701 
 
 952 
 
 
 21,299 
 
 342 
 
 
 23,564 
 
 3,623 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 12,701 
 
 952 
 
 
 21,299 
 
 342 
 
 
 23,564 
 
 3,623 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 76,890 
 
 20,843 
 
 
 89,068 
 
 30,181 
 
 
 211,588 
 
 43,901 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 (571)
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (1,698)
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (1,577)
 
 (3,345)
 
 
 (15,028)
 
 - 
 
 
 (2,010)
 
 (292)
 
 (7,269)
 
 (1,526)
 
 
 (7,890)
 
 (2,100)
 
 
 (21,214)
 
 (4,742)
 
 (65)
 
 (8)
 
 
 (70)
 
 (11)
 
 
 (190)
 
 (26)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 66,281 
 
 15,964 
 
 
 66,080 
 
 28,070 
 
 
 187,603 
 
 38,841 
 
 78,982 
 
 16,916 
 
 
 87,379 
 
 28,412 
 
 
 211,167 
 
 42,464 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 16,916 
 
 - 
 
 
 28,412 
 
 - 
 
 
 42,464 
 
 - 
$
 95,898 
$
 16,916 
 
$
 115,791 
$
 28,412 
 
$
 253,631 
$
 42,464 





 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
DWS Small Mid Cap Value Class B
 
 
 
 
 
 
 
 
 
 
 
 
Division (1)
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 36 
$
 2 
 
Total realized gains (losses) on investments
 
 645 
 
 (1)
 
Change in net unrealized appreciation or depreciation of investments
 
 1,954 
 
 60 
 
Net gains (losses) from investments
 
 2,635 
 
 61 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 2,635 
 
 61 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 20,686 
 
 1,373 
 
Contract terminations and surrenders
 
 - 
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 (127)
 
 - 
 
Transfers to other contracts
 
 (4,438)
 
 - 
 
Cost of insurance and administration charges
 
 (1,091)
 
 (191)
 
Mortality and expenses charges
 
 (10)
 
 (1)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 15,020 
 
 1,181 
Total increase (decrease)
 
 17,655 
 
 1,242 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 1,242 
 
 - 
Net assets at end of period
$
 18,897 
$
 1,242 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of DWS Dreman Small Mid Cap Value Class B Division until May 20, 2013.
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity Income Class 1
 
Fidelity VIP Contrafund
Service Class 2
 
Fidelity VIP Equity-Income
Service Class 2
 
 
 
 
 
 
Division
 
Division
 
Division
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 7,345 
$
 1,454 
 
$
 4,126 
$
 775 
 
$
 3,590 
$
 375 
 
 2,447 
 
 (143)
 
 
 4,459 
 
 611 
 
 
 12,072 
 
 597 
 
 32,577 
 
 2,020 
 
 
 70,168 
 
 1,599 
 
 
 1,368 
 
 (508)
 
 42,369 
 
 3,331 
 
 
 78,753 
 
 2,985 
 
 
 17,030 
 
 464 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 42,369 
 
 3,331 
 
 
 78,753 
 
 2,985 
 
 
 17,030 
 
 464 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 245,077 
 
 62,138 
 
 
 480,264 
 
 98,486 
 
 
 158,292 
 
 17,003 
 
 - 
 
 - 
 
 
 (989)
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 (762)
 
 - 
 
 
 (1,663)
 
 - 
 
 (10,635)
 
 (112)
 
 
 (18,334)
 
 (19,234)
 
 
 (5,740)
 
 (23)
 
 (22,394)
 
 (6,242)
 
 
 (46,415)
 
 (7,451)
 
 
 (8,843)
 
 (972)
 
 (200)
 
 (34)
 
 
 (414)
 
 (40)
 
 
 (79)
 
 (5)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 211,848 
 
 55,750 
 
 
 413,350 
 
 71,761 
 
 
 141,967 
 
 16,003 
 
 254,217 
 
 59,081 
 
 
 492,103 
 
 74,746 
 
 
 158,997 
 
 16,467 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 59,081 
 
 - 
 
 
 74,746 
 
 - 
 
 
 16,467 
 
 - 
$
 313,298 
$
 59,081 
 
$
 566,849 
$
 74,746 
 
$
 175,464 
$
 16,467 




Principal National Life Insurance Company
Variable Life Separate Account
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP High Income
Service Class 2
 
 
 
 
 
 
Division
 
 
 
2013
2012 
Increase (decrease) in net assets
 
 
 
 
 
 
 
 
 
 
 
 
Operations:
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income (loss)
 
 
$
18,080
 
 
$
 6,325 
Total realized gains (losses) on investments
 
 
 
 1,129 
 
 
 
 104 
Change in net unrealized appreciation or depreciation of investments
 
 
 
 (6,650)
 
 
 
 (2,278)
Net gains (losses) from investments
 
 
 
 12,559 
 
 
 
 4,151 
 
 
 
 
 
 
 
 
 
 
 
 
 
Payment from affiliate
 
 
 
 
 
 - 
 
 
 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 
 
 
 
 12,559 
 
 
 
 
 
 4,151 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
 
 
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 
 
 286,201 
 
 
 
 117,981 
Contract terminations and surrenders
 
 
 
 - 
 
 
 
 - 
Death benefit payments
 
 
 
 - 
 
 
 
 - 
Policy loan transfers
 
 
 
 - 
 
 
 
 - 
Transfers to other contracts
 
 
 
 (47,659)
 
 
 
 (3)
Cost of insurance and administration charges
 
 
 
 (25,890)
 
 
 
 (5,892)
Mortality and expenses charges
 
 
 
 (231)
 
 
 
 (32)
Surrender charges
 
 
 
 - 
 
 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 
 
 
 
 212,421 
 
 
 
 
 
 112,054 
Total increase (decrease)
 
 
 
 
 
 224,980 
 
 
 
 
 
 116,205 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 
 
 
 
 116,205 
 
 
 
 
 
 - 
Net assets at end of period
 
 
$
 
 
 341,185 
 
 
$
 
 
 116,205 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 






 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap
Service Class 2
 
Franklin Mutual Global
Discovery Class 2
 
Franklin Rising Dividends
Securities Class 2
 
 
 
 
 
 
Division
 
Division
 
Division
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 742 
$
 134 
 
$
 1,971 
$
 405 
 
$
 1,758 
$
 127 
 
 36,693 
 
 3,164 
 
 
 8,560 
 
 806 
 
 
 2,257 
 
 (2)
 
 4,133 
 
 (1,949)
 
 
 7,547 
 
 158 
 
 
 30,165 
 
 1,724 
 
 41,568 
 
 1,349 
 
 
 18,078 
 
 1,369 
 
 
 34,180 
 
 1,849 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 41,568 
 
 1,349 
 
 
 18,078 
 
 1,369 
 
 
 34,180 
 
 1,849 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 277,683 
 
 44,505 
 
 
 163,847 
 
 25,384 
 
 
 220,898 
 
 48,919 
 
 (884)
 
 - 
 
 
 (437)
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 (769)
 
 - 
 
 (22,279)
 
 (168)
 
 
 (1,009)
 
 (154)
 
 
 (8,322)
 
 (14)
 
 (18,675)
 
 (4,900)
 
 
 (13,030)
 
 (2,346)
 
 
 (21,211)
 
 (3,161)
 
 (167)
 
 (27)
 
 
 (116)
 
 (13)
 
 
 (189)
 
 (17)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 235,678 
 
 39,410 
 
 
 149,255 
 
 22,871 
 
 
 190,407 
 
 45,727 
 
 277,246 
 
 40,759 
 
 
 167,333 
 
 24,240 
 
 
 224,587 
 
 47,576 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 40,759 
 
 - 
 
 
 24,240 
 
 - 
 
 
 47,576 
 
 - 
$
 318,005 
$
 40,759 
 
$
 191,573 
$
 24,240 
 
$
 272,163 
$
 47,576 





 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Franklin Small Cap Value
Securities Class 2
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 39 
$
 8 
 
Total realized gains (losses) on investments
 
 1,270 
 
 57 
 
Change in net unrealized appreciation or depreciation of investments
 
 5,821 
 
 116 
 
Net gains (losses) from investments
 
 7,130 
 
 181 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 7,130 
 
 181 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 64,392 
 
 6,749 
 
Contract terminations and surrenders
 
 (570)
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 - 
 
 - 
 
Transfers to other contracts
 
 (64)
 
 (3,362)
 
Cost of insurance and administration charges
 
 (1,644)
 
 (957)
 
Mortality and expenses charges
 
 (15)
 
 (5)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 62,099 
 
 2,425 
Total increase (decrease)
 
 69,229 
 
 2,606 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 2,606 
 
 - 
Net assets at end of period
$
 71,835 
$
 2,606 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of Invesco Van Kampen American Franchise Series II Division until May 20, 2013.
 
 
(2) Commenced operations April 27, 2012.
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Government & High
Quality Bond Class 1
 
International Emerging
Markets Class 1
 
Invesco American
Franchise Series II
 
 
 
 
 
 
Division
 
Division
 
Division (1) (2)
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 8,775 
$
 3,053 
 
$
 4,204 
$
 824 
 
$
 25 
$
 - 
 
 (10,371)
 
 (247)
 
 
 2,713 
 
 (167)
 
 
 126 
 
 (30)
 
 (872)
 
 (1,721)
 
 
 (5,750)
 
 11,043 
 
 
 3,328 
 
 119 
 
 (2,468)
 
 1,085 
 
 
 1,167 
 
 11,700 
 
 
 3,479 
 
 89 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 (2,468)
 
 1,085 
 
 
 1,167 
 
 11,700 
 
 
 3,479 
 
 89 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 554,186 
 
 164,890 
 
 
 282,979 
 
 120,708 
 
 
 16,524 
 
 6,195 
 
 - 
 
 - 
 
 
 (887)
 
 - 
 
 
 (331)
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (76,136)
 
 - 
 
 
 (2,497)
 
 - 
 
 
 - 
 
 - 
 
 (251,310)
 
 (26,778)
 
 
 (19,464)
 
 (2,942)
 
 
 (249)
 
 (3)
 
 (28,090)
 
 (8,205)
 
 
 (39,745)
 
 (10,109)
 
 
 (1,339)
 
 (834)
 
 (251)
 
 (44)
 
 
 (355)
 
 (55)
 
 
 (12)
 
 (5)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 198,399 
 
 129,863 
 
 
 220,031 
 
 107,602 
 
 
 14,593 
 
 5,353 
 
 195,931 
 
 130,948 
 
 
 221,198 
 
 119,302 
 
 
 18,072 
 
 5,442 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 130,948 
 
 - 
 
 
 119,302 
 
 - 
 
 
 5,442 
 
 - 
$
 326,879 
$
 130,948 
 
$
 340,500 
$
 119,302 
 
$
 23,514 
$
 5,442 





 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Core
Equity Series II
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 95 
$
 18 
 
Total realized gains (losses) on investments
 
 151 
 
 (4)
 
Change in net unrealized appreciation or depreciation of investments
 
 1,568 
 
 17 
 
Net gains (losses) from investments
 
 1,814 
 
 31 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 1,814 
 
 31 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 19,378 
 
 3,988 
 
Contract terminations and surrenders
 
 (261)
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 - 
 
 - 
 
Transfers to other contracts
 
 (35)
 
 (3)
 
Cost of insurance and administration charges
 
 (1,803)
 
 (547)
 
Mortality and expenses charges
 
 (16)
 
 (3)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 17,263 
 
 3,435 
Total increase (decrease)
 
 19,077 
 
 3,466 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 3,466 
 
 - 
Net assets at end of period
$
 22,543 
$
 3,466 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invesco Global
Health Care Series I
 
Invesco Mid Cap Core
Equity Series II
 
Janus Aspen Forty
Service Shares
 
 
 
 
 
 
Division
 
Division
 
Division
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 678 
$
 - 
 
$
 59 
$
 - 
 
$
 406 
$
 82 
 
 3,992 
 
 14 
 
 
 1,274 
 
 170 
 
 
 3,347 
 
 46 
 
 24,149 
 
 1,676 
 
 
 4,605 
 
 365 
 
 
 17,469 
 
 1,051 
 
 28,819 
 
 1,690 
 
 
 5,938 
 
 535 
 
 
 21,222 
 
 1,179 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 28,819 
 
 1,690 
 
 
 5,938 
 
 535 
 
 
 21,222 
 
 1,179 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 208,372 
 
 35,101 
 
 
 125,135 
 
 7,657 
 
 
 146,007 
 
 27,225 
 
 (2,746)
 
 - 
 
 
 (70)
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 (1,715)
 
 - 
 
 
 - 
 
 - 
 
 (12,456)
 
 (3)
 
 
 (111)
 
 (2,078)
 
 
 (13,079)
 
 (346)
 
 (17,790)
 
 (3,966)
 
 
 (1,279)
 
 (296)
 
 
 (12,634)
 
 (2,959)
 
 (159)
 
 (21)
 
 
 (11)
 
 (2)
 
 
 (113)
 
 (16)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 175,221 
 
 31,111 
 
 
 121,949 
 
 5,281 
 
 
 120,181 
 
 23,904 
 
 204,040 
 
 32,801 
 
 
 127,887 
 
 5,816 
 
 
 141,403 
 
 25,083 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 32,801 
 
 - 
 
 
 5,816 
 
 - 
 
 
 25,083 
 
 - 
$
 236,841 
$
 32,801 
 
$
 133,703 
$
 5,816 
 
$
 166,486 
$
 25,083 





 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap
Blend II Class 1
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 207 
$
 61 
 
Total realized gains (losses) on investments
 
 157 
 
 18 
 
Change in net unrealized appreciation or depreciation of investments
 
 3,135 
 
 216 
 
Net gains (losses) from investments
 
 3,499 
 
 295 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 3,499 
 
 295 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 21,161 
 
 5,104 
 
Contract terminations and surrenders
 
 - 
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 - 
 
 - 
 
Transfers to other contracts
 
 (325)
 
 - 
 
Cost of insurance and administration charges
 
 (3,032)
 
 (373)
 
Mortality and expenses charges
 
 (27)
 
 (2)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 17,777 
 
 4,729 
Total increase (decrease)
 
 21,276 
 
 5,024 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 5,024 
 
 - 
Net assets at end of period
$
 26,300 
$
 5,024 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap
Growth Class 1
 
LargeCap
Growth I Class 1
 
LargeCap
S&P 500 Index Class 1
 
 
 
 
 
 
Division
 
Division
 
Division
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 633 
$
 47 
 
$
 282 
$
 9 
 
$
 19,140 
$
 94 
 
 4,843 
 
 (11)
 
 
 3,508 
 
 (5)
 
 
 17,546 
 
 (69)
 
 21,127 
 
 980 
 
 
 23,501 
 
 939 
 
 
 348,790 
 
 (352)
 
 26,603 
 
 1,016 
 
 
 27,291 
 
 943 
 
 
 385,476 
 
 (327)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 26,603 
 
 1,016 
 
 
 27,291 
 
 943 
 
 
 385,476 
 
 (327)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 145,625 
 
 27,034 
 
 
 218,786 
 
 35,705 
 
 
 1,766,734 
 
 115,849 
 
 (425)
 
 - 
 
 
 (4,994)
 
 - 
 
 
 (879)
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (2,185)
 
 (3)
 
 
 (3,934)
 
 (26)
 
 
 (8,714)
 
 (19)
 
 (9,110)
 
 (2,417)
 
 
 (18,745)
 
 (5,981)
 
 
 (59,458)
 
 (8,304)
 
 (81)
 
 (13)
 
 
 (167)
 
 (32)
 
 
 (531)
 
 (45)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 133,824 
 
 24,601 
 
 
 190,946 
 
 29,666 
 
 
 1,697,152 
 
 107,481 
 
 160,427 
 
 25,617 
 
 
 218,237 
 
 30,609 
 
 
 2,082,628 
 
 107,154 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 25,617 
 
 - 
 
 
 30,609 
 
 - 
 
 
 107,154 
 
 - 
$
 186,044 
$
 25,617 
 
$
 248,846 
$
 30,609 
 
$
 2,189,782 
$
 107,154 





 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
LargeCap
Value Class 1
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 2,435 
$
 529 
 
Total realized gains (losses) on investments
 
 1,409 
 
 76 
 
Change in net unrealized appreciation or depreciation of investments
 
 20,455 
 
 2,215 
 
Net gains (losses) from investments
 
 24,299 
 
 2,820 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 24,299 
 
 2,820 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 102,796 
 
 54,400 
 
Contract terminations and surrenders
 
 - 
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 (3,367)
 
 - 
 
Transfers to other contracts
 
 (2,420)
 
 (117)
 
Cost of insurance and administration charges
 
 (18,431)
 
 (3,479)
 
Mortality and expenses charges
 
 (165)
 
 (19)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 78,413 
 
 50,785 
Total increase (decrease)
 
