ThZeal - The Zeal

For the year ended December 31,

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VL 497 PLIC EVUL III SAI 033120 Combined Document

PART B

STATEMENT OF ADDITIONAL INFORMATION

PRINCIPAL^® EXECUTIVE VARIABLE UNIVERSAL LIFE III

dated March 31, 2020

The Statement of Additional Information provides information about the Principal^® Executive Variable Universal Life III Insurance Policy (the "Policy") sponsored by Principal Life Insurance Company through its Principal 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 March 31, 2020. It should be read with that prospectus which is available without charge. To request a copy of the prospectus, please contact us at:

Principal^® Executive Variable Universal Life 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	3
The Company	3
Principal Life Insurance Company Variable Life Separate Account	3
Independent Registered Public Accounting Firm	3
UNDERWRITERS	3
UNDERWRITING PROCEDURES	3
PERFORMANCE DATA	4
FINANCIAL STATEMENTS	A-1
APPENDIX A - Principal Life Insurance Company - Variable Life Separate Account Financials	A-1
APPENDIX B - Principal Life Insurance Company Financials	B-1

GENERAL INFORMATION AND HISTORY

The Company

Principal Life Insurance Company (the “Company”) is the issuer of the Principal Variable Universal Life Income IV Insurance Policy (the “Policy”). The Company is a stock life insurance company with its home office at: Principal Financial Group, Des Moines, Iowa 50306-0431. It is authorized to transact life and annuity business in all states of the United States and the District of Columbia. The Company is a wholly owned indirect subsidiary of Principal Financial Group, Inc., a publicly-traded company.

In 1879, the Company was incorporated under Iowa law as a mutual assessment life insurance company named Bankers Life Association. It became a legal reserve life insurance company and changed its name to Bankers Life Company in 1911 and then to Principal Mutual Life Insurance Company in 1986. The name change to Principal Life Insurance Company and reorganization into a mutual insurance holding company structure took place in 1998, when the Company became a stock life insurance company. In 2001, the mutual insurance holding company converted to a stock company through a process called demutualization, resulting in the current organizational structure.

Principal Life Insurance Company Variable Life Separate Account

The separate account was established under Iowa law on November 2, 1987. It was then registered as a unit investment trust with 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.

Independent Registered Public Accounting Firm

Ernst & Young LLP, 801 Grand Avenue, Suite 3000, Des Moines, Iowa, 50309, serves as the independent registered public accounting firm for Principal Life Insurance Company Variable Life Separate Account and the Company.

UNDERWRITERS

The principal underwriter of the Policy is Principal Securities, Inc. ("PSI") formerly Princor Financial Services Corporation which is a wholly-owned subsidiary of Principal Financial Services, Inc. and an affiliate of the Company. PSI’s address is Principal Securities, Inc., 655 9th Street, Des Moines, IA 50392. PSI was incorporated in Iowa in 1968, and is a securities broker-dealer registered with the SEC as well as a member of the Financial Institutions Regulatory Authority. The Policies may also be sold through other broker-dealers authorized by PSI and applicable law to do so.

The Policy’s offering to the public is continuous. As the principal underwriter, PSI is paid for the distribution of the Policy. This is a new Policy and therefore does not have commissions information to disclose for the last three fiscal years.

UNDERWRITING PROCEDURES

Guaranteed maximum cost of insurance rates are based on 1980 CSO Mortality Table (the prevailing mortality table approved by the National Association of Insurance Commissioners), age last birthday, with distinction for the gender and smoking status.

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 March 31, 2020. 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 Separate Account or an underlying fund may advertise the “yield” and “effective yield” of a money market division or of the underlying fund in which it invests. 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, 2019, the 7-day annualized and effective yields of the Fidelity VIP Government Money Market Division were 1.33% and 1.33%, 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 ten policy years (or within ten years of a face amount increase) are subject to a surrender charge.

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, mortality and expense risks charge, administrative charge, policy loan interest charge (if any), and charges for optional insurance benefits. Some of these charges vary depending on the age of the insureds, 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.

Following are the hypothetical average annual total returns for the periods ended December 31, 2019, 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 Global Thematic Growth	01/11/1996	30.16%	10.41%	8.21%
AllianceBernstein International Growth	09/23/1994	27.53%	5.38%	4.85%
AllianceBernstein International Value	05/10/2001	17.14%	2.98%	2.67%
AllianceBernstein Small Cap Growth	08/05/1996	36.40%	13.77%	16.19%
AllianceBernstein Small/Mid Cap Value	05/02/2001	20.10%	6.42%	11.01%
American Century VP Capital Appreciation	11/20/1987	35.32%	10.32%	12.58%
American Century VP Income & Growth	10/30/1997	23.75%	8.02%	11.61%



Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
American Century VP International	05/02/1994	28.14%	6.17%	6.52%
American Century VP Mid Cap Value	10/29/2004	28.99%	8.61%	12.08%
American Century VP Value	05/01/1996	26.92%	7.61%	10.84%
American Funds Blue Chip Income and Growth	07/05/2001	21.38%	8.38%	11.27%
American Funds Global Balanced Fund	05/02/2011	20.44%	6.97%		6.22%
American Funds Global Bond	10/04/2006	7.77%	2.29%	2.59%
American Growth	02/08/1984	30.77%	14.38%	13.98%
American International	05/01/1990	22.88%	6.87%	6.03%
American New World	06/17/1999	29.14%	7.94%	6.03%
BNY Mellon IP Core Value	05/01/1998	26.59%	8.01%	10.80%
BNY Mellon IP MidCap Stock	12/29/2000	19.86%	5.48%	11.55%
BNY Mellon IP Technology Growth	08/31/1999	25.51%	14.29%	14.24%
BNY Mellon Sustainable US Equity	10/07/1993	34.01%	9.34%	11.80%
BNY Mellon VIF Appreciation	04/05/1993	35.78%	10.90%	11.65%
Bond Market Index	05/15/2012	8.47%	2.75%		2.47%
Calvert VP EAFE International Index	11/12/2002	21.00%	5.01%	4.61%
Calvert VP Investment Grade Bond Index	03/31/2003	8.41%	2.79%	3.53%
Calvert VP Russell 2000 Small Cap Index	04/27/2000	24.82%	7.55%	10.97%
ClearBridge Mid Cap	11/01/1999	32.95%	7.97%	11.71%
ClearBridge Small Cap Growth	11/08/1999	26.87%	10.53%	14.36%
Core Plus Bond	12/18/1987	9.81%	3.28%	4.66%
Delaware VIP High Yield Series	05/01/2000	16.12%	4.52%	6.27%
Delaware VIP Small Cap Value	05/01/2000	27.72%	7.77%	11.62%
Deutsche Alternative Asset Allocation	01/30/2009	14.35%	1.71%	3.01%
Deutsche Small Mid Cap Value	05/01/1996	20.99%	4.89%	8.88%
Diversified International	05/02/1994	22.69%	5.48%	6.06%
Equity Income	04/28/1998	29.09%	10.54%	12.62%
Fidelity VIP Contrafund	01/03/1995	31.27%	10.02%	12.02%
Fidelity VIP Equity-Income	11/03/1986	27.11%	8.10%	10.73%
Fidelity VIP Extended Market Index Portfolio	04/17/2018	25.58%			6.60%
Fidelity VIP Government Money Market	07/07/2000	1.92%	0.83%	0.43%
Fidelity VIP High Income	10/01/1985	14.77%	5.35%	6.40%
Fidelity VIP International Index Portfolio	04/17/2018	21.16%			2.06%
Fidelity VIP Mid Cap	12/28/1998	23.17%	6.86%	10.18%
Fidelity VIP Strategic Income	12/23/2003	10.66%	4.13%	4.76%
Fidelity VIP Total Market Index Portfolio	04/17/2018	30.44%			12.01%
Franklin Income VIP	01/24/1989	16.06%	5.24%	7.18%
Franklin Mutual Global Discovery VIP	11/08/1996	24.37%	5.32%	7.97%
Franklin Mutual Shares VIP	11/08/1996	22.57%	5.91%	8.69%
Franklin Rising Dividends VIP	01/27/1992	29.23%	10.58%	12.81%
Franklin Small Cap Value VIP	05/01/1998	26.35%	7.99%	11.39%
Franklin Strategic Income VIP	07/01/1999	8.05%	2.79%	4.47%
Franklin US Government Securities VIP	01/06/1999	5.23%	1.59%	2.17%
Government & High Quality Bond	05/06/1993	6.45%	2.35%	3.16%
Guggenheim Rydex VI Basic Materials Fund	05/02/2001	21.43%	5.67%	4.38%
Guggenheim Rydex VI Utilities Fund	05/02/2001	19.01%	8.12%	10.00%
International Emerging Markets	10/24/2000	17.60%	4.28%	2.99%
Invesco Oppenheimer VI Main Street Small Cap	07/16/2001	26.13%	7.27%	12.17%
Invesco VI American Franchise	09/18/2000	36.43%	12.22%	13.07%



Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
Invesco VI American Value	01/02/1997	25.03%	4.74%	10.39%
Invesco VI Core Equity	05/02/1994	28.67%	6.31%	8.86%
Invesco VI Global Health Care	05/22/1997	32.50%	7.18%	12.15%
Invesco VI Global Real Estate	03/31/1998	23.00%	5.58%	8.07%
Invesco VI International Growth	05/05/1993	28.57%	5.50%	6.67%
Invesco VI Mid Cap Core Equity	09/10/2001	25.04%	6.54%	8.01%
Invesco VI Mid Cap Growth	09/25/2000	34.34%	9.64%	11.17%
Invesco VI Small Cap Equity	08/29/2003	26.60%	5.36%	10.26%
Janus Henderson Balanced	12/31/1999	22.27%	8.73%	9.37%
Janus Henderson Enterprise	09/13/1993	35.16%	14.69%	15.56%
Janus Henderson Flexible Bond	12/31/1999	9.28%	2.64%	3.94%
Janus Henderson Forty	05/01/1997	36.85%	15.61%	13.66%
Janus Henderson Global Research	12/31/1999	28.71%	8.50%	9.41%
Janus Henderson Global Technology Portfolio	01/18/2000	44.82%	20.33%	17.59%
LargeCap Growth I	06/01/1994	34.92%	15.32%	15.39%
LargeCap S&P 500 Index	05/03/1999	31.10%	11.40%	13.21%
Lord Abbett Developing Growth Portfolio	04/30/2010	31.77%	9.93%		14.02%
MFS Blended Research SmallCap Equity Portfolio	04/28/2006	26.36%	9.60%	12.73%
MFS Global Equity	05/03/1999	30.20%	8.85%	10.28%
MFS Growth	07/24/1995	37.78%	15.19%	14.95%
MFS Inflation-Adjusted Bond	10/01/2008	8.05%	1.52%	2.89%
MFS New Discovery	05/01/1998	41.27%	13.31%	13.63%
MFS New Discovery Value Portfolio	10/01/2008	33.43%	10.94%	11.66%
MFS Research International	08/24/2001	27.67%	6.28%	5.49%
MFS Total Return	01/03/1995	20.12%	6.50%	8.08%
MFS Utilities	01/03/1995	24.80%	6.43%	9.72%
MFS Value	01/02/2002	29.51%	8.96%	11.40%
MFS VIT International Value	08/23/2001	25.65%	9.69%	9.77%
MFS VIT Mid Cap Value	03/07/2008	30.71%	8.10%	12.36%
MidCap	12/18/1987	43.10%	13.49%	16.42%
Neuberger Berman AMT Mid Cap Growth	11/03/1997	32.48%	10.16%	12.79%
Neuberger Berman AMT Sustainable Equity Portfolio	02/18/1999	25.88%	8.98%	11.92%
PIMCO VIT All Asset	04/30/2003	11.90%	4.32%	5.13%
PIMCO VIT Commodity Real Return Strategy	06/30/2004	11.43%	-3.54%	-3.43%
PIMCO VIT Emerging Markets Bond	09/30/2002	14.80%	5.89%	5.83%
PIMCO VIT High Yield Portfolio	04/30/1998	14.75%	5.67%	6.90%
PIMCO VIT Long-Term U.S. Government	04/30/1999	13.34%	3.66%	6.76%
PIMCO VIT Low Duration Portfolio	02/16/1999	4.03%	1.45%	2.01%
PIMCO VIT Real Return	09/30/1999	8.45%	2.38%	3.29%
PIMCO VIT Short-Term Portfolio	09/30/1999	2.80%	2.04%	1.68%
PIMCO VIT Total Return	12/31/1997	8.37%	3.12%	3.88%
Principal Capital Appreciation	04/28/1998	32.49%	11.49%	12.95%
Principal LifeTime 2010	08/30/2004	14.10%	4.92%	6.67%
Principal LifeTime 2020	08/30/2004	18.12%	6.09%	7.97%
Principal LifeTime 2030	08/30/2004	22.01%	7.03%	8.74%
Principal LifeTime 2040	08/30/2004	24.74%	7.72%	9.46%
Principal LifeTime 2050	08/30/2004	26.39%	8.14%	9.77%
Principal LifeTime 2060	05/01/2013	27.24%	8.22%		9.35%
Principal LifeTime Strategic Income	08/30/2004	12.46%	4.25%	5.50%



Division	Effective Date	One Year	Five Years	Ten Years	Since Inception
Putnam VT Growth Opportunities	01/31/2000	36.74%	14.55%	15.00%
Real Estate Securities	05/01/1998	31.26%	8.65%	12.88%
SAM Balanced	06/03/1997	20.01%	6.82%	8.51%
SAM Conservative Balanced	04/23/1998	15.88%	5.64%	7.08%
SAM Conservative Growth	06/03/1997	24.06%	7.99%	9.79%
SAM Flexible Income	09/09/1997	13.25%	4.92%	6.27%
SAM Strategic Growth	06/03/1997	27.44%	8.25%	10.51%
Short-Term Income	01/12/1994	4.70%	2.18%	2.43%
SmallCap	05/01/1998	27.40%	8.49%	12.58%
T. Rowe Price Health Sciences	12/29/2000	28.63%	10.65%	18.50%
Templeton Developing Markets VIP	03/04/1996	26.70%	7.18%	3.75%
Templeton Foreign VIP	05/01/1992	12.53%	2.16%	3.41%
Templeton Global Bond VIP	01/24/1989	2.01%	0.87%	3.51%
TOPS Managed Balanced ETF	06/09/2011	14.55%	3.84%		4.35%
TOPS Managed Growth ETF	04/26/2011	17.08%	3.82%		4.32%
TOPS Managed Moderate Growth ETF	06/09/2011	16.30%	4.11%		4.93%
VanEck VIP Global Hard Assets	09/01/1989	11.87%	-5.48%	-2.80%
Vanguard VIF MidCap Index	02/09/1999	30.87%	9.13%	12.93%
Wanger International	05/03/1995	29.99%	7.01%	7.85%

FINANCIAL STATEMENTS

APPENDIX A - Principal Life Insurance Company - Variable Life Separate Account Financials

A-1

Report of Independent Registered Public Accounting Firm

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

Opinion on the Financial Statements

We have audited the accompanying statements of assets and liabilities of each of the subaccounts listed in the Appendix that comprise Principal Life Insurance Company Variable Life Separate Account (the Separate Account), as of December 31, 2019, the related statements of operations and the statements of changes in net assets for each of the periods indicated in the Appendix, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of each subaccount as of December 31, 2019, the results of its operations and changes in its net assets for each of the periods indicated in the Appendix, in conformity with U.S. generally accepted accounting principles.

Basis for Opinion

These financial statements are the responsibility of the Separate Account’s management. Our responsibility is to express an opinion on each of the subaccounts’ financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Separate Account in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our procedures included confirmation of securities owned as of December 31, 2019, by correspondence with the fund companies or their transfer agents, as applicable. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ Ernst & Young LLP

We have served as the Separate Account’s auditor since 1987.

Des Moines, Iowa

March 27, 2020

A-2

Appendix

Subaccounts comprising Principal Life Insurance Company Variable Life Separate Account



	Statement of operations	Statements of changes in net assets
AllianceBernstein Global Thematic Growth Class A Division AllianceBernstein International Growth Class A Division AllianceBernstein International Value Class A Division AllianceBernstein Small Cap Growth Class A Division AllianceBernstein Small/Mid Cap Value Class A Division American Century VP Capital Appreciation Class II Division American Century VP Income & Growth Class I Division American Century VP Income & Growth Class II Division American Century VP Inflation Protection Class II Division American Century VP International Class II Division American Century VP Mid Cap Value Class II Division American Century VP Ultra Class I Division American Century VP Ultra Class II Division American Century VP Value Class II Division American Funds Insurance Series Blue Chip Income and Growth Class 2 Division American Funds Insurance Series Global Bond Class 2 Division American Funds Insurance Series Growth Fund Class 2 Division American Funds Insurance Series International Fund Class 2 Division American Funds Insurance Series New World Fund Class 2 Division BNY Mellon IP Core Value Service Shares Division (1) BNY Mellon IP MidCap Stock Service Shares Division (2) BNY Mellon IP Technology Growth Service Shares Division (3) BNY Mellon Sustainable U.S. Equity Service Shares Division (4) BNY Mellon VIF Appreciation Service Shares Division (5) BNY Mellon VIF Opportunistic Small Cap Service Shares Division (6) BNY Mellon VIF Quality Bond Service Shares Division (7) Bond Market Index Class 1 Division Calvert EAFE International Index Class F Division Calvert Investment Grade Bond Index Class I Division Calvert Russell 2000 Small Cap Index Class F Division Calvert S&P 500 Index Portfolio Division Calvert S&P MidCap 400 Index Class F Division ClearBridge Mid Cap Class I Division ClearBridge Small Cap Growth Class I Division Core Plus Bond Class 1 Division Delaware High Yield Service Class Division Delaware Small Cap Value Service Class Division Delaware Smid Cap Core Service Class Division Diversified Balanced Class 1 Division Diversified International Class 1 Division DWS Alternative Asset Allocation Class B Division DWS Small Mid Cap Value Class B Division	For the year ended December 31, 2019	For each of the two years in the period ended December 31, 2019

A-3



Equity Income Class 1 Division Fidelity VIP Asset Manager Service Class 2 Division Fidelity VIP Contrafund Initial Class Division Fidelity VIP Contrafund Service Class 2 Division Fidelity VIP Equity-Income Initial Class Division Fidelity VIP Equity-Income Service Class 2 Division Fidelity VIP Government Money Market Service Class Division Fidelity VIP Growth Service Class 2 Division Fidelity VIP High Income Initial Class Division Fidelity VIP High Income Service Class 2 Division Fidelity VIP Mid Cap Service Class 2 Division Fidelity VIP Strategic Income Service Class 2 Division Franklin Income VIP Class 2 Division Franklin Mutual Global Discovery VIP Class 2 Division Franklin Mutual Shares VIP Class 2 Division Franklin Rising Dividends VIP Class 2 Division Franklin Small Cap Value VIP Class 2 Division Franklin Strategic Income VIP Class 2 Division Franklin U.S. Government Securities VIP Class 2 Division Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division Government & High Quality Bond Class 1 Division International Emerging Markets Class 1 Division Invesco American Franchise Series I Division Invesco American Franchise Series II Division Invesco American Value Series I Division Invesco Core Equity Series I Division Invesco Core Equity Series II Division Invesco Global Real Estate Series I Division Invesco Health Care Series I Division Invesco International Growth Series I Division Invesco Mid Cap Core Equity Series II Division Invesco Mid Cap Growth Series I Division Invesco Oppenheimer Main Street Small Cap Series II Division (8) Invesco Small Cap Equity Series I Division Invesco Technology Series I Division Janus Henderson Balanced Service Shares Division Janus Henderson Enterprise Service Shares Division Janus Henderson Flexible Bond Service Shares Division Janus Henderson Forty Service Shares Division Janus Henderson Global Research Service Shares Division Janus Henderson Overseas Service Shares Division JP Morgan Core Bond Class I Division JP Morgan Small Cap Core Class I Division LargeCap Growth I Class 1 Division LargeCap S&P 500 Index Class 1 Division Lord Abbett Series Fund Developing Growth Class VC Division

A-4



MFS Blended Research Small Cap Equity Service Class Division MFS Global Equity Service Class Division MFS Growth Service Class Division MFS Inflation-Adjusted Bond Service Class Division MFS International Intrinsic Value Service Class Division (9) MFS Mid Cap Growth Service Class Division MFS Mid Cap Value Portfolio Service Class Division MFS New Discovery Service Class Division MFS Research International Portfolio Service Class Division MFS Total Return Service Class Division MFS Utilities Service Class Division MFS Value Service Class Division MidCap Class 1 Division Neuberger Berman AMT Mid Cap Growth Portfolio Class S Division PIMCO All Asset Administrative Class Division PIMCO Commodity Real Return Strategy Administrative Class Division PIMCO Emerging Market Bond Administrative Class Division PIMCO High Yield Administrative Class Division PIMCO Long-Term U.S. Government Administrative Class Division PIMCO Low Duration Administrative Class Division PIMCO Real Return Administrative Class Division PIMCO Short-Term Administrative Class Division PIMCO Total Return Administrative Class Division Principal Capital Appreciation Class 1 Division Principal LifeTime 2010 Class 1 Division Principal LifeTime 2020 Class 1 Division Principal LifeTime 2030 Class 1 Division Principal LifeTime 2040 Class 1 Division Principal LifeTime 2050 Class 1 Division Principal LifeTime 2060 Class 1 Division Principal LifeTime Strategic Income Class 1 Division Putnam VT Equity Income Class IB Division Putnam VT Growth Opportunities Class IB Division Putnam VT International Equity Class IB Division Real Estate Securities Class 1 Division SAM Balanced Portfolio Class 1 Division SAM Conservative Balanced Portfolio Class 1 Division SAM Conservative Growth Portfolio Class 1 Division SAM Flexible Income Portfolio Class 1 Division SAM Strategic Growth Portfolio Class 1 Division

A-5



Short-Term Income Class 1 Division SmallCap Class 1 Division T. Rowe Price Equity Income Portfolio II Division T. Rowe Price Health Sciences Portfolio II Division Templeton Developing Markets VIP Class 2 Division Templeton Foreign VIP Class 2 Division Templeton Global Bond VIP Class 2 Division TOPS Managed Risk Balanced ETF Class 2 Division TOPS Managed Risk Growth ETF Class 2 Division TOPS Managed Risk Moderate Growth ETF Class 2 Division VanEck Global Hard Assets Class S Division VanEck Global Hard Assets Initial Class Division Vanguard VIF Balanced Division Vanguard VIF Equity Index Division Vanguard VIF Mid-Cap Index Division Wanger International Division Wells Fargo VT Index Asset Allocation Class 2 Division Wells Fargo VT Omega Growth Class 2 Division
Fidelity VIP Extended Market Index Service Class 2 Division Fidelity VIP International Index Service Class 2 Division Fidelity VIP Total Market Index Service Class 2 Division Janus Henderson Global Technology Service Shares Division	For the period from June 7, 2019 (commencement of operations) through December 31, 2019
Neuberger Berman AMT Sustainable Equity I Class Division	For the period from April 29, 2019 (commencement of operations) through December 31, 2019
American Funds Insurance Series Global Balanced Class 2 Division Rydex Basic Materials Division Rydex Utilities Division	For the year ended December 31, 2019	For the year ended December 31, 2019 and the period from June 11, 2018 (commencement of operations) through December 31, 2018
(1) Represented the operations of Dreyfus IP Core Value Service Shares Division until June 2, 2019.
(2) Represented the operations of Dreyfus IP MidCap Stock Service Shares Division until June 2, 2019.
(3) Represented the operations of Dreyfus IP Technology Growth Service Shares Division until June 2, 2019.
(4) Represented the operations of Dreyfus Sustainable U.S. Equity Service Shares Division until June 2, 2019.
(5) Represented the operations of Dreyfus VIF Appreciation Service Shares Division until June 2, 2019.
(6) Represented the operations of Dreyfus VIF Opportunistic Small Cap Service Shares Division until June 2, 2019.
(7) Represented the operations of Dreyfus VIF Quality Bond Service Shares Division until June 2, 2019.
(8) Represented the operations of Oppenheimer Main Street Small Cap Service Shares Division until May 24, 2019.
(9) Represented the operations of MFS International Value Service Class Division until June 6, 2019.

A-6



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		AllianceBernstein Global Thematic Growth Class A Division		AllianceBernstein International Growth Class A Division		AllianceBernstein International Value Class A Division		AllianceBernstein Small Cap Growth Class A Division




Assets
Investments in shares of mutual funds, at fair value		$	834,250	$	783,382	$	1,507,755	$	2,413,623
Total assets			834,250		783,382		1,507,755		2,413,623
Total liabilities			—		—		—		—
Net assets		$	834,250	$	783,382	$	1,507,755	$	2,413,623

Net assets
Applicable to accumulation units		$	834,250	$	783,382	$	1,507,755	$	2,413,623
Total net assets		$	834,250	$	783,382	$	1,507,755	$	2,413,623

Investments in shares of mutual funds, at cost		$	757,706	$	665,127	$	1,509,120	$	2,110,661

Shares of mutual funds owned			24,888		33,350		104,924		121,166

Accumulation units outstanding			38,472		59,146		182,112		69,268



Statements of Operations
Year ended December 31, 2019
		AllianceBernstein Global Thematic Growth Class A Division		AllianceBernstein International Growth Class A Division		AllianceBernstein International Value Class A Division		AllianceBernstein Small Cap Growth Class A Division




Net investment income (loss)
Investment income:
	Dividends	$	5,579	$	3,969	$	13,479	$	—

Expenses:
	Mortality and expense risks		—		—		—		—
Net investment income (loss)			5,579		3,969		13,479		—

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			75,285		11,780		(72,353)		163,912
Capital gains distributions			71,598		16,928		—		296,385
Total realized gains (losses) on investments			146,883		28,708		(72,353)		460,297

Change in net unrealized appreciation (depreciation)
	of investments		156,088		137,254		298,055		226,461

Net gains (losses) on investments			308,550		169,931		239,181		686,758

Net increase (decrease) in net assets resulting from operations		$	308,550	$	169,931	$	239,181	$	686,758


See accompanying notes.

A-7



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		AllianceBernstein Small/Mid Cap Value Class A Division		American Century VP Capital Appreciation Class II Division		American Century VP Income & Growth Class I Division		American Century VP Income & Growth Class II Division




Assets
Investments in shares of mutual funds, at fair value		$	5,201,772	$	803,766	$	3,214,284	$	7,977,740
Total assets			5,201,772		803,766		3,214,284		7,977,740
Total liabilities			—		—		—		—
Net assets		$	5,201,772	$	803,766	$	3,214,284	$	7,977,740

Net assets
Applicable to accumulation units		$	5,201,772	$	803,766	$	3,214,284	$	7,977,740
Total net assets		$	5,201,772	$	803,766	$	3,214,284	$	7,977,740

Investments in shares of mutual funds, at cost		$	5,601,730	$	763,018	$	2,831,323	$	7,605,694

Shares of mutual funds owned			290,439		50,936		320,787		795,388

Accumulation units outstanding			199,514		45,152		103,958		240,079



Statements of Operations
Year ended December 31, 2019
		AllianceBernstein Small/Mid Cap Value Class A Division		American Century VP Capital Appreciation Class II Division		American Century VP Income & Growth Class I Division		American Century VP Income & Growth Class II Division




Net investment income (loss)
Investment income:
	Dividends	$	30,030	$	—	$	63,455	$	142,031

Expenses:
	Mortality and expense risks		—		—		181		—
Net investment income (loss)			30,030		—		63,274		142,031

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(110,750)		18,249		118,781		(22,075)
Capital gains distributions			560,346		141,403		258,210		650,978
Total realized gains (losses) on investments			449,596		159,652		376,991		628,903

Change in net unrealized appreciation (depreciation)
	of investments		417,032		80,139		209,160		853,202

Net gains (losses) on investments			896,658		239,791		649,425		1,624,136

Net increase (decrease) in net assets resulting from operations		$	896,658	$	239,791	$	649,425	$	1,624,136


See accompanying notes.

A-8



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		American Century VP Inflation Protection Class II Division		American Century VP International Class II Division		American Century VP Mid Cap Value Class II Division		American Century VP Ultra Class I Division




Assets
Investments in shares of mutual funds, at fair value		$	1,663,303	$	2,460,349	$	30,049,258	$	2,517,283
Total assets			1,663,303		2,460,349		30,049,258		2,517,283
Total liabilities			—		—		—		—
Net assets		$	1,663,303	$	2,460,349	$	30,049,258	$	2,517,283

Net assets
Applicable to accumulation units		$	1,663,303	$	2,460,349	$	30,049,258	$	2,517,283
Total net assets		$	1,663,303	$	2,460,349	$	30,049,258	$	2,517,283

Investments in shares of mutual funds, at cost		$	1,650,663	$	2,330,191	$	29,799,694	$	1,932,778

Shares of mutual funds owned			162,115		214,316		1,451,655		120,272

Accumulation units outstanding			127,951		94,085		815,743		68,218



Statements of Operations
Year ended December 31, 2019
		American Century VP Inflation Protection Class II Division		American Century VP International Class II Division		American Century VP Mid Cap Value Class II Division		American Century VP Ultra Class I Division




Net investment income (loss)
Investment income:
	Dividends	$	38,575	$	8,264	$	542,380	$	—

Expenses:
	Mortality and expense risks		64		—		91		475
Net investment income (loss)			38,511		8,264		542,289		(475)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(2,438)		29,134		89,796		107,357
Capital gains distributions			—		59,842		3,062,481		228,544
Total realized gains (losses) on investments			(2,438)		88,976		3,152,277		335,901

Change in net unrealized appreciation (depreciation)
	of investments		106,424		274,736		3,376,785		315,235

Net gains (losses) on investments			142,497		371,976		7,071,351		650,661

Net increase (decrease) in net assets resulting from operations		$	142,497	$	371,976	$	7,071,351	$	650,661


See accompanying notes.

A-9



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		American Century VP Ultra Class II Division		American Century VP Value Class II Division		American Funds Insurance Series Blue Chip Income and Growth Class 2 Division		American Funds Insurance Series Global Balanced Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	6,258,944	$	29,813,510	$	13,632,630	$	1,383,710
Total assets			6,258,944		29,813,510		13,632,630		1,383,710
Total liabilities			—		—		—		—
Net assets		$	6,258,944	$	29,813,510	$	13,632,630	$	1,383,710

Net assets
Applicable to accumulation units		$	6,258,944	$	29,813,510	$	13,632,630	$	1,383,710
Total net assets		$	6,258,944	$	29,813,510	$	13,632,630	$	1,383,710

Investments in shares of mutual funds, at cost		$	5,017,751	$	24,566,051	$	13,759,373	$	1,324,647

Shares of mutual funds owned			305,612		2,539,481		1,018,120		102,649

Accumulation units outstanding			155,051		829,418		946,866		123,669



Statements of Operations
Year ended December 31, 2019
		American Century VP Ultra Class II Division		American Century VP Value Class II Division		American Funds Insurance Series Blue Chip Income and Growth Class 2 Division		American Funds Insurance Series Global Balanced Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	—	$	560,437	$	251,438	$	15,783

Expenses:
	Mortality and expense risks		—		185		109		—
Net investment income (loss)			—		560,252		251,329		15,783

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			119,307		1,462,527		(276,173)		8,260
Capital gains distributions			672,113		1,717,483		940,084		35,530
Total realized gains (losses) on investments			791,420		3,180,010		663,911		43,790

Change in net unrealized appreciation (depreciation)
	of investments		969,335		3,057,477		1,226,115		108,083

Net gains (losses) on investments			1,760,755		6,797,739		2,141,355		167,656

Net increase (decrease) in net assets resulting from operations		$	1,760,755	$	6,797,739	$	2,141,355	$	167,656


See accompanying notes.

A-10



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		American Funds Insurance Series Global Bond Class 2 Division		American Funds Insurance Series Growth Fund Class 2 Division		American Funds Insurance Series International Fund Class 2 Division		American Funds Insurance Series New World Fund Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	1,394,523	$	14,202,522	$	22,812,040	$	15,734,833
Total assets			1,394,523		14,202,522		22,812,040		15,734,833
Total liabilities			—		—		—		—
Net assets		$	1,394,523	$	14,202,522	$	22,812,040	$	15,734,833

Net assets
Applicable to accumulation units		$	1,394,523	$	14,202,522	$	22,812,040	$	15,734,833
Total net assets		$	1,394,523	$	14,202,522	$	22,812,040	$	15,734,833

Investments in shares of mutual funds, at cost		$	1,347,817	$	13,380,540	$	21,759,773	$	14,467,952

Shares of mutual funds owned			115,920		176,276		1,097,788		614,882

Accumulation units outstanding			124,979		662,486		1,704,517		1,171,408



Statements of Operations
Year ended December 31, 2019
		American Funds Insurance Series Global Bond Class 2 Division		American Funds Insurance Series Growth Fund Class 2 Division		American Funds Insurance Series International Fund Class 2 Division		American Funds Insurance Series New World Fund Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	20,655	$	94,820	$	302,756	$	132,484

Expenses:
	Mortality and expense risks		—		40		—		—
Net investment income (loss)			20,655		94,780		302,756		132,484

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			852		(35,701)		(316,729)		209,797
Capital gains distributions			—		1,348,161		448,959		438,585
Total realized gains (losses) on investments			852		1,312,460		132,230		648,382

Change in net unrealized appreciation (depreciation)
	of investments		60,906		1,829,087		3,208,071		2,298,648

Net gains (losses) on investments			82,413		3,236,327		3,643,057		3,079,514

Net increase (decrease) in net assets resulting from operations		$	82,413	$	3,236,327	$	3,643,057	$	3,079,514


See accompanying notes.

A-11



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		BNY Mellon IP Core Value Service Shares Division (1)		BNY Mellon IP MidCap Stock Service Shares Division (2)		BNY Mellon IP Technology Growth Service Shares Division (3)		BNY Mellon Sustainable U.S. Equity Service Shares Division (4)




Assets
Investments in shares of mutual funds, at fair value		$	731,845	$	272,451	$	3,572,830	$	477,922
Total assets			731,845		272,451		3,572,830		477,922
Total liabilities			—		—		—		—
Net assets		$	731,845	$	272,451	$	3,572,830	$	477,922

Net assets
Applicable to accumulation units		$	731,845	$	272,451	$	3,572,830	$	477,922
Total net assets		$	731,845	$	272,451	$	3,572,830	$	477,922

Investments in shares of mutual funds, at cost		$	724,002	$	268,740	$	3,481,833	$	419,441

Shares of mutual funds owned			48,563		14,703		151,199		12,346

Accumulation units outstanding			23,604		18,860		119,410		14,952



Statements of Operations
Year ended December 31, 2019
		BNY Mellon IP Core Value Service Shares Division (1)		BNY Mellon IP MidCap Stock Service Shares Division (2)		BNY Mellon IP Technology Growth Service Shares Division (3)		BNY Mellon Sustainable U.S. Equity Service Shares Division (4)




Net investment income (loss)
Investment income:
	Dividends	$	4,591	$	866	$	—	$	6,195

Expenses:
	Mortality and expense risks		—		—		—		—
Net investment income (loss)			4,591		866		—		6,195

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(45,816)		(20,727)		(2,355)		(7,946)
Capital gains distributions			71,836		15,697		410,039		16,021
Total realized gains (losses) on investments			26,020		(5,030)		407,684		8,075

Change in net unrealized appreciation (depreciation)
	of investments		130,673		47,955		313,864		121,900

Net gains (losses) on investments			161,284		43,791		721,548		136,170

Net increase (decrease) in net assets resulting from operations		$	161,284	$	43,791	$	721,548	$	136,170


(1) Represented the operations of Dreyfus IP Core Value Service Shares Division until June 2, 2019.
(2) Represented the operations of Dreyfus IP MidCap Stock Service Shares Division until June 2, 2019.
(3) Represented the operations of Dreyfus IP Technology Growth Service Shares Division until June 2, 2019.
(4) Represented the operations of Dreyfus Sustainable U.S. Equity Service Shares Division until June 2, 2019.

See accompanying notes.

A-12



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		BNY Mellon VIF Appreciation Service Shares Division (1)		BNY Mellon VIF Opportunistic Small Cap Service Shares Division (2)		BNY Mellon VIF Quality Bond Service Shares Division (3)		Bond Market Index Class 1 Division




Assets
Investments in shares of mutual funds, at fair value		$	4,412,515	$	4,767,455	$	1,408,138	$	16,914,688
Total assets			4,412,515		4,767,455		1,408,138		16,914,688
Total liabilities			—		—		—		—
Net assets		$	4,412,515	$	4,767,455	$	1,408,138	$	16,914,688

Net assets
Applicable to accumulation units		$	4,412,515	$	4,767,455	$	1,408,138	$	16,914,688
Total net assets		$	4,412,515	$	4,767,455	$	1,408,138	$	16,914,688

Investments in shares of mutual funds, at cost		$	4,080,803	$	4,749,287	$	1,372,857	$	16,415,572

Shares of mutual funds owned			104,340		120,238		117,443		1,577,863

Accumulation units outstanding			126,327		200,915		74,283		1,404,058



Statements of Operations
Year ended December 31, 2019
		BNY Mellon VIF Appreciation Service Shares Division (1)		BNY Mellon VIF Opportunistic Small Cap Service Shares Division (2)		BNY Mellon VIF Quality Bond Service Shares Division (3)		Bond Market Index Class 1 Division




Net investment income (loss)
Investment income:
	Dividends	$	36,895	$	—	$	20,839	$	371,791

Expenses:
	Mortality and expense risks		—		—		—		—
Net investment income (loss)			36,895		—		20,839		371,791

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(122,168)		(126,692)		(3,493)		45,044
Capital gains distributions			428,344		880,816		—		—
Total realized gains (losses) on investments			306,176		754,124		(3,493)		45,044

Change in net unrealized appreciation (depreciation)
	of investments		861,333		171,624		76,243		570,388

Net gains (losses) on investments			1,204,404		925,748		93,589		987,223

Net increase (decrease) in net assets resulting from operations		$	1,204,404	$	925,748	$	93,589	$	987,223


(1) Represented the operations of Dreyfus VIF Appreciation Service Shares Division until June 2, 2019.
(2) Represented the operations of Dreyfus VIF Opportunistic Small Cap Service Shares Division until June 2, 2019.
(3) Represented the operations of Dreyfus VIF Quality Bond Service Shares Division until June 2, 2019.

See accompanying notes.

A-13



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Calvert EAFE International Index Class F Division		Calvert Investment Grade Bond Index Class I Division		Calvert Russell 2000 Small Cap Index Class F Division		Calvert S&P 500 Index Portfolio Division




Assets
Investments in shares of mutual funds, at fair value		$	7,557,301	$	2,724,949	$	33,191,063	$	1,771,940
Total assets			7,557,301		2,724,949		33,191,063		1,771,940
Total liabilities			—		—		—		—
Net assets		$	7,557,301	$	2,724,949	$	33,191,063	$	1,771,940

Net assets
Applicable to accumulation units		$	7,557,301	$	2,724,949	$	33,191,063	$	1,771,940
Total net assets		$	7,557,301	$	2,724,949	$	33,191,063	$	1,771,940

Investments in shares of mutual funds, at cost		$	7,165,860	$	2,665,449	$	33,658,278	$	1,617,397

Shares of mutual funds owned			83,933		48,939		411,443		11,990

Accumulation units outstanding			578,728		229,862		1,228,963		93,510



Statements of Operations
Year ended December 31, 2019
		Calvert EAFE International Index Class F Division		Calvert Investment Grade Bond Index Class I Division		Calvert Russell 2000 Small Cap Index Class F Division		Calvert S&P 500 Index Portfolio Division




Net investment income (loss)
Investment income:
	Dividends	$	179,639	$	85,971	$	274,623	$	28,962

Expenses:
	Mortality and expense risks		—		—		—		104
Net investment income (loss)			179,639		85,971		274,623		28,858

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			75,062		9,554		339,724		70,047
Capital gains distributions			—		—		2,268,223		105,825
Total realized gains (losses) on investments			75,062		9,554		2,607,947		175,872

Change in net unrealized appreciation (depreciation)
	of investments		825,863		127,506		3,569,304		246,789

Net gains (losses) on investments			1,080,564		223,031		6,451,874		451,519

Net increase (decrease) in net assets resulting from operations		$	1,080,564	$	223,031	$	6,451,874	$	451,519


See accompanying notes.

A-14



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Calvert S&P MidCap 400 Index Class F Division		ClearBridge Mid Cap Class I Division		ClearBridge Small Cap Growth Class I Division		Core Plus Bond Class 1 Division




Assets
Investments in shares of mutual funds, at fair value		$	2,295,639	$	394,218	$	20,265,242	$	128,313,815
Total assets			2,295,639		394,218		20,265,242		128,313,815
Total liabilities			—		—		—		—
Net assets		$	2,295,639	$	394,218	$	20,265,242	$	128,313,815

Net assets
Applicable to accumulation units		$	2,295,639	$	394,218	$	20,265,242	$	128,313,815
Total net assets		$	2,295,639	$	394,218	$	20,265,242	$	128,313,815

Investments in shares of mutual funds, at cost		$	2,170,629	$	350,048	$	20,845,698	$	126,193,646

Shares of mutual funds owned			20,433		17,443		735,847		11,157,723

Accumulation units outstanding			85,425		28,743		967,533		4,531,403



Statements of Operations
Year ended December 31, 2019
		Calvert S&P MidCap 400 Index Class F Division		ClearBridge Mid Cap Class I Division		ClearBridge Small Cap Growth Class I Division		Core Plus Bond Class 1 Division




Net investment income (loss)
Investment income:
	Dividends	$	24,695	$	2,164	$	—	$	3,841,367

Expenses:
	Mortality and expense risks		—		—		—		5,103
Net investment income (loss)			24,695		2,164		—		3,836,264

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			25,785		11,504		1,603,043		(105,646)
Capital gains distributions			148,043		3,846		1,834,092		—
Total realized gains (losses) on investments			173,828		15,350		3,437,135		(105,646)

Change in net unrealized appreciation (depreciation)
	of investments		251,984		95,441		891,729		6,847,986

Net gains (losses) on investments			450,507		112,955		4,328,864		10,578,604

Net increase (decrease) in net assets resulting from operations		$	450,507	$	112,955	$	4,328,864	$	10,578,604


See accompanying notes.

A-15



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Delaware High Yield Service Class Division		Delaware Small Cap Value Service Class Division		Delaware Smid Cap Core Service Class Division		Diversified Balanced Class 1 Division




Assets
Investments in shares of mutual funds, at fair value		$	723,879	$	21,432,073	$	2,518,098	$	15,744,301
Total assets			723,879		21,432,073		2,518,098		15,744,301
Total liabilities			—		—		—		—
Net assets		$	723,879	$	21,432,073	$	2,518,098	$	15,744,301

Net assets
Applicable to accumulation units		$	723,879	$	21,432,073	$	2,518,098	$	15,744,301
Total net assets		$	723,879	$	21,432,073	$	2,518,098	$	15,744,301

Investments in shares of mutual funds, at cost		$	708,368	$	21,100,067	$	2,697,026	$	14,860,675

Shares of mutual funds owned			143,058		563,113		118,332		953,045

Accumulation units outstanding			60,606		752,515		108,869		1,295,260



Statements of Operations
Year ended December 31, 2019
		Delaware High Yield Service Class Division		Delaware Small Cap Value Service Class Division		Delaware Smid Cap Core Service Class Division		Diversified Balanced Class 1 Division




Net investment income (loss)
Investment income:
	Dividends	$	42,664	$	156,708	$	7,569	$	317,550

Expenses:
	Mortality and expense risks		—		19		6		14,221
Net investment income (loss)			42,664		156,689		7,563		303,329

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(10,097)		(101,808)		(181,415)		43,995
Capital gains distributions			—		1,615,879		150,236		626,722
Total realized gains (losses) on investments			(10,097)		1,514,071		(31,179)		670,717

Change in net unrealized appreciation (depreciation)
	of investments		76,095		3,227,811		649,687		1,516,348

Net gains (losses) on investments			108,662		4,898,571		626,071		2,490,394

Net increase (decrease) in net assets resulting from operations		$	108,662	$	4,898,571	$	626,071	$	2,490,394


See accompanying notes.

A-16



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Diversified International Class 1 Division		DWS Alternative Asset Allocation Class B Division		DWS Small Mid Cap Value Class B Division		Equity Income Class 1 Division




Assets
Investments in shares of mutual funds, at fair value		$	157,206,240	$	457,050	$	1,540,147	$	143,821,777
Total assets			157,206,240		457,050		1,540,147		143,821,777
Total liabilities			—		—		—		—
Net assets		$	157,206,240	$	457,050	$	1,540,147	$	143,821,777

Net assets
Applicable to accumulation units		$	157,206,240	$	457,050	$	1,540,147	$	143,821,777
Total net assets		$	157,206,240	$	457,050	$	1,540,147	$	143,821,777

Investments in shares of mutual funds, at cost		$	139,041,054	$	436,874	$	1,643,286	$	123,463,414

Shares of mutual funds owned			10,006,762		34,262		112,666		5,101,872

Accumulation units outstanding			4,890,405		41,632		68,089		5,277,904



Statements of Operations
Year ended December 31, 2019
		Diversified International Class 1 Division		DWS Alternative Asset Allocation Class B Division		DWS Small Mid Cap Value Class B Division		Equity Income Class 1 Division




Net investment income (loss)
Investment income:
	Dividends	$	2,403,178	$	32,252	$	6,503	$	2,518,669

Expenses:
	Mortality and expense risks		1,393		—		65		28,702
Net investment income (loss)			2,401,785		32,252		6,438		2,489,967

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			2,645,722		(10,993)		(162,910)		3,961,520
Capital gains distributions			7,239,412		—		129,665		3,524,178
Total realized gains (losses) on investments			9,885,134		(10,993)		(33,245)		7,485,698

Change in net unrealized appreciation (depreciation)
	of investments		17,415,934		89,205		338,766		23,172,164

Net gains (losses) on investments			29,702,853		110,464		311,959		33,147,829

Net increase (decrease) in net assets resulting from operations		$	29,702,853	$	110,464	$	311,959	$	33,147,829


See accompanying notes.

A-17



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Fidelity VIP Asset Manager Service Class 2 Division		Fidelity VIP Contrafund Initial Class Division		Fidelity VIP Contrafund Service Class 2 Division		Fidelity VIP Equity-Income Initial Class Division




Assets
Investments in shares of mutual funds, at fair value		$	1,330,015	$	71,296,081	$	90,129,384	$	22,461,171
Total assets			1,330,015		71,296,081		90,129,384		22,461,171
Total liabilities			—		—		—		—
Net assets		$	1,330,015	$	71,296,081	$	90,129,384	$	22,461,171

Net assets
Applicable to accumulation units		$	1,330,015	$	71,296,081	$	90,129,384	$	22,461,171
Total net assets		$	1,330,015	$	71,296,081	$	90,129,384	$	22,461,171

Investments in shares of mutual funds, at cost		$	1,292,488	$	56,558,513	$	79,432,044	$	19,832,667

Shares of mutual funds owned			89,744		1,918,108		2,496,659		944,937

Accumulation units outstanding			50,008		905,573		1,921,588		476,079



Statements of Operations
Year ended December 31, 2019
		Fidelity VIP Asset Manager Service Class 2 Division		Fidelity VIP Contrafund Initial Class Division		Fidelity VIP Contrafund Service Class 2 Division		Fidelity VIP Equity-Income Initial Class Division




Net investment income (loss)
Investment income:
	Dividends	$	20,384	$	306,521	$	187,007	$	421,593

Expenses:
	Mortality and expense risks		—		2,458		—		792
Net investment income (loss)			20,384		304,063		187,007		420,801

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(73,105)		2,116,237		356,669		639,355
Capital gains distributions			96,594		7,560,723		10,604,073		1,352,855
Total realized gains (losses) on investments			23,489		9,676,960		10,960,742		1,992,210

Change in net unrealized appreciation (depreciation)
	of investments		255,002		8,093,931		12,635,092		2,634,883

Net gains (losses) on investments			298,875		18,074,954		23,782,841		5,047,894

Net increase (decrease) in net assets resulting from operations		$	298,875	$	18,074,954	$	23,782,841	$	5,047,894


See accompanying notes.

A-18



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Fidelity VIP Equity-Income Service Class 2 Division		Fidelity VIP Extended Market Index Service Class 2 Division (1)		Fidelity VIP Government Money Market Service Class Division		Fidelity VIP Growth Service Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	24,850,275	$	5,718	$	270,865,846	$	19,413,577
Total assets			24,850,275		5,718		270,865,846		19,413,577
Total liabilities			—		—		—		—
Net assets		$	24,850,275	$	5,718	$	270,865,846	$	19,413,577

Net assets
Applicable to accumulation units		$	24,850,275	$	5,718	$	270,865,846	$	19,413,577
Total net assets		$	24,850,275	$	5,718	$	270,865,846	$	19,413,577

Investments in shares of mutual funds, at cost		$	22,387,362	$	5,598	$	270,865,846	$	15,651,884

Shares of mutual funds owned			1,075,769		526		270,865,846		250,724

Accumulation units outstanding			806,379		521		25,999,092		482,452



Statements of Operations
Year ended December 31, 2019
		Fidelity VIP Equity-Income Service Class 2 Division		Fidelity VIP Extended Market Index Service Class 2 Division (1)		Fidelity VIP Government Money Market Service Class Division		Fidelity VIP Growth Service Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	419,921	$	48	$	5,092,620	$	11,010

Expenses:
	Mortality and expense risks		—		—		8,930		550
Net investment income (loss)			419,921		48		5,083,690		10,460

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			119,017		83		—		1,181,325
Capital gains distributions			1,456,544		53		—		1,253,913
Total realized gains (losses) on investments			1,575,561		136		—		2,435,238

Change in net unrealized appreciation (depreciation)
	of investments		3,379,374		121		—		3,181,297

Net gains (losses) on investments			5,374,856		305		5,083,690		5,626,995

Net increase (decrease) in net assets resulting from operations		$	5,374,856	$	305	$	5,083,690	$	5,626,995


(1) Commenced operations June 7, 2019.

See accompanying notes.

A-19



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Fidelity VIP High Income Initial Class Division		Fidelity VIP High Income Service Class 2 Division		Fidelity VIP International Index Service Class 2 Division (1)		Fidelity VIP Mid Cap Service Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	5,031,306	$	21,941,769	$	564,953	$	33,132,795
Total assets			5,031,306		21,941,769		564,953		33,132,795
Total liabilities			—		—		—		—
Net assets		$	5,031,306	$	21,941,769	$	564,953	$	33,132,795

Net assets
Applicable to accumulation units		$	5,031,306	$	21,941,769	$	564,953	$	33,132,795
Total net assets		$	5,031,306	$	21,941,769	$	564,953	$	33,132,795

Investments in shares of mutual funds, at cost		$	5,059,784	$	21,957,391	$	530,661	$	33,676,888

Shares of mutual funds owned			926,576		4,203,404		56,382		1,043,553

Accumulation units outstanding			178,833		660,493		51,258		761,352



Statements of Operations
Year ended December 31, 2019
		Fidelity VIP High Income Initial Class Division		Fidelity VIP High Income Service Class 2 Division		Fidelity VIP International Index Service Class 2 Division (1)		Fidelity VIP Mid Cap Service Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	257,241	$	1,115,653	$	11,711	$	218,852

Expenses:
	Mortality and expense risks		391		—		—		—
Net investment income (loss)			256,850		1,115,653		11,711		218,852

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(85,683)		(46,184)		1,726		(750,756)
Capital gains distributions			—		—		1,217		4,109,413
Total realized gains (losses) on investments			(85,683)		(46,184)		2,943		3,358,657

Change in net unrealized appreciation (depreciation)
	of investments		526,813		1,705,540		34,292		3,645,678

Net gains (losses) on investments			697,980		2,775,009		48,946		7,223,187

Net increase (decrease) in net assets resulting from operations		$	697,980	$	2,775,009	$	48,946	$	7,223,187


(1) Commenced operations June 7, 2019.

See accompanying notes.

A-20



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Fidelity VIP Strategic Income Service Class 2 Division		Fidelity VIP Total Market Index Service Class 2 Division (1)		Franklin Income VIP Class 2 Division		Franklin Mutual Global Discovery VIP Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	4,259,228	$	320,358	$	17,792,323	$	14,258,686
Total assets			4,259,228		320,358		17,792,323		14,258,686
Total liabilities			—		—		—		—
Net assets		$	4,259,228	$	320,358	$	17,792,323	$	14,258,686

Net assets
Applicable to accumulation units		$	4,259,228	$	320,358	$	17,792,323	$	14,258,686
Total net assets		$	4,259,228	$	320,358	$	17,792,323	$	14,258,686

Investments in shares of mutual funds, at cost		$	4,239,432	$	310,382	$	17,256,167	$	14,731,394

Shares of mutual funds owned			375,593		27,012		1,118,311		769,077

Accumulation units outstanding			381,587		28,364		526,639		366,603



Statements of Operations
Year ended December 31, 2019
		Fidelity VIP Strategic Income Service Class 2 Division		Fidelity VIP Total Market Index Service Class 2 Division (1)		Franklin Income VIP Class 2 Division		Franklin Mutual Global Discovery VIP Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	131,337	$	2,888	$	806,672	$	210,847

Expenses:
	Mortality and expense risks		—		—		—		—
Net investment income (loss)			131,337		2,888		806,672		210,847

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			8,007		80		301,608		(336,688)
Capital gains distributions			31,097		622		243,806		1,324,490
Total realized gains (losses) on investments			39,104		702		545,414		987,802

Change in net unrealized appreciation (depreciation)
	of investments		68,245		9,976		1,037,345		2,206,337

Net gains (losses) on investments			238,686		13,566		2,389,431		3,404,986

Net increase (decrease) in net assets resulting from operations		$	238,686	$	13,566	$	2,389,431	$	3,404,986


(1) Commenced operations June 7, 2019.

See accompanying notes.

A-21



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Franklin Mutual Shares VIP Class 2 Division		Franklin Rising Dividends VIP Class 2 Division		Franklin Small Cap Value VIP Class 2 Division		Franklin Strategic Income VIP Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	12,068,129	$	21,297,393	$	18,134,462	$	17,524,495
Total assets			12,068,129		21,297,393		18,134,462		17,524,495
Total liabilities			—		—		—		—
Net assets		$	12,068,129	$	21,297,393	$	18,134,462	$	17,524,495

Net assets
Applicable to accumulation units		$	12,068,129	$	21,297,393	$	18,134,462	$	17,524,495
Total net assets		$	12,068,129	$	21,297,393	$	18,134,462	$	17,524,495

Investments in shares of mutual funds, at cost		$	12,467,706	$	20,482,419	$	19,883,440	$	17,612,137

Shares of mutual funds owned			641,580		789,085		1,204,947		1,661,090

Accumulation units outstanding			408,919		533,141		437,776		1,012,904



Statements of Operations
Year ended December 31, 2019
		Franklin Mutual Shares VIP Class 2 Division		Franklin Rising Dividends VIP Class 2 Division		Franklin Small Cap Value VIP Class 2 Division		Franklin Strategic Income VIP Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	206,845	$	265,050	$	186,863	$	827,857

Expenses:
	Mortality and expense risks		—		—		8		—
Net investment income (loss)			206,845		265,050		186,855		827,857

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(171,937)		403,783		(1,172,507)		76,262
Capital gains distributions			1,106,011		3,286,901		2,976,844		—
Total realized gains (losses) on investments			934,074		3,690,684		1,804,337		76,262

Change in net unrealized appreciation (depreciation)
	of investments		1,135,741		1,352,102		1,986,123		430,453

Net gains (losses) on investments			2,276,660		5,307,836		3,977,315		1,334,572

Net increase (decrease) in net assets resulting from operations		$	2,276,660	$	5,307,836	$	3,977,315	$	1,334,572


See accompanying notes.

A-22



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Franklin U.S. Government Securities VIP Class 2 Division		Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division		Government & High Quality Bond Class 1 Division		International Emerging Markets Class 1 Division




Assets
Investments in shares of mutual funds, at fair value		$	418,215	$	1,830,941	$	53,941,131	$	43,551,305
Total assets			418,215		1,830,941		53,941,131		43,551,305
Total liabilities			—		—		—		—
Net assets		$	418,215	$	1,830,941	$	53,941,131	$	43,551,305

Net assets
Applicable to accumulation units		$	418,215	$	1,830,941	$	53,941,131	$	43,551,305
Total net assets		$	418,215	$	1,830,941	$	53,941,131	$	43,551,305

Investments in shares of mutual funds, at cost		$	408,797	$	1,826,639	$	54,565,144	$	41,931,972

Shares of mutual funds owned			34,706		145,082		5,498,586		2,542,399

Accumulation units outstanding			34,122		70,961		3,673,702		1,022,811



Statements of Operations
Year ended December 31, 2019
		Franklin U.S. Government Securities VIP Class 2 Division		Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division		Government & High Quality Bond Class 1 Division		International Emerging Markets Class 1 Division




Net investment income (loss)
Investment income:
	Dividends	$	43,853	$	8,601	$	1,432,294	$	379,016

Expenses:
	Mortality and expense risks		—		—		832		681
Net investment income (loss)			43,853		8,601		1,431,462		378,335

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(12,883)		(187,775)		(588,062)		949,975
Capital gains distributions			—		37,839		—		1,079,741
Total realized gains (losses) on investments			(12,883)		(149,936)		(588,062)		2,029,716

Change in net unrealized appreciation (depreciation)
	of investments		39,215		518,277		2,150,651		4,256,549

Net gains (losses) on investments			70,185		376,942		2,994,051		6,664,600

Net increase (decrease) in net assets resulting from operations		$	70,185	$	376,942	$	2,994,051	$	6,664,600


See accompanying notes.

A-23



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Invesco American Franchise Series I Division		Invesco American Franchise Series II Division		Invesco American Value Series I Division		Invesco Core Equity Series I Division




Assets
Investments in shares of mutual funds, at fair value		$	2,881,940	$	2,757,643	$	142,852	$	6,408,980
Total assets			2,881,940		2,757,643		142,852		6,408,980
Total liabilities			—		—		—		—
Net assets		$	2,881,940	$	2,757,643	$	142,852	$	6,408,980

Net assets
Applicable to accumulation units		$	2,881,940	$	2,757,643	$	142,852	$	6,408,980
Total net assets		$	2,881,940	$	2,757,643	$	142,852	$	6,408,980

Investments in shares of mutual funds, at cost		$	2,335,479	$	2,331,471	$	150,821	$	6,223,649

Shares of mutual funds owned			42,918		43,156		8,973		183,376

Accumulation units outstanding			107,871		105,199		11,828		234,350



Statements of Operations
Year ended December 31, 2019
		Invesco American Franchise Series I Division		Invesco American Franchise Series II Division		Invesco American Value Series I Division		Invesco Core Equity Series I Division




Net investment income (loss)
Investment income:
	Dividends	$	—	$	—	$	919	$	59,464

Expenses:
	Mortality and expense risks		199		—		—		290
Net investment income (loss)			(199)		—		919		59,174

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			83,876		85,222		(2,189)		150,810
Capital gains distributions			381,197		368,770		9,642		722,646
Total realized gains (losses) on investments			465,073		453,992		7,453		873,456

Change in net unrealized appreciation (depreciation)
	of investments		349,505		300,256		17,489		588,457

Net gains (losses) on investments			814,379		754,248		25,861		1,521,087

Net increase (decrease) in net assets resulting from operations		$	814,379	$	754,248	$	25,861	$	1,521,087


See accompanying notes.

A-24



Principal Life Insurance Company
Variable Life Separate Account

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




Assets
Investments in shares of mutual funds, at fair value		$	9,762,588	$	1,165,582	$	19,991,668	$	14,562,655
Total assets			9,762,588		1,165,582		19,991,668		14,562,655
Total liabilities			—		—		—		—
Net assets		$	9,762,588	$	1,165,582	$	19,991,668	$	14,562,655

Net assets
Applicable to accumulation units		$	9,762,588	$	1,165,582	$	19,991,668	$	14,562,655
Total net assets		$	9,762,588	$	1,165,582	$	19,991,668	$	14,562,655

Investments in shares of mutual funds, at cost		$	9,448,597	$	1,092,771	$	18,017,023	$	14,062,779

Shares of mutual funds owned			280,454		63,973		661,319		372,828

Accumulation units outstanding			252,159		85,518		529,176		419,856



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




Net investment income (loss)
Investment income:
	Dividends	$	15,439	$	54,029	$	7,788	$	216,938

Expenses:
	Mortality and expense risks		—		—		65		—
Net investment income (loss)			15,439		54,029		7,723		216,938

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			237,924		14,068		(221,988)		832,921
Capital gains distributions			1,059,881		1,381		432,846		876,359
Total realized gains (losses) on investments			1,297,805		15,449		210,858		1,709,280

Change in net unrealized appreciation (depreciation)
	of investments		995,739		160,072		4,858,727		2,029,643

Net gains (losses) on investments			2,308,983		229,550		5,077,308		3,955,861

Net increase (decrease) in net assets resulting from operations		$	2,308,983	$	229,550	$	5,077,308	$	3,955,861


See accompanying notes.

A-25



Principal Life Insurance Company
Variable Life Separate Account

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




Assets
Investments in shares of mutual funds, at fair value		$	354,978	$	2,638,986	$	6,016,389	$	9,708,353
Total assets			354,978		2,638,986		6,016,389		9,708,353
Total liabilities			—		—		—		—
Net assets		$	354,978	$	2,638,986	$	6,016,389	$	9,708,353

Net assets
Applicable to accumulation units		$	354,978	$	2,638,986	$	6,016,389	$	9,708,353
Total net assets		$	354,978	$	2,638,986	$	6,016,389	$	9,708,353

Investments in shares of mutual funds, at cost		$	371,386	$	2,661,483	$	6,098,897	$	10,265,619

Shares of mutual funds owned			29,880		483,331		262,839		547,567

Accumulation units outstanding			14,414		113,981		199,361		436,552



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




Net investment income (loss)
Investment income:
	Dividends	$	827	$	—	$	—	$	—

Expenses:
	Mortality and expense risks		29		120		—		29
Net investment income (loss)			798		(120)		—		(29)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(20,406)		91,347		(303,349)		(196,313)
Capital gains distributions			42,427		385,719		561,812		1,126,037
Total realized gains (losses) on investments			22,021		477,066		258,463		929,724

Change in net unrealized appreciation (depreciation)
	of investments		59,261		304,926		1,033,515		1,252,710

Net gains (losses) on investments			82,080		781,872		1,291,978		2,182,405

Net increase (decrease) in net assets resulting from operations		$	82,080	$	781,872	$	1,291,978	$	2,182,405


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

A-26



Principal Life Insurance Company
Variable Life Separate Account

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




Assets
Investments in shares of mutual funds, at fair value		$	8,533,413	$	29,767,930	$	71,793,630	$	38,696,696
Total assets			8,533,413		29,767,930		71,793,630		38,696,696
Total liabilities			—		—		—		—
Net assets		$	8,533,413	$	29,767,930	$	71,793,630	$	38,696,696

Net assets
Applicable to accumulation units		$	8,533,413	$	29,767,930	$	71,793,630	$	38,696,696
Total net assets		$	8,533,413	$	29,767,930	$	71,793,630	$	38,696,696

Investments in shares of mutual funds, at cost		$	7,498,987	$	25,809,402	$	59,639,337	$	37,785,005

Shares of mutual funds owned			313,383		713,859		898,206		2,978,960

Accumulation units outstanding			404,988		771,089		1,527,446		1,620,822



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




Net investment income (loss)
Investment income:
	Dividends	$	—	$	452,466	$	33,333	$	1,078,477

Expenses:
	Mortality and expense risks		603		—		292		—
Net investment income (loss)			(603)		452,466		33,041		1,078,477

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			639,491		1,031,081		3,502,348		(447,717)
Capital gains distributions			661,227		719,368		3,921,014		—
Total realized gains (losses) on investments			1,300,718		1,750,449		7,423,362		(447,717)

Change in net unrealized appreciation (depreciation)
	of investments		1,142,417		3,084,073		10,331,801		2,901,767

Net gains (losses) on investments			2,442,532		5,286,988		17,788,204		3,532,527

Net increase (decrease) in net assets resulting from operations		$	2,442,532	$	5,286,988	$	17,788,204	$	3,532,527


See accompanying notes.

A-27



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Janus Henderson Forty Service Shares Division		Janus Henderson Global Research Service Shares Division		Janus Henderson Global Technology Service Shares Division (1)		Janus Henderson Overseas Service Shares Division




Assets
Investments in shares of mutual funds, at fair value		$	14,937,030	$	4,908,714	$	398,508	$	3,349,156
Total assets			14,937,030		4,908,714		398,508		3,349,156
Total liabilities			—		—		—		—
Net assets		$	14,937,030	$	4,908,714	$	398,508	$	3,349,156

Net assets
Applicable to accumulation units		$	14,937,030	$	4,908,714	$	398,508	$	3,349,156
Total net assets		$	14,937,030	$	4,908,714	$	398,508	$	3,349,156

Investments in shares of mutual funds, at cost		$	13,205,997	$	4,441,874	$	366,888	$	2,780,150

Shares of mutual funds owned			359,668		88,813		26,514		104,989

Accumulation units outstanding			486,201		191,945		34,034		110,667



Statements of Operations
Year ended December 31, 2019
		Janus Henderson Forty Service Shares Division		Janus Henderson Global Research Service Shares Division		Janus Henderson Global Technology Service Shares Division (1)		Janus Henderson Overseas Service Shares Division




Net investment income (loss)
Investment income:
	Dividends	$	3,103	$	39,654	$	—	$	56,630

Expenses:
	Mortality and expense risks		—		—		—		—
Net investment income (loss)			3,103		39,654		—		56,630

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(85,186)		154,290		186		58,461
Capital gains distributions			1,246,231		287,073		—		—
Total realized gains (losses) on investments			1,161,045		441,363		186		58,461

Change in net unrealized appreciation (depreciation)
	of investments		3,229,678		649,409		31,620		625,756

Net gains (losses) on investments			4,393,826		1,130,426		31,806		740,847

Net increase (decrease) in net assets resulting from operations		$	4,393,826	$	1,130,426	$	31,806	$	740,847


(1) Commenced operations June 7, 2019.

See accompanying notes.

A-28



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		JP Morgan Core Bond Class I Division		JP Morgan Small Cap Core Class I Division		LargeCap Growth I Class 1 Division		LargeCap S&P 500 Index Class 1 Division




Assets
Investments in shares of mutual funds, at fair value		$	3,318,009	$	3,826,857	$	317,348,384	$	213,356,494
Total assets			3,318,009		3,826,857		317,348,384		213,356,494
Total liabilities			—		—		—		—
Net assets		$	3,318,009	$	3,826,857	$	317,348,384	$	213,356,494

Net assets
Applicable to accumulation units		$	3,318,009	$	3,826,857	$	317,348,384	$	213,356,494
Total net assets		$	3,318,009	$	3,826,857	$	317,348,384	$	213,356,494

Investments in shares of mutual funds, at cost		$	3,181,315	$	3,923,349	$	260,643,070	$	175,839,128

Shares of mutual funds owned			295,196		166,096		8,431,147		10,567,434

Accumulation units outstanding			211,016		88,091		4,455,587		6,347,408



Statements of Operations
Year ended December 31, 2019
		JP Morgan Core Bond Class I Division		JP Morgan Small Cap Core Class I Division		LargeCap Growth I Class 1 Division		LargeCap S&P 500 Index Class 1 Division




Net investment income (loss)
Investment income:
	Dividends	$	67,616	$	14,922	$	143,332	$	3,619,868

Expenses:
	Mortality and expense risks		—		—		1,442		832
Net investment income (loss)			67,616		14,922		141,890		3,619,036

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(660)		76,225		14,780,061		8,883,036
Capital gains distributions			—		431,051		21,529,046		8,249,103
Total realized gains (losses) on investments			(660)		507,276		36,309,107		17,132,139

Change in net unrealized appreciation (depreciation)
	of investments		138,002		329,183		37,751,199		29,160,919

Net gains (losses) on investments			204,958		851,381		74,202,196		49,912,094

Net increase (decrease) in net assets resulting from operations		$	204,958	$	851,381	$	74,202,196	$	49,912,094


See accompanying notes.

A-29



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Lord Abbett Series Fund Developing Growth Class VC Division		MFS Blended Research Small Cap Equity Service Class Division		MFS Global Equity Service Class Division		MFS Growth Service Class Division




Assets
Investments in shares of mutual funds, at fair value		$	800,836	$	1,529,032	$	9,456,094	$	43,011,546
Total assets			800,836		1,529,032		9,456,094		43,011,546
Total liabilities			—		—		—		—
Net assets		$	800,836	$	1,529,032	$	9,456,094	$	43,011,546

Net assets
Applicable to accumulation units		$	800,836	$	1,529,032	$	9,456,094	$	43,011,546
Total net assets		$	800,836	$	1,529,032	$	9,456,094	$	43,011,546

Investments in shares of mutual funds, at cost		$	857,435	$	1,590,825	$	8,900,998	$	36,492,615

Shares of mutual funds owned			26,802		136,035		418,041		756,979

Accumulation units outstanding			40,143		93,827		295,199		799,216



Statements of Operations
Year ended December 31, 2019
		Lord Abbett Series Fund Developing Growth Class VC Division		MFS Blended Research Small Cap Equity Service Class Division		MFS Global Equity Service Class Division		MFS Growth Service Class Division




Net investment income (loss)
Investment income:
	Dividends	$	—	$	5,522	$	77,291	$	—

Expenses:
	Mortality and expense risks		6		—		—		—
Net investment income (loss)			(6)		5,522		77,291		—

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(28,126)		(33,244)		227,208		2,610,069
Capital gains distributions			71,595		192,945		543,490		3,528,619
Total realized gains (losses) on investments			43,469		159,701		770,698		6,138,688

Change in net unrealized appreciation (depreciation)
	of investments		114,564		75,818		1,116,028		5,777,088

Net gains (losses) on investments			158,027		241,041		1,964,017		11,915,776

Net increase (decrease) in net assets resulting from operations		$	158,027	$	241,041	$	1,964,017	$	11,915,776


See accompanying notes.

A-30



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		MFS Inflation-Adjusted Bond Service Class Division		MFS International Intrinsic Value Service Class Division (1)		MFS Mid Cap Growth Service Class Division		MFS Mid Cap Value Portfolio Service Class Division




Assets
Investments in shares of mutual funds, at fair value		$	374,237	$	21,840,185	$	551,806	$	3,015,837
Total assets			374,237		21,840,185		551,806		3,015,837
Total liabilities			—		—		—		—
Net assets		$	374,237	$	21,840,185	$	551,806	$	3,015,837

Net assets
Applicable to accumulation units		$	374,237	$	21,840,185	$	551,806	$	3,015,837
Total net assets		$	374,237	$	21,840,185	$	551,806	$	3,015,837

Investments in shares of mutual funds, at cost		$	367,980	$	19,786,556	$	542,106	$	2,841,634

Shares of mutual funds owned			35,008		741,099		60,175		348,651

Accumulation units outstanding			34,869		1,239,435		15,444		215,401



Statements of Operations
Year ended December 31, 2019
		MFS Inflation-Adjusted Bond Service Class Division		MFS International Intrinsic Value Service Class Division (1)		MFS Mid Cap Growth Service Class Division		MFS Mid Cap Value Portfolio Service Class Division




Net investment income (loss)
Investment income:
	Dividends	$	3,428	$	281,541	$	—	$	13,028

Expenses:
	Mortality and expense risks		—		—		—		—
Net investment income (loss)			3,428		281,541		—		13,028

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(2,328)		486,712		154,025		11,413
Capital gains distributions			—		590,185		151,885		112,602
Total realized gains (losses) on investments			(2,328)		1,076,897		305,910		124,015

Change in net unrealized appreciation (depreciation)
	of investments		12,533		2,466,506		316,512		320,774

Net gains (losses) on investments			13,633		3,824,944		622,422		457,817

Net increase (decrease) in net assets resulting from operations		$	13,633	$	3,824,944	$	622,422	$	457,817


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

See accompanying notes.

A-31



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		MFS New Discovery Service Class Division		MFS New Discovery Value Service Class Division		MFS Research International Portfolio Service Class Division		MFS Total Return Service Class Division




Assets
Investments in shares of mutual funds, at fair value		$	15,986,628	$	1,018,734	$	2,787,211	$	3,416,079
Total assets			15,986,628		1,018,734		2,787,211		3,416,079
Total liabilities			—		—		—		—
Net assets		$	15,986,628	$	1,018,734	$	2,787,211	$	3,416,079

Net assets
Applicable to accumulation units		$	15,986,628	$	1,018,734	$	2,787,211	$	3,416,079
Total net assets		$	15,986,628	$	1,018,734	$	2,787,211	$	3,416,079

Investments in shares of mutual funds, at cost		$	16,091,300	$	1,021,020	$	2,527,336	$	3,285,131

Shares of mutual funds owned			887,160		110,133		166,500		139,831

Accumulation units outstanding			346,697		61,807		219,280		163,607



Statements of Operations
Year ended December 31, 2019
		MFS New Discovery Service Class Division		MFS New Discovery Value Service Class Division		MFS Research International Portfolio Service Class Division		MFS Total Return Service Class Division




Net investment income (loss)
Investment income:
	Dividends	$	—	$	2,914	$	30,868	$	72,563

Expenses:
	Mortality and expense risks		156		—		—		—
Net investment income (loss)			(156)		2,914		30,868		72,563

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			823,889		(7,012)		37,821		9,114
Capital gains distributions			3,113,863		86,413		107,416		92,774
Total realized gains (losses) on investments			3,937,752		79,401		145,237		101,888

Change in net unrealized appreciation (depreciation)
	of investments		1,099,636		83,748		433,136		386,005

Net gains (losses) on investments			5,037,232		166,063		609,241		560,456

Net increase (decrease) in net assets resulting from operations		$	5,037,232	$	166,063	$	609,241	$	560,456


See accompanying notes.