 102,712 
 
 53,605 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 53,605 
 
 - 
Net assets at end of period
$
 156,317 
$
 53,605 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of MidCap Blend Class 1 Division until May 20, 2013.
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
MFS VIT New
Discovery Service Class
 
MFS VIT
Utilities Service Class
 
MidCap Class 1
 
 
 
 
 
 
Division
 
Division
 
Division (1)
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 - 
$
 - 
 
$
 2,199 
$
 1,549 
 
$
 10,335 
$
 850 
 
 404 
 
 190 
 
 
 3,648 
 
 23 
 
 
 48,735 
 
 1,553 
 
 6,980 
 
 153 
 
 
 10,172 
 
 1,030 
 
 
 99,314 
 
 9,001 
 
 7,384 
 
 343 
 
 
 16,019 
 
 2,602 
 
 
 158,384 
 
 11,404 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 7,384 
 
 343 
 
 
 16,019 
 
 2,602 
 
 
 158,384 
 
 11,404 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 49,029 
 
 7,804 
 
 
 157,990 
 
 38,366 
 
 
 773,061 
 
 195,577 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 (566)
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (879)
 
 (17)
 
 
 (7,078)
 
 (257)
 
 
 (22,536)
 
 (607)
 
 (5,383)
 
 (954)
 
 
 (16,540)
 
 (3,103)
 
 
 (96,797)
 
 (20,834)
 
 (48)
 
 (5)
 
 
 (148)
 
 (17)
 
 
 (864)
 
 (113)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 42,719 
 
 6,828 
 
 
 134,224 
 
 34,989 
 
 
 652,298 
 
 174,023 
 
 50,103 
 
 7,171 
 
 
 150,243 
 
 37,591 
 
 
 810,682 
 
 185,427 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 7,171 
 
 - 
 
 
 37,591 
 
 - 
 
 
 185,427 
 
 - 
$
 57,274 
$
 7,171 
 
$
 187,834 
$
 37,591 
 
$
 996,109 
$
 185,427 





 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Money Market Class 1
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 - 
$
 - 
 
Total realized gains (losses) on investments
 
 - 
 
 - 
 
Change in net unrealized appreciation or depreciation of investments
 
 - 
 
 - 
 
Net gains (losses) from investments
 
 - 
 
 - 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 - 
 
 - 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 15,689,148 
 
 6,576,665 
 
Contract terminations and surrenders
 
 - 
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 74,892 
 
 (18,324)
 
Transfers to other contracts
 
 (14,049,253)
 
 (5,393,896)
 
Cost of insurance and administration charges
 
 (409,180)
 
 (173,383)
 
Mortality and expenses charges
 
 (3,653)
 
 (940)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 1,301,954 
 
 990,122 
Total increase (decrease)
 
 1,301,954 
 
 990,122 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 990,122 
 
 - 
Net assets at end of period
$
 2,292,076 
$
 990,122 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of Oppenheimer Main Street Small & Mid Cap Service Shares Division until May 20, 2013.
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT
Large Cap Value I Class
 
Oppenheimer Main
Street Small Cap Service Shares
 
Principal LifeTime
Strategic Income Class 1
 
 
 
 
 
 
Division
 
Division (1)
 
Division
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 319 
$
 2 
 
$
 120 
$
 6 
 
$
 22 
$
 - 
 
 547 
 
 8 
 
 
 380 
 
 50 
 
 
 - 
 
 - 
 
 2,581 
 
 89 
 
 
 6,066 
 
 276 
 
 
 2 
 
 - 
 
 3,447 
 
 99 
 
 
 6,566 
 
 332 
 
 
 24 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 3,447 
 
 99 
 
 
 6,566 
 
 332 
 
 
 24 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 51,192 
 
 937 
 
 
 37,389 
 
 10,311 
 
 
 1,892 
 
 356 
 
 - 
 
 - 
 
 
 (107)
 
 - 
 
 
 (26)
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (562)
 
 - 
 
 
 (47)
 
 (1,780)
 
 
 - 
 
 (6)
 
 (4,092)
 
 (190)
 
 
 (3,775)
 
 (752)
 
 
 (868)
 
 (348)
 
 (37)
 
 (1)
 
 
 (34)
 
 (4)
 
 
 (8)
 
 (2)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 46,501 
 
 746 
 
 
 33,426 
 
 7,775 
 
 
 990 
 
 - 
 
 49,948 
 
 845 
 
 
 39,992 
 
 8,107 
 
 
 1,014 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 845 
 
 - 
 
 
 8,107 
 
 - 
 
 
 - 
 
 - 
$
 50,793 
$
 845 
 
$
 48,099 
$
 8,107 
 
$
 1,014 
$
 - 





 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime
2010 Class 1
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 1 
$
 - 
 
Total realized gains (losses) on investments
 
 - 
 
 - 
 
Change in net unrealized appreciation or depreciation of investments
 
 141 
 
 - 
 
Net gains (losses) from investments
 
 142 
 
 - 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 142 
 
 - 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 3,431 
 
 19 
 
Contract terminations and surrenders
 
 - 
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 - 
 
 - 
 
Transfers to other contracts
 
 (3)
 
 (1)
 
Cost of insurance and administration charges
 
 (416)
 
 (10)
 
Mortality and expenses charges
 
 (4)
 
 - 
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 3,008 
 
 8 
Total increase (decrease)
 
 3,150 
 
 8 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 8 
 
 - 
Net assets at end of period
$
 3,158 
$
 8 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime
2020 Class 1
 
Principal LifeTime
2030 Class 1
 
Principal LifeTime
2040 Class 1
 
 
 
 
 
 
Division
 
Division
 
Division
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 4,422 
$
 - 
 
$
 6,232 
$
 287 
 
$
 2,329 
$
 286 
 
 232 
 
 2 
 
 
 21,112 
 
 129 
 
 
 1,296 
 
 109 
 
 15,491 
 
 28 
 
 
 35,807 
 
 4,110 
 
 
 29,764 
 
 1,849 
 
 20,145 
 
 30 
 
 
 63,151 
 
 4,526 
 
 
 33,389 
 
 2,244 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 20,145 
 
 30 
 
 
 63,151 
 
 4,526 
 
 
 33,389 
 
 2,244 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 240,108 
 
 9,583 
 
 
 573,592 
 
 196,291 
 
 
 306,577 
 
 60,281 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 (68)
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (290)
 
 (129)
 
 
 (329,647)
 
 - 
 
 
 (85)
 
 (16)
 
 (7,669)
 
 (237)
 
 
 (43,218)
 
 (7,322)
 
 
 (37,051)
 
 (8,313)
 
 (68)
 
 (1)
 
 
 (386)
 
 (40)
 
 
 (331)
 
 (45)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 232,081 
 
 9,216 
 
 
 200,341 
 
 188,929 
 
 
 269,042 
 
 51,907 
 
 252,226 
 
 9,246 
 
 
 263,492 
 
 193,455 
 
 
 302,431 
 
 54,151 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 9,246 
 
 - 
 
 
 193,455 
 
 - 
 
 
 54,151 
 
 - 
$
 261,472 
$
 9,246 
 
$
 456,947 
$
 193,455 
 
$
 356,582 
$
 54,151 





 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime
2050 Class 1
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 2,192 
$
 451 
 
Total realized gains (losses) on investments
 
 1,159 
 
 (67)
 
Change in net unrealized appreciation or depreciation of investments
 
 26,021 
 
 3,076 
 
Net gains (losses) from investments
 
 29,372 
 
 3,460 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 29,372 
 
 3,460 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 248,630 
 
 60,931 
 
Contract terminations and surrenders
 
 (1,945)
 
 (118)
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 - 
 
 - 
 
Transfers to other contracts
 
 (128)
 
 (5)
 
Cost of insurance and administration charges
 
 (51,326)
 
 (13,571)
 
Mortality and expenses charges
 
 (458)
 
 (74)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 194,773 
 
 47,163 
Total increase (decrease)
 
 224,145 
 
 50,623 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 50,623 
 
 - 
Net assets at end of period
$
 274,768 
$
 50,623 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Commenced operations May 20, 2013.
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Principal LifeTime
2060 Class 1
 
Putnam VT
Voyager Class IB
 
Real Estate
Securities Class 1
 
 
 
 
 
 
Division (1)
 
Division
 
Division
2013 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 - 
 
$
 69 
$
 - 
 
$
 2,253 
$
 365 
 
 40 
 
 
 866 
 
 (43)
 
 
 961 
 
 75 
 
 1,321 
 
 
 6,886 
 
 164 
 
 
 (6,455)
 
 1,583 
 
 1,361 
 
 
 7,821 
 
 121 
 
 
 (3,241)
 
 2,023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 1,361 
 
 
 7,821 
 
 121 
 
 
 (3,241)
 
 2,023 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 15,744 
 
 
 47,064 
 
 6,170 
 
 
 307,123 
 
 67,905 
 
 - 
 
 
 (427)
 
 - 
 
 
 (335)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 
 (1,805)
 
 - 
 
 
 (802)
 
 - 
 
 - 
 
 
 (744)
 
 (7)
 
 
 (9,132)
 
 (1,260)
 
 (1,589)
 
 
 (3,971)
 
 (1,866)
 
 
 (35,582)
 
 (6,205)
 
 (14)
 
 
 (35)
 
 (10)
 
 
 (318)
 
 (34)
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 14,141 
 
 
 40,082 
 
 4,287 
 
 
 260,954 
 
 60,406 
 
 15,502 
 
 
 47,903 
 
 4,408 
 
 
 257,713 
 
 62,429 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 
 4,408 
 
 - 
 
 
 62,429 
 
 - 
$
 15,502 
 
$
 52,311 
$
 4,408 
 
$
 320,142 
$
 62,429 




 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Balanced
Portfolio Class 1
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 30,159 
$
 880 
 
Total realized gains (losses) on investments
 
 51,721 
 
 1,491 
 
Change in net unrealized appreciation or depreciation of investments
 
 106,578 
 
 10,177 
 
Net gains (losses) from investments
 
 188,458 
 
 12,548 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 188,458 
 
 12,548 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 1,518,494 
 
 476,374 
 
Contract terminations and surrenders
 
 (161)
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 685 
 
 - 
 
Transfers to other contracts
 
 (36,431)
 
 (196)
 
Cost of insurance and administration charges
 
 (232,551)
 
 (45,475)
 
Mortality and expenses charges
 
 (2,076)
 
 (247)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 1,247,960 
 
 430,456 
Total increase (decrease)
 
 1,436,418 
 
 443,004 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 443,004 
 
 - 
Net assets at end of period
$
 1,879,422 
$
 443,004 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Conservative
Balanced Portfolio Class 1
 
SAM Conservative
Growth Portfolio Class 1
 
SAM Flexible
Income Portfolio Class 1
 
 
 
 
 
 
Division
 
Division
 
Division
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 15,098 
$
 492 
 
$
 36,897 
$
 1,330 
 
$
 21,175 
$
 412 
 
 18,738 
 
 777 
 
 
 2,635 
 
 (2)
 
 
 9,664 
 
 597 
 
 23,619 
 
 3,429 
 
 
 332,076 
 
 37,707 
 
 
 16,337 
 
 1,795 
 
 57,455 
 
 4,698 
 
 
 371,608 
 
 39,035 
 
 
 47,176 
 
 2,804 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 57,455 
 
 4,698 
 
 
 371,608 
 
 39,035 
 
 
 47,176 
 
 2,804 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 852,546 
 
 180,846 
 
 
 1,978,531 
 
 936,788 
 
 
 1,220,423 
 
 112,409 
 
 - 
 
 - 
 
 
 (22,930)
 
 - 
 
 
 (585)
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 (14,376)
 
 - 
 
 (19,529)
 
 (2)
 
 
 (35,881)
 
 (2,021)
 
 
 (8,675)
 
 - 
 
 (89,460)
 
 (18,390)
 
 
 (233,754)
 
 (46,108)
 
 
 (87,228)
 
 (6,448)
 
 (798)
 
 (100)
 
 
 (2,087)
 
 (250)
 
 
 (779)
 
 (35)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 742,759 
 
 162,354 
 
 
 1,683,879 
 
 888,409 
 
 
 1,108,780 
 
 105,926 
 
 800,214 
 
 167,052 
 
 
 2,055,487 
 
 927,444 
 
 
 1,155,956 
 
 108,730 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 167,052 
 
 - 
 
 
 927,444 
 
 - 
 
 
 108,730 
 
 - 
$
 967,266 
$
 167,052 
 
$
 2,982,931 
$
 927,444 
 
$
 1,264,686 
$
 108,730 





 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SAM Strategic
Growth Portfolio Class 1
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 34,590 
$
 1,631 
 
Total realized gains (losses) on investments
 
 26,566 
 
 1,172 
 
Change in net unrealized appreciation or depreciation of investments
 
 511,724 
 
 68,460 
 
Net gains (losses) from investments
 
 572,880 
 
 71,263 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 572,880 
 
 71,263 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 1,824,732 
 
 1,594,454 
 
Contract terminations and surrenders
 
 (15,189)
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 (15,635)
 
 - 
 
Transfers to other contracts
 
 (100,944)
 
 (192)
 
Cost of insurance and administration charges
 
 (376,547)
 
 (73,754)
 
Mortality and expenses charges
 
 (3,361)
 
 (400)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 1,313,056 
 
 1,520,108 
Total increase (decrease)
 
 1,885,936 
 
 1,591,371 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 1,591,371 
 
 - 
Net assets at end of period
$
 3,477,307 
$
 1,591,371 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Short-Term Income Class 1
 
SmallCap Blend Class 1
 
SmallCap Growth II Class 1
 
 
 
 
 
 
Division
 
Division
 
Division
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 6,616 
$
 1,830 
 
$
 160 
$
 - 
 
$
 - 
$
 - 
 
 (215)
 
 (13)
 
 
 1,393 
 
 (1)
 
 
 2,153 
 
 (144)
 
 (2,752)
 
 728 
 
 
 22,032 
 
 711 
 
 
 10,357 
 
 325 
 
 3,649 
 
 2,545 
 
 
 23,585 
 
 710 
 
 
 12,510 
 
 181 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 3,649 
 
 2,545 
 
 
 23,585 
 
 710 
 
 
 12,510 
 
 181 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 411,025 
 
 192,953 
 
 
 184,949 
 
 18,259 
 
 
 92,959 
 
 11,655 
 
 - 
 
 - 
 
 
 (777)
 
 - 
 
 
 (478)
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (36)
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (77,485)
 
 (2,963)
 
 
 (3,231)
 
 (17)
 
 
 (368)
 
 (1,016)
 
 (45,500)
 
 (14,830)
 
 
 (9,420)
 
 (1,954)
 
 
 (7,067)
 
 (2,875)
 
 (406)
 
 (80)
 
 
 (84)
 
 (11)
 
 
 (63)
 
 (16)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 287,598 
 
 175,080 
 
 
 171,437 
 
 16,277 
 
 
 84,983 
 
 7,748 
 
 291,247 
 
 177,625 
 
 
 195,022 
 
 16,987 
 
 
 97,493 
 
 7,929 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 177,625 
 
 - 
 
 
 16,987 
 
 - 
 
 
 7,929 
 
 - 
$
 468,872 
$
 177,625 
 
$
 212,009 
$
 16,987 
 
$
 105,422 
$
 7,929 





 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
SmallCap Value I Class 1
 
 
 
 
 
 
 
 
 
 
 
 
Division
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 716 
$
 192 
 
Total realized gains (losses) on investments
 
 2,096 
 
 22 
 
Change in net unrealized appreciation or depreciation of investments
 
 15,703 
 
 2,062 
 
Net gains (losses) from investments
 
 18,515 
 
 2,276 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 18,515 
 
 2,276 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 59,231 
 
 28,748 
 
Contract terminations and surrenders
 
 (137)
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 (2,578)
 
 - 
 
Transfers to other contracts
 
 (2,944)
 
 (9)
 
Cost of insurance and administration charges
 
 (13,838)
 
 (2,524)
 
Mortality and expenses charges
 
 (124)
 
 (14)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 39,610 
 
 26,201 
Total increase (decrease)
 
 58,125 
 
 28,477 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 28,477 
 
 - 
Net assets at end of period
$
 86,602 
$
 28,477 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of TOPS Protected Balanced ETF Class 2 Division until May 20, 2013.
 
 
(2) Represented the operations of TOPS Protected Growth ETF Class 2 Division until May 20, 2013.
 
 
(3) Commenced operations May 21, 2012.
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 




 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Templeton Global
Bond Securities Class 2
 
TOPS Managed
Risk Balanced ETF Class 2
 
TOPS Managed
Risk Growth ETF Class 2
 
 
 
 
 
 
Division
 
Division (1) (3)
 
Division (2) (3)
2013 
2012 
 
2013 
2012 
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$
 11,536 
$
 325 
 
$
 309 
$
 - 
 
$
 3,024 
$
 91 
 
 2,361 
 
 (101)
 
 
 130 
 
 - 
 
 
 8,644 
 
 1 
 
 (11,228)
 
 2,248 
 
 
 1,803 
 
 2 
 
 
 30,141 
 
 7,325 
 
 2,669 
 
 2,472 
 
 
 2,242 
 
 2 
 
 
 41,809 
 
 7,417 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 2,669 
 
 2,472 
 
 
 2,242 
 
 2 
 
 
 41,809 
 
 7,417 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 407,742 
 
 50,908 
 
 
 85,243 
 
 442 
 
 
 193,217 
 
 256,615 
 
 (1,539)
 
 - 
 
 
 - 
 
 - 
 
 
 (95)
 
 - 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (276)
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 (81,855)
 
 (2,308)
 
 
 (1,799)
 
 - 
 
 
 (102)
 
 - 
 
 (33,053)
 
 (2,509)
 
 
 (6,742)
 
 (23)
 
 
 (93,549)
 
 (22,709)
 
 (295)
 
 (14)
 
 
 (60)
 
 - 
 
 
 (835)
 
 (123)
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 290,724 
 
 46,077 
 
 
 76,642 
 
 419 
 
 
 98,636 
 
 233,783 
 
 293,393 
 
 48,549 
 
 
 78,884 
 
 421 
 
 
 140,445 
 
 241,200 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 48,549 
 
 - 
 
 
 421 
 
 - 
 
 
 241,200 
 
 - 
$
 341,942 
$
 48,549 
 
$
 79,305 
$
 421 
 
$
 381,645 
$
 241,200 





 
 
Principal National Life Insurance Company
 
 
Variable Life Separate Account
 
 
 
 
 
 
 
 
 
Statements of Changes in Net Assets (continued)
 
 
 
 
 
 
 
 
 
Years ended December 31, 2013 and 2012, except as noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
TOPS Managed
Risk Moderate Growth ETF Class 2
 
 
 
 
 
 
 
 
 
 
 
 
Division (1) (2)
 
 
 
2013 
2012 
Increase (decrease) in net assets
 
 
 
 
Operations:
 
 
 
 
 
Net investment income (loss)
$
 110 
$
 1 
 
Total realized gains (losses) on investments
 
 116 
 
 - 
 
Change in net unrealized appreciation or depreciation of investments
 
 1,958 
 
 56 
 
Net gains (losses) from investments
 
 2,184 
 
 57 
 
 
 
 
 
 
 
Payment from affiliate
 
 - 
 
 - 
 
 
 
 
 
 
 
Net increase (decrease) in net assets resulting from operations
 
 2,184 
 
 57 
 
 
 
 
 
 
 
Policy related transactions:
 
 
 
 
 
Net premium payments, less sales charges and applicable premium taxes
 
 67,870 
 
 3,093 
 
Contract terminations and surrenders
 
 - 
 
 - 
 
Death benefit payments
 
 - 
 
 - 
 
Policy loan transfers
 
 - 
 
 - 
 
Transfers to other contracts
 
 (2,416)
 
 - 
 
Cost of insurance and administration charges
 
 (6,994)
 
 (1,039)
 
Mortality and expenses charges
 
 (62)
 
 (6)
 
Surrender charges
 
 - 
 
 - 
Increase (decrease) in net assets from policy related transactions
 
 58,398 
 
 2,048 
Total increase (decrease)
 
 60,582 
 
 2,105 
 
 
 
 
 
 
 
Net assets at beginning of period
 
 2,105 
 
 - 
Net assets at end of period
$
 62,687 
$
 2,105 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Represented the operations of TOPS Protected Moderate Growth ETF Class 2 Division until May 20, 2013.
 
 
(2) Commenced operations May 21, 2012.
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 





 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Van Eck Global
Hard Assets Service Class
 
 
 
 
Division
 
2013 
2012 
 
 
 
 
 
 
 
 
 
 
 
$
 123 
$
 79 
 
 
 1,709 
 
 112 
 
 
 5,705 
 
 602 
 
 
 7,537 
 
 793 
 
 
 
 
 
 
 
 - 
 
 - 
 
 
 
 
 
 
 
 7,537 
 
 793 
 
 
 
 
 
 
 
 
 
 
 
 
 109,792 
 
 23,293 
 
 
 (453)
 
 - 
 
 
 - 
 
 - 
 
 
 - 
 
 - 
 
 
 (11,422)
 
 (1,179)
 
 
 (6,616)
 
 (1,574)
 
 
 (59)
 
 (9)
 
 
 - 
 
 - 
 
 
 91,242 
 
 20,531 
 
 
 98,779 
 
 21,324 
 
 
 
 
 
 
 
 21,324 
 
 - 
 
$
 120,103 
$
 21,324 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013


1. Nature of Operations and Significant Accounting Policies

Principal National Life Insurance Company Variable Life Separate Account (“the Separate Account”) is a segregated investment account of Principal National Life Insurance Company (“Principal National”) 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 the Separate Account invests exclusively in shares representing interests in a corresponding investment option. As of December 31, 2013, contractholder investment options include the following diversified open-end management investment companies:
Principal Variable Contracts Funds, Inc. - Class 1: (1)
Bond & Mortgage Securities Account (2)
Diversified International Account (2)
Equity Income Account (2)
Government & High Quality Bond Account (2)
International Emerging Markets Account (2)
LargeCap Blend Account II (2)
LargeCap Growth Account (2)
LargeCap Growth Account I (2)
LargeCap S&P 500 Index Account (2)
LargeCap Value Account (2)
MidCap Class 1 Account (2) (8)
Money Market Account (2)
Principal LifeTime Strategic Income Account (2)
Principal LifeTime 2010 Account (2)
Principal LifeTime 2020 Account (2)
Principal LifeTime 2030 Account (2)
Principal LifeTime 2040 Account (2)
Principal LifeTime 2050 Account (2)
Principal LifeTime 2060 Account (5)
Real Estate Securities Account (2)
Short-Term Income Account (2)
SmallCap Blend Account (2)
SmallCap Growth Account II (2)
SmallCap Value Account I (2)
Strategic Asset Management Balanced Portfolio (2)
Strategic Asset Management Conservative Balanced Portfolio (2)
Strategic Asset Management Conservative Growth Portfolio (2)
Strategic Asset Management Flexible Income Portfolio (2)
Strategic Asset Management Strategic Growth Portfolio (2)
AllianceBernstein Variable Product Series Fund Inc.:
International Value Portfolio - Class A (2)
Small Cap Growth Portfolio - Class A (2)
Small/Mid Cap Value Portfolio - Class A (2)
American Century Investments®:
VP Income & Growth Fund - Class II (2)
VP Inflation Protection Fund - Class II (2)
VP Mid Cap Value Fund - Class II (2)
VP Value Fund - Class II (2)
VP VistaSM Fund - Class II (2)




Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013

Calvert VP Portfolio:
Income Portfolio (2)
Russell 2000 Small Cap Index Portfolio - Class F (2)
S&P MidCap 400 Index Portfolio - Class F (2)
    SRI Equity Portfolio (2)
Delaware VIP® Small Cap Value Series Service Class (2)
Delaware VIP® Smid Cap Growth Series Service Class (2)
DWS Small Mid Cap Value VIP - Class B (2) (6)
Fidelity® Variable Insurance Products Fund:
Contrafund® Portfolio - Service Class 2 (2)
Equity-Income Portfolio - Service Class 2 (2)
High Income Portfolio - Service Class 2 (2)
    Mid Cap Portfolio - Service Class 2 (2)
Franklin Templeton Variable Insurance Product Trust:
Mutual Global Discovery Securities Fund - Class 2 (2)
Franklin Rising Dividends Securities Fund - Class 2 (2)
Franklin Small Cap Value Securities Fund - Class 2 (2)
Invesco Variable Insurance Fund:
    Core Equity Fund - Series II Shares (2)
    Global Health Care Fund - Series I Shares (2)
    Mid Cap Core Equity Fund - Series II Shares (2)    
Invesco American Franchise Series II (3) (7)
Janus Aspen Series:
    Janus Aspen Forty Portfolio - Service Shares (2)
MFS ® Variable Insurance Trust:
New Discovery Series - Service Class (2)
Utilities Series - Service Class (2)
Neuberger Berman Advisors Management Trust:
    Large Cap Value Portfolio - I Class Shares (2)
Oppenheimer Main Street Small Cap Fund®/VA - Service Shares (2) (9)
Putnam Variable Trust:
Voyager Fund - Class IB (2)
Templeton Global Bond Securities - Class 2 (2)
TOPS Managed Risk Series:
TOPS Managed Risk Balanced ETF Class 2 (4) (10)     
TOPS Managed Risk Growth ETF Class 2 (4) (11)
    TOPS Managed Risk Moderate Growth ETF Class 2 (4) (12)
Van Eck VIP Trust:
    Global Hard Assets Fund - Service Class Shares (2)

(1)
Organized by Principal National Life Insurance Company.
(2)
Commencement of operations, December 31, 2011. No activity occurred during the 2011 reporting period.
(3)
Commencement of operations, April 27, 2012.
(4)
Commencement of operations, May 21, 2012.
(5)
Commencement of operations, May 20, 2013.
(6)
Represented the operations of DWS Dreman Small Mid Cap Value Class B Division until May 20, 2013.
(7)
Represented the operations of Invesco Van Kampen American Franchise Series II Division until May 20, 2013.
(8)
Represented the operations of MidCap Blend Class 1 Division until May 20, 2013.
(9)
Represented the operations of Oppenheimer Main Street Small & Mid Cap Service Shares Division until May 20, 2013.
(10)
Represented the operations of TOPS Protected Balanced ETF Class 2 Division until May 20, 2013.
(11)
Represented the operations of TOPS Protected Growth ETF Class 2 Division until May 20, 2013.




Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013

(12)
Represented the operations of TOPS Protected Moderate Growth ETF Class 2 Division until May 20, 2013.

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

The assets of the Separate Account are owned by Principal National. The assets of the Separate Account support Variable Universal Life Income III variable life insurance contracts of Principal National and may not be used to satisfy the liabilities arising from any other business of Principal National.

Use of Estimates in the Preparation of Financial Statements

The preparation of financial statements and accompanying notes of the Separate Account 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 values (“NAV”) per share on December 31, 2013. Net realized capital gains and losses on sales of investments are determined on the basis of specific identification. Dividends are taken into income on an accrual basis as of the ex-dividend date. Investment transactions are accounted for on a trade date basis.

Fair Value Measurements

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

•
Level 1 - Fair values are based on unadjusted quoted prices in active markets for identical assets or liabilities.
•
Level 2 - Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.
•
Level 3 - Fair values are based on significant unobservable inputs 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.

Foreign Tax Withholdings

Principal National may be entitled to claim a federal income tax credit to the extent foreign income taxes are withheld on investment income allocated to the Separate Account. Principal National will compensate each separate account division in an amount equal to the tax benefit claimed on its federal income tax return, or subsequently claimed for refund, attributable to foreign taxes on the division’s share of income associated with investments allocated to the Separate Account within a reasonable time of receiving a tax benefit. The amounts presented as payment from affiliate on the Statements of Operations and the Statements of Changes in Net Assets reflects compensation for subsequently claimed refunds.

2. Expenses and Related Party Transactions
Principal National is compensated for the following expenses and charges:
Variable Universal Life Income III contracts - Asset based charges assumed by Principal National are compensated for by a monthly charge equivalent to an annual rate of 0.15% of the asset value of each policy through the tenth policy




Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013

year. The current administrative charge is $25 per month during the first policy year. After the first policy year, the administration charge is $10 per month. A cost of insurance charge, which is based on Principal National's expected future mortality experience, is deducted as compensation for insurance charges. All charges are assessed through the redemption of units. A sales charge of 4.25% of premiums paid up to target premium is deducted from each payment on behalf of each participant during the first policy year. In policy years two and later, the sales charge is 3.00% of premiums paid up to target premium. A tax charge of 2.00% for state and local taxes and 1.25% for federal taxes is deducted from each premium payment on behalf of each participant. The sales and tax charges are deducted from contributions by Principal National prior to their transfer to the Separate Account.

During the year ended December 31, 2013, investment advisory and management fees were paid indirectly to Principal Management Corporation (“Manager”) (wholly owned by Principal Financial Services, Inc.), an affiliate of Principal National, computed at an annual percentage rate of each account’s average daily net assets. A portion of the management fee is paid by the Manager to the sub-advisor of each of the Separate Accounts, some of which are affiliates of the Manager. The annual rate paid by Principal LifeTime Accounts is 0.03% of each of the Principal LifeTime Accounts’ average net assets. The annual rate paid by the SAM Portfolios is based upon the aggregate average daily net assets (“aggregate net assets”) of the SAM Portfolios. The investment advisory and management fee schedule for the SAM Portfolios is 0.25% of aggregate net assets up to the first $1 billion and 0.20% of aggregate net assets over $1 billion. The annual rates used in this calculation for each of the other accounts are as follows:
 
Net Assets of Accounts (in millions)
 
First $100
Next $100
Next $100
Next $100
Over $400
Bond & Mortgage Securities 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 
Money Market Account
0.50 
0.45 
0.40 
0.35 
0.30 
Real Estate Securities Account
0.90 
0.85 
0.80 
0.75 
0.70 
SmallCap Blend Account
0.85 
0.80 
0.75 
0.70 
0.65 
SmallCap Growth Account II
1.00 
0.95 
0.90 
0.85 
0.80 
SmallCap Value Account I
1.10 
1.05 
1.00 
0.95 
0.90 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Assets of Accounts (in millions)
 
First $250
Next $250
Next $250
Next $250
Over $1,000
Diversified International Account
0.85%
0.80%
0.75%
0.70%
0.65%
International Emerging Markets Account
1.25 
1.20 
1.15 
1.10 
1.05 
LargeCap Blend Account II
0.75 
0.70 
0.65 
0.60 
0.55 
LargeCap Value Account
0.60 
0.55 
0.50 
0.45 
0.40 






Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013


 
 
 
 
 
 
 
 
 
 
 
 
Net Assets of Accounts
 
 
Net Assets of Accounts
 
(in millions)
 
 
(in millions)
 
First $500
Next $500
Next $1 billion
Next $1 billion
Over $3 billion
 
 
First $200
Next $300
Over $500
LargeCap Growth Account
0.68%
0.63%
0.61%
0.56%
0.51%
 
Short-Term Income Account
0.50%
0.45%
0.40%

 
Net Assets of Accounts
 
 
 
 
First $2 billion
Over $2 billion
 
 
All Net Assets
Government & High Quality Bond Account
0.50%
0.45%
 
LargeCap S&P 500 Index Account
0.25%

The Manager has contractually agreed to limit the Separate Account’s management and investment advisory fees for certain Separate Accounts through the period ended April 30, 2014. The expense limit will reduce the Separate Account’s management and investment advisory fees by the following amounts:
LargeCap Blend Account II
0.018%
LargeCap Growth Account I
0.016 
SmallCap Growth Account II
0.100 
SmallCap Value Account I
0.020 

The Manager has contractually agreed to limit the expenses (excluding interest the Separate Accounts incur in connection with investments they make) for certain classes of shares 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 attributable to each class of shares on an annualized basis during the reporting period. The operating expense limits are as follows:

 
From January 1, 2013 through December 31, 2013
 
Class 1
Class 2
Expiration
Principal LifeTime 2060 Account
0.13%
N/A
April 30, 2014
SmallCap Value Account I
0.99%
1.24%
April 30, 2014


The Manager has contractually agreed to limit Short-Term Income Account’s expenses by 0.01% through the period ended April 30, 2014.

In addition, the Manager has voluntarily agreed to limit Money Market Account’s expenses to the extent necessary to maintain a 0% yield. The voluntary expense limit may be terminated at any time.





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013

Reinsurance

There is a modified coinsurance agreement between Principal Life Insurance Company and Principal National for the Separate Accounts.

3. Federal Income Taxes

The operations of the Separate Account are a part of the operations of Principal National. Under current practice, no federal income taxes are allocated by Principal National to the operations of the Separate Account.




Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013

4. Purchases and Sales of Investments

The aggregate cost of purchases and proceeds from sales of investments were as follows for the period ended December 31, 2013:

Division
 
Purchases
 
Sales
 
 
 
 
 
AllianceBernstein International Value Class A Division:
 
 
 
 
    Variable Universal Life Income III
$
 184,109 
$
 12,102 
 
 
 
 
 
AllianceBernstein Small Cap Growth Class A Division:
 
 
 
 
    Variable Universal Life Income III
 
 66,457 
 
 7,151 
 
 
 
 
 
AllianceBernstein Small/Mid Cap Value Class A Division:
 
 
 
 
    Variable Universal Life Income III
 
 64,823 
 
 7,599 
 
 
 
 
 
American Century VP Income & Growth Class II Division:
 
 
 
 
    Variable Universal Life Income III
 
 92,171 
 
 8,896 
 
 
 
 
 
American Century VP Inflation Protection Class II Division:
 
 
 
 
    Variable Universal Life Income III
 
 107,432 
 
 48,027 
 
 
 
 
 
American Century VP MidCap Value Class II Division:
 
 
 
 
    Variable Universal Life Income III
 
 182,621 
 
 6,994 
 
 
 
 
 
American Century VP Value Class II Division:
 
 
 
 
    Variable Universal Life Income III
 
 129,864 
 
 10,243 
 
 
 
 
 
American Century VP Vista Class II Division:
 
 
 
 
    Variable Universal Life Income III
 
 1,162 
 
 593 
 
 
 
 
 
Bond & Mortgage Securities Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 130,661 
 
 51,008 
 
 
 
 
 
Calvert Income Division:
 
 
 
 
    Variable Universal Life Income III
 
 85,965 
 
 32,946 
 
 
 
 
 
Calvert Russell 2000 Small Cap Index Class F Division:
 
 
 
 
    Variable Universal Life Income III
 
 74,315 
 
 12,873 
 
 
 
 
 
Calvert S&P MidCap 400 Index Class F Division:
 
 
 
 
    Variable Universal Life Income III
 
 45,367 
 
 4,247 
 
 
 
 
 
Calvert SRI Equity Division:
 
 
 
 
    Variable Universal Life Income III
 
 19,464 
 
 2,571 
 
 
 
 
 
Delaware Small Cap Value Service Class Division:
 
 
 
 
    Variable Universal Life Income III
 
 78,336 
 
 10,609 
 
 
 
 
 
Delaware Smid Cap Growth Service Class Division:
 
 
 
 
    Variable Universal Life Income III
 
 91,717 
 
 22,988 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013

Division
 
Purchases
 
Sales
 
 
 
 
 
Diversified International Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
$
 214,446 
$
 23,985 
 
 
 
 
 
DWS Small Mid Cap Value Class B Division:
 
 
 
 
    Variable Universal Life Income III
 
 20,723 
 
 5,666 
 
 
 
 
 
Equity Income Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 252,422 
 
 33,229 
 
 
 
 
 
Fidelity VIP Contrafund Service Class 2 Division:
 
 
 
 
    Variable Universal Life Income III
 
 484,534 
 
 66,914 
 
 
 
 
 
Fidelity VIP Equity-Income Service Class 2 Division:
 
 
 
 
    Variable Universal Life Income III
 
 172,095 
 
 16,325 
 
 
 
 
 
Fidelity VIP High Income Service Class 2 Division:
 
 
 
 
    Variable Universal Life Income III
 
 304,281 
 
 73,780 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class 2 Division:
 
 
 
 
    Variable Universal Life Income III
 
 311,766 
 
 42,005 
 
 
 
 
 
Franklin Mutual Global Discovery Class 2 Division:
 
 
 
 
    Variable Universal Life Income III
 
 174,009 
 
 14,592 
 
 
 
 
 
Franklin Rising Dividends Securities Class 2 Division:
 
 
 
 
    Variable Universal Life Income III
 
 222,656 
 
 30,491 
 
 
 
 
 
Franklin Small Cap Value Securities Class 2 Division:
 
 
 
 
    Variable Universal Life Income III
 
 64,481 
 
 2,293 
 
 
 
 
 
Government & High Quality Bond Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 562,962 
 
 355,787 
 
 
 
 
 
International Emerging Markets Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 287,183 
 
 62,948 
 
 
 
 
 
Invesco American Franchise Series II Division:
 
 
 
 
    Variable Universal Life Income III
 
 16,550 
 
 1,931 
 
 
 
 
 
Invesco Core Equity Series II Division:
 
 
 
 
    Variable Universal Life Income III
 
 19,473 
 
 2,115 
 
 
 
 
 
Invesco Global Health Care Series I Division:
 
 
 
 
    Variable Universal Life Income III
 
 209,051 
 
 33,151 
 
 
 
 
 
Invesco Mid Cap Core Equity Series II Division:
 
 
 
 
    Variable Universal Life Income III
 
 126,017 
 
 3,186 
 
 
 
 
 
Janus Aspen Forty Service Shares Division:
 
 
 
 
    Variable Universal Life Income III
 
 146,413 
 
 25,826 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013

Division
 
Purchases
 
Sales
 
 
 
 
 
LargeCap Blend II Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
$
 21,368 
$
 3,384 
 
 
 
 
 
LargeCap Growth Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 146,259 
 
 11,801 
 
 
 
 
 
LargeCap Growth I Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 221,287 
 
 27,840 
 
 
 
 
 
LargeCap S&P 500 Index Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 1,798,089 
 
 69,582 
 
 
 
 
 
LargeCap Value Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 105,230 
 
 24,383 
 
 
 
 
 
MFS VIT New Discovery Service Class Division:
 
 
 
 
    Variable Universal Life Income III
 
 49,208 
 
 6,310 
 
 
 
 
 
MFS VIT Utilities Service Class Division:
 
 
 
 
    Variable Universal Life Income III
 
 162,146 
 
 23,766 
 
 
 
 
 
MidCap Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 816,353 
 
 120,763 
 
 
 
 
 
Money Market Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 15,689,147 
 
 14,387,194 
 
 
 
 
 
Neuberger Berman AMT Large Cap Value I Class Division:
 
 
 
 
    Variable Universal Life Income III
 
 51,510 
 
 4,691 
 
 
 
 
 
Oppenheimer Main Street Small Cap Service Shares Division:
 
 
 
 
    Variable Universal Life Income III
 
 37,715 
 
 3,963 
 
 
 
 
 
Principal LifeTime Strategic Income Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 1,914 
 
 902 
 
 
 
 
 
Principal LifeTime 2010 Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 3,432 
 
 423 
 
 
 
 
 
Principal LifeTime 2020 Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 244,530 
 
 8,027 
 
 
 
 
 
Principal LifeTime 2030 Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 581,440 
 
 373,251 
 
 
 
 
 
Principal LifeTime 2040 Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 308,906 
 
 37,535 
 
 
 
 
 
Principal LifeTime 2050 Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 250,822 
 
 53,857 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013

Division
 
Purchases
 
Sales
 
 
 
 
 
Principal LifeTime 2060 Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
$
 15,744 
$
 1,603 
 
 
 
 
 
Putnam VT Voyager Class IB Division:
 
 
 
 
    Variable Universal Life Income III
 
 47,133 
 
 6,982 
 
 
 
 
 
Real Estate Securities Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 309,377 
 
 46,169 
 
 
 
 
 
SAM Balanced Portfolio Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 1,563,517 
 
 270,534 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 873,078 
 
 109,787 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 2,015,428 
 
 294,652 
 
 
 
 
 
SAM Flexible Income Portfolio Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 1,249,591 
 
 111,643 
 
 
 
 
 
SAM Strategic Growth Portfolio Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 1,859,321 
 
 511,676 
 
 
 
 
 
Short-Term Income Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 417,641 
 
 123,427 
 
 
 
 
 
SmallCap Blend Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 185,109 
 
 13,512 
 
 
 
 
 
SmallCap Growth II Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 92,958 
 
 7,976 
 
 
 
 
 
SmallCap Value I Class 1 Division:
 
 
 
 
    Variable Universal Life Income III
 
 59,945 
 
 19,621 
 
 
 
 
 
Templeton Global Bond Securities Class 2 Division:
 
 
 
 
    Variable Universal Life Income III
 
 422,254 
 
 117,018 
 
 
 
 
 
TOPS Managed Risk Balanced ETF Class 2 Division:
 
 
 
 
    Variable Universal Life Income III
 
 85,552 
 
 8,601 
 
 
 
 
 
TOPS Managed Risk Growth ETF Class 2 Division:
 
 
 
 
    Variable Universal Life Income III
 
 196,240 
 
 94,581 
 
 
 
 
 
TOPS Managed Risk Moderate Growth ETF Class 2 Division:
 
 
 
 
    Variable Universal Life Income III
 
 67,980 
 
 9,472 
 
 
 
 
 
Van Eck Global Hard Assets Service Class Division:
 
 
 
 
    Variable Universal Life Income III
 
 110,392 
 
 18,550 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013

5. Changes in Units Outstanding

Transactions in units were as follows for each of the periods ended December 31:
 
 
2013 
 
2012 
Division
 
Purchased
Redeemed
 
Purchased
Redeemed
 
 
 
 
 
 
 
AllianceBernstein International Value Class A Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
26,000 
1,769 
 
 1,575 
 343 
 
 
 
 
 
 
 
AllianceBernstein Small Cap Growth Class A Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
3,950 
459 
 
 1,152 
 201 
 
 
 
 
 
 
 
AllianceBernstein Small/Mid Cap Value Class A Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
3,963 
483 
 
 834 
 203 
 
 
 
 
 
 
 
American Century VP Income & Growth Class II Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
4,930 
500 
 
 785 
 122 
 
 
 
 
 
 
 
American Century VP Inflation Protection Class II Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
8,831 
4,044 
 
 3,953 
 746 
 
 
 
 
 
 
 
American Century VP MidCap Value Class II Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
9,046 
365 
 
 832 
 93 
 
 
 
 
 
 
 
American Century VP Value Class II Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
6,323 
504 
 
 413 
 57 
 
 
 
 
 
 
 
American Century VP Vista Class II Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
79 
40 
 
 48 
 21 
 
 
 
 
 
 
 
Bond & Mortgage Securities Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
5,598 
2,233 
 
 3,007 
 232 
 
 
 
 
 
 
 
Calvert Income Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
6,389 
2,522 
 
 4,485 
 197 
 
 
 
 
 
 
 
Calvert Russell 2000 Small Cap Index Class F Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
4,423 
825 
 
 1,021 
 167 
 
 
 
 
 
 
 
Calvert S&P MidCap 400 Index Class F Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
2,892 
281 
 
 855 
 41 
 
 
 
 
 
 
 
Calvert SRI Equity Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
1,110 
166 
 
 1,154 
 81 
 
 
 
 
 
 
 
Delaware Small Cap Value Service Class Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
4,588 
633 
 
 1,579 
 365 
 
 
 
 
 
 
 
Delaware Smid Cap Growth Service Class Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
6,934 
1,701 
 
 2,975 
 207 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013
 
 
2013 
 
2012 
Division
 
Purchased
Redeemed
 
Purchased
Redeemed
 
 
 
 
 
 
 
Diversified International Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
8,993 
1,027 
 
 2,222 
 251 
 
 
 
 
 
 
 
DWS Small Mid Cap Value Class B Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
1,384 
368 
 
 115 
 16 
 
 
 
 
 
 
 
Equity Income Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
18,600 
2,381 
 
 5,698 
 574 
 
 
 
 
 
 
 
Fidelity VIP Contrafund Service Class 2 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
20,817 
2,821 
 
 5,137 
 1,381 
 
 
 
 
 
 
 
Fidelity VIP Equity-Income Service Class 2 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
8,936 
912 
 
 1,162 
 68 
 
 
 
 
 
 
 
Fidelity VIP High Income Service Class 2 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
11,601 
2,993 
 
 5,097 
 255 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class 2 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
9,146 
1,402 
 
 1,848 
 212 
 
 
 
 
 
 
 
Franklin Mutual Global Discovery Class 2 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
6,217 
559 
 
 1,207 
 117 
 
 
 
 
 
 
 
Franklin Rising Dividends Securities Class 2 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
10,982 
1,510 
 
 2,970 
 193 
 
 
 
 
 
 
 
Franklin Small Cap Value Securities Class 2 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
2,528 
94 
 
 355 
 228 
 
 
 
 
 
 
 
Government & High Quality Bond Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
44,196 
28,345 
 
 13,219 
 2,805 
 
 
 
 
 
 
 
International Emerging Markets Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
8,102 
1,754 
 
 3,546 
 377 
 
 
 
 
 
 
 
Invesco American Franchise Series II Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
1,342 
174 
 
 648 
 89 
 
 
 
 
 
 
 
Invesco Core Equity Series II Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
772 
88 
 
 197 
 28 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013
 
 
2013 
 
2012 
Division
 
Purchased
Redeemed
 
Purchased
Redeemed
 
 
 
 
 
 
 
Invesco Global Health Care Series I Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
10,239 
1,693 
 
 2,325 
 260 
 
 
 
 
 
 
 
Invesco Mid Cap Core Equity Series II Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
7,526 
197 
 
 618 
 184 
 
 
 
 
 
 
 
Janus Aspen Forty Service Shares Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
11,847 
2,102 
 
 2,719 
 326 
 
 
 
 
 
 
 
LargeCap Blend II Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
1,143 
181 
 
 347 
 24 
 
 
 
 
 
 
 
LargeCap Growth Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
7,542 
608 
 
 1,719 
 152 
 
 
 
 
 
 
 
LargeCap Growth I Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
7,301 
962 
 
 1,532 
 257 
 
 
 
 
 
 
 
LargeCap S&P 500 Index Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
122,957 
4,543 
 
 8,832 
 652 
 
 
 
 
 
 
 
LargeCap Value Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
4,210 
1,005 
 
 2,789 
 182 
 
 
 
 
 
 
 
MFS VIT New Discovery Service Class Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
2,035 
268 
 
 433 
 54 
 
 
 
 
 
 
 
MFS VIT Utilities Service Class Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
12,116 
1,821 
 
 3,564 
 303 
 
 
 
 
 
 
 
MidCap Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
15,303 
2,317 
 
 4,838 
 525 
 
 
 
 
 
 
 
Money Market Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
1,032,199 
946,543 
 
 432,683 
 367,542 
 
 
 
 
 
 
 
Neuberger Berman AMT Large Cap Value I Class Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
3,771 
355 
 
 94 
 18 
 
 
 
 
 
 
 
Oppenheimer Main Street Small Cap Service Shares Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
2,166 
237 
 
 798 
 199 
 
 
 
 
 
 
 







Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013
 
 
2013 
 
2012 
Division
 
Purchased
Redeemed
 
Purchased
Redeemed
 
 
 
 
 
 
 
Principal LifeTime Strategic Income Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
126 
60 
 
 25 
 25 
 
 
 
 
 
 
 
Principal LifeTime 2010 Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
215 
26 
 
 2 
 1 
 
 
 
 
 
 
 
Principal LifeTime 2020 Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
14,296 
470 
 
 615 
 24 
 
 
 
 
 
 
 
Principal LifeTime 2030 Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
35,452 
22,969 
 
 13,166 
 500 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
17,561 
2,183 
 
 4,075 
 563 
 
 
 
 
 
 
 
Principal LifeTime 2050 Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
14,287 
3,103 
 
 4,247 
 945 
 
 
 
 
 
 
 
Principal LifeTime 2060 Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
1,546 
151 
 
 - 
 - 
 
 
 
 
 
 
 
Putnam VT Voyager Class IB Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
2,560 
386 
 
 431 
 131 
 
 
 
 
 
 
 
Real Estate Securities Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
6,221 
932 
 
 1,513 
 166 
 
 
 
 
 
 
 
SAM Balanced Portfolio Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
113,746 
19,921 
 
 39,860 
 3,841 
 
 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
62,182 
7,958 
 
 14,400 
 1,464 
 
 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
153,263 
22,622 
 
 85,332 
 4,349 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
86,909 
7,902 
 
 8,555 
 489 
 
 
 
 
 
 
 
SAM Strategic Growth Portfolio Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
144,889 
40,863 
 
 152,510 
 7,008 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013
 
 
2013 
 
2012 
Division
 
Purchased
Redeemed
 
Purchased
Redeemed
 
 
 
 
 
 
 
Short-Term Income Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
33,421 
9,967 
 
 16,049 
 1,481 
 
 
 
 
 
 
 
SmallCap Blend Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
8,309 
637 
 
 1,156 
 125 
 
 
 
 
 
 
 
SmallCap Growth II Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
5,071 
456 
 
 870 
 294 
 
 
 
 
 
 
 
SmallCap Value I Class 1 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
1,609 
518 
 
 1,016 
 88 
 
 
 
 
 
 
 
Templeton Global Bond Securities Class 2 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
26,100 
7,453 
 
 3,473 
 328 
 
 
 
 
 
 
 
TOPS Managed Risk Balanced ETF Class 2 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
7,564 
762 
 
 41 
 2 
 
 
 
 
 
 
 
TOPS Managed Risk Growth ETF Class 2 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
16,191 
8,090 
 
 24,392 
 2,172 
 
 
 
 
 
 
 
TOPS Managed Risk Moderate Growth ETF Class 2 Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
5,766 
813 
 
 293 
 99 
 
 
 
 
 
 
 
Van Eck Global Hard Assets Service Class Division:
 
 
 
 
 
 
    Variable Universal Life Income III
 
12,347 
2,062 
 
 2,838 
 334 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013
6. Financial Highlights

Principal National sells a number of variable life insurance products, which have unique combinations of features and fees that are charged against the contract owner’s account balance. Differences in the fee structures results in a variety of unit values, expense ratios, and total returns.