A-32



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		MFS Utilities Service Class Division		MFS Value Service Class Division		MidCap Class 1 Division		Neuberger Berman AMT Mid Cap Growth Portfolio Class S Division




Assets
Investments in shares of mutual funds, at fair value		$	4,604,380	$	40,604,404	$	233,334,792	$	796,216
Total assets			4,604,380		40,604,404		233,334,792		796,216
Total liabilities			—		—		—		—
Net assets		$	4,604,380	$	40,604,404	$	233,334,792	$	796,216

Net assets
Applicable to accumulation units		$	4,604,380	$	40,604,404	$	233,334,792	$	796,216
Total net assets		$	4,604,380	$	40,604,404	$	233,334,792	$	796,216

Investments in shares of mutual funds, at cost		$	3,965,016	$	37,563,058	$	206,508,336	$	708,738

Shares of mutual funds owned			133,228		1,978,772		3,892,806		29,337

Accumulation units outstanding			216,317		1,023,386		1,824,380		51,569



Statements of Operations
Year ended December 31, 2019
		MFS Utilities Service Class Division		MFS Value Service Class Division		MidCap Class 1 Division		Neuberger Berman AMT Mid Cap Growth Portfolio Class S Division




Net investment income (loss)
Investment income:
	Dividends	$	159,909	$	721,791	$	591,413	$	—

Expenses:
	Mortality and expense risks		—		—		126,901		—
Net investment income (loss)			159,909		721,791		464,512		—

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			205,048		61,408		8,988,267		18,358
Capital gains distributions			12,666		1,734,310		30,076,566		58,701
Total realized gains (losses) on investments			217,714		1,795,718		39,064,833		77,059

Change in net unrealized appreciation (depreciation)
	of investments		550,902		6,875,964		34,710,413		123,676

Net gains (losses) on investments			928,525		9,393,473		74,239,758		200,735

Net increase (decrease) in net assets resulting from operations		$	928,525	$	9,393,473	$	74,239,758	$	200,735


See accompanying notes.

A-33



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Neuberger Berman AMT Sustainable Equity I Class Division (1)		PIMCO All Asset Administrative Class Division		PIMCO Commodity Real Return Strategy Administrative Class Division		PIMCO Emerging Market Bond Administrative Class Division




Assets
Investments in shares of mutual funds, at fair value		$	9,838,013	$	2,163,930	$	705,472	$	1,269,797
Total assets			9,838,013		2,163,930		705,472		1,269,797
Total liabilities			—		—		—		—
Net assets		$	9,838,013	$	2,163,930	$	705,472	$	1,269,797

Net assets
Applicable to accumulation units		$	9,838,013	$	2,163,930	$	705,472	$	1,269,797
Total net assets		$	9,838,013	$	2,163,930	$	705,472	$	1,269,797

Investments in shares of mutual funds, at cost		$	9,505,230	$	2,130,002	$	733,778	$	1,219,619

Shares of mutual funds owned			365,861		200,550		110,058		96,269

Accumulation units outstanding			898,567		156,753		115,159		89,956



Statements of Operations
Year ended December 31, 2019
		Neuberger Berman AMT Sustainable Equity I Class Division (1)		PIMCO All Asset Administrative Class Division		PIMCO Commodity Real Return Strategy Administrative Class Division		PIMCO Emerging Market Bond Administrative Class Division




Net investment income (loss)
Investment income:
	Dividends	$	38,360	$	69,102	$	30,026	$	53,474

Expenses:
	Mortality and expense risks		—		—		—		—
Net investment income (loss)			38,360		69,102		30,026		53,474

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(18,881)		74,793		(36,858)		(8,191)
Capital gains distributions			510,981		—		—		—
Total realized gains (losses) on investments			492,100		74,793		(36,858)		(8,191)

Change in net unrealized appreciation (depreciation)
	of investments		332,783		140,155		78,157		120,906

Net gains (losses) on investments			863,243		284,050		71,325		166,189

Net increase (decrease) in net assets resulting from operations		$	863,243	$	284,050	$	71,325	$	166,189


(1) Commenced operations April 29, 2019.

See accompanying notes.

A-34



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		PIMCO High Yield Administrative Class Division		PIMCO Long-Term U.S. Government Administrative Class Division		PIMCO Low Duration Administrative Class Division		PIMCO Real Return Administrative Class Division




Assets
Investments in shares of mutual funds, at fair value		$	16,989,018	$	251,852	$	1,563,732	$	12,805,062
Total assets			16,989,018		251,852		1,563,732		12,805,062
Total liabilities			—		—		—		—
Net assets		$	16,989,018	$	251,852	$	1,563,732	$	12,805,062

Net assets
Applicable to accumulation units		$	16,989,018	$	251,852	$	1,563,732	$	12,805,062
Total net assets		$	16,989,018	$	251,852	$	1,563,732	$	12,805,062

Investments in shares of mutual funds, at cost		$	16,491,583	$	259,098	$	1,554,579	$	12,484,266

Shares of mutual funds owned			2,136,984		19,523		153,307		1,013,059

Accumulation units outstanding			847,858		18,956		146,561		936,435



Statements of Operations
Year ended December 31, 2019
		PIMCO High Yield Administrative Class Division		PIMCO Long-Term U.S. Government Administrative Class Division		PIMCO Low Duration Administrative Class Division		PIMCO Real Return Administrative Class Division




Net investment income (loss)
Investment income:
	Dividends	$	761,775	$	9,729	$	33,836	$	199,324

Expenses:
	Mortality and expense risks		—		—		—		—
Net investment income (loss)			761,775		9,729		33,836		199,324

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(28,698)		21,559		1,574		32,473
Capital gains distributions			—		—		—		—
Total realized gains (losses) on investments			(28,698)		21,559		1,574		32,473

Change in net unrealized appreciation (depreciation)
	of investments		1,288,306		(188)		11,165		710,507

Net gains (losses) on investments			2,021,383		31,100		46,575		942,304

Net increase (decrease) in net assets resulting from operations		$	2,021,383	$	31,100	$	46,575	$	942,304


See accompanying notes.

A-35



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		PIMCO Short-Term Administrative Class Division		PIMCO Total Return Administrative Class Division		Principal Capital Appreciation Class 1 Division		Principal LifeTime 2010 Class 1 Division




Assets
Investments in shares of mutual funds, at fair value		$	40,356,595	$	48,734,341	$	24,031,281	$	14,517,817
Total assets			40,356,595		48,734,341		24,031,281		14,517,817
Total liabilities			—		—		—		—
Net assets		$	40,356,595	$	48,734,341	$	24,031,281	$	14,517,817

Net assets
Applicable to accumulation units		$	40,356,595	$	48,734,341	$	24,031,281	$	14,517,817
Total net assets		$	40,356,595	$	48,734,341	$	24,031,281	$	14,517,817

Investments in shares of mutual funds, at cost		$	40,444,981	$	47,765,265	$	19,682,120	$	14,715,639

Shares of mutual funds owned			3,910,522		4,422,354		782,268		1,138,652

Accumulation units outstanding			3,413,407		3,344,219		1,445,081		654,160



Statements of Operations
Year ended December 31, 2019
		PIMCO Short-Term Administrative Class Division		PIMCO Total Return Administrative Class Division		Principal Capital Appreciation Class 1 Division		Principal LifeTime 2010 Class 1 Division




Net investment income (loss)
Investment income:
	Dividends	$	891,129	$	1,383,734	$	355,316	$	419,152

Expenses:
	Mortality and expense risks		—		—		432		—
Net investment income (loss)			891,129		1,383,734		354,884		419,152

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			1,053		(254,999)		628,086		1,362
Capital gains distributions			—		—		1,981,767		791,684
Total realized gains (losses) on investments			1,053		(254,999)		2,609,853		793,046

Change in net unrealized appreciation (depreciation)
	of investments		80,939		2,505,229		3,133,563		712,916

Net gains (losses) on investments			973,121		3,633,964		6,098,300		1,925,114

Net increase (decrease) in net assets resulting from operations		$	973,121	$	3,633,964	$	6,098,300	$	1,925,114


See accompanying notes.

A-36



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Principal LifeTime 2020 Class 1 Division		Principal LifeTime 2030 Class 1 Division		Principal LifeTime 2040 Class 1 Division		Principal LifeTime 2050 Class 1 Division




Assets
Investments in shares of mutual funds, at fair value		$	107,315,528	$	119,379,884	$	64,652,423	$	24,642,942
Total assets			107,315,528		119,379,884		64,652,423		24,642,942
Total liabilities			—		—		—		—
Net assets		$	107,315,528	$	119,379,884	$	64,652,423	$	24,642,942

Net assets
Applicable to accumulation units		$	107,315,528	$	119,379,884	$	64,652,423	$	24,642,942
Total net assets		$	107,315,528	$	119,379,884	$	64,652,423	$	24,642,942

Investments in shares of mutual funds, at cost		$	104,321,372	$	115,310,906	$	60,028,802	$	22,922,313

Shares of mutual funds owned			7,720,541		9,099,077		3,985,969		1,580,689

Accumulation units outstanding			4,162,173		4,408,199		2,222,465		826,928



Statements of Operations
Year ended December 31, 2019
		Principal LifeTime 2020 Class 1 Division		Principal LifeTime 2030 Class 1 Division		Principal LifeTime 2040 Class 1 Division		Principal LifeTime 2050 Class 1 Division




Net investment income (loss)
Investment income:
	Dividends	$	2,492,390	$	2,234,633	$	1,088,045	$	424,558

Expenses:
	Mortality and expense risks		1,056		420		163		19
Net investment income (loss)			2,491,334		2,234,213		1,087,882		424,539

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			1,832,796		1,935,730		1,535,140		196,395
Capital gains distributions			4,418,327		5,628,389		2,951,694		1,354,756
Total realized gains (losses) on investments			6,251,123		7,564,119		4,486,834		1,551,151

Change in net unrealized appreciation (depreciation)
	of investments		7,834,635		9,911,176		6,446,896		3,095,265

Net gains (losses) on investments			16,577,092		19,709,508		12,021,612		5,070,955

Net increase (decrease) in net assets resulting from operations		$	16,577,092	$	19,709,508	$	12,021,612	$	5,070,955


See accompanying notes.

A-37



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Principal LifeTime 2060 Class 1 Division		Principal LifeTime Strategic Income Class 1 Division		Putnam VT Equity Income Class IB Division		Putnam VT Growth Opportunities Class IB Division




Assets
Investments in shares of mutual funds, at fair value		$	6,407,662	$	15,328,118	$	729,199	$	33,423,040
Total assets			6,407,662		15,328,118		729,199		33,423,040
Total liabilities			—		—		—		—
Net assets		$	6,407,662	$	15,328,118	$	729,199	$	33,423,040

Net assets
Applicable to accumulation units		$	6,407,662	$	15,328,118	$	729,199	$	33,423,040
Total net assets		$	6,407,662	$	15,328,118	$	729,199	$	33,423,040

Investments in shares of mutual funds, at cost		$	6,018,757	$	15,280,088	$	647,492	$	24,825,453

Shares of mutual funds owned			436,490		1,285,916		27,128		2,963,035

Accumulation units outstanding			367,908		778,674		54,028		1,814,402



Statements of Operations
Year ended December 31, 2019
		Principal LifeTime 2060 Class 1 Division		Principal LifeTime Strategic Income Class 1 Division		Putnam VT Equity Income Class IB Division		Putnam VT Growth Opportunities Class IB Division




Net investment income (loss)
Investment income:
	Dividends	$	76,967	$	332,550	$	15,696	$	40,425

Expenses:
	Mortality and expense risks		—		—		—		150
Net investment income (loss)			76,967		332,550		15,696		40,275

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(47,909)		55,956		4,043		839,763
Capital gains distributions			285,848		544,224		67,080		4,093,682
Total realized gains (losses) on investments			237,939		600,180		71,123		4,933,445

Change in net unrealized appreciation (depreciation)
	of investments		852,429		404,324		106,585		4,354,839

Net gains (losses) on investments			1,167,335		1,337,054		193,404		9,328,559

Net increase (decrease) in net assets resulting from operations		$	1,167,335	$	1,337,054	$	193,404	$	9,328,559


See accompanying notes.

A-38



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Putnam VT International Equity Class IB Division		Real Estate Securities Class 1 Division		Rydex Basic Materials Division		Rydex Utilities Division




Assets
Investments in shares of mutual funds, at fair value		$	1,014,918	$	82,312,268	$	365,984	$	33,815
Total assets			1,014,918		82,312,268		365,984		33,815
Total liabilities			—		—		—		—
Net assets		$	1,014,918	$	82,312,268	$	365,984	$	33,815

Net assets
Applicable to accumulation units		$	1,014,918	$	82,312,268	$	365,984	$	33,815
Total net assets		$	1,014,918	$	82,312,268	$	365,984	$	33,815

Investments in shares of mutual funds, at cost		$	929,870	$	78,213,534	$	344,631	$	33,288

Shares of mutual funds owned			67,706		3,828,477		4,816		1,002

Accumulation units outstanding			46,757		847,204		36,939		2,608



Statements of Operations
Year ended December 31, 2019
		Putnam VT International Equity Class IB Division		Real Estate Securities Class 1 Division		Rydex Basic Materials Division		Rydex Utilities Division




Net investment income (loss)
Investment income:
	Dividends	$	9,814	$	1,421,627	$	—	$	—

Expenses:
	Mortality and expense risks		—		623		—		—
Net investment income (loss)			9,814		1,421,004		—		—

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			4,167		373,017		961		2
Capital gains distributions			1,260		5,235,317		1,346		—
Total realized gains (losses) on investments			5,427		5,608,334		2,307		2

Change in net unrealized appreciation (depreciation)
	of investments		151,170		13,594,091		21,353		527

Net gains (losses) on investments			166,411		20,623,429		23,660		529

Net increase (decrease) in net assets resulting from operations		$	166,411	$	20,623,429	$	23,660	$	529


See accompanying notes.

A-39



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		SAM Balanced Portfolio Class 1 Division		SAM Conservative Balanced Portfolio Class 1 Division		SAM Conservative Growth Portfolio Class 1 Division		SAM Flexible Income Portfolio Class 1 Division




Assets
Investments in shares of mutual funds, at fair value		$	81,941,753	$	53,200,237	$	70,267,310	$	25,044,885
Total assets			81,941,753		53,200,237		70,267,310		25,044,885
Total liabilities			—		—		—		—
Net assets		$	81,941,753	$	53,200,237	$	70,267,310	$	25,044,885

Net assets
Applicable to accumulation units		$	81,941,753	$	53,200,237	$	70,267,310	$	25,044,885
Total net assets		$	81,941,753	$	53,200,237	$	70,267,310	$	25,044,885

Investments in shares of mutual funds, at cost		$	80,807,203	$	51,906,181	$	65,110,911	$	24,983,083

Shares of mutual funds owned			5,229,212		4,364,252		3,523,938		1,990,849

Accumulation units outstanding			3,805,907		2,643,076		3,156,856		1,278,696



Statements of Operations
Year ended December 31, 2019
		SAM Balanced Portfolio Class 1 Division		SAM Conservative Balanced Portfolio Class 1 Division		SAM Conservative Growth Portfolio Class 1 Division		SAM Flexible Income Portfolio Class 1 Division




Net investment income (loss)
Investment income:
	Dividends	$	1,978,012	$	1,486,985	$	1,223,183	$	794,580

Expenses:
	Mortality and expense risks		1,998		15		984		364
Net investment income (loss)			1,976,014		1,486,970		1,222,199		794,216

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(430,020)		(338,318)		1,254,089		(103,553)
Capital gains distributions			2,834,817		1,036,035		3,046,330		650,777
Total realized gains (losses) on investments			2,404,797		697,717		4,300,419		547,224

Change in net unrealized appreciation (depreciation)
	of investments		9,653,980		5,116,675		8,556,336		1,426,489

Net gains (losses) on investments			14,034,791		7,301,362		14,078,954		2,767,929

Net increase (decrease) in net assets resulting from operations		$	14,034,791	$	7,301,362	$	14,078,954	$	2,767,929


See accompanying notes.

A-40



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		SAM Strategic Growth Portfolio Class 1 Division		Short-Term Income Class 1 Division		SmallCap Class 1 Division		T. Rowe Price Equity Income Portfolio II Division




Assets
Investments in shares of mutual funds, at fair value		$	68,324,335	$	55,944,825	$	83,630,097	$	2,053,995
Total assets			68,324,335		55,944,825		83,630,097		2,053,995
Total liabilities			—		—		—		—
Net assets		$	68,324,335	$	55,944,825	$	83,630,097	$	2,053,995

Net assets
Applicable to accumulation units		$	68,324,335	$	55,944,825	$	83,630,097	$	2,053,995
Total net assets		$	68,324,335	$	55,944,825	$	83,630,097	$	2,053,995

Investments in shares of mutual funds, at cost		$	63,192,108	$	55,647,189	$	83,198,261	$	2,031,423

Shares of mutual funds owned			3,126,972		21,768,414		5,455,323		76,046

Accumulation units outstanding			3,032,154		4,003,857		2,176,713		78,295



Statements of Operations
Year ended December 31, 2019
		SAM Strategic Growth Portfolio Class 1 Division		Short-Term Income Class 1 Division		SmallCap Class 1 Division		T. Rowe Price Equity Income Portfolio II Division




Net investment income (loss)
Investment income:
	Dividends	$	958,575	$	1,384,542	$	267,304	$	34,902

Expenses:
	Mortality and expense risks		496		396		1,401		—
Net investment income (loss)			958,079		1,384,146		265,903		34,902

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			547,555		(6,563)		1,468,470		(41,966)
Capital gains distributions			3,227,951		—		12,699,804		108,518
Total realized gains (losses) on investments			3,775,506		(6,563)		14,168,274		66,552

Change in net unrealized appreciation (depreciation)
	of investments		9,926,175		896,877		4,693,210		322,264

Net gains (losses) on investments			14,659,760		2,274,460		19,127,387		423,718

Net increase (decrease) in net assets resulting from operations		$	14,659,760	$	2,274,460	$	19,127,387	$	423,718


See accompanying notes.

A-41



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		T. Rowe Price Health Sciences Portfolio II Division		Templeton Developing Markets VIP Class 2 Division		Templeton Foreign VIP Class 2 Division		Templeton Global Bond VIP Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	1,476,540	$	9,134,830	$	12,741,961	$	22,564,200
Total assets			1,476,540		9,134,830		12,741,961		22,564,200
Total liabilities			—		—		—		—
Net assets		$	1,476,540	$	9,134,830	$	12,741,961	$	22,564,200

Net assets
Applicable to accumulation units		$	1,476,540	$	9,134,830	$	12,741,961	$	22,564,200
Total net assets		$	1,476,540	$	9,134,830	$	12,741,961	$	22,564,200

Investments in shares of mutual funds, at cost		$	1,403,107	$	7,649,375	$	13,307,537	$	23,302,854

Shares of mutual funds owned			31,098		852,925		914,713		1,412,911

Accumulation units outstanding			101,079		440,771		1,033,849		1,350,588



Statements of Operations
Year ended December 31, 2019
		T. Rowe Price Health Sciences Portfolio II Division		Templeton Developing Markets VIP Class 2 Division		Templeton Foreign VIP Class 2 Division		Templeton Global Bond VIP Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	—	$	80,155	$	216,001	$	1,515,641

Expenses:
	Mortality and expense risks		—		—		—		7
Net investment income (loss)			—		80,155		216,001		1,515,634

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			9,550		593,707		(10,312)		114,173
Capital gains distributions			64,476		—		128,929		—
Total realized gains (losses) on investments			74,026		593,707		118,617		114,173

Change in net unrealized appreciation (depreciation)
	of investments		235,566		1,212,547		1,190,346		(1,203,814)

Net gains (losses) on investments			309,592		1,886,409		1,524,964		425,993

Net increase (decrease) in net assets resulting from operations		$	309,592	$	1,886,409	$	1,524,964	$	425,993


See accompanying notes.

A-42



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		TOPS Managed Risk Balanced ETF Class 2 Division		TOPS Managed Risk Growth ETF Class 2 Division		TOPS Managed Risk Moderate Growth ETF Class 2 Division		VanEck Global Hard Assets Class S Division




Assets
Investments in shares of mutual funds, at fair value		$	582,494	$	1,409,706	$	847,627	$	667,396
Total assets			582,494		1,409,706		847,627		667,396
Total liabilities			—		—		—		—
Net assets		$	582,494	$	1,409,706	$	847,627	$	667,396

Net assets
Applicable to accumulation units		$	582,494	$	1,409,706	$	847,627	$	667,396
Total net assets		$	582,494	$	1,409,706	$	847,627	$	667,396

Investments in shares of mutual funds, at cost		$	579,332	$	1,387,597	$	831,701	$	695,542

Shares of mutual funds owned			50,345		123,334		70,931		36,550

Accumulation units outstanding			40,375		91,669		55,350		118,266



Statements of Operations
Year ended December 31, 2019
		TOPS Managed Risk Balanced ETF Class 2 Division		TOPS Managed Risk Growth ETF Class 2 Division		TOPS Managed Risk Moderate Growth ETF Class 2 Division		VanEck Global Hard Assets Class S Division




Net investment income (loss)
Investment income:
	Dividends	$	12,581	$	24,921	$	16,905	$	—

Expenses:
	Mortality and expense risks		1		8		—		5
Net investment income (loss)			12,580		24,913		16,905		(5)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(6,354)		2,827		2,739		16,497
Capital gains distributions			16,212		84,185		33,150		—
Total realized gains (losses) on investments			9,858		87,012		35,889		16,497

Change in net unrealized appreciation (depreciation)
	of investments		78,254		98,582		63,743		159,428

Net gains (losses) on investments			100,692		210,507		116,537		175,920

Net increase (decrease) in net assets resulting from operations		$	100,692	$	210,507	$	116,537	$	175,920


See accompanying notes.

A-43



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		VanEck Global Hard Assets Initial Class Division		Vanguard VIF Balanced Division		Vanguard VIF Equity Index Division		Vanguard VIF Mid-Cap Index Division




Assets
Investments in shares of mutual funds, at fair value		$	5,028,709	$	40,373,269	$	157,005,358	$	101,400,367
Total assets			5,028,709		40,373,269		157,005,358		101,400,367
Total liabilities			—		—		—		—
Net assets		$	5,028,709	$	40,373,269	$	157,005,358	$	101,400,367

Net assets
Applicable to accumulation units		$	5,028,709	$	40,373,269	$	157,005,358	$	101,400,367
Total net assets		$	5,028,709	$	40,373,269	$	157,005,358	$	101,400,367

Investments in shares of mutual funds, at cost		$	5,594,029	$	37,422,357	$	121,621,867	$	91,996,312

Shares of mutual funds owned			264,113		1,618,816		3,291,517		4,219,741

Accumulation units outstanding			750,814		1,014,662		3,827,733		2,092,722



Statements of Operations
Year ended December 31, 2019
		VanEck Global Hard Assets Initial Class Division		Vanguard VIF Balanced Division		Vanguard VIF Equity Index Division		Vanguard VIF Mid-Cap Index Division




Net investment income (loss)
Investment income:
	Dividends	$	—	$	1,223,071	$	2,848,008	$	1,283,401

Expenses:
	Mortality and expense risks		—		—		—		—
Net investment income (loss)			—		1,223,071		2,848,008		1,283,401

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(897,422)		1,206,853		7,373,217		1,209,059
Capital gains distributions			—		2,459,294		3,729,022		6,615,637
Total realized gains (losses) on investments			(897,422)		3,666,147		11,102,239		7,824,696

Change in net unrealized appreciation (depreciation)
	of investments		1,538,748		3,656,060		25,343,486		13,847,824

Net gains (losses) on investments			641,326		8,545,278		39,293,733		22,955,921

Net increase (decrease) in net assets resulting from operations		$	641,326	$	8,545,278	$	39,293,733	$	22,955,921


See accompanying notes.

A-44



Principal Life Insurance Company
Variable Life Separate Account

Statements of Assets and Liabilities
December 31, 2019
		Wanger International Division		Wells Fargo VT Index Asset Allocation Class 2 Division		Wells Fargo VT Omega Growth Class 2 Division




Assets
Investments in shares of mutual funds, at fair value		$	2,052,986	$	1,588,607	$	6,254,107
Total assets			2,052,986		1,588,607		6,254,107
Total liabilities			—		—		—
Net assets		$	2,052,986	$	1,588,607	$	6,254,107

Net assets
Applicable to accumulation units		$	2,052,986	$	1,588,607	$	6,254,107
Total net assets		$	2,052,986	$	1,588,607	$	6,254,107

Investments in shares of mutual funds, at cost		$	2,099,483	$	1,481,793	$	5,787,247

Shares of mutual funds owned			78,961		77,304		204,717

Accumulation units outstanding			161,097		46,800		163,351



Statements of Operations
Year ended December 31, 2019
		Wanger International Division		Wells Fargo VT Index Asset Allocation Class 2 Division		Wells Fargo VT Omega Growth Class 2 Division




Net investment income (loss)
Investment income:
	Dividends	$	15,089	$	17,950	$	—

Expenses:
	Mortality and expense risks		—		10		46
Net investment income (loss)			15,089		17,940		(46)

Realized gains (losses) on investments
Realized gains (losses) on sale of fund shares			(54,131)		91,234		966,222
Capital gains distributions			152,773		98,644		810,550
Total realized gains (losses) on investments			98,642		189,878		1,776,772

Change in net unrealized appreciation (depreciation)
	of investments		328,252		115,403		847,546

Net gains (losses) on investments			441,983		323,221		2,624,272

Net increase (decrease) in net assets resulting from operations		$	441,983	$	323,221	$	2,624,272


See accompanying notes.

A-45



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		AllianceBernstein Global Thematic Growth Class A Division		AllianceBernstein International Growth Class A Division		AllianceBernstein International Value Class A Division		AllianceBernstein Small Cap Growth Class A Division



Net assets as of January 1, 2018		$	539,541	$	754,291	$	1,718,636	$	2,044,478
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		4,593		27,871		—
	Total realized gains (losses) on investments		93,142		30,235		55,006		164,122
	Change in net unrealized appreciation (depreciation)
	of investments		(205,298)		(158,014)		(528,685)		(196,690)
	Net gains (losses) on investments		(112,156)		(123,186)		(445,808)		(32,568)
Net increase (decrease) in net assets resulting from operations			(112,156)		(123,186)		(445,808)		(32,568)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,025,647		173,860		707,819		680,604
	Contract terminations and surrenders		(55,851)		(95,762)		(31,780)		(42,299)
	Death benefit payments		(52,898)		(43,532)		(3,558)		—
	Policy loan transfers		16,014		(784)		(55,636)		(762)
	Transfers to other contracts		(239,449)		(27,690)		(307,296)		(571,954)
	Cost of insurance and administration charges		(12,568)		(12,225)		(39,970)		(45,709)
	Mortality and expenses charges		(1,957)		(1,784)		(5,224)		(6,287)
	Surrender charges		2,457		(2,326)		(1,576)		(1,532)
Increase (decrease) in net assets from policy related transactions			681,395		(10,243)		262,779		12,061
Total increase (decrease)			569,239		(133,429)		(183,029)		(20,507)
Net assets as of December 31, 2018			1,108,780		620,862		1,535,607		2,023,971

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		5,579		3,969		13,479		—
	Total realized gains (losses) on investments		146,883		28,708		(72,353)		460,297
	Change in net unrealized appreciation (depreciation)
	of investments		156,088		137,254		298,055		226,461
	Net gains (losses) on investments		308,550		169,931		239,181		686,758
Net increase (decrease) in net assets resulting from operations			308,550		169,931		239,181		686,758
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		409,772		87,765		564,301		476,577
	Contract terminations and surrenders		(650,547)		(8,002)		(45,910)		(64,134)
	Death benefit payments		—		—		(4,914)		—
	Policy loan transfers		41,830		(91)		(6,171)		(11,090)
	Transfers to other contracts		(390,444)		(72,270)		(730,927)		(638,633)
	Cost of insurance and administration charges		(19,096)		(12,866)		(38,497)		(51,894)
	Mortality and expenses charges		(2,887)		(1,843)		(4,584)		(6,848)
	Surrender charges		28,292		(104)		(331)		(1,084)
Increase (decrease) in net assets from policy related transactions			(583,080)		(7,411)		(267,033)		(297,106)
Total increase (decrease)			(274,530)		162,520		(27,852)		389,652
Net assets as of December 31, 2019		$	834,250	$	783,382	$	1,507,755	$	2,413,623

See accompanying notes.

A-46



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		AllianceBernstein Small/Mid Cap Value Class A Division		American Century VP Capital Appreciation Class II Division		American Century VP Income & Growth Class I Division		American Century VP Income & Growth Class II Division



Net assets as of January 1, 2018		$	5,921,732	$	1,445,351	$	3,255,298	$	6,112,024
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		23,918		—		61,469		117,610
	Total realized gains (losses) on investments		793,902		62,214		425,362		822,848
	Change in net unrealized appreciation (depreciation)
	of investments		(1,563,798)		(83,077)		(681,954)		(1,547,795)
	Net gains (losses) on investments		(745,978)		(20,863)		(195,123)		(607,337)
Net increase (decrease) in net assets resulting from operations			(745,978)		(20,863)		(195,123)		(607,337)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,593,775		246,707		206,170		3,472,681
	Contract terminations and surrenders		(939,184)		(88,693)		(93,139)		(286,675)
	Death benefit payments		(223,499)		(538)		(79,760)		(8,797)
	Policy loan transfers		(47,590)		(2,738)		3,248		(269,273)
	Transfers to other contracts		(1,183,884)		(810,970)		(226,937)		(1,313,005)
	Cost of insurance and administration charges		(118,991)		(29,146)		(95,814)		(184,844)
	Mortality and expenses charges		(17,108)		(4,745)		(8,075)		(17,565)
	Surrender charges		23,431		(1,008)		(106)		212
Increase (decrease) in net assets from policy related transactions			(913,050)		(691,131)		(294,413)		1,392,734
Total increase (decrease)			(1,659,028)		(711,994)		(489,536)		785,397
Net assets as of December 31, 2018			4,262,704		733,357		2,765,762		6,897,421

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		30,030		—		63,274		142,031
	Total realized gains (losses) on investments		449,596		159,652		376,991		628,903
	Change in net unrealized appreciation (depreciation)
	of investments		417,032		80,139		209,160		853,202
	Net gains (losses) on investments		896,658		239,791		649,425		1,624,136
Net increase (decrease) in net assets resulting from operations			896,658		239,791		649,425		1,624,136
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,921,155		171,626		182,898		3,108,790
	Contract terminations and surrenders		(305,806)		(97,439)		(109,438)		(853,181)
	Death benefit payments		(1,786)		(122)		—		(12,041)
	Policy loan transfers		(51,246)		(3,858)		(13,119)		(229,668)
	Transfers to other contracts		(1,395,465)		(213,050)		(164,539)		(2,339,527)
	Cost of insurance and administration charges		(117,151)		(21,222)		(88,900)		(216,862)
	Mortality and expenses charges		(16,739)		(3,536)		(7,682)		(21,369)
	Surrender charges		9,448		(1,781)		(123)		20,041
Increase (decrease) in net assets from policy related transactions			42,410		(169,382)		(200,903)		(543,817)
Total increase (decrease)			939,068		70,409		448,522		1,080,319
Net assets as of December 31, 2019		$	5,201,772	$	803,766	$	3,214,284	$	7,977,740

See accompanying notes.

A-47



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		American Century VP Inflation Protection Class II Division		American Century VP International Class II Division		American Century VP Mid Cap Value Class II Division		American Century VP Ultra Class I Division



Net assets as of January 1, 2018		$	1,647,637	$	1,433,875	$	29,149,010	$	2,324,816
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		46,244		16,069		377,026		5,799
	Total realized gains (losses) on investments		(45,098)		157,123		2,627,427		526,747
	Change in net unrealized appreciation (depreciation)
	of investments		(53,327)		(376,436)		(6,873,650)		(501,506)
	Net gains (losses) on investments		(52,181)		(203,244)		(3,869,197)		31,040
Net increase (decrease) in net assets resulting from operations			(52,181)		(203,244)		(3,869,197)		31,040
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		771,142		357,511		12,684,140		313,608
	Contract terminations and surrenders		(27,762)		(74,942)		(983,121)		(236,479)
	Death benefit payments		(11,064)		(1,500)		(45,649)		—
	Policy loan transfers		42,067		(4,381)		(71,917)		(28,821)
	Transfers to other contracts		(652,571)		(400,998)		(10,373,333)		(396,902)
	Cost of insurance and administration charges		(84,927)		(24,088)		(523,856)		(72,373)
	Mortality and expenses charges		(6,399)		(3,368)		(76,051)		(6,285)
	Surrender charges		(1,111)		1,840		19,449		(348)
Increase (decrease) in net assets from policy related transactions			29,375		(149,926)		629,662		(427,600)
Total increase (decrease)			(22,806)		(353,170)		(3,239,535)		(396,560)
Net assets as of December 31, 2018			1,624,831		1,080,705		25,909,475		1,928,256

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		38,511		8,264		542,289		(475)
	Total realized gains (losses) on investments		(2,438)		88,976		3,152,277		335,901
	Change in net unrealized appreciation (depreciation)
	of investments		106,424		274,736		3,376,785		315,235
	Net gains (losses) on investments		142,497		371,976		7,071,351		650,661
Net increase (decrease) in net assets resulting from operations			142,497		371,976		7,071,351		650,661
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		198,276		1,557,273		8,866,973		297,597
	Contract terminations and surrenders		(68,477)		(219,383)		(1,634,027)		(115,396)
	Death benefit payments		—		—		(58,062)		—
	Policy loan transfers		(16,150)		(20,081)		(57,043)		(91,381)
	Transfers to other contracts		(137,852)		(292,635)		(9,514,127)		(63,597)
	Cost of insurance and administration charges		(72,497)		(23,106)		(493,098)		(81,494)
	Mortality and expenses charges		(4,752)		(3,448)		(71,493)		(7,244)
	Surrender charges		(2,573)		9,048		29,309		(119)
Increase (decrease) in net assets from policy related transactions			(104,025)		1,007,668		(2,931,568)		(61,634)
Total increase (decrease)			38,472		1,379,644		4,139,783		589,027
Net assets as of December 31, 2019		$	1,663,303	$	2,460,349	$	30,049,258	$	2,517,283

See accompanying notes.

A-48



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		American Century VP Ultra Class II Division		American Century VP Value Class II Division		American Funds Insurance Series Blue Chip Income and Growth Class 2 Division		American Funds Insurance Series Global Balanced Class 2 Division (1)



Net assets as of January 1, 2018		$	5,020,612	$	34,130,881	$	5,309,179	$	—
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		6,307		481,397		183,177		6,812
	Total realized gains (losses) on investments		1,069,654		2,770,371		720,329		3,803
	Change in net unrealized appreciation (depreciation)
	of investments		(1,040,206)		(5,855,908)		(1,723,398)		(49,020)
	Net gains (losses) on investments		35,755		(2,604,140)		(819,892)		(38,405)
Net increase (decrease) in net assets resulting from operations			35,755		(2,604,140)		(819,892)		(38,405)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		2,613,637		4,588,311		6,867,657		3,839,099
	Contract terminations and surrenders		(206,063)		(1,048,894)		(91,481)		—
	Death benefit payments		(7,081)		(172,116)		(50,710)		—
	Policy loan transfers		(45,379)		(7,338)		(43,885)		—
	Transfers to other contracts		(2,032,232)		(7,716,988)		(1,940,971)		(3,302,883)
	Cost of insurance and administration charges		(101,148)		(585,325)		(219,026)		(1,982)
	Mortality and expenses charges		(8,135)		(63,049)		(25,910)		(327)
	Surrender charges		(88)		(4,351)		(5,102)		—
Increase (decrease) in net assets from policy related transactions			213,511		(5,009,750)		4,490,572		533,907
Total increase (decrease)			249,266		(7,613,890)		3,670,680		495,502
Net assets as of December 31, 2018			5,269,878		26,516,991		8,979,859		495,502

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		560,252		251,329		15,783
	Total realized gains (losses) on investments		791,420		3,180,010		663,911		43,790
	Change in net unrealized appreciation (depreciation)
	of investments		969,335		3,057,477		1,226,115		108,083
	Net gains (losses) on investments		1,760,755		6,797,739		2,141,355		167,656
Net increase (decrease) in net assets resulting from operations			1,760,755		6,797,739		2,141,355		167,656
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,011,443		3,323,402		6,207,490		4,333,093
	Contract terminations and surrenders		(91,737)		(1,244,756)		(394,819)		—
	Death benefit payments		(1,810)		(26,814)		(7,447)		—
	Policy loan transfers		(38,039)		(526,136)		(113,911)		150
	Transfers to other contracts		(1,540,768)		(4,481,417)		(2,871,219)		(3,597,298)
	Cost of insurance and administration charges		(102,621)		(499,266)		(277,173)		(13,737)
	Mortality and expenses charges		(7,880)		(51,922)		(33,000)		(1,656)
	Surrender charges		(277)		5,689		1,495		—
Increase (decrease) in net assets from policy related transactions			(771,689)		(3,501,220)		2,511,416		720,552
Total increase (decrease)			989,066		3,296,519		4,652,771		888,208
Net assets as of December 31, 2019		$	6,258,944	$	29,813,510	$	13,632,630	$	1,383,710

(1) Commenced operations June 11, 2018.

See accompanying notes.

A-49



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		American Funds Insurance Series Global Bond Class 2 Division		American Funds Insurance Series Growth Fund Class 2 Division		American Funds Insurance Series International Fund Class 2 Division		American Funds Insurance Series New World Fund Class 2 Division



Net assets as of January 1, 2018		$	1,010,727	$	8,048,443	$	6,234,131	$	8,164,276
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		15,156		47,103		253,055		88,400
	Total realized gains (losses) on investments		10,019		1,398,871		879,763		763,905
	Change in net unrealized appreciation (depreciation)
	of investments		(29,305)		(1,574,926)		(3,017,913)		(2,349,531)
	Net gains (losses) on investments		(4,130)		(128,952)		(1,885,095)		(1,497,226)
Net increase (decrease) in net assets resulting from operations			(4,130)		(128,952)		(1,885,095)		(1,497,226)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		829,551		6,228,502		15,890,072		6,139,851
	Contract terminations and surrenders		—		(610,517)		(547,386)		(188,373)
	Death benefit payments		—		—		(2,614)		(1,877)
	Policy loan transfers		2,286		(86,981)		(278,710)		(53,129)
	Transfers to other contracts		(1,099,635)		(3,692,039)		(5,439,985)		(3,307,313)
	Cost of insurance and administration charges		(14,582)		(195,000)		(193,783)		(175,578)
	Mortality and expenses charges		(1,904)		(24,015)		(24,318)		(22,518)
	Surrender charges		—		18,468		13,853		4,365
Increase (decrease) in net assets from policy related transactions			(284,284)		1,638,418		9,417,129		2,395,428
Total increase (decrease)			(288,414)		1,509,466		7,532,034		898,202
Net assets as of December 31, 2018			722,313		9,557,909		13,766,165		9,062,478

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		20,655		94,780		302,756		132,484
	Total realized gains (losses) on investments		852		1,312,460		132,230		648,382
	Change in net unrealized appreciation (depreciation)
	of investments		60,906		1,829,087		3,208,071		2,298,648
	Net gains (losses) on investments		82,413		3,236,327		3,643,057		3,079,514
Net increase (decrease) in net assets resulting from operations			82,413		3,236,327		3,643,057		3,079,514
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		747,118		7,441,607		15,443,043		8,254,615
	Contract terminations and surrenders		(496)		(301,437)		(268,247)		(818,912)
	Death benefit payments		—		(36,245)		(21,093)		(20,814)
	Policy loan transfers		(20,019)		79,145		136,014		(34,580)
	Transfers to other contracts		(118,704)		(5,508,220)		(9,516,708)		(3,575,399)
	Cost of insurance and administration charges		(15,910)		(240,993)		(334,813)		(217,500)
	Mortality and expenses charges		(2,214)		(31,515)		(44,206)		(28,320)
	Surrender charges		22		5,944		8,828		33,751
Increase (decrease) in net assets from policy related transactions			589,797		1,408,286		5,402,818		3,592,841
Total increase (decrease)			672,210		4,644,613		9,045,875		6,672,355
Net assets as of December 31, 2019		$	1,394,523	$	14,202,522	$	22,812,040	$	15,734,833

See accompanying notes.

A-50



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018

		BNY Mellon IP Core Value Service Shares Division (1)		BNY Mellon IP MidCap Stock Service Shares Division (2)		BNY Mellon IP Technology Growth Service Shares Division (3)		BNY Mellon Sustainable U.S. Equity Service Shares Division (4)



Net assets as of January 1, 2018		$	762,742	$	270,927	$	2,455,968	$	370,343
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		760		—		5,093
	Total realized gains (losses) on investments		120,043		36,534		476,303		53,543
	Change in net unrealized appreciation (depreciation)
	of investments		(202,150)		(72,757)		(618,707)		(80,338)
	Net gains (losses) on investments		(82,107)		(35,463)		(142,404)		(21,702)
Net increase (decrease) in net assets resulting from operations			(82,107)		(35,463)		(142,404)		(21,702)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		220,319		51,416		2,282,338		170,986
	Contract terminations and surrenders		(63,855)		(6,820)		(165,000)		(15,387)
	Death benefit payments		(1,815)		—		(784)		(193)
	Policy loan transfers		(827)		(27,090)		(18,524)		36
	Transfers to other contracts		(229,548)		(47,094)		(1,386,685)		(87,476)
	Cost of insurance and administration charges		(11,576)		(4,978)		(63,831)		(7,536)
	Mortality and expenses charges		(2,123)		(560)		(9,672)		(1,385)
	Surrender charges		627		(130)		4,711		21
Increase (decrease) in net assets from policy related transactions			(88,798)		(35,256)		642,553		59,066
Total increase (decrease)			(170,905)		(70,719)		500,149		37,364
Net assets as of December 31, 2018			591,837		200,208		2,956,117		407,707

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		4,591		866		—		6,195
	Total realized gains (losses) on investments		26,020		(5,030)		407,684		8,075
	Change in net unrealized appreciation (depreciation)
	of investments		130,673		47,955		313,864		121,900
	Net gains (losses) on investments		161,284		43,791		721,548		136,170
Net increase (decrease) in net assets resulting from operations			161,284		43,791		721,548		136,170
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		181,409		138,236		1,700,307		117,206
	Contract terminations and surrenders		(48,523)		(2,378)		(229,504)		(99,527)
	Death benefit payments		—		—		—		—
	Policy loan transfers		(5)		(19,821)		16,951		(78)
	Transfers to other contracts		(141,847)		(81,683)		(1,518,530)		(73,479)
	Cost of insurance and administration charges		(11,895)		(5,419)		(72,482)		(9,324)
	Mortality and expenses charges		(2,236)		(586)		(11,111)		(1,648)
	Surrender charges		1,821		103		9,534		895
Increase (decrease) in net assets from policy related transactions			(21,276)		28,452		(104,835)		(65,955)
Total increase (decrease)			140,008		72,243		616,713		70,215
Net assets as of December 31, 2019		$	731,845	$	272,451	$	3,572,830	$	477,922

(1) Represented the operations of Dreyfus IP Core Value Service Shares Division until June 2, 2019.
(2) Represented the operations of Dreyfus IP MidCap Stock Service Shares Division until June 2, 2019.
(3) Represented the operations of Dreyfus IP Technology Growth Service Shares Division until June 2, 2019.
(4) Represented the operations of Dreyfus Sustainable U.S. Equity Service Shares Division until June 2, 2019.

See accompanying notes.

A-51



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018

		BNY Mellon VIF Appreciation Service Shares Division (1)		BNY Mellon VIF Opportunistic Small Cap Service Shares Division (2)		BNY Mellon VIF Quality Bond Service Shares Division (3)		Bond Market Index Class 1 Division



Net assets as of January 1, 2018		$	3,937,103	$	5,431,238	$	1,211,921	$	7,887,157
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		38,708		—		28,049		231,321
	Total realized gains (losses) on investments		410,570		1,293,510		(8,741)		(109,816)
	Change in net unrealized appreciation (depreciation)
	of investments		(712,762)		(2,389,002)		(54,046)		(82,938)
	Net gains (losses) on investments		(263,484)		(1,095,492)		(34,738)		38,567
Net increase (decrease) in net assets resulting from operations			(263,484)		(1,095,492)		(34,738)		38,567
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		437,451		1,017,552		190,055		10,387,617
	Contract terminations and surrenders		(289,802)		(220,172)		(126,516)		(83,502)
	Death benefit payments		(572)		(10,144)		(1,346)		(4,295)
	Policy loan transfers		(11,193)		(38,208)		1,646		(16,582)
	Transfers to other contracts		(402,117)		(394,928)		(245,706)		(7,238,175)
	Cost of insurance and administration charges		(51,991)		(160,469)		(13,904)		(159,285)
	Mortality and expenses charges		(9,173)		(8,280)		(2,591)		(23,375)
	Surrender charges		1,534		(786)		68		(763)
Increase (decrease) in net assets from policy related transactions			(325,863)		184,565		(198,294)		2,861,640
Total increase (decrease)			(589,347)		(910,927)		(233,032)		2,900,207
Net assets as of December 31, 2018			3,347,756		4,520,311		978,889		10,787,364

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		36,895		—		20,839		371,791
	Total realized gains (losses) on investments		306,176		754,124		(3,493)		45,044
	Change in net unrealized appreciation (depreciation)
	of investments		861,333		171,624		76,243		570,388
	Net gains (losses) on investments		1,204,404		925,748		93,589		987,223
Net increase (decrease) in net assets resulting from operations			1,204,404		925,748		93,589		987,223
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		796,820		613,537		561,262		10,431,740
	Contract terminations and surrenders		(240,862)		(141,155)		(46,024)		(100,293)
	Death benefit payments		—		(3,470)		—		—
	Policy loan transfers		(330)		(46,032)		(38,522)		(200,496)
	Transfers to other contracts		(640,786)		(945,335)		(123,726)		(4,735,152)
	Cost of insurance and administration charges		(54,418)		(149,258)		(14,514)		(224,740)
	Mortality and expenses charges		(9,801)		(6,392)		(2,816)		(34,918)
	Surrender charges		9,732		(499)		—		3,960
Increase (decrease) in net assets from policy related transactions			(139,645)		(678,604)		335,660		5,140,101
Total increase (decrease)			1,064,759		247,144		429,249		6,127,324
Net assets as of December 31, 2019		$	4,412,515	$	4,767,455	$	1,408,138	$	16,914,688

(1) Represented the operations of Dreyfus VIF Appreciation Service Shares Division until June 2, 2019.
(2) Represented the operations of Dreyfus VIF Opportunistic Small Cap Service Shares Division until June 2, 2019.
(3) Represented the operations of Dreyfus VIF Quality Bond Service Shares Division until June 2, 2019.

See accompanying notes.

A-52



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Calvert EAFE International Index Class F Division		Calvert Investment Grade Bond Index Class I Division		Calvert Russell 2000 Small Cap Index Class F Division		Calvert S&P 500 Index Portfolio Division



Net assets as of January 1, 2018		$	3,777,388	$	3,654,364	$	27,785,514	$	1,310,175
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		153,114		68,719		336,770		26,613
	Total realized gains (losses) on investments		51,405		(86,627)		2,933,793		152,859
	Change in net unrealized appreciation (depreciation)
	of investments		(883,981)		(15,460)		(6,694,707)		(264,112)
	Net gains (losses) on investments		(679,462)		(33,368)		(3,424,144)		(84,640)
Net increase (decrease) in net assets resulting from operations			(679,462)		(33,368)		(3,424,144)		(84,640)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		2,027,895		697,930		23,924,743		695,859
	Contract terminations and surrenders		(136,337)		(93,890)		(3,107,938)		(107,630)
	Death benefit payments		(9,596)		(2,886)		(11,034)		(27,570)
	Policy loan transfers		69,052		(16,139)		(245,247)		68,881
	Transfers to other contracts		(661,659)		(1,895,486)		(18,754,348)		(351,775)
	Cost of insurance and administration charges		(72,898)		(63,236)		(467,726)		(37,057)
	Mortality and expenses charges		(10,244)		(7,929)		(65,720)		(2,281)
	Surrender charges		3,243		(967)		80,596		(3,056)
Increase (decrease) in net assets from policy related transactions			1,209,456		(1,382,603)		1,353,326		235,371
Total increase (decrease)			529,994		(1,415,971)		(2,070,818)		150,731
Net assets as of December 31, 2018			4,307,382		2,238,393		25,714,696		1,460,906

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		179,639		85,971		274,623		28,858
	Total realized gains (losses) on investments		75,062		9,554		2,607,947		175,872
	Change in net unrealized appreciation (depreciation)
	of investments		825,863		127,506		3,569,304		246,789
	Net gains (losses) on investments		1,080,564		223,031		6,451,874		451,519
Net increase (decrease) in net assets resulting from operations			1,080,564		223,031		6,451,874		451,519
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		3,163,290		1,106,960		19,734,986		288,495
	Contract terminations and surrenders		(397,016)		(365,866)		(978,723)		(23,448)
	Death benefit payments		(6,480)		—		(38,274)		—
	Policy loan transfers		2,202		(4,175)		91,708		390
	Transfers to other contracts		(493,814)		(408,083)		(17,298,059)		(361,974)
	Cost of insurance and administration charges		(101,570)		(69,749)		(454,667)		(39,880)
	Mortality and expenses charges		(14,130)		(8,180)		(63,954)		(2,138)
	Surrender charges		16,873		12,618		31,476		(1,930)
Increase (decrease) in net assets from policy related transactions			2,169,355		263,525		1,024,493		(140,485)
Total increase (decrease)			3,249,919		486,556		7,476,367		311,034
Net assets as of December 31, 2019		$	7,557,301	$	2,724,949	$	33,191,063	$	1,771,940

See accompanying notes.

A-53



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Calvert S&P MidCap 400 Index Class F Division		ClearBridge Mid Cap Class I Division		ClearBridge Small Cap Growth Class I Division		Core Plus Bond Class 1 Division



Net assets as of January 1, 2018		$	1,884,825	$	302,057	$	11,370,372	$	90,934,196
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		22,893		2,226		—		3,400,288
	Total realized gains (losses) on investments		161,057		3,913		2,854,760		(229,939)
	Change in net unrealized appreciation (depreciation)
	of investments		(410,302)		(59,822)		(3,305,114)		(4,431,059)
	Net gains (losses) on investments		(226,352)		(53,683)		(450,354)		(1,260,710)
Net increase (decrease) in net assets resulting from operations			(226,352)		(53,683)		(450,354)		(1,260,710)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		286,759		238,208		10,650,638		34,068,444
	Contract terminations and surrenders		(37,695)		(20,246)		(351,146)		(3,722,305)
	Death benefit payments		—		—		(89,671)		(101,474)
	Policy loan transfers		(2,073)		9,730		(26,399)		(479,525)
	Transfers to other contracts		(101,605)		(112,755)		(4,929,228)		(15,575,601)
	Cost of insurance and administration charges		(65,314)		(11,113)		(229,676)		(2,220,013)
	Mortality and expenses charges		(5,525)		(1,297)		(34,226)		(204,276)
	Surrender charges		(1,968)		150		12,265		26,137
Increase (decrease) in net assets from policy related transactions			72,579		102,677		5,002,557		11,791,387
Total increase (decrease)			(153,773)		48,994		4,552,203		10,530,677
Net assets as of December 31, 2018			1,731,052		351,051		15,922,575		101,464,873

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		24,695		2,164		—		3,836,264
	Total realized gains (losses) on investments		173,828		15,350		3,437,135		(105,646)
	Change in net unrealized appreciation (depreciation)
	of investments		251,984		95,441		891,729		6,847,986
	Net gains (losses) on investments		450,507		112,955		4,328,864		10,578,604
Net increase (decrease) in net assets resulting from operations			450,507		112,955		4,328,864		10,578,604
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		392,218		194,576		9,774,364		44,761,174
	Contract terminations and surrenders		(53,629)		(13,399)		(1,090,129)		(2,923,624)
	Death benefit payments		—		—		(20,785)		(582,442)
	Policy loan transfers		(7,216)		(8,350)		682		16,076
	Transfers to other contracts		(135,344)		(231,238)		(8,387,230)		(22,600,496)
	Cost of insurance and administration charges		(72,413)		(10,378)		(263,849)		(2,204,662)
	Mortality and expenses charges		(4,953)		(1,165)		(39,752)		(216,525)
	Surrender charges		(4,583)		166		40,502		20,837
Increase (decrease) in net assets from policy related transactions			114,080		(69,788)		13,803		16,270,338
Total increase (decrease)			564,587		43,167		4,342,667		26,848,942
Net assets as of December 31, 2019		$	2,295,639	$	394,218	$	20,265,242	$	128,313,815

See accompanying notes.

A-54



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Delaware High Yield Service Class Division		Delaware Small Cap Value Service Class Division		Delaware Smid Cap Core Service Class Division		Diversified Balanced Class 1 Division



Net assets as of January 1, 2018		$	615,055	$	22,002,741	$	2,611,470	$	15,510,806
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		39,476		129,987		(34)		386,595
	Total realized gains (losses) on investments		(5,038)		1,638,792		739,399		240,171
	Change in net unrealized appreciation (depreciation)
	of investments		(69,320)		(5,482,379)		(1,032,043)		(1,086,141)
	Net gains (losses) on investments		(34,882)		(3,713,600)		(292,678)		(459,375)
Net increase (decrease) in net assets resulting from operations			(34,882)		(3,713,600)		(292,678)		(459,375)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		252,476		7,159,984		353,292		1,627,299
	Contract terminations and surrenders		(35,060)		(929,350)		(97,591)		(991,588)
	Death benefit payments		—		(43,957)		(5,761)		(49,963)
	Policy loan transfers		(2,675)		(17,814)		(32,912)		(87,068)
	Transfers to other contracts		(81,113)		(6,196,102)		(271,511)		(910,349)
	Cost of insurance and administration charges		(11,379)		(317,483)		(92,905)		(720,789)
	Mortality and expenses charges		(1,616)		(41,824)		(7,335)		(46,484)
	Surrender charges		(768)		18,697		(2,845)		(1,102)
Increase (decrease) in net assets from policy related transactions			119,865		(367,849)		(157,568)		(1,180,044)
Total increase (decrease)			84,983		(4,081,449)		(450,246)		(1,639,419)
Net assets as of December 31, 2018			700,038		17,921,292		2,161,224		13,871,387

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		42,664		156,689		7,563		303,329
	Total realized gains (losses) on investments		(10,097)		1,514,071		(31,179)		670,717
	Change in net unrealized appreciation (depreciation)
	of investments		76,095		3,227,811		649,687		1,516,348
	Net gains (losses) on investments		108,662		4,898,571		626,071		2,490,394
Net increase (decrease) in net assets resulting from operations			108,662		4,898,571		626,071		2,490,394
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		304,928		3,753,346		328,877		1,349,034
	Contract terminations and surrenders		(63,248)		(827,852)		(102,633)		(707,330)
	Death benefit payments		—		(8,741)		(3,867)		(129,527)
	Policy loan transfers		8,878		(4,894)		(11,943)		97,580
	Transfers to other contracts		(324,145)		(3,988,495)		(382,761)		(488,975)
	Cost of insurance and administration charges		(12,277)		(298,130)		(88,657)		(692,088)
	Mortality and expenses charges		(1,708)		(38,922)		(5,757)		(44,783)
	Surrender charges		2,751		25,898		(2,456)		(1,391)
Increase (decrease) in net assets from policy related transactions			(84,821)		(1,387,790)		(269,197)		(617,480)
Total increase (decrease)			23,841		3,510,781		356,874		1,872,914
Net assets as of December 31, 2019		$	723,879	$	21,432,073	$	2,518,098	$	15,744,301

See accompanying notes.

A-55



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Diversified International Class 1 Division		DWS Alternative Asset Allocation Class B Division		DWS Small Mid Cap Value Class B Division		Equity Income Class 1 Division



Net assets as of January 1, 2018		$	157,080,198	$	792,107	$	2,872,421	$	65,605,741
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		3,379,924		13,179		26,869		1,209,091
	Total realized gains (losses) on investments		3,847,379		586		331,010		6,633,092
	Change in net unrealized appreciation (depreciation)
	of investments		(35,998,531)		(95,545)		(713,192)		(14,901,570)
	Net gains (losses) on investments		(28,771,228)		(81,780)		(355,313)		(7,059,387)
Net increase (decrease) in net assets resulting from operations			(28,771,228)		(81,780)		(355,313)		(7,059,387)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		41,051,879		323,205		354,361		80,933,372
	Contract terminations and surrenders		(7,314,255)		(10,040)		(106,791)		(4,686,480)
	Death benefit payments		(422,033)		(187)		(10,274)		(208,182)
	Policy loan transfers		(256,484)		(265)		(27,283)		(687,596)
	Transfers to other contracts		(23,395,842)		(139,548)		(1,025,643)		(14,969,993)
	Cost of insurance and administration charges		(3,928,874)		(14,546)		(54,065)		(1,861,565)
	Mortality and expenses charges		(346,259)		(1,953)		(7,168)		(160,966)
	Surrender charges		29,258		186		(1,665)		80,168
Increase (decrease) in net assets from policy related transactions			5,417,390		156,852		(878,528)		58,438,758
Total increase (decrease)			(23,353,838)		75,072		(1,233,841)		51,379,371
Net assets as of December 31, 2018			133,726,360		867,179		1,638,580		116,985,112

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		2,401,785		32,252		6,438		2,489,967
	Total realized gains (losses) on investments		9,885,134		(10,993)		(33,245)		7,485,698
	Change in net unrealized appreciation (depreciation)
	of investments		17,415,934		89,205		338,766		23,172,164
	Net gains (losses) on investments		29,702,853		110,464		311,959		33,147,829
Net increase (decrease) in net assets resulting from operations			29,702,853		110,464		311,959		33,147,829
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		25,590,582		142,199		325,462		20,670,310
	Contract terminations and surrenders		(6,050,521)		(5,373)		(102,941)		(7,140,275)
	Death benefit payments		(579,632)		—		(10,504)		(621,350)
	Policy loan transfers		(495,681)		(74)		20,429		(65,139)
	Transfers to other contracts		(20,686,533)		(642,285)		(601,074)		(15,531,439)
	Cost of insurance and administration charges		(3,707,690)		(13,395)		(37,930)		(3,428,371)
	Mortality and expenses charges		(318,096)		(1,872)		(4,754)		(287,229)
	Surrender charges		24,598		207		920		92,329
Increase (decrease) in net assets from policy related transactions			(6,222,973)		(520,593)		(410,392)		(6,311,164)
Total increase (decrease)			23,479,880		(410,129)		(98,433)		26,836,665
Net assets as of December 31, 2019		$	157,206,240	$	457,050	$	1,540,147	$	143,821,777

See accompanying notes.

A-56



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Fidelity VIP Asset Manager Service Class 2 Division		Fidelity VIP Contrafund Initial Class Division		Fidelity VIP Contrafund Service Class 2 Division		Fidelity VIP Equity-Income Initial Class Division



Net assets as of January 1, 2018		$	2,065,204	$	68,023,727	$	94,554,843	$	21,992,902
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		35,364		475,493		408,801		483,858
	Total realized gains (losses) on investments		(751)		7,646,582		11,161,632		1,011,622
	Change in net unrealized appreciation (depreciation)
	of investments		(180,561)		(12,000,854)		(17,040,353)		(3,224,737)
	Net gains (losses) on investments		(145,948)		(3,878,779)		(5,469,920)		(1,729,257)
Net increase (decrease) in net assets resulting from operations			(145,948)		(3,878,779)		(5,469,920)		(1,729,257)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,675,945		3,849,064		19,949,315		1,494,635
	Contract terminations and surrenders		(71,705)		(3,293,150)		(3,548,301)		(1,085,098)
	Death benefit payments		(2,550)		(190,869)		(110,696)		(105,669)
	Policy loan transfers		(127,500)		141,581		(919,682)		113,425
	Transfers to other contracts		(1,142,406)		(2,841,298)		(20,748,997)		(630,552)
	Cost of insurance and administration charges		(30,923)		(1,879,089)		(1,846,140)		(674,406)
	Mortality and expenses charges		(6,029)		(155,107)		(215,151)		(55,317)
	Surrender charges		39		(3,366)		(26,348)		(1,103)
Increase (decrease) in net assets from policy related transactions			294,871		(4,372,234)		(7,466,000)		(944,085)
Total increase (decrease)			148,923		(8,251,013)		(12,935,920)		(2,673,342)
Net assets as of December 31, 2018			2,214,127		59,772,714		81,618,923		19,319,560

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		20,384		304,063		187,007		420,801
	Total realized gains (losses) on investments		23,489		9,676,960		10,960,742		1,992,210
	Change in net unrealized appreciation (depreciation)
	of investments		255,002		8,093,931		12,635,092		2,634,883
	Net gains (losses) on investments		298,875		18,074,954		23,782,841		5,047,894
Net increase (decrease) in net assets resulting from operations			298,875		18,074,954		23,782,841		5,047,894
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		290,096		3,205,609		9,593,720		1,402,792
	Contract terminations and surrenders		(31,270)		(4,028,913)		(3,435,203)		(1,272,977)
	Death benefit payments		—		(917,571)		(457,180)		(212,558)
	Policy loan transfers		77,966		(7,764)		(375,555)		(4,917)
	Transfers to other contracts		(1,491,515)		(2,886,916)		(18,686,179)		(1,125,490)
	Cost of insurance and administration charges		(23,320)		(1,762,666)		(1,710,780)		(638,211)
	Mortality and expenses charges		(4,944)		(149,992)		(193,883)		(53,789)
	Surrender charges		—		(3,374)		(7,320)		(1,133)
Increase (decrease) in net assets from policy related transactions			(1,182,987)		(6,551,587)		(15,272,380)		(1,906,283)
Total increase (decrease)			(884,112)		11,523,367		8,510,461		3,141,611
Net assets as of December 31, 2019		$	1,330,015	$	71,296,081	$	90,129,384	$	22,461,171

See accompanying notes.

A-57



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Fidelity VIP Equity-Income Service Class 2 Division		Fidelity VIP Extended Market Index Service Class 2 Division (1)		Fidelity VIP Government Money Market Service Class Division		Fidelity VIP Growth Service Class 2 Division



Net assets as of January 1, 2018		$	23,876,304	$	—	$	228,535,153	$	19,030,994
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		461,088		—		3,616,624		7,349
	Total realized gains (losses) on investments		1,378,216		—		—		4,247,930
	Change in net unrealized appreciation (depreciation)
	of investments		(3,703,395)		—		—		(4,171,861)
	Net gains (losses) on investments		(1,864,091)		—		3,616,624		83,418
Net increase (decrease) in net assets resulting from operations			(1,864,091)		—		3,616,624		83,418
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		2,851,808		—		306,164,046		3,845,613
	Contract terminations and surrenders		(908,794)		—		(30,168,241)		(1,357,401)
	Death benefit payments		(120,586)		—		(1,809,762)		(30,164)
	Policy loan transfers		(91,134)		—		(4,310,207)		(169,117)
	Transfers to other contracts		(3,134,887)		—		(249,374,282)		(3,357,357)
	Cost of insurance and administration charges		(605,628)		—		(6,760,645)		(450,357)
	Mortality and expenses charges		(47,162)		—		(751,414)		(47,219)
	Surrender charges		(8,009)		—		408,408		(1,374)
Increase (decrease) in net assets from policy related transactions			(2,064,392)		—		13,397,903		(1,567,376)
Total increase (decrease)			(3,928,483)		—		17,014,527		(1,483,958)
Net assets as of December 31, 2018			19,947,821		—		245,549,680		17,547,036

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		419,921		48		5,083,690		10,460
	Total realized gains (losses) on investments		1,575,561		136		—		2,435,238
	Change in net unrealized appreciation (depreciation)
	of investments		3,379,374		121		—		3,181,297
	Net gains (losses) on investments		5,374,856		305		5,083,690		5,626,995
Net increase (decrease) in net assets resulting from operations			5,374,856		305		5,083,690		5,626,995
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		2,675,966		5,641		315,899,793		2,544,003
	Contract terminations and surrenders		(932,160)		—		(53,402,331)		(1,582,059)
	Death benefit payments		(58,878)		—		(298,223)		(263,570)
	Policy loan transfers		(225,323)		—		(2,520,684)		40,332
	Transfers to other contracts		(1,293,766)		(39)		(232,055,639)		(3,974,669)
	Cost of insurance and administration charges		(591,307)		(189)		(7,516,030)		(472,480)
	Mortality and expenses charges		(42,524)		—		(858,674)		(50,629)
	Surrender charges		(4,410)		—		984,264		(1,382)
Increase (decrease) in net assets from policy related transactions			(472,402)		5,413		20,232,476		(3,760,454)
Total increase (decrease)			4,902,454		5,718		25,316,166		1,866,541
Net assets as of December 31, 2019		$	24,850,275	$	5,718	$	270,865,846	$	19,413,577

(1) Commenced operations June 7, 2019.

See accompanying notes.

A-58



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Fidelity VIP High Income Initial Class Division		Fidelity VIP High Income Service Class 2 Division		Fidelity VIP International Index Service Class 2 Division (1)		Fidelity VIP Mid Cap Service Class 2 Division



Net assets as of January 1, 2018		$	5,635,906	$	21,247,896	$	—	$	41,240,443
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		291,098		1,181,241		—		161,582
	Total realized gains (losses) on investments		(124,955)		(404,709)		—		3,794,948
	Change in net unrealized appreciation (depreciation)
	of investments		(329,693)		(1,544,113)		—		(9,659,749)
	Net gains (losses) on investments		(163,550)		(767,581)		—		(5,703,219)
Net increase (decrease) in net assets resulting from operations			(163,550)		(767,581)		—		(5,703,219)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		660,357		6,633,944		—		14,957,599
	Contract terminations and surrenders		(406,008)		(958,041)		—		(1,611,313)
	Death benefit payments		(10,768)		(32,217)		—		(336,735)
	Policy loan transfers		22,143		(275,564)		—		(668,644)
	Transfers to other contracts		(777,889)		(6,022,747)		—		(13,860,849)
	Cost of insurance and administration charges		(181,926)		(454,764)		—		(870,497)
	Mortality and expenses charges		(14,567)		(58,287)		—		(100,420)
	Surrender charges		(373)		(12,416)		—		(9,109)
Increase (decrease) in net assets from policy related transactions			(709,031)		(1,180,092)		—		(2,499,968)
Total increase (decrease)			(872,581)		(1,947,673)		—		(8,203,187)
Net assets as of December 31, 2018			4,763,325		19,300,223		—		33,037,256

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		256,850		1,115,653		11,711		218,852
	Total realized gains (losses) on investments		(85,683)		(46,184)		2,943		3,358,657
	Change in net unrealized appreciation (depreciation)
	of investments		526,813		1,705,540		34,292		3,645,678
	Net gains (losses) on investments		697,980		2,775,009		48,946		7,223,187
Net increase (decrease) in net assets resulting from operations			697,980		2,775,009		48,946		7,223,187
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		688,676		8,232,491		683,956		10,024,382
	Contract terminations and surrenders		(312,836)		(1,252,052)		—		(2,488,819)
	Death benefit payments		(45,362)		(2,560)		—		(88,425)
	Policy loan transfers		(84,081)		(93,770)		270		(530,581)
	Transfers to other contracts		(492,277)		(6,607,516)		(163,775)		(13,182,208)
	Cost of insurance and administration charges		(169,661)		(370,610)		(3,954)		(767,603)
	Mortality and expenses charges		(14,199)		(46,938)		(490)		(88,525)
	Surrender charges		(259)		7,492		—		(5,869)
Increase (decrease) in net assets from policy related transactions			(429,999)		(133,463)		516,007		(7,127,648)
Total increase (decrease)			267,981		2,641,546		564,953		95,539
Net assets as of December 31, 2019		$	5,031,306	$	21,941,769	$	564,953	$	33,132,795

(1) Commenced operations June 7, 2019.

See accompanying notes.

A-59



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Fidelity VIP Strategic Income Service Class 2 Division		Fidelity VIP Total Market Index Service Class 2 Division (1)		Franklin Income VIP Class 2 Division		Franklin Mutual Global Discovery VIP Class 2 Division



Net assets as of January 1, 2018		$	56,556	$	—	$	16,257,450	$	23,667,096
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		30,937		—		766,847		513,568
	Total realized gains (losses) on investments		(2,212)		—		130,424		(762,767)
	Change in net unrealized appreciation (depreciation)
	of investments		(46,848)		—		(1,593,486)		(2,038,609)
	Net gains (losses) on investments		(18,123)		—		(696,215)		(2,287,808)
Net increase (decrease) in net assets resulting from operations			(18,123)		—		(696,215)		(2,287,808)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,008,270		—		4,619,874		6,345,872
	Contract terminations and surrenders		—		—		(1,235,582)		(974,174)
	Death benefit payments		—		—		(14,503)		(77,708)
	Policy loan transfers		(1,209)		—		(131,600)		(87,466)
	Transfers to other contracts		(92,065)		—		(3,416,518)		(8,830,720)
	Cost of insurance and administration charges		(19,680)		—		(256,533)		(370,588)
	Mortality and expenses charges		(2,491)		—		(43,653)		(58,461)
	Surrender charges		—		—		22,887		12,384
Increase (decrease) in net assets from policy related transactions			892,825		—		(455,628)		(4,040,861)
Total increase (decrease)			874,702		—		(1,151,843)		(6,328,669)
Net assets as of December 31, 2018			931,258		—		15,105,607		17,338,427

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		131,337		2,888		806,672		210,847
	Total realized gains (losses) on investments		39,104		702		545,414		987,802
	Change in net unrealized appreciation (depreciation)
	of investments		68,245		9,976		1,037,345		2,206,337
	Net gains (losses) on investments		238,686		13,566		2,389,431		3,404,986
Net increase (decrease) in net assets resulting from operations			238,686		13,566		2,389,431		3,404,986
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		3,991,481		308,141		4,659,971		3,703,148
	Contract terminations and surrenders		(111,959)		—		(807,503)		(1,349,984)
	Death benefit payments		(3,049)		—		(25,641)		(10,778)
	Policy loan transfers		(11,151)		1,981		(82,022)		(93,924)
	Transfers to other contracts		(715,834)		(2,010)		(3,188,847)		(8,412,936)
	Cost of insurance and administration charges		(56,536)		(1,210)		(240,746)		(286,916)
	Mortality and expenses charges		(8,537)		(110)		(42,486)		(44,644)
	Surrender charges		4,869		—		24,559		11,307
Increase (decrease) in net assets from policy related transactions			3,089,284		306,792		297,285		(6,484,727)
Total increase (decrease)			3,327,970		320,358		2,686,716		(3,079,741)
Net assets as of December 31, 2019		$	4,259,228	$	320,358	$	17,792,323	$	14,258,686

(1) Commenced operations June 7, 2019.

See accompanying notes.

A-60



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Franklin Mutual Shares VIP Class 2 Division		Franklin Rising Dividends VIP Class 2 Division		Franklin Small Cap Value VIP Class 2 Division		Franklin Strategic Income VIP Class 2 Division



Net assets as of January 1, 2018		$	10,408,582	$	21,349,399	$	22,858,820	$	16,341,041
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		248,089		275,880		198,401		442,796
	Total realized gains (losses) on investments		260,118		1,580,767		2,531,872		(152,661)
	Change in net unrealized appreciation (depreciation)
	of investments		(1,497,526)		(2,827,084)		(4,846,330)		(658,142)
	Net gains (losses) on investments		(989,319)		(970,437)		(2,116,057)		(368,007)
Net increase (decrease) in net assets resulting from operations			(989,319)		(970,437)		(2,116,057)		(368,007)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,833,780		5,117,642		21,265,428		7,459,122
	Contract terminations and surrenders		(102,156)		(663,314)		(4,254,804)		(146,030)
	Death benefit payments		(122,622)		(218,797)		(121,991)		(50,083)
	Policy loan transfers		(23,435)		(236,265)		(7,990)		(9,565)
	Transfers to other contracts		(755,829)		(5,183,225)		(21,710,634)		(5,026,276)
	Cost of insurance and administration charges		(136,845)		(373,513)		(355,486)		(315,626)
	Mortality and expenses charges		(23,793)		(54,936)		(58,004)		(45,691)
	Surrender charges		304		1,296		118,074		1,952
Increase (decrease) in net assets from policy related transactions			669,404		(1,611,112)		(5,125,407)		1,867,803
Total increase (decrease)			(319,915)		(2,581,549)		(7,241,464)		1,499,796
Net assets as of December 31, 2018			10,088,667		18,767,850		15,617,356		17,840,837

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		206,845		265,050		186,855		827,857
	Total realized gains (losses) on investments		934,074		3,690,684		1,804,337		76,262
	Change in net unrealized appreciation (depreciation)
	of investments		1,135,741		1,352,102		1,986,123		430,453
	Net gains (losses) on investments		2,276,660		5,307,836		3,977,315		1,334,572
Net increase (decrease) in net assets resulting from operations			2,276,660		5,307,836		3,977,315		1,334,572
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,371,571		3,267,065		5,264,621		8,871,888
	Contract terminations and surrenders		(719,219)		(1,477,642)		(1,239,248)		(194,822)
	Death benefit payments		(15,381)		(21,957)		(26,955)		(7,010)
	Policy loan transfers		2,981		(26,379)		(44,129)		(53,386)
	Transfers to other contracts		(772,817)		(4,103,949)		(5,110,917)		(9,892,767)
	Cost of insurance and administration charges		(146,168)		(389,295)		(282,858)		(332,172)
	Mortality and expenses charges		(26,290)		(56,806)		(47,642)		(48,486)
	Surrender charges		8,125		30,670		26,919		5,841
Increase (decrease) in net assets from policy related transactions			(297,198)		(2,778,293)		(1,460,209)		(1,650,914)
Total increase (decrease)			1,979,462		2,529,543		2,517,106		(316,342)
Net assets as of December 31, 2019		$	12,068,129	$	21,297,393	$	18,134,462	$	17,524,495

See accompanying notes.

A-61



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Franklin U.S. Government Securities VIP Class 2 Division		Goldman Sachs VIT Small Cap Equity Insights Institutional Shares Division		Government & High Quality Bond Class 1 Division		International Emerging Markets Class 1 Division



Net assets as of January 1, 2018		$	1,104,078	$	721,016	$	43,180,576	$	52,398,059
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		31,830		8,395		1,601,739		578,456
	Total realized gains (losses) on investments		(27,043)		335,180		(931,020)		1,789,315
	Change in net unrealized appreciation (depreciation)
	of investments		7,308		(552,523)		(283,769)		(13,072,216)
	Net gains (losses) on investments		12,095		(208,948)		386,950		(10,704,445)
Net increase (decrease) in net assets resulting from operations			12,095		(208,948)		386,950		(10,704,445)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		715,918		1,468,895		10,185,512		18,895,572
	Contract terminations and surrenders		(6,541)		(112,955)		(1,764,392)		(2,739,807)
	Death benefit payments		(93)		(1,779)		(73,075)		(79,633)
	Policy loan transfers		(618)		17,755		(238,666)		(271,766)
	Transfers to other contracts		(345,601)		(344,071)		(7,298,913)		(15,929,580)
	Cost of insurance and administration charges		(23,120)		(8,751)		(1,337,305)		(1,572,776)
	Mortality and expenses charges		(3,060)		(1,641)		(126,733)		(132,753)
	Surrender charges		210		63		735		11,205
Increase (decrease) in net assets from policy related transactions			337,095		1,017,516		(652,837)		(1,819,538)
Total increase (decrease)			349,190		808,568		(265,887)		(12,523,983)
Net assets as of December 31, 2018			1,453,268		1,529,584		42,914,689		39,874,076

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		43,853		8,601		1,431,462		378,335
	Total realized gains (losses) on investments		(12,883)		(149,936)		(588,062)		2,029,716
	Change in net unrealized appreciation (depreciation)
	of investments		39,215		518,277		2,150,651		4,256,549
	Net gains (losses) on investments		70,185		376,942		2,994,051		6,664,600
Net increase (decrease) in net assets resulting from operations			70,185		376,942		2,994,051		6,664,600
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		224,985		667,751		23,666,126		9,174,195
	Contract terminations and surrenders		(2,555)		(52,054)		(3,121,866)		(2,047,688)
	Death benefit payments		(33,770)		—		(159,045)		(329,812)
	Policy loan transfers		(15,896)		(51,950)		(441,352)		(76,677)
	Transfers to other contracts		(1,258,457)		(624,663)		(10,443,084)		(8,194,491)
	Cost of insurance and administration charges		(17,189)		(12,250)		(1,389,076)		(1,393,350)
	Mortality and expenses charges		(2,441)		(2,419)		(137,730)		(108,975)
	Surrender charges		85		—		58,418		(10,573)
Increase (decrease) in net assets from policy related transactions			(1,105,238)		(75,585)		8,032,391		(2,987,371)
Total increase (decrease)			(1,035,053)		301,357		11,026,442		3,677,229
Net assets as of December 31, 2019		$	418,215	$	1,830,941	$	53,941,131	$	43,551,305

See accompanying notes.

A-62



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Invesco American Franchise Series I Division		Invesco American Franchise Series II Division		Invesco American Value Series I Division		Invesco Core Equity Series I Division



Net assets as of January 1, 2018		$	2,311,316	$	2,089,158	$	98,616	$	7,252,958
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(191)		—		584		55,540
	Total realized gains (losses) on investments		286,442		205,522		17,621		517,199
	Change in net unrealized appreciation (depreciation)
	of investments		(379,975)		(295,771)		(33,497)		(1,107,122)
	Net gains (losses) on investments		(93,724)		(90,249)		(15,292)		(534,383)
Net increase (decrease) in net assets resulting from operations			(93,724)		(90,249)		(15,292)		(534,383)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		478,396		288,660		35,581		388,866
	Contract terminations and surrenders		(174,399)		(57,579)		(3,423)		(303,167)
	Death benefit payments		(3,415)		—		—		(1,584)
	Policy loan transfers		10,323		(13,884)		(835)		(35,976)
	Transfers to other contracts		(194,869)		(67,616)		(12,630)		(1,075,115)
	Cost of insurance and administration charges		(60,653)		(63,968)		(6,010)		(197,290)
	Mortality and expenses charges		(5,561)		(4,989)		(299)		(18,740)
	Surrender charges		(123)		(1,074)		151		(207)
Increase (decrease) in net assets from policy related transactions			49,699		79,550		12,535		(1,243,213)
Total increase (decrease)			(44,025)		(10,699)		(2,757)		(1,777,596)
Net assets as of December 31, 2018			2,267,291		2,078,459		95,859		5,475,362

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(199)		—		919		59,174
	Total realized gains (losses) on investments		465,073		453,992		7,453		873,456
	Change in net unrealized appreciation (depreciation)
	of investments		349,505		300,256		17,489		588,457
	Net gains (losses) on investments		814,379		754,248		25,861		1,521,087
Net increase (decrease) in net assets resulting from operations			814,379		754,248		25,861		1,521,087
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		148,473		195,443		37,931		435,495
	Contract terminations and surrenders		(69,091)		(108,526)		(1,618)		(222,979)
	Death benefit payments		—		—		—		(6,170)
	Policy loan transfers		(614)		(13,093)		—		3,915
	Transfers to other contracts		(211,959)		(74,516)		(8,272)		(599,220)
	Cost of insurance and administration charges		(60,663)		(68,813)		(6,594)		(181,141)
	Mortality and expenses charges		(5,797)		(5,138)		(310)		(17,165)
	Surrender charges		(79)		(421)		(5)		(204)
Increase (decrease) in net assets from policy related transactions			(199,730)		(75,064)		21,132		(587,469)
Total increase (decrease)			614,649		679,184		46,993		933,618
Net assets as of December 31, 2019		$	2,881,940	$	2,757,643	$	142,852	$	6,408,980

See accompanying notes.

A-63



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Invesco Core Equity Series II Division		Invesco Global Real Estate Series I Division		Invesco Health Care Series I Division		Invesco International Growth Series I Division



Net assets as of January 1, 2018		$	9,997,832	$	910,501	$	17,406,847	$	25,385,635
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		37,855		(95)		409,094
	Total realized gains (losses) on investments		960,936		7,951		1,728,441		1,367,943
	Change in net unrealized appreciation (depreciation)
	of investments		(1,844,697)		(105,369)		(1,616,411)		(4,947,486)
	Net gains (losses) on investments		(883,761)		(59,563)		111,935		(3,170,449)
Net increase (decrease) in net assets resulting from operations			(883,761)		(59,563)		111,935		(3,170,449)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,286,478		438,062		10,299,925		6,786,824
	Contract terminations and surrenders		(363,106)		(59,805)		(940,138)		(884,818)
	Death benefit payments		(21,606)		(328)		(68,729)		(66,890)
	Policy loan transfers		(93,706)		(564)		(12,207)		(45,912)
	Transfers to other contracts		(1,167,706)		(233,506)		(9,999,488)		(11,566,873)
	Cost of insurance and administration charges		(408,141)		(18,613)		(415,043)		(326,192)
	Mortality and expenses charges		(17,922)		(2,889)		(40,115)		(50,948)
	Surrender charges		(5,728)		(1,283)		5,496		22,627
Increase (decrease) in net assets from policy related transactions			(791,437)		121,074		(1,170,299)		(6,132,182)
Total increase (decrease)			(1,675,198)		61,511		(1,058,364)		(9,302,631)
Net assets as of December 31, 2018			8,322,634		972,012		16,348,483		16,083,004

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		15,439		54,029		7,723		216,938
	Total realized gains (losses) on investments		1,297,805		15,449		210,858		1,709,280
	Change in net unrealized appreciation (depreciation)
	of investments		995,739		160,072		4,858,727		2,029,643
	Net gains (losses) on investments		2,308,983		229,550		5,077,308		3,955,861
Net increase (decrease) in net assets resulting from operations			2,308,983		229,550		5,077,308		3,955,861
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,104,080		348,892		9,778,939		3,317,810
	Contract terminations and surrenders		(1,064,309)		(60,244)		(784,277)		(522,925)
	Death benefit payments		(15,028)		—		(16,764)		(17,473)
	Policy loan transfers		(108,686)		(2,368)		18,860		(191,415)
	Transfers to other contracts		(420,952)		(296,388)		(9,990,388)		(7,785,214)
	Cost of insurance and administration charges		(362,209)		(24,289)		(408,784)		(253,451)
	Mortality and expenses charges		(14,836)		(3,840)		(38,348)		(40,818)
	Surrender charges		12,911		2,257		6,639		17,276
Increase (decrease) in net assets from policy related transactions			(869,029)		(35,980)		(1,434,123)		(5,476,210)
Total increase (decrease)			1,439,954		193,570		3,643,185		(1,520,349)
Net assets as of December 31, 2019		$	9,762,588	$	1,165,582	$	19,991,668	$	14,562,655

See accompanying notes.

A-64



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


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



Net assets as of January 1, 2018		$	686,954	$	2,563,072	$	4,588,861	$	10,240,172
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		699		(139)		3,277		(35)
	Total realized gains (losses) on investments		70,220		432,147		905,549		399,832
	Change in net unrealized appreciation (depreciation)
	of investments		(116,818)		(591,250)		(1,588,048)		(1,894,265)
	Net gains (losses) on investments		(45,899)		(159,242)		(679,222)		(1,494,468)
Net increase (decrease) in net assets resulting from operations			(45,899)		(159,242)		(679,222)		(1,494,468)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		195,322		1,234,069		3,493,804		2,860,817
	Contract terminations and surrenders		(46,580)		(56,374)		(249,837)		(119,877)
	Death benefit payments		(782)		(12,515)		(89,095)		(28,838)
	Policy loan transfers		(976)		12,287		(65,879)		68,234
	Transfers to other contracts		(425,048)		(1,166,388)		(1,838,964)		(2,969,955)
	Cost of insurance and administration charges		(15,740)		(69,663)		(106,169)		(147,787)
	Mortality and expenses charges		(2,189)		(9,532)		(14,458)		(21,810)
	Surrender charges		(552)		78		9,088		228
Increase (decrease) in net assets from policy related transactions			(296,545)		(68,038)		1,138,490		(358,988)
Total increase (decrease)			(342,444)		(227,280)		459,268		(1,853,456)
Net assets as of December 31, 2018			344,510		2,335,792		5,048,129		8,386,716

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		798		(120)		—		(29)
	Total realized gains (losses) on investments		22,021		477,066		258,463		929,724
	Change in net unrealized appreciation (depreciation)
	of investments		59,261		304,926		1,033,515		1,252,710
	Net gains (losses) on investments		82,080		781,872		1,291,978		2,182,405
Net increase (decrease) in net assets resulting from operations			82,080		781,872		1,291,978		2,182,405
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		89,991		1,014,552		2,618,813		1,230,445
	Contract terminations and surrenders		(91,313)		(749,106)		(615,267)		(399,945)
	Death benefit payments		—		(31,252)		—		(3,624)
	Policy loan transfers		21,869		(18,606)		(60,204)		(6,936)
	Transfers to other contracts		(80,107)		(639,113)		(2,174,953)		(1,531,571)
	Cost of insurance and administration charges		(11,652)		(72,728)		(101,625)		(136,111)
	Mortality and expenses charges		(1,460)		(10,113)		(13,840)		(20,693)
	Surrender charges		1,060		27,688		23,358		7,667
Increase (decrease) in net assets from policy related transactions			(71,612)		(478,678)		(323,718)		(860,768)
Total increase (decrease)			10,468		303,194		968,260		1,321,637
Net assets as of December 31, 2019		$	354,978	$	2,638,986	$	6,016,389	$	9,708,353

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

A-65



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


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



Net assets as of January 1, 2018		$	6,285,142	$	19,717,215	$	44,649,036	$	49,161,339
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(515)		375,482		67,797		1,154,775
	Total realized gains (losses) on investments		887,262		1,210,412		4,061,370		(675,667)
	Change in net unrealized appreciation (depreciation)
	of investments		(1,089,795)		(1,653,739)		(4,846,042)		(1,142,533)
	Net gains (losses) on investments		(203,048)		(67,845)		(716,875)		(663,425)
Net increase (decrease) in net assets resulting from operations			(203,048)		(67,845)		(716,875)		(663,425)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		5,847,123		9,464,738		20,392,228		14,002,486
	Contract terminations and surrenders		(273,374)		(1,064,059)		(2,904,683)		(1,295,555)
	Death benefit payments		(6,599)		(16,697)		(112,655)		(470,827)
	Policy loan transfers		1,620		(157,583)		(237,962)		435
	Transfers to other contracts		(4,026,066)		(5,207,991)		(11,406,248)		(18,158,426)
	Cost of insurance and administration charges		(148,941)		(354,974)		(849,196)		(706,879)
	Mortality and expenses charges		(19,903)		(51,201)		(113,868)		(111,046)
	Surrender charges		(98)		20,067		73,103		19,023
Increase (decrease) in net assets from policy related transactions			1,373,762		2,632,300		4,840,719		(6,720,789)
Total increase (decrease)			1,170,714		2,564,455		4,123,844		(7,384,214)
Net assets as of December 31, 2018			7,455,856		22,281,670		48,772,880		41,777,125

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(603)		452,466		33,041		1,078,477
	Total realized gains (losses) on investments		1,300,718		1,750,449		7,423,362		(447,717)
	Change in net unrealized appreciation (depreciation)
	of investments		1,142,417		3,084,073		10,331,801		2,901,767
	Net gains (losses) on investments		2,442,532		5,286,988		17,788,204		3,532,527
Net increase (decrease) in net assets resulting from operations			2,442,532		5,286,988		17,788,204		3,532,527
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		6,817,108		9,742,707		23,378,472		17,391,575
	Contract terminations and surrenders		(167,347)		(2,305,207)		(3,695,325)		(1,546,920)
	Death benefit payments		(5,064)		(29,870)		(63,861)		(48,136)
	Policy loan transfers		8,491		(67,961)		(41,406)		(105,028)
	Transfers to other contracts		(7,858,940)		(4,714,597)		(13,276,152)		(21,595,020)
	Cost of insurance and administration charges		(139,494)		(446,907)		(1,044,608)		(656,684)
	Mortality and expenses charges		(19,663)		(66,158)		(144,758)		(103,615)
	Surrender charges		(66)		87,265		120,184		50,872
Increase (decrease) in net assets from policy related transactions			(1,364,975)		2,199,272		5,232,546		(6,612,956)
Total increase (decrease)			1,077,557		7,486,260		23,020,750		(3,080,429)
Net assets as of December 31, 2019		$	8,533,413	$	29,767,930	$	71,793,630	$	38,696,696

See accompanying notes.

A-66



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Janus Henderson Forty Service Shares Division		Janus Henderson Global Research Service Shares Division		Janus Henderson Global Technology Service Shares Division (1)		Janus Henderson Overseas Service Shares Division



Net assets as of January 1, 2018		$	10,018,133	$	2,662,403	$	—	$	3,649,229
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		163,169		33,845		—		59,986
	Total realized gains (losses) on investments		2,159,943		256,752		—		(42,941)
	Change in net unrealized appreciation (depreciation)
	of investments		(2,497,639)		(664,736)		—		(571,355)
	Net gains (losses) on investments		(174,527)		(374,139)		—		(554,310)
Net increase (decrease) in net assets resulting from operations			(174,527)		(374,139)		—		(554,310)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		11,930,078		3,178,728		—		8,859,602
	Contract terminations and surrenders		(181,045)		(94,176)		—		(171,114)
	Death benefit payments		(20,835)		(1,253)		—		(1,348)
	Policy loan transfers		(51,669)		(69,830)		—		(9,550)
	Transfers to other contracts		(8,897,937)		(1,115,954)		—		(8,547,099)
	Cost of insurance and administration charges		(302,295)		(64,259)		—		(63,192)
	Mortality and expenses charges		(39,756)		(10,242)		—		(11,885)
	Surrender charges		1,225		1,977		—		45
Increase (decrease) in net assets from policy related transactions			2,437,766		1,824,991		—		55,459
Total increase (decrease)			2,263,239		1,450,852		—		(498,851)
Net assets as of December 31, 2018			12,281,372		4,113,255		—		3,150,378

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		3,103		39,654		—		56,630
	Total realized gains (losses) on investments		1,161,045		441,363		186		58,461
	Change in net unrealized appreciation (depreciation)
	of investments		3,229,678		649,409		31,620		625,756
	Net gains (losses) on investments		4,393,826		1,130,426		31,806		740,847
Net increase (decrease) in net assets resulting from operations			4,393,826		1,130,426		31,806		740,847
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		6,285,726		2,462,739		370,145		9,354,488
	Contract terminations and surrenders		(166,972)		(218,085)		—		(38,339)
	Death benefit payments		(57,738)		(21,237)		—		—
	Policy loan transfers		(216,923)		5,384		844		8,804
	Transfers to other contracts		(7,192,991)		(2,493,012)		(935)		(9,798,601)
	Cost of insurance and administration charges		(344,287)		(65,254)		(3,141)		(57,075)
	Mortality and expenses charges		(45,051)		(11,094)		(211)		(11,346)
	Surrender charges		68		5,592		—		—
Increase (decrease) in net assets from policy related transactions			(1,738,168)		(334,967)		366,702		(542,069)
Total increase (decrease)			2,655,658		795,459		398,508		198,778
Net assets as of December 31, 2019		$	14,937,030	$	4,908,714	$	398,508	$	3,349,156

(1) Commenced operations June 7, 2019.

See accompanying notes.

A-67



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		JP Morgan Core Bond Class I Division		JP Morgan Small Cap Core Class I Division		LargeCap Growth I Class 1 Division		LargeCap S&P 500 Index Class 1 Division



Net assets as of January 1, 2018		$	2,952,957	$	5,929,932	$	187,992,159	$	158,276,427
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		70,841		21,819		72,704		2,898,430
	Total realized gains (losses) on investments		(74,548)		941,657		25,303,537		15,014,081
	Change in net unrealized appreciation (depreciation)
	of investments		1,387		(1,434,193)		(18,245,859)		(25,770,209)
	Net gains (losses) on investments		(2,320)		(470,717)		7,130,382		(7,857,698)
Net increase (decrease) in net assets resulting from operations			(2,320)		(470,717)		7,130,382		(7,857,698)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,442,832		1,895,375		69,657,523		67,497,779
	Contract terminations and surrenders		(259,046)		(471,677)		(10,513,006)		(7,294,810)
	Death benefit payments		(52,570)		(3,462)		(640,523)		(204,561)
	Policy loan transfers		(3,133)		(281,975)		(1,383,544)		(255,388)
	Transfers to other contracts		(1,271,698)		(2,783,326)		(57,018,191)		(47,214,293)
	Cost of insurance and administration charges		(33,607)		(62,145)		(4,189,798)		(3,541,812)
	Mortality and expenses charges		(6,423)		(12,205)		(429,675)		(385,812)
	Surrender charges		114		54		119,038		208,451
Increase (decrease) in net assets from policy related transactions			(183,531)		(1,719,361)		(4,398,176)		8,809,554
Total increase (decrease)			(185,851)		(2,190,078)		2,732,206		951,856
Net assets as of December 31, 2018			2,767,106		3,739,854		190,724,365		159,228,283

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		67,616		14,922		141,890		3,619,036
	Total realized gains (losses) on investments		(660)		507,276		36,309,107		17,132,139
	Change in net unrealized appreciation (depreciation)
	of investments		138,002		329,183		37,751,199		29,160,919
	Net gains (losses) on investments		204,958		851,381		74,202,196		49,912,094
Net increase (decrease) in net assets resulting from operations			204,958		851,381		74,202,196		49,912,094
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,198,721		509,064		138,806,280		72,241,751
	Contract terminations and surrenders		(328,045)		(172,588)		(16,882,277)		(10,135,293)
	Death benefit payments		—		—		(988,579)		(372,241)
	Policy loan transfers		291		13,505		(352,632)		(273,166)
	Transfers to other contracts		(488,253)		(1,062,817)		(62,876,276)		(53,201,200)
	Cost of insurance and administration charges		(30,508)		(42,649)		(5,046,090)		(3,945,033)
	Mortality and expenses charges		(6,261)		(8,893)		(531,487)		(440,455)
	Surrender charges		—		—		292,884		341,754
Increase (decrease) in net assets from policy related transactions			345,945		(764,378)		52,421,823		4,216,117
Total increase (decrease)			550,903		87,003		126,624,019		54,128,211
Net assets as of December 31, 2019		$	3,318,009	$	3,826,857	$	317,348,384	$	213,356,494

See accompanying notes.

A-68



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Lord Abbett Series Fund Developing Growth Class VC Division		MFS Blended Research Small Cap Equity Service Class Division		MFS Global Equity Service Class Division		MFS Growth Service Class Division



Net assets as of January 1, 2018		$	10,935	$	98,470	$	6,894,666	$	29,260,694
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		2,547		48,484		—
	Total realized gains (losses) on investments		86,857		43,633		537,444		4,159,169
	Change in net unrealized appreciation (depreciation)
	of investments		(172,667)		(138,411)		(1,229,639)		(3,716,669)
	Net gains (losses) on investments		(85,810)		(92,231)		(643,711)		442,500
Net increase (decrease) in net assets resulting from operations			(85,810)		(92,231)		(643,711)		442,500
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		691,904		785,978		1,726,129		12,648,834
	Contract terminations and surrenders		—		(528)		(218,275)		(1,059,317)
	Death benefit payments		—		—		(1,977)		(105,498)
	Policy loan transfers		10		3,735		(3,427)		(205,956)
	Transfers to other contracts		(39,175)		(76,192)		(1,833,832)		(9,032,240)
	Cost of insurance and administration charges		(24,860)		(5,556)		(129,850)		(474,892)
	Mortality and expenses charges		(1,277)		(694)		(18,322)		(73,298)
	Surrender charges		—		18		1,252		42,325
Increase (decrease) in net assets from policy related transactions			626,602		706,761		(478,302)		1,739,958
Total increase (decrease)			540,792		614,530		(1,122,013)		2,182,458
Net assets as of December 31, 2018			551,727		713,000		5,772,653		31,443,152

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(6)		5,522		77,291		—
	Total realized gains (losses) on investments		43,469		159,701		770,698		6,138,688
	Change in net unrealized appreciation (depreciation)
	of investments		114,564		75,818		1,116,028		5,777,088
	Net gains (losses) on investments		158,027		241,041		1,964,017		11,915,776
Net increase (decrease) in net assets resulting from operations			158,027		241,041		1,964,017		11,915,776
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		484,711		1,168,940		3,940,411		11,516,327
	Contract terminations and surrenders		(13,251)		(8,644)		(233,474)		(1,568,154)
	Death benefit payments		—		—		—		(54,005)
	Policy loan transfers		1,500		(5,725)		(64,430)		109,240
	Transfers to other contracts		(338,905)		(558,022)		(1,784,499)		(9,796,566)
	Cost of insurance and administration charges		(40,835)		(19,378)		(129,393)		(533,102)
	Mortality and expenses charges		(2,183)		(2,521)		(18,914)		(84,976)
	Surrender charges		45		341		9,723		63,854
Increase (decrease) in net assets from policy related transactions			91,082		574,991		1,719,424		(347,382)
Total increase (decrease)			249,109		816,032		3,683,441		11,568,394
Net assets as of December 31, 2019		$	800,836	$	1,529,032	$	9,456,094	$	43,011,546

See accompanying notes.

A-69



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		MFS Inflation-Adjusted Bond Service Class Division		MFS International Intrinsic Value Service Class Division (1)		MFS Mid Cap Growth Service Class Division		MFS Mid Cap Value Portfolio Service Class Division



Net assets as of January 1, 2018		$	52,008	$	11,636,335	$	693,854	$	1,082,668
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		2,849		126,064		—		7,922
	Total realized gains (losses) on investments		(7,415)		685,535		231,407		87,318
	Change in net unrealized appreciation (depreciation)
	of investments		(7,455)		(2,183,404)		(387,626)		(231,498)
	Net gains (losses) on investments		(12,021)		(1,371,805)		(156,219)		(136,258)
Net increase (decrease) in net assets resulting from operations			(12,021)		(1,371,805)		(156,219)		(136,258)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		267,414		6,728,720		1,678,939		337,304
	Contract terminations and surrenders		—		(468,828)		(6,766)		(4,636)
	Death benefit payments		—		(17,001)		(3,844)		—
	Policy loan transfers		1,992		(76,261)		(49,355)		—
	Transfers to other contracts		(188,458)		(3,226,201)		(189,818)		(149,930)
	Cost of insurance and administration charges		(3,545)		(219,647)		(22,525)		(21,357)
	Mortality and expenses charges		(450)		(31,404)		(4,244)		(2,469)
	Surrender charges		—		6,989		3		(4)
Increase (decrease) in net assets from policy related transactions			76,953		2,696,367		1,402,390		158,908
Total increase (decrease)			64,932		1,324,562		1,246,171		22,650
Net assets as of December 31, 2018			116,940		12,960,897		1,940,025		1,105,318

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		3,428		281,541		—		13,028
	Total realized gains (losses) on investments		(2,328)		1,076,897		305,910		124,015
	Change in net unrealized appreciation (depreciation)
	of investments		12,533		2,466,506		316,512		320,774
	Net gains (losses) on investments		13,633		3,824,944		622,422		457,817
Net increase (decrease) in net assets resulting from operations			13,633		3,824,944		622,422		457,817
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		312,699		9,175,909		130,620		1,757,174
	Contract terminations and surrenders		—		(1,104,732)		(4,716)		(12,945)
	Death benefit payments		—		(14,675)		(104,209)		—
	Policy loan transfers		39		(180,972)		8,622		—
	Transfers to other contracts		(65,157)		(2,560,893)		(2,008,747)		(206,287)
	Cost of insurance and administration charges		(3,463)		(267,155)		(26,873)		(76,020)
	Mortality and expenses charges		(454)		(40,453)		(5,338)		(9,624)
	Surrender charges		—		47,315		—		404
Increase (decrease) in net assets from policy related transactions			243,664		5,054,344		(2,010,641)		1,452,702
Total increase (decrease)			257,297		8,879,288		(1,388,219)		1,910,519
Net assets as of December 31, 2019		$	374,237	$	21,840,185	$	551,806	$	3,015,837

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

See accompanying notes.

A-70



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		MFS New Discovery Service Class Division		MFS New Discovery Value Service Class Division		MFS Research International Portfolio Service Class Division		MFS Total Return Service Class Division



Net assets as of January 1, 2018		$	11,405,719	$	280,564	$	2,944,824	$	2,181,280
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(53)		827		31,843		48,544
	Total realized gains (losses) on investments		2,680,117		50,220		135,370		133,969
	Change in net unrealized appreciation (depreciation)
	of investments		(3,089,489)		(92,252)		(558,436)		(342,330)
	Net gains (losses) on investments		(409,425)		(41,205)		(391,223)		(159,817)
Net increase (decrease) in net assets resulting from operations			(409,425)		(41,205)		(391,223)		(159,817)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		8,223,034		140,240		526,097		1,350,510
	Contract terminations and surrenders		(752,333)		(135)		(172,835)		(62,293)
	Death benefit payments		(8,440)		—		(23,590)		—
	Policy loan transfers		(146,255)		(816)		3,999		(7,534)
	Transfers to other contracts		(5,625,510)		(58,408)		(662,713)		(640,909)
	Cost of insurance and administration charges		(247,176)		(9,108)		(43,744)		(60,961)
	Mortality and expenses charges		(31,370)		(898)		(6,671)		(8,005)
	Surrender charges		13,441		(31)		7,474		2,740
Increase (decrease) in net assets from policy related transactions			1,425,391		70,844		(371,983)		573,548
Total increase (decrease)			1,015,966		29,639		(763,206)		413,731
Net assets as of December 31, 2018			12,421,685		310,203		2,181,618		2,595,011

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		(156)		2,914		30,868		72,563
	Total realized gains (losses) on investments		3,937,752		79,401		145,237		101,888
	Change in net unrealized appreciation (depreciation)
	of investments		1,099,636		83,748		433,136		386,005
	Net gains (losses) on investments		5,037,232		166,063		609,241		560,456
Net increase (decrease) in net assets resulting from operations			5,037,232		166,063		609,241		560,456
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		10,403,357		708,831		355,631		895,497
	Contract terminations and surrenders		(796,657)		(669)		(133,121)		(232,954)
	Death benefit payments		(11,597)		—		(1,146)		—
	Policy loan transfers		8,014		(3,286)		(2,415)		(7,184)
	Transfers to other contracts		(10,782,360)		(145,804)		(181,187)		(326,125)
	Cost of insurance and administration charges		(275,296)		(14,953)		(38,011)		(69,346)
	Mortality and expenses charges		(34,461)		(1,650)		(6,062)		(9,407)
	Surrender charges		16,711		(1)		2,663		10,131
Increase (decrease) in net assets from policy related transactions			(1,472,289)		542,468		(3,648)		260,612
Total increase (decrease)			3,564,943		708,531		605,593		821,068
Net assets as of December 31, 2019		$	15,986,628	$	1,018,734	$	2,787,211	$	3,416,079

See accompanying notes.

A-71



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		MFS Utilities Service Class Division		MFS Value Service Class Division		MidCap Class 1 Division		Neuberger Berman AMT Mid Cap Growth Portfolio Class S Division



Net assets as of January 1, 2018		$	3,765,419	$	38,445,176	$	209,663,834	$	770,248
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		31,492		483,781		437,602		—
	Total realized gains (losses) on investments		37,273		2,878,402		33,273,569		106,928
	Change in net unrealized appreciation (depreciation)
	of investments		(44,040)		(7,068,395)		(45,996,356)		(143,845)
	Net gains (losses) on investments		24,725		(3,706,212)		(12,285,185)		(36,917)
Net increase (decrease) in net assets resulting from operations			24,725		(3,706,212)		(12,285,185)		(36,917)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,289,819		12,682,119		23,694,312		127,406
	Contract terminations and surrenders		(209,877)		(1,893,016)		(10,825,178)		(61,911)
	Death benefit payments		(12,343)		(50,854)		(582,657)		(586)
	Policy loan transfers		(48,350)		(90,062)		(1,662,788)		(99)
	Transfers to other contracts		(837,886)		(12,901,994)		(23,674,554)		(166,122)
	Cost of insurance and administration charges		(110,270)		(550,174)		(4,788,359)		(11,364)
	Mortality and expenses charges		(16,022)		(90,644)		(371,810)		(2,053)
	Surrender charges		173		38,195		(56,675)		(966)
Increase (decrease) in net assets from policy related transactions			55,244		(2,856,430)		(18,267,709)		(115,695)
Total increase (decrease)			79,969		(6,562,642)		(30,552,894)		(152,612)
Net assets as of December 31, 2018			3,845,388		31,882,534		179,110,940		617,636

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		159,909		721,791		464,512		—
	Total realized gains (losses) on investments		217,714		1,795,718		39,064,833		77,059
	Change in net unrealized appreciation (depreciation)
	of investments		550,902		6,875,964		34,710,413		123,676
	Net gains (losses) on investments		928,525		9,393,473		74,239,758		200,735
Net increase (decrease) in net assets resulting from operations			928,525		9,393,473		74,239,758		200,735
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,513,516		7,859,244		23,846,638		129,662
	Contract terminations and surrenders		(324,966)		(2,367,884)		(9,883,723)		(38,575)
	Death benefit payments		(5,408)		(43,886)		(1,576,922)		—
	Policy loan transfers		13,319		(57,232)		(1,781,293)		(26)
	Transfers to other contracts		(1,236,686)		(5,531,923)		(25,614,977)		(100,586)
	Cost of insurance and administration charges		(117,841)		(530,377)		(4,643,968)		(10,927)
	Mortality and expenses charges		(15,738)		(90,353)		(354,673)		(2,091)
	Surrender charges		4,271		90,808		(6,988)		388
Increase (decrease) in net assets from policy related transactions			(169,533)		(671,603)		(20,015,906)		(22,155)
Total increase (decrease)			758,992		8,721,870		54,223,852		178,580
Net assets as of December 31, 2019		$	4,604,380	$	40,604,404	$	233,334,792	$	796,216

See accompanying notes.

A-72



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Neuberger Berman AMT Sustainable Equity I Class Division (1)		PIMCO All Asset Administrative Class Division		PIMCO Commodity Real Return Strategy Administrative Class Division		PIMCO Emerging Market Bond Administrative Class Division



Net assets as of January 1, 2018		$	—	$	3,161,875	$	670,804	$	1,297,522
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		94,888		15,869		51,737
	Total realized gains (losses) on investments		—		(14,761)		(22,029)		19,487
	Change in net unrealized appreciation (depreciation)
	of investments		—		(246,595)		(100,705)		(133,653)
	Net gains (losses) on investments		—		(166,468)		(106,865)		(62,429)
Net increase (decrease) in net assets resulting from operations			—		(166,468)		(106,865)		(62,429)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		—		592,652		384,539		3,373,337
	Contract terminations and surrenders		—		(114,594)		(63,822)		(100,687)
	Death benefit payments		—		(562)		(1,030)		(1,176)
	Policy loan transfers		—		(37,868)		(55,946)		291
	Transfers to other contracts		—		(665,888)		(205,125)		(3,311,745)
	Cost of insurance and administration charges		—		(58,622)		(14,436)		(21,537)
	Mortality and expenses charges		—		(8,451)		(1,999)		(3,400)
	Surrender charges		—		(21)		1,218		(402)
Increase (decrease) in net assets from policy related transactions			—		(293,354)		43,399		(65,319)
Total increase (decrease)			—		(459,822)		(63,466)		(127,748)
Net assets as of December 31, 2018			—		2,702,053		607,338		1,169,774

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		38,360		69,102		30,026		53,474
	Total realized gains (losses) on investments		492,100		74,793		(36,858)		(8,191)
	Change in net unrealized appreciation (depreciation)
	of investments		332,783		140,155		78,157		120,906
	Net gains (losses) on investments		863,243		284,050		71,325		166,189
Net increase (decrease) in net assets resulting from operations			863,243		284,050		71,325		166,189
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		10,409,843		484,296		377,631		3,632,688
	Contract terminations and surrenders		(191,260)		(854,038)		(76,023)		(180,574)
	Death benefit payments		(635)		—		(30)		—
	Policy loan transfers		(47,385)		(24,571)		30,205		(3,911)
	Transfers to other contracts		(1,078,096)		(410,754)		(291,254)		(3,493,858)
	Cost of insurance and administration charges		(101,455)		(47,069)		(14,306)		(23,892)
	Mortality and expenses charges		(18,487)		(7,142)		(2,052)		(3,790)
	Surrender charges		2,245		37,105		2,638		7,171
Increase (decrease) in net assets from policy related transactions			8,974,770		(822,173)		26,809		(66,166)
Total increase (decrease)			9,838,013		(538,123)		98,134		100,023
Net assets as of December 31, 2019		$	9,838,013	$	2,163,930	$	705,472	$	1,269,797

(1) Commenced operations April 29, 2019.

See accompanying notes.

A-73



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		PIMCO High Yield Administrative Class Division		PIMCO Long-Term U.S. Government Administrative Class Division		PIMCO Low Duration Administrative Class Division		PIMCO Real Return Administrative Class Division



Net assets as of January 1, 2018		$	11,845,252	$	723,674	$	30,500	$	10,701,100
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		640,505		16,686		7,814		268,562
	Total realized gains (losses) on investments		186,974		(31,784)		(711)		(137,693)
	Change in net unrealized appreciation (depreciation)
	of investments		(1,166,806)		(2,078)		(1,993)		(384,716)
	Net gains (losses) on investments		(339,327)		(17,176)		5,110		(253,847)
Net increase (decrease) in net assets resulting from operations			(339,327)		(17,176)		5,110		(253,847)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		12,029,384		145,968		627,314		6,191,789
	Contract terminations and surrenders		(1,086,734)		—		—		(537,640)
	Death benefit payments		(27,619)		—		—		(55,803)
	Policy loan transfers		(88,466)		(26,178)		(10,151)		(44,878)
	Transfers to other contracts		(9,114,214)		(89,874)		(143,242)		(5,066,558)
	Cost of insurance and administration charges		(214,279)		(5,249)		(6,936)		(184,372)
	Mortality and expenses charges		(30,760)		(985)		(909)		(26,122)
	Surrender charges		29,438		—		—		18,631
Increase (decrease) in net assets from policy related transactions			1,496,750		23,682		466,076		295,047
Total increase (decrease)			1,157,423		6,506		471,186		41,200
Net assets as of December 31, 2018			13,002,675		730,180		501,686		10,742,300

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		761,775		9,729		33,836		199,324
	Total realized gains (losses) on investments		(28,698)		21,559		1,574		32,473
	Change in net unrealized appreciation (depreciation)
	of investments		1,288,306		(188)		11,165		710,507
	Net gains (losses) on investments		2,021,383		31,100		46,575		942,304
Net increase (decrease) in net assets resulting from operations			2,021,383		31,100		46,575		942,304
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		13,001,109		410,582		1,277,449		6,949,002
	Contract terminations and surrenders		(2,251,429)		—		(20,825)		(546,587)
	Death benefit payments		(5,664)		—		—		(1,503)
	Policy loan transfers		(38,437)		(4,855)		(32,720)		(116,622)
	Transfers to other contracts		(8,530,384)		(908,981)		(188,378)		(4,923,489)
	Cost of insurance and administration charges		(265,173)		(5,266)		(18,380)		(229,050)
	Mortality and expenses charges		(38,951)		(908)		(2,581)		(33,342)
	Surrender charges		93,889		—		906		22,049
Increase (decrease) in net assets from policy related transactions			1,964,960		(509,428)		1,015,471		1,120,458
Total increase (decrease)			3,986,343		(478,328)		1,062,046		2,062,762
Net assets as of December 31, 2019		$	16,989,018	$	251,852	$	1,563,732	$	12,805,062

See accompanying notes.

A-74



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		PIMCO Short-Term Administrative Class Division		PIMCO Total Return Administrative Class Division		Principal Capital Appreciation Class 1 Division		Principal LifeTime 2010 Class 1 Division



Net assets as of January 1, 2018		$	24,165,922	$	44,213,121	$	20,451,341	$	17,413,882
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		539,972		1,106,377		238,694		480,659
	Total realized gains (losses) on investments		128,952		17,615		1,703,856		814,687
	Change in net unrealized appreciation (depreciation)
	of investments		(312,838)		(1,379,917)		(2,596,848)		(1,917,312)
	Net gains (losses) on investments		356,086		(255,925)		(654,298)		(621,966)
Net increase (decrease) in net assets resulting from operations			356,086		(255,925)		(654,298)		(621,966)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		15,871,249		21,080,045		2,855,714		6,066,550
	Contract terminations and surrenders		(3,619,564)		(2,369,582)		(1,297,917)		(706,743)
	Death benefit payments		(7,578)		(170,249)		(25,488)		(4,800)
	Policy loan transfers		(75,654)		173,840		(107,900)		(80,874)
	Transfers to other contracts		(6,797,230)		(17,824,307)		(1,502,027)		(7,510,405)
	Cost of insurance and administration charges		(355,903)		(602,224)		(581,770)		(306,773)
	Mortality and expenses charges		(52,862)		(82,094)		(41,276)		(41,598)
	Surrender charges		148,757		61,459		7,967		4,149
Increase (decrease) in net assets from policy related transactions			5,111,215		266,888		(692,697)		(2,580,494)
Total increase (decrease)			5,467,301		10,963		(1,346,995)		(3,202,460)
Net assets as of December 31, 2018			29,633,223		44,224,084		19,104,346		14,211,422

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		891,129		1,383,734		354,884		419,152
	Total realized gains (losses) on investments		1,053		(254,999)		2,609,853		793,046
	Change in net unrealized appreciation (depreciation)
	of investments		80,939		2,505,229		3,133,563		712,916
	Net gains (losses) on investments		973,121		3,633,964		6,098,300		1,925,114
Net increase (decrease) in net assets resulting from operations			973,121		3,633,964		6,098,300		1,925,114
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		18,638,533		24,370,852		2,273,411		5,819,888
	Contract terminations and surrenders		(907,341)		(2,427,761)		(1,030,578)		(1,412,449)
	Death benefit payments		(42,665)		(75,397)		(74,694)		(17,683)
	Policy loan transfers		(93,225)		(153,035)		(252,510)		(118,992)
	Transfers to other contracts		(7,363,957)		(20,192,480)		(1,456,773)		(5,626,677)
	Cost of insurance and administration charges		(447,121)		(650,475)		(582,796)		(276,686)
	Mortality and expenses charges		(69,009)		(91,808)		(39,844)		(37,316)
	Surrender charges		35,036		96,397		(7,581)		51,196
Increase (decrease) in net assets from policy related transactions			9,750,251		876,293		(1,171,365)		(1,618,719)
Total increase (decrease)			10,723,372		4,510,257		4,926,935		306,395
Net assets as of December 31, 2019		$	40,356,595	$	48,734,341	$	24,031,281	$	14,517,817

See accompanying notes.

A-75



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Principal LifeTime 2020 Class 1 Division		Principal LifeTime 2030 Class 1 Division		Principal LifeTime 2040 Class 1 Division		Principal LifeTime 2050 Class 1 Division



Net assets as of January 1, 2018		$	92,473,824	$	81,208,684	$	45,470,025	$	18,728,247
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		2,602,795		2,277,565		1,003,302		406,774
	Total realized gains (losses) on investments		2,715,429		4,426,089		2,931,903		1,994,292
	Change in net unrealized appreciation (depreciation)
	of investments		(10,559,120)		(13,050,347)		(7,767,813)		(4,156,437)
	Net gains (losses) on investments		(5,240,896)		(6,346,693)		(3,832,608)		(1,755,371)
Net increase (decrease) in net assets resulting from operations			(5,240,896)		(6,346,693)		(3,832,608)		(1,755,371)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		51,729,807		72,666,448		27,041,538		10,168,207
	Contract terminations and surrenders		(8,031,238)		(8,178,746)		(2,209,448)		(1,221,712)
	Death benefit payments		(26,501)		(286,529)		(74,844)		(52,528)
	Policy loan transfers		(487,149)		(976,651)		(282,952)		(60,329)
	Transfers to other contracts		(39,903,260)		(53,593,472)		(18,375,044)		(6,262,574)
	Cost of insurance and administration charges		(1,819,307)		(1,886,750)		(1,188,121)		(587,955)
	Mortality and expenses charges		(237,988)		(222,075)		(110,047)		(50,156)
	Surrender charges		233,726		177,319		4,423		4,112
Increase (decrease) in net assets from policy related transactions			1,458,090		7,699,544		4,805,505		1,937,065
Total increase (decrease)			(3,782,806)		1,352,851		972,897		181,694
Net assets as of December 31, 2018			88,691,018		82,561,535		46,442,922		18,909,941

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		2,491,334		2,234,213		1,087,882		424,539
	Total realized gains (losses) on investments		6,251,123		7,564,119		4,486,834		1,551,151
	Change in net unrealized appreciation (depreciation)
	of investments		7,834,635		9,911,176		6,446,896		3,095,265
	Net gains (losses) on investments		16,577,092		19,709,508		12,021,612		5,070,955
Net increase (decrease) in net assets resulting from operations			16,577,092		19,709,508		12,021,612		5,070,955
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		65,020,279		65,749,927		34,998,440		7,774,046
	Contract terminations and surrenders		(17,046,878)		(5,011,741)		(3,374,436)		(1,457,945)
	Death benefit payments		(265,810)		(124,593)		(33,508)		(40,364)
	Policy loan transfers		(220,686)		(499,383)		(82,332)		(314,705)
	Transfers to other contracts		(43,800,005)		(40,714,150)		(23,990,717)		(4,652,624)
	Cost of insurance and administration charges		(1,976,221)		(2,165,301)		(1,307,416)		(635,141)
	Mortality and expenses charges		(259,544)		(252,372)		(118,378)		(51,760)
	Surrender charges		596,283		126,454		96,236		40,539
Increase (decrease) in net assets from policy related transactions			2,047,418		17,108,841		6,187,889		662,046
Total increase (decrease)			18,624,510		36,818,349		18,209,501		5,733,001
Net assets as of December 31, 2019		$	107,315,528	$	119,379,884	$	64,652,423	$	24,642,942

See accompanying notes.

A-76



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Principal LifeTime 2060 Class 1 Division		Principal LifeTime Strategic Income Class 1 Division		Putnam VT Equity Income Class IB Division		Putnam VT Growth Opportunities Class IB Division



Net assets as of January 1, 2018		$	4,690,717	$	9,247,861	$	863,116	$	27,936,892
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		88,130		284,126		5,277		(159)
	Total realized gains (losses) on investments		584,342		256,122		52,301		2,774,085
	Change in net unrealized appreciation (depreciation)
	of investments		(966,507)		(814,101)		(117,468)		(1,994,846)
	Net gains (losses) on investments		(294,035)		(273,853)		(59,890)		779,080
Net increase (decrease) in net assets resulting from operations			(294,035)		(273,853)		(59,890)		779,080
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		7,132,987		7,509,751		44,415		2,543,658
	Contract terminations and surrenders		(451,538)		(906,476)		(5,199)		(2,212,061)
	Death benefit payments		(74,627)		(47,112)		(193)		(91,019)
	Policy loan transfers		(12,880)		(23,442)		(6,671)		(159,450)
	Transfers to other contracts		(7,448,560)		(6,301,020)		(145,384)		(1,634,182)
	Cost of insurance and administration charges		(78,028)		(183,454)		(11,385)		(852,356)
	Mortality and expenses charges		(11,753)		(22,855)		(2,145)		(75,877)
	Surrender charges		13,221		24,206		3		(744)
Increase (decrease) in net assets from policy related transactions			(931,178)		49,598		(126,559)		(2,482,031)
Total increase (decrease)			(1,225,213)		(224,255)		(186,449)		(1,702,951)
Net assets as of December 31, 2018			3,465,504		9,023,606		676,667		26,233,941

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		76,967		332,550		15,696		40,275
	Total realized gains (losses) on investments		237,939		600,180		71,123		4,933,445
	Change in net unrealized appreciation (depreciation)
	of investments		852,429		404,324		106,585		4,354,839
	Net gains (losses) on investments		1,167,335		1,337,054		193,404		9,328,559
Net increase (decrease) in net assets resulting from operations			1,167,335		1,337,054		193,404		9,328,559
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		5,458,967		8,885,935		18,251		2,302,319
	Contract terminations and surrenders		(754,449)		(300,924)		(56,692)		(1,664,105)
	Death benefit payments		(7,507)		(22,488)		—		(345,076)
	Policy loan transfers		9,384		(21,965)		1,395		(85,966)
	Transfers to other contracts		(2,856,592)		(3,301,724)		(91,449)		(1,444,034)
	Cost of insurance and administration charges		(93,862)		(245,820)		(10,332)		(826,430)
	Mortality and expenses charges		(13,478)		(31,413)		(2,045)		(76,507)
	Surrender charges		32,360		5,857		—		339
Increase (decrease) in net assets from policy related transactions			1,774,823		4,967,458		(140,872)		(2,139,460)
Total increase (decrease)			2,942,158		6,304,512		52,532		7,189,099
Net assets as of December 31, 2019		$	6,407,662	$	15,328,118	$	729,199	$	33,423,040

See accompanying notes.

A-77



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Putnam VT International Equity Class IB Division		Real Estate Securities Class 1 Division		Rydex Basic Materials Division (1)		Rydex Utilities Division (1)



Net assets as of January 1, 2018		$	916,109	$	75,297,380	$	—	$	—
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		11,844		1,283,173		—		—
	Total realized gains (losses) on investments		17,461		6,048,897		—		—
	Change in net unrealized appreciation (depreciation)
	of investments		(185,412)		(10,397,871)		—		—
	Net gains (losses) on investments		(156,107)		(3,065,801)		—		—
Net increase (decrease) in net assets resulting from operations			(156,107)		(3,065,801)		—		—
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		127,816		20,029,403		—		—
	Contract terminations and surrenders		(107,242)		(3,222,668)		—		—
	Death benefit payments		(145)		(125,665)		—		—
	Policy loan transfers		(4,711)		(204,421)		—		—
	Transfers to other contracts		(139,611)		(19,020,210)		—		—
	Cost of insurance and administration charges		(8,443)		(1,747,247)		—		—
	Mortality and expenses charges		(1,676)		(180,463)		—		—
	Surrender charges		8		4,957		—		—
Increase (decrease) in net assets from policy related transactions			(134,004)		(4,466,314)		—		—
Total increase (decrease)			(290,111)		(7,532,115)		—		—
Net assets as of December 31, 2018			625,998		67,765,265		—		—

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		9,814		1,421,004		—		—
	Total realized gains (losses) on investments		5,427		5,608,334		2,307		2
	Change in net unrealized appreciation (depreciation)
	of investments		151,170		13,594,091		21,353		527
	Net gains (losses) on investments		166,411		20,623,429		23,660		529
Net increase (decrease) in net assets resulting from operations			166,411		20,623,429		23,660		529
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		373,028		19,893,942		396,329		33,992
	Contract terminations and surrenders		(15,319)		(4,057,838)		—		—
	Death benefit payments		—		(413,319)		—		—
	Policy loan transfers		701		(331,379)		—		—
	Transfers to other contracts		(126,845)		(19,309,928)		(51,647)		(431)
	Cost of insurance and administration charges		(7,504)		(1,734,235)		(2,071)		(242)
	Mortality and expenses charges		(1,552)		(182,445)		(287)		(33)
	Surrender charges		—		58,776		—		—
Increase (decrease) in net assets from policy related transactions			222,509		(6,076,426)		342,324		33,286
Total increase (decrease)			388,920		14,547,003		365,984		33,815
Net assets as of December 31, 2019		$	1,014,918	$	82,312,268	$	365,984	$	33,815

(1) Commenced operations June 11, 2018.

See accompanying notes.

A-78



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		SAM Balanced Portfolio Class 1 Division		SAM Conservative Balanced Portfolio Class 1 Division		SAM Conservative Growth Portfolio Class 1 Division		SAM Flexible Income Portfolio Class 1 Division



Net assets as of January 1, 2018		$	77,136,822	$	42,523,622	$	62,036,232	$	23,581,724
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		2,306,481		1,527,341		1,760,899		864,186
	Total realized gains (losses) on investments		2,925,213		1,388,532		3,827,689		282,025
	Change in net unrealized appreciation (depreciation)
	of investments		(8,993,883)		(4,517,618)		(9,775,722)		(1,560,037)
	Net gains (losses) on investments		(3,762,189)		(1,601,745)		(4,187,134)		(413,826)
Net increase (decrease) in net assets resulting from operations			(3,762,189)		(1,601,745)		(4,187,134)		(413,826)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		12,482,470		9,243,890		13,843,090		7,334,308
	Contract terminations and surrenders		(3,576,412)		(1,329,936)		(2,818,823)		(1,402,568)
	Death benefit payments		(477,271)		(207,087)		(204,803)		(120,472)
	Policy loan transfers		(194,214)		(186,486)		(371,308)		(395,774)
	Transfers to other contracts		(7,218,191)		(3,355,261)		(6,762,491)		(7,023,029)
	Cost of insurance and administration charges		(2,908,753)		(1,134,657)		(2,026,456)		(720,061)
	Mortality and expenses charges		(257,253)		(137,634)		(197,673)		(63,804)
	Surrender charges		(73,037)		24,374		(35,224)		(16,751)
Increase (decrease) in net assets from policy related transactions			(2,222,661)		2,917,203		1,426,312		(2,408,151)
Total increase (decrease)			(5,984,850)		1,315,458		(2,760,822)		(2,821,977)
Net assets as of December 31, 2018			71,151,972		43,839,080		59,275,410		20,759,747

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		1,976,014		1,486,970		1,222,199		794,216
	Total realized gains (losses) on investments		2,404,797		697,717		4,300,419		547,224
	Change in net unrealized appreciation (depreciation)
	of investments		9,653,980		5,116,675		8,556,336		1,426,489
	Net gains (losses) on investments		14,034,791		7,301,362		14,078,954		2,767,929
Net increase (decrease) in net assets resulting from operations			14,034,791		7,301,362		14,078,954		2,767,929
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		10,827,537		10,048,622		10,662,792		6,653,612
	Contract terminations and surrenders		(3,172,092)		(1,747,328)		(3,689,111)		(970,691)
	Death benefit payments		(321,906)		(2,757)		(208,183)		(22,079)
	Policy loan transfers		(625,752)		(15,565)		(637,659)		(198,402)
	Transfers to other contracts		(6,679,772)		(4,793,118)		(6,861,435)		(3,179,009)
	Cost of insurance and administration charges		(2,944,941)		(1,182,946)		(1,962,491)		(721,658)
	Mortality and expenses charges		(240,425)		(136,019)		(172,442)		(61,491)
	Surrender charges		(87,659)		(111,094)		(218,525)		16,927
Increase (decrease) in net assets from policy related transactions			(3,245,010)		2,059,795		(3,087,054)		1,517,209
Total increase (decrease)			10,789,781		9,361,157		10,991,900		4,285,138
Net assets as of December 31, 2019		$	81,941,753	$	53,200,237	$	70,267,310	$	25,044,885

See accompanying notes.

A-79



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		SAM Strategic Growth Portfolio Class 1 Division		Short-Term Income Class 1 Division		SmallCap Class 1 Division		T. Rowe Price Equity Income Portfolio II Division



Net assets as of January 1, 2018		$	59,384,372	$	43,851,281	$	90,502,201	$	2,646,203
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		1,419,688		926,195		258,468		35,040
	Total realized gains (losses) on investments		3,828,045		(185,301)		11,482,218		184,257
	Change in net unrealized appreciation (depreciation)
	of investments		(10,305,026)		(304,007)		(20,264,477)		(392,237)
	Net gains (losses) on investments		(5,057,293)		436,887		(8,523,791)		(172,940)
Net increase (decrease) in net assets resulting from operations			(5,057,293)		436,887		(8,523,791)		(172,940)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		9,063,449		16,913,763		14,112,031		5,311,194
	Contract terminations and surrenders		(2,172,381)		(2,394,276)		(5,473,325)		(640,276)
	Death benefit payments		(20,679)		(45,417)		(202,659)		(29,410)
	Policy loan transfers		(507,571)		(147,549)		(420,340)		(3,378)
	Transfers to other contracts		(4,639,820)		(13,123,423)		(16,427,787)		(5,413,888)
	Cost of insurance and administration charges		(1,808,299)		(1,022,522)		(2,153,059)		(26,698)
	Mortality and expenses charges		(175,024)		(111,907)		(194,909)		(4,994)
	Surrender charges		(183,208)		32,191		(5,830)		355
Increase (decrease) in net assets from policy related transactions			(443,533)		100,860		(10,765,878)		(807,095)
Total increase (decrease)			(5,500,826)		537,747		(19,289,669)		(980,035)
Net assets as of December 31, 2018			53,883,546		44,389,028		71,212,532		1,666,168

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		958,079		1,384,146		265,903		34,902
	Total realized gains (losses) on investments		3,775,506		(6,563)		14,168,274		66,552
	Change in net unrealized appreciation (depreciation)
	of investments		9,926,175		896,877		4,693,210		322,264
	Net gains (losses) on investments		14,659,760		2,274,460		19,127,387		423,718
Net increase (decrease) in net assets resulting from operations			14,659,760		2,274,460		19,127,387		423,718
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		9,040,812		23,319,861		10,973,437		8,973,673
	Contract terminations and surrenders		(2,320,605)		(2,269,251)		(5,136,278)		(174,790)
	Death benefit payments		(160,931)		(59,782)		(379,494)		—
	Policy loan transfers		(676,978)		(351,408)		(111,919)		342
	Transfers to other contracts		(4,154,711)		(10,092,181)		(9,724,425)		(8,810,254)
	Cost of insurance and administration charges		(1,743,187)		(1,176,789)		(2,154,134)		(20,734)
	Mortality and expenses charges		(147,688)		(129,383)		(196,651)		(4,128)
	Surrender charges		(55,683)		40,270		19,642		—
Increase (decrease) in net assets from policy related transactions			(218,971)		9,281,337		(6,709,822)		(35,891)
Total increase (decrease)			14,440,789		11,555,797		12,417,565		387,827
Net assets as of December 31, 2019		$	68,324,335	$	55,944,825	$	83,630,097	$	2,053,995

See accompanying notes.

A-80



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		T. Rowe Price Health Sciences Portfolio II Division		Templeton Developing Markets VIP Class 2 Division		Templeton Foreign VIP Class 2 Division		Templeton Global Bond VIP Class 2 Division



Net assets as of January 1, 2018		$	1,827	$	7,663,589	$	15,452,388	$	19,533,250
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		64,363		404,015		(7)
	Total realized gains (losses) on investments		105,521		(39,395)		121,679		(220,265)
	Change in net unrealized appreciation (depreciation)
	of investments		(162,107)		(1,307,897)		(2,947,925)		625,765
	Net gains (losses) on investments		(56,586)		(1,282,929)		(2,422,231)		405,493
Net increase (decrease) in net assets resulting from operations			(56,586)		(1,282,929)		(2,422,231)		405,493
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		1,620,981		7,342,200		4,380,124		9,445,058
	Contract terminations and surrenders		—		(261,571)		(491,657)		(1,475,475)
	Death benefit payments		—		(47,174)		(61,035)		(63,289)
	Policy loan transfers		1,825		(24,348)		(101,207)		(24,995)
	Transfers to other contracts		(529,541)		(6,614,471)		(3,525,215)		(7,229,181)
	Cost of insurance and administration charges		(8,863)		(140,707)		(206,918)		(397,986)
	Mortality and expenses charges		(1,690)		(22,279)		(29,722)		(51,665)
	Surrender charges		—		1,260		17,484		37,553
Increase (decrease) in net assets from policy related transactions			1,082,712		232,910		(18,146)		240,020
Total increase (decrease)			1,026,126		(1,050,019)		(2,440,377)		645,513
Net assets as of December 31, 2018			1,027,953		6,613,570		13,012,011		20,178,763

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		80,155		216,001		1,515,634
	Total realized gains (losses) on investments		74,026		593,707		118,617		114,173
	Change in net unrealized appreciation (depreciation)
	of investments		235,566		1,212,547		1,190,346		(1,203,814)
	Net gains (losses) on investments		309,592		1,886,409		1,524,964		425,993
Net increase (decrease) in net assets resulting from operations			309,592		1,886,409		1,524,964		425,993
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		583,692		9,141,178		3,570,580		9,298,535
	Contract terminations and surrenders		(505)		(363,083)		(357,644)		(1,048,363)
	Death benefit payments		—		—		(39,767)		(20,118)
	Policy loan transfers		(5,272)		(42,871)		(10,347)		(21,050)
	Transfers to other contracts		(424,962)		(7,924,249)		(4,766,458)		(5,806,403)
	Cost of insurance and administration charges		(11,684)		(163,314)		(179,972)		(416,866)
	Mortality and expenses charges		(2,274)		(25,877)		(25,919)		(54,932)
	Surrender charges		—		13,067		14,513		28,641
Increase (decrease) in net assets from policy related transactions			138,995		634,851		(1,795,014)		1,959,444
Total increase (decrease)			448,587		2,521,260		(270,050)		2,385,437
Net assets as of December 31, 2019		$	1,476,540	$	9,134,830	$	12,741,961	$	22,564,200

See accompanying notes.

A-81



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		TOPS Managed Risk Balanced ETF Class 2 Division		TOPS Managed Risk Growth ETF Class 2 Division		TOPS Managed Risk Moderate Growth ETF Class 2 Division		VanEck Global Hard Assets Class S Division



Net assets as of January 1, 2018		$	651,582	$	1,192,466	$	1,970,611	$	1,138,957
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		13,248		18,960		10,882		(7)
	Total realized gains (losses) on investments		46,747		74,807		150,355		(25,999)
	Change in net unrealized appreciation (depreciation)
	of investments		(109,629)		(203,562)		(206,725)		(233,816)
	Net gains (losses) on investments		(49,634)		(109,795)		(45,488)		(259,822)
Net increase (decrease) in net assets resulting from operations			(49,634)		(109,795)		(45,488)		(259,822)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		275,734		233,107		241,107		1,147,903
	Contract terminations and surrenders		(150)		(12,698)		(19,528)		(13,003)
	Death benefit payments		—		—		—		—
	Policy loan transfers		(4,244)		(15,897)		31,808		45,394
	Transfers to other contracts		(69,572)		(77,047)		(1,467,555)		(554,386)
	Cost of insurance and administration charges		(15,979)		(32,891)		(37,792)		(36,186)
	Mortality and expenses charges		(1,958)		(5,284)		(6,450)		(2,899)
	Surrender charges		6		(20)		(19)		(321)
Increase (decrease) in net assets from policy related transactions			183,837		89,270		(1,258,429)		586,502
Total increase (decrease)			134,203		(20,525)		(1,303,917)		326,680
Net assets as of December 31, 2018			785,785		1,171,941		666,694		1,465,637

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		12,580		24,913		16,905		(5)
	Total realized gains (losses) on investments		9,858		87,012		35,889		16,497
	Change in net unrealized appreciation (depreciation)
	of investments		78,254		98,582		63,743		159,428
	Net gains (losses) on investments		100,692		210,507		116,537		175,920
Net increase (decrease) in net assets resulting from operations			100,692		210,507		116,537		175,920
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		123,868		296,437		(425,434)		214,449
	Contract terminations and surrenders		(2,149)		(8,625)		(12,271)		(252,120)
	Death benefit payments		—		—		—		(2,455)
	Policy loan transfers		(16,035)		(11,194)		9,805		4
	Transfers to other contracts		(391,847)		(206,997)		527,009		(900,267)
	Cost of insurance and administration charges		(16,027)		(36,408)		(29,920)		(31,218)
	Mortality and expenses charges		(1,807)		(5,548)		(5,235)		(2,266)
	Surrender charges		14		(407)		442		(288)
Increase (decrease) in net assets from policy related transactions			(303,983)		27,258		64,396		(974,161)
Total increase (decrease)			(203,291)		237,765		180,933		(798,241)
Net assets as of December 31, 2019		$	582,494	$	1,409,706	$	847,627	$	667,396

See accompanying notes.

A-82



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		VanEck Global Hard Assets Initial Class Division		Vanguard VIF Balanced Division		Vanguard VIF Equity Index Division		Vanguard VIF Mid-Cap Index Division



Net assets as of January 1, 2018		$	9,552,682	$	46,265,171	$	140,643,850	$	76,988,439
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		1,037,676		2,385,750		936,747
	Total realized gains (losses) on investments		201,333		2,486,446		10,880,257		4,827,350
	Change in net unrealized appreciation (depreciation)
	of investments		(2,760,290)		(4,945,234)		(19,154,231)		(13,242,999)
	Net gains (losses) on investments		(2,558,957)		(1,421,112)		(5,888,224)		(7,478,902)
Net increase (decrease) in net assets resulting from operations			(2,558,957)		(1,421,112)		(5,888,224)		(7,478,902)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		3,958,542		15,069,076		56,046,597		40,569,873
	Contract terminations and surrenders		(155,673)		(1,713,262)		(4,566,509)		(4,166,383)
	Death benefit payments		(23,180)		(97,446)		(1,111,833)		(174,816)
	Policy loan transfers		(35,355)		(84,956)		(71,507)		(251,336)
	Transfers to other contracts		(4,080,714)		(16,166,187)		(51,126,600)		(31,749,203)
	Cost of insurance and administration charges		(133,357)		(661,065)		(1,701,927)		(1,244,424)
	Mortality and expenses charges		(20,327)		(127,897)		(320,336)		(195,844)
	Surrender charges		610		469		1,772		91,736
Increase (decrease) in net assets from policy related transactions			(489,454)		(3,781,268)		(2,850,343)		2,879,603
Total increase (decrease)			(3,048,411)		(5,202,380)		(8,738,567)		(4,599,299)
Net assets as of December 31, 2018			6,504,271		41,062,791		131,905,283		72,389,140

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		—		1,223,071		2,848,008		1,283,401
	Total realized gains (losses) on investments		(897,422)		3,666,147		11,102,239		7,824,696
	Change in net unrealized appreciation (depreciation)
	of investments		1,538,748		3,656,060		25,343,486		13,847,824
	Net gains (losses) on investments		641,326		8,545,278		39,293,733		22,955,921
Net increase (decrease) in net assets resulting from operations			641,326		8,545,278		39,293,733		22,955,921
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		2,812,189		9,487,406		39,557,401		44,138,566
	Contract terminations and surrenders		(360,310)		(1,348,020)		(1,886,733)		(3,430,206)
	Death benefit payments		(19)		(46,181)		(57,053)		(74,837)
	Policy loan transfers		(8,945)		(455,023)		(133,697)		(630,105)
	Transfers to other contracts		(4,462,256)		(16,185,445)		(49,793,065)		(32,501,034)
	Cost of insurance and administration charges		(96,932)		(570,386)		(1,567,763)		(1,358,722)
	Mortality and expenses charges		(15,285)		(117,151)		(312,747)		(217,392)
	Surrender charges		14,670		—		(1)		129,036
Increase (decrease) in net assets from policy related transactions			(2,116,888)		(9,234,800)		(14,193,658)		6,055,306
Total increase (decrease)			(1,475,562)		(689,522)		25,100,075		29,011,227
Net assets as of December 31, 2019		$	5,028,709	$	40,373,269	$	157,005,358	$	101,400,367

See accompanying notes.

A-83



Principal Life Insurance Company
Variable Life Separate Account

Statements of Changes in Net Assets

Years ended December 31, 2019 and 2018


		Wanger International Division		Wells Fargo VT Index Asset Allocation Class 2 Division		Wells Fargo VT Omega Growth Class 2 Division



Net assets as of January 1, 2018		$	1,217,331	$	2,827,804	$	8,069,976
Increase (decrease) in net assets
Operations:
	Net investment income (loss)		28,142		24,498		(55)
	Total realized gains (losses) on investments		193,727		283,699		1,232,637
	Change in net unrealized appreciation (depreciation)
	of investments		(497,897)		(368,487)		(1,271,709)
	Net gains (losses) on investments		(276,028)		(60,290)		(39,127)
Net increase (decrease) in net assets resulting from operations			(276,028)		(60,290)		(39,127)
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		837,167		339,176		3,624,513
	Contract terminations and surrenders		(51,629)		(212,656)		(155,502)
	Death benefit payments		—		(1,132)		(9,820)
	Policy loan transfers		7,068		(406,596)		(4,025)
	Transfers to other contracts		(325,114)		(487,683)		(1,968,833)
	Cost of insurance and administration charges		(23,198)		(64,178)		(122,736)
	Mortality and expenses charges		(2,214)		(3,997)		(16,194)
	Surrender charges		176		(256)		(101)
Increase (decrease) in net assets from policy related transactions			442,256		(837,322)		1,347,302
Total increase (decrease)			166,228		(897,612)		1,308,175
Net assets as of December 31, 2018			1,383,559		1,930,192		9,378,151

Increase (decrease) in net assets
Operations:
	Net investment income (loss)		15,089		17,940		(46)
	Total realized gains (losses) on investments		98,642		189,878		1,776,772
	Change in net unrealized appreciation (depreciation)
	of investments		328,252		115,403		847,546
	Net gains (losses) on investments		441,983		323,221		2,624,272
Net increase (decrease) in net assets resulting from operations			441,983		323,221		2,624,272
Policy related transactions:
	Net premium payments, less sales charges and applicable
	premium taxes		579,324		203,668		1,754,556
	Contract terminations and surrenders		(43,380)		(59,324)		(61,615)
	Death benefit payments		—		(104,497)		—
	Policy loan transfers		16,706		(411,360)		(10,388)
	Transfers to other contracts		(283,079)		(229,780)		(7,335,440)
	Cost of insurance and administration charges		(38,209)		(60,035)		(85,285)
	Mortality and expenses charges		(3,876)		(3,399)		(10,066)
	Surrender charges		(42)		(79)		(78)
Increase (decrease) in net assets from policy related transactions			227,444		(664,806)		(5,748,316)
Total increase (decrease)			669,427		(341,585)		(3,124,044)
Net assets as of December 31, 2019		$	2,052,986	$	1,588,607	$	6,254,107

See accompanying notes.

A-84

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

1. Nature of Operations and Significant Accounting Policies

Description of Business

Principal Life Insurance Company Variable Life Separate Account (“the Separate Account”) is a segregated investment account of Principal Life Insurance Company (“Principal Life”) and is registered under the Investment Company Act of 1940 as a unit investment trust, with no stated limitations on the number of authorized units. As directed by eligible contractholders, each division of the Separate Account invests exclusively in shares representing interests in a corresponding investment option. As of December 31, 2019, contractholder investment options included the following diversified open-end management investment companies:

Principal Variable Contracts Funds, Inc. – Class 1: (1)

Bond Market Index Account

Core Plus Bond Account

Diversified Balanced Account (11)

Diversified International Account

Equity Income Account

Government & High Quality Bond Account

International Emerging Markets Account

LargeCap Growth Account I

LargeCap S&P 500 Index Account

MidCap Account

Principal Capital Appreciation Account (3)

Principal LifeTime 2010 Account

Principal LifeTime 2020 Account

Principal LifeTime 2030 Account

Principal LifeTime 2040 Account

Principal LifeTime 2050 Account

Principal LifeTime 2060 Account

Principal LifeTime Strategic Income Account

Real Estate Securities Account

Short-Term Income Account

SmallCap Account

Strategic Asset Management (“SAM”) Portfolios:

Balanced Portfolio

Conservative Balanced Portfolio

Conservative Growth Portfolio

Flexible Income Portfolio

Strategic Growth Portfolio

AllianceBernstein Variable Product Series Fund, Inc.:

Global Thematic Growth Portfolio – Class A

International Growth Portfolio – Class A

International Value Portfolio – Class A

Small Cap Growth Portfolio – Class A

Small/Mid Cap Value Portfolio – Class A

A-85

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

American Century Investments®:

VP Capital Appreciation Fund – Class II

VP Income & Growth Fund – Class I

VP Income & Growth Fund – Class II

VP Inflation Protection Fund – Class II

VP International Fund – Class II

VP Mid Cap Value Fund – Class II

VP Ultra® Fund – Class I

VP Ultra® Fund – Class II

VP Value Fund – Class II

American Funds Insurance Series:

Blue Chip Income and Growth Fund – Class 2 (4)

Global Balanced Fund – Class 2 (12)

Global Bond Fund – Class 2 (4)

Growth Fund – Class 2

International Fund – Class 2

New World Fund – Class 2

BNY Mellon Investment Portfolios:

Core Value Portfolio – Service Shares (15)

MidCap Stock Portfolio – Service Shares (16)

Technology Growth Portfolio – Service Shares (17)

BNY Mellon Sustainable U.S. Equity Portfolio, Inc. – Service Shares (18)

BNY Mellon Variable Investment Fund:

Appreciation Portfolio – Service Shares (19)

Opportunistic Small Cap Portfolio – Service Shares (20)

Quality Bond Portfolio – Service Shares (21)

Calvert VP Portfolio:

EAFE International Index – Class F

Investment Grade Bond Index – Class I

Russell 2000 Small Cap Index – Class F

S&P 500 Index

S&P MidCap 400 Index – Class F

ClearBridge Investments:

Variable Mid Cap Portfolio – Class I Shares (4)

Variable Small Cap Growth Portfolio – Class I Shares

Delaware VIP® Trust Series:

High Yield – Service Class

Small Cap Value – Service Class

Smid Cap Core – Service Class

A-86

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

DWS Variable Series II:

Alternative Asset Allocation VIP – Class B

Small Mid Cap Value VIP – Class B

Fidelity® Variable Insurance Products:

Asset Manager Portfolio – Service Class 2

Contrafund® Portfolio – Initial Class

Contrafund® Portfolio – Service Class 2

Equity-Income Portfolio – Initial Class

Equity-Income Portfolio – Service Class 2

Extended Market Index Portfolio – Service Class 2 (14)

Government Money Market Portfolio – Service Class (6)

Growth Portfolio – Service Class 2

High Income Portfolio – Initial Class

High Income Portfolio – Service Class 2

International Index Portfolio – Service Class 2 (14)

Mid Cap Portfolio – Service Class 2

Strategic Income Portfolio – Service Class 2 (10)

Total Market Index Portfolio – Service Class 2 (14)

Franklin Templeton Variable Insurance Products Trust:

Franklin Income VIP Fund – Class 2

Franklin Mutual Global Discovery VIP Fund – Class 2

Franklin Mutual Shares VIP Fund – Class 2

Franklin Rising Dividends VIP Fund – Class 2

Franklin Small Cap Value VIP Fund – Class 2

Franklin Strategic Income VIP Fund – Class 2

Franklin U.S. Government Securities VIP Fund – Class 2

Templeton Developing Markets VIP Fund – Class 2

Templeton Foreign VIP Fund – Class 2

Templeton Global Bond VIP Fund – Class 2

Goldman Sachs Variable Insurance Trust, Small Cap Equity Insights Fund – Institutional Shares

Invesco V.I. Fund:

American Franchise Fund – Series I Shares

American Franchise Fund – Series II Shares

American Value Fund – Series I Shares (4)

Core Equity Fund – Series I Shares

Core Equity Fund – Series II Shares

Global Real Estate Fund – Series I Shares

Health Care Fund – Series I Shares

International Growth Fund – Series I Shares

Mid Cap Core Equity Fund – Series II Shares

Mid Cap Growth Fund – Series I Shares

Oppenheimer Main Street Small Cap Fund – Series II (22)

Small Cap Equity Fund – Series I Shares

Technology Fund – Series I Shares

A-87

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

Janus Henderson Series:

Balanced Portfolio – Service Shares

Enterprise Portfolio – Service Shares

Flexible Bond Portfolio – Service Shares

Forty Portfolio – Service Shares

Global Research Portfolio – Service Shares

Global Technology Portfolio – Service Shares (14)

Overseas Portfolio – Service Shares

JPMorgan Insurance Trust:

Core Bond Portfolio – Class 1 Shares

Small Cap Core Portfolio – Class 1 Shares

Lord Abbett Series Fund:

Developing Growth Portfolio – Class VC (7)

MFS®:

Blended Research Small Cap Equity Portfolio – Service Class (7)

Global Equity Series – Service Class

Growth Series – Service Class

Inflation-Adjusted Bond Portfolio – Service Class (4)

International Intrinsic Value Portfolio – Service Class (23)

Mid Cap Growth Series – Service Class

Mid Cap Value Portfolio – Service Class (4)

New Discovery Series – Service Class

New Discovery Value Portfolio – Service Class (7)

Research International Series – Service Class (2)

Total Return Series – Service Class

Utilities Series – Service Class

Value Series – Service Class

Neuberger Berman Advisors Management Trust:

Mid Cap Growth Portfolio – Class S (5)

Sustainable Equity Portfolio – I Class Shares (13)

PIMCO:

All Asset Portfolio – Administrative Class

Commodity Real Return Strategy Portfolio – Administrative Class

Emerging Market Bond Portfolio – Administrative Class

High Yield Portfolio – Administrative Class

Long-Term U.S. Government Portfolio – Administrative Class

Low Duration Portfolio – Administration Class (7)

Real Return Portfolio – Administrative Class

Short-Term Portfolio – Administrative Class

Total Return Portfolio – Administrative Class

Putnam Variable Trust:

Equity Income Fund – Class IB (9)

Growth Opportunities Fund – Class IB (8)

International Equity Fund – Class IB

A-88

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

Rydex VI Fund:

Rydex Basic Materials (12)

Rydex Utilities (12)

T. Rowe Price Equity Series, Inc.:

Equity Income Portfolio – II

Health Sciences Portfolio – II (10)

TOPS Managed Risk Series:

Balanced ETF Portfolio – Class 2

Growth ETF Portfolio – Class 2

Moderate Growth ETF Portfolio – Class 2

VanEck VIP Trust:

VanEck VIP Global Hard Assets Fund – Class S Shares

VanEck VIP Global Hard Assets Fund – Initial Class Shares

Vanguard Variable Insurance Fund:

Balanced Portfolio

Equity Index Portfolio

Mid-Cap Index Portfolio

Wanger International (4)

Wells Fargo Variable Trust Funds®:

Index Asset Allocation Fund – Class 2

Omega Growth Fund – Class 2


(1)	Organized by Principal Life.


(2)	Commenced operations March 27, 2015.


(3)	Commenced operations April 17, 2015.


(4)	Commenced operations May 18, 2015.


(5)	Commenced operations November 6, 2015.


(6)	Commenced operations February 8, 2016.


(7)	Commenced operations May 23, 2016.


(8)	Commenced operations November 18, 2016.


(9)	Commenced operations May 12, 2017.