The Separate Account has presented the following disclosures for 2013 in accordance with the AICPA Audit and Accounting Guide for Investment Companies. The following table was developed by determining which products issued by Principal National 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 National as contract owners 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
 
 
Units
(000's)
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
Net Assets (000's)
 
Investment
Income
Ratio (1)
Expense
Ratio (2)
Lowest to
Highest
Total Return (3)
Lowest to Highest
 
 
 
 
 
Division
 
 
 
 
 
 
 
 
 
AllianceBernstein International Value Class A Division:
 
 
 
 
 
 
 
 
2013 
 25 
$7.57 
$193 
 
9.58%
-%
22.89%
 
2012 
 1 
$6.16 
$8 
 
3.35%
-%
14.71%
 
 
 
 
 
 
 
 
 
AllianceBernstein Small Cap Growth Class A Division:
 
 
 
 
 
 
 
 
2013 
 4 
$18.62 
$83 
 
-%
-%
45.70%
 
2012 
 1 
$12.78 
$12 
 
-%
-%
15.03%
 
 
 
 
 
 
 
 
 
AllianceBernstein Small/Mid Cap Value Class A Division:
 
 
 
 
 
 
 
 
2013 
 4 
$17.49 
$72 
 
0.60%
-%
38.04%
 
2012 
 1 
$12.67 
$8 
 
0.60%
-%
18.74%
 
 
 
 
 
 
 
 
 
American Century VP Income & Growth Class II Division:
 
 
 
 
 
 
 
 
2013 
 5 
$20.11 
$102 
 
2.12%
-%
35.51%
 
2012 
 1 
$14.84 
$10 
 
3.19%
-%
14.42%
 
 
 
 
 
 
 
 
 
American Century VP Inflation Protection Class II Division:
 
 
 
 
 
 
 
 
2013 
 8 
$11.27 
$90 
 
1.49%
-%
-8.45%
 
2012 
 3 
$12.31 
$39 
 
3.18%
-%
7.32%
 
 
 
 
 
 
 
 
 
American Century VP MidCap Value Class II Division:
 
 
 
 
 
 
 
 
2013 
 9 
$20.97 
$198 
 
1.41%
-%
29.93%
 
2012 
 1 
$16.14 
$12 
 
2.14%
-%
16.20%
 
 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013

 
 
December 31
 
For the Year Ended December 31,
 
 
Except as Noted
 
 
Units
(000's)
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
Net Assets (000's)
 
Investment
Income
Ratio (1)
Expense
Ratio (2)
Lowest to
Highest
Total Return (3)
Lowest to Highest
 
 
 
 
 
Division
American Century VP Value Class II Division:
 
 
 
 
 
 
 
 
2013 
 6 
$22.06 
$136 
 
1.51%
-%
31.47%
 
2012 
 - 
$16.78 
$6 
 
2.24%
-%
14.54%
 
 
 
 
 
 
 
 
 
American Century VP Vista Class II Division:
 
 
 
 
 
 
 
 
2013 
 - 
$16.44 
$1 
 
-%
-%
30.06%
 
2012 
 - 
$12.64 
0
 
-%
-%
15.43%
 
 
 
 
 
 
 
 
 
Bond & Mortgage Securities Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 6 
$22.90 
$141 
 
3.05%
-%
(0.87)%
 
2012 
 3 
$23.10 
$64 
 
3.53%
-%
7.54%
 
 
 
 
 
 
 
 
 
Calvert Income Division:
 
 
 
 
 
 
 
 
2013 
 8 
$12.96 
$106 
 
3.34%
-%
(1.22)%
 
2012 
 4 
$13.12 
$56 
 
8.58%
-%
8.61%
 
 
 
 
 
 
 
 
 
Calvert Russell 2000 Small Cap Index Class F Division:
 
 
 
 
 
 
 
 
2013 
 4 
$18.06 
$80 
 
0.86%
-%
37.65%
 
2012 
 1 
$13.12 
$11 
 
1.97%
-%
15.19%
 
 
 
 
 
 
 
 
 
Calvert S&P MidCap 400 Index Class F Division:
 
 
 
 
 
 
 
 
2013 
 3 
$16.49 
$56 
 
0.87%
-%
32.45%
 
2012 
 1 
$12.45 
$10 
 
1.32%
-%
17.01%
 
 
 
 
 
 
 
 
 
Calvert SRI Equity Division:
 
 
 
 
 
 
 
 
2013 
 2 
$17.75 
$36 
 
0.11%
-%
31.00%
 
2012 
 1 
$13.55 
$15 
 
0.20%
-%
16.01%
 
 
 
 
 
 
 
 
 
Delaware Small Cap Value Service Class Division:
 
 
 
 
 
 
 
 
2013 
 5 
$18.55 
$96 
 
0.30%
-%
33.17%
 
2012 
 1 
$13.93 
$17 
 
0.09%
-%
13.62%
 
 
 
 
 
 
 
 
 
Delaware Smid Cap Growth Service Class Division:
 
 
 
 
 
 
 
 
2013 
 8 
$14.47 
$116 
 
-%
-%
40.90%
 
2012 
 3 
$10.27 
$28 
 
-%
-%
10.79%
 
 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013
 
 
December 31
 
For the Year Ended December 31,
 
 
Except as Noted
 
 
Units
(000's)
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
Net Assets (000's)
 
Investment
Income
Ratio (1)
Expense
Ratio (2)
Lowest to
Highest
Total Return (3)
Lowest to Highest
 
 
 
 
 
Division
Diversified International Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 10 
$25.52 
$254 
 
2.38%
-%
18.42%
 
2012 
 2 
$21.55 
$42 
 
3.08%
-%
18.47%
 
 
 
 
 
 
 
 
 
DWS Small Mid Cap Value Class B Division:
 
 
 
 
 
 
 
 
2013 (7)
 1 
$16.95 
$19 
 
0.39%
-%
34.63%
 
2012 
 - 
$12.59 
$1 
 
0.41%
-%
13.42%
 
 
 
 
 
 
 
 
 
Equity Income Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 21 
$14.68 
$313 
 
3.58%
-%
27.32%
 
2012 
 5 
$11.53 
$59 
 
4.50%
-%
13.04%
 
 
 
 
 
 
 
 
 
Fidelity VIP Contrafund Service Class 2 Division:
 
 
 
 
 
 
 
 
2013 
 22 
$26.06 
$567 
 
1.35%
-%
30.95%
 
2012 
 4 
$19.90 
$75 
 
2.28%
-%
16.17%
 
 
 
 
 
 
 
 
 
Fidelity VIP Equity-Income Service Class 2 Division:
 
 
 
 
 
 
 
 
2013 
 9 
$19.24 
$175 
 
4.56%
-%
27.84%
 
2012 
 1 
$15.05 
$16 
 
6.56%
-%
17.03%
 
 
 
 
 
 
 
 
 
Fidelity VIP High Income Service Class 2 Division:
 
 
 
 
 
 
 
 
2013 
 13 
$25.37 
$341 
 
8.66%
-%
5.71%
 
2012 
 5 
$24.00 
$116 
 
13.69%
-%
13.96%
 
 
 
 
 
 
 
 
 
Fidelity VIP Mid Cap Service Class 2 Division:
 
 
 
 
 
 
 
 
2013 
 9 
$33.91 
$318 
 
0.55%
-%
35.86%
 
2012 
 2 
$24.96 
$41 
 
1.08%
-%
14.55%
 
 
 
 
 
 
 
 
 
Franklin Mutual Global Discovery Class 2 Division:
 
 
 
 
 
 
 
 
2013 
 7 
$28.39 
$192 
 
2.36%
-%
27.60%
 
2012 
 1 
$22.25 
$24 
 
4.00%
-%
13.35%
 
 
 
 
 
 
 
 
 
Franklin Rising Dividends Securities Class 2 Division:
 
 
 
 
 
 
 
 
2013 
 12 
$22.22 
$272 
 
1.18%
-%
29.71%
 
2012 
 3 
$17.13 
$48 
 
0.73%
-%
11.96%




Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013
 
 
December 31
 
For the Year Ended December 31,
 
 
Except as Noted
 
 
Units
(000's)
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
Net Assets (000's)
 
Investment
Income
Ratio (1)
Expense
Ratio (2)
Lowest to
Highest
Total Return (3)
Lowest to Highest
 
 
 
 
 
Division
Franklin Small Cap Value Securities Class 2 Division:
 
 
 
 
 
 
 
 
2013 
 3 
$28.05 
$72 
 
0.19%
-%
36.23%
 
2012 
 - 
$20.59 
$3 
 
0.70%
-%
18.40%
 
 
 
 
 
 
 
 
 
Government & High Quality Bond Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 26 
$12.45 
$327 
 
3.20%
-%
(0.95)%
 
2012 
 10 
$12.57 
$131 
 
5.50%
-%
3.88%
 
 
 
 
 
 
 
 
 
International Emerging Markets Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 10 
$35.78 
$341 
 
1.99%
-%
(4.94)%
 
2012 
 3 
$37.64 
$119 
 
1.77%
-%
20.80%
 
 
 
 
 
 
 
 
 
Invesco American Franchise Series II Division:
 
 
 
 
 
 
 
 
2013 (8)
 2 
$13.62 
$24 
 
0.26%
-%
39.84%
 
2012 (4)
 1 
$9.74 
$5 
 
-%
-%
(2.70)%
 
 
 
 
 
 
 
-%
-%
Invesco Core Equity Series II Division:
 
 
 
 
 
 
 
 
2013 
 1 
$26.44 
$23 
 
1.23%
-%
28.91%
 
2012 
 - 
$20.51 
$3 
 
1.84%
-%
13.63%
 
 
 
 
 
 
 
 
 
Invesco Global Health Care Series I Division:
 
 
 
 
 
 
 
 
2013 
 11 
$22.32 
$237 
 
0.70%
-%
40.55%
 
2012 
 2 
$15.88 
$33 
 
-%
-%
20.85%
 
 
 
 
 
 
 
 
 
Invesco Mid Cap Core Equity Series II Division:
 
 
 
 
 
 
 
 
2013 
 8 
$17.22 
$134 
 
0.30%
-%
28.41%
 
2012 
 - 
$13.41 
$6 
 
-%
-%
10.64%
 
 
 
 
 
 
 
 
 
Janus Aspen Forty Service Shares Division:
 
 
 
 
 
 
 
 
2013 
 12 
$13.72 
$166 
 
0.55%
-%
30.92%
 
2012 
 2 
$10.48 
$25 
 
0.81%
-%
23.88%
 
 
 
 
 
 
 
 
 
LargeCap Blend II Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 1 
$20.46 
$26 
 
1.48%
-%
31.41%
 
2012 
 - 
$15.57 
$5 
 
2.47%
-%
15.16%
 
 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013
 
 
December 31
 
For the Year Ended December 31,
 
 
Except as Noted
 
 
Units
(000's)
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
Net Assets (000's)
 
Investment
Income
Ratio (1)
Expense
Ratio (2)
Lowest to
Highest
Total Return (3)
Lowest to Highest
 
 
 
 
 
Division
LargeCap Growth Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 9 
$21.89 
$186 
 
0.72%
-%
33.97%
 
2012 
 2 
$16.34 
$26 
 
0.45%
-%
16.80%
 
 
 
 
 
 
 
 
 
LargeCap Growth I Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 8 
$32.68 
$249 
 
0.33%
-%
36.11%
 
2012 
 1 
$24.01 
$31 
 
0.08%
-%
16.38%
 
 
 
 
 
 
 
 
 
LargeCap S&P 500 Index Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 127 
$17.30 
$2,190 
 
1.18%
-%
32.06%
 
2012 
 8 
$13.10 
$107 
 
0.54%
-%
15.52%
 
 
 
 
 
 
 
 
 
LargeCap Value Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 6 
$26.90 
$156 
 
2.51%
-%
30.84%
 
2012 
 3 
$20.56 
$54 
 
2.42%
-%
18.57%
 
 
 
 
 
 
 
 
 
MFS VIT New Discovery Service Class Division:
 
 
 
 
 
 
 
 
2013 
 2 
$26.69 
$57 
 
-%
-%
41.22%
 
2012 
 - 
$18.90 
$7 
 
-%
-%
20.84%
 
 
 
 
 
 
 
 
 
MFS VIT Utilities Service Class Division:
 
 
 
 
 
 
 
 
2013 
 14 
$13.86 
$188 
 
2.17%
-%
20.21%
 
2012 
 3 
$11.53 
$38 
 
8.96%
-%
13.26%
 
 
 
 
 
 
 
 
 
MidCap Class 1 Division:
 
 
 
 
 
 
 
 
2013 (9)
 17 
$57.58 
$996 
 
1.69%
-%
33.94%
 
2012 
 4 
$42.99 
$185 
 
1.17%
-%
19.42%
 
 
 
 
 
 
 
 
 
Money Market Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 151 
$15.20 
$2,292 
 
-%
-%
-%
 
2012 
 65 
$15.20 
$990 
 
-%
-%
-%
 
 
 
 
 
 
 
 
 
Neuberger Berman AMT Large Cap Value I Class Division:
 
 
 
 
 
 
 
 
2013 
 3 
$14.55 
$51 
 
2.19%
-%
31.20%
 
2012 
 - 
$11.09 
$1 
 
0.54%
-%
16.61%
 
 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013
 
 
December 31
 
For the Year Ended December 31,
 
 
Except as Noted
 
 
Units
(000's)
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
Net Assets (000's)
 
Investment
Income
Ratio (1)
Expense
Ratio (2)
Lowest to
Highest
Total Return (3)
Lowest to Highest
 
 
 
 
 
Division
Oppenheimer Main Street Small Cap Service Shares Division:
 
 
 
 
 
 
 
 
2013 (10)
 3 
$19.03 
$48 
 
0.55%
-%
40.65%
 
2012 
 1 
$13.53 
$8 
 
0.21%
-%
17.65%
 
 
 
 
 
 
 
 
 
Principal LifeTime Strategic Income Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 - 
$15.29 
$1 
 
2.81%
-%
5.16%
 
2012 
 - 
$14.54 
0
 
-%
-%
9.65%
 
 
 
 
 
 
 
 
 
Principal LifeTime 2010 Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 - 
$16.65 
$3 
 
0.10%
-%
10.78%
 
2012 
 - 
$15.03 
0
 
-%
-%
11.83%
 
 
 
 
 
 
 
 
 
Principal LifeTime 2020 Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 14 
$18.14 
$261 
 
3.20%
-%
15.98%
 
2012 
 1 
$15.64 
$9 
 
-%
-%
14.75%
 
 
 
 
 
 
 
 
 
Principal LifeTime 2030 Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 25 
$18.17 
$457 
 
1.69%
-%
18.99%
 
2012 
 13 
$15.27 
$193 
 
0.53%
-%
15.59%
 
 
 
 
 
 
 
 
Principal LifeTime 2040 Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 19 
$18.88 
$357 
 
1.41%
-%
22.44%
 
2012 
 4 
$15.42 
$54 
 
1.52%
-%
16.73%
 
 
 
 
 
 
 
 
 
Principal LifeTime 2050 Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 14 
$18.97 
$275 
 
1.55%
-%
23.74%
 
2012 
 3 
$15.33 
$51 
 
1.82%
-%
17.11%
 
 
 
 
 
 
 
 
 
Principal LifeTime 2060 Class 1 Division:
 
 
 
 
 
 
 
 
2013 (6)
 1 
$11.11 
$16 
 
-%
-%
10.99%
 
 
 
 
 
 
 
 
Putnam VT Voyager Class IB Division:
 
 
 
 
 
 
 
 
2013 
 2 
$21.14 
$52 
 
0.33%
-%
43.71%
 
2012 
 - 
$14.71 
$4 
 
-%
-%
14.21%
 
 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013
 
 
December 31
 
For the Year Ended December 31,
 
 
Except as Noted
 
 
Units
(000's)
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
Net Assets (000's)
 
Investment
Income
Ratio (1)
Expense
Ratio (2)
Lowest to
Highest
Total Return (3)
Lowest to Highest
 
 
 
 
 
Division
Real Estate Securities Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 7 
$48.25 
$320 
 
1.24%
-%
4.10%
 
2012 
 1 
$46.35 
$62 
 
1.44%
-%
17.16%
 
 
 
 
 
 
 
 
 
SAM Balanced Portfolio Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 130 
$14.47 
$1,879 
 
2.49%
-%
17.64%
 
2012 
 36 
$12.30 
$443 
 
0.53%
-%
12.74%
 
 
 
 
 
 
 
 
 
SAM Conservative Balanced Portfolio Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 67 
$14.40 
$967 
 
2.73%
-%
11.54%
 
2012 
 13 
$12.91 
$167 
 
0.87%
-%
11.20%
 
 
 
 
 
 
 
 
 
SAM Conservative Growth Portfolio Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 212 
$14.10 
$2,983 
 
1.93%
-%
23.14%
 
2012 
 81 
$11.45 
$927 
 
0.40%
-%
14.16%
 
 
 
 
 
 
 
 
 
SAM Flexible Income Portfolio Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 87 
$14.52 
$1,265 
 
3.61%
-%
7.72%
 
2012 
 8 
$13.48 
$109 
 
0.95%
-%
10.67%
 
 
 
 
 
 
 
 
 
SAM Strategic Growth Portfolio Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 250 
$13.94 
$3,477 
 
1.41%
-%
27.42%
 
2012 
 146 
$10.94 
$1,591 
 
0.26%
-%
15.52%
 
 
 