(10)	Commenced operations May 15, 2017.


(11)	Commenced operations May 26, 2017.


(12)	Commenced operations June 11, 2018.


(13)	Commenced operations April 29, 2019.


(14)	Commenced operations June 7, 2019.


(15)	Represented the operations of Dreyfus IP Core Value Service Shares Division until June 2, 2019.


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


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


(18)	Represented the operations of Dreyfus Sustainable U.S. Equity Service Shares Division until June 2, 2019.


(19)	Represented the operations of Dreyfus VIF Appreciation Service Shares Division until June 2, 2019.


(20)	Represented the operations of Dreyfus VIF Opportunistic Small Cap Service Shares Division until June 2, 2019.


(21)	Represented the operations of Dreyfus VIF Quality Bond Service Shares Division until June 2, 2019.


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


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

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

A-89

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

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



			Transferred
Date	Liquidation Division	Reinvested Division	Assets
June 8, 2019	LargeCap Growth Class 1	LargeCap Growth I Class 1	$	57,531,020
July 31, 2019	Lord Abbett Series Fund International Opportunities Class VC	Fidelity VIP Government Money Market Service Class		442,054
June 8, 2019	Multi-Asset Income Class 1	SAM Flexible Income Portfolio Class 1		77,761
April 30, 2019	Neuberger Berman AMT Guardian Class I	Neuberger Berman AMT Sustainable Equity I Class		3,747,383
April 30, 2019	Neuberger Berman AMT Large Cap Value Class I	Neuberger Berman AMT Sustainable Equity I Class		5,945,527

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

Principal^® Benefit Variable Universal Life contracts;

Principal^® Benefit Variable Universal Life II contracts;

Principal^® Executive Variable Universal Life contracts;

Principal^® Executive Variable Universal Life II contracts;

Principal^® Flexible Variable Life contracts;

PrinFlex Life^® contracts;

Principal^® Survivorship Flexible Premium Variable Universal Life contracts;

Principal^® Variable Universal Life Accumulator contracts;

Principal^® Variable Universal Life Accumulator II contracts;

Principal^® Variable Universal Life Income contracts;

Principal^® Variable Universal Life Income II contracts and

Principal^® Variable Universal Life Income IV contracts.

Sales of Principal^® Variable Universal Life Income IV began in October 2019 and disclosures in the financial statements and footnotes do not reflect a full twelve months of activity for that product.

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 value (“NAV”) per share on December 31, 2019. Realized capital gains (losses) on sales of investments are determined on the basis of specific identification under the first-in, first-out method. Investment transactions are accounted for on a trade date basis. Dividends and realized gains (losses) on investments are recognized on an accrual basis as of the ex-dividend date and are automatically reinvested in shares of the funds on the payable date.

A-90

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (an exit price). The fair value hierarchy prioritizes the inputs to valuation techniques used to measure fair value into three levels. The level in the fair value hierarchy within which the fair value measurement in its entirety falls is determined based on the lowest level input that is significant to the fair value measurement in its entirety considering factors specific to the asset or liability.


•	Level 1 – Fair values are based on unadjusted quoted prices in active markets for identical assets or liabilities.


•	Level 2 – Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset or

liability, either directly or indirectly.


•	Level 3 – Fair values are based on at least one significant unobservable input for the asset or liability.

All investments of the open-end management investment companies listed above represent investments in mutual funds for which a daily NAV is calculated and published. Therefore, the investments fall into Level 1 of the fair value hierarchy.

2. Expenses and Related Party Transactions

Principal Life is compensated for the following expenses and charges:

Principal^® Benefit Variable Universal Life contracts – Principal Life assumes a risk that expenses incurred in issuing and administering a policy are greater than originally estimated. The expense charge is deducted at an annual rate of 0.40% of the net policy value in years one through ten and 0.30% thereafter to cover this risk. A cost of insurance charge, which is based on Principal Life’s expected future mortality experience, is deducted as compensation for insurance charges. All charges are assessed through the redemption of units. In all years, a sales charge of 6.50% of premiums less than or equal to target premium is deducted from each payment on behalf of each participant. The sales charge in excess of target premium is reduced to 5.00% in years one through five. After the fifth year, the sales charge is 6.50% of premiums paid. The sales and tax charges are deducted from contributions by Principal Life prior to their transfer to the Separate Account.

Principal^® Benefit Variable Universal Life II contracts – Principal Life assumes a risk that expenses incurred in issuing and administering a policy are greater than originally estimated. The expense charge is deducted at an annual rate of 0.70% of the net policy value to cover this risk. A cost of insurance charge, which is based on Principal Life’s expected future mortality experience, is deducted as compensation for insurance charges. All charges are assessed through the redemption of units. In policy years one through five, a sales charge of 6.70% of premiums paid up to target premium and 5.20% of premiums paid in excess of target premium is deducted from each payment on behalf of each participant. In policy years six and thereafter, a sales charge of 6.70% of premiums paid is deducted from each payment on behalf of each participant. 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 Life prior to their transfer to the Separate Account.

A-91

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

Principal^® Executive Variable Universal Life contracts – Principal Life assumes a risk that expenses incurred in issuing and administering a policy are greater than originally estimated. The expense charge is deducted at an annual rate of 0.30% of the net policy value to cover this risk. A cost of insurance charge, which is based on Principal Life’s expected future mortality experience, is deducted as compensation for insurance charges. All charges are assessed through the redemption of units. A sales charge is deducted from each payment on behalf of each participant, as follows:



Year	Policies Issued Prior to April 1, 2007	Policies Issued April 1, 2007 and After
First year	4.50% of premiums paid	3.75% of premiums paid
Years two through five	7.00% of premiums paid (up to target premium)	7.00% of premiums paid (up to target premium)
Years six through ten	3.00% of premiums paid (up to target premium)	3.00% of premiums paid (up to target premium)
After year ten	No sales charge is deducted.	No sales charge is deducted.

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 Life prior to their transfer to the Separate Account.

Principal^® Executive Variable Universal Life II contracts – Principal Life assumes a risk that expenses incurred in issuing and administering a policy are greater than originally estimated. The expense charge is deducted monthly at an annual rate of 0.20% of the net policy value to cover this risk. A cost of insurance charge, which is based on Principal Life’s expected future mortality experience, is deducted as compensation for insurance charges. All charges are assessed through the redemption of units. In the first year, a sales charge of 3.75% of premiums paid is deducted from each payment on behalf of each participant. In years two through five, a sales charge of 7.00% of premiums paid is deducted from each payment on behalf of each participant. In years six through ten, a sales charge of 5.75% of premiums paid is deducted from each payment on behalf of each participant. Each year thereafter, a sales charge of 3.00% of premiums paid is deducted from each payment on behalf of each participant. 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 Life prior to their transfer to the Separate Account.

Principal^® Flexible Variable Life contracts – Mortality and expense risks assumed by Principal Life are compensated for by a daily charge resulting in a monthly reduction of the unit value equivalent to an annual rate of 0.75% of the policy value. An annual administration charge of $60 for each policy and a cost of insurance charge, which is based on Principal Life’s expected future mortality experience, are deducted on a monthly basis through the redemption of units as compensation for administrative and insurance expenses, respectively. A sales charge of 5.00% and a tax charge of 2.00% are deducted from premium payments made on behalf of each participant. The sales and tax charges are deducted from the contributions by Principal Life prior to their transfer to the Separate Account. In addition, a surrender charge up to a maximum of 25.00% of the minimum first year premium may be imposed upon total surrender or termination of a policy for insufficient value.

PrinFlex Life^® contracts – Mortality and expense risks assumed by Principal Life are compensated for by a charge equivalent to an annual rate of 0.90% of the division values through the ninth policy year. Each month thereafter, the charge will be deducted at an annual rate of 0.27% of the division values. A monthly administration charge of $0.60 for each $1,000 of policy face amount (with a maximum charge of $25 per month) will be deducted from policies in their 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 Life’s expected future mortality experience, is also deducted as compensation for insurance charges. All charges are assessed through the redemption of units. A sales charge of 2.75% of premiums paid less than or equal to target premium and 0.75% of premiums in excess of target is deducted from premium payments on behalf of each participant. A tax charge of 2.20% for state and local taxes and 1.25% for federal taxes is also deducted from each premium payment on behalf of each participant. The sales and tax charges are deducted from contributions by Principal Life prior to their transfer to the Separate Account.

A-92

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

Principal^® Survivorship Flexible Premium Variable Universal Life contracts – Mortality and expense risks assumed by Principal Life are compensated for by a monthly charge equivalent to an annual rate of 0.80% of the division values through the ninth policy year. Each month thereafter, the charge is deducted at an annual rate of 0.30% of the division values. A monthly administration charge of $8 is deducted from policies. An additional monthly administration charge of $0.08 per $1,000 of face amount is deducted in the first ten years (and ten years after an increase in the face amount). The charge of $0.08 is increased by $0.005 per $1,000 for each insured classified as a smoker. In years 11 through 20 (after issue or adjustment) an additional monthly charge of $0.04 per $1,000 of face amount is deducted. After policy year 21, an additional monthly charge of $0.02 per $1,000 of face amount is deducted. A cost of insurance charge, which is based on Principal Life’s expected future mortality experience, is also deducted as compensation for insurance charges. All charges are assessed through the redemption of units. In policy years one through ten, a sales charge of 5.00% of premiums paid less than or equal to target premium and 2.00% of premiums paid in excess of target is deducted from each payment on behalf of each participant. Each year thereafter, a sales charge of 2.00% of premiums paid is deducted from each premium payment on behalf of each participant. A tax charge of 2.20% 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 Life prior to their transfer to the Separate Account.

Principal^® Variable Universal Life Accumulator contracts – Mortality and expense risks assumed by Principal Life are compensated for by a monthly charge equivalent to an annual rate of 0.70% of the policy value through the tenth policy year. Each month thereafter, the charge will be deducted at a rate equivalent to 0.20% of the policy value per year. The current administrative charge is $25 per month during the first policy year. After the first policy year, the administrative charge is $10 per month. A cost of insurance charge, which is based on Principal Life’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 3.00% of premiums paid is deducted from each payment on behalf of each participant during the first five policy years. A tax charge of 2.20% 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 Life prior to their transfer to the Separate Account.

Principal^® Variable Universal Life Accumulator II contracts – Mortality and expense risks assumed by Principal Life are compensated for by a monthly charge equivalent to an annual rate of 0.70% of the policy value through the tenth policy year. Each month thereafter, the charge will be deducted at a rate equivalent to 0.20% of the policy value per year. The current monthly administrative charge is $25 per month during the first policy year. After the first policy year, the administrative charge is $10 per month. A cost of insurance charge, which is based on Principal Life’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 3.00% of premiums paid up to surrender target premium and a sale charge of 1.25% of premiums in excess of surrender target premium is deducted from each payment on behalf of each participant. 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 Life prior to their transfer to the Separate Account.

Principal^® Variable Universal Life Income contracts – Mortality and expense risks assumed by Principal Life are compensated for by a monthly charge equivalent to an annual rate of 0.70% of the policy value through the tenth policy year. The current monthly administrative charge is $25 per month during the first policy year. After the first policy year, the administrative charge is $10 per month. A cost of insurance charge, which is based on Principal Life’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 3.00% of premiums paid (without the surrender charge adjustment rider) is deducted from each payment on behalf of each participant. 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 Life prior to their transfer to the Separate Account.

A-93

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

Principal^® Variable Universal Life Income II contracts – For policies issued prior to May 18, 2009, asset based charges assumed by Principal Life are compensated for by a monthly charge equivalent to an annual rate of 0.70% of the asset value of each policy. The current administrative charge is $25 per month. A cost of insurance charge, which is based on Principal Life'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 3.00% of premiums is deducted from each payment on behalf of each participant. A sales charge of 3.25% of premiums paid (with the surrender charge adjustment rider) is deducted from each payment on behalf of each participant during the first policy year. Each year thereafter, a sales charge of 3.00% of premiums paid (with the surrender charge adjustment rider) is deducted from each payment on behalf of each participant. 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 Life prior to their transfer to the Separate Account. For policies issued May 18, 2009 and after, asset based charges assumed by Principal Life are compensated for by a monthly charge equivalent to an annual rate of 0.50% of the asset value of each policy through the tenth policy year. The current administrative charge is $25 per month during the first policy year. After the first policy year, the administrative charge is $10 per month. A cost of insurance charge, which is based on Principal Life'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 3.00% of premiums is deducted from each payment on behalf of each participant. A sales charge of 3.25% of premiums paid (with the surrender charge adjustment rider) is deducted from each payment on behalf of each participant during the first policy year. Each year thereafter, a sales charge of 3.00% of premiums paid (with the surrender charge adjustment rider) is deducted from each payment on behalf of each participant. 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 Life prior to their transfer to the Separate Account.

Principal® Variable Universal Life Income IV contracts - 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 Life’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 4.00% 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 2.00% 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 Life prior to their transfer to the Separate Account.

During the year ended December 31, 2019, investment advisory and management fees were paid indirectly to Principal Global Investors, LLC (“Manager”) (wholly owned by Principal Financial Services, Inc.), in its capacity as advisor to Principal Variable Contracts Funds, Inc. A portion of the management fee is paid by the Manager to the sub-advisor of each of the divisions, some of which are affiliates of the Manager. The annual rate paid by the SAM Portfolios is based upon the aggregate average daily net assets (“aggregate net assets”) of the SAM Portfolios. The investment advisory and management fee schedule for the SAM Portfolios is 0.25% of aggregate net assets up to the first $1 billion and 0.20% of aggregate net assets over $1 billion. The Principal LifeTime Accounts do not pay investment advisory and management fees.

A-94

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

The annual rates used in this calculation for each of the other divisions are shown in the following tables:



	Net Assets of Accounts
	(in millions)
	First $100		Next $100		Next $100		Next $100		Thereafter
Core Plus Bond Account		0.50%		0.45%		0.40%		0.35%		0.30%
Equity Income Account		0.60		0.55		0.50		0.45		0.40
LargeCap Growth Account I		0.80		0.75		0.70		0.65		0.60
MidCap Account		0.65		0.60		0.55		0.50		0.45
Real Estate Securities Account		0.90		0.85		0.80		0.75		0.70
SmallCap Account		0.85		0.80		0.75		0.70		0.65

	Net Assets of Accounts
	(in millions)
	First $250		Next $250		Next $250		Next $250		Thereafter
Diversified International Account		0.85%		0.80%		0.75%		0.70%		0.65%
International Emerging Markets Account		1.25		1.20		1.15		1.10		1.05



	Net Assets of Accounts
	(in millions)
	First $200		Next $300	Over $500
Short-Term Income Account	0.50%		0.45%	0.40%

	Net Assets of Accounts
	(in millions)
	First $500		Over $500
Principal Capital Appreciation Account	0.625%		0.500%

	Net Assets of Accounts
	(in millions)
	First $2,000		Over $2,000
Government & High Quality Bond Account	0.50%		0.45%

		All Net Assets
Bond Market Index Account (Effective July 1, 2019)		0.14%
Bond Market Index Account (Prior to July 1, 2019)		0.25
Diversified Balanced Account		0.05
LargeCap S&P 500 Index Account		0.25

A-95

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

The Manager has contractually agreed to limit the expenses (including acquired fund fees and expenses, but excluding interest expense, expenses related to fund investments, and other extraordinary expenses) for certain classes of shares of certain of the divisions. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits. The limits are expressed as a percentage of average daily net assets attributable to each class of shares on an annualized basis during the reporting period. The expenses borne by the Manager are subject to reimbursement by the divisions through the fiscal year end, provided no reimbursement will be made if it would result in the divisions exceeding the total operating expense limits. Any amounts outstanding at the end of the year are shown as an expense reimbursement from Manager or expense reimbursement to Manager on the statements of assets and liabilities. The operating expense limits, were as follows:



	From January 1, 2019 through April 30, 2019
	Class 1	Expiration
SAM Balanced Portfolio	0.86%	April 30, 2019
SAM Conservative Balanced Portfolio	0.84	April 30, 2019
SAM Conservative Growth Portfolio	0.99	April 30, 2019
SAM Strategic Growth Portfolio	0.99	April 30, 2019

The Manager has contractually agreed to limit the Separate Account’s management and investment advisory fees

for certain of the divisions. The expense limit will reduce the Separate Account’s management and investment advisory fees by the following amounts:



			From January 1, 2019 through December 31, 2019
			All Classes		Expiration
	Bond Market Index Account		0.100%		June 30, 2019
International Emerging Markets Account		0.015		April 30, 2020
LargeCap Growth Account I		0.016		April 30, 2020
	Real Estate Securities Account		0.020		April 30, 2020

The Manager has contractually agreed to limit the expenses (excluding interest expense, expense related to fund investments, acquired fund fees and expenses, and other extraordinary expenses) for certain classes of shares of certain of the divisions. The reductions and reimbursements are in amounts that maintain total operating expenses at or below certain limits. The limits are expressed as a percentage of average daily net assets attributable to each class of shares on an annualized basis during the reporting period. The operating expense limits were as follows:



	From January 1, 2019 through December 31, 2019
	Class 1	Expiration
International Emerging Markets Account	1.20%	April 30, 2020
LargeCap Growth Account I	0.69^	April 30, 2021
Principal LifeTime 2060 Account	0.10	April 30, 2020

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

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

A-96

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

3. Federal Income Taxes

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

4. Purchases and Sales of Investments

The aggregate cost of purchases and proceeds from sales of investments were as follows for the year ended December 31, 2019:



Division	Purchases		Sales

AllianceBernstein Global Thematic Growth Class A	$	486,949	$	992,852

AllianceBernstein International Growth Class A	$	108,661	$	95,176

AllianceBernstein International Value Class A	$	577,779	$	831,333

AllianceBernstein Small Cap Growth Class A	$	772,962	$	773,683

AllianceBernstein Small/Mid Cap Value Class A	$	2,511,531	$	1,878,745

American Century VP Capital Appreciation Class II	$	313,029	$	341,008

American Century VP Income & Growth Class I	$	504,563	$	383,982

American Century VP Income & Growth Class II	$	3,901,799	$	3,652,607

American Century VP Inflation Protection Class II	$	236,850	$	302,364

American Century VP International Class II	$	1,625,378	$	549,605

American Century VP Mid Cap Value Class II	$	12,471,834	$	11,798,632

American Century VP Ultra Class I	$	526,140	$	359,705

American Century VP Ultra Class II	$	1,683,556	$	1,783,132

American Century VP Value Class II	$	5,601,324	$	6,824,806

American Funds Insurance Series Blue Chip Income and Growth Class 2	$	7,399,011	$	3,696,182

American Funds Insurance Series Global Balanced Class 2	$	4,384,406	$	3,612,541

American Funds Insurance Series Global Bond Class 2	$	767,772	$	157,321

American Funds Insurance Series Growth Fund Class 2	$	8,884,589	$	6,033,362

American Funds Insurance Series International Fund Class 2	$	16,194,758	$	10,040,225

American Funds Insurance Series New World Fund Class 2	$	8,825,684	$	4,661,775

A-97

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019




Division	Purchases		Sales

BNY Mellon IP Core Value Service Shares	$	257,835	$	202,685

BNY Mellon IP MidCap Stock Service Shares	$	154,799	$	109,784

BNY Mellon IP Technology Growth Service Shares	$	2,110,346	$	1,805,143

BNY Mellon Sustainable U.S. Equity Service Shares	$	139,421	$	183,161

BNY Mellon VIF Appreciation Service Shares	$	1,262,058	$	936,465

BNY Mellon VIF Opportunistic Small Cap Service Shares	$	1,494,353	$	1,292,141

BNY Mellon VIF Quality Bond Service Shares	$	582,101	$	225,602

Bond Market Index Class 1	$	10,803,532	$	5,291,639

Calvert EAFE International Index Class F	$	3,342,928	$	993,935

Calvert Investment Grade Bond Index Class I	$	1,192,931	$	843,435

Calvert Russell 2000 Small Cap Index Class F	$	22,277,832	$	18,710,493

Calvert S&P 500 Index Portfolio	$	423,282	$	429,083

Calvert S&P MidCap 400 Index Class F	$	564,956	$	278,138

ClearBridge Mid Cap Class I	$	200,586	$	264,364

ClearBridge Small Cap Growth Class I	$	11,608,455	$	9,760,561

Core Plus Bond Class 1	$	48,602,540	$	28,495,938

Delaware High Yield Service Class	$	347,593	$	389,749

Delaware Small Cap Value Service Class	$	5,525,932	$	5,141,154

Delaware Smid Cap Core Service Class	$	486,682	$	598,079

Diversified Balanced Class 1	$	2,293,306	$	1,980,735

Diversified International Class 1	$	35,233,172	$	31,814,948

DWS Alternative Asset Allocation Class B	$	174,451	$	662,792

DWS Small Mid Cap Value Class B	$	461,630	$	735,919

A-98

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019




Division	Purchases		Sales

Equity Income Class 1	$	26,713,156	$	27,010,176

Fidelity VIP Asset Manager Service Class 2	$	407,074	$	1,473,084

Fidelity VIP Contrafund Initial Class	$	11,072,853	$	9,759,654

Fidelity VIP Contrafund Service Class 2	$	20,384,800	$	24,866,100

Fidelity VIP Equity-Income Initial Class	$	3,177,240	$	3,309,867

Fidelity VIP Equity-Income Service Class 2	$	4,552,431	$	3,148,368

Fidelity VIP Extended Market Index Service Class 2	$	5,743	$	228

Fidelity VIP Government Money Market Service Class	$	320,992,412	$	295,676,246

Fidelity VIP Growth Service Class 2	$	3,808,926	$	6,305,008

Fidelity VIP High Income Initial Class	$	945,917	$	1,119,066

Fidelity VIP High Income Service Class 2	$	9,348,144	$	8,365,954

Fidelity VIP International Index Service Class 2	$	696,884	$	167,949

Fidelity VIP Mid Cap Service Class 2	$	14,352,647	$	17,152,031

Fidelity VIP Strategic Income Service Class 2	$	4,153,915	$	902,197

Fidelity VIP Total Market Index Service Class 2	$	311,651	$	1,349

Franklin Income VIP Class 2	$	5,710,449	$	4,362,686

Franklin Mutual Global Discovery VIP Class 2	$	5,238,484	$	10,187,875

Franklin Mutual Shares VIP Class 2	$	2,684,427	$	1,668,770

Franklin Rising Dividends VIP Class 2	$	6,819,016	$	6,045,358

Franklin Small Cap Value VIP Class 2	$	8,428,327	$	6,724,837

Franklin Strategic Income VIP Class 2	$	9,699,745	$	10,522,802

Franklin U.S. Government Securities VIP Class 2	$	268,837	$	1,330,223

A-99

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019




Division	Purchases		Sales

Goldman Sachs VIT Small Cap Equity Insights Institutional Shares	$	714,191	$	743,336

Government & High Quality Bond Class 1	$	25,098,420	$	15,634,567

International Emerging Markets Class 1	$	10,632,951	$	12,162,247

Invesco American Franchise Series I	$	529,671	$	348,402

Invesco American Franchise Series II	$	564,213	$	270,507

Invesco American Value Series I	$	48,492	$	16,799

Invesco Core Equity Series I	$	1,217,604	$	1,023,253

Invesco Core Equity Series II	$	2,179,400	$	1,973,109

Invesco Global Real Estate Series I	$	404,303	$	384,872

Invesco Health Care Series I	$	10,219,573	$	11,213,126

Invesco International Growth Series I	$	4,411,106	$	8,794,020

Invesco Mid Cap Core Equity Series II	$	133,245	$	161,631

Invesco Mid Cap Growth Series I	$	1,400,271	$	1,493,350

Invesco Oppenheimer Main Street Small Cap Series II	$	3,180,624	$	2,942,531

Invesco Small Cap Equity Series I	$	2,356,482	$	2,091,242

Invesco Technology Series I	$	7,478,335	$	8,182,686

Janus Henderson Balanced Service Shares	$	10,914,541	$	7,543,435

Janus Henderson Enterprise Service Shares	$	27,332,818	$	18,146,217

Janus Henderson Flexible Bond Service Shares	$	18,470,051	$	24,004,531

Janus Henderson Forty Service Shares	$	7,535,060	$	8,023,895

Janus Henderson Global Research Service Shares	$	2,789,465	$	2,797,705

Janus Henderson Global Technology Service Shares	$	370,145	$	3,443

Janus Henderson Overseas Service Shares	$	9,411,118	$	9,896,557

A-100

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019




Division	Purchases		Sales

JP Morgan Core Bond Class I	$	1,266,338	$	852,776

JP Morgan Small Cap Core Class I	$	955,038	$	1,273,442

LargeCap Growth I Class 1	$	160,478,657	$	86,385,898

LargeCap S&P 500 Index Class 1	$	84,110,722	$	68,026,466

Lord Abbett Series Fund Developing Growth Class VC	$	556,307	$	393,635

MFS Blended Research Small Cap Equity Service Class	$	1,367,407	$	593,949

MFS Global Equity Service Class	$	4,561,192	$	2,220,987

MFS Growth Service Class	$	15,044,946	$	11,863,709

MFS Inflation-Adjusted Bond Service Class	$	316,127	$	69,035

MFS International Intrinsic Value Service Class	$	10,047,636	$	4,121,565

MFS Mid Cap Growth Service Class	$	282,504	$	2,141,261

MFS Mid Cap Value Portfolio Service Class	$	1,882,803	$	304,472

MFS New Discovery Service Class	$	13,517,219	$	11,875,802

MFS New Discovery Value Service Class	$	798,157	$	166,363

MFS Research International Portfolio Service Class	$	493,916	$	359,280

MFS Total Return Service Class	$	1,060,835	$	634,885

MFS Utilities Service Class	$	1,686,090	$	1,683,049

MFS Value Service Class	$	10,315,344	$	8,530,846

MidCap Class 1	$	54,514,617	$	43,989,444

Neuberger Berman AMT Mid Cap Growth Portfolio Class S	$	188,363	$	151,817

Neuberger Berman AMT Sustainable Equity I Class	$	10,959,183	$	1,435,072

PIMCO All Asset Administrative Class	$	553,398	$	1,306,469

A-101

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019




Division	Purchases		Sales

PIMCO Commodity Real Return Strategy Administrative Class	$	407,657	$	350,822

PIMCO Emerging Market Bond Administrative Class	$	3,686,161	$	3,698,853

PIMCO High Yield Administrative Class	$	13,762,884	$	11,036,147

PIMCO Long-Term U.S. Government Administrative Class	$	420,311	$	920,010

PIMCO Low Duration Administrative Class	$	1,311,284	$	261,979

PIMCO Real Return Administrative Class	$	7,148,325	$	5,828,542

PIMCO Short-Term Administrative Class	$	19,529,660	$	8,888,282

PIMCO Total Return Administrative Class	$	25,754,586	$	23,494,559

Principal Capital Appreciation Class 1	$	4,610,492	$	3,445,207

Principal LifeTime 2010 Class 1	$	7,030,723	$	7,438,606

Principal LifeTime 2020 Class 1	$	71,930,996	$	62,973,916

Principal LifeTime 2030 Class 1	$	73,612,949	$	48,641,505

Principal LifeTime 2040 Class 1	$	39,038,179	$	28,810,714

Principal LifeTime 2050 Class 1	$	9,553,359	$	7,112,018

Principal LifeTime 2060 Class 1	$	5,821,782	$	3,684,144

Principal LifeTime Strategic Income Class 1	$	9,762,708	$	3,918,478

Putnam VT Equity Income Class IB	$	101,027	$	159,123

Putnam VT Growth Opportunities Class IB	$	6,436,426	$	4,441,929

Putnam VT International Equity Class IB	$	384,100	$	150,519

Real Estate Securities Class 1	$	26,550,885	$	25,970,990

Rydex Basic Materials	$	397,674	$	54,005

Rydex Utilities	$	33,992	$	706

SAM Balanced Portfolio Class 1	$	15,640,365	$	14,074,546

A-102

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019




Division	Purchases		Sales

SAM Conservative Balanced Portfolio Class 1	$	12,571,642	$	7,988,842

SAM Conservative Growth Portfolio Class 1	$	14,932,305	$	13,750,830

SAM Flexible Income Portfolio Class 1	$	8,098,969	$	5,136,767

SAM Strategic Growth Portfolio Class 1	$	13,227,339	$	9,260,279

Short-Term Income Class 1	$	24,704,402	$	14,038,919

SmallCap Class 1	$	23,940,545	$	17,684,660

T. Rowe Price Equity Income Portfolio II	$	9,117,093	$	9,009,564

T. Rowe Price Health Sciences Portfolio II	$	648,168	$	444,697

Templeton Developing Markets VIP Class 2	$	9,221,333	$	8,506,327

Templeton Foreign VIP Class 2	$	3,915,510	$	5,365,594

Templeton Global Bond VIP Class 2	$	10,814,176	$	7,339,099

TOPS Managed Risk Balanced ETF Class 2	$	152,661	$	427,852

TOPS Managed Risk Growth ETF Class 2	$	405,543	$	269,187

TOPS Managed Risk Moderate Growth ETF Class 2	$	(375,380)	$	(489,830)

VanEck Global Hard Assets Class S	$	214,448	$	1,188,615

VanEck Global Hard Assets Initial Class	$	2,812,189	$	4,929,077

Vanguard VIF Balanced	$	13,169,771	$	18,722,206

Vanguard VIF Equity Index	$	46,134,431	$	53,751,059

Vanguard VIF Mid-Cap Index	$	52,037,603	$	38,083,260

Wanger International	$	747,186	$	351,880

Wells Fargo VT Index Asset Allocation Class 2	$	320,261	$	868,483

Wells Fargo VT Omega Growth Class 2	$	2,565,105	$	7,502,918

A-103

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

5. Changes in Units Outstanding

Transactions in units were as follows for each of the years ended December 31:



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

AllianceBernstein Global Thematic Growth Class A	20,763	48,844	(28,081)	55,942	18,601	37,341

AllianceBernstein International Growth Class A	7,418	8,050	(632)	14,760	14,963	(203)

AllianceBernstein International Value Class A	74,234	109,384	(35,150)	81,223	51,708	29,515

AllianceBernstein Small Cap Growth Class A	15,358	25,319	(9,961)	23,831	23,919	(88)

AllianceBernstein Small/Mid Cap Value Class A	79,468	76,307	3,161	62,175	97,599	(35,424)

American Century VP Capital Appreciation Class II	10,443	21,038	(10,595)	16,837	65,068	(48,231)

American Century VP Income & Growth Class I	6,553	13,463	(6,910)	7,520	18,167	(10,647)

American Century VP Income & Growth Class II	101,659	118,443	(16,784)	116,970	71,349	45,621

American Century VP Inflation Protection Class II	15,702	23,893	(8,191)	63,532	61,572	1,960

American Century VP International Class II	64,808	23,679	41,129	14,622	21,183	(6,561)

American Century VP Mid Cap Value Class II	267,299	358,835	(91,536)	387,882	369,017	18,865

American Century VP Ultra Class I	8,937	11,016	(2,079)	10,118	25,071	(14,953)

American Century VP Ultra Class II	28,755	49,239	(20,484)	80,219	72,916	7,303

American Century VP Value Class II	104,180	211,051	(106,871)	146,558	303,580	(157,022)

American Funds Insurance Series Blue Chip Income and Growth Class 2	474,908	285,086	189,822	530,549	182,356	348,193

American Funds Insurance Series Global Balanced Class 2	421,134	350,803	70,331	389,826	336,488	53,338

American Funds Insurance Series Global Bond Class 2	69,828	14,612	55,216	79,934	106,490	(26,556)

American Funds Insurance Series Growth Fund Class 2	395,579	316,125	79,454	352,263	258,984	93,279

American Funds Insurance Series International Fund Class 2	1,271,127	830,587	440,540	1,294,374	527,631	766,743

American Funds Insurance Series New World Fund Class 2	687,263	387,154	300,109	519,037	322,498	196,539

BNY Mellon IP Core Value Service Shares	6,603	7,163	(560)	7,933	11,325	(3,392)

A-104

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

BNY Mellon IP MidCap Stock Service Shares	10,316	8,067	2,249	3,699	6,040	(2,341)

BNY Mellon IP Technology Growth Service Shares	60,455	65,050	(4,595)	84,310	62,023	22,287

BNY Mellon Sustainable U.S. Equity Service Shares	4,220	6,360	(2,140)	6,642	4,357	2,285

BNY Mellon VIF Appreciation Service Shares	26,871	30,682	(3,811)	15,745	27,786	(12,041)

BNY Mellon VIF Opportunistic Small Cap Service Shares	27,726	58,250	(30,524)	41,531	34,537	6,994

BNY Mellon VIF Quality Bond Service Shares	30,814	12,251	18,563	10,754	22,138	(11,384)

Bond Market Index Class 1	885,971	453,198	432,773	950,864	688,375	262,489

Calvert EAFE International Index Class F	262,396	82,790	179,606	165,169	67,766	97,403

Calvert Investment Grade Bond Index Class I	97,910	72,745	25,165	64,703	192,969	(128,266)

Calvert Russell 2000 Small Cap Index Class F	791,648	751,130	40,518	942,768	891,307	51,461

Calvert S&P 500 Index Portfolio	17,616	25,210	(7,594)	44,405	29,693	14,712

Calvert S&P MidCap 400 Index Class F	16,010	11,467	4,543	11,577	8,573	3,004

ClearBridge Mid Cap Class I	15,607	20,893	(5,286)	20,311	11,896	8,415

ClearBridge Small Cap Growth Class I	506,377	503,332	3,045	565,015	312,938	252,077

Core Plus Bond Class 1	1,647,744	1,046,482	601,262	1,325,903	867,520	458,383

Delaware High Yield Service Class	27,084	34,533	(7,449)	23,575	12,467	11,108

Delaware Small Cap Value Service Class	146,830	197,972	(51,142)	266,316	282,166	(15,850)

Delaware Smid Cap Core Service Class	15,659	27,564	(11,905)	16,861	23,932	(7,071)

Diversified Balanced Class 1	118,548	173,490	(54,942)	153,408	264,170	(110,762)

Diversified International Class 1	867,660	1,082,576	(214,916)	1,318,807	1,161,385	157,422

DWS Alternative Asset Allocation Class B	13,580	62,252	(48,672)	32,049	16,521	15,528

DWS Small Mid Cap Value Class B	15,382	34,938	(19,556)	16,123	57,023	(40,900)

Equity Income Class 1	843,800	1,106,162	(262,362)	3,596,299	1,000,215	2,596,084

Fidelity VIP Asset Manager Service Class 2	11,987	60,222	(48,235)	69,579	57,825	11,754

A-105

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

Fidelity VIP Contrafund Initial Class	45,360	141,924	(96,564)	57,457	122,861	(65,404)

Fidelity VIP Contrafund Service Class 2	229,409	592,188	(362,779)	499,332	685,678	(186,346)

Fidelity VIP Equity-Income Initial Class	32,300	78,254	(45,954)	36,589	58,701	(22,112)

Fidelity VIP Equity-Income Service Class 2	96,711	113,088	(16,377)	109,222	187,186	(77,964)

Fidelity VIP Extended Market Index Service Class 2	542	21	521	—	—	—

Fidelity VIP Government Money Market Service Class	30,566,154	28,586,550	1,979,604	30,209,837	28,890,376	1,319,461

Fidelity VIP Growth Service Class 2	74,152	175,846	(101,694)	119,096	165,573	(46,477)

Fidelity VIP High Income Initial Class	25,481	41,409	(15,928)	25,932	55,779	(29,847)

Fidelity VIP High Income Service Class 2	258,036	264,321	(6,285)	221,486	262,151	(40,665)

Fidelity VIP International Index Service Class 2	67,560	16,302	51,258	—	—	—

Fidelity VIP Mid Cap Service Class 2	274,286	446,417	(172,131)	348,995	392,834	(43,839)

Fidelity VIP Strategic Income Service Class 2	372,547	83,283	289,264	98,146	11,275	86,871

Fidelity VIP Total Market Index Service Class 2	28,490	126	28,364	—	—	—

Franklin Income VIP Class 2	145,013	137,287	7,726	152,213	167,745	(15,532)

Franklin Mutual Global Discovery VIP Class 2	104,156	291,965	(187,809)	179,793	297,268	(117,475)

Franklin Mutual Shares VIP Class 2	51,237	61,326	(10,089)	70,248	44,343	25,905

Franklin Rising Dividends VIP Class 2	90,864	164,879	(74,015)	154,377	202,847	(48,470)

Franklin Small Cap Value VIP Class 2	142,103	180,675	(38,572)	556,903	688,004	(131,101)

Franklin Strategic Income VIP Class 2	520,180	621,520	(101,340)	460,443	344,987	115,456

Franklin U.S. Government Securities VIP Class 2	18,930	109,582	(90,652)	62,747	33,087	29,660

Goldman Sachs VIT Small Cap Equity Insights Institutional Shares	28,716	31,764	(3,048)	60,686	18,555	42,131

Government & High Quality Bond Class 1	1,651,479	1,089,232	562,247	753,127	801,059	(47,932)

International Emerging Markets Class 1	235,488	313,940	(78,452)	428,175	470,104	(41,929)

Invesco American Franchise Series I	6,418	14,592	(8,174)	21,518	19,480	2,038

A-106

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

Invesco American Franchise Series II	8,487	11,460	(2,973)	13,379	9,707	3,672

Invesco American Value Series I	3,423	1,520	1,903	3,086	2,081	1,005

Invesco Core Equity Series I	17,906	41,765	(23,859)	16,454	68,103	(51,649)

Invesco Core Equity Series II	31,930	56,359	(24,429)	38,764	62,506	(23,742)

Invesco Global Real Estate Series I	27,893	30,094	(2,201)	37,901	27,296	10,605

Invesco Health Care Series I	304,035	348,235	(44,200)	351,639	394,331	(42,692)

Invesco International Growth Series I	106,408	282,728	(176,320)	219,368	423,286	(203,918)

Invesco Mid Cap Core Equity Series II	4,052	7,142	(3,090)	8,836	22,175	(13,339)

Invesco Mid Cap Growth Series I	49,635	71,167	(21,532)	63,943	68,835	(4,892)

Invesco Oppenheimer Main Street Small Cap Series II	95,523	107,152	(11,629)	127,093	87,688	39,405

Invesco Small Cap Equity Series I	61,454	102,772	(41,318)	135,186	153,073	(17,887)

Invesco Technology Series I	364,073	439,775	(75,702)	343,597	266,240	77,357

Janus Henderson Balanced Service Shares	275,132	209,767	65,365	290,241	211,714	78,527

Janus Henderson Enterprise Service Shares	551,808	426,828	124,980	543,385	416,228	127,157

Janus Henderson Flexible Bond Service Shares	754,636	1,046,000	(291,364)	644,687	953,726	(309,039)

Janus Henderson Forty Service Shares	232,096	292,970	(60,874)	491,174	398,030	93,144

Janus Henderson Global Research Service Shares	108,003	123,082	(15,079)	144,076	61,563	82,513

Janus Henderson Global Technology Service Shares	34,345	311	34,034	—	—	—

Janus Henderson Overseas Service Shares	347,627	368,854	(21,227)	326,554	324,316	2,238

JP Morgan Core Bond Class I	77,605	56,957	20,648	101,003	113,889	(12,886)

JP Morgan Small Cap Core Class I	12,560	31,714	(19,154)	44,902	87,420	(42,518)

LargeCap Growth I Class 1	2,197,747	1,343,914	853,833	1,217,681	1,298,213	(80,532)

LargeCap S&P 500 Index Class 1	2,410,441	2,273,469	136,972	2,436,068	2,116,345	319,723

Lord Abbett Series Fund Developing Growth Class VC	24,640	20,935	3,705	39,613	3,932	35,681

A-107

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

MFS Blended Research Small Cap Equity Service Class	79,189	40,646	38,543	53,491	5,432	48,059

MFS Global Equity Service Class	137,438	76,869	60,569	63,699	81,491	(17,792)

MFS Growth Service Class	250,736	256,499	(5,763)	300,922	263,113	37,809

MFS Inflation-Adjusted Bond Service Class	29,793	6,697	23,096	25,643	18,859	6,784

MFS International Intrinsic Value Service Class	571,553	256,349	315,204	439,437	264,311	175,126

MFS Mid Cap Growth Service Class	4,245	63,881	(59,636)	57,981	10,009	47,972

MFS Mid Cap Value Portfolio Service Class	136,103	23,889	112,214	28,756	14,902	13,854

MFS New Discovery Service Class	254,352	288,211	(33,859)	225,346	188,197	37,149

MFS New Discovery Value Service Class	48,011	11,313	36,698	9,954	5,056	4,898

MFS Research International Portfolio Service Class	31,346	31,193	153	46,411	80,717	(34,306)

MFS Total Return Service Class	46,697	32,374	14,323	73,991	42,824	31,167

MFS Utilities Service Class	76,988	86,136	(9,148)	75,585	72,687	2,898

MFS Value Service Class	222,229	239,500	(17,271)	375,264	459,516	(84,252)

MidCap Class 1	216,987	397,242	(180,255)	252,586	435,866	(183,280)

Neuberger Berman AMT Mid Cap Growth Portfolio Class S	9,024	10,451	(1,427)	9,962	18,722	(8,760)

Neuberger Berman AMT Sustainable Equity I Class	1,042,506	143,939	898,567	—	—	—

PIMCO All Asset Administrative Class	36,927	99,193	(62,266)	45,678	69,092	(23,414)

PIMCO Commodity Real Return Strategy Administrative Class	63,404	58,713	4,691	61,030	55,331	5,699

PIMCO Emerging Market Bond Administrative Class	270,586	275,737	(5,151)	270,494	275,890	(5,396)

PIMCO High Yield Administrative Class	678,367	575,005	103,362	674,739	590,544	84,195

PIMCO Long-Term U.S. Government Administrative Class	30,153	73,480	(43,327)	12,711	10,688	2,023

PIMCO Low Duration Administrative Class	122,342	24,744	97,598	61,752	15,776	45,976

PIMCO Real Return Administrative Class	522,020	437,413	84,607	487,676	465,660	22,016

PIMCO Short-Term Administrative Class	1,597,424	760,499	836,925	1,382,366	939,194	443,172

A-108

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

PIMCO Total Return Administrative Class	1,721,920	1,665,988	55,932	1,584,130	1,565,818	18,312

Principal Capital Appreciation Class 1	155,591	232,310	(76,719)	212,481	264,208	(51,727)

Principal LifeTime 2010 Class 1	279,302	355,787	(76,485)	300,151	430,112	(129,961)

Principal LifeTime 2020 Class 1	2,710,547	2,611,156	99,391	2,249,121	2,193,988	55,133

Principal LifeTime 2030 Class 1	2,628,205	1,939,502	688,703	3,029,410	2,710,015	319,395

Principal LifeTime 2040 Class 1	1,310,756	1,079,671	231,085	1,068,919	874,306	194,613

Principal LifeTime 2050 Class 1	287,269	262,335	24,934	389,120	312,764	76,356

Principal LifeTime 2060 Class 1	346,165	231,438	114,727	467,380	525,196	(57,816)

Principal LifeTime Strategic Income Class 1	470,687	207,510	263,177	417,796	414,745	3,051

Putnam VT Equity Income Class IB	1,604	12,956	(11,352)	4,027	14,963	(10,936)

Putnam VT Growth Opportunities Class IB	141,346	274,332	(132,986)	177,500	353,270	(175,770)

Putnam VT International Equity Class IB	18,478	7,814	10,664	5,945	12,576	(6,631)

Real Estate Securities Class 1	222,160	290,464	(68,304)	265,287	324,064	(58,777)

Rydex Basic Materials	42,906	5,967	36,939	—	—	—

Rydex Utilities	2,663	55	2,608	—	—	—

SAM Balanced Portfolio Class 1	543,787	703,540	(159,753)	659,814	776,376	(116,562)

SAM Conservative Balanced Portfolio Class 1	543,042	423,905	119,137	512,200	350,810	161,390

SAM Conservative Growth Portfolio Class 1	528,196	675,048	(146,852)	720,698	645,529	75,169

SAM Flexible Income Portfolio Class 1	358,034	279,633	78,401	418,365	554,593	(136,228)

SAM Strategic Growth Portfolio Class 1	444,764	460,182	(15,418)	468,855	491,176	(22,321)

Short-Term Income Class 1	1,701,413	1,023,933	677,480	1,281,169	1,274,133	7,036

SmallCap Class 1	312,508	497,060	(184,552)	397,793	711,216	(313,423)

T. Rowe Price Equity Income Portfolio II	373,230	374,987	(1,757)	235,171	269,935	(34,764)

T. Rowe Price Health Sciences Portfolio II	45,365	34,803	10,562	133,327	42,973	90,354

Templeton Developing Markets VIP Class 2	494,396	457,934	36,462	416,263	406,458	9,805

A-109

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



	2019			2018
			Net increase			Net increase
Division	Purchases	Redemptions	(decrease)	Purchases	Redemptions	(decrease)

Templeton Foreign VIP Class 2	311,353	465,537	(154,184)	359,757	364,716	(4,959)

Templeton Global Bond VIP Class 2	554,916	436,448	118,468	581,056	564,758	16,298

TOPS Managed Risk Balanced ETF Class 2	9,112	31,132	(22,020)	20,736	6,957	13,779

TOPS Managed Risk Growth ETF Class 2	21,073	18,630	2,443	16,594	10,235	6,359

TOPS Managed Risk Moderate Growth ETF Class 2	(34,867)	(39,585)	4,718	17,373	105,599	(88,226)

VanEck Global Hard Assets Class S	40,002	211,443	(171,441)	211,964	83,405	128,559

VanEck Global Hard Assets Initial Class	434,637	770,202	(335,565)	522,668	580,667	(57,999)

Vanguard VIF Balanced	261,906	511,245	(249,339)	446,446	558,036	(111,590)

Vanguard VIF Equity Index	1,081,969	1,476,629	(394,660)	1,657,845	1,734,686	(76,841)

Vanguard VIF Mid-Cap Index	999,715	862,198	137,517	974,483	904,713	69,770

Wanger International	51,631	31,660	19,971	72,553	33,619	38,934

Wells Fargo VT Index Asset Allocation Class 2	6,685	28,182	(21,497)	11,491	40,367	(28,876)

Wells Fargo VT Omega Growth Class 2	50,803	223,090	(172,287)	118,937	72,930	46,007

A-110

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

6. Financial Highlights

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

The Separate Account has presented the following disclosures for 2019, 2018, 2017, 2016 and 2015 in accordance with the AICPA Audit and Accounting Guide for Investment Companies. The following table was developed by determining which products issued by Principal Life have the lowest and highest total return. Only product designs within each division that had units outstanding during the respective periods were considered when determining the lowest and highest total return. The summary may not reflect the minimum and maximum contract charges offered by Principal Life as the contractholder may not have selected all available and applicable contact options as discussed in Note 2.



		December 31,						For the year ended December 31, except as noted
		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) corresponding to lowest to highest expense ratio


Division

AllianceBernstein Global Thematic Growth Class A:
	2019	38		$	21.68	$	834	0.45	%	—%		30.13	%
	2018	67		$	16.66	$	1,109	—%		—%		(9.80)	%
	2017	29		$	18.47	$	540	0.48	%	—%		36.71	%
	2016	29		$	13.51	$	388	—%		—%		(0.66)	%
	2015	27		$	13.60	$	371	—%		—%		2.87	%

AllianceBernstein International Growth Class A:
	2019	59		$	13.24	$	783	0.56	%	—%		27.43		%
	2018	60		$	10.39	$	621	0.69	%	—%		(17.41)		%
	2017	60		$	12.58	$	754	1.15	%	—%		35.12		%
	2016	62		$	9.31	$	579	—%		—%		(6.90)		%
	2015	83		$	10.00	$	830	0.33	%	—%		(1.86)		%

AllianceBernstein International Value Class A:
	2019	182		$	8.22	$	1,508	0.78	%	—%		3.92		%
	2018	217		$	7.07	$	1,536	1.54	%	—%		(22.73)		%
	2017	188		$	9.15	$	1,719	2.46	%	—%		25.34		%
	2016	150		$	7.30	$	1,092	1.38	%	—%		(0.54)		%
	2015	108		$	7.34	$	795	4.25	%	—%		2.66		%

AllianceBernstein Small Cap Growth Class A:
	2019	69		$	34.84	$	2,414	—%		—%		36.36		%
	2018	79		$	25.55	$	2,024	—%		—%		(0.89)		%
	2017	79		$	25.78	$	2,044	—%		—%		34.13		%
	2016	89		$	19.22	$	1,701	—%		—%		6.48		%
	2015	99		$	18.05	$	1,790	—%		—%		(1.26)		%

A-111

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

AllianceBernstein Small/Mid Cap Value Class A:
	2019	200				$	26.07	$	5,202	0.59	%	—%				4.53	%
	2018	196				$	21.71	$	4,263	0.46	%	—%				(15.03)	%
	2017	232				$	25.55	$	5,922	0.46	%	—%				13.15	%
	2016	246				$	22.58	$	5,565	0.61	%	—%				25.10	%
	2015	224				$	18.05	$	4,042	0.80	%	—%				(5.50)	%

American Century VP Capital Appreciation Class II:
	2019	45				$	17.80	$	804	—%		—%				6.27	%
	2018	56				$	13.16	$	733	—%		—%				(5.32)	%
	2017	104				$	13.90	$	1,445	—%		—%				21.61	%
	2016	105				$	11.43	$	1,205	—%		—%				3.16	%
	2015	78				$	11.08	$	867	—%		—%				1.74	%

American Century VP Income & Growth Class I:
	2019	104	$	30.96	to	$	26.92	$	3,214	2.08	%	—% to 0.75%	23.99	%	to	23.03	%
	2018	111	$	24.97	to	$	21.88	$	2,766	1.91	%	—% to 0.75%	(6.90)	%	to	(7.56)	%
	2017	122	$	26.82	to	$	23.67	$	3,255	2.36	%	—% to 0.75%	20.49	%	to	19.55	%
	2016	129	$	22.26	to	$	19.80	$	2,869	2.38	%	—% to 0.75%	13.51	%	to	12.69	%
	2015	142	$	19.61	to	$	17.57	$	2,778	2.11	%	—% to 0.75%	(5.63)	%	to	(6.34)	%

American Century VP Income & Growth Class II:
	2019	240				$	33.23	$	7,978	1.81	%	—%				5.19	%
	2018	257				$	26.85	$	6,897	1.71	%	—%				(7.19)	%
	2017	211				$	28.93	$	6,112	2.13	%	—%				20.29	%
	2016	220				$	24.05	$	5,288	2.15	%	—%				13.18	%
	2015	236				$	21.25	$	5,020	1.92	%	—%				(5.93)	%

American Century VP Inflation Protection Class II:
	2019	128	$	13.00	to	$	12.10	$	1,663	2.29	%	—% to 0.75%	1.01	%	to	8.13	%
	2018	136	$	11.94	to	$	11.19	$	1,625	2.81	%	—% to 0.75%	(2.85)	%	to	(3.53)	%
	2017	134	$	12.29	to	$	11.60	$	1,648	2.63	%	—% to 0.75%	3.71	%	to	2.84	%
	2016	133	$	11.85	to	$	11.28	$	1,577	1.62	%	—% to 0.75%	4.41	%	to	3.68	%
	2015	119	$	11.35	to	$	10.88	$	1,345	1.97	%	—% to 0.75%	(2.49)	%	to	(3.20)	%

A-112

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

American Century VP International Class II:
	2019	94				$	26.15	$	2,460	0.54	%	—%				28.12	%
	2018	53				$	20.41	$	1,081	1.19	%	—%				(15.28)	%
	2017	60				$	24.09	$	1,434	0.68	%	—%				30.92	%
	2016	61				$	18.40	$	1,115	1.16	%	—%				(5.54)	%
	2015	68				$	19.48	$	1,328	0.16	%	—%				0.52	%

American Century VP Mid Cap Value Class II:
	2019	816	$	36.84	to	$	34.27	$	30,049	1.92	%	—% to 0.75%	5.50	%	to	28.02	%
	2018	907	$	28.56	to	$	26.77	$	25,909	1.28	%	—% to 0.75%	(12.95)	%	to	(13.62)	%
	2017	888	$	32.81	to	$	30.99	$	29,149	1.39	%	—% to 0.75%	11.45	%	to	10.64	%
	2016	885	$	29.44	to	$	28.01	$	26,054	1.55	%	—% to 0.75%	22.72	%	to	21.78	%
	2015	703	$	23.99	to	$	23.00	$	16,871	1.49	%	—% to 0.75%	(1.56)	%	to	(2.29)	%

American Century VP Ultra Class I:
	2019	68	$	37.06	to	$	32.23	$	2,517	—%		—% to 0.75%	34.57	%	to	33.57	%
	2018	70	$	27.54	to	$	24.13	$	1,928	0.28	%	—% to 0.75%	0.77	%	to	—	%
	2017	85	$	27.33	to	$	24.13	$	2,325	0.39	%	—% to 0.75%	32.22	%	to	31.28	%
	2016	97	$	20.67	to	$	18.38	$	2,005	0.35	%	—% to 0.75%	4.45	%	to	3.67	%
	2015	102	$	19.79	to	$	17.73	$	2,015	0.44	%	—% to 0.75%	6.28	%	to	5.47	%

American Century VP Ultra Class II:
	2019	155				$	40.37	$	6,259	—%		—%				34.48	%
	2018	176				$	30.02	$	5,270	0.11	%	—%				0.60	%
	2017	168				$	29.84	$	5,021	0.23	%	—%				31.98	%
	2016	169				$	22.61	$	3,810	0.20	%	—%				4.34	%
	2015	181				$	21.67	$	3,911	0.29	%	—%				6.07	%

American Century VP Value Class II:
	2019	829	$	35.95	to	$	31.50	$	29,814	1.96	%	—% to 0.75%	7.89	%	to	26.00	%
	2018	936	$	28.32	to	$	25.00	$	26,517	1.52	%	—% to 0.75%	(9.29)	%	to	(9.97)	%
	2017	1,093	$	31.22	to	$	27.77	$	34,131	1.50	%	—% to 0.75%	8.59	%	to	7.76	%
	2016	1,178	$	28.75	to	$	25.77	$	33,858	1.58	%	—% to 0.75%	20.24	%	to	19.42	%
	2015	1,209	$	23.91	to	$	21.58	$	28,900	2.01	%	—% to 0.75%	(4.01)	%	to	(4.77)	%

A-113

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

American Funds Insurance Series Blue Chip Income and Growth Class 2:
	2019	947	$	14.40	to	$	13.91	$	13,633	2.14	%	—% to 0.75%	7.70	%	to	20.54	%
	2018	757	$	11.86	to	$	11.54	$	8,980	2.17	%	—% to 0.75%	(8.70)	%	to	(9.35)	%
	2017	409	$	12.99	to	$	12.73	$	5,309	2.37	%	—% to 0.75%	17.03	%	to	16.15	%
	2016	197	$	11.10	to	$	10.96	$	2,182	3.42	%	—% to 0.75%	18.72	%	to	17.85	%
	2015	38	$	9.35	to	$	9.30	$	360	16.67	%	—% to 0.75%	(6.69)	%	to	(7.19)	%

American Funds Insurance Series Global Balanced Class 2:
	2019	124	$	11.19	to	$	11.06	$	1,384	1.75	%	—% to 0.75%	4.78	%	to	19.57	%
	2018 (14)	53	$	9.29	to	$	9.25	$	496	2.49	%	—% to 0.75%	(7.38)	%	to	(7.78)	%

American Funds Insurance Series Global Bond Class 2:
	2019	125				$	11.16	$	1,395	1.76	%	—%				7.83	%
	2018	70				$	10.35	$	722	2.83	%	—%				(1.33)	%
	2017	96				$	10.49	$	1,011	0.34	%	—%				6.82	%
	2016	98				$	9.82	$	958	2.13	%	—%				2.72	%
	2015 (6)	—				$	9.56	$	—	—%		—%				(3.63)	%

American Funds Insurance Series Growth Fund Class 2:
	2019	662	$	21.44	to	$	20.55	$	14,203	0.74	%	—% to 0.75%	8.39	%	to	29.82	%
	2018	583	$	16.39	to	$	15.83	$	9,558	0.47	%	—% to 0.75%	(0.24)	%	to	(1.00)	%
	2017	490	$	16.43	to	$	15.99	$	8,048	0.65	%	—% to 0.75%	28.26	%	to	27.31	%
	2016	165	$	12.81	to	$	12.56	$	2,115	1.07	%	—% to 0.75%	9.49	%	to	8.65	%
	2015	87.00	$	11.70	to	$	11.56	$	1,023	0.91	%	—% to 0.75%	6.85	%	to	6.06	%

American Funds Insurance Series International Fund Class 2:
	2019	1,705	$	13.38	to	$	12.83	$	22,812	1.61	%	—% to 0.75%	6.11	%	to	21.96	%
	2018	1,264	$	10.89	to	$	10.52	$	13,766	2.23	%	—% to 0.75%	(13.16)	%	to	(13.77)	%
	2017	497	$	12.54	to	$	12.20	$	6,234	1.46	%	—% to 0.75%	32.14	%	to	31.18	%
	2016	237	$	9.49	to	$	9.30	$	2,248	1.53	%	—% to 0.75%	3.60	%	to	2.76	%
	2015	195	$	9.16	to	$	9.05	$	1,788	2.27	%	—% to 0.75%	(4.58)	%	to	(5.24)	%

American Funds Insurance Series New World Fund Class 2:
	2019	1,171	$	13.43	to	$	12.88	$	15,735	1.05	%	—% to 0.75%	6.93	%	to	28.16	%
	2018	871	$	10.40	to	$	10.05	$	9,062	0.92	%	—% to 0.75%	(14.05)	%	to	(14.69)	%
	2017	675	$	12.10	to	$	11.78	$	8,164	1.07	%	—% to 0.75%	29.41	%	to	28.60	%
	2016	458	$	9.35	to	$	9.16	$	4,285	1.00	%	—% to 0.75%	5.29	%	to	4.45	%
	2015	228	$	8.88	to	$	8.77	$	2,024	0.62	%	—% to 0.75%	(3.16)	%	to	(3.94)	%

A-114

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

BNY Mellon IP Core Value Service Shares:
	2019 (17)	24				$	31.00	$	732	0.65	%	—%				26.58	%
	2018	24				$	24.49	$	592	—%		—%				(11.52)	%
	2017	28				$	27.68	$	763	0.82	%	—%				14.10	%
	2016	20				$	24.26	$	496	0.72	%	—%				18.00	%
	2015	31				$	20.56	$	637	0.41	%	—%				(2.51)	%

BNY Mellon IP MidCap Stock Service Shares:
	2019 (18)	19	$	14.45	to	$	13.85	$	272	0.33	%	—% to 0.75%	5.71	%	to	18.99	%
	2018	17	$	12.05	to	$	11.64	$	200	0.34	%	—% to 0.75%	(15.68)	%	to	(16.32)	%
	2017	19	$	14.29	to	$	13.91	$	271	1.32	%	—% to 0.75%	14.96	%	to	14.20	%
	2016	34	$	12.43	to	$	12.18	$	419	0.85	%	—% to 0.75%	15.20	%	to	14.26	%
	2015	33	$	10.79	to	$	10.66	$	353	0.25	%	—% to 0.75%	(2.44)	%	to	(3.18)	%

BNY Mellon IP Technology Growth Service Shares:
	2019 (19)	119				$	29.92	$	3,573	—%		—%				25.50	%
	2018	124				$	23.84	$	2,956	—%		—%				(1.24)	%
	2017	102				$	24.14	$	2,456	—%		—%				42.33	%
	2016	62				$	16.96	$	1,058	—%		—%				4.37	%
	2015	43				$	16.25	$	706	—%		—%				5.93	%

BNY Mellon Sustainable U.S. Equity Service Shares:
	2019 (20)	15				$	31.96	$	478	1.31	%	—%				34.00	%
	2018	17				$	23.85	$	408	1.37	%	—%				(4.64)	%
	2017	15				$	25.01	$	370	1.25	%	—%				15.04	%
	2016	23				$	21.74	$	507	0.91	%	—%				10.08	%
	2015	22				$	19.75	$	428	0.68	%	—%				(3.42)	%

BNY Mellon VIF Appreciation Service Shares:
	2019 (21)	126				$	34.93	$	4,413	0.90	%	—%				35.81	%
	2018	130				$	25.72	$	3,348	1.03	%	—%				(7.11)	%
	2017	142				$	27.69	$	3,937	1.11	%	—%				27.02	%
	2016	176				$	21.80	$	3,834	1.40	%	—%				7.60	%
	2015	190				$	20.26	$	3,858	1.45	%	—%				(2.69)	%

A-115

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

BNY Mellon VIF Opportunistic Small Cap Service Shares:
	2019 (22)	201		$	23.73	$	4,767	—%		—%		21.51	%
	2018	231		$	19.53	$	4,520	—%		—%		(19.30)	%
	2017	224		$	24.20	$	5,431	—%		—%		24.36	%
	2016	235		$	19.46	$	4,568	—%		—%		16.81	%
	2015	276		$	16.66	$	4,598	—%		—%		(2.52)	%

BNY Mellon VIF Quality Bond Service Shares:
	2019 (23)	74		$	18.94	$	1,408	1.62	%	—%		7.80	%
	2018	56		$	17.57	$	979	2.53	%	—%		(2.71)	%
	2017	67		$	18.06	$	1,212	1.84	%	—%		4.21	%
	2016	56		$	17.33	$	974	1.62	%	—%		1.29	%
	2015	97		$	17.11	$	1,660	1.80	%	—%		(1.89)	%

Bond Market Index Class 1:
	2019	1,404		$	12.05	$	16,915	2.78	%	—%		8.46	%
	2018	971		$	11.11	$	10,787	2.38	%	—%		(0.18)	%
	2017	709		$	11.13	$	7,887	1.88	%	—%		3.25	%
	2016	376		$	10.78	$	4,049	1.96	%	—%		2.37	%
	2015	247		$	10.53	$	2,602	1.55	%	—%		0.10	%

Calvert EAFE International Index Class F:
	2019	579		$	13.06	$	7,557	2.87	%	—%		21.04	%
	2018	399		$	10.79	$	4,307	3.46	%	—%		(13.82)	%
	2017	302		$	12.52	$	3,777	2.55	%	—%		24.45	%
	2016	280		$	10.06	$	2,821	3.09	%	—%		0.20	%
	2015	204		$	10.04	$	2,046	0.03	%	—%		(1.76)	%

Calvert Investment Grade Bond Index Class I:
	2019	230		$	11.85	$	2,725	3.10	%	—%		0.51	%
	2018	205		$	10.94	$	2,238	2.89	%	—%		(0.36)	%
	2017	333		$	10.98	$	3,654	2.80	%	—%		3.58	%
	2016	296		$	10.60	$	3,142	4.65	%	—%		2.51	%
	2015	106		$	10.34	$	1,094	0.17	%	—%		0.10	%

A-116

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Calvert Russell 2000 Small Cap Index Class F:
	2019	1,229				$	27.01	$	33,191	0.91	%	—%				6.34	%
	2018	1,188				$	21.64	$	25,715	1.12	%	—%				(11.46)	%
	2017	1,137				$	24.44	$	27,786	0.77	%	—%				14.10	%
	2016	1,040				$	21.42	$	22,268	0.44	%	—%				20.61	%
	2015	868				$	17.76	$	15,415	—%		—%				(5.38)	%

Calvert S&P 500 Index Portfolio:
	2019	94	$	18.96	to	$	18.16	$	1,772	1.66	%	—% to 0.75%	31.21	%	to	30.18	%
	2018	101	$	14.45	to	$	13.95	$	1,461	1.90	%	—% to 0.75%	(4.75)	%	to	(5.49)	%
	2017	86	$	15.17	to	$	14.76	$	1,310	1.47	%	—% to 0.75%	21.46	%	to	20.59	%
	2016	71	$	12.49	to	$	12.24	$	884	1.40	%	—% to 0.75%	11.52	%	to	10.77	%
	2015	51	$	11.20	to	$	11.05	$	573	0.20	%	—% to 0.75%	0.99	%	to	0.18	%

Calvert S&P MidCap 400 Index Class F:
	2019	85				$	26.87	$	2,296	1.18	%	—%				4.96	%
	2018	81				$	21.40	$	1,731	1.18	%	—%				(11.57)	%
	2017	78				$	24.20	$	1,885	0.72	%	—%				15.62	%
	2016	73				$	20.93	$	1,532	0.54	%	—%				19.94	%
	2015	76				$	17.45	$	1,318	—%		—%				(2.89)	%

ClearBridge Mid Cap Class I:
	2019	29	$	13.72	to	$	13.25	$	394	0.51	%	—% to 0.75%	6.11	%	to	31.97	%
	2018	34	$	10.32	to	$	10.04	$	351	0.58	%	—% to 0.75%	(12.47)	%	to	(13.15)	%
	2017	26	$	11.79	to	$	11.56	$	302	0.65	%	—% to 0.75%	12.82	%	to	11.91	%
	2016	10	$	10.45	to	$	10.33	$	99	1.00	%	—% to 0.75%	9.31	%	to	8.51	%
	2015 (6)	3	$	9.56	to	$	9.52	$	30	—%		—% to 0.75%	(5.35)	%	to	(5.74)	%

ClearBridge Small Cap Growth Class I:
	2019	968				$	20.95	$	20,265	—%		—%				26.89	%
	2018	964				$	16.51	$	15,923	—%		—%				3.45	%
	2017	712				$	15.96	$	11,370	—%		—%				24.30	%
	2016	575				$	12.84	$	7,382	—%		—%				5.77	%
	2015	499				$	12.14	$	6,053	—%		—%				(4.33)	%

A-117

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Core Plus Bond Class 1:
	2019	4,531	$	24.66	to	$	48.94	$	128,314	3.26	%	—% to 0.75%	1.07	%	to	8.97	%
	2018	3,930	$	22.46	to	$	44.91	$	101,465	3.47	%	—% to 0.75%	(1.40)	%	to	(2.16)	%
	2017	3,472	$	22.78	to	$	45.90	$	90,934	2.91	%	—% to 0.75%	4.83	%	to	4.03	%
	2016	3,453	$	21.73	to	$	44.12	$	86,300	3.46	%	—% to 0.75%	4.07	%	to	3.30	%
	2015	2,535	$	20.88	to	$	42.71	$	60,953	3.28	%	—% to 0.75%	(0.48)	%	to	(1.23)	%

Delaware High Yield Service Class:
	2019	61				$	11.94	$	724	4.93	%	—%				16.03	%
	2018	68				$	10.29	$	700	5.79	%	—%				(4.72)	%
	2017	57				$	10.80	$	615	5.67	%	—%				7.25	%
	2016	50				$	10.07	$	502	5.53	%	—%				12.89	%
	2015	98				$	8.92	$	875	6.55	%	—%				(6.89)	%

Delaware Small Cap Value Service Class:
	2019	753	$	28.48	to	$	26.50	$	21,432	0.76	%	—% to 0.75%	6.03	%	to	26.79	%
	2018	804	$	22.30	to	$	20.90	$	17,921	0.60	%	—% to 0.75%	(16.95)	%	to	(17.59)	%
	2017	820	$	26.85	to	$	25.36	$	22,003	0.64	%	—% to 0.75%	11.78	%	to	10.94	%
	2016	841	$	24.02	to	$	22.86	$	20,204	0.70	%	—% to 0.75%	31.04	%	to	30.11	%
	2015	782	$	18.33	to	$	17.57	$	14,328	0.46	%	—% to 0.75%	(6.43)	%	to	(7.18)	%

Delaware Smid Cap Core Service Class:
	2019	109	$	23.13	to	$	21.68	$	2,518	0.30	%	—% to 0.75%	5.09	%	to	28.28	%
	2018	121	$	17.89	to	$	16.90	$	2,161	—%		—% to 0.75%	(12.43)	%	to	(13.07)	%
	2017	128	$	20.43	to	$	19.44	$	2,611	0.08	%	—% to 0.75%	18.37	%	to	17.53	%
	2016	131	$	17.26	to	$	16.54	$	2,255	—%		—% to 0.75%	8.01	%	to	7.19	%
	2015	131	$	15.98	to	$	15.43	$	2,090	0.14	%	—% to 0.75%	7.32	%	to	6.49	%

Diversified Balanced Class 1:
	2019	1,295	$	12.19	to	$	11.95	$	15,744	2.11	%	—% to 0.75%	18.46	%	to	17.50	%
	2018	1,350	$	10.29	to	$	10.17	$	13,871	2.68	%	—% to 0.75%	(3.11)	%	to	(3.88)	%
	2017 (13)	1,461	$	10.62	to	$	10.58	$	15,511	2.40	%	—% to 0.75%	6.31	%	to	5.91	%

Diversified International Class 1:
	2019	4,890	$	32.26	to	$	22.75	$	157,206	1.63	%	—% to 0.75%	5.87	%	to	21.72	%
	2018	5,105	$	20.09	to	$	18.69	$	133,726	2.16	%	—% to 0.75%	(17.53)	%	to	(18.13)	%
	2017	4,948	$	24.36	to	$	22.83	$	157,080	1.85	%	—% to 0.75%	29.09	%	to	28.11	%
	2016	4,993	$	18.87	to	$	17.82	$	122,650	2.32	%	—% to 0.75%	0.32	%	to	(0.39)	%
	2015	5,461	$	18.81	to	$	17.89	$	133,721	2.53	%	—% to 0.75%	(0.32)	%	to	(1.11)	%

A-118

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

DWS Alternative Asset Allocation Class B:
	2019	42				$	10.98	$	457	4.26	%	—%				14.38	%
	2018	90				$	9.60	$	867	1.73	%	—%				(9.35)	%
	2017	75				$	10.59	$	792	1.79	%	—%				6.97	%
	2016	57				$	9.90	$	560	1.67	%	—%				4.98	%
	2015	39				$	9.43	$	372	2.39	%	—%				(6.54)	%

DWS Small Mid Cap Value Class B:
	2019	68	$	22.63	to	$	21.21	$	1,540	0.39	%	—% to 0.75%	5.11	%	to	20.10	%
	2018	88	$	18.70	to	$	17.66	$	1,639	1.07	%	—% to 0.75%	(16.33)	%	to	(16.97)	%
	2017	129	$	22.35	to	$	21.27	$	2,872	0.36	%	—% to 0.75%	10.15	%	to	9.30	%
	2016	129	$	20.29	to	$	19.46	$	2,626	0.23	%	—% to 0.75%	16.48	%	to	15.63	%
	2015	146	$	17.42	to	$	16.83	$	2,545	—%		—% to 0.75%	(2.24)	%	to	(2.94)	%

Equity Income Class 1:
	2019	5,278	$	27.33	to	$	24.79	$	143,822	1.90	%	—% to 0.75%	5.73	%	to	28.11	%
	2018	5,540	$	21.17	to	$	19.35	$	116,985	1.55	%	—% to 0.75%	(5.02)	%	to	(5.70)	%
	2017	2,944	$	22.29	to	$	20.52	$	65,606	2.24	%	—% to 0.75%	21.08	%	to	20.14	%
	2016	3,003	$	18.41	to	$	17.08	$	55,270	2.73	%	—% to 0.75%	15.71	%	to	14.86	%
	2015	3,113	$	15.91	to	$	14.87	$	49,506	2.49	%	—% to 0.75%	(3.93)	%	to	(4.62)	%

Fidelity VIP Asset Manager Service Class 2:
	2019	50				$	26.60	$	1,330	1.30	%	—%				18.01	%
	2018	98				$	22.54	$	2,214	1.53	%	—%				(5.61)	%
	2017	86				$	23.88	$	2,065	2.07	%	—%				13.77	%
	2016	61				$	20.99	$	1,280	1.29	%	—%				2.84	%
	2015	68				$	20.41	$	1,385	1.50	%	—%				(0.10)	%

Fidelity VIP Contrafund Initial Class:
	2019	906	$	47.86	to	$	41.91	$	71,296	0.46	%	—% to 0.75%	31.56	%	to	30.60	%
	2018	1,002	$	36.37	to	$	32.09	$	59,773	0.70	%	—% to 0.75%	(6.38)	%	to	(7.09)	%
	2017	1,068	$	38.85	to	$	34.54	$	68,024	0.99	%	—% to 0.75%	21.86	%	to	20.98	%
	2016	1,158	$	31.88	to	$	28.55	$	60,546	0.81	%	—% to 0.75%	8.03	%	to	7.21	%
	2015	1,250	$	29.51	to	$	26.63	$	60,510	1.03	%	—% to 0.75%	0.65	%	to	(0.11)	%

A-119

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Fidelity VIP Contrafund Service Class 2:
	2019	1,922				$	46.90	$	90,129	0.21	%	—%				7.05	%
	2018	2,284				$	35.73	$	81,619	0.43	%	—%				(6.64)	%
	2017	2,471				$	38.27	$	94,555	0.75	%	—%				21.57	%
	2016	2,745				$	31.48	$	86,410	0.62	%	—%				7.73	%
	2015	2,995				$	29.22	$	87,516	0.77	%	—%				0.41	%

Fidelity VIP Equity-Income Initial Class:
	2019	476	$	33.16	to	$	26.39	$	22,461	2.00	%	—% to 0.75%	27.42	%	to	26.51	%
	2018	522	$	26.02	to	$	20.86	$	19,320	2.28	%	—% to 0.75%	(8.28)	%	to	(8.99)	%
	2017	544	$	28.37	to	$	22.92	$	21,993	1.67	%	—% to 0.75%	12.89	%	to	12.08	%
	2016	599	$	25.13	to	$	20.45	$	21,497	2.31	%	—% to 0.75%	18.04	%	to	17.12	%
	2015	643	$	21.29	to	$	17.46	$	19,554	3.16	%	—% to 0.75%	(3.97)	%	to	(4.69)	%

Fidelity VIP Equity-Income Service Class 2:
	2019	806				$	30.82	$	24,850	1.83	%	—%				6.02	%
	2018	823				$	24.24	$	19,948	2.03	%	—%				(8.56)	%
	2017	901				$	26.51	$	23,876	1.47	%	—%				12.66	%
	2016	973				$	23.53	$	22,908	2.11	%	—%				17.71	%
	2015	1,103				$	19.99	$	22,060	2.93	%	—%				(4.26)	%

Fidelity VIP Extended Market Index Service Class 2:
	2019 (16)	1	$	10.99	to	$	10.94	$	6	2.75	%	—% to 0.75%	5.67	%	to	9.40	%

Fidelity VIP Government Money Market Service Class:
	2019	25,999	$	10.42	to	$	10.12	$	270,866	1.87	%	—% to 0.75%	0.29	%	to	1.20	%
	2018	24,019	$	10.22	to	$	10.00	$	245,550	1.54	%	—% to 0.75%	1.49	%	to	0.70	%
	2017	22,700	$	10.07	to	$	9.93	$	228,535	0.57	%	—% to 0.75%	0.60	%	to	(0.10)	%
	2016 (8)	25,809	$	10.01	to	$	9.94	$	258,348	0.12	%	—% to 0.75%	0.10	%	to	(0.60)	%