 
 
 
 
 
 
Short-Term Income Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 38 
$12.33 
$469 
 
1.98%
-%
1.15%
 
2012 
 15 
$12.19 
$178 
 
2.50%
-%
5.00%
 
 
 
 
 
 
 
 
 
SmallCap Blend Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 9 
$24.36 
$212 
 
0.27%
-%
47.82%
 
2012 
 1 
$16.48 
$17 
 
-%
-%
14.68%
 
 
 
 
 
 
 
 
 
SmallCap Growth II Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 5 
$20.31 
$105 
 
-%
-%
47.39%
 
2012 
 1 
$13.78 
$8 
 
-%
-%
16.29%
 
 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013
 
 
December 31
 
For the Year Ended December 31,
 
 
Except as Noted
 
 
Units
(000's)
Unit Fair Value
Corresponding to
Lowest to Highest
Expense Ratio
Net Assets (000's)
 
Investment
Income
Ratio (1)
Expense
Ratio (2)
Lowest to
Highest
Total Return (3)
Lowest to Highest
 
 
 
 
 
Division
SmallCap Value I Class 1 Division:
 
 
 
 
 
 
 
 
2013 
 2 
$42.90 
$87 
 
1.20%
-%
39.78%
 
2012 
 1 
$30.69 
$28 
 
1.61%
-%
21.69%
 
 
 
 
 
 
 
 
 
Templeton Global Bond Securities Class 2 Division:
 
 
 
 
 
 
 
 
2013 
 22 
$15.69 
$342 
 
4.81%
-%
1.62%
 
2012 
 3 
$15.44 
$49 
 
1.94%
-%
15.05%
 
 
 
 
 
 
 
 
 
TOPS Managed Risk Balanced ETF Class 2 Division:
 
 
 
 
 
 
 
 
2013 (11)
 7 
$11.59 
$79 
 
0.92%
-%
7.91%
 
2012 (5)
 - 
$10.74 
0
 
-%
-%
6.65%
 
 
 
 
 
 
 
 
 
TOPS Managed Risk Growth ETF Class 2 Division:
 
 
 
 
 
 
 
 
2013 (12)
 30 
$12.59 
$382 
 
1.12%
-%
16.04%
 
2012 (5)
 22 
$10.85 
$241 
 
0.12%
-%
7.64%
 
 
 
 
 
 
 
 
 
TOPS Managed Risk Moderate Growth ETF Class 2 Division:
 
 
 
 
 
 
 
 
2013 (13)
 5 
$12.18 
$63 
 
0.58%
-%
12.36%
 
2012 (5)
 - 
$10.84 
$2 
 
0.18%
-%
7.43%
 
 
 
 
 
 
 
 
 
Van Eck Global Hard Assets Service Class Division:
 
 
 
 
 
 
 
 
2013 
 13 
$9.39 
$120 
 
-%
-%
10.34%
 
2012 
 3 
$8.51 
$21 
 
1.01%
-%
3.03%

(1)
These amounts represent the dividends, excluding distributions of capital gains, received by the division from the underlying mutual fund, net of management fees assessed by the fund manager, divided by the average net assets. These ratios exclude those expenses, such as mortality and expense charges, that result in direct reductions in the unit values. The recognition of investment income by the division is affected by the timing of the declaration of dividends by the underlying fund in which the divisions invest. These ratios are annualized for periods less than one year.
(2)
These ratios represent the annualized contract expenses of the separate account, consisting primarily of mortality and expense charges, for each period indicated. The ratios include only those expenses that result in a direct reduction to unit values. Charges made directly to contract owner accounts through the redemption of units and expenses of the underlying fund are excluded.





Principal National Life Insurance Company
Variable Life Separate Account

Notes to Financial Statements

December 31, 2013

(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 then a beginning unit value of ten would typically be used. The total return is calculated for the period indicated or from the effective date through the end of the reporting period. Total returns have not been annualized for periods less than one year. These percentages represent the range of total returns available as of the report date and correspond with the expense ratio lowest to highest.
(4)
Commencement of operations, April 27, 2012. Investment income ratios have been annualized for the period ended December 31, 2012.
(5)
Commencement of operations, May 21, 2012. Investment income ratios have been annualized for the period ended December 31, 2012.
(6)
Commencement of operations, May 20, 2013. Investment income ratios have been annualized for the period ended December 31, 2013.
(7)
Represented the operations of DWS Dreman Small Mid Cap Value Class B Division until May 20, 2013.
(8)
Represented the operations of Invesco Van Kampen American Franchise Series II Division until May 20, 2013.
(9)
Represented the operations of MidCap Blend Class 1 Division until May 20, 2013.
(10)
Represented the operations of Oppenheimer Main Street Small & Mid Cap Service Shares Division until May 20, 2013.
(11)
Represented the operations of TOPS Protected Balanced ETF Class 2 Division until May 20, 2013.
(12)
Represented the operations of TOPS Protected Growth ETF Class 2 Division until May 20, 2013.
(13)
Represented the operations of TOPS Protected Moderate Growth ETF Class 2 Division until May 20, 2013.




 


Report of Independent Registered Public Accounting Firm


The Board of Directors and Stockholder
Principal National Life Insurance Company

We have audited the accompanying statements of financial position of Principal National Life Insurance Company (“the Company”) as of December 31, 2013 and 2012, 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, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Principal National Life Insurance Company at December 31, 2013 and 2012, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2013, in conformity with U.S generally accepted accounting principles.
     
Des Moines, Iowa
April 2, 2014





Principal National Life Insurance Company
Statements of Financial Position
 
 
 
 
 
 
 
 
 
December 31,
 
 
2013 
 
2012 
 
 
(in thousands)
Assets
 
 
 
 
 
Fixed maturities, available-for-sale
$
 73,893.8 
 
$
 61,032.2 
Policy loans
 
 4,778.0 
 
 
 4,238.9 
 
Total investments
 
 78,671.8 
 
 
 65,271.1 
Cash and cash equivalents
 
 1,368.8 
 
 
 12,768.0 
Accrued investment income
 
 827.0 
 
 
 313.0 
Premiums due and other receivables
 
 1,480,516.1 
 
 
 1,098,949.5 
Goodwill
 
 95.0 
 
 
 95.0 
Other intangibles
 
 1,755.0 
 
 
 1,755.0 
Separate account assets
 
 25,890.4 
 
 
 6,656.7 
Deferred income taxes
 
 18,713.8 
 
 
 11,953.7 
Other assets
 
 455.4 
 
 
 422.6 
 
Total assets
$
 1,608,293.3 
 
$
 1,198,184.6 
Liabilities
 
 
 
 
 
Contractholder funds
$
 1,189,547.7 
 
$
 933,761.2 
Future policy benefits and claims
 
 267,472.2 
 
 
 154,319.7 
Other policyholder funds
 
 21,736.1 
 
 
 8,507.5 
Income taxes currently payable
 
 1,664.3 
 
 
 388.8 
Separate account liabilities
 
 25,890.4 
 
 
 6,656.7 
Other liabilities
 
 3,579.5 
 
 
 11,663.5 
 
Total liabilities
 
 1,509,890.2 
 
 
 1,115,297.4 
Stockholder's equity
 
 
 
 
 
Common stock, par value $1 per share - 5.0 million shares
 
 
 
 
 
 
authorized, 2.5 million shares issued and outstanding (wholly
 
 
 
 
 
 
owned indirectly by Principal Financial Group, Inc.)
 
 2,500.0 
 
 
 2,500.0 
Preferred stock, par value $1 per share - 1.0 million shares
 
 
 
 
 
 
authorized, none issued and outstanding
 
 - 
 
 
 - 
Additional paid-in capital
 
 97,287.1 
 
 
 79,460.8 
Retained deficit
 
 (833.5)
 
 
 (619.6)
Accumulated other comprehensive income (loss)
 
 (550.5)
 
 
 1,546.0 
 
Total stockholder's equity
 
 98,403.1 
 
 
 82,887.2 
 
Total liabilities and stockholder's equity
$
 1,608,293.3 
 
$
 1,198,184.6 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 





Principal National Life Insurance Company
Statements of Operations
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 
 
 
2013 
 
2012 
 
2011 
 
 
(in thousands) 
Revenues
 
 
 
 
 
 
 
 
Premiums and other considerations
$
 7.0 
 
$
 6.6 
 
$
 6.5 
Fees and other revenues
 
 483.0 
 
 
 474.8 
 
 
 337.7 
Net investment income
 
 1,554.0 
 
 
 1,016.2 
 
 
 666.3 
Net realized capital gains
 
 968.4 
 
 
 - 
 
 
 - 
 
Total revenues
 
 3,012.4 
 
 
 1,497.6 
 
 
 1,010.5 
Expenses
 
 
 
 
 
 
 
 
Benefits, claims and settlement expenses
 
 34.6 
 
 
 0.3 
 
 
 0.5 
Operating expenses
 
 2,825.9 
 
 
 2,001.5 
 
 
 1,323.3 
 
Total expenses
 
 2,860.5 
 
 
 2,001.8 
 
 
 1,323.8 
Income (loss) from operations before income taxes
 
 151.9 
 
 
 (504.2)
 
 
 (313.3)
Income taxes (benefit)
 
 183.0 
 
 
 (132.2)
 
 
 (12.7)
Net loss
$
 (31.1)
 
$
 (372.0)
 
$
 (300.6)
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Statements of Comprehensive Income
 
 
 
 
 
 
 
 
For the year ended December 31,
 
 
 
2013 
 
2012 
 
2011 
 
 
 
(in thousands)
Net loss
$
 (31.1)
 
$
 (372.0)
 
$
 (300.6)
Other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
Net unrealized gains (losses) on available-for-sale securities
 
 (2,096.5)
 
 
 265.8 
 
 
 1,143.4 
Comprehensive income (loss)
$
 (2,127.6)
 
$
 (106.2)
 
$
 842.8 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Statements of Stockholder's Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated
 
 
 
 
 
 
 
 
 
Additional
 
Retained
 
other
 
Total
 
 
 
Common
 
paid-in
 
earnings
 
comprehensive
 
stockholder's
 
 
 
stock
 
capital
 
(deficit)
 
income (loss)
 
equity
 
 
 
(in thousands)
Balances at January 1, 2011
 
$
 2,500.0 
 
$
 21,320.3 
 
$
 260.8 
 
$
 136.8 
 
$
 24,217.9 
Contributions from parent
 
 
 - 
 
 
 40,000.0 
 
 
 - 
 
 
 - 
 
 
 40,000.0 
Stock-based compensation
 
 
 - 
 
 
 978.2 
 
 
 (81.3)
 
 
 - 
 
 
 896.9 
Net loss
 
 
 - 
 
 
 - 
 
 
 (300.6)
 
 
 - 
 
 
 (300.6)
Other comprehensive income
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 1,143.4 
 
 
 1,143.4 
Balances at December 31, 2011
 
 
 2,500.0 
 
 
 62,298.5 
 
 
 (121.1)
 
 
 1,280.2 
 
 
 65,957.6 
Contributions from parent
 
 
 - 
 
 
 15,000.0 
 
 
 - 
 
 
 - 
 
 
 15,000.0 
Stock-based compensation
 
 
 - 
 
 
 2,162.3 
 
 
 (126.5)
 
 
 - 
 
 
 2,035.8 
Net loss
 
 
 - 
 
 
 - 
 
 
 (372.0)
 
 
 - 
 
 
 (372.0)
Other comprehensive income
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 265.8 
 
 
 265.8 
Balances at December 31, 2012
 
 
 2,500.0 
 
 
 79,460.8 
 
 
 (619.6)
 
 
 1,546.0 
 
 
 82,887.2 
Contributions from parent
 
 
 - 
 
 
 15,000.0 
 
 
 - 
 
 
 - 
 
 
 15,000.0 
Stock-based compensation
 
 
 - 
 
 
 2,826.3 
 
 
 (182.8)
 
 
 - 
 
 
 2,643.5 
Net loss
 
 
 - 
 
 
 - 
 
 
 (31.1)
 
 
 - 
 
 
 (31.1)
Other comprehensive loss
 
 
 - 
 
 
 - 
 
 
 - 
 
 
 (2,096.5)
 
 
 (2,096.5)
Balances at December 31, 2013
 
$
 2,500.0 
 
$
 97,287.1 
 
$
 (833.5)
 
$
 (550.5)
 
$
 98,403.1 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Statements of Cash Flows
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 
 
 
2013 
 
 
2012 
 
 
2011 
 
 
(in thousands) 
Operating activities
 
 
 
 
 
 
 
 
Net loss
$
 (31.1)
 
$
 (372.0)
 
$
 (300.6)
Adjustments to reconcile net loss to net cash
 
 
 
 
 
 
 
 
 
used in operating activities:
 
 
 
 
 
 
 
 
 
Accrued investment income
 
 (514.0)
 
 
 (43.4)
 
 
 (89.6)
 
Premiums due and other receivables
 
 (381,567.3)
 
 
 (502,721.7)
 
 
 (417,248.1)
 
Future policy benefits and claims
 
 27,160.8 
 
 
 5,236.3 
 
 
 (14,555.7)
 
Current and deferred income tax benefits
 
 (4,355.8)
 
 
 (5,882.4)
 
 
 (6,632.1)
 
Net realized capital gains
 
 (968.4)
 
 
 - 
 
 
 - 
 
Other liabilities
 
 (8,084.0)
 
 
 2,116.5 
 
 
 (12,888.3)
 
Other
 
 2,617.9 
 
 
 2,046.1 
 
 
 779.9 
Net adjustments
 
 (365,710.8)
 
 
 (499,248.6)
 
 
 (450,633.9)
Net cash used in operating activities
 
 (365,741.9)
 
 
 (499,620.6)
 
 
 (450,934.5)
Investing activities
 
 
 
 
 
 
 
 
Available-for-sale securities:
 
 
 
 
 
 
 
 
 
Purchases
 
 (64,662.9)
 
 
 (9,952.7)
 
 
 (33,890.5)
 
Sales
 
 44,512.3 
 
 
 - 
 
 
 - 
 
Maturities
 
 5,025.0 
 
 
 - 
 
 
 3,445.0 
 
Other
 
 0.7 
 
 
 (1.8)
 
 
 (3.1)
Net change in other investments
 
 (539.1)
 
 
 (1,864.6)
 
 
 (1,050.6)
Net cash used in investing activities
 
 (15,664.0)
 
 
 (11,819.1)
 
 
 (31,499.2)
Financing activities
 
 
 
 
 
 
 
 
Investment contract deposits
 
 361,142.2 
 
 
 499,189.3 
 
 
 433,449.4 
Investment contract withdrawals
 
 (6,135.5)
 
 
 (2,819.2)
 
 
 (2,308.2)
Capital contribution from parent
 
 15,000.0 
 
 
 15,000.0 
 
 
 40,000.0 
Net cash provided by financing activities
 
 370,006.7 
 
 
 511,370.1 
 
 
 471,141.2 
Net decrease in cash and cash equivalents
 
 (11,399.2)
 
 
 (69.6)
 
 
 (11,292.5)
Cash and cash equivalents at beginning of year
 
 12,768.0 
 
 
 12,837.6 
 
 
 24,130.1 
Cash and cash equivalents at end of year
$
 1,368.8 
 
$
 12,768.0 
 
$
 12,837.6 
 
 
 
 
 
 
 
 
 
 
Supplemental Information:
 
 
 
 
 
 
 
 
Cash paid for income taxes
$
 4,327.5 
 
$
 5,396.0 
 
$
 6,715.5 
 
 
 
 
 
 
 
 
 
 
See accompanying notes.
 
 
 
 
 
 
 
 





Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

1. Nature of Operations and Significant Accounting Policies

Description of Business

Principal National Life Insurance Company is 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”), our ultimate parent. We are a life insurance company licensed in 49 states currently selling ordinary life insurance products.

Basis of Presentation

The accompanying financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). We have evaluated subsequent events through April X, 2014, which was the date our financial statements were issued.

Recent Accounting Pronouncements

In July 2013, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that requires the liability related to certain unrecognized benefits to be offset against a deferred tax asset from operating loss carryforwards. This guidance will be effective for us beginning January 1, 2014, and is not expected to have a material impact on our financial statements.

In February 2013, the FASB issued authoritative guidance that requires entities to disclose additional information about items reclassified out of accumulated other comprehensive income (“AOCI”). Entities are required to disclose information regarding changes in AOCI balances by component and significant items reclassified out of AOCI by component either on the face of the income statement or as a separate footnote to the financial statements. This guidance was effective for us beginning January 1, 2013, and did not have a material impact on our financial statements. This guidance did not impact the requirements for reporting of comprehensive income under FASB guidance issued in June 2011, which changed the presentation of comprehensive income in the financial statements. The guidance eliminated the presentation options contained in previous guidance and instead required entities to report components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements that show the components of net income and other comprehensive income (“OCI”), including adjustments for items that are reclassified from OCI to net income. The guidance did not change the items that must be reported in OCI or when an item of OCI must be reclassified to net income. This guidance was effective for us on January 1, 2012, and did not have a material impact on our
financial statements. See “Notes to Financial Statements, Note 7, Stockholders’ Equity”, for further details.

In January 2013 and December 2011, the FASB issued authoritative guidance related to balance sheet offsetting. The 2011 guidance requires disclosures about assets and liabilities that are offset or have the potential to be offset. These disclosures are intended to address differences in the asset and liability offsetting requirements under U.S. GAAP and International Financial Reporting Standards. The 2013 guidance clarified that the disclosure requirements would apply to derivative instruments, including bifurcated embedded derivatives, repurchase and reverse repurchase agreements and securities borrowing and securities lending arrangements that are either offset on the balance sheet or subject to an enforceable master netting arrangement or similar agreement. Both pieces of guidance were effective for us beginning January 1, 2013, with retrospective application required and did not have a material impact on our financial statements. See “Notes to Financial Statements, Note 4, Investments”, for further details.

In July 2012, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance that amends how indefinite-lived intangible assets are tested for impairment. The amendments provide an option to perform a qualitative assessment to determine whether it is necessary to perform the annual fair value calculation impairment test. This new guidance was effective for our 2013 indefinite-lived intangible asset impairment testing and did not have a material impact on our financial statements.




Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

In September 2011, the FASB issued authoritative guidance that amends how goodwill is tested for impairment. The amendments provide an option to perform a qualitative assessment to determine whether it is necessary to perform the annual two-step quantitative goodwill impairment test. This guidance was effective for our 2012 goodwill impairment test and did not have a material impact on our financial statements.

In June 2011, the FASB issued authoritative guidance that changes the presentation of comprehensive income in the financial statements. The new guidance eliminates the presentation options contained in current guidance and instead requires entities to report components of comprehensive income in either a continuous statement of comprehensive income or two separate but consecutive statements that show the components of net income and OCI, including adjustments for items that are reclassified from OCI to net income. The guidance does not change the items that must be reported in OCI or when an item of OCI must be reclassified to net income. In December 2011, the FASB issued a final standard to defer the new requirement to present classification adjustments out of OCI to net income on the face of the financial statements. All other requirements contained in the original statement on comprehensive income are still effective. This guidance was effective for us on January 1, 2012, and did not have a material impact on our financial statements. The required disclosures are included in our financial statements. See “Notes to Financial Statements, Note 7, Stockholder’s Equity”, for further details.

In May 2011, the FASB issued authoritative guidance that clarifies and changes fair value measurement and disclosure requirements. This guidance expands existing disclosure requirements for fair value measurements and makes other amendments but does not require additional fair value measurements. This guidance was effective for us on January 1, 2012, and did not have a material impact on our financial statements. See “Notes to Financial Statements, Note 8, Fair Value Measurements”, for further details.

In April 2010, the FASB issued authoritative guidance addressing how investments held through the separate accounts of an insurance entity affect the entity’s analysis. This guidance clarifies that an insurance entity should not consider any separate account interests held for the benefit of policyholders in an investment to be the insurer’s interests and should not combine those interests with its general account interest in the same investment when assessing the investment for consolidation. This guidance was effective for us on January 1, 2011, and did not have a material impact on our financial statements.

In January 2010, the FASB issued authoritative guidance that requires new disclosures related to fair value measurements and clarifies existing disclosure requirements about the level of disaggregation, inputs and valuation techniques. Specifically, reporting entities now must disclose separately the amounts of significant transfers in and out of Level 1 and Level 2 fair value measurements and describe the reasons for the transfers. In addition, in the reconciliation for Level 3 fair value measurements, a reporting entity should present separately information about purchases, sales, issuances and settlements. The guidance clarifies that a reporting entity needs to use judgment in determining the appropriate classes of assets and liabilities for disclosure of fair value measurement, considering the level of disaggregated information required by other applicable U.S. GAAP guidance and should also provide disclosures about the valuation techniques and inputs used to measure fair value for each class of assets and liabilities. This guidance was effective for us on January 1, 2010, except for the disclosures about purchases, sales, issuances and settlements in the reconciliation for Level 3 fair value measurements, which became effective for us on January 1, 2011. This guidance did not have a material impact on our financial statements. See “Notes to Financial Statements, Note 8, Fair Value Measurements”, for further details.

Use of Estimates in the Preparation of Financial Statements

The preparation of our 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 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;





Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

•
the measurement of goodwill, indefinite lived intangible assets, finite lived intangible assets and related impairments or amortization, if any;
•
the liability for future policy benefits and claims and
•
accounting for income taxes and the valuation of deferred tax assets.

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

Cash and Cash Equivalents

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

Investments

We classify our fixed maturities as available‑for‑sale and, accordingly, carry them at fair value. See “Notes to Financial Statements, Note 8, Fair Value Measurements”, for policies related to the determination of fair value. We determine the appropriate classification of fixed maturity securities at the time of purchase. Unrealized gains and losses related to available-for-sale securities are reflected in stockholder’s equity, net of adjustments for income taxes.
 
The cost of fixed maturity securities is adjusted for amortization of premiums and accrual of discounts, both computed using the interest method. The cost of fixed maturity securities is adjusted for declines in value that are other than temporary. In addition to realized capital gains and losses on investment sales, impairments in value deemed to be other than temporary are reported in net income as a component of net realized capital gains (losses).

Policy loans are primarily reported at cost.

Premiums Due and Other Receivables

Premiums due and other receivables consist primarily of the estimated reinsurance receivable for the ceding of business to Principal Life Insurance Company (“Principal Life”).

Contractholder and Policyholder Liabilities

Contractholder and policyholder liabilities (contractholder funds, future policy benefits and claims and other policyholder funds) include reserves for universal life, variable universal life and term life insurance.

We hold additional reserves on certain long duration contracts where benefit features result in gains in early years followed by losses in later years and universal life and variable universal life contracts that contain no lapse guarantee features.

Reserves for universal life and variable universal life contracts are equal to cumulative deposits less charges plus credited interest, which represents the account balance that accrues to the benefit of the policyholder.

Reserves for nonparticipating term life insurance 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.





Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

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 statements of financial position. These unearned revenue reserves are amortized to operations over the estimated lives of these policies and contracts in relation to the emergence of estimated gross profit margins.

Reinsurance

We enter into reinsurance agreements with Principal Life in the normal course of business. We assume reinsurance from and cede reinsurance to Principal Life. Assets and liabilities related to reinsurance ceded are reported on a gross basis. Premiums and expenses are reported net of reinsurance ceded. We had ceded reinsurance expenses of $431,250.5, $377,019.1, and $244,816.2, for the years ended December 31, 2013, 2012 and 2011, respectively. 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. At December 31, 2013 and 2012, our exposures to Principal Life in our individual life insurance business was $78,091.8 million and $48,582.3 million of life insurance in force, representing 99.9% and 99.9% of total net individual life insurance in force, respectively.

The effects of reinsurance on premiums and other considerations and policy and contract benefits were as follows:
 
 
For the year ended December 31,
 
 
2013 
 
2012 
 
2011 
 
 
 
 
 
 
 
 
 
 
Premiums and other considerations
 
 
 
 
 
 
 
 
 
Direct
$
 99,549.1 
 
$
 56,634.3 
 
$
 27,114.4 
 
Assumed
 
 7.0 
 
 
 6.6 
 
 
 6.5 
 
Ceded
 
 (99,549.1)
 
 
 (56,634.3)
 
 
 (27,114.4)
Net premiums and other considerations
$
 7.0 
 
$
 6.6 
 
$
 6.5 
Benefits, claims and settlement expenses:
 
 
 
 
 
 
 
 
 
Direct
$
 174,215.8 
 
$
 122,906.5 
 
$
 57,924.5 
 
Assumed
 
 0.4 
 
 
 0.3 
 
 
 0.5 
 
Ceded
 
 (174,181.6)
 
 
 (122,906.5)
 
 
 (57,924.5)
Net benefits, claims and settlement expenses
$
 34.6 
 
$
 0.3 
 
$
 0.5 

Recognition of Premiums and Other Considerations, Fees and Other Revenues and Benefits

Traditional individual life insurance products include those products with fixed and guaranteed premiums and benefits and consist of term life insurance policies. Premiums from these products are recognized as premium revenue when due. Related policy benefits and expenses for individual life products are associated with earned premiums and result in the recognition of profits over the expected term of the policies and contracts.

Universal life and variable universal life products are insurance contracts with terms that are not fixed. Amounts received as payments for such contracts are not reported as premium revenues. Revenues for these products 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.





Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

Separate Accounts
The separate account assets presented in the financial statements represent the fair value of funds that are separately administered by us for contracts with equity, real estate and fixed income investments. The separate account contract owner, rather than us, bears the investment risk of these funds. The separate account assets are legally segregated and are not subject to claims that arise out of any of our other business. 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 statements of operations. Net deposits, net investment income and realized and unrealized capital gains and losses on the separate accounts are not reflected in the statements of operations.
Income Taxes
In December 2006, we became a life insurance company and began filing our own tax return and continued to do so through 2011. Beginning in 2012, we are included in the consolidated return filed by our ultimate parent, PFG. 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 and net operating losses 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 operations in the period in which the change is enacted.
Goodwill and Other Intangibles
We recorded goodwill at cost in excess of the fair value of net tangible assets at the time of our acquisition by PFS. Goodwill is not amortized. Rather, goodwill is tested for impairment during the third quarter each year or more frequently if events or changes in circumstances indicate that the asset might be impaired.
Other intangibles consist of values assigned to state licenses to sell insurance that were obtained at the time of acquisition. State licenses do not expire and have therefore been determined to have indefinite lives. Other intangibles are tested for impairment during the third quarter each year or more frequently if events or changes in circumstances indicate that the asset might be impaired.
2. Related Party Transactions
We assume reinsurance from Principal Life. Under this agreement, policy reserves assumed were $6.9 and $6.5 as of December 31, 2013 and 2012, respectively. In addition, premiums assumed for the years ending December 31, 2013, 2012, and 2011 totaled $7.0, $6.6, and $6.5, respectively.
In July 2009, we became a direct writer of life insurance policies and entered into a reinsurance transaction with Principal Life. Reinsurance premiums and other fees, expenses and reserves related to reinsured business are accounted for on bases consistent with those used in accounting for the original policies issued and the terms of the reinsurance contracts. Premiums and other fees of $223,578.9, $168,371.4 and $102,608.3 were ceded under this agreement during 2013, 2012 and 2011. Reserves of $1,479,668.4 and $1,098,578.2 were ceded under this agreement during 2013 and 2012. We are contingently liable with respect to reinsurance ceded in the event that Principal Life is unable to meet the obligations it has assumed. As of December 31, 2013, and 2012 we had a $953.1 and $2,094.8 recoverable from Principal Life, respectively.
We have entered into various related party transactions with affiliates. During the years ended December 31, 2013, 2012 and 2011, we received $5,005.3, $6,207.4 and $8,411.1 respectively, of expense reimbursements from Principal Life. We have a management services agreement with Principal Global Investors, LLC and management fees paid were $61.0, $53.7, and $26.5 during the years ended December 31, 2013, 2012 and 2011, respectively.





Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

PFG has agreed to guarantee that our capital and surplus meet or exceed the requirements of the State of New Jersey for a minimum of ten years pursuant to a request from the State of New Jersey. We were licensed in the State of New Jersey on January 29, 2009, and the guarantee commenced on this date.

3. Goodwill and Other Intangibles

We had goodwill of $95.0 as of both December 31, 2013 and 2012, and indefinite-lived intangible assets of $1,755.0 as of both December 31, 2013 and 2012. The indefinite-lived intangible assets consist of state licenses to sell insurance, which do not expire.

4. Investments

Fixed Maturities

The amortized cost, gross unrealized gains and losses and fair value of fixed maturities securities available-for-sale are summarized as follows:
 
 
 
 
 
Gross
 
Gross
 
 
 
 
 
Amortized
 
unrealized
 
unrealized
 
Fair
 
 
cost
 
gains
 
losses
 
value
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2013
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
 10,058.5 
 
$
 - 
 
$
 514.0 
 
$
 9,544.5 
States and political subdivisions
 
 25,863.8 
 
 
 52.1 
 
 
 259.9 
 
 
 25,656.0 
Corporate
 
 38,818.4 
 
 
 180.1 
 
 
 305.2 
 
 
 38,693.3 
Total fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 available-for-sale
$
 74,740.7 
 
$
 232.2 
 
$
 1,079.1 
 
$
 73,893.8 
December 31, 2012
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
 58,653.8 
 
$
 2,378.4 
 
$
 - 
 
$
 61,032.2 
Total fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
$
 58,653.8 
 
$
 2,378.4 
 
$
 - 
 
$
 61,032.2 

The amortized cost and fair values of fixed maturities available-for sale at December 31, 2013, by expected maturity, are as follows:
 
Amortized
 
Fair
 
cost
 
value
Due after five years through ten years
$
 52,116.1 
 
$
 51,438.9 
Due after ten years
 22,624.6 
 
 
 22,454.9 
Total
$
 74,740.7 
 
$
 73,893.8 

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 establish limits.




Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

Net Investment Income

Major categories of net investment income are summarized as follows:
 
For the year ended December 31,
 
2013 
 
2012 
 
2011 
Fixed maturities, available-for-sale
$
 1,601.5 
 
$
 1,057.0 
 
$
 667.5 
Policy loans
 
 (0.9)
 
 
 0.9 
 
 
 - 
Cash and cash equivalents
 
 14.4 
 
 
 12.0 
 
 
 25.3 
Total
 
 1,615.0 
 
 
 1,069.9 
 
 
 692.8 
Investment expenses
 
 (61.0)
 
 
 (53.7)
 
 
 (26.5)
Net investment income
$
 1,554.0 
 
$
 1,016.2 
 
$
 666.3 

Net Realized Capital Gains and Losses
 
 
 
For the year ended December 31,
 
 
2013 
 
2012 
 
2011 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
Gross gains
$
 1,116.5 
 
$
 - 
 
$
 - 
 
Gross losses
 
 (148.1)
 
 
 - 
 
 
 - 
Net realized capital gains
$
 968.4 
 
$
 - 
 
$
 - 

Proceeds from sales of investments (excluding call and maturity proceeds) in fixed maturities, available-for-sale was $44,512.3 in 2013.

Other-Than-Temporary Impairments
    
We have a process in place to identify fixed maturity and equity securities that could potentially have a credit impairment that is other than temporary. This process involves monitoring market events that could impact issuers’ credit ratings, business climate, management changes, litigation and government actions and other similar factors. This process also involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues.

Each reporting period, all securities are reviewed to determine whether an other-than-temporary decline in value exists and whether losses should be recognized. We consider relevant facts and circumstances in evaluating whether a credit or interest rate-related impairment of a security is other than temporary. Relevant facts and circumstances considered include: (1) the extent and length of time the fair value has been below cost; (2) the reasons for the decline in value; (3) the financial position and access to capital of the issuer, including the current and future impact of any specific events; (4) 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. To the extent we determine that a security is deemed to be other than temporarily impaired, an impairment loss is recognized. We did not recognize any other-than-temporary impairments as of December 31, 2013 and 2012.

Gross Unrealized Losses for Fixed Maturities

For fixed maturities available-for-sale with unrealized losses, including other-than-temporary impairment losses reported in OCI, as of December 31, 2013, the gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized position are summarized as follows:




Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

 
 
 
December 31, 2013
 
 
 
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
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
agencies
$
 9,544.5 
 
$
 514.0 
 
$
 - 
 
$
 - 
 
$
 9,544.5 
 
$
 514.0 
 
States and political
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
subdivisions
 
 19,562.2 
 
 
 259.9 
 
 
 - 
 
 
 - 
 
 
 19,562.2 
 
 
 259.9 
 
Corporate
 
 24,054.4 
 
 
 305.2 
 
 
 - 
 
 
 - 
 
 
 24,054.4 
 
 
 305.2 
Total fixed maturities,
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
available-for-sale
$
 53,161.1 
 
$
 1,079.1 
 
$
 - 
 
$
 - 
 
$
 53,161.1 
 
$
 1,079.1 

Because we expected to recover our amortized cost, it was not our intent to sell the fixed maturity available-for-sale securities with unrealized losses and it was not more likely than not that we would be required to sell these securities before recovery of the amortized cost, which may be maturity, we did not consider these investments to be other-than-temporarily impaired at December 31, 2013.

Net Unrealized Gains and Losses on Available-for-Sale Securities
    
The net unrealized gains and losses on investments in fixed maturities available-for-sale are reported as a separate component of stockholder’s equity. The cumulative amount of net unrealized gains and losses on available-for-sale securities was as follows:
 
December 31,
 
2013 
 
2012 
 
 
 
 
 
 
Net unrealized gains/(losses) on fixed maturities, available-for-sale
$
 (846.9)
 
$
 2,378.4 
Provision for deferred income taxes
 
 296.4 
 
 (832.4)
Net unrealized gains/(losses) on available-for-sale securities
$
 (550.5)
 
$
 1,546.0 

5. Insurance Liabilities

Contractholder Funds
    
Our contractholder funds consist entirely of reserves for universal life, variable universal life and term life insurance.