Fidelity VIP Growth Service Class 2:
	2019	482	$	40.26	to	$	35.27	$	19,414	0.06	%	—% to 0.75%	33.98	%	to	32.94	%
	2018	584	$	30.05	to	$	26.53	$	17,547	0.04	%	—% to 0.75%	(0.43)	%	to	(1.15)	%
	2017	631	$	30.18	to	$	26.84	$	19,031	0.08	%	—% to 0.75%	34.79	%	to	33.80	%
	2016	656	$	22.39	to	$	20.06	$	14,678	—%		—% to 0.75%	0.54	%	to	(0.20)	%
	2015	697	$	22.27	to	$	20.10	$	15,520	0.03	%	—% to 0.75%	6.91	%	to	6.12	%

A-120

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Fidelity VIP High Income Initial Class:
	2019	179	$	24.01	to	$	27.30	$	5,031	5.13	%	—% to 0.75%	15.10	%	to	14.23	%
	2018	195	$	20.86	to	$	23.90	$	4,763	5.55	%	—% to 0.75%	(3.29)	%	to	(3.98)	%
	2017	225	$	21.57	to	$	24.89	$	5,636	5.23	%	—% to 0.75%	6.94	%	to	6.14	%
	2016	237	$	20.17	to	$	23.45	$	5,555	5.34	%	—% to 0.75%	14.60	%	to	13.72	%
	2015	256	$	17.60	to	$	20.62	$	5,244	6.35	%	—% to 0.75%	(3.61)	%	to	(4.36)	%

Fidelity VIP High Income Service Class 2:
	2019	660				$	33.22	$	21,942	5.46	%	—%				1.87	%
	2018	667				$	28.95	$	19,300	5.32	%	—%				(3.60)	%
	2017	707				$	30.03	$	21,248	4.94	%	—%				6.91	%
	2016	757				$	28.09	$	21,271	5.37	%	—%				14.14	%
	2015	841				$	24.61	$	20,685	6.39	%	—%				(3.87)	%

Fidelity VIP International Index Service Class 2:
	2019 (16)	51	$	11.02	to	$	10.98	$	565	7.97	%	—% to 0.75%	5.25	%	to	9.80	%

Fidelity VIP Mid Cap Service Class 2:
	2019	761				$	50.10	$	33,133	0.64	%	—%				6.35	%
	2018	933				$	25.35	$	33,037	0.40	%	—%				(14.79)	%
	2017	977				$	29.75	$	41,240	0.46	%	—%				20.54	%
	2016	1,159				$	24.68	$	41,071	0.32	%	—%				11.93	%
	2015	1,232				$	22.05	$	39,390	0.25	%	—%				(1.61)	%

Fidelity VIP Strategic Income Service Class 2:
	2019	382				$	11.16	$	4,259	4.09	%	—%				10.60	%
	2018	92				$	10.09	$	931	6.71	%	—%				(2.89)	%
	2017 (12)	5				$	10.39	$	57	17.25	%	—%				3.80	%

Fidelity VIP Total Market Index Service Class 2:
	2019 (16)	28	$	11.29	to	$	11.25	$	320	3.09	%	—% to 0.75%	6.51	%	to	12.50	%

Franklin Income VIP Class 2:
	2019	527				$	33.78	$	17,792	5.02	%	—%				16.04	%
	2018	519				$	29.11	$	15,106	4.69	%	—%				(4.31)	%
	2017	534				$	30.42	$	16,257	4.07	%	—%				9.66	%
	2016	592				$	27.74	$	16,407	5.02	%	—%				14.02	%
	2015	645				$	24.33	$	15,694	4.59	%	—%				(7.03)	%

A-121

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Franklin Mutual Global Discovery VIP Class 2:
	2019	367				$	38.89	$	14,259	1.38	%	—%				5.88	%
	2018	554				$	31.27	$	17,338	2.31	%	—%				(11.22)	%
	2017	672				$	35.22	$	23,667	1.82	%	—%				8.57	%
	2016	826				$	32.44	$	26,792	1.66	%	—%				12.17	%
	2015	939				$	28.92	$	27,142	2.85	%	—%				(3.63)	%

Franklin Mutual Shares VIP Class 2:
	2019	409				$	29.51	$	12,068	1.81	%	—%				22.55	%
	2018	419				$	24.08	$	10,089	2.40	%	—%				(9.06)	%
	2017	393				$	26.48	$	10,409	2.37	%	—%				8.35	%
	2016	322				$	24.44	$	7,869	2.09	%	—%				16.05	%
	2015	506				$	21.06	$	10,659	3.15	%	—%				(4.92)	%

Franklin Rising Dividends VIP Class 2:
	2019	533				$	39.95	$	21,297	1.26	%	—%				6.28	%
	2018	607				$	30.91	$	18,768	1.26	%	—%				(5.07)	%
	2017	656				$	32.56	$	21,349	1.50	%	—%				20.55	%
	2016	641				$	27.01	$	17,321	1.33	%	—%				16.02	%
	2015	592				$	23.28	$	13,777	1.44	%	—%				(3.64)	%

Franklin Small Cap Value VIP Class 2:
	2019	438	$	41.42	to	$	38.83	$	18,134	1.08	%	—% to 0.75%	4.36	%	to	25.42	%
	2018	476	$	32.79	to	$	30.96	$	15,617	0.95	%	—% to 0.75%	(12.86)	%	to	(13.54)	%
	2017	607	$	37.63	to	$	35.81	$	22,859	0.51	%	—% to 0.75%	10.64	%	to	9.81	%
	2016	640	$	34.01	to	$	32.61	$	21,763	0.78	%	—% to 0.75%	30.21	%	to	29.25	%
	2015	612	$	26.12	to	$	25.23	$	15,984	0.62	%	—% to 0.75%	(7.41)	%	to	(8.09)	%

Franklin Strategic Income VIP Class 2:
	2019	1,013				$	17.30	$	17,524	4.91	%	—%				8.06	%
	2018	1,114				$	16.01	$	17,841	2.59	%	—%				(2.14)	%
	2017	999				$	16.36	$	16,341	3.03	%	—%				4.54	%
	2016	778				$	15.65	$	12,173	3.56	%	—%				7.93	%
	2015	992				$	14.50	$	14,374	6.78	%	—%				(3.85)	%

A-122

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Franklin U.S. Government Securities VIP Class 2:
	2019	34				$	12.26	$	418	4.14	%	—%				5.24	%
	2018	125				$	11.65	$	1,453	2.59	%	—%				0.34	%
	2017	95				$	11.61	$	1,104	2.63	%	—%				1.40	%
	2016	106				$	11.45	$	1,210	2.56	%	—%				0.62	%
	2015	89				$	11.38	$	1,010	2.52	%	—%				0.44	%

Goldman Sachs VIT Small Cap Equity Insights Institutional Shares:
	2019	71				$	25.80	$	1,831	0.46	%	—%				24.82	%
	2018	74				$	20.67	$	1,530	0.85	%	—%				(8.62)	%
	2017	32				$	22.62	$	721	0.54	%	—%				11.59	%
	2016	31				$	20.27	$	626	1.06	%	—%				23.15	%
	2015	69				$	16.46	$	1,140	0.28	%	—%				(2.08)	%

Government & High Quality Bond Class 1:
	2019	3,674	$	14.69	to	$	13.51	$	53,941	2.89	%	—% to 0.75%	0.62	%	to	5.63	%
	2018	3,111	$	13.80	to	$	12.79	$	42,915	3.78	%	—% to 0.75%	0.95	%	to	0.16	%
	2017	3,159	$	13.67	to	$	12.77	$	43,181	4.03	%	—% to 0.75%	1.86	%	to	1.11	%
	2016	3,278	$	13.42	to	$	12.63	$	43,977	3.52	%	—% to 0.75%	1.82	%	to	1.04	%
	2015	3,123	$	13.18	to	$	12.50	$	41,159	3.32	%	—% to 0.75%	0.76	%	to	0.08	%

International Emerging Markets Class 1:
	2019	1,023	$	42.48	to	$	37.31	$	43,551	0.90	%	—% to 0.75%	6.87	%	to	16.70	%
	2018	1,101	$	36.22	to	$	31.97	$	39,874	1.21	%	—% to 0.75%	(21.02)	%	to	(21.60)	%
	2017	1,143	$	45.86	to	$	40.78	$	52,398	1.28	%	—% to 0.75%	40.85	%	to	39.75	%
	2016	1,073	$	32.56	to	$	29.18	$	34,927	1.15	%	—% to 0.75%	9.41	%	to	8.60	%
	2015	1,135	$	29.76	to	$	26.87	$	33,774	1.72	%	—% to 0.75%	(13.81)	%	to	(14.45)	%

Invesco American Franchise Series I:
	2019	108	$	26.73	to	$	25.24	$	2,882	—%		—% to 0.75%	36.73	%	to	35.77	%
	2018	116	$	19.55	to	$	18.59	$	2,267	—%		—% to 0.75%	(3.60)	%	to	(4.37)	%
	2017	114	$	20.28	to	$	19.44	$	2,311	0.08	%	—% to 0.75%	27.31	%	to	26.40	%
	2016	127	$	15.93	to	$	15.38	$	2,018	—%		—% to 0.75%	2.25	%	to	1.52	%
	2015	159	$	15.58	to	$	15.15	$	2,474	—%		—% to 0.75%	5.06	%	to	4.20	%

A-123

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Invesco American Franchise Series II:
	2019	105				$	26.21	$	2,758	—%		—%				8.13	%
	2018	108				$	19.21	$	2,078	—%		—%				(3.90)	%
	2017	104				$	19.99	$	2,089	—%		—%				27.00	%
	2016	104				$	15.74	$	1,643	—%		—%				2.01	%
	2015	96				$	15.43	$	1,479	—%		—%				4.75	%

Invesco American Value Series I:
	2019	12	$	12.08	to	$	11.66	$	143	0.75	%	—% to 0.75%	7.28	%	to	24.04	%
	2018	10	$	9.66	to	$	9.40	$	96	0.51	%	—% to 0.75%	(12.66)	%	to	(13.28)	%
	2017	9	$	11.06	to	$	10.84	$	99	0.89	%	—% to 0.75%	9.94	%	to	9.16	%
	2016	6	$	10.06	to	$	9.93	$	58	0.52	%	—% to 0.75%	15.50	%	to	14.53	%
	2015 (6)	—	$	8.71	to	$	8.67	$	—	0.60	%	—% to 0.75%	(13.51)	%	to	(13.90)	%

Invesco Core Equity Series I:
	2019	234	$	27.37	to	$	23.80	$	6,409	0.96	%	—% to 0.75%	28.98	%	to	27.96	%
	2018	258	$	21.22	to	$	18.60	$	5,475	0.84	%	—% to 0.75%	(9.43)	%	to	(10.06)	%
	2017	310	$	23.43	to	$	20.68	$	7,253	1.05	%	—% to 0.75%	13.19	%	to	12.33	%
	2016	330	$	20.70	to	$	18.41	$	6,828	0.74	%	—% to 0.75%	10.28	%	to	9.45	%
	2015	423	$	18.77	to	$	16.82	$	7,937	1.13	%	—% to 0.75%	(5.77)	%	to	(6.50)	%

Invesco Core Equity Series II:
	2019	252				$	38.72	$	9,763	0.17	%	—%				6.34	%
	2018	277				$	30.09	$	8,323	—%		—%				(9.61)	%
	2017	300				$	33.29	$	9,998	0.81	%	—%				12.89	%
	2016	304				$	29.49	$	8,969	0.51	%	—%				10.00	%
	2015	345				$	26.81	$	9,247	0.90	%	—%				(6.00)	%

Invesco Global Real Estate Series I:
	2019	86				$	13.63	$	1,166	4.70	%	—%				23.01	%
	2018	88				$	11.08	$	972	3.92	%	—%				(6.18)	%
	2017	77				$	11.81	$	911	3.13	%	—%				13.12	%
	2016	74				$	10.44	$	777	1.79	%	—%				1.95	%
	2015	63				$	10.24	$	649	4.12	%	—%				(1.44)	%

A-124

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Invesco Health Care Series I:
	2019	529	$	37.78	to	$	32.86	$	19,992	0.04	%	—% to 0.75%	14.07	%	to	31.55	%
	2018	573	$	28.51	to	$	24.98	$	16,348	—%		—% to 0.75%	0.88	%	to	0.12	%
	2017	616	$	28.26	to	$	24.95	$	17,407	0.36	%	—% to 0.75%	15.82	%	to	14.98	%
	2016	704	$	24.40	to	$	21.70	$	17,161	—%		—% to 0.75%	(11.47)	%	to	(12.11)	%
	2015	879	$	27.56	to	$	24.69	$	24,203	—%		—% to 0.75%	3.18	%	to	2.36	%

Invesco International Growth Series I:
	2019	420				$	34.68	$	14,563	1.42	%	—%				28.54	%
	2018	596				$	26.98	$	16,083	1.93	%	—%				(14.97)	%
	2017	800				$	31.73	$	25,386	1.46	%	—%				22.98	%
	2016	751				$	25.80	$	19,384	1.44	%	—%				(0.42)	%
	2015	716				$	25.91	$	18,549	1.51	%	—%				(2.34)	%

Invesco Mid Cap Core Equity Series II:
	2019	14	$	24.63	to	$	23.09	$	355	0.22	%	—% to 0.75%	6.62	%	to	24.14	%
	2018	18	$	19.70	to	$	18.60	$	345	0.12	%	—% to 0.75%	(11.58)	%	to	(12.26)	%
	2017	31	$	22.28	to	$	21.20	$	687	0.35	%	—% to 0.75%	14.67	%	to	13.79	%
	2016	24	$	19.43	to	$	18.63	$	465	—%		—% to 0.75%	13.16	%	to	12.30	%
	2015	21	$	17.17	to	$	16.59	$	364	0.11	%	—% to 0.75%	(4.29)	%	to	(4.98)	%

Invesco Mid Cap Growth Series I:
	2019	114	$	23.16	to	$	21.87	$	2,639	—%		—% to 0.75%	34.34	%	to	33.35	%
	2018	136	$	17.24	to	$	16.40	$	2,336	—%		—% to 0.75%	(5.59)	%	to	(6.29)	%
	2017	140	$	18.26	to	$	17.50	$	2,563	—%		—% to 0.75%	22.47	%	to	21.61	%
	2016	126	$	14.91	to	$	14.39	$	1,880	—%		—% to 0.75%	0.74	%	to	—	%
	2015	139	$	14.80	to	$	14.39	$	2,063	—%		—% to 0.75%	1.23	%	to	0.42	%

Invesco Oppenheimer Main Street Small Cap Series II:
	2019 (24)	199				$	30.18	$	6,016	—%		—%				6.23	%
	2018	211				$	23.93	$	5,048	0.06	%	—%				(10.51)	%
	2017	172				$	26.74	$	4,589	0.64	%	—%				13.88	%
	2016	163				$	23.48	$	3,838	0.24	%	—%				17.69	%
	2015	140				$	19.95	$	2,787	0.64	%	—%				(6.12)	%

A-125

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Invesco Small Cap Equity Series I:
	2019	437	$	22.74	to	$	19.76	$	9,708	—%		—% to 0.75%	26.61	%	to	25.62	%
	2018	478	$	17.17	to	$	15.73	$	8,387	—%		—% to 0.75%	(15.08)	%	to	(15.70)	%
	2017	496	$	20.22	to	$	18.66	$	10,240	—%		—% to 0.75%	14.04	%	to	13.23	%
	2016	523	$	17.73	to	$	16.48	$	9,472	—%		—% to 0.75%	12.07	%	to	11.20	%
	2015	628	$	15.82	to	$	14.82	$	10,118	—%		—% to 0.75%	(5.50)	%	to	(6.20)	%

Invesco Technology Series I:
	2019	405	$	21.10	to	$	18.35	$	8,533	—%		—% to 0.75%	35.87	%	to	34.83	%
	2018	481	$	15.53	to	$	13.61	$	7,456	—%		—% to 0.75%	(0.45)	%	to	(1.16)	%
	2017	403	$	15.60	to	$	13.77	$	6,285	—%		—% to 0.75%	35.06	%	to	34.08	%
	2016	385	$	11.55	to	$	10.27	$	4,445	—%		—% to 0.75%	(0.69)	%	to	(1.44)	%
	2015	344	$	11.63	to	$	10.42	$	3,997	—%		—% to 0.75%	6.80	%	to	6.00	%

Janus Henderson Balanced Service Shares:
	2019	771				$	38.60	$	29,768	1.65	%	—%				22.27	%
	2018	706				$	31.57	$	22,282	1.79	%	—%				0.41	%
	2017	627				$	31.44	$	19,717	1.38	%	—%				18.15	%
	2016	610				$	26.61	$	16,237	1.92	%	—%				4.31	%
	2015	726				$	25.51	$	18,508	1.73	%	—%				0.43	%

Janus Henderson Enterprise Service Shares:
	2019	1,527	$	47.01	to	$	40.87	$	71,794	0.05	%	—% to 0.75%	5.66	%	to	34.13	%
	2018	1,402	$	34.78	to	$	30.47	$	48,773	0.13	%	—% to 0.75%	(10.52)	%	to	(1.42)	%
	2017	1,275	$	35.01	to	$	30.91	$	44,649	0.53	%	—% to 0.75%	27.08	%	to	26.16	%
	2016	1,181	$	27.55	to	$	24.50	$	32,522	0.70	%	—% to 0.75%	12.08	%	to	11.26	%
	2015	1,114	$	24.58	to	$	22.02	$	27,387	0.79	%	—% to 0.75%	3.80	%	to	2.99	%

Janus Henderson Flexible Bond Service Shares:
	2019	1,621				$	23.87	$	38,697	2.75	%	—%				9.24	%
	2018	1,912				$	21.85	$	41,777	2.62	%	—%				(1.27)	%
	2017	2,221				$	22.13	$	49,161	2.49	%	—%				3.36	%
	2016	2,279				$	21.41	$	48,806	2.45	%	—%				2.20	%
	2015	2,067				$	20.95	$	43,292	1.99	%	—%				(0.05)	%

A-126

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Janus Henderson Forty Service Shares:
	2019	486				$	30.72	$	14,937	0.02	%	—%				6.85	%
	2018	547				$	22.45	$	12,281	1.27	%	—%				1.72	%
	2017	454				$	22.07	$	10,018	—%		—%				29.98	%
	2016	366				$	16.98	$	6,208	0.86	%	—%				1.98	%
	2015	409				$	16.65	$	6,808	1.24	%	—%				11.90	%

Janus Henderson Global Research Service Shares:
	2019	192				$	25.57	$	4,909	0.87	%	—%				28.69	%
	2018	207				$	19.87	$	4,113	1.04	%	—%				(7.06)	%
	2017	125				$	21.38	$	2,662	0.66	%	—%				26.66	%
	2016	127				$	16.88	$	2,149	1.00	%	—%				1.81	%
	2015	100				$	16.58	$	1,651	0.55	%	—%				(2.53)	%

Janus Henderson Global Technology Service Shares
	2019 (16)	34	$	11.71	to	$	11.66	$	399	—%		—% to 0.75%	8.73	%	to	16.60	%

Janus Henderson Overseas Service Shares:
	2019	111				$	30.27	$	3,349	1.81	%	—%				26.71	%
	2018	132				$	23.89	$	3,150	1.67	%	—%				(15.13)	%
	2017	130				$	28.15	$	3,649	1.55	%	—%				30.81	%
	2016	144				$	21.52	$	3,099	5.00	%	—%				(6.72)	%
	2015	115				$	23.07	$	2,652	0.52	%	—%				(8.78)	%

JP Morgan Core Bond Class I:
	2019	211				$	15.72	$	3,318	2.51	%	—%				8.12	%
	2018	190				$	14.54	$	2,767	2.24	%	—%				0.07	%
	2017	203				$	14.53	$	2,953	2.35	%	—%				3.56	%
	2016	217				$	14.03	$	3,050	2.54	%	—%				2.11	%
	2015	256				$	13.74	$	3,515	3.63	%	—%				1.18	%

JP Morgan Small Cap Core Class I:
	2019	88				$	43.44	$	3,827	0.40	%	—%				24.58	%
	2018	107				$	34.87	$	3,740	0.39	%	—%				(11.94)	%
	2017	150				$	39.60	$	5,930	0.32	%	—%				15.25	%
	2016	159				$	34.36	$	5,463	0.52	%	—%				20.18	%
	2015	161				$	28.59	$	4,600	0.15	%	—%				(5.27)	%

A-127

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

LargeCap Growth I Class 1:
	2019	4,456	$	72.40	to	$	36.71	$	317,348	0.05	%	—% to 0.75%	7.45	%	to	33.93	%
	2018	3,602	$	32.27	to	$	27.41	$	190,724	0.04	%	—% to 0.75%	3.60	%	to	2.81	%
	2017	3,682	$	31.15	to	$	26.66	$	187,992	0.03	%	—% to 0.75%	33.75	%	to	32.70	%
	2016	3,891	$	23.29	to	$	20.09	$	148,226	—%		—% to 0.75%	1.26	%	to	0.50	%
	2015	3,880	$	23.00	to	$	19.99	$	145,851	0.23	%	—% to 0.75%	7.78	%	to	6.96	%

LargeCap S&P 500 Index Class 1:
	2019	6,347	$	33.61	to	$	29.82	$	213,356	1.89	%	—% to 0.75%	6.63	%	to	30.10	%
	2018	6,210	$	25.64	to	$	22.92	$	159,228	1.73	%	—% to 0.75%	(4.58)	%	to	(5.29)	%
	2017	5,891	$	26.87	to	$	24.20	$	158,276	1.68	%	—% to 0.75%	21.47	%	to	20.58	%
	2016	5,316	$	22.12	to	$	20.07	$	117,572	1.68	%	—% to 0.75%	11.60	%	to	10.76	%
	2015	4,611	$	19.82	to	$	18.12	$	91,385	1.48	%	—% to 0.75%	1.12	%	to	0.39	%

Lord Abbett Series Fund Developing Growth Class VC:
	2019	40	$	19.95	to	$	19.42	$	801	—%		—% to 0.75%	4.56	%	to	30.77	%
	2018	36	$	15.14	to	$	14.85	$	552	—%		—% to 0.75%	4.85	%	to	4.14	%
	2017	1	$	14.44	to	$	14.26	$	11	—%		—% to 0.75%	29.97	%	to	28.93	%
	2016 (9)	—	$	11.11	to	$	11.06	$	3	—%		—% to 0.75%	10.66	%	to	10.16	%

MFS Blended Research Small Cap Equity Service Class:
	2019	94	$	16.30	to	$	15.86	$	1,529	0.49	%	—% to 0.75%	8.09	%	to	25.38	%
	2018	55	$	12.90	to	$	12.65	$	713	0.70	%	—% to 0.75%	(5.36)	%	to	(6.02)	%
	2017	7	$	13.63	to	$	13.46	$	98	0.74	%	—% to 0.75%	14.73	%	to	13.78	%
	2016 (9)	1	$	11.88	to	$	11.83	$	15	0.24	%	—% to 0.75%	18.92	%	to	18.42	%

MFS Global Equity Service Class:
	2019	295				$	32.03	$	9,456	0.99	%	—%				30.20	%
	2018	235				$	24.60	$	5,773	0.71	%	—%				(9.92)	%
	2017	252				$	27.31	$	6,895	0.72	%	—%				23.74	%
	2016	197				$	22.07	$	4,355	0.70	%	—%				7.03	%
	2015	199				$	20.62	$	4,099	0.87	%	—%				(1.67)	%

MFS Growth Service Class:
	2019	799				$	53.82	$	43,012	—%		—%				37.79	%
	2018	805				$	39.06	$	31,443	—%		—%				2.41	%
	2017	767				$	38.14	$	29,261	—%		—%				31.07	%
	2016	656				$	29.10	$	19,087	—%		—%				2.18	%
	2015	624				$	28.48	$	17,778	—%		—%				7.31	%

A-128

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

MFS Inflation-Adjusted Bond Service Class:
	2019	35				$	10.73	$	374	1.54	%	—%				8.06	%
	2018	12				$	9.93	$	117	1.63	%	—%				(4.70)	%
	2017	5				$	10.42	$	52	—%		—%				7.98	%
	2016	2				$	9.65	$	21	—%		—%				2.33	%
	2015 (6)	—				$	9.43	$	2	—%		—%				(4.84)	%

MFS International Intrinsic Value Service Class:
	2019 (25)	1,239				$	17.62	$	21,840	1.53	%	—%				25.68	%
	2018	924				$	14.02	$	12,961	0.94	%	—%				(9.72)	%
	2017	749				$	15.53	$	11,636	1.34	%	—%				26.78	%
	2016	567				$	12.25	$	6,946	1.16	%	—%				3.81	%
	2015	433				$	11.80	$	5,107	1.88	%	—%				6.31	%

MFS Mid Cap Growth Service Class:
	2019	15				$	35.73	$	552	—%		—%				38.27	%
	2018	75				$	25.84	$	1,940	—%		—%				0.94	%
	2017	27				$	25.60	$	694	—%		—%				26.67	%
	2016	28				$	20.21	$	571	—%		—%				4.66	%
	2015	30				$	19.31	$	586	—%		—%				4.43	%

MFS Mid Cap Value Portfolio Service Class:
	2019	215	$	14.00	to	$	13.52	$	3,016	0.72	%	—% to 0.75%	5.98	%	to	29.75	%
	2018	103	$	10.71	to	$	10.42	$	1,105	0.68	%	—% to 0.75%	(11.63)	%	to	(12.29)	%
	2017	89	$	12.12	to	$	11.88	$	1,083	1.04	%	—% to 0.75%	13.38	%	to	12.50	%
	2016	77	$	10.69	to	$	10.56	$	822	0.73	%	—% to 0.75%	15.82	%	to	14.91	%
	2015 (6)	12	$	9.23	to	$	9.19	$	108	0.02	%	—% to 0.75%	(8.25)	%	to	(8.65)	%

MFS New Discovery Service Class:
	2019	347	$	46.12	to	$	43.23	$	15,987	—%		—% to 0.75%	8.70	%	to	40.22	%
	2018	381	$	32.64	to	$	30.83	$	12,422	—%		—% to 0.75%	(1.72)	%	to	(2.47)	%
	2017	343	$	33.21	to	$	31.61	$	11,406	—%		—% to 0.75%	26.32	%	to	25.39	%
	2016	354	$	26.29	to	$	25.21	$	9,297	—%		—% to 0.75%	8.82	%	to	8.01	%
	2015	407	$	24.16	to	$	23.34	$	9,834	—%		—% to 0.75%	(2.15)	%	to	(2.87)	%

A-129

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

MFS New Discovery Value Service Class:
	2019	62	$	16.48	to	$	16.04	$	1,019	0.37	%	—% to 0.75%	6.32	%	to	32.45	%
	2018	25	$	12.35	to	$	12.11	$	310	0.28	%	—% to 0.75%	(11.02)	%	to	(11.67)	%
	2017	20	$	13.88	to	$	13.71	$	281	0.92	%	—% to 0.75%	15.00	%	to	14.15	%
	2016 (9)	2	$	12.07	to	$	12.01	$	29	0.31	%	—% to 0.75%	21.31	%	to	20.70	%

MFS Research International Portfolio Service Class:
	2019	219				$	12.71	$	2,787	1.22	%	—%				27.61	%
	2018	219				$	9.96	$	2,182	1.18	%	—%				(14.29)	%
	2017	253				$	11.62	$	2,945	1.69	%	—%				27.97	%
	2016	225				$	9.08	$	2,043	1.22	%	—%				(0.98)	%
	2015 (4)	360				$	9.17	$	3,301	2.13	%	—%				(8.30)	%

MFS Total Return Service Class:
	2019	164				$	20.88	$	3,416	2.30	%	—%				20.14	%
	2018	149				$	17.38	$	2,595	2.03	%	—%				(5.90)	%
	2017	118				$	18.47	$	2,181	2.30	%	—%				12.08	%
	2016	77				$	16.48	$	1,270	2.89	%	—%				8.78	%
	2015	50				$	15.15	$	764	2.61	%	—%				(0.59)	%

MFS Utilities Service Class:
	2019	216				$	21.28	$	4,604	3.77	%	—%				2.60	%
	2018	225				$	17.05	$	3,845	0.85	%	—%				0.77	%
	2017	223				$	16.92	$	3,765	4.16	%	—%				14.48	%
	2016	222				$	14.78	$	3,288	3.67	%	—%				11.30	%
	2015	204				$	13.28	$	2,716	4.01	%	—%				(14.76)	%

MFS Value Service Class:
	2019	1,023				$	39.68	$	40,604	1.91	%	—%				29.50	%
	2018	1,041				$	30.64	$	31,883	1.30	%	—%				(10.36)	%
	2017	1,125				$	34.18	$	38,445	1.74	%	—%				17.38	%
	2016	1,140				$	29.12	$	33,197	1.95	%	—%				13.75	%
	2015	1,017				$	25.60	$	26,025	2.11	%	—%				(0.93)	%

A-130

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

MidCap Class 1:
	2019	1,824	$	97.00	to	$	344.48	$	233,335	0.27	%	—% to 0.75%	43.09	%	to	42.03	%
	2018	2,005	$	67.79	to	$	242.54	$	179,111	0.28	%	—% to 0.75%	(6.55)	%	to	(7.25)	%
	2017	2,188	$	72.54	to	$	261.50	$	209,664	0.54	%	—% to 0.75%	25.52	%	to	24.58	%
	2016	2,340	$	57.79	to	$	209.90	$	179,257	0.41	%	—% to 0.75%	10.37	%	to	9.54	%
	2015	2,615	$	52.36	to	$	191.62	$	181,319	0.52	%	—% to 0.75%	1.65	%	to	0.88	%

Neuberger Berman AMT Mid Cap Growth Portfolio Class S:
	2019	52				$	15.44	$	796	—%		—%				32.53	%
	2018	53				$	11.65	$	618	—%		—%				(6.58)	%
	2017	62				$	12.47	$	770	—%		—%				24.58	%
	2016	85				$	10.01	$	853	—%		—%				4.16	%
	2015 (7)	104				$	9.61	$	1,004	—%		—%				(4.19)	%

Neuberger Berman AMT Sustainable Equity I Class:
	2019 (15)	899				$	10.95	$	9,838	0.54	%	—%				6.52	%

PIMCO All Asset Administrative Class:
	2019	157				$	13.80	$	2,164	2.88	%	—%				11.83	%
	2018	219				$	12.34	$	2,702	3.13	%	—%				(5.37)	%
	2017	242				$	13.04	$	3,162	4.84	%	—%				13.49	%
	2016	210				$	11.49	$	2,411	2.71	%	—%				12.98	%
	2015	199				$	10.17	$	2,029	3.55	%	—%				(9.03)	%

PIMCO Commodity Real Return Strategy Administrative Class:
	2019	115				$	6.13	$	705	4.37	%	—%				11.45	%
	2018	110				$	5.50	$	607	2.15	%	—%				(14.06)	%
	2017	105				$	6.40	$	671	10.99	%	—%				2.07	%
	2016	72				$	6.27	$	450	1.18	%	—%				15.26	%
	2015	34				$	5.44	$	184	3.75	%	—%				(25.78)	%

PIMCO Emerging Market Bond Administrative Class:
	2019	90				$	14.12	$	1,270	4.39	%	—%				14.80	%
	2018	95				$	12.30	$	1,170	4.15	%	—%				(4.73)	%
	2017	101				$	12.91	$	1,298	4.97	%	—%				9.87	%
	2016	81				$	11.75	$	950	5.26	%	—%				13.31	%
	2015	51				$	10.37	$	527	5.28	%	—%				(2.26)	%

A-131

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

PIMCO High Yield Administrative Class:
	2019	848		$	20.05	$	16,989	4.88	%	—%		14.77	%
	2018	744		$	17.47	$	13,003	5.09	%	—%		(2.67)	%
	2017	660		$	17.95	$	11,845	4.80	%	—%		6.65	%
	2016	544		$	16.83	$	9,159	5.17	%	—%		12.42	%
	2015	373		$	14.97	$	5,577	5.28	%	—%		(1.64)	%

PIMCO Long-Term U.S. Government Administrative Class:
	2019	19		$	13.29	$	252	2.25	%	—%		13.40	%
	2018	62		$	11.72	$	730	2.39	%	—%		(2.41)	%
	2017	60		$	12.01	$	724	2.16	%	—%		8.98	%
	2016	49		$	11.02	$	536	1.84	%	—%		0.64	%
	2015	2		$	10.95	$	20	2.10	%	—%		(1.35)	%

PIMCO Low Duration Administrative Class:
	2019	147		$	10.66	$	1,564	2.68	%	—%		4.00	%
	2018	49		$	10.25	$	502	2.11	%	—%		0.39	%
	2017	3		$	10.21	$	31	1.18	%	—%		1.29	%
	2016 (9)	—		$	10.08	$	—	—%		—%		0.80	%

PIMCO Real Return Administrative Class:
	2019	936		$	13.67	$	12,805	1.65	%	—%		8.49	%
	2018	852		$	12.60	$	10,742	2.44	%	—%		(2.25)	%
	2017	830		$	12.89	$	10,701	2.36	%	—%		3.70	%
	2016	817		$	12.43	$	10,161	2.31	%	—%		5.16	%
	2015	794		$	11.82	$	9,388	4.28	%	—%		(2.72)	%

PIMCO Short-Term Administrative Class:
	2019	3,413		$	11.82	$	40,357	2.42	%	—%		2.78	%
	2018	2,576		$	11.50	$	29,633	2.13	%	—%		1.50	%
	2017	2,133		$	11.33	$	24,166	1.67	%	—%		2.44	%
	2016	1,653		$	11.06	$	18,282	1.57	%	—%		2.31	%
	2015	1,876		$	10.81	$	20,275	0.98	%	—%		1.12	%

A-132

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

PIMCO Total Return Administrative Class:
	2019	3,344				$	14.57	$	48,734	2.99	%	—%				8.33	%
	2018	3,288				$	13.45	$	44,224	2.54	%	—%				(0.52)	%
	2017	3,270				$	13.52	$	44,213	2.00	%	—%				4.89	%
	2016	2,695				$	12.89	$	34,726	2.06	%	—%				2.71	%
	2015	2,583				$	12.55	$	32,426	5.10	%	—%				0.40	%

Principal Capital Appreciation Class 1:
	2019	1,445	$	16.63	to	$	16.05	$	24,031	1.60	%	—% to 0.75%	5.92	%	to	31.45	%
	2018	1,522	$	12.55	to	$	12.21	$	19,104	1.15	%	—% to 0.75%	(3.46)	%	to	(4.08)	%
	2017	1,574	$	13.00	to	$	12.73	$	20,451	1.25	%	—% to 0.75%	20.82	%	to	19.76	%
	2016	1,656	$	10.76	to	$	10.63	$	17,828	1.13	%	—% to 0.75%	9.13	%	to	8.36	%
	2015 (5)	1,745	$	9.86	to	$	9.81	$	17,214	0.33	%	—% to 0.75%	(0.40)	%	to	(0.91)	%

Principal LifeTime 2010 Class 1:
	2019	654	$	22.19	to	$	24.47	$	14,518	2.86	%	—% to 0.75%	2.40	%	to	13.23	%
	2018	731	$	19.45	to	$	21.61	$	14,211	3.00	%	—% to 0.75%	(3.86)	%	to	(4.59)	%
	2017	861	$	20.23	to	$	22.65	$	17,414	2.08	%	—% to 0.75%	11.40	%	to	10.60	%
	2016	854	$	18.16	to	$	20.48	$	15,505	2.16	%	—% to 0.75%	5.28	%	to	4.44	%
	2015	729	$	17.25	to	$	19.61	$	12,577	2.24	%	—% to 0.75%	(1.20)	%	to	(1.90)	%

Principal LifeTime 2020 Class 1:
	2019	4,162	$	25.77	to	$	28.61	$	107,316	2.42	%	—% to 0.75%	3.33	%	to	17.25	%
	2018	4,063	$	21.83	to	$	24.40	$	88,691	2.75	%	—% to 0.75%	(5.39)	%	to	(6.12)	%
	2017	4,008	$	23.07	to	$	25.99	$	92,474	1.98	%	—% to 0.75%	15.00	%	to	14.14	%
	2016	3,911	$	20.06	to	$	22.77	$	78,473	1.95	%	—% to 0.75%	5.75	%	to	4.98	%
	2015	3,839	$	18.97	to	$	21.69	$	72,833	2.70	%	—% to 0.75%	(1.15)	%	to	(1.86)	%

Principal LifeTime 2030 Class 1:
	2019	4,408	$	27.07	to	$	31.21	$	119,380	2.14	%	—% to 0.75%	4.32	%	to	21.11	%
	2018	3,719	$	22.20	to	$	25.77	$	82,562	2.57	%	—% to 0.75%	(7.04)	%	to	(7.77)	%
	2017	3,400	$	23.88	to	$	27.94	$	81,209	1.65	%	—% to 0.75%	18.28	%	to	17.39	%
	2016	2,825	$	20.19	to	$	23.80	$	57,057	1.69	%	—% to 0.75%	5.82	%	to	5.08	%
	2015	2,443	$	19.08	to	$	22.65	$	46,609	2.58	%	—% to 0.75%	(1.04)	%	to	(1.82)	%

A-133

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Principal LifeTime 2040 Class 1:
	2019	2,222	$	29.08	to	$	33.91	$	64,652	1.92	%	—% to 0.75%	4.91	%	to	23.80	%
	2018	1,991	$	23.32	to	$	27.39	$	46,443	2.09	%	—% to 0.75%	(7.86)	%	to	(8.55)	%
	2017	1,797	$	25.31	to	$	29.95	$	45,470	1.39	%	—% to 0.75%	20.70	%	to	19.80	%
	2016	1,616	$	20.97	to	$	25.00	$	33,897	1.45	%	—% to 0.75%	5.43	%	to	4.65	%
	2015	1,512	$	19.89	to	$	23.89	$	30,067	2.55	%	—% to 0.75%	(0.85)	%	to	(1.57)	%

Principal LifeTime 2050 Class 1:
	2019	827	$	29.79	to	$	35.17	$	24,643	1.90	%	—% to 0.75%	5.34	%	to	25.43	%
	2018	802	$	23.58	to	$	28.04	$	18,910	2.03	%	—% to 0.75%	(8.64)	%	to	(9.34)	%
	2017	726	$	25.81	to	$	30.93	$	18,728	1.30	%	—% to 0.75%	22.15	%	to	21.25	%
	2016	777	$	21.13	to	$	25.51	$	16,430	1.42	%	—% to 0.75%	5.60	%	to	4.81	%
	2015	690	$	20.01	to	$	24.34	$	13,819	2.64	%	—% to 0.75%	(0.69)	%	to	(1.46)	%

Principal LifeTime 2060 Class 1:
	2019	368	$	17.42	to	$	16.57	$	6,408	1.46	%	—% to 0.75%	5.64	%	to	26.30	%
	2018	253	$	13.69	to	$	13.12	$	3,466	1.93	%	—% to 0.75%	(9.22)	%	to	(9.95)	%
	2017	311	$	15.08	to	$	14.57	$	4,691	0.97	%	—% to 0.75%	22.70	%	to	21.82	%
	2016	159	$	12.29	to	$	11.96	$	1,951	1.13	%	—% to 0.75%	5.49	%	to	4.73	%
	2015	143	$	11.65	to	$	11.42	$	1,663	1.28	%	—% to 0.75%	(0.68)	%	to	(1.47)	%

Principal LifeTime Strategic Income Class 1:
	2019	779	$	19.68	to	$	20.07	$	15,328	2.67	%	—% to 0.75%	1.97	%	to	11.62	%
	2018	515	$	17.50	to	$	17.98	$	9,024	2.94	%	—% to 0.75%	(3.05)	%	to	(3.75)	%
	2017	512	$	18.05	to	$	18.68	$	9,248	2.34	%	—% to 0.75%	8.80	%	to	7.98	%
	2016	514	$	16.59	to	$	17.30	$	8,522	2.54	%	—% to 0.75%	4.73	%	to	3.97	%
	2015	461	$	15.84	to	$	16.64	$	7,306	2.25	%	—% to 0.75%	(0.94)	%	to	(1.71)	%

Putnam VT Equity Income Class IB:
	2019	54				$	13.50	$	729	2.13	%	—%				30.43	%
	2018	65				$	10.35	$	677	0.71	%	—%				(8.49)	%
	2017 (11)	76				$	11.31	$	863	—%		—%				13.21	%

Putnam VT Growth Opportunities Class IB:
	2019	1,814	$	18.42	to	$	18.00	$	33,423	0.13	%	—% to 0.75%	6.78	%	to	35.75	%
	2018	1,947	$	13.47	to	$	13.26	$	26,234	—%		—% to 0.75%	2.36	%	to	1.61	%
	2017	2,123	$	13.16	to	$	13.05	$	27,937	0.10	%	—% to 0.75%	30.95	%	to	29.98	%
	2016 (10)	2,254	$	10.05	to	$	10.04	$	22,655	—%		—% to 0.75%	0.70	%	to	0.60	%

A-134

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Putnam VT International Equity Class IB:
	2019	47				$	21.71	$	1,015	1.29	%	—%				25.20	%
	2018	36				$	17.34	$	626	1.45	%	—%				(19.12)	%
	2017	43				$	21.44	$	916	2.19	%	—%				26.56	%
	2016	45				$	16.94	$	770	3.93	%	—%				(2.48)	%
	2015	67				$	17.37	$	1,170	1.16	%	—%				0.17	%

Real Estate Securities Class 1:
	2019	847	$	97.03	to	$	72.96	$	82,312	1.79	%	—% to 0.75%	(0.88)	%	to	30.29	%
	2018	916	$	73.92	to	$	56.00	$	67,765	1.81	%	—% to 0.75%	(4.22)	%	to	(4.94)	%
	2017	974	$	77.18	to	$	58.91	$	75,297	1.75	%	—% to 0.75%	9.20	%	to	8.39	%
	2016	1,105	$	70.68	to	$	54.35	$	78,178	1.39	%	—% to 0.75%	5.84	%	to	5.04	%
	2015	1,134	$	66.78	to	$	51.74	$	75,834	1.15	%	—% to 0.75%	4.21	%	to	3.44	%

Rydex Basic Materials:
	2019	37				$	9.91	$	366	—%		—%				21.45	%
	2018 (14)	—				$	8.16	$	—	—%		—%				(18.56)	%

Rydex Utilities:
	2019	3				$	12.97	$	34	—%		—%				18.99	%
	2018 (14)	—				$	10.90	$	—	—%		—%				9.66	%

SAM Balanced Portfolio Class 1:
	2019	3,806	$	21.51	to	$	28.68	$	81,942	2.52	%	—% to 0.75%	3.81	%	to	19.10	%
	2018	3,966	$	17.93	to	$	24.08	$	71,152	3.07	%	—% to 0.75%	(5.03)	%	to	(5.75)	%
	2017	4,082	$	18.88	to	$	25.55	$	77,137	2.13	%	—% to 0.75%	15.19	%	to	14.32	%
	2016	4,226	$	16.39	to	$	22.35	$	69,351	2.08	%	—% to 0.75%	6.84	%	to	6.02	%
	2015	4,516	$	15.34	to	$	21.08	$	69,369	2.93	%	—% to 0.75%	(0.78)	%	to	(1.54)	%

SAM Conservative Balanced Portfolio Class 1:
	2019	2,643	$	20.12	to	$	24.02	$	53,200	2.92	%	—% to 0.75%	2.86	%	to	14.98	%
	2018	2,524	$	17.37	to	$	20.89	$	43,839	3.45	%	—% to 0.75%	(3.50)	%	to	(4.22)	%
	2017	2,363	$	18.00	to	$	21.81	$	42,524	2.79	%	—% to 0.75%	11.46	%	to	10.65	%
	2016	2,448	$	16.15	to	$	19.71	$	39,530	2.59	%	—% to 0.75%	6.39	%	to	5.57	%
	2015	2,382	$	15.18	to	$	18.67	$	36,166	3.21	%	—% to 0.75%	(0.78)	%	to	(1.53)	%

A-135

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

SAM Conservative Growth Portfolio Class 1:
	2019	3,157	$	22.24	to	$	33.49	$	70,267	1.84	%	—% to 0.75%	4.71	%	to	23.12	%
	2018	3,304	$	17.93	to	$	27.20	$	59,275	2.79	%	—% to 0.75%	(6.61)	%	to	(7.29)	%
	2017	3,229	$	19.20	to	$	29.34	$	62,036	1.56	%	—% to 0.75%	19.78	%	to	18.88	%
	2016	3,199	$	16.03	to	$	24.68	$	51,320	1.43	%	—% to 0.75%	7.01	%	to	6.20	%
	2015	3,310	$	14.98	to	$	23.24	$	49,631	2.23	%	—% to 0.75%	(1.12)	%	to	(1.86)	%

SAM Flexible Income Portfolio Class 1:
	2019	1,279	$	19.58	to	$	21.75	$	25,045	3.50	%	—% to 0.75%	2.03	%	to	12.40	%
	2018	1,200	$	17.29	to	$	19.35	$	20,760	4.04	%	—% to 0.75%	(1.98)	%	to	(2.67)	%
	2017	1,337	$	17.64	to	$	19.88	$	23,582	3.39	%	—% to 0.75%	8.42	%	to	7.58	%
	2016	1,292	$	16.27	to	$	18.48	$	21,032	3.32	%	—% to 0.75%	7.04	%	to	6.27	%
	2015	1,193	$	15.20	to	$	17.39	$	18,145	3.61	%	—% to 0.75%	(1.30)	%	to	(2.08)	%

SAM Strategic Growth Portfolio Class 1:
	2019	3,032	$	22.52	to	$	36.77	$	68,324	1.54	%	—% to 0.75%	5.58	%	to	26.49	%
	2018	3,048	$	17.67	to	$	29.07	$	53,884	2.39	%	—% to 0.75%	(8.63)	%	to	(9.27)	%
	2017	3,070	$	19.34	to	$	32.04	$	59,384	1.41	%	—% to 0.75%	22.25	%	to	21.32	%
	2016	3,307	$	15.82	to	$	26.41	$	52,336	1.42	%	—% to 0.75%	6.17	%	to	5.35	%
	2015	3,395	$	14.90	to	$	25.07	$	50,623	2.27	%	—% to 0.75%	(1.65)	%	to	(2.34)	%

Short-Term Income Class 1:
	2019	4,004	$	13.97	to	$	12.86	$	55,945	2.70	%	—% to 0.75%	0.36	%	to	3.96	%
	2018	3,326	$	13.35	to	$	12.37	$	44,389	2.16	%	—% to 0.75%	1.06	%	to	0.24	%
	2017	3,319	$	13.21	to	$	12.34	$	43,851	1.97	%	—% to 0.75%	2.40	%	to	1.65	%
	2016	3,560	$	12.90	to	$	12.14	$	45,938	2.23	%	—% to 0.75%	2.14	%	to	1.34	%
	2015	2,753	$	12.63	to	$	11.98	$	34,776	2.60	%	—% to 0.75%	0.72	%	to	—	%

SmallCap Class 1:
	2019	2,177	$	38.40	to	$	30.57	$	83,630	0.33	%	—% to 0.75%	5.67	%	to	26.48	%
	2018	2,361	$	30.14	to	$	24.17	$	71,213	0.30	%	—% to 0.75%	(10.88)	%	to	(11.56)	%
	2017	2,675	$	33.82	to	$	27.33	$	90,502	0.38	%	—% to 0.75%	12.85	%	to	12.01	%
	2016	2,950	$	29.97	to	$	24.40	$	88,434	0.25	%	—% to 0.75%	17.39	%	to	16.52	%
	2015	3,293	$	25.53	to	$	20.94	$	84,116	0.07	%	—% to 0.75%	(0.08)	%	to	(0.85)	%

A-136

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

T. Rowe Price Equity Income Portfolio II:
	2019	78				$	26.23	$	2,054	1.97	%	—%				26.05	%
	2018	80				$	20.81	$	1,666	1.66	%	—%				(9.72)	%
	2017	115				$	23.05	$	2,646	1.53	%	—%				15.77	%
	2016	117				$	19.91	$	2,324	2.06	%	—%				18.79	%
	2015	119				$	16.76	$	2,000	1.52	%	—%				(7.10)	%

T. Rowe Price Health Sciences Portfolio II:
	2019	101				$	14.61	$	1,477	—%		—%				28.61	%
	2018	91				$	11.36	$	1,028	—%		—%				0.89	%
	2017 (12)	—				$	11.26	$	2	—%		—%				12.15	%

Templeton Developing Markets VIP Class 2:
	2019	441				$	20.72	$	9,135	1.00	%	—%				26.65	%
	2018	404				$	16.36	$	6,614	0.86	%	—%				(15.80)	%
	2017	395				$	19.43	$	7,664	0.96	%	—%				40.39	%
	2016	406				$	13.84	$	5,616	0.78	%	—%				17.49	%
	2015	441				$	11.78	$	5,190	2.07	%	—%				(19.59)	%

Templeton Foreign VIP Class 2:
	2019	1,034				$	12.32	$	12,742	1.71	%	—%				12.51	%
	2018	1,188				$	10.95	$	13,012	2.68	%	—%				(15.44)	%
	2017	1,193				$	12.95	$	15,452	2.61	%	—%				16.67	%
	2016	1,178				$	11.10	$	13,080	1.95	%	—%				7.14	%
	2015	1,251				$	10.36	$	12,960	3.24	%	—%				(6.50)	%

Templeton Global Bond VIP Class 2:
	2019	1,351	$	16.68	to	$	15.66	$	22,564	6.96	%	—% to 0.75%	1.28	%	to	1.23	%
	2018	1,232	$	16.38	to	$	15.47	$	20,179	—%		—% to 0.75%	1.93	%	to	1.18	%
	2017	1,216	$	16.07	to	$	15.29	$	19,533	—%		—% to 0.75%	1.97	%	to	1.19	%
	2016	1,082	$	15.76	to	$	15.11	$	17,061	—%		—% to 0.75%	2.94	%	to	2.16	%
	2015	1,199	$	15.31	to	$	14.79	$	18,360	7.96	%	—% to 0.75%	(4.31)	%	to	(5.01)	%

TOPS Managed Risk Balanced ETF Class 2:
	2019	40	$	14.43	to	$	13.63	$	582	1.71	%	—% to 0.75%	3.07	%	to	13.77	%
	2018	62	$	12.59	to	$	11.98	$	786	1.87	%	—% to 0.75%	(6.04)	%	to	(6.77)	%
	2017	49	$	13.40	to	$	12.85	$	652	1.43	%	—% to 0.75%	10.56	%	to	9.74	%
	2016	48	$	12.12	to	$	11.71	$	577	1.41	%	—% to 0.75%	6.22	%	to	5.50	%
	2015	33	$	11.41	to	$	11.10	$	372	1.19	%	—% to 0.75%	(4.52)	%	to	(5.29)	%

A-137

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

TOPS Managed Risk Growth ETF Class 2:
	2019	92	$	15.38	to	$	14.52	$	1,410	1.87	%	—% to 0.75%	4.84	%	to	16.16	%
	2018	89	$	13.14	to	$	12.50	$	1,172	1.57	%	—% to 0.75%	(8.69)	%	to	(9.42)	%
	2017	83	$	14.39	to	$	13.80	$	1,192	0.88	%	—% to 0.75%	17.66	%	to	16.85	%
	2016	291	$	12.23	to	$	11.81	$	3,561	1.67	%	—% to 0.75%	5.52	%	to	4.70	%
	2015	305	$	11.59	to	$	11.28	$	3,533	1.42	%	—% to 0.75%	(9.10)	%	to	(9.76)	%

TOPS Managed Risk Moderate Growth ETF Class 2:
	2019	55	$	15.31	to	$	14.46	$	848	2.20	%	—% to 0.75%	3.87	%	to	15.40	%
	2018	51	$	13.17	to	$	12.53	$	667	0.85	%	—% to 0.75%	(7.19)	%	to	(7.94)	%
	2017	139	$	14.19	to	$	13.61	$	1,971	1.52	%	—% to 0.75%	13.79	%	to	13.04	%
	2016	130	$	12.47	to	$	12.04	$	1,621	1.48	%	—% to 0.75%	6.31	%	to	5.52	%
	2015	123	$	11.73	to	$	11.41	$	1,442	1.25	%	—% to 0.75%	(6.31)	%	to	(7.08)	%

VanEck Global Hard Assets Class S:
	2019	118	$	5.64	to	$	5.29	$	667	—%		—% to 0.75%	8.25	%	to	10.67	%
	2018	290	$	5.06	to	$	4.78	$	1,466	—%		—% to 0.75%	(28.43)	%	to	(28.97)	%
	2017	161	$	7.07	to	$	6.73	$	1,139	—%		—% to 0.75%	(1.94)	%	to	(2.60)	%
	2016	145	$	7.21	to	$	6.91	$	1,040	0.27	%	—% to 0.75%	43.34	%	to	42.18	%
	2015	99	$	5.03	to	$	4.86	$	497	0.03	%	—% to 0.75%	(33.55)	%	to	(34.06)	%

VanEck Global Hard Assets Initial Class:
	2019	751				$	6.70	$	5,029	—%		—%				11.85	%
	2018	1,086				$	5.99	$	6,504	—%		—%				(28.26)	%
	2017	1,144				$	8.35	$	9,553	—%		—%				(1.65)	%
	2016	1,213				$	8.49	$	10,298	0.35	%	—%				43.65	%
	2015	1,008				$	5.91	$	5,957	0.03	%	—%				(33.45)	%

Vanguard VIF Balanced:
	2019	1,015				$	39.79	$	40,373	2.91	%	—%				22.47	%
	2018	1,264				$	32.49	$	41,063	2.37	%	—%				(3.39)	%
	2017	1,376				$	33.63	$	46,265	2.34	%	—%				14.70	%
	2016	1,833				$	29.32	$	53,753	2.48	%	—%				11.02	%
	2015	1,890				$	26.41	$	49,927	2.36	%	—%				0.11	%

A-138

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



		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) corresponding to lowest to highest expense ratio


Division

Vanguard VIF Equity Index:
	2019	3,828				$	41.02	$	157,005	1.95	%	—%				31.31	%
	2018	4,222				$	31.24	$	131,905	1.67	%	—%				(4.49)	%
	2017	4,299				$	32.71	$	140,644	1.76	%	—%				21.64	%
	2016	4,374				$	26.89	$	117,629	2.17	%	—%				11.81	%
	2015	4,257				$	24.05	$	102,385	1.53	%	—%				1.26	%

Vanguard VIF Mid-Cap Index:
	2019	2,093				$	48.45	$	101,400	1.41	%	—%				30.88	%
	2018	1,955				$	37.02	$	72,389	1.17	%	—%				(9.33)	%
	2017	1,885				$	40.83	$	76,988	1.14	%	—%				19.07	%
	2016	1,755				$	34.29	$	60,191	1.29	%	—%				11.11	%
	2015	1,543				$	30.86	$	47,630	1.17	%	—%				(1.44)	%

Wanger International:
	2019	161	$	12.74	to	$	12.31	$	2,053	0.86	%	—% to 0.75%	8.43	%	to	29.04	%
	2018	141	$	9.80	to	$	9.54	$	1,384	2.05	%	—% to 0.75%	(17.72)	%	to	(18.32)	%
	2017	102	$	11.91	to	$	11.68	$	1,217	1.44	%	—% to 0.75%	32.92	%	to	31.98	%
	2016	38	$	8.96	to	$	8.85	$	345	1.36	%	—% to 0.75%	(1.43)	%	to	(2.21)	%
	2015 (6)	14	$	9.09	to	$	9.05	$	131	1.65	%	—% to 0.75%	(9.19)	%	to	(9.59)	%

Wells Fargo VT Index Asset Allocation Class 2:
	2019	47	$	33.96	to	$	29.75	$	1,589	1.09	%	—% to 0.75%	20.17	%	to	19.24	%
	2018	68	$	28.26	to	$	24.95	$	1,930	0.97	%	—% to 0.75%	(2.92)	%	to	(3.63)	%
	2017	97	$	29.11	to	$	25.89	$	2,828	0.75	%	—% to 0.75%	12.26	%	to	11.40	%
	2016	122	$	25.93	to	$	23.24	$	3,162	0.92	%	—% to 0.75%	7.68	%	to	6.90	%
	2015	84	$	24.08	to	$	21.74	$	2,015	0.99	%	—% to 0.75%	1.22	%	to	0.46	%

Wells Fargo VT Omega Growth Class 2:
	2019	163	$	38.30	to	$	35.67	$	6,254	—%		—% to 0.75%	37.08	%	to	36.04	%
	2018	336	$	27.94	to	$	26.22	$	9,378	—%		—% to 0.75%	0.25	%	to	(0.49)	%
	2017	290	$	27.87	to	$	26.35	$	8,070	0.01	%	—% to 0.75%	34.64	%	to	33.62	%
	2016	294	$	20.70	to	$	19.72	$	6,089	—%		—% to 0.75%	0.49	%	to	(0.25)	%
	2015	332	$	20.60	to	$	19.77	$	6,840	—%		—% to 0.75%	1.38	%	to	0.61	%



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

A-139

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



(3)		These amounts represent the total return for the periods indicated, including changes in the value of the underlying fund, and reflect deductions for all items included in the expense ratio. The total return does not include any expenses assessed through the redemption of units; inclusion of these expenses in the calculation would result in a reduction in the total return presented. Investment options with a date notation indicate the effective date of that investment option in the variable account. For purposes of the total return calculation the beginning unit value is typically equal to an investment option with a similar expense structure and if no such similar investment option exists, a beginning unit value of ten would typically be used. The total return is calculated for the period indicated or from the effective date through the end of the reporting period. Total returns have not been annualized for periods less than one year. These percentages represent the range of total returns available as of the report date and correspond with the expense ratio lowest to highest.
(4)		Commenced operations March 27, 2015. Investment income ratios have been annualized for the year ended December 31, 2015.
(5)		Commenced operations April 17, 2015. Investment income ratios have been annualized for the year ended December 31, 2015.
(6)		Commenced operations May 18, 2015. Investment income ratios have been annualized for the year ended December 31, 2015.
(7)		Commenced operations November 6, 2015. Investment income ratios have been annualized for the year ended December 31, 2015.
(8)		Commenced operations February 8, 2016. Investment income ratios have been annualized for the year ended December 31, 2016.
(9)		Commenced operations May 23, 2016. Investment income ratios have been annualized for the year ended December 31, 2016.
(10)		Commenced operations November 18, 2016. Investment income ratios have been annualized for the year ended December 31, 2016.
(11)		Commenced operations May 12, 2017. Investment income ratios have been annualized for the year ended December 31, 2017.
(12)		Commenced operations May 15, 2017. Investment income ratios have been annualized for the year ended December 31, 2017.
(13)		Commenced operations May 26, 2017. Investment income ratios have been annualized for the year ended December 31, 2017.
(14)		Commenced operations June 11, 2018. Investment income ratios have been annualized for the year ended December 31, 2018.
(15)		Commenced operations April 29, 2019. Investment income ratios have been annualized for the year ended December 31, 2019.
(16)		Commenced operations June 7, 2019. Investment income ratios have been annualized for the year ended December 31, 2019.
(17)		Represented the operations of Dreyfus IP Core Value Service Shares Division until June 2, 2019.
(18)		Represented the operations of Dreyfus IP MidCap Stock Service Shares Division until June 2, 2019.
(19)		Represented the operations of Dreyfus IP Technology Growth Service Shares Division until June 2, 2019.
(20)		Represented the operations of Dreyfus Sustainable U.S. Equity Service Shares Division until June 2, 2019.
(21)		Represented the operations of Dreyfus VIF Appreciation Service Shares Division until June 2, 2019.
(22)		Represented the operations of Dreyfus VIF Opportunistic Small Cap Service Shares Division until June 2, 2019.
(23)		Represented the operations of Dreyfus VIF Quality Bond Service Shares Division until June 2, 2019.
(24)		Represented the operations of Oppenheimer Main Street Small Cap Service Shares Division until May 24, 2019.
(25)		Represented the operations of MFS International Value Service Class Division until June 6, 2019.

A-140

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019

Following is a list of divisions and corresponding unit values and total return for divisions that had unit values and/or total return outside those corresponding to the lowest to highest expense ratio indicated above for applicable years.




Division		2019 Unit Value ($)

AllianceBernstein International Value Class A		8.28
Diversified International Class 1		32.34
Fidelity VIP Contrafund Initial Class		82.45
Fidelity VIP Equity-Income Initial Class		49.63
Fidelity VIP High Income Initial Class		28.44
Fidelity VIP Mid Cap Service Class 2		31.23
International Emerging Markets Class 1		42.59
LargeCap S&P 500 Index Class 1		33.75
Real Estate Securities Class 1		104.44
SmallCap Class 1		39.95
Templeton Global Bond VIP Class 2		16.71

Division		2019 Total Return (%)

AllianceBernstein International Value Class A		17.11
AllianceBernstein Small/Mid Cap Value Class A		20.08
American Century VP Capital Appreciation Class II		35.26
American Century VP Income & Growth Class II		23.76
American Century VP Inflation Protection Class II		8.88
American Century VP MidCap Value Class II		28.99
American Century VP Value Class II		26.94
American Funds Insurance Series Blue Chip Income and Growth Class 2		21.42
American Funds Insurance Series Global Balanced Class 2		20.45
American Funds Insurance Series Growth Fund Class 2		30.81
American Funds Insurance Series International Fund Class 2		22.87
American Funds Insurance Series New World Fund Class 2		29.13
BNY Mellon IP MidCap Stock Service Shares		19.92
Calvert Investment Grade Bond Portfolio Class I		8.32
Calvert Russell 2000 Small Cap Index Class F		24.82
Calvert S&P MidCap 400 Index Class F		25.56
ClearBridge Mid Cap Class I		32.95
Core Plus Bond Class 1		9.81 and 9.80
Delaware Small Cap Value Service Class		27.71
Delaware Smid Cap Core Service Class		29.29
Diversified International Class 1		22.69 and 22.70
DWS Small Mid Cap Value Class B		21.02
Equity Income Class 1		29.10
Fidelity VIP Contrafund Initial Class		31.59

A-141

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



Division		2019 Total Return (%)

Fidelity VIP Contrafund Service Class 2		31.26
Fidelity VIP Equity-Income Initial Class		27.44
Fidelity VIP Equity-Income Service Class 2		27.15
Fidelity VIP Extended Market Index Service Class 2		9.90
Fidelity VIP Government Money Market Service Class		1.96
Fidelity VIP High Income Service Class 2		14.75
Fidelity VIP International Index Service Class 2		10.20
Fidelity VIP Mid Cap Service Class 2		23.19 and 23.20
Fidelity VIP Total Market Index Service Class 2		12.90
Franklin Mutual Global Discovery VIP Class 2		24.37
Franklin Rising Dividends VIP Class 2		29.25
Franklin Small Cap Value VIP Class 2		26.32
Government & High Quality Bond Class 1		6.45
International Emerging Markets Class 1		17.59
Invesco American Franchise Series II		36.44
Invesco American Value Series I		25.05
Invesco Core Equity Series II		28.68
Invesco Health Care Series I		32.51
Invesco Mid Cap Core Equity Series II		25.03
Invesco Oppenheimer Main Street Small Cap Series II		26.12
Invesco Small Cap Equity Series I		26.62
Janus Henderson Enterprise Service Shares		35.16
Janus Henderson Forty Service Shares		36.84
Janus Henderson Global Technology Service Shares		17.10
LargeCap Growth I Class 1		34.92
LargeCap S&P 500 Index Class 1		31.08 and 31.12
Lord Abbett Series Fund Developing Growth Class VC		31.77
MFS Blended Research Small Cap Equity Service Class		26.36
MFS Mid Cap Value Portfolio Service Class		30.72
MFS New Discovery Service Class		41.30
MFS New Discovery Value Service Class		33.44
MFS Utilities Service Class		24.81
Neuberger Berman AMT Sustainable Equity I Class		9.50
Principal Capital Appreciation Class 1		32.51
Principal LifeTime 2010 Class 1		14.09
Principal LifeTime 2020 Class 1		18.09
Principal LifeTime 2030 Class 1		21.98
Principal LifeTime 2040 Class 1		24.74
Principal LifeTime 2050 Class 1		26.38
Principal LifeTime 2060 Class 1		27.25
Principal LifeTime Strategic Income Class 1		12.46
Putnam VT Growth Opportunities Class IB		36.75

A-142

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



Division		2019 Total Return (%)

Real Estate Securities Class 1		31.26
SAM Balanced Portfolio Class 1		19.97
SAM Conservative Balanced Portfolio Class 1		15.89
SAM Conservative Growth Portfolio Class 1		24.04
SAM Flexible Income Portfolio Class 1		13.24
SAM Strategic Growth Portfolio Class 1		27.45
Short-Term Income Class 1		4.64
SmallCap Class 1		27.41 and 27.39
Templeton Global Bond VIP Class 2		2.01
TOPS Managed Risk Balanced ETF Class 2		14.61
TOPS Managed Risk Growth ETF Class 2		17.05
TOPS Managed Risk Moderate Growth ETF Class 2		16.25
VanEck Global Hard Assets Class S		11.46
Wanger International		30.00

Division		2018 Unit Value ($)

Diversified International Class 1		26.36
Fidelity VIP Contrafund Initial Class		62.67
Fidelity VIP Equity-Income Initial Class		38.95
Fidelity VIP High Income Initial Class		20.86
Fidelity VIP Mid Cap Service Class 2		40.67
Invesco Small Cap Equity Series I		17.96
LargeCap Growth Class 1		30.29
LargeCap Growth I Class 1		53.66
LargeCap S&P 500 Index Class 1		25.74
Real Estate Securities Class 1		79.57
SmallCap Class 1		31.36

Division		2018 Total Return (%)

Fidelity VIP Contrafund Initial Class		(6.360)
Fidelity VIP Mid Cap Service Class 2		(14.770)
Janus Henderson Enterprise Service Shares		(10.52) and (0.66)
LargeCap Growth Class 1		(7.280)
Real Estate Securities Class 1		(4.210)

Division		2017 Unit Value ($)

Diversified International Class 1		31.97
Fidelity VIP Contrafund Initial Class		66.93
Fidelity VIP Equity-Income Initial Class		42.47
Fidelity VIP High Income Initial Class		25.55

A-143

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



Division		2017 Unit Value ($)

Invesco Small Cap Equity Series I		21.15
LargeCap Growth Class 1		32.67
LargeCap Growth I Class 1		51.80
LargeCap S&P 500 Index Class 1		26.98
Real Estate Securities Class 1		83.07
SmallCap Class 1		35.19

Division		2017 Total Return (%)

LargeCap S&P 500 Index Class 1		21.48
LargeCap Value Class 1		16.82
MidCap Class 1		25.53

Division		2016 Unit Value ($)

Diversified International Class 1		24.77
Fidelity VIP Contrafund Initial Class		54.92
Fidelity VIP Equity-Income Initial Class		37.62
Fidelity VIP High Income Initial Class		23.89
Invesco Small Cap Equity Series I		18.55
LargeCap Growth Class 1		24.22
LargeCap Growth I Class 1		38.74
LargeCap S&P 500 Index Class 1		22.21
Real Estate Securities Class 1		76.07
SmallCap Class 1		31.18

Division		2016 Total Return (%)

Balanced Class 1		5.69
Core Plus Bond Class 1		4.09
Diversified International Class 1		0.36
Fidelity VIP High Income Initial Class		14.64
Fidelity VIP Mid Cap Service Class 2		39.59
Invesco Small Cap Equity Series I		12.08
LargeCap Growth Class 1		(5.130)
LargeCap S&P 500 Index Class 1		11.61
LargeCap Value Class 1		8.18

Division		2015 Unit Value ($)

Diversified International Class 1		24.68
Fidelity VIP Contrafund Initial Class		50.85
Fidelity VIP Equity-Income Initial Class		31.87

A-144

Principal Life Insurance Company

Variable Life Separate Account

Notes to Financial Statements

December 31, 2019



Division		2015 Unit Value ($)

Fidelity VIP High Income Initial Class		20.84
Fidelity VIP Mid Cap Service Class 2		35.37
Invesco Small Cap Equity Series I		16.55
LargeCap Growth Class 1		25.53
LargeCap Growth I Class 1		38.26
LargeCap S&P 500 Index Class 1		19.90
Putnam VT Voyager Class IB		21.78
Real Estate Securities Class 1		71.87
SmallCap Blend Class 1		26.56

Division		2015 Total Return (%)

Balanced Class 1		0.43
Fidelity VIP Contrafund Initial Class		0.67
Fidelity VIP Mid Cap Service Class 2		(1.640)
LargeCap Growth Class 1		4.98

7. Subsequent Events

The Separate Account performed an evaluation of subsequent events through March 27, 2020.

The outbreak of the novel coronavirus (“COVID-19”) in many countries continues to adversely impact global commercial activity and has contributed to significant volatility in financial markets. The global impact of the outbreak has been rapidly evolving and many countries have reacted by instituting quarantines and restrictions on travel. Such measures, as well as the general uncertainty surrounding the dangers and impact of COVID-19, are creating significant disruption in supply chains and economic activity. As COVID-19 continues to spread, the potential impacts, including a global, regional or other economic recession, are increasingly difficult to assess. These events, or fear of such an event, present material uncertainty and risk with respect to the Separate Account performance and financial results.

A-145

APPENDIX B - Principal Life Insurance Company Financials

B-1

Report of Independent Auditors

The Board of Directors and Stockholders

Principal Life Insurance Company

We have audited the accompanying consolidated financial statements of Principal Life Insurance Company, which comprise the consolidated statements of financial position as of December 31, 2019 and 2018, and the related statements of operations, comprehensive income, stockholder’s equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in conformity with U.S. generally accepted accounting principles; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion.An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Principal Life Insurance Company at December 31, 2019 and 2018, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with U.S. generally accepted accounting principles.

Required Supplementary Information

Accounting principles generally accepted in the United States require that the Claims Development and Claim Duration and Payout information presented as unaudited within the Short-Duration Contracts disclosure on pages 55-59 be presented to supplement the financial statements. Such information, although not a part of the financial statements, is required by the Financial Accounting Standards Board who considers it to be an essential part of financial reporting for placing the financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the financial statements, and other knowledge we obtained during our audit of the financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

/s/ Ernst & Young LLP

Des Moines, Iowa

March 13, 2020

B-2



Principal Life Insurance Company
Consolidated Statements of Financial Position
		December 31, 2019		December 31, 2018
		(in millions)
Assets
Fixed maturities, available-for-sale (2019 and 2018 include $99.4 million and $94.5 million related to
	consolidated variable interest entities)	$	65,983.4	$	56,275.3
Fixed maturities, trading			237.6		165.5
Equity securities			69.9		84.8
Mortgage loans			15,820.3		14,662.2
Real estate (2019 and 2018 include $457.6 million and $364.0 million related to consolidated variable
	interest entities)		1,713.5		1,726.3
Policy loans			742.2		755.9
Other investments (2019 and 2018 include $19.9 million and $44.1 million related to consolidated variable
	interest entities and $22.8 million and $23.6 million measured at fair value under the fair value option)		2,133.2		1,752.5
	Total investments		86,700.1		75,422.5
Cash and cash equivalents			1,525.0		1,806.3
Accrued investment income			666.5		615.5
Premiums due and other receivables			1,734.2		1,618.2
Deferred acquisition costs			3,509.9		3,680.4
Property and equipment			763.1		692.9
Goodwill			75.1		75.1
Other intangibles			19.6		22.2
Separate account assets			125,801.7		107,343.0
Other assets			1,119.5		1,135.9
	Total assets	$	221,914.7	$	192,412.0

Liabilities
Contractholder funds		$	38,334.6	$	36,861.7
Future policy benefits and claims			35,333.8		30,565.5
Other policyholder funds			791.8		727.2
Long-term debt (2019 and 2018 include $64.2 million and $58.4 million related to consolidated variable
	interest entities)		108.7		129.1
Deferred income taxes			1,823.9		1,029.4
Separate account liabilities			125,801.7		107,343.0
Other liabilities (2019 and 2018 include $122.2 million and $101.3 million related to consolidated variable
	interest entities)		8,331.5		6,904.9
Total liabilities			210,526.0		183,560.8

Stockholder's equity
Common stock, par value $1.00 per share - 5.0 million shares authorized, 2.5 million shares issued
	and outstanding (wholly owned indirectly by Principal Financial Group, Inc.)		2.5		2.5
Additional paid-in capital			6,331.5		6,331.6
Retained earnings			2,410.8		2,441.2
Accumulated other comprehensive income			2,620.7		55.5
	Total stockholder's equity attributable to Principal Life Insurance Company		11,365.5		8,830.8
Noncontrolling interest			23.2		20.4
	Total stockholder's equity		11,388.7		8,851.2
	Total liabilities and stockholder's equity	$	221,914.7	$	192,412.0

See accompanying notes.

B-3



Principal Life Insurance Company
Consolidated Statements of Operations

		For the year ended December 31,
		2019		2018		2017
		(in millions)
Revenues
Premiums and other considerations		$	7,473.3	$	6,092.4	$	5,999.4
Fees and other revenues			2,396.7		2,222.2		2,182.1
Net investment income			3,293.9		3,022.9		2,833.7
Net realized capital gains (losses), excluding impairment losses on
	available-for-sale securities		(68.7)		121.8		451.7
Net other-than-temporary impairment (losses) recoveries on available-
	for-sale securities		(38.3)		10.6		(30.0)
Other-than-temporary impairment losses on fixed maturities, available-
	for-sale reclassified from other comprehensive income		(5.2)		(39.7)		(49.7)
Net impairment losses on available-for-sale securities			(43.5)		(29.1)		(79.7)
Net realized capital gains (losses)			(112.2)		92.7		372.0
	Total revenues		13,051.7		11,430.2		11,387.2
Expenses
Benefits, claims and settlement expenses			9,167.5		7,542.0		7,317.9
Dividends to policyholders			119.1		123.6		124.6
Operating expenses			2,502.3		2,363.5		2,226.7
	Total expenses		11,788.9		10,029.1		9,669.2
Income from continuing operations before income taxes			1,262.8		1,401.1		1,718.0
Income taxes (benefits)			140.2		146.8		(518.40)
Income from continuing operations, net of related income taxes			1,122.6		1,254.3		2,236.4
Income from discontinued operations, net of related income taxes			—		—		37.0
Net income			1,122.6		1,254.3		2,273.4
Net income attributable to noncontrolling interest			9.7		3.3		2.4
Net income attributable to Principal Life Insurance Company		$	1,112.9	$	1,251.0	$	2,271.0

See accompanying notes.

B-4



Principal Life Insurance Company
Consolidated Statements of Comprehensive Income

		For the year ended December 31,
		2019		2018		2017
		(in millions)
Net income		$	1,122.6	$	1,254.3	$	2,273.4
Other comprehensive income (loss), net:
	Net unrealized gains (losses) on available-for-sale securities		2,533.7		(1,513.3)		619.9
	Noncredit component of impairment losses on fixed maturities, available-for-sale		3.0		26.5		27.4
	Net unrealized gains (losses) on derivative instruments		(14.6)		8.0		(49.1)
	Net unrecognized postretirement benefit obligation		43.1		(67.6)		13.3
Other comprehensive income (loss)			2,565.2		(1,546.4)		611.5
Comprehensive income (loss)			3,687.8		(292.1)		2,884.9
Comprehensive income attributable to noncontrolling interest			9.7		3.3		2.4
Comprehensive income (loss) attributable to Principal Life Insurance Company		$	3,678.1	$	(295.4)	$	2,882.5

See accompanying notes.

B-5



Principal Life Insurance Company
Consolidated Statements of Stockholder's Equity

								Accumulated
				Additional				other				Total
		Common		paid-in		Retained		comprehensive		Noncontrolling		stockholder's
		stock		capital		earnings		income		interest		equity
		(in millions)
Balances as of January 1, 2017		$	2.5	$	5,305.6	$	2,139.9	$	748.4	$	42.9	$	8,239.3
Capital distributions to parent			—		(27.5)		—		—		—		(27.5)
Stock-based compensation			—		41.9		(3.0)		—		0.1		39.0
Net true-up of tax asset transferred to affiliate due
	to prior year change in benefit plan sponsorship		—		(3.0)		—		—		—		(3.0)
Dividends to parent			—		—		(1,818.4)		—		—		(1,818.4)
Distributions to noncontrolling interest			—		—		—		—		(3.1)		(3.1)
Contributions from noncontrolling interest			—		—		—		—		6.0		6.0
Purchase of subsidiary shares from noncontrolling
	interest		—		(5.1)		—		—		(1.3)		(6.4)
Sale of subsidiary to parent, net of related income
	taxes, as part of a common control transaction		—		1,034.1		(351.4)		(0.1)		(23.0)		659.6
Net income			—		—		2,271.0		—		2.4		2,273.4
Other comprehensive income			—		—		—		611.5		—		611.5
Balances as of December 31, 2017			2.5		6,346.0		2,238.1		1,359.8		24.0		9,970.4
Capital distributions to parent			—		(21.6)		—		—		—		(21.6)
Stock-based compensation			—		28.6		(2.2)		—		—		26.4
Dividends to parent			—		—		(840.0)		—		—		(840.0)
Distributions to noncontrolling interest			—		—		—		—		(8.3)		(8.3)
Contributions from noncontrolling interest			—		—		—		—		3.0		3.0
Purchase of subsidiary shares from noncontrolling
	interest		—		(21.4)		—		—		(1.6)		(23.0)
Effects of implementation of accounting change
	related to equity investments, net		—		—		(0.1)		0.1		—		—
Effects of implementation of accounting change
	related to revenue recognition, net		—		—		36.4		—		—		36.4
Effects of implementation of accounting change
	related to the reclassification of certain tax
	effects, net		—		—		(242.0)		242.0		—		—
Net income			—		—		1,251.0		—		3.3		1,254.3
Other comprehensive loss			—		—		—		(1,546.4)		—		(1,546.4)
Balances as of December 31, 2018			2.5		6,331.6		2,441.2		55.5		20.4		8,851.2
Capital distributions to parent			—		(24.2)		—		—		—		(24.2)
Stock-based compensation			—		24.1		(2.3)		—		—		21.8
Dividends to parent			—		—		(1,145.0)		—		—		(1,145.0)
Distributions to noncontrolling interest			—		—		—		—		(14.0)		(14.0)
Contributions from noncontrolling interest			—		—		—		—		7.1		7.1
Effects of implementation of accounting change
	related to leases, net		—		—		4.0		—		—		4.0
Net income			—		—		1,112.9		—		9.7		1,122.6
Other comprehensive income			—		—		—		2,565.2		—		2,565.2
Balances as of December 31, 2019		$	2.5	$	6,331.5	$	2,410.8	$	2,620.7	$	23.2	$	11,388.7

See accompanying notes.

B-6



Principal Life Insurance Company
Consolidated Statements of Cash Flows

		For the year ended December 31,
		2019		2018		2017
		(in millions)
Operating activities
Net income		$	1,122.6	$	1,254.3	$	2,273.4
Adjustments to reconcile net income to net cash provided by operating activities:
	Income from discontinued operations, net of related income taxes		—		—		(37.0)
	Net realized capital (gains) losses		112.2		(92.7)		(372.0)
	Depreciation and amortization expense		121.5		111.6		112.2
	Amortization of deferred acquisition costs and contract costs		353.3		260.6		212.1
	Additions to deferred acquisition costs and contract costs		(480.1)		(419.2)		(397.8)
	Stock-based compensation		22.7		26.6		39.3
	(Income) loss from equity method investments, net of dividends received		(40.6)		(32.5)		9.7
Changes in:
	Accrued investment income		(51.0)		(24.5)		(27.3)
	Net cash flows for trading securities and equity securities with operating intent		(58.6)		(124.8)		171.3
	Premiums due and other receivables		(113.3)		62.2		(360.1)
	Contractholder and policyholder liabilities and dividends		3,287.2		3,324.8		3,251.9
	Current and deferred income taxes (benefits)		187.1		253.0		(616.4)
	Real estate acquired through operating activities		(64.7)		(89.2)		(82.5)
	Real estate sold through operating activities		134.9		133.5		1.2
	Other assets and liabilities		522.4		244.3		(212.8)
Other			398.9		266.5		983.3
Net adjustments			4,331.9		3,900.2		2,675.1
Net cash provided by operating activities			5,454.5		5,154.5		4,948.5
Investing activities
Fixed maturities available-for-sale and equity securities with intent to hold:
	Purchases		(12,781.4)		(12,392.8)		(12,878.8)
	Sales		1,509.6		2,701.9		1,142.6
	Maturities		6,587.1		6,008.4		8,407.5
Mortgage loans acquired or originated			(3,366.5)		(3,299.5)		(2,594.0)
Mortgage loans sold or repaid			2,205.4		2,085.6		1,724.0
Real estate acquired			(127.4)		(88.1)		(200.5)
Real estate sold			94.9		63.5		481.9
Net purchases of property and equipment			(51.3)		(48.1)		(105.7)
Net change in other investments			(237.5)		(355.3)		(127.9)
Net cash used in investing activities			(6,167.1)		(5,324.4)		(4,150.9)
Financing activities
Proceeds from financing element derivatives			—		—		0.1
Payments for financing element derivatives			(26.9)		(65.9)		(77.6)
Purchase of subsidiary shares from noncontrolling interest			—		(23.0)		(6.4)
Dividends paid to parent			(1,145.0)		(840.0)		(1,818.4)
Capital contributions from (distributions to) parent			(24.2)		(21.6)		1,006.6
Issuance of long-term debt			12.0		80.2		2.8
Principal repayments of long-term debt			(32.2)		(1.3)		(56.5)
Net repayments of short-term borrowings			—		—		(76.5)
Investment contract deposits			8,727.6		7,896.0		9,760.5
Investment contract withdrawals			(7,709.4)		(6,520.1)		(9,889.9)
Net increase in banking operation deposits			623.4		553.0		136.6
Other			6.0		(4.5)		(2.5)
Net cash provided by (used in) financing activities			431.3		1,052.8		(1,021.2)
Net increase (decrease) in cash and cash equivalents			(281.3)		882.9		(223.6)
Cash and cash equivalents from continuing operations at beginning of period			1,806.3		923.4		1,147.0
Cash and cash equivalents from continuing operations at end of period		$	1,525.0	$	1,806.3	$	923.4

Discontinued operations (excluded from amounts above):
Net cash provided by operating activities		$	—	$	—	$	47.7
Net cash used in investing activities			—		—		(0.6)
Net cash used in financing activities			—		—		(44.7)
Net cash and cash equivalents provided by discontinued operations		$	—	$	—	$	2.4

Supplemental information:
Cash paid for interest		$	6.1	$	3.1	$	3.9
Cash paid for (received from) income taxes		$	(62.9)	$	(91.2)	$	91.0

Supplemental disclosure of non-cash activities:
Note receivable from parent in consideration of subsidiaries sold to parent		$	—	$	—	$	300.0
Assets received in kind for pension risk transfer transactions		$	1,225.8	$	—	$	—
Lease assets established upon adoption of accounting guidance		$	102.2	$	—	$	—
Lease liabilities established upon adoption of accounting guidance		$	97.2	$	—	$	—
Assets and liability changes resulting from exchange agreement to exit real estate joint ventures:
	Real estate properties received	$	—	$	—	$	743.2
	Long-term debt assumed on real estate properties received	$	—	$	—	$	269.0
	Increase in other investments due to discontinuing equity method accounting	$	—	$	—	$	222.4

See accompanying notes.

B-7

Principal Life Insurance Company
Notes to Consolidated Financial Statements
December 31, 2019

1. Nature of Operations and Significant Accounting Policies

Description of Business

Principal Life Insurance Company (“PLIC”) along with its consolidated subsidiaries is a diversified financial services organization offering businesses, individuals and institutional clients a wide range of financial products and services, including retirement and insurance in the U.S. We are a direct wholly owned subsidiary of Principal Financial Services, Inc. (“PFS”), which in turn is a direct wholly owned subsidiary of Principal Financial Group, Inc. (“PFG”).

Basis of Presentation

The accompanying consolidated financial statements include the accounts of PLIC and all other entities in which we directly or indirectly have a controlling financial interest as well as those variable interest entities (“VIEs”) in which we are the primary beneficiary. The consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”). All significant intercompany accounts and transactions have been eliminated.

On May 1, 2017, we sold our ownership interest in Principal Global Investors, LLC (“PGI LLC”) to PFS in connection with a corporate reorganization designed to better utilize and allocate capital internally. PGI LLC met the criteria to be reported as a discontinued operation. See Note 2, Discontinued Operations, for further details. Information included in the notes to the financial statements excludes information applicable to the discontinued operations, unless otherwise noted.

We evaluated subsequent events through March 13, 2020, which was the date our consolidated financial statements were issued.

Consolidation

We have relationships with various special purpose entities and other legal entities that must be evaluated to determine if the entities meet the criteria of a VIE or a voting interest entity (“VOE”). This assessment is performed by reviewing contractual, ownership and other rights, including involvement of related parties, and requires use of judgment. First, we determine if we hold a variable interest in an entity by assessing if we have the right to receive expected losses and expected residual returns of the entity. If we hold a variable interest, then the entity is assessed to determine if it is a VIE. An entity is a VIE if the equity at risk is not sufficient to support its activities, if the equity holders lack a controlling financial interest or if the entity is structured with non-substantive voting rights. In addition to the previous criteria, if the entity is a limited partnership or similar entity, it is a VIE if the limited partners do not have the power to direct the entity’s most significant activities through substantive kick-out rights or participating rights. A VIE is evaluated to determine the primary beneficiary. The primary beneficiary of a VIE is the enterprise with (1) the power to direct the activities of a VIE that most significantly impact the entity's economic performance and (2) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. When we are the primary beneficiary, we are required to consolidate the entity in our financial statements. We reassess our involvement with VIEs on a quarterly basis. For further information about VIEs, refer to Note 5, Variable Interest Entities.

If an entity is not a VIE it is considered a VOE. VOEs are generally consolidated if we own a greater than 50% voting interest. If we determine our involvement in an entity no longer meets the requirements for consolidation under either the VIE or VOE models, the entity is deconsolidated. Entities in which we have management influence over the operating and financing decisions but are not required to consolidate, other than investments accounted for at fair value under the fair value option, are reported using the equity method.

B-8

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Recent Accounting Pronouncements



Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
Standards not yet adopted:
Targeted improvements to the accounting for long-duration insurance contracts This authoritative guidance updates certain requirements in the accounting for long-duration insurance and annuity contracts. 1. The assumptions used to calculate the liability for future policy benefits on traditional and limited-payment contracts will be reviewed and updated periodically. Cash flow assumptions will be reviewed at least annually and updated when necessary with the impact recognized in net income. Discount rate assumptions are prescribed as the current upper-medium grade (low credit risk) fixed income instrument yield and will be updated quarterly with the impact recognized in other comprehensive income (“OCI”). 2. Market risk benefits, which are certain market-based options or guarantees associated with deposit or account balance contracts, will be measured at fair value. The periodic change in fair value related to instrument-specific credit risk will be recognized in OCI while the remaining change in fair value will be recognized in net income. 3. Deferred acquisition costs (“DAC”) for all insurance and annuity contracts will be amortized on a constant basis over the expected term of the related contracts. 4. Additional disclosures are required, including disaggregated rollforwards of significant insurance liabilities and other account balances and disclosures about significant inputs, judgments, assumptions and methods used in measurement. The guidance for the liability for future policy benefits for traditional and limited-payment contracts and DAC will be applied on a modified retrospective basis; that is, to contracts in force as of the beginning of the earliest period presented based on their existing carrying amounts. An entity may elect to apply the changes retrospectively. The guidance for market risk benefits will be applied retrospectively. Early adoption is permitted.	January 1, 2022	Our implementation and evaluation process to date includes, but is not limited to the following: • identifying and documenting contracts and contract features in scope of the guidance; • identifying the actuarial models, systems and processes to be updated; • evaluating and selecting our systems solutions for implementing the new guidance; • beginning to build key models; • evaluating our key accounting policies; • assessing the impact to our chart of accounts; • developing format and content of new disclosures and • evaluating transition requirements and impacts. As we progress through our implementation, we will be able to better assess the impact to our consolidated financial statements; however, we expect this guidance to significantly change how we account for many of our insurance and annuity products.
Goodwill impairment testing This authoritative guidance simplifies how an entity is required to test goodwill for impairment by eliminating Step 2 (which measures a goodwill impairment loss by comparing the implied fair value of a reporting unit’s goodwill to the carrying amount of that goodwill) from the goodwill impairment test. A goodwill impairment loss will be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. Entities will continue to have the option to perform a qualitative assessment to determine if a quantitative impairment test is necessary. Early adoption is permitted.	January 1, 2020	We expect the guidance will reduce complexity and costs associated with performing a Step 2 test, should one be needed in the future. However, the impact of eliminating the Step 2 test from any such future impairment assessment will be dependent on modeling factors that are not currently determinable. We do not expect this guidance to have a material impact on our consolidated financial statements.

B-9

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
Credit losses This authoritative guidance requires entities to use a current expected credit loss (“CECL”) model to measure impairment for most financial assets that are not recorded at fair value through net income. Under the CECL model, an entity will estimate lifetime expected credit losses considering available relevant information about historical events, current conditions and reasonable and supportable forecasts. The CECL model does not apply to available-for-sale debt securities. This guidance also expands the required credit loss disclosures and will be applied using a modified retrospective approach by recording a cumulative effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. Early adoption is permitted.	January 1, 2020	The guidance will be adopted using the modified retrospective approach. Our evaluation process is complete and included, but was not limited to, identifying financial assets within scope of the guidance, developing and refining CECL models for the relevant assets, preparing quarterly estimates of the cumulative effect of adoption, developing and refining necessary internal controls and preparing the required financial statement disclosures. The financial statement changes are not material and will result in an immaterial reduction to stockholder’s equity.
Standards adopted:
Implementation costs in a cloud computing arrangement that is a service contract This authoritative guidance aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This guidance can be applied either retrospectively or prospectively and early adoption is permitted.	January 1, 2019	The effective date of the guidance is January 1, 2020; however, we elected to early-adopt this guidance on a prospective basis, effective January 1, 2019. This guidance did not have a material impact on our consolidated financial statements.
Nonemployee share-based payment accounting This authoritative guidance simplifies the accounting for share-based payments to nonemployees by generally aligning it with the accounting for share-based payments to employees. Under the guidance, the measurement of equity-classified nonemployee awards will be fixed at the grant date, where previously the measurement was fixed at performance completion date. The guidance will be applied to equity-classified nonemployee awards for which a measurement date has not been established as of the date of adoption.	January 1, 2019	This guidance did not have a material impact on our consolidated financial statements.

B-10

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
Leases This authoritative guidance requires lessee recognition of lease assets and lease liabilities on the balance sheet. The concept of an operating lease, where the lease assets and liabilities are off balance sheet, is eliminated under the new guidance. For lessors, the guidance modifies lease classification criteria and accounting for certain types of leases. Other key aspects of the guidance relate to the removal of the current real estate-specific guidance and new presentation and disclosure requirements. Lessees and lessors are required to recognize and measure leases using a modified retrospective approach, which includes certain optional practical expedients that may be elected. We elected the alternative transition method, which allows entities to initially apply the new standard at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption.	January 1, 2019	We adopted the guidance using the modified retrospective approach and comparative periods were not restated. Further details are included under the caption “Adoption of Lease Guidance” and in Note 14, Contingencies, Guarantees, Indemnifications and Leases.
Targeted improvements to accounting for hedging activities This authoritative guidance updated certain recognition and measurement requirements for hedge accounting. The objective of the guidance is to more closely align the economics of a company’s risk management activities in its financial results and reduce the complexity of applying hedge accounting. The updates included the expansion of hedging strategies that are eligible for hedge accounting, elimination of the separate measurement and reporting of hedge ineffectiveness, presentation of the changes in the fair value of the hedging instrument in the same consolidated statement of operations line as the earnings effect of the hedged item and simplification of hedge effectiveness assessments. This guidance also included new disclosures.	January 1, 2019	This guidance did not have a material impact on our consolidated financial statements. See Note 7, Derivative Financial Instruments, for further details.
Premium amortization on purchased callable debt securities This authoritative guidance applies to entities that hold certain non-contingently callable debt securities, where the amortized cost basis is at a premium to the price repayable by the issuer at the earliest call date. Under the guidance the premium will be amortized to the first call date.	January 1, 2019	This guidance did not have a material impact on our consolidated financial statements.

B-11

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
Reclassification of certain tax effects from accumulated other comprehensive income This authoritative guidance permits a reclassification from accumulated other comprehensive income (“AOCI”) to retained earnings for the stranded tax effects resulting from U.S. tax legislation enacted on December 22, 2017, which is referred to as the ‘‘Tax Cuts and Jobs Act’’ (‘‘U.S. tax reform’’). The amount of that reclassification includes the change in corporate income tax rate, as well as an election to include other income tax effects related to the application of U.S. tax reform. The guidance also requires disclosures about stranded tax effects.	January 1, 2018	The effective date of the guidance was January 1, 2019; however, we elected to early adopt the guidance. The guidance was applied at the beginning of the period of adoption and comparative periods were not restated. We reclassified the stranded tax effects in AOCI resulting from U.S. tax reform, which includes the change in corporate income tax rate and an election to reclassify the tax effects of the one-time deemed repatriation tax. A reclassification of $242.0 million was recorded as an increase to AOCI and a decrease to retained earnings.
Revenue recognition This authoritative guidance replaces all general and most industry specific revenue recognition guidance currently prescribed by U.S. GAAP. The core principle is that an entity recognizes revenue to reflect the transfer of a promised good or service to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for that good or service. This guidance also provides clarification on when an entity is a principal or an agent in a transaction. In addition, the guidance updates the accounting for certain costs associated with obtaining and fulfilling a customer contract. The guidance may be applied using one of the following two methods: (1) retrospectively to each prior reporting period presented, or (2) retrospectively with the cumulative effect of initially applying the standard recognized at the date of initial application.	January 1, 2018	We adopted the guidance using the modified retrospective approach. The guidance did not have a material impact on our consolidated financial statements. A cumulative effect adjustment of $36.4 million was recorded as an increase to total stockholder’s equity. See Note 18, Revenues from Contracts with Customers, for further details.
Income tax - intra-entity transfers of assets This authoritative guidance requires entities to recognize current and deferred income tax resulting from an intra-entity asset transfer when the transfer occurs. Prior to issuance of this guidance, U.S. GAAP did not allow recognition of income tax consequences until the asset had been sold to a third party. This guidance requires adoption through a cumulative effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption.	January 1, 2018	We adopted the guidance using the modified retrospective approach. The guidance did not have a material impact on our consolidated financial statements.

B-12

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



Description	Date of adoption	Effect on our consolidated financial statements or other significant matters
Financial instruments - recognition and measurement This authoritative guidance addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. The guidance eliminated the classification of equity securities into different categories (trading or available-for-sale) and requires equity investments to be measured at fair value with changes in the fair value recognized through net income. The guidance also updated certain financial instrument disclosures and eliminated the requirement to disclose the methods and significant assumptions used to estimate the fair value of financial instruments that are measured at amortized cost on the balance sheet.	January 1, 2018	We adopted this guidance using the modified retrospective approach. A cumulative effect adjustment of $0.1 million was recorded as an increase to AOCI and a corresponding decrease to retained earnings. The guidance did not have a material impact on our consolidated financial statements. See Note 6, Investments, for further details.
Nonfinancial asset derecognition and partial sales of nonfinancial assets This authoritative guidance clarifies the scope of the recently established guidance on nonfinancial asset derecognition and the accounting for partial sales of nonfinancial assets. The guidance conforms the derecognition guidance on nonfinancial assets with the model for transactions in the new revenue recognition standard.	January 1, 2018	The guidance did not have a material impact on our consolidated financial statements.
Presentation of net periodic pension cost and net periodic postretirement benefit cost This authoritative guidance requires that an employer disaggregate the service cost component from the other components of net benefit cost. The guidance also provides explicit guidance on the presentation of the service cost component and the other components of net benefit cost in the consolidated statement of operations and allows only the service cost component of net benefit cost to be eligible for capitalization.	January 1, 2018	The guidance did not have a material impact on our consolidated financial statements.
Definition of a business This authoritative guidance clarifies the definition of a business to assist with evaluating when transactions involving an integrated set of assets and activities (a “set”) should be accounted for as acquisitions or disposals of assets or businesses. The guidance requires that when substantially all of the fair value of the gross assets acquired or disposed of is concentrated in a single identifiable asset or a group of similar identifiable assets, the set is not a business. The guidance also requires a set to include, at a minimum, an input and a substantive process that together significantly contribute to the ability to create output to be considered a business. Lastly, the guidance removes the evaluation of whether a market participant could replace missing elements and narrows the definition of outputs by more closely aligning it with how outputs are described in the revenue recognition guidance. The guidance will be applied prospectively.	January 1, 2018	The guidance did not have a material impact on our consolidated financial statements.
Employee share-based payment accounting This authoritative guidance changes certain aspects of accounting for and reporting share-based payments to employees including changes related to the income tax effects of share-based payments, tax withholding requirements and accounting for forfeitures. Various transition methods will apply depending on the situation being addressed.	January 1, 2017	The guidance was adopted prospectively as indicated by the guidance for each area of change and did not have a material impact on our consolidated financial statements.

B-13

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

When we adopt new accounting standards, we have a process in place to perform a thorough review of the pronouncement, identify the financial statement and system impacts and create an implementation plan among our impacted business units to ensure we are compliant with the pronouncement on the date of adoption. This includes having effective processes and controls in place to support the reported amounts. Each of the standards listed above is in varying stages in our implementation process based on its issuance and adoption dates. We are on track to implement guidance by the respective effective dates.

Adoption of Lease Guidance

On January 1, 2019, we adopted the guidance using the modified retrospective approach with the cumulative effect of initially applying the standard recognized at the date of adoption. We elected the package of practical expedients permitted under the transition guidance. In addition, we elected the hindsight practical expedient to determine the lease term for existing leases. We have agreements with lease and non-lease components, which we account for as a combined unit of account for all classes.

The impact of the guidance to our consolidated financial statements primarily related to the establishment of additional assets and liabilities of $102.2 million and $97.2 million, respectively. The difference between the additional assets and liabilities, net of deferred tax impacts, was recorded as a cumulative effect adjustment to retained earnings and increased total stockholder’s equity by $4.0 million.

Results of reporting periods beginning January 1, 2019, are presented under the new guidance, while prior period amounts are not adjusted and continue to be reported in accordance with our prior accounting. The guidance did not have a material impact on our consolidated statements of operations.

Use of Estimates in the Preparation of Financial Statements

The preparation of our consolidated financial statements and accompanying notes requires management to make estimates and assumptions that affect the amounts reported and disclosed. These estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed in the consolidated financial statements and accompanying notes. The most critical estimates include those used in determining:


•	the fair value of investments in the absence of quoted market values;


•	investment impairments and valuation allowances;


•	the fair value of and accounting for derivatives;


•	the DAC and other actuarial balances where the amortization is based on estimated gross profits (“EGPs”);


•	the liability for future policy benefits and claims;


•	the value of our other postretirement benefit obligation and


•	accounting for income taxes and the valuation of deferred tax assets.

A description of such critical estimates is incorporated within the discussion of the related accounting policies that follow. In applying these policies, management makes subjective and complex judgments that frequently require estimates about matters that are inherently uncertain. Actual results could differ from these estimates.

Closed Block

We operate a closed block (“Closed Block”) for the benefit of individual participating dividend‑paying policies in force at the time of the 1998 mutual insurance holding company (“MIHC”) formation. See Note 8, Closed Block, for further details.

Cash and Cash Equivalents

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

B-14

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Investments

Fixed maturities include bonds, asset-backed securities (“ABS”), redeemable preferred stock and certain non-redeemable preferred securities. Equity securities include mutual funds, common stock and non-redeemable preferred stock. We classify fixed maturities as either available-for-sale or trading at the time of the purchase and, accordingly, carry them at fair value. Equity securities are also carried at fair value. See Note 16, Fair Value Measurements, for methodologies related to the determination of fair value. Unrealized gains and losses related to fixed maturities, available-for-sale, excluding those in fair value hedging relationships, are reflected in stockholder’s equity, net of adjustments associated with DAC and related actuarial balances, derivatives in cash flow hedge relationships and applicable income taxes. Mark-to-market adjustments on equity securities, unrealized gains and losses related to hedged portions of fixed maturities, available-for-sale in fair value hedging relationships prior to 2019 and mark-to-market adjustments on fixed maturities, trading are reflected in net realized capital gains (losses). Beginning in 2019, unrealized gains and losses related to hedged portions of fixed maturities, available-for-sale in fair value hedging relationships are reflected in net investment income. Mark-to-market adjustments related to certain securities carried at fair value with an investment objective to realize economic value through mark-to-market changes are reflected in net investment income.

The amortized cost of fixed maturities includes cost adjusted for amortization of premiums and discounts, computed using the interest method. The amortized cost of fixed maturities classified as available-for-sale is adjusted for changes in fair value of hedged portions of securities in fair value hedging relationships and declines in value that are other than temporary. Impairments in value deemed to be other than temporary are primarily reported in net income as a component of net realized capital gains (losses), with noncredit impairment losses for certain fixed maturities, available-for-sale reported in OCI. Interest income, as well as prepayment fees and the amortization of the related premium or discount, is reported in net investment income. For loan-backed and structured securities, we recognize income using a constant effective yield based on currently anticipated cash flows.

Real estate investments are reported at cost less accumulated depreciation. The initial cost bases of properties acquired through loan foreclosures are the lower of the fair market values of the properties at the time of foreclosure or the outstanding loan balance. Buildings and land improvements are generally depreciated on the straight-line method over the estimated useful life of improvements and tenant improvement costs are depreciated on the straight-line method over the term of the related lease. We recognize impairment losses for properties when indicators of impairment are present and a property's expected undiscounted cash flows are not sufficient to recover the property's carrying value. In such cases, the cost basis of the property is reduced to fair value. Real estate expected to be disposed is carried at the lower of cost or fair value, less cost to sell, with valuation allowances established accordingly and depreciation no longer recognized. The carrying amount of real estate held for sale was $169.0 million and $207.7 million as of December 31, 2019 and 2018, respectively. Any impairment losses and any changes in valuation allowances are reported in net income.

Commercial and residential mortgage loans are generally reported at cost adjusted for amortization of premiums and accrual of discounts, computed using the interest method and net of valuation allowances. Interest income is accrued on the principal amount of the loan based on the loan’s contractual interest rate. Interest income, as well as prepayment of fees and the amortization of the related premium or discount, is reported in net investment income. Any changes in the valuation allowances are reported in net realized capital gains (losses). We measure impairment based upon the difference between carrying value and estimated value less cost to sell. Estimated value is based on either the present value of expected cash flows discounted at the loan's effective interest rate, the loan's observable market price or the fair value of the collateral. If foreclosure is probable, the measurement of any valuation allowance is based upon the fair value of the collateral.

Net realized capital gains and losses on sales of investments are determined on the basis of specific identification. In general, in addition to realized capital gains and losses on investment sales and periodic settlements on derivatives not designated as hedges, we report gains and losses related to the following in net realized capital gains (losses): other-than-temporary impairments of securities and subsequent realized recoveries, mark-to-market adjustments on equity securities, mark-to-market adjustments on fixed maturities, trading, mark-to-market adjustments on certain investment funds, mark-to-market adjustments on derivatives not designated as hedges, cash flow hedge gains (losses) when the hedged item impacts realized capital gains (losses), changes in the mortgage loan valuation allowance provision, impairments of real estate held for investment and impairments of equity method investments. Investment gains and losses on sales of certain real estate held for sale due to investment strategy and mark-to-market adjustments on certain securities carried at fair value with an investment objective to realize economic value through mark-to-market changes are reported as net investment income and are excluded from net realized capital gains (losses).

B-15

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Policy loans and certain other investments are reported at cost. Interests in unconsolidated entities, joint ventures and partnerships are generally accounted for using the equity method. We have other investments reported at fair value or for which the fair value option has been elected in prior periods. See Note 16, Fair Value Measurements, for detail on these investments.

Derivatives

Overview

Derivatives are financial instruments whose values are derived from interest rates, foreign exchange rates, financial indices or the values of securities. Derivatives generally used by us include swaps, options and futures. Derivative positions are either assets or liabilities in the consolidated statements of financial position and are measured at fair value, generally by obtaining quoted market prices or through the use of pricing models. See Note 16, Fair Value Measurements, for policies related to the determination of fair value. Fair values can be affected by changes in interest rates, foreign exchange rates, financial indices, values of securities, credit spreads, and market volatility and liquidity.

Accounting and Financial Statement Presentation

We designate derivatives as either:


(a)	a hedge of the exposure to changes in the fair value of a recognized asset or liability or an unrecognized firm commitment, including those denominated in a foreign currency (“fair value hedge”);


(b)	a hedge of a forecasted transaction or the exposure to variability of cash flows to be received or paid related to a recognized asset or liability, including those denominated in a foreign currency (“cash flow hedge”) or


(c)	a derivative not designated as a hedging instrument.

Our accounting for the ongoing changes in fair value of a derivative depends on the intended use of the derivative and the designation, as described above, and is determined when the derivative contract is entered into or at the time of redesignation. Hedge accounting is used for derivatives that are specifically designated in advance as hedges and that reduce our exposure to an indicated risk by having a high correlation between changes in the value of the derivatives and the items being hedged at both the inception of the hedge and throughout the hedge period.

Fair Value Hedges. When a derivative is designated as a fair value hedge and is determined to be highly effective, changes in its fair value, along with changes in the fair value of the hedged asset, liability or firm commitment attributable to the hedged risk, are reported in the same income statement line item that is used to report the earnings effect of the hedged item. For fair value hedges of fixed maturities, available-for-sale, these changes in fair value are reported in net investment income. Prior to 2019, these changes in fair value were recorded in net realized capital gains (losses). A fair value hedge determined to be highly effective may still result in a mismatch between the change in the fair value of the hedging instrument and the change in the fair value of the hedged item attributable to the hedged risk.

Cash Flow Hedges. When a derivative is designated as a cash flow hedge and is determined to be highly effective, changes in its fair value are recorded as a component of OCI. At the time the variability of cash flows being hedged impacts net income, the related portion of deferred gains or losses on the derivative instrument is reclassified and reported in net income.

Non-Hedge Derivatives. If a derivative does not qualify or is not designated for hedge accounting, all changes in fair value are reported in net income without considering the changes in the fair value of the economically associated assets or liabilities.

Hedge Documentation and Effectiveness Testing. At inception, we formally document all relationships between hedging instruments and hedged items, as well as our risk management objective and strategy for undertaking various hedge transactions. This process includes associating all derivatives designated as fair value or cash flow hedges with specific assets or liabilities on the consolidated statements of financial position or with specific firm commitments or forecasted transactions. Effectiveness of the hedge is formally assessed at inception and throughout the life of the hedging relationship. Even if a hedge is determined to be highly effective, the hedge may still result in a mismatch between the change in the fair value of the hedging instrument and the change in the fair value of the hedged item attributable to the hedged risk.

B-16

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

We use qualitative and quantitative methods to assess hedge effectiveness. Qualitative methods may include monitoring changes to terms and conditions and counterparty credit ratings. Quantitative methods may include statistical tests including regression analysis and minimum variance and dollar offset techniques.

Termination of Hedge Accounting. We prospectively discontinue hedge accounting when (1) the criteria to qualify for hedge accounting is no longer met, e.g., a derivative is determined to no longer be highly effective in offsetting the change in fair value or cash flows of a hedged item; (2) the derivative expires, is sold, terminated or exercised or (3) we remove the designation of the derivative being the hedging instrument for a fair value or cash flow hedge.

If it is determined that a derivative no longer qualifies as an effective hedge, the derivative will continue to be carried on the consolidated statements of financial position at its fair value, with changes in fair value recognized prospectively in net realized capital gains (losses). The asset or liability under a fair value hedge will no longer be adjusted for changes in fair value pursuant to hedging rules and the existing basis adjustment is amortized to the consolidated statements of operations line associated with the asset or liability. The component of AOCI related to discontinued cash flow hedges that are no longer highly effective is amortized to the consolidated statements of operations consistent with the net income impacts of the original hedged cash flows. If a cash flow hedge is discontinued because it is probable the hedged forecasted transaction will not occur, the deferred gain or loss is immediately reclassified from AOCI into net income.

Embedded Derivatives. We purchase and issue certain financial instruments and products that contain a derivative that is embedded in the financial instrument or product. We assess whether this embedded derivative is clearly and closely related to the asset or liability that serves as its host contract. If we deem that the embedded derivative's terms are not clearly and closely related to the host contract, and a separate instrument with the same terms would qualify as a derivative instrument, the derivative is bifurcated from that contract and held at fair value on the consolidated statements of financial position, with changes in fair value reported in net income.

Contractholder and Policyholder Liabilities

Contractholder and policyholder liabilities (contractholder funds, future policy benefits and claims and other policyholder funds) include reserves for investment contracts, individual and group annuities that provide periodic income payments, universal life insurance, variable universal life insurance, indexed universal life insurance, term life insurance, participating traditional individual life insurance, group dental and vision insurance, group critical illness, group accident, group short-term and long-term disability insurance, group life insurance, individual disability insurance and long-term care insurance. It also includes a provision for dividends on participating policies.

Investment contracts are contractholders' funds on deposit with us and generally include reserves for pension and annuity contracts. Reserves on investment contracts are equal to the cumulative deposits less any applicable charges and withdrawals plus credited interest. Reserves for universal life, variable universal life and indexed universal life insurance contracts are equal to cumulative deposits less charges plus credited interest, which represents the account balances that accrue to the benefit of the policyholders.

We hold additional reserves on certain long-duration contracts where benefit features result in gains in early years followed by losses in later years; universal life, variable universal life and indexed universal life insurance contracts that contain no lapse guarantee features; and annuities with guaranteed minimum death benefits.

Reserves for individual and group annuities that provide periodic income payments, nonparticipating term life insurance and disability income contracts are computed on a basis of assumed investment yield, mortality, morbidity and expenses, including a provision for adverse deviation, which generally varies by plan, year of issue and policy duration. Investment yield is based on our experience. Mortality, morbidity and withdrawal rate assumptions are based on our experience and are periodically reviewed against both industry standards and experience.

Reserves for participating life insurance contracts are based on the net level premium reserve for death and endowment policy benefits. This net level premium reserve is calculated based on dividend fund interest rates and mortality rates guaranteed in calculating the cash surrender values described in the contract.

B-17

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Participating business represented approximately 6%, 7% and 8% of our life insurance in force and 23%, 26% and 29% of the number of life insurance policies in force as of December 31, 2019, 2018 and 2017, respectively. Participating business represented approximately 31%, 34% and 39% of life insurance premiums for the years ended December 31, 2019, 2018 and 2017, respectively. The amount of dividends to policyholders is declared annually by our Board of Directors. The amount of dividends to be paid to policyholders is determined after consideration of several factors including interest, mortality, morbidity and other expense experience for the year and judgment as to the appropriate level of statutory surplus to be retained by us. At the end of the reporting period, we establish a dividend liability for the pro rata portion of the dividends expected to be paid on or before the next policy anniversary date.

Some of our policies and contracts require payment of fees or other policyholder assessments in advance for services that will be rendered over the estimated lives of the policies and contracts. These payments are established as unearned revenue liabilities upon receipt and included in other policyholder funds in the consolidated statements of financial position. These unearned revenue reserves are amortized to net income over the estimated lives of these policies and contracts in relation to the emergence of EGPs.

Short-Duration Contracts

We include the following group products in our short-duration insurance contracts disclosures: long-term disability (“LTD”), group life waiver, dental, vision, short-term disability (“STD”), critical illness, accident and group life.

Future policy benefits and claims include reserves for group life and disability insurance that provide periodic income payments. These reserves are computed using assumptions of mortality, morbidity and investment performance. These assumptions are based on our experience, industry results, emerging trends and future expectations. Future policy benefits and claims also include reserves for incurred but unreported group disability, dental, vision, critical illness, accident and life insurance claims. We recognize claims costs in the period the service was provided to our policyholders. However, claims costs incurred in a particular period are not known with certainty until after we receive, process and pay the claims. We determine the amount of this liability using actuarial methods based on historical claim payment patterns as well as emerging cost trends, where applicable, to determine our estimate of claim liabilities.

We have defined claim frequency as follows for each short-duration product:


•	LTD: Claim frequency is based on submitted reserve claim counts.


•	Group Life Waiver: Claim frequency is based on submitted reserve claim counts, consistent with LTD.


•	Dental and Vision: Claim frequency is based on the claim form, which may include one or more procedures.


•	STD, Critical Illness and Accident: Claim frequency is based on submitted claims.


•	Group Life: Claim frequency is based on submitted life claims (lives, not coverages).

We did not make any significant changes to our methodologies or assumptions used to calculate the liability for unpaid claims for short-duration contracts during 2019.

Liability for Unpaid Claims

The liability for unpaid claims for both long-duration and short-duration contracts is an estimate of the ultimate net cost of reported and unreported losses not yet settled. This liability is estimated using actuarial analyses and case basis evaluations. Although considerable variability is inherent in such estimates, we believe the liability for unpaid claims is adequate. These estimates are continually reviewed and, as adjustments to this liability become necessary, such adjustments are reflected in net income. Our liability for unpaid claims does not include any allocated claim adjustment expenses.

We incur claim adjustment expenses for both long-duration and short-duration contracts that cannot be allocated to a specific claim. Our claim adjustment expense liability is estimated using actuarial analyses based on historical trends of expenses and expected claim runout patterns.

See Note 10, Insurance Liabilities, under the caption “Liability for Unpaid Claims” for further details.

B-18

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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

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

Immediate annuities with life contingencies include products with fixed and guaranteed annuity considerations and benefits and consist principally of group and individual single premium annuities with life contingencies. Annuity considerations from these products are recognized as premium revenue. However, the collection of these annuity considerations does not represent the completion of the earnings process, as we establish annuity reserves using estimates for mortality and investment assumptions, which include provision for adverse deviation as required by U.S. GAAP. We anticipate profits to emerge over the life of the annuity products as we earn investment income, pay benefits and release reserves.

Group life, dental, vision, critical illness, accident and disability premiums are generally recorded as premium revenue over the term of the coverage. Certain group contracts contain experience premium refund provisions based on a pre-defined formula that reflects their claim experience. Experience premium refunds reduce revenue over the term of the coverage and are adjusted to reflect current experience. Related policy benefits and expenses are associated with earned premiums and result in the recognition of profits over the term of the policies and contracts. Fees for contracts providing claim processing or other administrative services are recorded as revenue over the period the service is provided.

Universal life-type policies are insurance contracts with terms that are not fixed. Amounts received as payments for such contracts are not reported as premium revenues. Revenues for universal life-type insurance contracts consist of policy charges for the cost of insurance, policy initiation and administration, surrender charges and other fees that have been assessed against policy account values and investment income. Policy benefits and claims that are charged to expense include interest credited to contracts and benefit claims incurred in the period in excess of related policy account balances.

Investment contracts do not subject us to significant risks arising from policyholder mortality or morbidity and consist primarily of guaranteed investment contracts (“GICs”), funding agreements and certain deferred annuities. Amounts received as payments for investment contracts are established as investment contract liability balances and are not reported as premium revenues. Revenues for investment contracts consist of investment income and policy administration charges. Investment contract benefits that are charged to expense include benefit claims incurred in the period in excess of related investment contract liability balances and interest credited to investment contract liability balances.

Fees and other revenues are earned for administrative services performed including recordkeeping and reporting services for retirement savings plans, insurance companies, endowments and other financial institutions and other products. Fees and other revenues received for performance of administrative services are recognized as revenue when earned, typically when the service is performed.

Deferred Acquisition Costs

Incremental direct costs of contract acquisition as well as certain costs directly related to acquisition activities (underwriting, policy issuance and processing, medical and inspection and sales force contract selling) for the successful acquisition of new and renewal insurance policies and investment contract business are capitalized to the extent recoverable. Commissions and other incremental direct costs for the acquisition of long-term service contracts are also capitalized to the extent recoverable. Maintenance costs and acquisition costs that are not deferrable are charged to net income as incurred.

DAC for universal life-type insurance contracts and certain investment contracts are amortized over the expected lifetime of the contracts in relation to EGPs or, in certain circumstances, estimated gross revenues (“EGR”). This amortization is adjusted in the current period when EGPs or EGRs are revised. EGRs include similar assumptions as the revenue component of EGPs and the changes of future estimates and reflection of actual experience and market conditions is done in the same manner as EGPs.

B-19

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

For individual variable universal life insurance, individual variable annuities and group annuities that have separate account U.S. equity investment options, we utilize a mean reversion methodology (reversion to the mean assumption), a common industry practice, to determine the future domestic equity market growth rate assumption used for the calculation of EGPs.

DAC for participating life insurance policies are amortized in proportion to estimated gross margins (“EGM”) rather than EGPs. EGMs include similar assumption items as EGPs. We stopped selling participating business in the early 2000s. Some products allow for underwritten death benefit increases and cost of living adjustments, resulting in a small amount of new DAC each year, and the amortization schedules are modified as appropriate.

DAC for non-participating term life insurance and individual disability policies are amortized over the premium-paying period of the related policies using assumptions consistent with those used in computing policyholder liabilities. Once these assumptions are made for a given policy or group of policies, they will not be changed over the life of the policy unless a loss recognition event occurs.

DAC on insurance policies and investment contracts are subject to recoverability testing at the time of policy issue and loss recognition testing on an annual basis, or when an event occurs that may warrant loss recognition. If loss recognition or impairment is necessary, DAC would be written off to the extent it is determined that future policy premiums and investment income or gross profits are not adequate to cover related losses and expenses.

DAC on short-duration group benefits policies are amortized over the estimated term of the underlying contracts.

Deferred Acquisition Costs on Internal Replacements

All insurance and investment contract modifications and replacements are reviewed to determine if the internal replacement results in a substantially changed contract. If so, the acquisition costs, sales inducements and unearned revenue associated with the new contract are deferred and amortized over the lifetime of the new contract. In addition, the existing DAC, sales inducement costs and unearned revenue balances associated with the replaced contract are written off. If an internal replacement results in a substantially unchanged contract, the acquisition costs, sales inducements and unearned revenue associated with the new contract are immediately recognized in the period incurred. In addition, the existing DAC, sales inducement costs or unearned revenue balance associated with the replaced contract is not written off, but instead is carried over to the new contract.

Long-Term Debt

Long-term debt includes notes payable, nonrecourse mortgages and other debt with a maturity date greater than one year at the date of issuance. Current maturities of long-term debt are classified as long-term debt in our consolidated statements of financial position. Long-term debt is primarily recorded at the unpaid principal balance, net of unamortized discount, premium and issuance costs.

Reinsurance

We enter into reinsurance agreements with other companies in the normal course of business in order to limit losses and minimize exposure to significant risks. We may assume reinsurance from or cede reinsurance to other companies. Assets and liabilities related to reinsurance ceded are reported on a gross basis. Premiums and expenses are reported net of reinsurance ceded. The cost of reinsurance related to long-duration contracts is accounted for over the life of the underlying reinsured policies using assumptions consistent with those used to account for the underlying policies. We are contingently liable with respect to reinsurance ceded to other companies in the event the reinsurer is unable to meet the obligations it has assumed. As of December 31, 2019 and 2018, we had $465.3 million and $450.4 million of net ceded reinsurance recoverables related to claims that have been received, respectively. As of December 31, 2019 and 2018, $457.2 million, or 98%, and $435.6 million, or 97%, were with our five largest ceded reinsurers, respectively. Our total amount recoverable from reinsurers includes net ceded reinsurance recoverables related to claims that have been received and reserves ceded to reinsurers; however, it does not reflect potentially offsetting impacts of collateral. As of December 31, 2019 and 2018, the total amount recoverable from reinsurers was $961.4 million and $920.8 million, respectively, and is recognized in premiums due and other receivables.

B-20

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

The effects of reinsurance on premiums and other considerations and policy and contract benefits were as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Premiums and other considerations:
	Direct	$	7,656.0	$	6,284.8	$	6,202.7
	Assumed		379.7		327.1		279.8
	Ceded		(562.4)		(519.5)		(483.1)
Net premiums and other considerations		$	7,473.3	$	6,092.4	$	5,999.4

Benefits, claims and settlement expenses:
	Direct	$	9,162.3	$	7,528.2	$	7,296.3
	Assumed		581.6		509.8		441.1
	Ceded		(576.4)		(496.0)		(419.5)
Net benefits, claims and settlement expenses		$	9,167.5	$	7,542.0	$	7,317.9

Separate Accounts

The separate accounts are legally segregated and are not subject to the claims that arise out of any of our other business. The client, rather than us, directs the investments and bears the investment risk of these funds. The separate account assets represent the fair value of funds that are separately administered by us for contracts with equity, real estate and fixed income investments and are presented as a summary total within the consolidated statements of financial position. An equivalent amount is reported as separate account liabilities, which represent the obligation to return the monies to the client. We receive fees for mortality, withdrawal and expense risks, as well as administrative, maintenance and investment advisory services that are included in the consolidated statements of operations. Net deposits, net investment income and realized and unrealized capital gains and losses of the separate accounts are not reflected in the consolidated statements of operations.

As of December 31, 2019 and 2018, the separate accounts included a separate account valued at $100.4 million and $94.9 million, respectively, which primarily included shares of PFG common stock that were allocated and issued to eligible participants of qualified employee benefit plans administered by us as part of the policy credits issued under Principal Mutual Holding Company’s 2001 demutualization. In the consolidated statements of financial position, the separate account shares are recorded at fair value and are reported as separate account assets with a corresponding separate account liability. Changes in fair value of the separate account shares are reflected in both the separate account assets and separate account liabilities and do not impact our results of operations.

Income Taxes

Our ultimate parent, PFG, files a U.S. consolidated income tax return that includes us and all of our qualifying subsidiaries. In addition, we file income tax returns in all states and foreign jurisdictions in which we conduct business. PFG allocates income tax expenses and benefits to companies in the group generally based upon pro rata contribution of taxable income or operating losses. We are taxed at corporate rates on taxable income based on existing tax laws. Current income taxes are charged or credited to net income based upon amounts estimated to be payable or recoverable as a result of taxable operations for the current year. Deferred income taxes are provided for the tax effect of temporary differences in the financial reporting and income tax bases of assets and liabilities, net operating loss carryforwards and tax credit carryforwards using enacted income tax rates and laws. The effect on deferred income tax assets and deferred income tax liabilities of a change in tax rates is recognized in net income in the period in which the change is enacted. Subsequent to a change in tax rates and laws, any stranded tax effects remaining in AOCI will be released only if an entire portfolio is liquidated, sold or extinguished. However, a specific exception to this rule was adopted effective January 1, 2018, to reclassify the stranded tax effects generated by U.S. tax reform from AOCI to retained earnings. Further details are included under the caption “Recent Accounting Pronouncements.”

B-21

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

2. Discontinued Operations

On May 1, 2017, we sold our ownership interest in PGI LLC to PFS. PGI LLC results are subsequently reported as discontinued operations and the results of operations have been removed from our results of continuing operations for all periods presented. Additionally, intercompany eliminations associated with PGI LLC are reported as discontinued operations and have been removed from our results of continuing operations for all periods presented. PGI LLC continues to provide asset management services for us.

Operating results of the discontinued operations, which reflect the net impact of discontinuing PGI LLC and associated intercompany eliminations, were as follows:



		For the year ended
		December 31, 2017
		(in millions)
Revenues
Fees and other revenues		$	155.9
Net investment income			42.7
Net realized capital gains			1.8
	Total revenues		200.4
Expenses
Operating expenses			148.5
	Total expenses		148.5
Income before income taxes			51.9
Income taxes			14.9
Income from discontinued operations			37.0
Income from discontinued operations attributable to
	noncontrolling interest		1.5
Income from discontinued operations attributable to parent		$	35.5

3. Related Party Transactions

Expense Reimbursements

We have entered into various related party transactions with our ultimate parent and its other affiliates. During the years ended December 31, 2019, 2018 and 2017, we received $607.1 million, $520.7 million and $431.9 million, respectively, of expense reimbursements from affiliated entities.

Cash Advance Agreement

We and our direct parent, PFS, are parties to a cash advance agreement, which allows us, collectively, to pool our available cash with other affiliates in order to more efficiently and effectively invest our cash. The cash advance agreement allows (i) us to advance cash to PFS in aggregate principal amounts not to exceed $1.0 billion, with such advanced amounts earning interest at the daily 30-day LIBOR rate (the “Internal Crediting Rate”); and (ii) PFS to advance cash to us in aggregate principal amounts not to exceed $1.0 billion, with such advance amounts paying interest at the Internal Crediting Rate plus 10 basis points to reimburse PFS for the costs incurred in maintaining short-term investing and borrowing programs. Under this cash advance agreement, we had a receivable from/(payable to) PFS of $(52.9) million and $64.2 million as of December 31, 2019 and 2018, respectively, and earned interest of $4.3 million, $4.9 million and $1.7 million during 2019, 2018 and 2017, respectively.

Reinsurance

We and an affiliated entity, Principal National Life Insurance Company, are parties to a reinsurance agreement to reinsure certain life insurance business. Under this agreement, we had an assumed reinsurance liability of $3,958.9 million and $3,399.2 million as of December 31, 2019 and 2018, respectively. In addition, we recognized premiums and other fees of $672.3 million, $555.4 million and $498.9 million for the years ended December 31, 2019, 2018 and 2017, respectively, associated with this agreement. Furthermore, we recognized expenses of $869.1 million, $776.1 million and $700.3 million for the years ended December 31, 2019, 2018 and 2017, respectively, associated with this agreement.

B-22

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Sale of Subsidiaries

On May 1, 2017, we sold our ownership interest in PGI LLC to PFS as part of a common control transaction. Accordingly, no gain or loss was recognized on the sale and the amount received in excess of book value was recorded in additional paid-in capital. We received $1,068.4 million in cash and a $300.0 million 10-year note from PFS, with the note balance approximating the carrying value of PGI LLC. The note bears interest at 2.885% with semi-annual principal and interest payments due in May and November each year. Subsequent to the sale, we paid an extraordinary dividend of $1,068.4 million to PFS with the cash proceeds received from the sale.

Following the sale of our ownership of PGI LLC, it continues to provide asset management services for us. We recognized $100.1 million, $103.6 million and $65.7 million of asset management fee expense for the years ended December 31, 2019, 2018 and 2017, respectively. Prior to the sale of PGI LLC, these expenses were eliminated upon consolidation.

Our ultimate parent, PFG, is a guarantor of notes received from PFS related to the sale of interests in subsidiaries. We recorded interest income on these notes of $9.8 million, $11.1 million and $9.4 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Distribution of Affiliated Products

We receive commission fees, distribution fees and service fees from Principal Securities, Inc. and PGI LLC. Furthermore, we receive management and administrative fees for investments our products sold in the Principal Mutual Funds and Principal Variable Contracts. Fees and other revenues were $392.7 million, $412.0 million and $433.8 million for the years ended December 31, 2019, 2018 and 2017, respectively. In addition, we pay commission expense to affiliated registered representatives within Principal Securities, Inc. to sell proprietary products. Commission expense was $88.7 million, $82.6 million and $84.8 million for the years ended December 31, 2019, 2018 and 2017, respectively.

Benefit Plans

PFG is the sponsor of the qualified defined contribution plans for both employees and individual field agents. We were allocated plan expenses from PFG of $32.9 million, $32.1 million and $31.6 million during 2019, 2018 and 2017, respectively.

PFG is also the sponsor of the nonqualified deferred compensation plans for select employees and individual field agents. We were allocated plan expenses from PFG of $1.9 million, $2.0 million and $2.4 million during 2019, 2018 and 2017, respectively.

PFG is the sponsor of the defined benefit pension plans for both employees and individual field agents. We were allocated $46.7 million, $51.2 million and $48.4 million of pension expense from PFG during 2019, 2018 and 2017, respectively.

Other Agreements

Pursuant to certain regulatory requirements or otherwise in the ordinary course of business, we guarantee certain payments of our affiliates and have agreements with affiliates to provide and/or receive management, administrative and other services, all of which, individually and in the aggregate, are immaterial to our business, financial condition and net income.

B-23

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

4. Goodwill and Other Intangible Assets

Goodwill

The carrying amount of goodwill did not change during 2019 and 2018.

Finite Lived Intangible Assets

Amortized intangible assets that continue to be subject to amortization over a weighted average remaining expected life of 14 years were as follows:



	December 31,
	2019		2018
	(in millions)
Gross carrying value	$	41.4	$	41.4
Accumulated amortization		21.8		19.2
Net carrying value	$	19.6	$	22.2

The amortization expense for intangible assets with finite useful lives was $2.6 million, $2.6 million and $2.6 million for 2019, 2018 and 2017, respectively. As of December 31, 2019, the estimated amortization expense for the next five years is as follows (in millions):



Year ending December 31:
	2020	$	2.4
	2021		2.2
	2022		2.0
	2023		1.2
	2024		1.1

5. Variable Interest Entities

We have relationships with various types of entities which may be VIEs. Certain VIEs are consolidated in our financial results. See Note 1, Nature of Operations and Significant Accounting Policies, under the caption “Consolidation” for further details of our consolidation accounting policies. We did not provide financial or other support to investees designated as VIEs for the periods ended December 31, 2019 and December 31, 2018.

Consolidated Variable Interest Entities

Grantor Trust

We contributed undated subordinated floating rate notes to a grantor trust. The trust separated its cash flows by issuing an interest-only certificate and a residual certificate related to each note contributed. Each interest-only certificate entitles the holder to interest on the stated note for a specified term, while the residual certificate entitles the holder to interest payments subsequent to the term of the interest-only certificate and to all principal payments. We retained the interest-only certificates and the residual certificates were subsequently sold to third parties. We determined the grantor trust is a VIE due to insufficient equity to sustain it. We determined we are the primary beneficiary as a result of our contribution of securities into the trust and our significant continuing interest in the trust.

Commercial Mortgage-Backed Securities

We sold commercial mortgage loans to a real estate mortgage investment conduit trust. The trust issued various commercial mortgage-backed securities ("CMBS") certificates using the cash flows of the underlying commercial mortgage loans it purchased. This was considered a VIE due to insufficient equity to sustain itself. We determined we were the primary beneficiary as we retained the special servicing role for the assets within the trust as well as the ownership of the bond class that controls the unilateral kick-out rights of the special servicer. The trust was unwound in the third quarter of 2019.

B-24

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Real Estate

We invest in several real estate limited partnerships and limited liability companies. The entities invest in real estate properties. Certain of these entities are VIEs based on the combination of our significant economic interest and related voting rights. We determined we are the primary beneficiary as a result of our power to control the entities through our significant ownership. Due to the nature of these real estate investments, the investment balance will fluctuate as we purchase and sell interests in the entities and as capital expenditures are made to improve the underlying real estate.

Sponsored Investment Fund

We invest in certain series of an investment fund. These series are VIEs as the equity holders of each series lack the power to direct the most significant activities of the VIE. We determined we are the primary beneficiary of these series as our interest is more than insignificant and collectively we have the power to direct the most significant activities of the fund.

Assets and Liabilities of Consolidated Variable Interest Entities

The carrying amounts of our consolidated VIE assets, which can only be used to settle obligations of consolidated VIEs, and liabilities of consolidated VIEs for which creditors do not have recourse were as follows:



	December 31, 2019				December 31, 2018
	Total		Total		Total		Total
	assets		liabilities		assets		liabilities
	(in millions)
Grantor trust (1)	$	99.9	$	98.6	$	95.0	$	89.4
CMBS		—		—		6.4		—
Real estate (2)		479.7		88.0		379.2		70.6
Sponsored investment fund (3)		19.9		—		37.7		—
Total	$	599.5	$	186.6	$	518.3	$	160.0


(1)	The assets of the grantor trust are primarily fixed maturities, available-for-sale. The liabilities are primarily other liabilities that reflect an embedded derivative of the forecasted transaction to deliver the underlying securities.


(2)	The assets of the real estate VIEs primarily include real estate and cash. Liabilities primarily include long-term debt and other liabilities.


(3)	The assets of the sponsored investment fund include other investments.

Unconsolidated Variable Interest Entities

We hold a variable interest in a number of VIEs where we are not the primary beneficiary. Our investments in these VIEs are reported in fixed maturities, available-for-sale; fixed maturities, trading and other investments in the consolidated statements of financial position and are described below.

Unconsolidated VIEs include certain CMBS, residential mortgage-backed pass-through securities ("RMBS") and other ABS. All of these entities were deemed VIEs because the equity within these entities is insufficient to sustain them. We determined we are not the primary beneficiary in the entities within these categories of investments. This determination was based primarily on the fact we do not own the class of security that controls the unilateral right to replace the special servicer or equivalent function.

We invest in cash collateralized debt obligations, collateralized bond obligations, collateralized loan obligations and other collateralized structures, which are VIEs due to insufficient equity to sustain the entities. We have determined we are not the primary beneficiary of these entities primarily because we do not control the economic performance of the entities and were not involved with the design of the entities or because we do not have a potentially significant variable interest in the entities for which we are the asset manager.

We have invested in various VIE trusts and similar entities as a debt holder. Most of these entities are classified as VIEs due to insufficient equity to sustain them. In addition, we have an entity classified as a VIE based on the combination of our significant economic interest and lack of voting rights. We have determined we are not the primary beneficiary primarily because we do not control the economic performance of the entities and were not involved with the design of the entities.

B-25

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

We have invested in partnerships and other funds, which are classified as VIEs. The entities are VIEs as equity holders lack the power to control the most significant activities of the entities because the equity holders do not have either the ability by a simple majority to exercise substantive kick-out rights or substantive participating rights. We have determined we are not the primary beneficiary because we do not have the power to direct the most significant activities of the entities.

As previously discussed, we sponsor, invest in and have other interests in certain investment funds that are VIEs. We determined we are not the primary beneficiary of the VIEs for which we are the asset manager but do not have a potentially significant variable interest in the funds.

The carrying value and maximum loss exposure for our unconsolidated VIEs were as follows:



				Maximum exposure to
		Asset carrying value		loss (1)
		(in millions)
December 31, 2019
Fixed maturities, available-for-sale:
	Corporate	$	238.2	$	225.7
	Residential mortgage-backed pass-through securities		2,844.2		2,777.5
	Commercial mortgage-backed securities		4,802.7		4,700.8
	Collateralized debt obligations (2)		3,211.2		3,222.6
	Other debt obligations		8,075.4		7,961.4
Fixed maturities, trading:
	Residential mortgage-backed pass-through securities		14.1		14.1
	Commercial mortgage-backed securities		28.1		28.1
	Collateralized debt obligations (2)		20.9		20.9
	Other debt obligations		13.3		13.3
Other investments:
	Other limited partnership and fund interests		635.2		899.1

December 31, 2018
Fixed maturities, available-for-sale:
	Corporate	$	235.3	$	222.6
	Residential mortgage-backed pass-through securities		2,416.2		2,444.4
	Commercial mortgage-backed securities		3,902.8		3,979.4
	Collateralized debt obligations (2)		2,416.9		2,447.0
	Other debt obligations		7,139.5		7,183.0
Fixed maturities, trading:
	Residential mortgage-backed pass-through securities		13.8		13.8
	Commercial mortgage-backed securities		13.4		13.4
	Collateralized debt obligations (2)		11.8		11.8
	Other debt obligations		9.7		9.7
Other investments:
	Other limited partnership and fund interests		575.4		968.6

(1)

Our risk of loss is limited to our initial investment measured at amortized cost for fixed maturities, available-for-sale. Our risk of loss is limited to our investment measured at fair value for our fixed maturities, trading. Our risk of loss is limited to our carrying value plus any unfunded commitments and/or guarantees and similar provisions for our other investments. Unfunded commitments are not liabilities on our consolidated statements of financial position because we are only required to fund additional equity when called upon to do so by the general partner or investment manager.


(2)	Primarily consists of collateralized loan obligations backed by secured corporate loans.

B-26

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

6. Investments

Fixed Maturities and Equity Securities

The amortized cost, gross unrealized gains and losses, other-than-temporary impairments in AOCI and fair value of available-for-sale securities were as follows:



										Other-than-
				Gross		Gross				temporary
		Amortized		unrealized		unrealized				impairments in
		cost		gains		losses		Fair value		AOCI (1)
		(in millions)
December 31, 2019
Fixed maturities, available-for-sale:
	U.S. government and agencies	$	1,562.7	$	97.2	$	3.0	$	1,656.9	$	—
	Non-U.S. governments		724.6		128.4		—		853.0		—
	States and political subdivisions		6,791.7		639.2		11.5		7,419.4		—
	Corporate		34,057.5		3,086.3		32.7		37,111.1		—
	Residential mortgage-backed pass-through securities		2,777.5		70.5		3.8		2,844.2		—
	Commercial mortgage-backed securities		4,700.8		125.7		23.8		4,802.7		15.8
	Collateralized debt obligations (2)		3,222.6		2.8		14.2		3,211.2		0.9
	Other debt obligations		7,970.8		129.0		14.9		8,084.9		31.8
Total fixed maturities, available-for-sale		$	61,808.2	$	4,279.1	$	103.9	$	65,983.4	$	48.5

December 31, 2018
Fixed maturities, available-for-sale:
	U.S. government and agencies	$	1,383.7	$	16.1	$	16.6	$	1,383.2	$	—
	Non-U.S. governments		683.5		61.2		13.9		730.8		—
	States and political subdivisions		6,065.7		194.6		94.6		6,165.7		—
	Corporate		32,037.2		873.0		821.8		32,088.4		—
	Residential mortgage-backed pass-through securities		2,444.4		21.4		49.6		2,416.2		—
	Commercial mortgage-backed securities		3,979.4		17.0		93.6		3,902.8		16.3
	Collateralized debt obligations (2)		2,447.0		—		30.1		2,416.9		1.2
	Other debt obligations		7,214.8		39.2		82.7		7,171.3		36.2
Total fixed maturities, available-for-sale		$	56,255.7	$	1,222.5	$	1,202.9	$	56,275.3	$	53.7


(1)	Excludes $62.3 million and $64.2 million as of December 31, 2019 and December 31, 2018, respectively, of net unrealized gains on impaired fixed maturities, available-for-sale related to changes in fair value subsequent to the impairment date, which are included in gross unrealized gains and gross unrealized losses.


(2)	Primarily consists of collateralized loan obligations backed by secured corporate loans.

The amortized cost and fair value of fixed maturities available-for-sale as of December 31, 2019, by expected maturity, were as follows:



	Amortized cost		Fair value
	(in millions)
Due in one year or less	$	2,052.0	$	2,063.8
Due after one year through five years		9,590.6		9,931.5
Due after five years through ten years		11,538.3		12,270.5
Due after ten years		19,955.6		22,774.6
Subtotal		43,136.5		47,040.4
Mortgage-backed and other asset-backed securities		18,671.7		18,943.0
Total	$	61,808.2	$	65,983.4

Actual maturities may differ because borrowers may have the right to call or prepay obligations. Our portfolio is diversified by industry, issuer and asset class. Credit concentrations are managed to established limits.

B-27

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Net Investment Income

Major components of net investment income were as follows:



	For the year ended December 31,
	2019		2018		2017
	(in millions)
Fixed maturities, available-for-sale (1)	$	2,406.5	$	2,249.8	$	2,143.2
Fixed maturities, trading		9.1		6.5		4.3
Equity securities, available-for-sale		—		—		5.4
Equity securities		4.7		4.6		—
Mortgage loans		651.3		587.8		563.5
Real estate		191.0		158.4		129.1
Policy loans		39.7		39.9		40.5
Cash and cash equivalents		39.5		33.5		12.0
Derivatives (1)		(2.0)		0.1		(3.2)
Other		106.0		83.6		96.6
Total		3,445.8		3,164.2		2,991.4
Investment expenses		(151.9)		(141.3)		(157.7)
Net investment income	$	3,293.9	$	3,022.9	$	2,833.7

(1)

Upon adoption of authoritative guidance effective January 1, 2019, the change in fair value of fixed maturities, available-for-sale and the change in fair value of derivative hedging instruments in fair value hedging relationships are reported in net investment income with the earnings effect of fixed maturities, available-for-sale. Prior to 2019, the change in fair value of fixed maturities, available-for-sale and the change in fair value of derivative hedging instruments in fair value hedging relationships were reported in net realized capital gains (losses). See Note 7, Derivative Financial Instruments, for further details.

B-28

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Net Realized Capital Gains and Losses

Major components of net realized capital gains (losses) on investments were as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Fixed maturities, available-for-sale:
	Gross gains	$	7.9	$	6.8	$	10.3
	Gross losses		(11.4)		(68.8)		(22.7)
	Net impairment losses		(43.5)		(29.1)		(79.6)
	Hedging, net (1)		(9.3)		(39.6)		(28.5)
Fixed maturities, trading (2)			14.4		(7.7)		1.4
Equity securities, available-for-sale:
	Net impairment losses		—		—		(0.1)
Equity securities, trading (3)			—		—		(1.3)
Equity securities (4)			8.2		0.8		—
Mortgage loans			3.3		6.4		9.2
Derivatives (1)			(58.2)		79.2		(195.8)
Other (5)			(23.6)		144.7		679.1
Net realized capital gains (losses)		$	(112.2)	$	92.7	$	372.0

(1)


(2)	Unrealized gains (losses) on fixed maturities, trading still held at the reporting date were $14.1 million, $(7.6) million and $2.7 million for the years ended December 31, 2019, 2018 and 2017, respectively.


(3)	Unrealized losses on equity securities, trading still held at the reporting date were $1.2 million for the year ended December 31, 2017.


(4)	Unrealized gains (losses) on equity securities still held at the reporting date were $7.6 million and $(12.5) million for the years ended December 31, 2019 and 2018, respectively.


(5)	Other gains in 2018 primarily include a gain from the sale of an equity method investment. Further details relating to other gains in 2017 are included under the caption “Real Estate Transactions.”

Proceeds from sales of investments (excluding call and maturity proceeds) in fixed maturities, available-for-sale were $1,489.3 million, $2,658.1 million and $1,149.8 million in 2019, 2018 and 2017, respectively.

Other-Than-Temporary Impairments

We have a process in place to identify fixed maturity securities that could potentially have an impairment that is other than temporary. Prior to 2018, we also used this process to assess equity securities for impairment. This process involves monitoring market events that could impact issuers’ credit ratings, business climate, management changes, litigation and government actions and other similar factors. This process also involves monitoring late payments, pricing levels, downgrades by rating agencies, key financial ratios, financial statements, revenue forecasts and cash flow projections as indicators of credit issues.

B-29

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

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

The way in which impairment losses on fixed maturities are recognized in the financial statements is dependent on the facts and circumstances related to the specific security. If we intend to sell a security or it is more likely than not that we would be required to sell a security before the recovery of its amortized cost, we recognize an other-than-temporary impairment in net income for the difference between amortized cost and fair value. If we do not expect to recover the amortized cost basis, we do not plan to sell the security and if it is not more likely than not that we would be required to sell a security before the recovery of its amortized cost, the recognition of the other-than-temporary impairment is bifurcated. We recognize the credit loss portion in net income and the noncredit loss portion in OCI (“bifurcated OTTI”). Prior to 2018, impairment losses on equity securities were recognized in net income and were measured as the difference between amortized cost and fair value.

Total other-than-temporary impairment losses, net of recoveries from the sale of previously impaired securities, were as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Fixed maturities, available-for-sale		$	(38.3)	$	10.6	$	(29.9)
Equity securities, available-for-sale			—		—		(0.1)
Total other-than-temporary impairment losses, net of recoveries from
	the sale of previously impaired securities		(38.3)		10.6		(30.0)
Other-than-temporary impairment losses on fixed maturities,
	available-for-sale reclassified from OCI (1)		(5.2)		(39.7)		(49.7)
Net impairment losses on available-for-sale securities		$	(43.5)	$	(29.1)	$	(79.7)

(1) Represents the net impact of (a) gains resulting from reclassification of noncredit impairment losses for fixed maturities

with bifurcated OTTI from net realized capital gains (losses) to OCI and (b) losses resulting from reclassification of

previously recognized noncredit impairment losses from OCI to net realized capital gains (losses) for fixed maturities

with bifurcated OTTI that had additional credit losses or fixed maturities that previously had bifurcated OTTI that have

now been sold or are intended to be sold.

We estimate the amount of the credit loss component of a fixed maturity security impairment as the difference between amortized cost and the present value of the expected cash flows of the security. The present value is determined using the best estimate cash flows discounted at the effective interest rate implicit to the security at the date of purchase or the current yield to accrete an asset-backed or floating rate security. The methodology and assumptions for establishing the best estimate cash flows vary depending on the type of security. The ABS cash flow estimates are based on security specific facts and circumstances that may include collateral characteristics, expectations of delinquency and default rates, loss severity and prepayment speeds and structural support, including subordination and guarantees. The corporate security cash flow estimates are derived from scenario-based outcomes of expected corporate restructurings or liquidations using bond specific facts and circumstances including timing, security interests and loss severity.

B-30

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

The following table provides a rollforward of accumulated credit losses for fixed maturities with bifurcated credit losses. The purpose of the table is to provide detail of (1) additions to the bifurcated credit loss amounts recognized in net realized capital gains (losses) during the period and (2) decrements for previously recognized bifurcated credit losses where the loss is no longer bifurcated and/or there has been a positive change in expected cash flows or accretion of the bifurcated credit loss amount.



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Beginning balance		$	(117.5)	$	(124.3)	$	(134.7)
Credit losses for which an other-than-temporary impairment was
	not previously recognized		(6.8)		(11.3)		(15.0)
Credit losses for which an other-than-temporary impairment was
	previously recognized		(11.8)		(20.0)		(42.5)
Reduction for credit losses previously recognized on fixed maturities
	now sold, paid down or intended to be sold		54.3		29.5		57.9
Net reduction for positive changes in cash flows expected
	to be collected and amortization (1)		0.8		8.6		10.0
Ending balance		$	(81.0)	$	(117.5)	$	(124.3)

(1) Amounts are recognized in net investment income.

Gross Unrealized Losses for Available-for-Sale Securities

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



			December 31, 2019
			Less than				Greater than or
			twelve months				equal to twelve months				Total
					Gross				Gross				Gross
			Fair		unrealized		Fair		unrealized		Fair		unrealized
			value		losses		value		losses		value		losses
			(in millions)
Fixed maturities, available-for-sale:
	U.S. government and agencies		$	100.0	$	1.9	$	74.2	$	1.1	$	174.2	$	3.0
	Non-U.S. governments			1.3		—		—		—		1.3		—
	States and political subdivisions			557.6		11.1		86.3		0.4		643.9		11.5
	Corporate			985.5		9.1		360.7		23.6		1,346.2		32.7
	Residential mortgage-backed pass-
		through securities		416.8		1.4		237.4		2.4		654.2		3.8
	Commercial mortgage-backed
		securities		829.3		9.2		260.4		14.6		1,089.7		23.8
	Collateralized debt obligations (1)			639.4		1.8		1,445.3		12.4		2,084.7		14.2
	Other debt obligations			1,772.8		9.5		613.7		5.4		2,386.5		14.9
Total fixed maturities, available-for-sale			$	5,302.7	$	44.0	$	3,078.0	$	59.9	$	8,380.7	$	103.9


(1)	Primarily consists of collateralized loan obligations backed by secured corporate loans.

B-31

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Of the available-for-sale fixed maturities within our consolidated portfolio in a gross unrealized loss position, 97% were investment grade (rated AAA through BBB-) with an average price of 99 (carrying value/amortized cost) as of December 31, 2019. Gross unrealized losses in our fixed maturities portfolio decreased during the year ended December 31, 2019, primarily due to a decrease in interest rates and tightening of credit spreads.

For those securities that had been in a continuous unrealized loss position for less than twelve months, our consolidated portfolio held 882 securities reflecting an average price of 99 as of December 31, 2019. Of this portfolio, 98% was investment grade (rated AAA through BBB-) as of December 31, 2019, with associated unrealized losses of $43.1 million. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.

For those securities that had been in a continuous unrealized loss position greater than or equal to twelve months, our consolidated portfolio held 502 securities reflecting an average price of 98 and an average credit rating of AA+ as of December 31, 2019. Corporate securities with unrealized losses had an average price of 94 and an average credit rating of BBB-. Commercial mortgage-backed securities with unrealized losses had an average price of 95 and an average credit rating of AA+. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.

Because we expected to recover our amortized cost, it was not our intent to sell the fixed maturity available-for-sale securities with unrealized losses and it was not more likely than not that we would be required to sell these securities before recovery of the amortized cost, which may be at maturity, we did not consider these investments to be other-than-temporarily impaired as of December 31, 2019.



			December 31, 2018
			Less than				Greater than or
			twelve months				equal to twelve months				Total
					Gross				Gross				Gross
			Fair		unrealized		Fair		unrealized		Fair		unrealized
			value		losses		value		losses		value		losses
			(in millions)
Fixed maturities, available-for-sale:
	U.S. government and agencies		$	96.1	$	1.4	$	486.7	$	15.2	$	582.8	$	16.6
	Non-U.S. governments			191.3		4.4		164.7		9.5		356.0		13.9
	States and political subdivisions			1,344.6		33.4		1,587.4		61.2		2,932.0		94.6
	Corporate			12,931.1		461.4		6,610.9		360.4		19,542.0		821.8
	Residential mortgage-backed pass-
		through securities		210.1		0.8		1,410.3		48.8		1,620.4		49.6
	Commercial mortgage-backed
		securities		779.4		11.4		2,203.9		82.2		2,983.3		93.6
	Collateralized debt obligations (1)			2,229.4		23.6		162.6		6.5		2,392.0		30.1
	Other debt obligations			982.0		4.9		3,661.4		77.8		4,643.4		82.7
Total fixed maturities, available-for-sale			$	18,764.0	$	541.3	$	16,287.9	$	661.6	$	35,051.9	$	1,202.9


(1)	Primarily consists of collateralized loan obligations backed by secured corporate loans.