Future Policy Benefits and Claims
    
Incurred liability adjustments relating to prior years, which affected current operations during 2013, 2012 and 2011, resulted in part from changes in the estimates for incurred but not reported (“IBNR”) claims. Historical trends have been considered in establishing the current year IBNR liability. As of December 31, 2013 and 2012, unpaid claim liabilities were $23,481.4 and $17,174.2, respectively, which were 100% reinsured to Principal Life.




Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

Other Policyholder Funds
Other policyholder funds consist of unearned and advanced premiums and fees.
6. Income Taxes
Income Tax Expense
Our income tax expense was as follows:
 
 
For the year ended December 31,
 
 
2013 
 
2012 
 
2011 
 
 
 
 
 
 
 
 
 
 
Current income taxes:
 
 
 
 
 
 
 
 
 
U.S. federal
$
 5,814.3 
 
$
 6,061.6 
 
$
 6,775.8 
Total current income taxes
 
 5,814.3 
 
 
 6,061.6 
 
 
 6,775.8 
Total deferred income tax benefits
 
 (5,631.3)
 
 
 (6,193.8)
 
 
 (6,788.5)
Total income taxes (benefits)
$
 183.0 
 
$
 (132.2)
 
$
 (12.7)
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 tax rate is as follows:
 
For the year ended December 31,
 
2013 
 
2012 
 
2011 
 
 
 
 
 
 
 
 
 
U.S. corporate tax rate
 35 

%
 
 35 
%
 
 35 
%
Stock options
 86 

 
 
 (8)
 
 
 (26)
 
Other
(1
)
 
 
 (1)
 
 
 (5)
 
Effective income tax rate
120

%
 
 26 
%
 
 4 
%
Net Deferred Income Taxes
Significant components of our net deferred income taxes were as follows:
 
 
 
 
December 31,
 
 
 
2013 
 
2012 
 
 
 
 
 
 
 
 
Deferred tax assets:
 
 
 
 
 
 
Net unrealized losses on available-for-sale securities
$
 296.4 

 
$
 - 

 
Stock based compensation
 
 341.5 

 
 
 316.7 

 
Deferred acquisition costs
 
 18,521.9 

 
 
 12,851.8 

 
Other deferred income tax assets
 
 2,003.6 

 
 
 1,648.1 

 
 
Total deferred income tax assets
 
 21,163.4 

 
 
 14,816.6 

Deferred income tax liabilities:
 
 

 
 
 
 
Net unrealized gains on available-for-sale securities
 
 - 

 
 
 (832.4)

 
Intangible assets
 
 (440.4)

 
 
 (396.8)

 
Policy loans
 
 (1,672.3)

 
 
 (1,483.6)

 
Other deferred income tax liabilities
 
 (336.9)

 
 
 (150.1)

 
 
Total deferred income tax liabilities
 
(2,449.6
)
 
 
(2,862.9
)
Total net deferred income tax assets
$
18,713.8

 
$
11,953.7

As of December 31, 2013 and 2012, we did not have any unrecognized tax benefits. We recognize interest and penalties related to uncertain tax positions in operating expenses. As of both December 31, 2013 and 2012, we did not recognize accumulated pre-tax interest and penalties related to unrecognized tax benefits.





Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

7. Stockholder's Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other Comprehensive Income (Loss)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2013
 
Pre-Tax
 
Tax
 
After-Tax
 
 
 
(in millions)
Net unrealized losses on available-for-sale securities
 
 
 
 
 
 
 
 
 
during the period
$
 (2,256.9)
 
$
 789.8 
 
$
 (1,467.1)
Reclassification adjustment for gains included in net income
 
 (968.4)
 
 
 339.0 
 
 
 (629.4)
Other comprehensive loss
$
 (3,225.3)
 
$
 1,128.8 
 
$
 (2,096.5)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2012
 
Pre-Tax
 
Tax
 
After-Tax
 
 
 
(in millions)
Net unrealized gains on available-for-sale securities
 
 
 
 
 
 
 
 
 
during the period
$
 408.8 
 
$
 (143.0)
 
$
 265.8 
Other comprehensive income
$
 408.8 
 
$
 (143.0)
 
$
 265.8 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
For the year ended December 31, 2011
 
Pre-Tax
 
Tax
 
After-Tax
 
 
 
(in millions)
Net unrealized gains on available-for-sale securities
 
 
 
 
 
 
 
 
 
during the period
$
 1,759.1 
 
$
 (615.7)
 
$
 1,143.4 
Other comprehensive income
$
 1,759.1 
 
$
 (615.7)
 
$
 1,143.4 

Accumulated Other Comprehensive Income (Loss)

A rollforward of accumulated other comprehensive income consisting entirely of net unrealized gains/(losses) on available-for-sale securities, was as follows:
 
Net unrealized
 
gains (losses) on
 
available-for-sale
 
securities
 
 
 
Balance at January 1, 2011
$
136.8

Other comprehensive income
 
1,143.4

Balance at December 31, 2011
 
1,280.2

Other comprehensive income
 
265.8

Balance at December 31, 2012
 
1,546.0

Other comprehensive loss
 
(2,096.5
)
Balance at December 31, 2013
$
(550.5
)










Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

Dividend Limitations
Under Iowa law, we may pay stockholder dividends only from the earned surplus arising from our business and must receive the prior approval of the Commissioner to pay a stockholder dividend if such a stockholder dividend would exceed certain statutory limitations. In general, the current statutory limitation is the greater of 10% of our policyholder surplus as of the preceding year-end or the net gain from operations from the previous calendar year. Based on this limitation and 2013 statutory results, we could not pay stockholder dividends in 2014.
Additional Paid-In Capital
The expenses related to stock based compensation issued by PFG are allocated to all of its subsidiaries. The allocation of equity awards, which amounted to $2,826.3, $2,162.3and $978.2 for the years ended December 31, 2013, 2012, and 2011, respectively, are not settled in cash and, therefore, are reported as equity.
8. 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-type contracts, are excluded from these fair value disclosure requirements.
Valuation Hierarchy
Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety considering factors specific to the asset or liability.
•
Level 1 - Fair values are based on unadjusted quoted prices in active markets for identical assets or liabilities. Our Level 1 assets include highly liquid U.S. Treasury bonds and exchange-traded common stock in our separate accounts.
•
Level 2 - Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly. Our Level 2 assets include fixed maturity securities that are priced by third-party pricing services.
•
Level 3 - Fair values are based on significant unobservable inputs for the asset or liability. We have no Level 3 assets and liabilities.

Determination of Fair Value
The following discussion describes the valuation methodologies used for assets and liabilities measured or disclosed at fair value. The techniques utilized in estimating the fair values 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 2013.






Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

Fixed Maturities

Fixed maturities include public and private bonds. 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.

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 public and private bonds, are generally reflected in Level 2.

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, which are reflected in Level 3. These models primarily use projected cash flows discounted using a rate derived from market interest rate curves and relevant risk spreads.

The primary inputs, by asset class, for valuations of our Level 2 investments from third party pricing vendors or our internal pricing valuation approach are described below.

U.S. Government and Agencies. 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.

Separate Account Assets

Separate account assets include common stock for which fair values are determined using quoted prices in active markets for identical assets, which are reflected in Level 1.






Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis are summarized below.
 
 
As of December 31, 2013
 
 
 
Assets
 
Fair value hierarchy level
 
 
 
measured at fair
 
 
 
 
 
 
 
 
 
 
 
 
value
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
 9,544.5 
 
$
 9,544.5 
 
$
 - 
 
$
 - 
 
States and political subdivisions
 
 25,656.0 
 
 
 - 
 
 
 25,656.0 
 
 
 - 
 
Corporate
 
 38,693.3 
 
 
 - 
 
 
 38,693.3 
 
 
 - 
Total Fixed maturities, available-for-sale
 
 73,893.8 
 
 
 9,544.5 
 
 
 64,349.3 
 
 
 - 
Separate accounts assets
 
 25,890.4 
 
 
 25,890.4 
 
 
 - 
 
 
 - 
 
Total assets
$
 99,784.2 
 
$
 35,434.9 
 
$
 64,349.3 
 
$
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of December 31, 2012
 
 
 
Assets
 
Fair value hierarchy level
 
 
 
measured at fair
 
 
 
 
 
 
 
 
 
 
 
 
value
 
 
Level 1
 
 
Level 2
 
 
Level 3
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
Fixed maturities, available-for-sale:
 
 
 
 
 
 
 
 
 
 
 
 
U.S. government and agencies
$
 61,032.2 
 
$
 56,233.7 
 
$
 4,798.5 
 
$
 - 
Total Fixed maturities, available-for-sale
 
 61,032.2 
 
 
 56,233.7 
 
 
 4,798.5 
 
 
 - 
Separate accounts assets
 
 6,656.7 
 
 
 6,656.7 
 
 
 - 
 
 
 - 
 
Total assets
$
 67,688.9 
 
$
 62,890.4 
 
$
 4,798.5 
 
$
 - 

We did not have any transfers between fair value hierarchy levels during 2013 or 2012.






Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

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, 2013
 
Carrying
 
 
 
 
Fair value hierarchy level
 
amount
 
Fair value
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policy loans
$
 4,778.0 
 
$
 5,397.3 
 
$
 - 
 
$
 - 
 
$
 5,397.3 
Cash and cash equivalents
 
 1,368.8 
 
 
 1,368.8 
 
 
 1,368.8 
 
 
 - 
 
 
 - 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31, 2012
 
Carrying
 
 
 
 
Fair value hierarchy level
 
amount
 
Fair value
 
Level 1
 
Level 2
 
Level 3
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Policy loans
$
 4,238.9 
 
$
 5,157.5 
 
$
 - 
 
$
 - 
 
$
 5,157.5 
Cash and cash equivalents
 
 12,768.0 
 
 
 12,768.0 
 
 
 12,768.0 
 
 
 - 
 
 
 - 

Policy Loans

Fair values of policy loans are estimated by discounting expected cash flows using a risk-free rate based on the Treasury curve. The expected cash flows reflect an estimate of timing of the repayment of loans. These are reflected in Level 3.

Cash and Cash Equivalents

Carrying amounts of cash and cash equivalents approximate fair values, which are reflected in Level 1 given the nature of cash.

9. Statutory Insurance Financial Information
    
We prepare statutory financial statements in accordance with the accounting practices prescribed or permitted by the Insurance Division of the Department of Commerce of the State of Iowa (the “State of Iowa”). The State of Iowa recognizes only statutory accounting practices prescribed or permitted by the State of Iowa for determining and reporting the financial condition and results of operations of an insurance company to determine its solvency under the Iowa Insurance Law. The National Association of Insurance Commissioners’ (“NAIC”) Accounting Practices and Procedures Manual has been adopted as a component of prescribed practices by the State of Iowa. The Commissioner has the right to permit other specific practices that deviate from prescribed practices.

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, 2013, we meet the minimum RBC requirements.






Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

Statutory net loss and statutory capital and surplus were as follows:
 
As of or for the year ended
 
December 31,
 
2013 
 
2012 
 
2011 
 
 
 
 
 
 
 
 
 
Statutory net loss
$
 (6,385.7)
 
$
 (5,957.1)
 
$
 (6,981.9)
Statutory capital and surplus
 
 84,236.6 
 
 
 70,772.1 
 
 
 58,113.8 

10. Segment Information

The U.S. Insurance Solutions segment provides individual life insurance throughout the United States, except for the state of New York.
    
The Corporate segment manages the assets representing capital that has not been allocated to any other segment. Financial results of the Corporate segment primarily reflect our financing activities (including interest expense), income on capital not allocated to other segments, inter-segment eliminations, income tax risks and certain income, expenses and other after-tax adjustments not allocated to the segments based on the nature of such items.
    
Management uses segment operating earnings in goal setting, as a basis for determining employee compensation and in evaluating performance on a basis comparable to that used by securities analysts. We determine segment operating earnings by adjusting U.S. GAAP net income for net realized capital gains (losses), as adjusted, and other after-tax adjustments which management believes are not indicative of overall operating trends. Segment operating revenues exclude net realized capital gains (losses). While these items may be significant components in understanding and assessing the financial performance, management believes the presentation of segment operating earnings enhances the understanding of our results of operations by highlighting earnings attributable to the normal ongoing operations of the business.
    
The accounting policies of the segments are consistent with the accounting policies for the financial statements, with the exception of income tax allocation. The Corporate segment functions to absorb the risk inherent in interpreting and applying tax law. The segments are allocated tax adjustments consistent with the positions we took on tax returns. The Corporate segment results reflect any differences between the tax returns and the estimated resolution of any disputes.
    
The following tables summarize selected financial information by segment and reconcile segment totals to those reported in the financial statements:
 
 
 
 
 
December 31,
 
 
 
 
 
2013 
 
2012 
Assets:
 
 
 
 
 
 
 
 
U.S. Insurance Solutions
 
 
 
$
 1,513,931.5 
 
$
 1,114,380.3 
Corporate
 
 
 
 
 94,361.8 
 
 
 83,804.3 
 
Total assets
 
 
 
$
 1,608,293.3 
 
$
 1,198,184.6 





Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

 
 
For the year ended December 31,
 
 
2013 
 
2012 
 
2011 
 
 
 
 
 
 
 
 
 
 
Operating revenues by segment:
 
 
 
 
 
 
 
 
U.S. Insurance Solutions
$
 456.2 
 
$
 449.4 
 
$
 320.2 
Corporate
 
 1,587.8 
 
 
 1,048.2 
 
 
 690.3 
 
Total segment operating revenue
 
 2,044.0 
 
 
 1,497.6 
 
 
 1,010.5 
Net realized capital gains
 
 968.4 
 
 
 - 
 
 
 - 
 
Total revenues per consolidated statements of operations
 
 3,012.4 
 
 
 1,497.6 
 
 
 1,010.5 
Operating loss by segment, net of related income taxes:
 
 
 
 
 
 
 
 
U.S. Insurance Solutions
$
 (1,438.1)
 
$
 (824.3)
 
$
 (499.7)
Corporate
 
 777.6 
 
 
 452.3 
 
 
 199.1 
 
Total segment operating loss net of related income taxes:
 
 (660.5)
 
 
 (372.0)
 
 
 (300.6)
Net realized capital gains
 
 629.4 
 
 
 - 
 
 
 - 
 
Net loss per statements of operations
$
 (31.1)
 
$
 (372.0)
 
$
 (300.6)

The following is a summary of income tax expense (benefit) allocated to our segments for purposes of determining operating earnings. Segment income taxes are reconciled to income taxes reported on our statement of operations.
 
 
For the year ended December 31,
 
 
2013 
 
2012 
 
2011 
 
 
 
 
 
 
 
 
 
 
Income tax expense (benefit) by segment:
 
 
 
 
 
 
 
 
U.S. Insurance Solutions
$
 (576.8)
 
$
 (383.1)
 
$
 (145.7)
Corporate
 
 420.9 
 
 
 250.9 
 
 
 133.0 
Total segment income taxes from operating earnings
 
 (155.9)
 
 
 (132.2)
 
 
 (12.7)
 
Tax expense related to net realized capital gains
 
 338.9 
 
 
 - 
 
 
 - 
Total income tax expense (benefit) per statements of operations
$
 183.0 
 
$
 (132.2)
 
$
 (12.7)

The following is a summary of depreciation and amortization expense allocated to our segments for purposes of determining operating earnings. Segment depreciation and amortization equates to depreciation and amortization included in our statements of operations.
 
 
For the year ended December 31,
 
 
2013 
 
2012 
 
2011 
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization expense by segment:
 
 
 
 
 
 
 
 
U.S. Insurance Solutions
$
 2,665.8 
 
$
 1,844.8 
 
$
 1,549.9 
Total depreciation and amortization expense included in our
 
 
 
 
 
 
 
 
 
statements of operations
$
 2,665.8 
 
$
 1,844.8 
 
$
 1,549.9 






Principal National Life Insurance Company
Notes to Financial Statements
December 31, 2013
(in thousands)

The following table summarizes operating revenues for our products and services:
 
 
For the year ended December 31,
 
 
2013 
 
2012 
 
2011 
 
 
 
 
 
 
 
 
 
 
U.S. Insurance Solutions:
 
 
 
 
 
 
 
 
 
Individual life insurance
$
 456.2 
 
$
 449.4 
 
$
 320.2 
Corporate
 
 1,587.8 
 
 
 1,048.2 
 
 
 690.3 
Total operating revenues
 
 2,044.0 
 
 
 1,497.6 
 
 
 1,010.5 
 
Net realized capital gains
 
 968.4 
 
 
 - 
 
 
 - 
Total revenues per statements of operations
 
 3,012.4 
 
 
 1,497.6 
 
 
 1,010.5