Of the available-for-sale fixed maturities within our consolidated portfolio in a gross unrealized loss position, 95% were investment grade (rated AAA through BBB-) with an average price of 97 (carrying value/amortized cost) as of December 31, 2018. Gross unrealized losses in our fixed maturities portfolio increased during the year ended December 31, 2018, primarily due to widening of credit spreads and an increase in interest rates.

For those securities that had been in a continuous unrealized loss position for less than twelve months, our consolidated portfolio held 2,076 securities reflecting an average price of 97 as of December 31, 2018. Of this portfolio, 92% was investment grade (rated AAA through BBB-) as of December 31, 2018, with associated unrealized losses of $473.7 million. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.

B-32

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

For those securities that had been in a continuous unrealized loss position greater than or equal to twelve months, our consolidated portfolio held 2,335 securities reflecting an average price of 96 and an average credit rating of AA- as of December 31, 2018. Corporate securities with unrealized losses had an average price of 95 and an average credit rating of A-. Commercial mortgage-backed securities with unrealized losses had an average price of 96 and an average credit rating of AA+. The unrealized losses on these securities can primarily be attributed to changes in market interest rates and changes in credit spreads since the securities were acquired.

Net Unrealized Gains and Losses on Available-for-Sale Securities and Derivative Instruments

The net unrealized gains and losses on investments in available-for-sale securities, the noncredit component of impairment losses on fixed maturities available-for-sale and the net unrealized gains and losses on derivative instruments in cash flow hedge relationships are reported as separate components of stockholder’s equity. The cumulative amount of net unrealized gains and losses on available-for-sale securities and derivative instruments in cash flow hedge relationships net of adjustments related to DAC and related actuarial balances, policyholder liabilities, noncontrolling interest and applicable income taxes was as follows:



		December 31, 2019		December 31, 2018
		(in millions)
Net unrealized gains on fixed maturities, available-for-sale (1)		$	4,205.7	$	37.8
Noncredit component of impairment losses on fixed maturities, available-for-sale			(48.5)		(53.7)
Net unrealized gains on derivative instruments			94.1		123.3
Adjustments for assumed changes in amortization patterns			(261.0)		30.3
Adjustments for assumed changes in policyholder liabilities			(687.7)		(41.2)
Net unrealized gains on other investments and noncontrolling interest
	adjustments		5.9		15.8
Provision for deferred income taxes			(696.0)		(21.9)
Net unrealized gains on available-for-sale securities and derivative instruments		$	2,612.5	$	90.4


(1)	Excludes net unrealized gains (losses) on fixed maturities, available-for-sale included in fair value hedging relationships.

Mortgage Loans

Mortgage loans consist of commercial and residential mortgage loans. We evaluate risks inherent in our commercial mortgage loans in two classes: (1) brick and mortar property loans, including mezzanine loans, where we analyze the property's rent payments as support for the loan, and (2) credit tenant loans (“CTL”), where we rely on the credit analysis of the tenant for the repayment of the loan. We evaluate risks inherent in our residential mortgage loan portfolio in two classes: (1) first lien mortgages and (2) home equity mortgages. The carrying amount of our mortgage loan portfolio was as follows:



		December 31, 2019		December 31, 2018
		(in millions)
Commercial mortgage loans		$	14,758.4	$	13,780.7
Residential mortgage loans			1,088.2		908.3
	Total amortized cost		15,846.6		14,689.0

Valuation allowance			(26.3)		(26.8)
Total carrying value		$	15,820.3	$	14,662.2

B-33

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

We periodically purchase mortgage loans as well as sell mortgage loans we have originated. Mortgage loans purchased and sold were as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Commercial mortgage loans:
	Purchased	$	133.9	$	24.7	$	44.4
Residential mortgage loans:
	Purchased		422.8		337.5		276.5
	Sold		—		—		89.3

Our commercial mortgage loan portfolio consists primarily of non-recourse, fixed rate mortgages on stabilized properties. Our commercial mortgage loan portfolio is diversified by geographic region and specific collateral property type as follows:



	December 31, 2019					December 31, 2018
	Amortized		Percent			Amortized		Percent
	cost		of total			cost		of total
	($ in millions)
Geographic distribution
New England	$	615.0		4.2	%	$	642.2		4.7	%
Middle Atlantic		4,151.7		28.2			3,937.9		28.6
East North Central		626.2		4.2			594.7		4.3
West North Central		237.7		1.6			206.2		1.5
South Atlantic		2,324.4		15.7			2,211.9		16.1
East South Central		439.4		3.0			423.3		3.1
West South Central		1,454.7		9.9			1,216.8		8.8
Mountain		934.4		6.3			970.8		7.0
Pacific		3,974.9		26.9			3,576.9		25.9
Total	$	14,758.4		100.0	%	$	13,780.7		100.0	%

Property type distribution
Office	$	4,899.9		33.2	%	$	4,637.6		33.7	%
Retail		2,056.9		13.9			2,310.0		16.8
Industrial		2,274.5		15.4			2,319.1		16.8
Apartments		5,263.6		35.7			4,262.5		30.9
Hotel		91.2		0.6			100.1		0.7
Mixed use/other		172.3		1.2			151.4		1.1
Total	$	14,758.4		100.0	%	$	13,780.7		100.0	%

Our residential mortgage loan portfolio is composed of first lien mortgages with an amortized cost of $1,077.2 million and $893.2 million and home equity mortgages with an amortized cost of $11.0 million and $15.1 million as of December 31, 2019 and December 31, 2018, respectively. Our residential home equity mortgages are generally second lien mortgages comprised of closed-end loans and lines of credit.

B-34

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Mortgage Loan Credit Monitoring

Commercial Credit Risk Profile Based on Internal Rating

We actively monitor and manage our commercial mortgage loan portfolio. All commercial mortgage loans are analyzed regularly and substantially all are internally rated, based on a proprietary risk rating cash flow model, in order to monitor the financial quality of these assets. The model stresses expected cash flows at various levels and at different points in time depending on the durability of the income stream, which includes our assessment of factors such as location (macro and micro markets), tenant quality and lease expirations. Our internal rating analysis presents expected losses in terms of an S&P Global (“S&P”) bond equivalent rating. As the credit risk for commercial mortgage loans increases, we adjust our internal ratings downward with loans in the category “B+ and below” having the highest risk for credit loss. Internal ratings on commercial mortgage loans are updated at least annually and potentially more often for certain loans with material changes in collateral value or occupancy and for loans on an internal “watch list”.

Commercial mortgage loans that require more frequent and detailed attention are identified and placed on an internal “watch list”. Among the criteria that would indicate a potential problem are significant negative changes in ratios of loan to value or contract rents to debt service, major tenant vacancies or bankruptcies, borrower sponsorship problems, late payments, delinquent taxes and loan relief/restructuring requests.

The amortized cost of our commercial mortgage loan portfolio by credit risk, as determined by our internal rating system expressed in terms of an S&P bond equivalent rating, was as follows:



	December 31, 2019
	Brick and mortar		CTL		Total
	(in millions)
A- and above	$	13,698.0	$	76.9	$	13,774.9
BBB+ thru BBB-		877.8		83.8		961.6
BB+ thru BB-		21.9		—		21.9
Total	$	14,597.7	$	160.7	$	14,758.4

	December 31, 2018
	Brick and mortar		CTL		Total
	(in millions)
A- and above	$	12,571.4	$	84.5	$	12,655.9
BBB+ thru BBB-		932.1		105.7		1,037.8
BB+ thru BB-		87.0		—		87.0
Total	$	13,590.5	$	190.2	$	13,780.7

B-35

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Residential Credit Risk Profile Based on Performance Status

Our residential mortgage loan portfolio is monitored based on performance of the loans. Monitoring on a residential mortgage loan increases when the loan is delinquent or earlier if there is an indication of potential impairment. We define non-performing residential mortgage loans as loans 90 days or greater delinquent or on non-accrual status.

The amortized cost of our performing and non-performing residential mortgage loans was as follows:



	December 31, 2019
	First liens		Home equity		Total
	(in millions)
Performing	$	1,074.7	$	8.0	$	1,082.7
Non-performing		2.5		3.0		5.5
Total	$	1,077.2	$	11.0	$	1,088.2

	December 31, 2018
	First liens		Home equity		Total
	(in millions)
Performing	$	890.3	$	10.8	$	901.1
Non-performing		2.9		4.3		7.2
Total	$	893.2	$	15.1	$	908.3

Non-Accrual Mortgage Loans

Commercial and residential mortgage loans are placed on non-accrual status if we have concern regarding the collectability of future payments or if a loan has matured without being paid off or extended. Factors considered may include conversations with the borrower, loss of major tenant, bankruptcy of borrower or major tenant, decreased property cash flow for commercial mortgage loans or number of days past due and other circumstances for residential mortgage loans. Based on an assessment as to the collectability of the principal, a determination is made to apply any payments received either against the principal, against the valuation allowance or according to the contractual terms of the loan. When a loan is placed on non-accrual status, the accrued unpaid interest receivable is reversed against interest income. Accrual of interest resumes after factors resulting in doubts about collectability have improved.

The amortized cost of mortgage loans on non-accrual status was as follows:



		December 31, 2019		December 31, 2018
		(in millions)
Residential:
	First liens	$	2.5	$	2.9
	Home equity		3.0		4.3
Total		$	5.5	$	7.2

B-36

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

The aging of our mortgage loans, based on amortized cost, was as follows:



	December 31, 2019
					90 days or
	30-59 days		60-89 days		more past		Total past
	past due		past due		due		due		Current		Total loans
	(in millions)
Commercial-brick and mortar	$	—	$	—	$	—	$	—	$	14,597.7	$	14,597.7
Commercial-CTL		—		—		—		—		160.7		160.7
Residential-first liens		8.5		0.3		2.1		10.9		1,066.3		1,077.2
Residential-home equity		0.8		—		0.3		1.1		9.9		11.0
Total	$	9.3	$	0.3	$	2.4	$	12.0	$	15,834.6	$	15,846.6

	December 31, 2018
					90 days or
	30-59 days		60-89 days		more past		Total past
	past due		past due		due		due		Current		Total loans
	(in millions)
Commercial-brick and mortar	$	—	$	—	$	—	$	—	$	13,590.5	$	13,590.5
Commercial-CTL		—		—		—		—		190.2		190.2
Residential-first liens		3.7		0.8		2.3		6.8		886.4		893.2
Residential-home equity		0.8		0.6		0.4		1.8		13.3		15.1
Total	$	4.5	$	1.4	$	2.7	$	8.6	$	14,680.4	$	14,689.0

We did not have any mortgage loans that were 90 days or more past due and still accruing interest as of either December 31, 2019 or December 31, 2018.

Mortgage Loan Valuation Allowance

We establish a valuation allowance to provide for the risk of credit losses inherent in our portfolio. The valuation allowance includes loan specific reserves for loans that are deemed to be impaired as well as reserves for pools of loans with similar risk characteristics where a property risk or market specific risk has not been identified but for which we anticipate a loss may occur. Mortgage loans on real estate are considered impaired when, based on current information and events, it is probable we will be unable to collect all amounts due according to contractual terms of the loan agreement. When we determine a loan is impaired, a valuation allowance is established equal to the difference between the carrying amount of the mortgage loan and the estimated value reduced by the cost to sell. Estimated value is based on either the present value of the expected future cash flows discounted at the loan's effective interest rate, the loan's observable market price or fair value of the collateral. Subsequent changes in the estimated value are reflected in the valuation allowance. Amounts on loans deemed to be uncollectible are charged off and removed from the valuation allowance. The change in the valuation allowance provision is included in net realized capital gains (losses) on our consolidated statements of operations.

B-37

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

The valuation allowance is maintained at a level believed adequate by management to absorb estimated probable credit losses. Management's periodic evaluation and assessment of the valuation allowance adequacy is based on known and inherent risks in the portfolio, adverse situations that may affect a borrower's ability to repay, the estimated value of the underlying collateral, composition of the loan portfolio, portfolio delinquency information, underwriting standards, peer group information, current economic conditions, loss experience and other relevant factors. The evaluation of our impaired loan component is subjective, as it requires the estimation of timing and amount of future cash flows expected to be received on impaired loans.

We review our commercial mortgage loan portfolio and analyze the need for a valuation allowance for any loan that is delinquent for 60 days or more, in process of foreclosure, restructured, on the internal “watch list” or that currently has a valuation allowance. In addition to establishing allowance levels for specifically identified impaired commercial mortgage loans, management determines an allowance for all other loans in the portfolio for which historical experience and current economic conditions indicate certain losses exist. These loans are segregated by risk rating level with an estimated loss ratio applied against each risk rating level. The loss ratio is generally based upon historical loss experience for each risk rating level as adjusted for certain current environmental factors management believes to be relevant.

For our residential mortgage loan portfolio, we separate the loans into several homogeneous pools, each of which consist of loans of a similar nature including but not limited to loans similar in collateral, term and structure and loan purpose or type. We evaluate loan pools based on aggregated risk ratings, estimated specific loss potential in the different classes of credits, and historical loss experience by pool type. We adjust these quantitative factors for qualitative factors of present conditions. Qualitative factors include items such as economic and business conditions, changes in the portfolio, value of underlying collateral and concentrations. Residential mortgage loan pools exclude loans that have been restructured or impaired, as those loans are evaluated individually.

B-38

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

A rollforward of our valuation allowance and ending balances of the allowance and loan balance by basis of impairment method was as follows:



		Commercial		Residential		Total
		(in millions)
For the year ended December 31, 2019
Beginning balance		$	24.3	$	2.5	$	26.8
	Provision		0.2		(3.4)		(3.2)
	Charge-offs		—		(0.5)		(0.5)
	Recoveries		—		3.2		3.2
Ending balance		$	24.5	$	1.8	$	26.3
Allowance ending balance by basis of impairment method:
	Individually evaluated for impairment	$	—	$	1.2	$	1.2
	Collectively evaluated for impairment		24.5		0.6		25.1
Allowance ending balance		$	24.5	$	1.8	$	26.3
Loan balance by basis of impairment method:
	Individually evaluated for impairment	$	—	$	6.3	$	6.3
	Collectively evaluated for impairment		14,758.4		1,081.9		15,840.3
Loan ending balance		$	14,758.4	$	1,088.2	$	15,846.6

For the year ended December 31, 2018
Beginning balance		$	25.8	$	6.4	$	32.2
	Provision		(1.5)		(4.6)		(6.1)
	Charge-offs		—		(2.4)		(2.4)
	Recoveries		—		3.1		3.1
Ending balance		$	24.3	$	2.5	$	26.8
Allowance ending balance by basis of impairment method:
	Individually evaluated for impairment	$	—	$	1.4	$	1.4
	Collectively evaluated for impairment		24.3		1.1		25.4
Allowance ending balance		$	24.3	$	2.5	$	26.8
Loan balance by basis of impairment method:
	Individually evaluated for impairment	$	—	$	9.1	$	9.1
	Collectively evaluated for impairment		13,780.7		899.2		14,679.9
Loan ending balance		$	13,780.7	$	908.3	$	14,689.0

For the year ended December 31, 2017
Beginning balance		$	27.4	$	17.1	$	44.5
	Provision		(1.6)		(10.5)		(12.1)
	Charge-offs		—		(5.0)		(5.0)
	Recoveries		—		4.8		4.8
Ending balance		$	25.8	$	6.4	$	32.2
Allowance ending balance by basis of impairment method:
	Individually evaluated for impairment	$	—	$	4.5	$	4.5
	Collectively evaluated for impairment		25.8		1.9		27.7
Allowance ending balance		$	25.8	$	6.4	$	32.2
Loan balance by basis of impairment method:
	Individually evaluated for impairment	$	—	$	12.3	$	12.3
	Collectively evaluated for impairment		12,755.2		716.8		13,472.0
Loan ending balance		$	12,755.2	$	729.1	$	13,484.3

B-39

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Impaired Mortgage Loans

Impaired mortgage loans are loans with a related specific valuation allowance, loans whose carrying amount has been reduced to the expected collectible amount because the impairment has been considered other than temporary or a loan modification has been classified as a troubled debt restructuring (“TDR”). Based on an assessment as to the collectability of the principal, a determination is made to apply any payments received either against the principal, against the valuation allowance or according to the contractual terms of the loan. Our recorded investment in and unpaid principal balance of impaired loans along with the related loan specific allowance for losses, if any, and the average recorded investment and interest income recognized during the time the loans were impaired were as follows:



		December 31, 2019
				Unpaid
		Recorded		principal		Related
		investment		balance		allowance
		(in millions)
With no related allowance recorded:
	Residential-first liens	$	0.8	$	—	$	—
With an allowance recorded:
	Residential-first liens		1.7		—		—
	Residential-home equity		3.8		5.0		1.2
Total:
	Residential	$	6.3	$	5.0	$	1.2

		December 31, 2018
				Unpaid
		Recorded		principal		Related
		investment		balance		allowance
		(in millions)
With no related allowance recorded:
	Residential-first liens	$	1.6	$	1.6	$	—
With an allowance recorded:
	Residential-first liens		2.1		2.1		—
	Residential-home equity		5.4		6.5		1.4
Total:
	Residential	$	9.1	$	10.2	$	1.4

B-40

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



		Average
		recorded		Interest income
		investment		recognized
		(in millions)
For the year ended December 31, 2019
With no related allowance recorded:
	Residential-first liens	$	1.2	$	—
With an allowance recorded:
	Residential-first liens		1.9		—
	Residential-home equity		4.6		0.1
Total:
	Residential	$	7.7	$	0.1

For the year ended December 31, 2018
With no related allowance recorded:
	Residential-first liens	$	1.3	$	—
With an allowance recorded:
	Residential-first liens		2.9		0.1
	Residential-home equity		6.5		0.2
Total:
	Residential	$	10.7	$	0.3

For the year ended December 31, 2017
With no related allowance recorded:
	Residential-first liens	$	1.2	$	—
With an allowance recorded:
	Residential-first liens		4.2		0.2
	Residential-home equity		10.3		0.2
Total:
	Residential	$	15.7	$	0.4

Mortgage Loan Modifications

Our commercial and residential mortgage loan portfolios can include loans that have been modified. We assess loan modifications on a case-by-case basis to evaluate whether a TDR has occurred. When we have commercial mortgage loan TDRs, they are modified to delay or reduce principal payments and to reduce or delay interest payments. The commercial mortgage loan modifications result in delayed cash receipts, a decrease in interest income and loan rates that are considered below market. When we have residential mortgage loan TDRs, they include modifications of interest-only payment periods, delays in principal balloon payments and interest rate reductions. Residential mortgage loan modifications result in delayed or decreased cash receipts and a decrease in interest income.

When we have commercial mortgage loan TDRs, they are reserved for in the mortgage loan valuation allowance at the estimated fair value of the underlying collateral reduced by the cost to sell.

When we have residential mortgage loan TDRs, they are specifically reserved for in the mortgage loan valuation allowance if losses result from the modification. Residential mortgage loans that have defaulted or have been discharged through bankruptcy are reduced to the expected collectible amount.

We did not have any significant loans that were modified and met the criteria of a TDR in 2019, 2018 and 2017.

B-41

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Real Estate

Depreciation expense on invested real estate was $60.3 million, $54.1 million and $55.9 million in 2019, 2018 and 2017, respectively. Accumulated depreciation was $525.9 million and $487.0 million as of December 31, 2019 and 2018, respectively.

Real Estate Transactions

In September 2017, we entered an exchange agreement to exit certain real estate joint ventures. The transaction resulted in us transferring our interest in certain real estate properties in exchange for our joint venture partner’s interest in certain other real estate properties. In a subsequent transaction we sold certain of these real estate properties to a third party. Both transactions closed in September 2017, and resulted in a net pre-tax realized capital gain of $690.9 million (net after-tax realized capital gain of $410.8 million).

Other Investments

Other investments include interests in unconsolidated entities, joint ventures and partnerships and properties owned jointly with venture partners and operated by the partners. Such investments are generally accounted for using the equity method. In applying the equity method, we record our share of income or loss reported by the equity investees in net investment income. Summarized financial information for these unconsolidated entities was as follows:



			December 31,
			2019		2018
			(in millions)
Total assets			$	73,594.5	$	61,696.6
Total liabilities				11,862.4		11,589.8
Total equity			$	61,732.1	$	50,106.8
Net investment in unconsolidated entities			$	756.3	$	744.6

	For the year ended December 31,
	2019		2018		2017
	(in millions)
Total revenues	$	10,548.6	$	8,968.6	$	6,561.9
Net income		6,991.8		5,491.6		3,319.6
Our share of net income of unconsolidated entities		55.3		57.7		83.3

In addition, other investments include $734.1 million and $502.6 million of cash surrender value of company owned life insurance as of December 31, 2019 and 2018, respectively.

Derivative assets are carried at fair value and reported as a component of other investments. See Note 7, Derivative Financial Instruments, for further details.

Securities Posted as Collateral

As of December 31, 2019 and 2018, we posted $4,062.0 million and $3,761.3 million, respectively, in commercial mortgage loans and residential first lien mortgages to satisfy collateral requirements associated with our obligation under funding agreements with Federal Home Loan Bank of Des Moines (“FHLB Des Moines”). In addition, as of December 31, 2019 and 2018, we posted $2,633.2 million and $2,383.0 million, respectively, in fixed maturities, available-for-sale and trading securities to satisfy collateral requirements primarily associated with a reinsurance arrangement, our derivative credit support annex (collateral) agreements, Futures Commission Merchant (“FCM”) agreements, a lending arrangement and our obligation under funding agreements with FHLB Des Moines. Since we did not relinquish ownership rights on these instruments, they are reported as mortgage loans, fixed maturities, available-for-sale and fixed maturities, trading, respectively, on our consolidated statements of financial position. Of the securities posted as collateral, as of December 31, 2019 and 2018, $163.9 million and $124.2 million, respectively, could be sold or repledged by the secured party.

B-42

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Balance Sheet Offsetting

Financial assets subject to master netting agreements or similar agreements were as follows:



			Gross amounts not offset in the
			consolidated statements
			of financial position
	Gross amount
	of recognized		Financial		Collateral
	assets (1)		instruments (2)		received		Net amount
	(in millions)
December 31, 2019
Derivative assets	$	279.6	$	(80.2)	$	(197.6)	$	1.8
December 31, 2018
Derivative assets	$	172.6	$	(63.7)	$	(101.6)	$	7.3


(1)	The gross amount of recognized derivative assets is reported with other investments on the consolidated statements of financial position. The gross amounts of derivative assets are not netted against offsetting liabilities for presentation on the consolidated statements of financial position.


(2)	Represents amount of offsetting derivative liabilities that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative assets for presentation on the consolidated statements of financial position.

Financial liabilities subject to master netting agreements or similar agreements were as follows:



			Gross amounts not offset in the
			consolidated statements
			of financial position
	Gross amount
	of recognized		Financial		Collateral
	liabilities (1)		instruments (2)		pledged		Net amount
	(in millions)
December 31, 2019
Derivative liabilities	$	147.0	$	(80.2)	$	(57.5)	$	9.3
December 31, 2018
Derivative liabilities	$	104.4	$	(63.7)	$	(34.3)	$	6.4

(1)

The gross amount of recognized derivative liabilities is reported with other liabilities on the consolidated statements of financial position. The above excludes $249.9 million and $94.6 million of derivative liabilities as of December 31, 2019 and December 31, 2018, respectively, which are primarily embedded derivatives that are not subject to master netting agreements or similar agreements. The gross amounts of derivative liabilities are not netted against offsetting assets for presentation on the consolidated statements of financial position.


(2)	Represents amount of offsetting derivative assets that are subject to an enforceable master netting agreement or similar agreement that are not netted against the gross derivative liabilities for presentation on the consolidated statements of financial position.

The financial instruments that are subject to master netting agreements or similar agreements include right of setoff provisions. Derivative instruments include provisions to setoff positions covered under the agreements with the same counterparties and provisions to setoff positions outside of the agreements with the same counterparties in the event of default by one of the parties. Derivative instruments also include collateral or variation margin provisions, which are generally settled daily with each counterparty. See Note 7, Derivative Financial Instruments, for further details.

B-43

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Repurchase and reverse repurchase agreements include provisions to setoff other repurchase and reverse repurchase balances with the same counterparty. Repurchase and reverse repurchase agreements also include collateral provisions with the counterparties. For reverse repurchase agreements we require the counterparties to pledge collateral with a value greater than the amount of cash transferred. We have the right but do not sell or repledge collateral received in reverse repurchase agreements. Repurchase agreements are structured as secured borrowings for all counterparties. We pledge fixed maturities available-for-sale, which the counterparties have the right to sell or repledge. Interest incurred on repurchase agreements is reported as part of operating expenses on the consolidated statements of operations. Net proceeds related to repurchase agreements are reported as a component of financing activities on the consolidated statements of cash flows. We did not have any outstanding repurchase or reverse repurchase agreements as of December 31, 2019 and December 31, 2018.

7. Derivative Financial Instruments

Derivatives are generally used to hedge or reduce exposure to market risks associated with assets held or expected to be purchased or sold and liabilities incurred or expected to be incurred. Derivatives are used to change the characteristics of our asset/liability mix consistent with our risk management activities. Derivatives are also used in asset replication strategies.

Types of Derivative Instruments

Interest Rate Contracts

Interest rate risk is the risk we will incur economic losses due to adverse changes in interest rates. Sources of interest rate risk include the difference between the maturity and interest rate changes of assets with the liabilities they support, timing differences between the pricing of liabilities and the purchase or procurement of assets and changing cash flow profiles from original projections due to prepayment options embedded within asset and liability contracts. We use various derivatives to manage our exposure to fluctuations in interest rates.

Interest rate swaps are contracts in which we agree with other parties to exchange, at specified intervals, the difference between fixed rate and/or floating rate interest amounts based upon designated market rates or rate indices and an agreed upon notional principal amount. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by any party. Cash is paid or received based on the terms of the swap. We use interest rate swaps primarily to more closely match the interest rate characteristics of assets and liabilities and to mitigate the risks arising from timing mismatches between assets and liabilities (including duration mismatches). We also use interest rate swaps to hedge against changes in the value of assets we anticipate acquiring and other anticipated transactions and commitments. Interest rate swaps are used to hedge against changes in the value of the guaranteed minimum withdrawal benefit (“GMWB”) liability. The GMWB rider on our variable annuity products provides for guaranteed minimum withdrawal benefits regardless of the actual performance of various equity and/or fixed income funds available with the product.

Interest rate options, including interest rate caps and interest rate floors, which can be combined to form interest rate collars, are contracts that entitle the purchaser to pay or receive the amounts, if any, by which a specified market rate exceeds a cap strike interest rate, or falls below a floor strike interest rate, respectively, at specified dates. We use interest rate options to manage prepayment risks in our assets and minimum guaranteed interest rates and lapse risks in our liabilities.

A swaption is an option to enter into an interest rate swap at a future date. We purchase swaptions to hedge interest rate exposure for certain assets and liabilities. Swaptions not only hedge against the downside risk, but also allow us to take advantage of any upside benefits.

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

Foreign Exchange Contracts

Foreign currency risk is the risk we will incur economic losses due to adverse fluctuations in foreign currency exchange rates. This risk arises from foreign currency-denominated funding agreements issued to nonqualified institutional investors in the international market and foreign currency-denominated fixed maturities we invest in. We use currency swaps to manage our exposure to fluctuations in foreign currency exchange rates.

B-44

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Currency swaps are contracts in which we agree with other parties to exchange, at specified intervals, a series of principal and interest payments in one currency for that of another currency. Generally, the principal amount of each currency is exchanged at the beginning and termination of the currency swap by each party. The interest payments are primarily fixed-to-fixed rate; however, they may also be fixed-to-floating rate or floating-to-fixed rate. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty for payments made in the same currency at each due date. We use currency swaps to reduce market risks from changes in currency exchange rates with respect to investments or liabilities denominated in foreign currencies that we either hold or intend to acquire or sell.

Equity Contracts

Equity risk is the risk that we will incur economic losses due to adverse fluctuations in common stock prices. We use various derivatives to manage our exposure to equity risk, which arises from products in which the interest we credit is tied to an external equity index as well as products subject to minimum contractual guarantees.

We purchase equity call spreads (“option collars”) to hedge the equity participation rates promised to contractholders in conjunction with our fixed deferred annuity and universal life products that credit interest based on changes in an external equity index. We use exchange-traded futures and equity put options to hedge against changes in the value of the GMWB liability related to the GMWB rider on our variable annuity product. The premium associated with certain options is paid quarterly over the life of the option contract.

Credit Contracts

Credit risk relates to the uncertainty associated with the continued ability of a given obligor to make timely payments of principal and interest. We use credit default swaps to enhance the return on our investment portfolio by providing comparable exposure to fixed income securities that might not be available in the primary market. They are also used to hedge credit exposures in our investment portfolio. Credit derivatives are used to sell or buy credit protection on an identified name or names on an unfunded or synthetic basis in return for receiving or paying a quarterly premium. The premium generally corresponds to a referenced name's credit spread at the time the agreement is executed. In cases where we sell protection, we also buy a quality cash bond to match against the credit default swap, thereby entering into a synthetic transaction replicating a cash security. When selling protection, if there is an event of default by the referenced name, as defined by the agreement, we are obligated to pay the counterparty the referenced amount of the contract and receive in return the referenced security in a principal amount equal to the notional value of the credit default swap.

Other Contracts

Embedded Derivatives. We purchase or issue certain financial instruments or products that contain a derivative instrument that is embedded in the financial instrument or product. When it is determined that the embedded derivative possesses economic characteristics that are not clearly or closely related to the economic characteristics of the host contract and a separate instrument with the same terms would qualify as a derivative instrument, the embedded derivative is bifurcated from the host instrument for measurement purposes. The embedded derivative, which is reported with the host instrument in the consolidated statements of financial position, is carried at fair value.

We offer group annuity contracts that have guaranteed separate accounts as an investment option.

We have structured investment relationships with trusts we have determined to be VIEs, which are consolidated in our financial statements. The notes issued by these trusts include obligations to deliver an underlying security to residual interest holders and the obligations contain an embedded derivative of the forecasted transaction to deliver the underlying security.

We have fixed deferred annuities and universal life products that credit interest based on changes in an external equity index. We also have certain variable annuity products with a GMWB rider, which allows the customer to make withdrawals of a specified annual amount, either for a fixed number of years or for the lifetime of the customer, even if the account value is fully exhausted. Declines in the equity markets may increase our exposure to benefits under contracts with the GMWB. We economically hedge the exposure in these contracts, as previously explained.

B-45

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Exposure

Our risk of loss is typically limited to the fair value of our derivative instruments and not to the notional or contractual amounts of these derivatives. We are also exposed to credit losses in the event of nonperformance of the counterparties. Our current credit exposure is limited to the value of derivatives that have become favorable to us. This credit risk is minimized by purchasing such agreements from financial institutions with high credit ratings and by establishing and monitoring exposure limits. We also utilize various credit enhancements, including collateral and credit triggers to reduce the credit exposure to our derivative instruments.

Derivatives may be exchange-traded or they may be privately negotiated contracts, which are usually referred to as over-the-counter (“OTC”) derivatives. Certain of our OTC derivatives are cleared and settled through central clearing counterparties (“OTC cleared”), while others are bilateral contracts between two counterparties (“bilateral OTC”). Our derivative transactions are generally documented under International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements. Management believes that such agreements provide for legally enforceable set-off and close-out netting of exposures to specific counterparties. Under such agreements, in connection with an early termination of a transaction, we are permitted to set off our receivable from a counterparty against our payables to the same counterparty arising out of all included transactions. For reporting purposes, we do not offset fair value amounts of bilateral OTC derivatives for the right to reclaim cash collateral or the obligation to return cash collateral against fair value amounts recognized for derivative instruments executed with the same counterparties under master netting agreements. OTC cleared derivatives have variation margin that is legally characterized as settlement of the derivative exposure, which reduces their fair value in the consolidated statements of financial position.

We posted $148.9 million and $88.7 million in cash and securities under collateral arrangements as of December 31, 2019 and December 31, 2018, respectively, to satisfy collateral and initial margin requirements associated with our derivative credit support agreements and FCM agreements.

Certain of our derivative instruments contain provisions that require us to maintain an investment grade rating from each of the major credit rating agencies on our debt. If the ratings on our debt were to fall below investment grade, it would be in violation of these provisions and the counterparties to the derivative instruments could request immediate payment or demand immediate and ongoing full overnight collateralization on derivative instruments in net liability positions. The aggregate fair value, inclusive of accrued interest, of all derivative instruments with credit-risk-related contingent features that were in a liability position without regard to netting under derivative credit support annex agreements as of December 31, 2019 and December 31, 2018, was $151.1 million and $108.7 million, respectively. Cleared derivatives have contingent features that require us to post excess margin as required by the FCM. The terms surrounding excess margin vary by FCM agreement. With respect to derivatives containing collateral triggers, we posted collateral and initial margin of $148.9 million and $88.7 million as of December 31, 2019 and December 31, 2018, respectively, in the normal course of business, which reflects netting under derivative agreements. If the credit-risk-related contingent features underlying these agreements were triggered on December 31, 2019, we would be required to post an additional $42.5 million of collateral to our counterparties.

As of December 31, 2019 and December 31, 2018, we had received $156.8 million and $70.1 million, respectively, of cash collateral associated with our derivative credit support annex agreements and FCM agreements, for which we recorded a corresponding liability reflecting our obligation to return the collateral.

B-46

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Notional amounts are used to express the extent of our involvement in derivative transactions and represent a standard measurement of the volume of our derivative activity. Notional amounts represent those amounts used to calculate contractual flows to be exchanged and are not paid or received, except for contracts such as currency swaps. Credit exposure represents the gross amount owed to us under derivative contracts as of the valuation date. The notional amounts and credit exposure of our derivative financial instruments by type were as follows:



		December 31, 2019		December 31, 2018
		(in millions)
Notional amounts of derivative instruments
Interest rate contracts:
	Interest rate swaps	$	35,173.6	$	34,393.7
	Interest rate options		1,416.9		1,126.9
	Interest rate futures		142.5		260.0
	Swaptions		62.0		—
Foreign exchange contracts:
	Currency swaps		784.0		697.7
Equity contracts:
	Equity options		1,672.8		1,522.5
	Equity futures		149.5		491.7
Credit contracts:
	Credit default swaps		165.0		420.0
Other contracts:
	Embedded derivatives		8,869.5		8,793.9
Total notional amounts at end of period		$	48,435.8	$	47,706.4

Credit exposure of derivative instruments
Interest rate contracts:
	Interest rate swaps	$	181.9	$	95.4
	Interest rate options		28.3		16.3
Foreign exchange contracts:
	Currency swaps		45.2		54.4
Equity contracts:
	Equity options		30.5		7.7
Credit contracts:
	Credit default swaps		0.5		2.4
Total gross credit exposure			286.4		176.2
Less: collateral received			208.3		104.6
Net credit exposure		$	78.1	$	71.6

B-47

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

The fair value of our derivative instruments classified as assets and liabilities was as follows:



		Derivative assets (1)				Derivative liabilities (2)
		December 31, 2019		December 31, 2018		December 31, 2019		December 31, 2018
		(in millions)
Derivatives designated as hedging
	instruments
Interest rate contracts		$	—	$	—	$	21.3	$	16.1
Foreign exchange contracts			30.0		37.6		15.2		13.5
Total derivatives designated as hedging
	instruments	$	30.0	$	37.6	$	36.5	$	29.6

Derivatives not designated as hedging
	instruments
Interest rate contracts		$	204.2	$	108.0	$	16.7	$	22.6
Foreign exchange contracts			14.4		17.0		29.5		20.2
Equity contracts			30.5		7.7		63.1		27.6
Credit contracts			0.5		2.3		1.2		4.4
Other contracts			—		—		249.9		94.6
Total derivatives not designated as hedging
	instruments		249.6		135.0		360.4		169.4

Total derivative instruments		$	279.6	$	172.6	$	396.9	$	199.0

(1) The fair value of derivative assets is reported with other investments on the consolidated statements of financial position.

(2) The fair value of derivative liabilities is reported with other liabilities on the consolidated statements of financial position, with the exception of certain embedded derivative liabilities. Embedded derivatives with a net liability fair value of $151.2 million and $5.3 million as of December 31, 2019 and December 31, 2018, respectively, are reported with contractholder funds on the consolidated statements of financial position.

Credit Derivatives Sold

When we sell credit protection, we are exposed to the underlying credit risk similar to purchasing a fixed maturity security instrument. Our credit derivative contracts sold reference a single name or reference security (referred to as “single name credit default swaps”). These instruments are either referenced in an OTC credit derivative transaction or embedded within an investment structure that has been fully consolidated into our financial statements.

These credit derivative transactions are subject to events of default defined within the terms of the contract, which normally consist of bankruptcy, failure to pay, or modified restructuring of the reference entity and/or issue. If a default event occurs for a reference name or security, we are obligated to pay the counterparty an amount equal to the notional amount of the credit derivative transaction. As a result, our maximum future payment is equal to the notional amount of the credit derivative. In certain cases, we also may have purchased credit protection with identical underlyings to certain of our sold protection transactions. As of December 31, 2019 and December 31, 2018, we did not purchase credit protection relating to our sold protection transactions. In certain circumstances, our potential loss could also be reduced by any amount recovered in the default proceedings of the underlying credit name.

B-48

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

The following tables show our credit default swap protection sold by types of contract, types of referenced/underlying asset class and external agency rating for the underlying reference security. The maximum future payments are undiscounted and have not been reduced by the effect of any offsetting transactions, collateral or recourse features described above.



			December 31, 2019
									Weighted
							Maximum		average
			Notional		Fair		future		expected life
			amount		value		payments		(in years)
			(in millions)
Single name credit default swaps
	Corporate debt
		A	$	5.0	$	—	$	5.0		0.5
		BBB		70.0		0.2		70.0		2.6
	Sovereign
		BBB		15.0		0.3		15.0		2.0
Total credit default swap protection sold			$	90.0	$	0.5	$	90.0		2.4



			December 31, 2018
									Weighted
							Maximum		average
			Notional		Fair		future		expected life
			amount		value		payments		(in years)
			(in millions)
Single name credit default swaps
	Corporate debt
		AAA	$	10.0	$	0.1	$	10.0		0.7
		A		15.0		0.1		15.0		1.0
		BBB		190.0		0.4		190.0		1.7
		BB		10.0		—		10.0		0.5
		CCC		15.0		(3.6)		15.0		0.9
	Government/municipalities
		AA		20.0		0.2		20.0		1.0
	Sovereign
		A		10.0		0.1		10.0		0.7
		BBB		55.0		0.4		55.0		1.3
Total credit default swap protection sold			$	325.0	$	(2.3)	$	325.0		1.4

Fair Value and Cash Flow Hedges

Fair Value Hedges

We use fixed-to-floating rate interest rate swaps to more closely align the interest rate characteristics of certain assets and have used them to align the interest rate characteristics of certain liabilities. In general, these swaps are used in asset and liability management to modify duration, which is a measure of sensitivity to interest rate changes.

The net interest effect of interest rate swap transactions for derivatives in fair value hedges is recorded as an adjustment to income or expense of the underlying hedged item in our consolidated statements of operations.

B-49

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

The following amounts were recorded on the consolidated statements of financial position related to cumulative basis adjustments for fair value hedges. The amortized cost includes the amortized cost basis and the fair value hedging basis adjustment.



						Cumulative amount of fair
						value hedging basis adjustment
Line item in the consolidated statements						included in the amortized cost
of financial position in which the		Amortized cost of hedged item				of the hedged item
hedged item is included		December 31, 2019		December 31, 2018		December 31, 2019		December 31, 2018
		(in millions)
Fixed maturities, available-for-sale:
	Active hedging relationships	$	142.0	$	137.0	$	18.1	$	12.4
	Discontinued hedging relationships		159.3		298.9		7.7		13.3
Total fixed maturities, available-for-sale in
	active or discontinued hedging relationships	$	301.3	$	435.9	$	25.8	$	25.7

Cash Flow Hedges

We utilized floating-to-fixed rate interest rate swaps to eliminate the variability in cash flows of recognized financial assets and liabilities and forecasted transactions.

We enter into currency exchange swap agreements to convert both principal and interest payments of certain foreign denominated assets and liabilities into U.S. dollar denominated fixed-rate instruments to eliminate the exposure to future currency volatility on those items.

The net interest effect of interest rate swap and currency swap transactions for derivatives in cash flow hedges is recorded as an adjustment to income or expense of the underlying hedged item in our consolidated statements of operations.

The maximum length of time we are hedging our exposure to the variability in future cash flows for forecasted transactions, excluding those related to the payments of variable interest on existing financial assets and liabilities, is 0.5 years. As of December 31, 2019, we had $0.0 million of net gains reported in AOCI on the consolidated statements of financial position related to active hedges of forecasted transactions. If a hedged forecasted transaction is no longer probable of occurring, cash flow hedge accounting is discontinued. If it is probable that the hedged forecasted transaction will not occur, the deferred gain or loss is immediately reclassified from AOCI into net income.

The following table shows the effect of derivatives in cash flow hedging relationships on the consolidated statements of financial position.



		Amount of gain (loss) recognized in AOCI on derivatives
Derivatives in cash flow		for the year ended December 31,
hedging relationships	Related hedged item	2019		2018		2017
		(in millions)
Interest rate contracts	Fixed maturities, available-for-sale	$	(9.9)	$	36.7	$	(51.7)
Foreign exchange contracts	Fixed maturities, available-for-sale		(9.4)		20.8		(68.5)
Foreign exchange contracts	Investment contracts		—		(0.1)		—
Total		$	(19.3)	$	57.4	$	(120.2)

We expect to reclassify net gains of $24.3 million from AOCI into net income in the next 12 months, which includes both net deferred gains on discontinued hedges and net losses on periodic settlements of active hedges. Actual amounts may vary from this amount as a result of market conditions.

B-50

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations

The following tables show the effect of derivatives in fair value and cash flow hedging relationships and the related hedged items on the consolidated statements of operations.



			For the year ended December 31, 2019
							Benefits,
			Net investment		Net realized		claims and
			income related		capital gains		settlement
			to hedges		(losses) related to		expenses
			of fixed		hedges of fixed		related to
			maturities,		maturities,		hedges of
			available-		available-		investment
			for-sale		for-sale		contracts
			(in millions)
Total amounts of consolidated statement of operations line items in
	which the effects of fair value and cash flow hedges are reported		$	3,293.9	$	(112.2)	$	9,167.5


Losses on fair value hedging relationships:
Interest rate contracts:
	Gain recognized on hedged item		$	5.7	$	—	$	—
	Loss recognized on derivatives			(6.0)		—		—
	Amortization of hedged item basis adjustments			(4.2)		—		—
	Amounts related to periodic settlements on derivatives			(3.4)		—		—
Total loss recognized for fair value hedging relationships			$	(7.9)	$	—	$	—

Gains (losses) on cash flow hedging relationships:
Interest rate contracts:
	Gain (loss) reclassified from AOCI on derivatives		$	19.8	$	(0.6)	$	(0.1)
	Gain reclassified from AOCI into net income as a result that a
		forecasted transaction is no longer probable of occurring		—		0.1		—

Foreign exchange contracts:
	Gain reclassified from AOCI on derivatives			—		9.5		—
	Amounts related to periodic settlements on derivatives			7.4		—		—
Total gain (loss) recognized for cash flow hedging relationships			$	27.2	$	9.0	$	(0.1)

B-51

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



			For the year ended December 31, 2018
							Benefits,
			Net investment		Net realized		claims and
			income related		capital gains		settlement
			to hedges		(losses) related to		expenses
			of fixed		hedges of fixed		related to
			maturities,		maturities,		hedges of
			available-		available-		investment
			for-sale		for-sale		contracts
			(in millions)
Total amounts of consolidated statement of operations line items in
	which the effects of fair value and cash flow hedges are reported		$	3,022.9	$	92.7	$	7,542.0


Losses on fair value hedging relationships:
Interest rate contracts:
	Loss recognized on hedged item		$	—	$	(6.6)	$	—
	Gain recognized on derivatives			—		6.2		—
	Amortization of hedged item basis adjustments			(6.7)		—		—
	Amounts related to periodic settlements on derivatives			(5.9)		—		—
Total loss recognized for fair value hedging relationships			$	(12.6)	$	(0.4)	$	—

Gains (losses) on cash flow hedging relationships:
Interest rate contracts:
	Gain (loss) reclassified from AOCI on derivatives		$	20.9	$	17.0	$	(0.1)
	Gain reclassified from AOCI as a result that a forecasted
		transaction is no longer probable of occurring		—		0.3		—

Foreign exchange contracts:
	Gain reclassified from AOCI on derivatives			—		12.7		—
	Amounts related to periodic settlements on derivatives			6.0		—		(0.1)
Total gain (loss) recognized for cash flow hedging relationships			$	26.9	$	30.0	$	(0.2)

B-52

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



			For the year ended December 31, 2017
			Net
			investment								Benefits,
			income		Net realized capital gains (losses)						claims and
			related		Related to						settlement
			to hedges		hedges						expenses
			of fixed		fixed		Related to				related to
			maturities,		maturities,		hedges of				hedges of
			available-		available-		investment				investment
			for-sale		for-sale		contracts		Total		contracts
			(in millions)
Total amounts of consolidated statement of operations line
	items in which the effects of fair value and cash flow
	hedges are reported		$	2,833.7					$	372.0	$	7,317.9


Gains (losses) on fair value hedging relationships:
Interest rate contracts:
	Gain (loss) recognized on hedged item		$	—	$	(5.2)	$	0.6	$	(4.6)	$	—
	Gain (loss) recognized on derivatives			—		4.7		(0.6)		4.1		—
	Amortization of hedged item basis adjustments			(11.6)		—		—		—		(0.5)
	Amounts related to periodic settlements on derivatives			(10.3)		—		—		—		0.9
Total gain (loss) recognized for fair value hedging
	relationships		$	(21.9)	$	(0.5)	$	—	$	(0.5)	$	0.4


Gains (losses) on cash flow hedging relationships:
Interest rate contracts:
	Gain (loss) reclassified from AOCI on derivatives		$	21.0	$	(0.7)	$	—	$	(0.7)	$	—
	Gain reclassified from AOCI as a result that a forecasted
		transaction is no longer probable of occurring		—		0.2		—		0.2		—

Foreign exchange contracts:
	Gain reclassified from AOCI on derivatives			—		21.9		—		21.9		—
	Amounts related to periodic settlements on derivatives			7.1		—		—		—		(1.2)
Total gain (loss) recognized for cash flow hedging
	relationships		$	28.1	$	21.4	$	—	$	21.4	$	(1.2)

Derivatives Not Designated as Hedging Instruments

Our use of futures, certain swaptions and swaps, option collars and options are effective from an economic standpoint, but they have not been designated as hedges for financial reporting purposes. As such, periodic changes in the market value of these instruments, which includes mark-to-market gains and losses as well as periodic and final settlements, primarily flow directly into net realized capital gains (losses) on the consolidated statements of operations.

B-53

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

The following table shows the effect of derivatives not designated as hedging instruments, including fair value changes of embedded derivatives that have been bifurcated from the host contract, on the consolidated statements of operations.



	Amount of gain (loss) recognized in
	net income on derivatives for the
	year ended December 31,
Derivatives not designated as hedging instruments	2019		2018		2017
	(in millions)
Interest rate contracts	$	218.0	$	(27.6)	$	(26.9)
Foreign exchange contracts		(1.3)		4.1		18.1
Equity contracts		(132.9)		(31.0)		(181.3)
Credit contracts		(3.6)		(1.6)		(15.9)
Other contracts		(145.3)		107.9		6.8
Total	$	(65.1)	$	51.8	$	(199.2)

8. Closed Block

In connection with the 1998 MIHC formation, we formed a Closed Block to provide reasonable assurance to policyholders included therein that, after the formation of the MIHC, assets would be available to maintain dividends in aggregate in accordance with the 1997 policy dividend scales, if the experience underlying such scales continued. Our assets were allocated to the Closed Block in an amount that produces cash flows which, together with anticipated revenue from policies and contracts included in the Closed Block, were expected to be sufficient to support the Closed Block policies. This includes, but is not limited to, provisions for payment of claims, certain expenses, charges and taxes, and to provide for continuation of policy and contract dividends in aggregate in accordance with the 1997 dividend scales, if the experience underlying such scales continues, and to allow for appropriate adjustments in such scales, if such experience changes. Due to adjustable life policies being included in the Closed Block, the Closed Block is charged with amounts necessary to properly fund for certain adjustments, such as face amount and premium increases, that are made to these policies after the Closed Block inception date. These amounts are referred to as Funding Adjustment Charges and are treated as capital transfers from the Closed Block.

Assets allocated to the Closed Block inure solely to the benefit of the holders of policies included in the Closed Block. Closed Block assets and liabilities are carried on the same basis as other similar assets and liabilities. We will continue to pay guaranteed benefits under all policies, including the policies within the Closed Block, in accordance with their terms. If the assets allocated to the Closed Block, the investment cash flows from those assets and the revenues from the policies included in the Closed Block, including investment income thereon, prove to be insufficient to pay the benefits guaranteed under the policies included in the Closed Block, we will be required to make such payments from our general funds. No additional policies were added to the Closed Block, nor was the Closed Block affected in any other way, as a result of the demutualization.

A policyholder dividend obligation (“PDO”) is required to be established for higher than expected earnings in the Closed Block that will need to be paid as dividends unless future performance of the Closed Block is less favorable than originally expected. A model of the Closed Block was established to produce the pattern of expected earnings, assets and liabilities in the Closed Block. These projections are utilized to determine ratios that will allow us to compare actual cumulative earnings to expected cumulative earnings and determine the amount of the PDO. As of December 31, 2019 and 2018, the PDO was $202.7 million and $36.6 million, respectively.

B-54

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Closed Block liabilities and assets designated to the Closed Block were as follows:



		December 31, 2019		December 31, 2018
		(in millions)
Closed Block liabilities
Future policy benefits and claims		$	3,563.1	$	3,732.5
Other policyholder funds			6.6		6.5
Policyholder dividends payable			199.1		211.3
Policyholder dividends obligation			202.7		36.6
Other liabilities			7.8		9.5
	Total Closed Block liabilities		3,979.3		3,996.4

Assets designated to the Closed Block
Fixed maturities, available-for-sale			2,269.6		2,176.4
Fixed maturities, trading			2.6		2.5
Equity securities			1.1		1.0
Mortgage loans			622.8		678.5
Policy loans			486.0		510.5
Other investments			46.4		33.8
	Total investments		3,428.5		3,402.7
Cash and cash equivalents			47.5		42.1
Accrued investment income			38.1		39.5
Premiums due and other receivables			9.7		10.0
Deferred tax asset			29.5		30.5
	Total assets designated to the Closed Block		3,553.3		3,524.8
Excess of Closed Block liabilities over assets designated to the Closed Block			426.0		471.6
Amounts included in accumulated other comprehensive income			0.9		5.2
Maximum future earnings to be recognized from Closed Block assets and
	liabilities	$	426.9	$	476.8

Closed Block revenues and expenses were as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Revenues
Premiums and other considerations		$	227.6	$	244.2	$	275.6
Net investment income			154.4		160.5		169.4
Net realized capital gains (losses)			7.4		(3.4)		(5.8)
	Total revenues		389.4		401.3		439.2

Expenses
Benefits, claims and settlement expenses			204.4		211.5		245.6
Dividends to policyholders			116.3		120.9		122.0
Operating expenses			2.9		3.3		3.5
	Total expenses		323.6		335.7		371.1
Closed Block revenues, net of Closed Block expenses, before income taxes			65.8		65.6		68.1
Income taxes			12.9		11.1		46.0
Closed Block revenues, net of Closed Block expenses and income taxes			52.9		54.5		22.1
Funding adjustments			(3.0)		(0.5)		(4.4)
Closed Block revenues, net of Closed Block expenses, income taxes and
	funding adjustments	$	49.9	$	54.0	$	17.7

B-55

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

The change in maximum future earnings of the Closed Block was as follows:



	For the year ended December 31,
	2019		2018		2017
	(in millions)
Beginning of year	$	476.8	$	532.1	$	549.8
Effects of implementation of accounting changes (1)		—		1.3		—
End of year		426.9		476.8		532.1
Change in maximum future earnings	$	(49.9)	$	(54.0)	$	(17.7)


(1)	Includes the effects of implementation of accounting changes related to equity investments and the reclassification of certain tax effects.

We charge the Closed Block with U.S. federal income taxes, payroll taxes, state and local premium taxes and other state or local taxes, licenses and fees as provided in the plan of reorganization.

9. Deferred Acquisition Costs

Acquisition costs deferred and amortized were as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Balance at beginning of year		$	3,680.4	$	3,331.7	$	3,184.2
Costs deferred during the year			473.0		414.2		397.8
Amortized to expense during the year (1)			(345.8)		(252.2)		(212.1)
Adjustment related to unrealized (gains) losses on available-for-sale
	securities and derivative instruments		(297.7)		186.7		(38.2)
Balance at end of year		$	3,509.9	$	3,680.4	$	3,331.7

(1) Includes adjustments for revisions to EGPs.

10. Insurance Liabilities

Contractholder Funds

Major components of contractholder funds in the consolidated statements of financial position were as follows:



		December 31,
		2019		2018
		(in millions)
Liabilities for investment contracts:
	Liabilities for individual annuities	$	13,457.5	$	12,913.9
	GICs		10,423.5		10,321.7
	Funding agreements		8,640.6		7,729.5
	Other investment contracts		893.6		907.3
Total liabilities for investment contracts			33,415.2		31,872.4
Universal life and other reserves			4,919.4		4,989.3
Total contractholder funds		$	38,334.6	$	36,861.7

Our GICs and funding agreements contain provisions limiting or prohibiting early surrenders, which typically include penalties for early surrenders, minimum notice requirements or, in the case of funding agreements with survivor options, minimum pre-death holding periods and specific maximum amounts.

B-56

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Funding agreements include those issued directly to nonqualified institutional investors and those issued to the FHLB Des Moines under their membership funding programs. As of December 31, 2019 and 2018, $4,010.9 million and $3,512.2 million, respectively, of liabilities were outstanding with respect to issuances under the program with FHLB Des Moines. In addition, we have five separate programs where the funding agreements have been issued directly or indirectly to unconsolidated special purpose entities. Claims for principal and interest under funding agreements are afforded equal priority to claims of life insurance and annuity policyholders under insolvency provisions of Iowa Insurance Laws.

We were authorized to issue up to $4.0 billion of funding agreements under a program established in 1998 to support the prospective issuance of medium term notes by an unaffiliated entity in non-U.S. markets. As of December 31, 2019 and 2018, $75.2 million and $109.6 million, respectively, of liabilities were outstanding with respect to the issuance outstanding under this program. We were also authorized to issue up to Euro 4.0 billion (approximately USD$5.3 billion) of funding agreements under a program established in 2006 to support the prospective issuance of medium term notes by an unaffiliated entity in non-U.S. markets. The unaffiliated entity is an unconsolidated special purpose entity. As of December 31, 2019 and 2018, $112.2 million and $114.4 million, respectively, of liabilities were outstanding with respect to issuances outstanding under this program. We do not anticipate any new issuance activity under either of these programs due to the existence of the program established in 2011 described below.

In addition, we were authorized to issue up to $7.0 billion of funding agreements under a program established in 2001 to support the prospective issuance of medium term notes by an unaffiliated entity in both domestic and international markets. The unaffiliated entity is an unconsolidated special purpose entity. As of December 31, 2019 and 2018, $201.7 million and $201.6 million, respectively, of liabilities were being held with respect to issuances outstanding under this program. We do not anticipate any new issuance activity under this program, given our December 2005 termination of the dealership agreement for this program and the availability of the program established in 2011 described below.

Additionally, we were authorized to issue up to $9.0 billion of funding agreements under a program that was originally established in March 2004 to support the prospective issuance of medium term notes by unaffiliated entities in both domestic and international markets. Under this program, both the notes and the supporting funding agreements were registered with the United States Securities and Exchange Commission (“SEC”). As of both December 31, 2019 and 2018, $26.2 million of liabilities were being held with respect to issuances outstanding under this program. In contrast with direct funding agreements, GIC issuances and the other three funding agreement backed medium term note programs described above, our payment obligations on each funding agreement issued under this SEC registered program are guaranteed by PFG. We do not anticipate any new issuance activity under this program due to the existence of the program established in 2011 described below.

We were authorized to issue up to $5.0 billion of funding agreements under a program that was originally established in 2011 to support the prospective issuance of medium term notes by an unaffiliated entity in both domestic and international markets. The unaffiliated entity is an unconsolidated special purpose entity. In June 2015, this program was amended to authorize issuance of up to an additional $4.0 billion in recognition of the use of nearly all $5.0 billion of existing issuance authorization. In November 2017, this program was amended to authorize issuance of up to an additional $4.0 billion. As of December 31, 2019 and 2018, $4,214.3 million and $3,765.3 million, respectively, of liabilities were being held with respect to issuances outstanding under this program. Similar to the SEC registered program, our payment obligations on each funding agreement issued under this program are guaranteed by PFG. The program established in 2011 is not registered with the SEC.

B-57

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Liability for Unpaid Claims

The liability for unpaid claims is reported in future policy benefits and claims within our consolidated statements of financial position. Activity associated with unpaid claims was as follows:



		For the year ended December 31,
		2019		2018		2017

		(in millions)
Balance at beginning of year		$	2,252.7	$	2,130.5	$	2,001.3
Less: reinsurance recoverable			404.3		375.8		340.3
Net balance at beginning of year			1,848.4		1,754.7		1,661.0
Incurred:
	Current year		1,361.3		1,268.8		1,196.6
	Prior years		0.8		0.3		18.2
Total incurred			1,362.1		1,269.1		1,214.8
Payments:
	Current year		869.4		815.7		767.2
	Prior years		379.4		359.7		353.9
Total payments			1,248.8		1,175.4		1,121.1
Net balance at end of year			1,961.7		1,848.4		1,754.7
Plus: reinsurance recoverable			403.8		404.3		375.8
Balance at end of year		$	2,365.5	$	2,252.7	$	2,130.5

Amounts not included in the rollforward above:
	Claim adjustment expense liabilities	$	57.9	$	54.6	$	50.7

Incurred liability adjustments relating to prior years, which affected current operations during 2019, 2018 and 2017, resulted in part from developed claims for prior years being different than were anticipated when the liabilities for unpaid claims were originally estimated. These trends have been considered in establishing the current year liability for unpaid claims.

Short-Duration Contracts

Claims Development

The following tables present undiscounted information about claims development by incurral year, including separate information about incurred claims and paid claims net of reinsurance for the periods indicated. The tables also include information on incurred but not reported claims and the cumulative number of reported claims.

The tables present information for the number of years for which claims incurred typically remain outstanding, but do not exceed ten years. The data is disaggregated into groupings of claims with similar characteristics, such as duration of the claim payment period and average claim amount, and with consideration to the overall size of the groupings. Outstanding liabilities equal total net incurred claims less total net paid claims plus outstanding liabilities for net unpaid claims of prior years.

B-58

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

LTD and Group Life Waiver Claims



																							Incurred		Cumulative
																							but not		number of
																							reported		reported
			Net incurred claims (1)																				claims		claims
			December 31,
			2010		2011		2012		2013		2014		2015		2016		2017		2018		2019		2019		2019
			($ in millions)
Incurral
	year
	2010		$	184.1	$	176.7	$	176.2	$	172.0	$	162.7	$	155.7	$	154.1	$	153.4	$	152.1	$	151.8	$	0.1	5,649
	2011					203.7		192.6		185.4		184.8		178.4		172.3		169.6		167.6		166.5		0.1	6,290
	2012							217.9		200.0		191.1		189.5		181.8		174.8		173.3		171.9		0.1	6,444
	2013									219.3		203.3		188.4		190.7		182.3		179.5		177.1		0.1	7,050
	2014											242.2		231.4		214.4		218.1		206.2		201.9		0.1	7,596
	2015													231.0		227.2		217.2		215.3		208.2		0.1	7,174
	2016															229.8		228.4		219.4		219.5		5.4	6,161
	2017																	238.4		239.7		243.1		8.0	6,053
	2018																			239.4		245.1		3.8	5,668
	2019																					255.2		104.6	3,472
	Total net incurred claims																				$	2,040.3

			Net cumulative paid claims (1)
			December 31,
			2010		2011		2012		2013		2014		2015		2016		2017		2018		2019
			(in millions)
Incurral
	year
	2010		$	10.4	$	46.5	$	67.1	$	78.4	$	85.9	$	94.2	$	100.9	$	107.2	$	112.1	$	116.7
	2011					11.2		50.0		72.5		85.7		95.4		105.2		112.6		119.3		125.4
	2012							13.8		55.1		80.8		93.7		104.6		112.9		120.0		126.1
	2013									12.5		55.0		81.4		97.0		106.4		116.4		123.2
	2014											16.1		66.0		96.3		111.8		122.3		132.4
	2015													16.9		67.0		98.0		114.6		126.8
	2016															16.2		70.6		105.6		124.9
	2017																	17.8		76.5		115.0
	2018																			20.1		79.9
	2019																					19.2
	Total net paid claims																					1,089.6
	All outstanding liabilities for unpaid claims prior to 2010 net of reinsurance																					237.8
	Total outstanding liabilities for unpaid claims net of reinsurance																				$	1,188.5

		(1) 2010-2018 unaudited.

B-59

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Dental, Vision, STD, Critical Illness and Accident Claims



								Incurred	Cumulative
								but not	number of
								reported	reported
			Net incurred claims (1)					claims	claims
			December 31,
			2018		2019		2019		2019
			($ in millions)
Incurral year
	2018		$	648.3	$	640.0	$	—	3,032,617
	2019					724.7		45.0	3,184,519
	Total net incurred claims				$	1,364.7

			Net cumulative
			paid claims (1)
			December 31,
			2018		2019
			(in millions)
Incurral year
	2018		$	589.1	$	640.0
	2019					653.5
	Total net paid claims					1,293.5
	All outstanding liabilities for unpaid claims prior to 2018 net of
		reinsurance				—
	Total outstanding liabilities for unpaid claims net of reinsurance				$	71.2

	(1) 2018 unaudited.

Group Life Claims



								Incurred	Cumulative
								but not	number of
								reported	reported
			Net incurred claims (1)					claims	claims
			December 31,
			2018		2019		2019		2019
			($ in millions)
Incurral year
	2018		$	239.6	$	238.4	$	0.7	5,220
	2019					228.3		23.0	4,625
	Total net incurred claims				$	466.7

			Net cumulative
			paid claims (1)
			December 31,
			2018		2019
			(in millions)
Incurral year
	2018		$	193.9	$	236.5
	2019					181.7
	Total net paid claims					418.2
	All outstanding liabilities for unpaid claims prior to 2018 net of
		reinsurance				1.0
	Total outstanding liabilities for unpaid claims net of reinsurance				$	49.5

	(1) 2018 unaudited.

B-60

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Reconciliation of Unpaid Claims to Liability for Unpaid Claims

Our reconciliation of net outstanding liabilities for unpaid claims of short-duration contracts to the liability for unpaid claims follows:



		December 31, 2019
				Dental, Vision, STD,
		LTD and Group		Critical Illness and
		Life Waiver		Accident		Group Life		Consolidated
		(in millions)
Net outstanding liabilities for unpaid claims		$	1,188.5	$	71.2	$	49.5	$	1,309.2

Reconciling items:
	Reinsurance recoverable on unpaid claims		56.4		—		0.9		57.3
	Impact of discounting		(215.00)		—		—		(215.0)
Liability for unpaid claims - short-duration
	contracts	$	1,029.9	$	71.2	$	50.4		1,151.5
Insurance contracts other than short-duration									1,214.0
Liability for unpaid claims								$	2,365.5

Claim Duration and Payout

Our historical average percentage of claims paid in each year from incurral was as follows:



	December 31, 2019 (1)
			Dental, Vision, STD,
	LTD and Group Life		Critical Illness and
Year	Waiver		Accident		Group Life
1	7.6	%	91.7	%	81.7	%
2	24.2		8.0		17.0
3	14.9
4	8.1
5	5.6
6	5.3
7	4.2
8	3.9
9	3.5
10	3.1

(1) Unaudited.

B-61

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Discounting

The following table provides the carrying amount of liabilities reported at present value for short-duration contract unpaid claims. We use a range of discount rates to derive the present value of the unpaid claims. The ranges of discount rates as well as the aggregate amount of discount deducted to derive the liabilities for unpaid claims and interest accretion recognized are also disclosed. Interest accretion is included in benefits, claims and settlement expenses within our consolidated statements of operations.



								Dental, Vision, STD,
			LTD and Group					Critical Illness and
			Life Waiver					Accident					Group Life
			($ in millions)
Carrying amount of liabilities for unpaid claims
	December 31, 2019		$	1,029.9				$	71.2				$	50.4
	December 31, 2018			1,020.0					59.3					49.7
Range of discount rates
	December 31, 2019			3.3	-	7.0	%		—	-	—	%		—	-	—	%
	December 31, 2018			3.3	-	7.0			—	-	—			—	-	—
Aggregate amount of discount
	December 31, 2019		$	215.0				$	—				$	—
	December 31, 2018			217.7					—					—
Interest accretion
	For the year ended:
		December 31, 2019	$	34.2				$	—				$	—
		December 31, 2018		34.5					—					—
		December 31, 2017		35.0					—					—

11. Debt

Short-Term Debt

The components of short-term debt were as follows:

December 31, 2019

Financing

Short-term debt

Obligor/Applicant

structure

Maturity

Capacity

outstanding

(in millions)

PFG, PFS, PLIC as co-borrowers

Credit facility

November 2023

600.0

—

PFG, PFS, PLIC and Principal Financial Services V

(UK) LTD as co-borrowers

Credit facility

November 2023

200.0

—

Unsecured

PLIC

line of credit

September 2020

60.0

—

Total

860.0

—

December 31, 2018

Financing

Short-term debt

Obligor/Applicant

structure

Maturity

Capacity

outstanding

(in millions)

PFG, PFS, PLIC as co-borrowers

Credit facility

November 2023

600.0

—

PFG, PFS, PLIC and Principal Financial Services V

(UK) LTD as co-borrowers

Credit facility

November 2023

200.0

—

Unsecured

PLIC

line of credit

September 2019

60.0

—

Total

860.0

—

B-62

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Our revolving credit facilities are committed and available for general corporate purposes. These credit facilities also provide 100% back-stop support for our commercial paper program, of which we had no outstanding balances as of both December 31, 2019 and 2018.

Interest expense on intercompany debt was $0.0 million, $0.0 million and $0.6 million during 2019, 2018 and 2017, respectively.

Long-Term Debt

The components of long-term debt were as follows:



	December 31, 2019
			Net unamortized
				discount,
				premium and
				debt issuance		Carrying
	Principal			costs		amount
	(in millions)
Non-recourse mortgages and notes payable	$	107.7		$	1.0	$	108.7
Total long-term debt	$	107.7		$	1.0	$	108.7

	December 31, 2018
			Net unamortized
				discount,
				premium and
				debt issuance		Carrying
	Principal			costs		amount
	(in millions)
Non-recourse mortgages and notes payable	$	127.9		$	1.2	$	129.1
Total long-term debt	$	127.9		$	1.2	$	129.1

The non-recourse mortgages and notes payable are primarily financings for real estate developments. Outstanding principal balances as of December 31, 2019, ranged from $3.7 million to $64.2 million per development with interest rates ranging from 3.9% to 4.8%. Outstanding principal balances as of December 31, 2018, ranged from $3.8 million to $58.4 million per development with interest rates ranging from 3.9% to 4.8%. Outstanding debt is secured by the underlying real estate properties, which were reported as real estate on our consolidated statements of financial position with a carrying value of $238.2 million and $307.3 million as of December 31, 2019 and 2018, respectively.

As of December 31, 2019, future annual maturities of long-term debt were as follows (in millions):



Year ending December 31:
	2020	$	65.9
	2021		1.8
	2022		1.8
	2023		14.9
	2024		17.5
	Thereafter		6.8
	Total future maturities of long-term debt	$	108.7

B-63

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

12. Income Taxes

Income Taxes (Benefits)

Our income taxes (benefit) were as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Current income taxes (benefits):
	U.S. federal	$	24.5	$	(29.7)	$	(36.8)
	State		8.0		2.0		45.7
	Foreign		—		(0.1)		0.1
	Tax benefit of operating loss carryforward		(0.3)		(0.2)		(0.1)
Total current income taxes (benefits)			32.2		(28.0)		8.9
Deferred income taxes (benefits):
	U.S. federal		113.2		174.8		(551.3)
	State		(5.2)		—		24.0
Total deferred income taxes (benefits)			108.0		174.8		(527.3)
Income taxes (benefits)		$	140.2	$	146.8	$	(518.4)

Our income before income taxes was as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Domestic		$	1,262.8	$	1,398.7	$	1,717.7
Foreign			—		2.4		0.3
	Total income before income taxes	$	1,262.8	$	1,401.1	$	1,718.0

Effective Income Tax Rate

Our provision for income taxes may not have the customary relationship of taxes to income. A reconciliation between the U.S. corporate income tax rate and the effective income tax rate was as follows:



	For the year ended December 31,
	2019		2018		2017
U.S. corporate income tax rate	21	%	21	%	35	%
Dividends received deduction	(6)		(5)		(10)
Tax credits	(4)		(3)		(3)
Interest exclusion from taxable income	(1)		(1)		(1)
Impact of the Tax Cuts and Jobs Act	—		(2)		(54)
Low income housing tax credit amortization	1		1		—
State income taxes	—		—		3
Other	—		(1)		—
Effective income tax rate	11	%	10	%	(30)	%

The U.S. tax reform enacted on December 22, 2017, made broad and complex changes to the U.S. Internal Revenue Code applicable to us. The U.S. statutory tax rate was reduced from 35% to 21% effective January 1, 2018. Other provisions of U.S. tax reform effective January 1, 2018, included, but were not limited to: 1) provisions reducing the dividends received deduction; 2) essentially eliminating U.S. federal income taxes on dividends from foreign subsidiaries; 3) retaining an element of current inclusion of certain earnings of controlled foreign corporations; 4) eliminating the corporate alternative minimum tax (“AMT”); and, 5) changing how existing AMT credits are realized.

B-64

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Unrecognized Tax Benefits

Our changes in unrecognized tax benefits were as follows:



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Balance at beginning of period		$	37.2	$	188.5	$	202.6
	Additions based on tax positions related to the current year		0.1		—		7.2
	Additions for tax positions of prior years		23.1		43.1		19.3
	Reductions for tax positions related to the current year		(3.2)		(10.6)		(3.4)
	Reductions for tax positions of prior years		—		(23.2)		(0.5)
	Settlements		—		(160.6)		(36.7)
Balance at end of period (1)		$	57.2	$	37.2	$	188.5

(1) There would be no impact to the effective income tax rate if the 2019 benefits were recognized. We recognize interest and penalties related to uncertain tax positions in operating expenses within the consolidated statements of operations.

As of December 31, 2019, 2018 and 2017, we had recognized $0.8 million, $1.3 million and $125.3 million of accumulated pre-tax interest and penalties related to unrecognized tax benefits, respectively. We do not believe there is a reasonable possibility the total amount of the unrecognized tax benefits will significantly increase or decrease in the next twelve months considering recent settlements and the status of current and pending Internal Revenue Service (“IRS”) examinations. Settlement agreements applicable to tax years 1995 to 2003 were executed in 2018 with the Department of Justice, as previously approved by the Joint Committee of Taxation in August 2017. In 2019, an IRS 30-day letter on examination of tax years 2009 through 2012 was received, and the IRS began its examination of tax years 2015 through 2017.

B-65

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Net Deferred Income Taxes

Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Our significant components of net deferred income taxes were as follows:



			December 31,
			2019		2018
			(in millions)
Deferred income tax assets:
	Investments, including derivatives		$	190.9	$	122.6
	Insurance liabilities			62.9		—
	Net unrealized losses on available-for-sale securities			—		1.5
	Net operating and capital loss carryforwards			0.1		13.7
	Tax credit carryforwards			106.0		163.2
	Employee benefits			—		10.7
		Total deferred income tax assets		359.9		311.7
Deferred income tax liabilities:
	Deferred acquisition costs			(562.8)		(615.9)
	Investments, including derivatives			(362.0)		(238.3)
	Net unrealized gains on available-for-sale securities			(874.7)		—
	Real estate			(146.7)		(144.5)
	Insurance liabilities			—		(87.9)
	Intangible assets			(9.6)		(7.6)
	Gain on sale of discontinued operations (1)			(203.2)		(209.2)
	Employee benefits			(3.4)		—
	Other deferred income tax liabilities			(21.4)		(37.7)
		Total deferred income tax liabilities		(2,183.8)		(1,341.1)
		Total net deferred income tax liabilities	$	(1,823.9)	$	(1,029.4)


(1)	Represents a deferred intercompany gain on the sale of PGI LLC to PFS, which was allocated to stockholder’s equity as the result of a taxable common control transaction on the standalone financials of the transferring entity.

Our net deferred income taxes by jurisdiction were as follows:



		December 31,
		2019		2018
		(in millions)
Deferred income tax liabilities:
	U.S. federal	$	(1,795.2)	$	(999.1)
	State		(28.7)		(30.3)
Total net deferred income tax liabilities		$	(1,823.9)	$	(1,029.4)

In management’s judgment, total deferred income tax assets are more likely than not to be realized. Included in the deferred income tax asset are tax carryforwards available to offset future taxable income or income taxes. As of December 31, 2019 and 2018, we had tax credit carryforwards for U.S. federal income tax purposes of $106.0 million and $163.2 million, respectively. Alternative minimum and general business tax credit carryovers were generated during and since the period we utilized net operating losses, primarily attributable to our captive reinsurance companies that joined our consolidated U.S. federal income tax return beginning in 2012 and 2013. The AMT credit carryforwards became refundable in 2018 and will be fully recovered by 2021, and the other tax credits will expire by 2028 if unused. As of December 31, 2019, all accumulated U.S. federal tax credit carryforwards are anticipated to be utilized before expiration; therefore, no valuation allowance has been provided for the related deferred income tax assets.

B-66

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

As of December 31, 2019 and 2018, domestic state net operating loss carryforwards were $1.0 million and $4.7 million, respectively, and will expire between 2026 and 2036. As of December 31, 2019, all accumulated state net operating loss carryforwards are anticipated to be utilized before expiration; therefore, no valuation allowance has been provided for the related deferred income tax assets.

The effects of tax legislation on deferred taxes are recognized in the period of enactment. The primary impact of U.S. tax reform on our 2017 financial results was associated with the effect of reducing the U.S. statutory tax rate from 35% to 21% on our deferred tax balances as of December 31, 2017. The effects of the U.S. tax reform were reflected in the 2017 financial statements as determined or as reasonably estimated provisional amounts based on available information subject to interpretation in accordance with the SEC's Staff Accounting Bulletin No. 118. The provisional amounts apply in regard to potential technical interpretations of accounting and taxing authorities related to elements of the U.S. tax reform subject to change. The provisional amount was finalized within the one-year measurement period with no material adjustments.

Other Tax Information

Income tax returns are filed in the U.S. federal jurisdiction as well as various states and foreign jurisdictions where we and one or more of our subsidiaries conduct business. Although determined by jurisdiction, with few exceptions our tax uncertainties relate primarily to the U.S. federal jurisdiction. The IRS has completed examination of our consolidated U.S. federal income tax returns for years prior to 2009. A settlement was reached in 2018 with the Department of Justice involving a suit in the Court of Federal Claims, requesting refunds for the years 1995-2003. IRS claims for refund for tax years 2004 through 2008, following settlement of a partnership matter with the Department of Justice in March 2019, are expected to be finalized in 2020 following review by the Joint Committee of Taxation. As of December 31, 2019 and 2018, we had $196.6 million and $195.7 million, respectively, of current income tax receivables associated with outstanding audit issues reported as other assets in our consolidated statements of financial position.

PFG filed claims for refund for tax years 2006 through 2008 in 2015 and tax year 2012 in 2016. The IRS commenced audit of our U.S. federal income tax return for 2009 in the fourth quarter of 2011, 2010 in the first quarter of 2012, 2011 in the first quarter of 2013, 2012 in the third quarter of 2015 and 2015 through 2017 in the first quarter of 2019. The U.S. federal statute of limitations expired for years prior to 2009, except for pending audit issues. The statute was extended until December 31, 2020, for 2009 through 2012, has expired for 2013 and 2014, and was extended or remains open for tax years 2015 through 2017 through October 15, 2021. The ultimate settlement of earlier tax years can be adjusted into subsequent tax years regardless of statute status. We do not expect the results of these audits, subsequent related adjustments or developments in other tax areas for all open tax years to significantly change the possible increase in the amount of unrecognized tax benefits, but the outcome of tax reviews is uncertain and unforeseen results can occur.

We believe we have adequate defenses against, or sufficient provisions for, contested issues, but final resolution could take several years while legal remedies are pursued. Consequently, we do not expect the resolved issues from tax years 1995-2003 or those that might arise in tax years subsequent to 2003 to have a material impact on our net income.

13. Employee and Agent Benefits

PFG provides a U.S. qualified defined benefit pension plan, covering U.S. employees that meet certain eligibility requirements and certain agents contracted on or before December 31, 2018. A final average pay benefit formula has been in place for plan participants employed prior to January 1, 2002. For agents, this formula ended on December 31, 2018, and for employees the formula will end on December 31, 2022. The final average pay benefit is based on the years of service and generally the employee's or agent's average annual compensation during the last five years prior to the earliest of termination, retirement or the formula end date. A cash balance benefit was added on January 1, 2002. A participant's cash balance account is credited with an amount based on the participant’s salary, age and service. These credits accrue with interest. For plan participants hired on and after January 1, 2002, only the cash balance benefit applies. For pre-2002 participants, the pension benefit earned prior to the final average pay formula end date is the greater of the final average pay benefit or the cash balance benefit earned before the end date. They will also earn a new cash balance benefit for service after the formula end date. We reflect pension expense through our expense allocation agreement with PFG.

In addition, PFG sponsors non-qualified defined benefit plans subject to Section 409A of the Internal Revenue Code. This plan is for certain highly compensated employees and agents to replace the benefit that cannot be provided by the qualified defined benefit pension plan due to IRS limits. These nonqualified plans generally parallel the qualified plan but offer different payment options. No agent will become a new participant in the nonqualified plan after December 31, 2018.

B-67

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

We provide certain health care, life insurance and long-term care benefits for retired employees, their beneficiaries and covered dependents ("other postretirement benefits"). While virtually all U.S. employees continue to have access to the post-retirement health care and life insurance benefits, only those U.S. employees that were hired prior to January 1, 2002, and retired prior to January 1, 2011, (post-65 medical) or January 1, 2020, (life insurance and pre-65 medical) were eligible to receive subsidized benefits. All others pay the full cost of coverage. The long-term care plan was subsidized only for those who retired prior to January 1, 2000, and is no longer accessible. The subsidy level for all benefits varies by plan, age, service and retirement date. Our policy is to fund the cost of providing retiree benefits in the years the employees are providing service, taking into account the funded status of the trust. PFG is the sponsor of the post-65 retiree medical plan for both employees and individual field agents.

Obligations and Funded Status

The combined funded status, reconciled to amounts recognized in the consolidated statements of financial position relating to other postretirement employee benefit (“OPEB”) plan, was as follows:



	December 31,
	2019		2018
	(in millions)
Change in benefit obligation
Benefit obligation at beginning of year	$	(83.8)	$	(91.8)
Service cost		—		(0.1)
Interest cost		(3.2)		(2.9)
Actuarial gain (loss)		(3.6)		6.6
Participant contributions		(4.4)		(3.8)
Benefits paid		10.4		8.2
Plan amendments		(1.7)		—
Benefit obligation at end of year	$	(86.3)	$	(83.8)

Change in plan assets
Fair value of plan assets at beginning of year	$	618.7	$	668.3
Actual return on plan assets		91.6		(46.0)
Employer contribution		1.0		0.8
Participant contributions		4.4		3.8
Benefits paid		(10.4)		(8.2)
Fair value of plan assets at end of year	$	705.3	$	618.7

Amount recognized in statement of financial position
Other assets	$	622.8	$	536.8
Other liabilities		(3.8)		(1.9)
Total	$	619.0	$	534.9

Amount recognized in accumulated other comprehensive (income) loss
Total net actuarial (gain) loss	$	(12.0)	$	44.3
Prior service benefit		1.8		—
Pre-tax accumulated other comprehensive (income) loss	$	(10.2)	$	44.3

Other Postretirement Plan Changes and Plan Gains/Losses

For the year ended December 31, 2019, the other postretirement benefit plans had an actuarial loss primarily due to a decrease in the discount rate and a gain from actual and projected medical claims cost being lower than expected. For the year ended December 31, 2018, other postretirement benefit plans had an actuarial gain primarily due to an increase in the discount rate and a gain from actual and projected medical claims cost being lower than expected.

B-68

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



Information for Other Postretirement Benefit Plans With an Accumulated Postretirement Benefit Obligation
in Excess of Plan Assets

	December 31,
	2019		2018
	(in millions)
Accumulated postretirement benefit obligation	$	3.8	$	2.1
Fair value of plan assets		—		0.2



Components of Other Postretirement Benefits Net Periodic Benefit Cost

	For the year ended December 31,
	2019		2018		2017
	(in millions)
Service cost	$	—	$	0.1	$	0.1
Interest cost		3.2		2.9		3.3
Expected return on plan assets		(32.0)		(32.2)		(26.2)
Amortization of prior service benefit		(0.1)		(12.8)		(33.4)
Recognized net actuarial (gain) loss		0.3		(1.2)		0.1
Net periodic benefit income	$	(28.6)	$	(43.2)	$	(56.1)

The components of net periodic benefit cost including the service cost component are included in operating expenses on the consolidated statements of operations.

For the other postretirement benefit plans, actuarial gains and losses were amortized with use of the corridors allowed.

For the other postretirement benefit plans, amounts recognized in pre-tax accumulated other comprehensive (income) loss were as follows:



		For the year ended December 31,
			2019		2018
		(in millions)
Other changes recognized in accumulated other comprehensive (income) loss
Net actuarial (gain) loss			$	(56.0)	$	71.6
Prior service cost				1.7		—
Amortization of gain (loss)				(0.3)		1.2
Amortization of prior service benefit				0.1		12.8
Total recognized in pre-tax accumulated other comprehensive (income) loss			$	(54.5)	$	85.6
Total recognized in net periodic benefit cost and pre-tax accumulated
	other comprehensive (income) loss		$	(83.1)	$	42.4

Net actuarial (gain) loss and net prior service cost benefit have been recognized in AOCI. The estimated net actuarial (gain) loss and prior service cost (benefit) for the postretirement benefits that will be amortized from AOCI into net periodic benefit cost during the 2020 fiscal year are $(0.1) million and $(0.9) million, respectively.

Assumptions

Weighted‑average assumptions used for other postretirement benefit plans to determine benefit obligations as disclosed under the Obligations and Funded Status section

B-69

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



Weighted average assumptions used for other postretirement benefit plans to determine net periodic benefit cost

	For the year ended December 31,
	2019		2018		2017
Discount rate	3.95	%	3.35	%	3.75	%
Expected long-term return on plan assets	5.20	%	4.85	%	4.40	%
Rate of compensation increase	N/A		2.39	%	2.44	%

For other postretirement benefits, the discount rate is determined by projecting future benefit payments inherent in the accumulated postretirement benefit obligation, and discounting those cash flows using a spot yield curve for high quality corporate bonds. The plans’ expected benefit payments are discounted to determine a present value using the yield curve and the discount rate is the level rate that produces the same present value. The 5.20% expected long-term return on plan assets for 2019 was based on the weighted average expected long-term asset returns for the medical, life and long-term care plans. The expected long-term rates for the home office medical/life, agent medical/life and long-term care plans were 5.25%, 4.95% and 4.35%, respectively.

Assumed Health Care Cost Trend Rates Used to Determine Net Periodic Benefit Cost



	December 31,
	2019		2018
Health care cost trend rate assumed for next year under age 65	6.75	%	7.00	%
Rate to which the cost trend rate is assumed to decline (the ultimate trend rate)	4.50	%	4.50	%
Year that the rate reaches the ultimate trend rate (under age 65)	2029		2026

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects:



	1-percentage		1-percentage
	point increase		point decrease
		(in millions)
Effect on total of service cost and interest cost components	$	—	$	—
Effect on accumulated postretirement benefit obligation		(1.20)		1.1

Other Postretirement Benefit Plan Assets

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


•	Level 1 – Fair values are based on unadjusted quoted prices in active markets for identical assets.


•	Level 2 – Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset, either directly or indirectly.


•	Level 3 – Fair values are based on significant unobservable inputs for the asset.

Our other postretirement benefit plan assets consist of cash, investments in fixed income security portfolios, investments in equity security portfolios, investments in alternative mutual fund portfolios and investment in a real estate mutual fund. Because of the nature of cash, its carrying amount approximates fair value. The fair value of fixed income investment funds, U.S. equity portfolios and international equity portfolios is based on quoted prices in active markets for identical assets. The fair value of the alternative mutual fund portfolios and the real estate mutual fund are based on quoted market prices, which represent the net asset value (“NAV”) of shares held by the other postretirement benefit plan.

B-70

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

The fair value of the other postretirement benefit plans’ assets by asset category as of the most recent measurement date was as follows:



		December 31, 2019
		Assets		Fair value hierarchy level
		measured at
		fair value		Level 1		Level 2		Level 3
		(in millions)
Asset category
Cash and cash equivalents		$	0.6	$	0.6	$	—	$	—
Fixed income security portfolios:
	Fixed income investment funds (1)		355.8		316.4		39.4		—
U.S. equity portfolios (2)			245.6		201.4		44.2		—
International equity portfolios (3)			103.3		85.0		18.3		—
Total		$	705.3	$	603.4	$	101.9	$	—

		December 31, 2018
		Assets		Fair value hierarchy level
		measured at
		fair value		Level 1		Level 2		Level 3
		(in millions)
Asset category
Cash and cash equivalents		$	0.3	$	0.3	$	—	$	—
Fixed income security portfolios:
	Fixed income investment funds (1)		194.2		156.7		37.5		—
U.S. equity portfolios (2)			130.5		95.7		34.8		—
International equity portfolios (3)			57.6		43.8		13.8		—
Alternative mutual fund portfolios (4)			229.8		229.8		—		—
Real estate mutual fund (5)			6.3		6.3		—		—
Total		$	618.7	$	532.6	$	86.1	$	—


(1)	The portfolios invest in various fixed income securities, primarily of U.S. origin. These include, but are not limited to, corporate bonds, residential mortgage-backed securities, commercial mortgage-backed securities, U.S. Treasury securities, agency securities, asset-backed securities and collateralized mortgage obligations.


(2)	The portfolios invest primarily in publicly traded equity securities of large U.S. companies.


(3)	The portfolios invest primarily in publicly traded equity securities of non-U.S. companies.


(4)	The portfolios invest primarily in equities, corporate bonds, foreign currencies, convertible securities and derivatives.


(5)	The mutual fund invests primarily in U.S. commercial real estate properties.

As of December 31, 2019 and 2018, $101.8 million and $86.1 million of assets, respectively, in cash, fixed income security portfolios, U.S. equity portfolios and international equity portfolios were included in a trust owned life insurance contract.

We have established an investment policy that provides the investment objectives and guidelines for the other postretirement benefit plans. Our investment strategy is to achieve the following:


•	Obtain a reasonable long-term return consistent with the level of risk assumed and at a cost of operation within prudent levels. Performance benchmarks are monitored.


•	Ensure sufficient liquidity to meet the emerging benefit liabilities for the plans.


•	Provide for diversification of assets in an effort to avoid the risk of large losses and maximize the investment return to the other postretirement benefit plans consistent with market and economic risk.

In administering the other postretirement benefit plans’ asset allocation strategies, we consider the projected liability stream of benefit payments, the relationship between current and projected assets of the plan and the projected actuarial liabilities streams, the historical performance of capital markets adjusted for the perception of future short‑ and long-term capital market performance and the perception of future economic conditions.

B-71

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

According to our investment policy, the target asset allocation for the other postretirement benefit plans is:



Asset category	Target allocation
U.S. equity portfolios	35	%
International equity portfolios	15	%
Fixed income security portfolios	50	%

Estimated Future Benefit Payments

The estimated future benefit payments, which reflect expected future service are:



		Other postretirement
		benefits (gross benefit
		payments, including
		prescription drug benefits)
	(in millions)
Year ending December 31:
2020	$	11.4
2021		10.6
2022		10.0
2023		9.2
2024		8.5
2025-2029		25.4

The above table reflects the total estimated future benefits to be paid from the plan, including both our share of the benefit cost and the participants' share of the cost, which is funded by their contributions to the plan. The assumptions used in calculating the estimated future benefit payments are the same as those used to measure the benefit obligation for the year ended December 31, 2019.

14. Contingencies, Guarantees, Indemnifications and Leases

Litigation and Regulatory Contingencies

We are regularly involved in litigation, both as a defendant and as a plaintiff, but primarily as a defendant. Litigation naming us as a defendant ordinarily arises out of our business operations as a provider of asset management and accumulation products and services, individual life insurance, specialty benefits insurance and our investment activities. Some of the lawsuits may be class actions, or purport to be, and some may include claims for unspecified or substantial punitive and treble damages.

We may discuss such litigation in one of three ways. We accrue a charge to income and disclose legal matters for which the chance of loss is probable and for which the amount of loss can be reasonably estimated. We may disclose contingencies for which the chance of loss is reasonably possible and provide an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. Finally, we may voluntarily disclose loss contingencies for which the chance of loss is remote in order to provide information concerning matters that potentially expose us to possible losses.

In addition, regulatory bodies such as state insurance departments, the SEC, the Financial Industry Regulatory Authority, the Department of Labor and other regulatory agencies regularly make inquiries and conduct examinations or investigations concerning our compliance with, among other things, insurance laws, securities laws, Employee Retirement Income Security Act (“ERISA”) and laws governing the activities of broker-dealers. We receive requests from regulators and other governmental authorities relating to industry issues and may receive additional requests, including subpoenas and interrogatories, in the future.

B-72

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

On November 12, 2014, Frederick Rozo filed a class action lawsuit in the United States District Court for the Southern District of Iowa against us and PFG. PFG was later dismissed as a defendant. The Plaintiff alleged that defendants breached fiduciary duties and engaged in prohibited transactions under ERISA in connection with a general account guaranteed product known as the Principal Fixed Income Option (“PFIO”). On May 12, 2017, the district court certified a nationwide class of participants and beneficiaries who had funds invested in one of the PFIO contracts. On September 25, 2018, the district court granted our motion for summary judgment. On February 3, 2020, the Eighth Circuit Court of Appeals reversed that ruling and remanded the case back to the district court. We will continue to aggressively defend the case.

While the outcome of any pending or future litigation or regulatory matter cannot be predicted, management does not believe any such matter will have a material adverse effect on our business or financial position. As of December 31, 2019, we had no estimated loss accrued related to the legal matter discussed above because we believe the chance of loss from this matter is not probable and the amount of loss cannot be reasonably estimated.

To the extent such matters present a reasonably possible chance of loss, we are generally not able to estimate the possible loss or range of loss associated therewith. The outcome of such matters is always uncertain and unforeseen results can occur. It is possible that such outcomes could require us to pay damages or make other expenditures or establish accruals in amounts that we could not estimate at December 31, 2019.

Guarantees and Indemnifications

In the normal course of business, we have provided guarantees to our ultimate parent, PFG, related to benefit payments of the nonqualified pension plans and the nonqualified deferred compensation plans. We also provided guarantees to third parties primarily related to a former subsidiary. The terms of these agreements range in duration and often are not explicitly defined. The maximum exposure under these agreements as of December 31, 2019, was approximately $258.0 million. At inception, the fair value of such guarantees was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. Should we be required to perform under these guarantees, we generally could recover a portion of the loss from third parties through recourse provisions included in agreements with such parties, the sale of assets held as collateral that can be liquidated in the event performance is required under the guarantees or other recourse generally available to us; therefore, such guarantees would not result in a material adverse effect on our business or financial position. While the likelihood is remote, such outcomes could materially affect net income in a particular quarter or annual period.

We are also subject to various other indemnification obligations issued in conjunction with divestitures, acquisitions and financing transactions whose terms range in duration and often are not explicitly defined. Certain portions of these indemnifications may be capped, while other portions are not subject to such limitations; therefore, the overall maximum amount of the obligation under the indemnifications cannot be reasonably estimated. At inception, the fair value of such indemnifications was insignificant. In addition, we believe the likelihood is remote that material payments will be required. Therefore, any liability accrued within our consolidated statements of financial position is insignificant. While we are unable to estimate with certainty the ultimate legal and financial liability with respect to these indemnifications, we believe that performance under these indemnifications would not result in a material adverse effect on our business or financial position. While the likelihood is remote, performance under these indemnifications could materially affect net income in a particular quarter or annual period.

Guaranty Funds

Under state insurance guaranty fund laws, insurers doing business in a state can be assessed, up to prescribed limits, for certain obligations of insolvent insurance companies to policyholders and claimants. A state’s fund assesses its members based on their pro rata market share of written premiums in the state for the classes of insurance for which the insolvent insurer was engaged. Some states permit member insurers to recover assessments paid through full or partial premium tax offsets. We accrue liabilities for guaranty fund assessments when an assessment is probable, can be reasonably estimated and when the event obligating us to pay has occurred. While we cannot predict the amount and timing of any future assessments, we have established reserves we believe are adequate for assessments relating to insurance companies that are currently subject to insolvency proceedings. As of December 31, 2019 and 2018, the liability balance for guaranty fund assessments, which is not discounted, was $21.7 million and $22.2 million, respectively, and was reported within other liabilities in the consolidated statements of financial position. As of December 31, 2019 and 2018, $10.0 million and $10.4 million, respectively, related to premium tax offsets were included in premiums due and other receivables in the consolidated statements of financial position.

B-73

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Leases

As a lessee, we lease office space, data processing equipment, office furniture and office equipment under various operating leases. We also lease buildings and hardware storage equipment under finance leases. Lease assets and liabilities are recognized at the commencement of a lease based on the present value of lease payments over the lease term. We generally use our incremental borrowing rate based on the information available at the lease commencement date to determine the present value of lease payments. Lease term may include options to extend or terminate the lease when it is reasonably certain we will exercise the option. Leases with an initial term of twelve months or less are not recorded on the consolidated statements of financial position. We recognize lease expense for leases on a straight-line basis over the lease term. Some of our lease agreements include payments for property taxes, insurance, utilities or common area maintenance, which are not based on an index or rate. These payments are recognized in net income in the period in which the obligation has occurred.

We sublease certain office space to third parties, which are primarily operating leases. We record sublease income on a straight-line basis over the lease term.

The lease assets and liabilities were as follows:



	December 31, 2019
	(in millions)
Assets
Operating lease assets (1)	$	92.9
Finance lease assets (1)		31.0
Total lease assets	$	123.9

Liabilities
Operating lease liabilities (2)	$	94.0
Finance lease liabilities (2)		31.4
Total lease liabilities	$	125.4


(1)	Operating and finance lease assets are primarily reported within property and equipment on the consolidated statements of financial position.


(2)	Operating and finance lease liabilities are reported within other liabilities on the consolidated statements of

financial position.

As of December 31, 2018, we had capital lease assets of $31.9 million.

The lease cost was as follows:



		For the year ended
		December 31, 2019
		(in millions)
Finance lease cost (1):
	Amortization of right-of-use assets	$	14.5
	Interest on lease liabilities		1.0
Operating lease cost (1)			29.4
Other lease cost (1) (2)			5.0
Sublease income (3)			(1.7)
Total lease cost		$	48.2


(1)	Finance, operating and other lease costs are primarily included in operating expenses on the consolidated statements of operations.


(2)	Other lease cost primarily reflects variable and short-term lease costs.


(3)	Sublease income is included in fees and other revenues on the consolidated statements of operations.

B-74

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Rental expense for operating leases for the years ended December 31, 2018 and 2017, was $17.1 million and $23.0 million, respectively. Depreciation expense for capital leases for both the years ended December 31, 2018 and 2017, was $9.9 million.

Payments for operating leases and finance leases for the year ended December 31, 2019, were $31.6 million and $15.1 million, respectively. The following represents future payments due by period for lease obligations:



		Operating leases		Finance leases			Total
		(in millions)
For the twelve months ending December 31:
2020		$	27.5	$	14.7	$	42.2
2021			22.5		11.6		34.1
2022			16.1		3.8		19.9
2023			10.5		1.9		12.4
2024			6.6		0.5		7.1
2025 and thereafter			24.7		—		24.7
	Total lease payments		107.9		32.5		140.4
	Less: interest		13.9		1.1		15.0
	Present value of lease liabilities	$	94.0	$	31.4	$	125.4

The weighted-average remaining lease term and weighted-average discount rates were as follows:



		For the year ended
		December 31, 2019
Weighted-average remaining lease term (in years):
	Operating leases	7.6
	Finance leases	2.6

Weighted-average discount rate:
	Operating leases	3.1	%
	Finance leases	2.7	%

B-75

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

15. Stockholder's Equity



Other Comprehensive Income (Loss)

		For the year ended December 31, 2019
		Pre-Tax		Tax		After-Tax
		(in millions)
Net unrealized gains on available-for-sale securities during the period		$	4,107.0	$	(865.2)	$	3,241.8
Reclassification adjustment for losses included in net income (1)			51.0		(10.6)		40.4
Adjustments for assumed changes in amortization patterns			(293.0)		61.5		(231.5)
Adjustments for assumed changes in policyholder liabilities			(654.4)		137.4		(517.0)
Net unrealized gains on available-for-sale securities			3,210.6		(676.9)		2,533.7

Noncredit component of impairment losses on fixed maturities,
	available-for-sale during the period		5.2		(1.1)		4.1
Adjustments for assumed changes in amortization patterns			(1.4)		0.3		(1.1)
Noncredit component of impairment losses on fixed maturities,
	available-for-sale (2)		3.8		(0.8)		3.0

Net unrealized losses on derivative instruments during the period			(0.5)		—		(0.5)
Reclassification adjustment for gains included in net income (3)			(28.7)		6.1		(22.6)
Adjustments for assumed changes in amortization patterns			3.1		(0.6)		2.5
Adjustments for assumed changes in policyholder liabilities			7.9		(1.9)		6.0
Net unrealized losses on derivative instruments			(18.2)		3.6		(14.6)

Unrecognized postretirement benefit obligation during the period			54.3		(11.4)		42.9
Amortization of amounts included in net periodic benefit cost (4)			0.2		—		0.2
Net unrecognized postretirement benefit obligation			54.5		(11.4)		43.1

Other comprehensive income		$	3,250.7	$	(685.5)	$	2,565.2

B-76

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



		For the year ended December 31, 2018
		Pre-Tax		Tax		After-Tax
		(in millions)
Net unrealized losses on available-for-sale securities during the period		$	(2,534.3)	$	526.0	$	(2,008.3)
Reclassification adjustment for losses included in net income (1)			84.4		(13.6)		70.8
Adjustments for assumed changes in amortization patterns			185.9		(39.1)		146.8
Adjustments for assumed changes in policyholder liabilities			351.1		(73.7)		277.4
Net unrealized losses on available-for-sale securities			(1,912.9)		399.6		(1,513.3)

Noncredit component of impairment losses on fixed maturities,
	available-for-sale during the period		39.7		(8.3)		31.4
Adjustments for assumed changes in amortization patterns			(5.3)		1.1		(4.2)
Adjustments for assumed changes in policyholder liabilities			(0.8)		0.1		(0.7)
Noncredit component of impairment losses on fixed maturities,
	available-for-sale (2)		33.6		(7.1)		26.5

Net unrealized gains on derivative instruments during the period			50.4		(3.6)		46.8
Reclassification adjustment for gains included in net income (3)			(50.8)		7.1		(43.7)
Adjustments for assumed changes in amortization patterns			0.3		(0.1)		0.2
Adjustments for assumed changes in policyholder liabilities			5.7		(1.0)		4.7
Net unrealized gains on derivative instruments			5.6		2.4		8.0

Unrecognized postretirement benefit obligation during the period			(71.6)		15.1		(56.5)
Amortization of amounts included in net periodic benefit cost (4)			(14.0)		2.9		(11.1)
Net unrecognized postretirement benefit obligation			(85.6)		18.0		(67.6)

Other comprehensive loss		$	(1,959.3)	$	412.9	$	(1,546.4)

		For the year ended December 31, 2017
		Pre-Tax		Tax		After-Tax
		(in millions)
Net unrealized gains on available-for-sale securities during the period		$	1,028.5	$	(325.0)	$	703.5
Reclassification adjustment for losses included in net income (1)			65.6		(22.8)		42.8
Adjustments for assumed changes in amortization patterns			(26.2)		9.3		(16.9)
Adjustments for assumed changes in policyholder liabilities			(168.5)		59.0		(109.5)
Net unrealized gains on available-for-sale securities			899.4		(279.5)		619.9

Noncredit component of impairment losses on fixed maturities,
	available-for-sale during the period		49.7		(17.4)		32.3
Adjustments for assumed changes in amortization patterns			(6.4)		2.3		(4.1)
Adjustments for assumed changes in policyholder liabilities			(1.3)		0.5		(0.8)
Noncredit component of impairment losses on fixed maturities,
	available-for-sale (2)		42.0		(14.6)		27.4

Net unrealized losses on derivative instruments during the period			(46.7)		16.0		(30.7)
Reclassification adjustment for gains included in net income (3)			(42.4)		15.1		(27.3)
Adjustments for assumed changes in amortization patterns			3.9		(1.3)		2.6
Adjustments for assumed changes in policyholder liabilities			9.6		(3.3)		6.3
Net unrealized losses on derivative instruments			(75.6)		26.5		(49.1)

Unrecognized postretirement benefit obligation during the period			44.2		(9.2)		35.0
Amortization of amounts included in net periodic benefit cost (4)			(33.3)		11.6		(21.7)
Net unrecognized postretirement benefit obligation			10.9		2.4		13.3

Other comprehensive income		$	876.7	$	(265.2)	$	611.5

B-77

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019


(1)	Pre-tax reclassification adjustments relating to available-for-sale securities are reported in net realized capital gains (losses) on the consolidated statements of operations.

(2) Represents the net impact of (1) unrealized gains resulting from reclassification of previously recognized noncredit impairment losses from OCI to net realized capital gains (losses) for fixed maturities with bifurcated OTTI that had additional credit losses or fixed maturities that previously had bifurcated OTTI that have now been sold or are intended to be sold and (2) unrealized losses resulting from reclassification of noncredit impairment losses for fixed maturities with bifurcated OTTI from net realized capital gains (losses) to OCI.

(3) See Note 7, Derivative Financial Instruments, under the caption “Effect of Fair Value and Cash Flow Hedges on Consolidated Statements of Operations” for further details.

(4) Amount is comprised of amortization of prior service cost (benefit) and recognized net actuarial (gain) loss, which is reported in operating expenses on the consolidated statements of operations. See Note 13, Employee and Agent Benefits, under the caption “Components of Net Periodic Benefit Cost” for further details.



Accumulated Other Comprehensive Income

				Noncredit
		Net unrealized		component of		Net unrealized		Foreign		Unrecognized		Accumulated
		gains on		impairment losses		gains on		currency		postretirement		other
		available-for-sale		on fixed maturities		derivative		translation		benefit		comprehensive
		securities		available-for-sale		instruments		adjustment		obligation		income
		(in millions)
Balances as of January 1, 2017		$	713.6	$	(85.8)	$	101.7	$	(0.9)	$	19.8	$	748.4
Other comprehensive income
	during the period, net of
	adjustments		577.1		—		(21.8)		—		35.0		590.3
Amounts reclassified from AOCI			42.8		27.4		(27.3)		—		(21.7)		21.2
Other comprehensive income			619.9		27.4		(49.1)		—		13.3		611.5
Sale of subsidiary to parent, net of
	related income taxes, as part of a
	common control transaction		—		—		—		(0.1)		—		(0.1)
Balances as of December 31, 2017			1,333.5		(58.4)		52.6		(1.0)		33.1		1,359.8
Other comprehensive loss
	during the period, net of
	adjustments		(1,584.1)		—		51.7		—		(56.5)		(1,588.9)
Amounts reclassified from AOCI			70.8		26.5		(43.7)		—		(11.1)		42.5
Other comprehensive loss			(1,513.3)		26.5		8.0		—		(67.6)		(1,546.4)
Effects of implementation of
	accounting change related to
	equity investments, net		0.1		—		—		—		—		0.1
Effects of implementation of
	accounting change related to
	the reclassification of certain
	tax effects, net		248.9		(15.2)		7.7		1.0		(0.4)		242.0
Balances as of December 31, 2018			69.2		(47.1)		68.3		—		(34.9)		55.5
Other comprehensive income
	during the period, net of
	adjustments		2,493.3		—		8.0		—		42.9		2,544.2
Amounts reclassified from AOCI			40.4		3.0		(22.6)		—		0.2		21.0
Other comprehensive income			2,533.7		3.0		(14.6)		—		43.1		2,565.2
Balances as of December 31, 2019		$	2,602.9	$	(44.1)	$	53.7	$	—	$	8.2	$	2,620.7

B-78

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Dividend Limitations

Under Iowa law, we may pay dividends only from the earned surplus arising from our business and must receive the prior approval of the Commissioner of Insurance of the State of Iowa (“the Commissioner”) to pay stockholder dividends or make any other distribution if such distribution would exceed certain statutory limitations. Iowa law gives the Commissioner discretion to disapprove requests for distributions in excess of these limitations. Extraordinary dividends include those made, together with dividends and other distributions, within the preceding twelve months that exceed the greater of (i) 10% of our statutory policyholder surplus as of the previous year-end or (ii) the statutory net gain from operations from the previous calendar year, not to exceed earned surplus. Based on this limitation and 2019 statutory results, our dividend limitation is approximately $1,060.3 million in ordinary stockholder dividends in 2020 without prior regulatory approval. However, because the dividend test is based on dividends previously paid over rolling 12-month periods, if paid before a specified date during 2020, some or all of such dividends may be extraordinary and require regulatory approval.

On May 1, 2017, we sold our ownership interest in PGI LLC to PFS in connection with a corporate reorganization designed to better utilize and allocate capital internally. Subsequent to the sale, we paid an extraordinary dividend of $1,068.4 million to PFS with the cash proceeds received from the sale, which was approved by the Commissioner.

16. Fair Value Measurements

We use fair value measurements to record fair value of certain assets and liabilities and to estimate fair value of financial instruments not recorded at fair value but required to be disclosed at fair value. Certain financial instruments, particularly policyholder liabilities other than investment contracts, are excluded from these fair value disclosure requirements.

Valuation Hierarchy


•	Level 1 – Fair values are based on unadjusted quoted prices in active markets for identical assets or liabilities.


•	Level 2 – Fair values are based on inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly.


•	Level 3 – Fair values are based on at least one significant unobservable input for the asset or liability.

Determination of Fair Value

The following discussion describes the valuation methodologies and inputs used for assets and liabilities measured at fair value on a recurring basis or disclosed at fair value. The techniques utilized in estimating the fair value of financial instruments are reliant on the assumptions used. Care should be exercised in deriving conclusions about our business, its value or financial position based on the fair value information of financial instruments presented below.

Fair value estimates are made based on available market information and judgments about the financial instrument at a specific point in time. Such estimates do not consider the tax impact of the realization of unrealized gains or losses. In addition, the disclosed fair value may not be realized in the immediate settlement of the financial instrument. We validate prices through an investment analyst review process, which includes validation through direct interaction with external sources, review of recent trade activity or use of internal models. In circumstances where broker quotes are used to value an instrument, we generally receive one non-binding quote. Broker quotes are validated through an investment analyst review process, which includes validation through direct interaction with external sources and use of internal models or other relevant information. We did not make any significant changes to our valuation processes during 2019.

B-79

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Fixed Maturities

Fixed maturities include bonds, ABS, redeemable preferred stock and certain non-redeemable preferred securities. When available, the fair value of fixed maturities is based on quoted prices of identical assets in active markets. These are reflected in Level 1 and primarily include U.S. Treasury bonds and actively traded redeemable corporate preferred securities.

When quoted prices of identical assets in active markets are not available, our first priority is to obtain prices from third party pricing vendors. We have regular interaction with these vendors to ensure we understand their pricing methodologies and to confirm they are utilizing observable market information. Their methodologies vary by asset class and include inputs such as estimated cash flows, benchmark yields, reported trades, broker quotes, credit quality, industry events and economic events. Fixed maturities with validated prices from pricing services, which includes the majority of our public fixed maturities in all asset classes, are generally reflected in Level 2. Also included in Level 2 are corporate bonds when quoted market prices are not available, for which an internal model using substantially all observable inputs or a matrix pricing valuation approach is used. In the matrix approach, securities are grouped into pricing categories that vary by sector, rating and average life. Each pricing category is assigned a risk spread based on studies of observable public market data from the investment professionals assigned to specific security classes. The expected cash flows of the security are then discounted back at the current Treasury curve plus the appropriate risk spread. Although the matrix valuation approach provides a fair valuation of each pricing category, the valuation of an individual security within each pricing category may also be impacted by company specific factors.

If we are unable to price a fixed maturity security using prices from third party pricing vendors or other sources specific to the asset class, we may obtain a broker quote or utilize an internal pricing model specific to the asset utilizing relevant market information, to the extent available and where at least one significant unobservable input is utilized. These are reflected in Level 3 in the fair value hierarchy and can include fixed maturities across all asset classes. As of December 31, 2019, less than 1% of our total fixed maturities were Level 3 securities valued using internal pricing models.

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

U.S. Government and Agencies/Non-U.S. Governments. Inputs include recently executed market transactions, interest rate yield curves, maturity dates, market price quotations and credit spreads relating to similar instruments.

States and Political Subdivisions. Inputs include Municipal Securities Rulemaking Board reported trades, U.S. Treasury and other benchmark curves, material event notices, new issue data and obligor credit ratings.

Corporate. Inputs include recently executed transactions, market price quotations, benchmark yields, issuer spreads and observations of equity and credit default swap curves related to the issuer. For private placement corporate securities valued through the matrix valuation approach inputs include the current Treasury curve and risk spreads based on sector, rating and average life of the issuance.

RMBS, CMBS, Collateralized Debt Obligations and Other Debt Obligations. Inputs include cash flows, priority of the tranche in the capital structure, expected time to maturity for the specific tranche, reinvestment period remaining and performance of the underlying collateral including prepayments, defaults, deferrals, loss severity of defaulted collateral and, for RMBS, prepayment speed assumptions. Other inputs include market indices and recently executed market transactions.

Equity Securities

Equity securities include mutual funds, common stock and non-redeemable preferred stock. Fair values of equity securities are determined using quoted prices in active markets for identical assets when available, which are reflected in Level 1. When quoted prices are not available, we may utilize internal valuation methodologies appropriate for the specific asset that use observable inputs such as underlying share prices or the NAV, which are reflected in Level 2. Fair values might also be determined using broker quotes or through the use of internal models or analysis that incorporate significant assumptions deemed appropriate given the circumstances and consistent with what other market participants would use when pricing such securities, which are reflected in Level 3.

B-80

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Derivatives

The fair values of exchange-traded derivatives are determined through quoted market prices, which are reflected in Level 1. Exchange-traded derivatives include futures that are settled daily, which reduces their fair value in the consolidated statements of financial position. The fair values of OTC cleared derivatives are determined through market prices published by the clearinghouses, which are reflected in Level 2. The clearinghouses may utilize the overnight indexed swap (“OIS”) curve in their valuation. Variation margin associated with OTC cleared derivatives is settled daily, which reduces their fair value in the consolidated statements of financial position. The fair values of bilateral OTC derivative instruments are determined using either pricing valuation models that utilize market observable inputs or broker quotes. The majority of our bilateral OTC derivatives are valued with models that use market observable inputs, which are reflected in Level 2. Significant inputs include contractual terms, interest rates, currency exchange rates, credit spread curves, equity prices and volatilities. These valuation models consider projected discounted cash flows, relevant swap curves and appropriate implied volatilities. Certain bilateral OTC derivatives utilize unobservable market data, primarily independent broker quotes that are nonbinding quotes based on models that do not reflect the result of market transactions, which are reflected in Level 3.

Our non-cleared derivative contracts are generally documented under ISDA Master Agreements, which provide for legally enforceable set-off and close-out netting of exposures to specific counterparties. Collateral arrangements are bilateral and based on current ratings of each entity. We utilize the LIBOR interest rate curve to value our positions, which includes a credit spread. This credit spread incorporates an appropriate level of nonperformance risk into our valuations given the current ratings of our counterparties, as well as the collateral agreements in place. Counterparty credit risk is routinely monitored to ensure our adjustment for non-performance risk is appropriate. Our centrally cleared derivative contracts are conducted with regulated centralized clearinghouses, which provide for daily exchange of cash collateral or variation margin equal to the difference in the daily market values of those contracts that eliminates the non-performance risk on these trades.

Interest Rate Contracts. For non-cleared contracts we use discounted cash flow valuation techniques to determine the fair value of interest rate swaps and swaptions using observable swap curves as the inputs. These are reflected in Level 2. For centrally cleared contracts we use published prices from clearinghouses. These are reflected in Level 2. In addition, we have interest rate options and have had swaptions that are valued using broker quotes. These are reflected in Level 3.

Foreign Exchange Contracts. We use discounted cash flow valuation techniques that utilize observable swap curves and exchange rates as the inputs to determine the fair value of foreign currency swaps. These are reflected in Level 2. In addition, we have a limited number of non-standard currency swaps that are valued using broker quotes. These are reflected within Level 3.

Equity Contracts. We use an option pricing model using observable implied volatilities, dividend yields, index prices and swap curves as the inputs to determine the fair value of equity options. These are reflected in Level 2.

Credit Contracts. We use either the ISDA Credit Default Swap Standard discounted cash flow model that utilizes observable default probabilities and recovery rates as inputs or broker prices to determine the fair value of credit default swaps. These are reflected in Level 3.

Other Investments

Other investments reported at fair value include investment funds reported at fair value, commercial mortgage loans of consolidated VIEs for which the fair value option was elected, equity method real estate investments for which the fair value option was elected and certain redeemable and nonredeemable preferred stock. In addition, in 2017 we had other investment funds for which the fair value option was elected.

The fair value of investment funds is determined using the NAV of the fund. The NAV of the fund represents the price at which we would be able to initiate a transaction. Investments for which the NAV represents a quoted price in an active market for identical assets are reflected in Level 1. Investments that do not have a quoted price in an active market are reflected in Level 2.

Commercial mortgage loans of a consolidated VIE were valued using the more observable fair value of the liabilities of the consolidated collateralized financing entity (“CCFE”) under the measurement alternative guidance and were reflected in Level 2. The liabilities were affiliated so were not reflected in our consolidated results. The trust was unwound in the third quarter of 2019.

B-81

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Equity method real estate investments for which the fair value option was elected are reflected in Level 3. The equity method real estate investments consist of underlying real estate and debt. The real estate fair value is estimated using a discounted cash flow valuation model that utilizes public real estate market data inputs such as transaction prices, market rents, vacancy levels, leasing absorption, market cap rates and discount rates. The debt fair value is estimated using a discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements.

The fair value of certain redeemable and nonredeemable preferred stock is based on an internal model using unobservable inputs, which is reflected in Level 3. In 2018, the fair value of redeemable preferred stock was based on observable inputs and was reflected in Level 2.

Cash Equivalents

Certain cash equivalents are reported at fair value on a recurring basis and include money market instruments and other short-term investments with maturities of three months or less. Fair values of these cash equivalents may be determined using public quotations, when available, which are reflected in Level 1. When public quotations are not available, because of the highly liquid nature of these assets, carrying amounts may be used to approximate fair values, which are reflected in Level 2.

Separate Account Assets

Separate account assets include equity securities, debt securities, cash equivalents and derivative instruments, for which fair values are determined as previously described, and are reflected in Level 1, Level 2 and Level 3. Separate account assets also include commercial mortgage loans, for which the fair value is estimated by discounting the expected total cash flows using market rates that are applicable to the yield, credit quality and maturity of the loans. The market clearing spreads vary based on mortgage type, weighted average life, rating and liquidity. These are reflected in Level 3. Finally, separate account assets include real estate, for which the fair value is estimated using discounted cash flow valuation models that utilize various public real estate market data inputs. In addition, each property is appraised annually by an independent appraiser. The real estate included in separate account assets is recorded net of related mortgage encumbrances for which the fair value is estimated using discounted cash flow analysis based on our incremental borrowing rate for similar borrowing arrangements. The real estate within the separate accounts is reflected in Level 3.

Investment and Universal Life Contracts

Certain universal life, annuity and other investment contracts include embedded derivatives that have been bifurcated from the host contract and are measured at fair value on a recurring basis, which are reflected in Level 3. The key assumptions for calculating the fair value of the embedded derivative liabilities are market assumptions (such as equity market returns, interest rate levels, market volatility and correlations) and policyholder behavior assumptions (such as lapse, mortality, utilization and withdrawal patterns). Risk margins are included in the policyholder behavior assumptions. The assumptions are based on a combination of historical data and actuarial judgment. The embedded derivative liabilities are valued using models that incorporate a spread reflecting our own creditworthiness.

The assumption for our own non-performance risk for investment contracts and any embedded derivatives bifurcated from certain universal life, annuity and investment contracts is based on the current market credit spreads for debt-like instruments we have issued and are available in the market.

Other Liabilities

Certain obligations reported in other liabilities include embedded derivatives to deliver underlying securities of structured investments to third parties. The fair value of the embedded derivatives is calculated based on the value of the underlying securities that are valued based on prices obtained from third party pricing vendors as utilized and described in our discussion of how fair value is determined for fixed maturities, which are reflected in Level 2.

Certain obligations of consolidated VIEs for which the fair value option was elected were included in other liabilities. The synthetic entity that had these obligations matured in the first quarter of 2017. The VIEs’ unaffiliated obligations were valued utilizing internal pricing models, which were reflected in Level 3.

B-82

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets and liabilities measured at fair value on a recurring basis were as follows:



	December 31, 2019
	Assets/		Amount
	(liabilities)		measured at		Fair value hierarchy level
	measured at		net asset
	fair value		value (4)		Level 1		Level 2		Level 3
	(in millions)
Assets
Fixed maturities, available-for-sale:
U.S. government and agencies	$	1,656.9	$	—	$	1,277.4	$	379.5	$	—
Non-U.S. governments		853.0		—		—		853.0		—
States and political subdivisions		7,419.4		—		—		7,419.4		—
Corporate		37,111.1		—		18.5		37,010.9		81.7
Residential mortgage-backed securities		2,844.2		—		—		2,844.2		—
Commercial mortgage-backed securities		4,802.7		—		—		4,789.8		12.9
Collateralized debt obligations (1)		3,211.2		—		—		3,012.2		199.0
Other debt obligations		8,084.9		—		—		7,993.6		91.3
Total fixed maturities, available-for-sale		65,983.4		—		1,295.9		64,302.6		384.9
Fixed maturities, trading		237.6		—		0.5		236.8		0.3
Equity securities		69.9		—		26.5		43.4		—
Derivative assets (2)		279.6		—		—		251.7		27.9
Other investments		112.5		78.3		—		—		34.2
Cash equivalents		729.3		—		—		729.3		—
Sub-total excluding separate account
assets		67,412.3		78.3		1,322.9		65,563.8		447.3

Separate account assets		125,801.7		129.0		95,419.5		21,286.5		8,966.7
Total assets	$	193,214.0	$	207.3	$	96,742.4	$	86,850.3	$	9,414.0

Liabilities
Investment and universal life contracts (3)	$	(151.2)	$	—	$	—	$	—	$	(151.2)
Derivative liabilities (2)		(147.0)		—		—		(130.7)		(16.3)
Other liabilities (3)		(98.7)		—		—		(98.7)		—
Total liabilities	$	(396.9)	$	—	$	—	$	(229.4)	$	(167.5)

Net assets	$	192,817.1	$	207.3	$	96,742.4	$	86,620.9	$	9,246.5

B-83

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



	December 31, 2018
	Assets/		Amount
	(liabilities)		measured at		Fair value hierarchy level
	measured at		net asset
	fair value		value (4)		Level 1		Level 2		Level 3
	(in millions)
Assets
Fixed maturities, available-for-sale:
U.S. government and agencies	$	1,383.2	$	—	$	993.1	$	390.1	$	—
Non-U.S. governments		730.8		—		—		726.2		4.6
States and political subdivisions		6,165.7		—		—		6,165.7		—
Corporate		32,088.4		—		19.2		32,011.3		57.9
Residential mortgage-backed securities		2,416.2		—		—		2,416.2		—
Commercial mortgage-backed securities		3,902.8		—		—		3,893.3		9.5
Collateralized debt obligations (1)		2,416.9		—		—		2,408.6		8.3
Other debt obligations		7,171.3		—		—		7,112.8		58.5
Total fixed maturities, available-for-sale		56,275.3		—		1,012.3		55,124.2		138.8
Fixed maturities, trading		165.5		—		—		165.5		—
Equity securities		84.8		—		46.6		38.2		—
Derivative assets (2)		172.6		—		—		154.0		18.6
Other investments		109.0		75.4		—		16.4		17.2
Cash equivalents		945.8		—		—		945.8		—
Sub-total excluding separate account
assets		57,753.0		75.4		1,058.9		56,444.1		174.6

Separate account assets		107,343.0		124.6		79,303.1		19,471.3		8,444.0
Total assets	$	165,096.0	$	200.0	$	80,362.0	$	75,915.4	$	8,618.6

Liabilities
Investment and universal life contracts (3)	$	(5.3)	$	—	$	—	$	—	$	(5.3)
Derivative liabilities (2)		(104.4)		—		—		(89.3)		(15.1)
Other liabilities (3)		(89.3)		—		—		(89.3)		—
Total liabilities	$	(199.0)	$	—	$	—	$	(178.6)	$	(20.4)

Net assets	$	164,897.0	$	200.0	$	80,362.0	$	75,736.8	$	8,598.2


(1)	Primarily consists of collateralized loan obligations backed by secured corporate loans.

(2) Within the consolidated statements of financial position, derivative assets are reported with other investments and derivative liabilities are reported with other liabilities. The amounts are presented gross in the tables above to reflect the presentation on the consolidated statements of financial position; however, are presented net for purposes of the rollforward in the Changes in Level 3 Fair Value Measurements tables. Refer to Note 7, Derivative Financial Instruments, for further information on fair value by class of derivative instruments.

(3) Includes bifurcated embedded derivatives that are reported at net asset (liability) fair value within the same line item in the consolidated statements of financial position in which the host contract is reported.

(4) Certain investments are measured at fair value using the NAV per share (or its equivalent) practical expedient and have not been classified in the fair value hierarchy. Other investments using the NAV practical expedient consist of certain fund interests that are restricted until maturity with unfunded commitments totaling $19.9 million and $32.0 million as of December 31, 2019 and December 31, 2018, respectively. Separate account assets using the NAV practical expedient consist of hedge funds with varying investment strategies that also have a variety of redemption terms and conditions. We do not have unfunded commitments associated with these hedge funds.

B-84

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Changes in Level 3 Fair Value Measurements

The reconciliation for all assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) was as follows:



			For the year ended December 31, 2019
																	Changes in
			Beginning		Total realized/unrealized				Net						Ending		unrealized
			asset/		gains (losses)				purchases,						asset/		gains (losses)
			(liability)						sales,						(liability)		included in
			balance		Included		Included in		issuances						balance		net income
			as of		in net		other		and		Transfers		Transfers		as of		relating to
			January 1,		income		comprehensive		settlements		into		out of		December 31,		positions still
			2019		(1)		income		(3)		Level 3		Level 3		2019		held (1)
			(in millions)
Assets
Fixed maturities,
	available-for-sale:
	Non-U.S.
		governments	$	4.6	$	—	$	—	$	(4.6)	$	—	$	—	$	—	$	—
	Corporate			57.9		—		2.5		17.2		4.1		—		81.7		—
	Commercial
		mortgage-backed
		securities		9.5		(3.8)		3.4		2.4		3.7		(2.3)		12.9		(2.9)
	Collateralized
		debt obligations		8.3		(2.6)		0.9		122.5		69.9		—		199.0		(2.6)
	Other debt
		obligations		58.5		—		0.8		100.0		8.3		(76.3)		91.3		—
Total fixed
	maturities,
	available-for-sale			138.8		(6.4)		7.6		237.5		86.0		(78.6)		384.9		(5.5)
Fixed maturities,
	trading			—		—		—		0.3		—		—		0.3		—
Other investments				17.2		5.9		—		1.1		10.0		—		34.2		6.0
Separate account
	assets (2)			8,444.0		735.5		—		(212.1)		—		(0.7)		8,966.7		697.1

Liabilities
Investment and
	universal life
	contracts			(5.3)		(132.9)		—		(13.0)		—		—		(151.2)		(134.0)

Derivatives
Net derivative assets
	(liabilities)			3.5		(0.2)		—		8.3		—		—		11.6		3.9

B-85

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



			For the year ended December 31, 2018
																	Changes in
			Beginning		Total realized/unrealized				Net						Ending		unrealized
			asset/		gains (losses)				purchases,						asset/		gains (losses)
			(liability)						sales,						(liability)		included in
			balance		Included		Included in		issuances						balance		net income
			as of		in net		other		and		Transfers		Transfers		as of		relating to
			January 1,		income		comprehensive		settlements		into		out of		December 31,		positions still
			2018		(1)		income		(3)		Level 3		Level 3		2018		held (1)
			(in millions)
Assets
Fixed maturities,
	available-for-sale:
	Non-U.S.
		governments	$	6.1	$	—	$	(0.1)	$	(1.4)	$	—	$	—	$	4.6	$	—
	Corporate			100.6		(1.0)		0.3		(22.0)		—		(20.0)		57.9		—
	Commercial
		mortgage-backed
		securities		10.6		(3.5)		0.2		0.1		3.6		(1.5)		9.5		(1.9)
	Collateralized
		debt obligations		125.0		(0.9)		0.2		64.4		54.7		(235.1)		8.3		(0.9)
	Other debt
		obligations		2.3		—		(0.2)		147.4		—		(91.0)		58.5		—
Total fixed
	maturities,
	available-for-sale			244.6		(5.4)		0.4		188.5		58.3		(347.6)		138.8		(2.8)
Fixed maturities,
	trading			—		—		—		3.7		—		(3.7)		—		—
Equity securities				2.7		12.9		—		(15.6)		—		—		—		—
Other investments				6.5		1.7		—		9.0		—		—		17.2		1.7
Separate account
	assets (2)			7,486.3		889.7		—		106.8		2.3		(41.1)		8,444.0		829.8

Liabilities
Investment and
	universal life
	contracts			(119.6)		107.9		—		6.4		—		—		(5.3)		110.3

Derivatives
Net derivative assets
	(liabilities)			19.6		(18.6)		—		2.5		—		—		3.5		(17.1)

B-86

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



			For the year ended December 31, 2017
																	Changes in
			Beginning		Total realized/unrealized				Net						Ending		unrealized
			asset/		gains (losses)				purchases,						asset/		gains (losses)
			(liability)						sales,						(liability)		included in
			balance		Included		Included in		issuances						balance		net income
			as of		in net		other		and		Transfers		Transfers		as of		relating to
			January 1,		income		comprehensive		settlements		into		out of		December 31,		positions still
			2017		(1)		income		(3)		Level 3		Level 3		2017		held (1)
			(in millions)
Assets
Fixed maturities,
	available-for-sale:
	Non-U.S.
		governments	$	7.6	$	—	$	(0.1)	$	(1.4)	$	—	$	—	$	6.1	$	—
	Corporate			145.6		(1.5)		4.4		(32.8)		22.2		(37.3)		100.6		—
	Commercial
		mortgage-backed
		securities		71.1		(12.7)		11.1		(0.7)		26.3		(84.5)		10.6		(4.0)
	Collateralized
		debt obligations		33.6		—		1.7		7.3		183.7		(101.3)		125.0		—
	Other debt
		obligations		91.5		—		(0.2)		(0.8)		0.1		(88.3)		2.3		—
Total fixed
	maturities,
	available-for-sale			349.4		(14.2)		16.9		(28.4)		232.3		(311.4)		244.6		(4.0)
Fixed maturities,
	trading			92.9		(0.5)		—		(92.4)		—		—		—		—
Equity securities,
	available-for-sale			2.7		—		—		—		—		—		2.7		—
Equity securities,
	trading			—		—		—		(0.7)		0.7		—		—		—
Other investments				36.9		3.9		—		(34.3)		—		—		6.5		3.8
Separate account
	assets (2)			7,226.3		788.8		—		(493.2)		3.1		(38.7)		7,486.3		696.0

Liabilities
Investment and
	universal life
	contracts			(130.8)		6.8		—		4.4		—		—		(119.6)		4.0
Other liabilities				(59.9)		(0.1)		—		60.0		—		—		—		—

Derivatives
Net derivative assets
	(liabilities)			11.8		7.5		—		0.3		—		—		19.6		6.7

(1) Both realized gains (losses) and mark-to-market unrealized gains (losses) are generally reported in net realized capital gains (losses) within the consolidated statements of operations. Realized and unrealized gains (losses) on certain securities with an investment objective to realize economic value through mark-to-market changes are reported in net investment income within the consolidated statements of operations.

(2) Gains and losses for separate account assets do not impact net income as the change in value of separate account assets is offset by a change in value of separate account liabilities.

(3) Gross purchases, sales, issuances and settlements were:

B-87

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



		For the year ended December 31, 2019
										Net purchases,
										sales, issuances
		Purchases		Sales		Issuances		Settlements		and settlements
		(in millions)
Assets
Fixed maturities, available-for-sale:
	Non-U.S. governments	$	—	$	—	$	—	$	(4.6)	$	(4.6)
	Corporate		41.9		(1.4)		—		(23.3)		17.2
	Commercial mortgage-backed securities		2.4		—		—		—		2.4
	Collateralized debt obligations		124.7		—		—		(2.2)		122.5
	Other debt obligations		107.7		—		—		(7.7)		100.0
Total fixed maturities, available-for-sale			276.7		(1.4)		—		(37.8)		237.5
Fixed maturities, trading			0.5		—		—		(0.2)		0.3
Other investments			6.0		(4.9)		—		—		1.1
Separate account assets (4)			279.2		(524.4)		(280.4)		313.5		(212.1)

Liabilities
Investment and universal life contracts			—		—		(17.8)		4.8		(13.0)

Derivatives
Net derivative assets (liabilities)			1.9		6.4		—		—		8.3



		For the year ended December 31, 2018
										Net purchases,
										sales, issuances
		Purchases		Sales		Issuances		Settlements		and settlements
		(in millions)
Assets
Fixed maturities, available-for-sale:
	Non-U.S. governments	$	—	$	—	$	—	$	(1.4)	$	(1.4)
	Corporate		2.3		(6.3)		—		(18.0)		(22.0)
	Commercial mortgage-backed securities		—		—		—		0.1		0.1
	Collateralized debt obligations		91.7		—		—		(27.3)		64.4
	Other debt obligations		152.0		—		—		(4.6)		147.4
Total fixed maturities, available-for-sale			246.0		(6.3)		—		(51.2)		188.5
Fixed maturities, trading			3.7		—		—		—		3.7
Equity securities			—		(15.6)		—		—		(15.6)
Other investments			9.0		—		—		—		9.0
Separate account assets (4)			627.1		(519.4)		(206.5)		205.6		106.8

Liabilities
Investment and universal life contracts			—		—		2.8		3.6		6.4

Derivatives
Net derivative assets (liabilities)			1.8		0.7		—		—		2.5

B-88

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



		For the year ended December 31, 2017
										Net purchases,
										sales, issuances
		Purchases		Sales		Issuances		Settlements		and settlements
		(in millions)
Assets
Fixed maturities, available-for-sale:
	Non-U.S. governments	$	—	$	—	$	—	$	(1.4)	$	(1.4)
	Corporate		20.9		(1.6)		—		(52.1)		(32.8)
	Commercial mortgage-backed securities		—		—		—		(0.7)		(0.7)
	Collateralized debt obligations		22.9		—		—		(15.6)		7.3
	Other debt obligations		—		—		—		(0.8)		(0.8)
Total fixed maturities, available-for-sale			43.8		(1.6)		—		(70.6)		(28.4)
Fixed maturities, trading			—		—		—		(92.4)		(92.4)
Equity securities, trading			—		—		—		(0.7)		(0.7)
Other investments			2.4		(36.7)		—		—		(34.3)
Separate account assets (4)			302.2		(580.6)		(284.6)		69.8		(493.2)

Liabilities
Investment and universal life contracts			—		—		—		4.4		4.4
Other liabilities			—		—		—		60.0		60.0

Derivatives
Net derivative assets (liabilities)			0.8		(0.5)		—		—		0.3


(4)	Issuances and settlements include amounts related to mortgage encumbrances associated with real estate in our separate accounts.

Transfers

Transfers of assets and liabilities measured at fair value on a recurring basis between fair value hierarchy levels were as follows:



			For the year ended December 31, 2019
			Transfers out		Transfers out		Transfers out		Transfers out		Transfers out		Transfers out
			of Level 1 into		of Level 1 into		of Level 2 into		of Level 2 into		of Level 3 into		of Level 3 into
			Level 2		Level 3		Level 1		Level 3		Level 1		Level 2
			(in millions)
Assets
Fixed maturities, available-for-
	sale:
	Corporate		$	—	$	—	$	—	$	4.1	$	—	$	—
	Commercial mortgage-backed
		securities		—		—		—		3.7		—		2.3
	Collateralized debt obligations			—		—		—		69.9		—		—
	Other debt obligations			—		—		—		8.3		—		76.3
Total fixed maturities,
	available-for-sale			—		—		—		86.0		—		78.6
Other investments				—		—		—		10.0		—		—
Separate account assets				—		—		—		—		—		0.7

B-89

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



			For the year ended December 31, 2018
			Transfers out		Transfers out		Transfers out		Transfers out		Transfers out		Transfers out
			of Level 1 into		of Level 1 into		of Level 2 into		of Level 2 into		of Level 3 into		of Level 3 into
			Level 2		Level 3		Level 1		Level 3		Level 1		Level 2
			(in millions)
Assets
Fixed maturities, available-for-
	sale:
	Corporate		$	—	$	—	$	—	$	—	$	—	$	20.0
	Commercial mortgage-backed
		securities		—		—		—		3.6		—		1.5
	Collateralized debt obligations			—		—		—		54.7		—		235.1
	Other debt obligations			—		—		—		—		—		91.0
Total fixed maturities,
	available-for-sale			—		—		—		58.3		—		347.6
Fixed maturities, trading				—		—		—		—		—		3.7
Separate account assets				287.5		—		0.8		2.3		0.2		40.9



			For the year ended December 31, 2017
			Transfers out		Transfers out		Transfers out		Transfers out		Transfers out		Transfers out
			of Level 1 into		of Level 1 into		of Level 2 into		of Level 2 into		of Level 3 into		of Level 3 into
			Level 2		Level 3		Level 1		Level 3		Level 1		Level 2
			(in millions)
Assets
Fixed maturities, available-for-
	sale:
	Corporate		$	—	$	—	$	—	$	22.2	$	—	$	37.3
	Commercial mortgage-backed
		securities		—		—		—		26.3		—		84.5
	Collateralized debt obligations			—		—		—		183.7		—		101.3
	Other debt obligations			—		—		—		0.1		—		88.3
Total fixed maturities,
	available-for-sale			—		—		—		232.3		—		311.4
Equity securities, trading				—		—		—		0.7		—		—
Separate account assets				12.5		—		5.9		3.1		—		38.7

Transfers between fair value hierarchy levels are recognized at the beginning of the reporting period.

Separate account assets transferred from Level 1 to Level 2 during 2018 primarily included cash equivalents as a result of additional analysis to clarify the source of the price. Separate account assets transferred between Level 1 and Level 2 during 2017 primarily related to foreign equity securities. When these securities are valued at the close price of the local exchange where the assets traded, they are reflected in Level 1. When events materially affecting the value occur between the close of the local exchange and the New York Stock Exchange, we use adjusted prices determined by a third party pricing vendor to update the foreign market closing prices and the fair value is reflected in Level 2.

Assets transferred into Level 3 during 2019, 2018 and 2017, primarily included those assets for which we are now unable to obtain pricing from a recognized third party pricing vendor as well as assets that were previously priced using a matrix valuation approach that may no longer be relevant when applied to asset-specific situations.

Assets transferred out of Level 3 during 2019, 2018 and 2017, included those for which we are now able to obtain pricing from a recognized third party pricing vendor or from internal models using substantially all market observable information.

B-90

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Quantitative Information about Level 3 Fair Value Measurements

The following table provides quantitative information about the significant unobservable inputs used for recurring fair value measurements categorized within Level 3, excluding assets and liabilities for which significant quantitative unobservable inputs are not developed internally, which primarily consists of those valued using broker quotes or the measurement alternative for CCFEs. Refer to “Assets and liabilities measured at fair value on a recurring basis” for a complete valuation hierarchy summary.



		December 31, 2019
		Assets /
		(liabilities)
		measured at		Valuation	Unobservable	Input/range		Weighted
		fair value		technique(s)	input description	of inputs		average
		(in millions)
Assets
Fixed maturities, available-for-sale:
	Corporate	$	72.5	Discounted cash flow	Discount rate (1)	1.9%-5.1%		3.8	%
					Illiquidity premium	0 basis points ("bps")-410bps		152bps
	Commercial mortgage-backed securities		2.4	Discounted cash flow	Probability of default	100.0	%	100.0	%
					Potential loss severity	53.1	%	53.1	%
	Collateralized debt obligations		108.7	Discounted cash flow	Discount rate (1)	2.9%-10.0%		3.4	%
					Potential loss severity	23.0	%	23.0	%
					Probability of default	100.0	%	100.0	%
	Other debt obligations		1.2	Discounted cash flow	Discount rate (1)	5.0	%	5.0	%
					Illiquidity premium	500bps		500bps
Other investments			10.0	Market comparables	Revenue multiples (2)	0.8x-5.0x		3.2x
Separate account assets			8,966.2	Discounted cash flow - mortgage loans	Discount rate (1)	2.8	%	2.8	%
					Illiquidity premium	60bps		60bps
					Credit spread rate	120bps		120bps
				Discounted cash flow - real estate	Discount rate (1)	5.5%-11.8%		6.7	%
					Terminal capitalization rate	4.5%-9.3%		5.7%
					Average market rent growth rate	2.0%-4.7%		3.0%
				Discounted cash flow - real estate debt	Loan to value	8.0%-80.4%		45.9	%
					Market interest rate	3.2%-5.8%		3.6	%

B-91

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

December 31, 2019

Assets /

(liabilities)

measured at

Valuation

Unobservable

Input/range

Weighted

fair value

technique(s)

input description

of inputs

average

(in millions)

Liabilities

Investment and universal life

contracts (6)

(151.2)

Discounted cash

flow

Long duration

interest rate

2.1% (3)

Long-term equity

market volatility

16.9%-26.9%

Non-performance risk

0.2%-1.3%

Utilization rate

See note (4)

Lapse rate

0.0%-9.3%

Mortality rate

See note (5)

December 31, 2018

Assets /

(liabilities)

measured at

Valuation

Unobservable

Input/range

Weighted

fair value

technique(s)

input description

of inputs

average

(in millions)

Assets

Fixed maturities, available-for-sale:

Non-U.S. governments

4.6

Discounted cash

flow

Discount rate (1)

3.2

Illiquidity premium

50bps

Comparability

adjustment

(25)bps

Corporate

25.4

Discounted cash

flow

Discount rate (1)

3.3%-4.5%

3.9

Illiquidity premium

0bps-60bps

36bps

Other debt obligations

1.7

Discounted cash

flow

Discount rate (1)

5.0

Illiquidity premium

500bps

Separate account assets

8,440.8

Discounted cash

flow - mortgage

loans

Discount rate (1)

3.3%-4.7%

4.2

Illiquidity premium

0bps-60bps

56bps

Credit spread rate

85bps-172bps

168bps

Discounted cash

flow - real estate

Discount rate (1)

5.6%-11.5%

6.7

Terminal

capitalization rate

4.3%-9.3%

5.8%

Average market rent

growth rate

2.0%-4.7%

2.9%

Discounted cash

flow - real estate

debt

Loan to value

11.0%-69.3%

45.9

Market interest rate

3.9%-6.0%

4.3

B-92

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

December 31, 2018

Assets /

(liabilities)

measured at

Valuation

Unobservable

Input/range

Weighted

fair value

technique(s)

input description

of inputs

average

(in millions)

Liabilities

Investment and universal life

contracts (6)

(5.3)

Discounted cash

flow

Long duration

interest rate

2.8% (3)

Long-term equity

market volatility

16.7%-27.8%

Non-performance risk

0.6%-1.6%

Utilization rate

See note (4)

Lapse rate

1.3%-9.3%

Mortality rate

See note (5)


(1)	Represents market comparable interest rate or an index adjusted rate used as the base rate in the discounted cash flow analysis prior to any illiquidity or other adjustments, where applicable.


(2)	Revenue multiples are amounts used when we have determined market participants would use such multiples to value the investments.


(3)	Represents the range of rate curves used in the valuation analysis that we have determined market participants would use when pricing the instrument. Derived from interpolation between various observable swap rates.


(4)	This input factor is the number of contractholders taking withdrawals as well as the amount and timing of the withdrawals and a range does not provide a meaningful presentation.


(5)	This input is based on an appropriate industry mortality table and a range does not provide a meaningful presentation.


(6)	Includes bifurcated embedded derivatives that are reported at net asset (liability) fair value within the same line item in the consolidated statements of financial position in which the host contract is reported.

Market comparable discount rates are used as the base rate in the discounted cash flows used to determine the fair value of certain assets. Increases or decreases in the credit spreads on the comparable assets could cause the fair value of the assets to significantly decrease or increase, respectively. Additionally, we may adjust the base discount rate or the modeled price by applying an illiquidity premium given the highly structured nature of certain assets. Increases or decreases in this illiquidity premium could cause significant decreases or increases, respectively, in the fair value of the asset.

Embedded derivatives within our investment and universal life contracts liability can be in either an asset or liability position, depending on certain inputs at the reporting date. Increases to an asset or decreases to a liability are described as increases to fair value. Increases or decreases in market volatilities could cause significant decreases or increases, respectively, in the fair value of embedded derivatives in investment and universal life contracts. Long duration interest rates are used as the mean return when projecting the growth in the value of associated account value and impact the discount rate used in the discounted future cash flows valuation. The amount of claims will increase if account value is not sufficient to cover guaranteed withdrawals. Increases or decreases in risk-free rates could cause the fair value of the embedded derivative to significantly increase or decrease, respectively. Increases or decreases in our own credit risks, which impact the rates used to discount future cash flows, could significantly increase or decrease, respectively, the fair value of the embedded derivative. All of these changes in fair value would impact net income.

Decreases or increases in the mortality rate assumption could cause the fair value of the embedded derivative to decrease or increase, respectively. Decreases or increases in the overall lapse rate assumption could cause the fair value of the embedded derivative to decrease or increase, respectively. The lapse rate assumption may vary dynamically based on the relationship of the guarantee and associated account value. A stronger or weaker dynamic lapse rate assumption could cause the fair value of the embedded derivative to decrease or increase, respectively. The utilization rate assumption includes how many contractholders will take withdrawals, when they will take them and how much of their benefit they will take. Increases or decreases in the assumption of the number of contractholders taking withdrawals could cause the fair value of the embedded derivative to decrease or increase, respectively. Assuming contractholders take withdrawals earlier or later could cause the fair value of the embedded derivative to decrease or increase, respectively. Assuming contractholders take more or less of their benefit could cause the fair value of the embedded derivative to decrease or increase, respectively.

B-93

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

No significant assets and liabilities were measured at fair value on a nonrecurring basis for the years ended December 31, 2019, 2018 and 2017.

Fair Value Option

We elected fair value accounting for:

•

Certain commercial mortgage loans of a consolidated VIE for which it was not practicable for us to determine the carrying value. The consolidated VIE was unwound in the third quarter of 2019. In addition, we had certain obligations of consolidated VIEs held by a synthetic entity for which it was not practicable for us to determine the carrying value. The synthetic entity matured in the first quarter of 2017.


•	Certain real estate ventures that are subject to the equity method of accounting because the nature of the investments is to add value to the properties and generate income from the operations of the properties. Other equity method real estate investments are not fair valued because the investments mainly generate income from the operations of the underlying properties.


•	In 2017, we had certain investment funds for which we did not have enough influence to account for under the equity method in order to reflect the economics of the investment in the financial statements. We did not elect the fair value option for other similar investments as these investments are generally accounted for under the equity method of accounting.

The following tables present information regarding the assets and liabilities for which the fair value option was elected.



		December 31, 2019		December 31, 2018
		(in millions)
Commercial mortgage loans of consolidated VIEs (1) (2)
	Fair value	$	—	$	6.4
	Aggregate contractual principal		—		6.5

Real estate ventures (1)
	Fair value		22.8		17.2


(1)	Reported with other investments in the consolidated statements of financial position.


(2)	None of the loans were more than 90 days past due or in non-accrual status.

B-94

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



		For the year ended December 31,
		2019		2018		2017
		(in millions)
Commercial mortgage loans of consolidated VIEs
	Change in fair value pre-tax gain (loss) (1) (2)	$	0.1	$	(0.2)	$	(0.4)
	Interest income (3)		0.3		0.7		0.9

Obligations of consolidated VIEs
	Change in fair value pre-tax loss - instrument-specific credit risk (2) (4)		—		—		(0.1)
	Change in fair value pre-tax loss (2)		—		—		(0.1)
	Interest expense (5)		—		—		0.3

Real estate ventures
	Change in fair value pre-tax gain (6)		6.0		1.7		3.8

Investment funds
	Change in fair value pre-tax gain (6) (7)		—		—		1.7
	Dividend income (6)		—		—		1.9


(1)	None of the change in fair value related to instrument-specific credit risk.


(2)	Reported in net realized capital gains (losses) on the consolidated statements of operations.


(3)	Reported in net investment income on the consolidated statements of operations and recorded based on the effective interest rates as determined at the closing of the loan.


(4)	Estimated based on credit spreads and quality ratings.


(5)	Reported in operating expenses on the consolidated statements of operations.


(6)	Reported in net investment income on the consolidated statements of operations.


(7)	Absent the fair value election, the change in fair value on the investments would be reported in OCI.

Financial Instruments Not Reported at Fair Value

The carrying value and estimated fair value of financial instruments not recorded at fair value on a recurring basis but required to be disclosed at fair value were as follows:



	December 31, 2019
					Fair value hierarchy level
	Carrying amount		Fair value		Level 1		Level 2		Level 3
	(in millions)
Assets (liabilities)
Mortgage loans	$	15,820.3	$	16,548.0	$	—	$	—	$	16,548.0
Policy loans		742.2		966.3		—		—		966.3
Other investments		273.5		267.8		—		175.0		92.8
Cash and cash equivalents		795.7		795.7		795.7		—		—
Investment contracts		(33,264.0)		(33,358.2)		—		(4,304.5)		(29,053.7)
Long-term debt		(108.7)		(107.6)		—		—		(107.6)
Separate account liabilities		(111,959.7)		(110,964.9)		—		—		(110,964.9)
Bank deposits (1)		(469.6)		(468.3)		—		(468.3)		—
Cash collateral payable		(156.8)		(156.8)		(156.8)		—		—

B-95

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019



	December 31, 2018
					Fair value hierarchy level
	Carrying amount		Fair value		Level 1		Level 2		Level 3
	(in millions)
Assets (liabilities)
Mortgage loans	$	14,662.2	$	14,708.8	$	—	$	—	$	14,708.8
Policy loans		755.9		916.3		—		—		916.3
Other investments		240.9		233.3		—		151.0		82.3
Cash and cash equivalents		860.5		860.5		860.5		—		—
Investment contracts		(31,867.1)		(30,739.2)		—		(4,085.7)		(26,653.5)
Long-term debt		(129.1)		(127.8)		—		—		(127.8)
Separate account liabilities		(95,341.6)		(94,488.7)		—		—		(94,488.7)
Bank deposits (1)		(500.0)		(489.1)		—		(489.1)		—
Cash collateral payable		(70.1)		(70.1)		(70.1)		—		—


(1)	Excludes deposit liabilities without defined or contractual maturities.

17. Statutory Insurance Financial Information

We, the largest indirect subsidiary of PFG, prepare statutory financial statements in accordance with the accounting practices prescribed or permitted by the Insurance Division of the Department of Commerce of the State of Iowa (the “Iowa Insurance Division”). The Iowa Insurance Division recognizes only statutory accounting practices prescribed or permitted by the State of Iowa for determining and reporting the financial condition and results of operations of an insurance company to determine its solvency under the Iowa Insurance Law. The National Association of Insurance Commissioners' (“NAIC”) Accounting Practices and Procedures Manual has been adopted as a component of prescribed practices by the State of Iowa. The Commissioner has the right to permit other specific practices that deviate from prescribed practices. Statutory accounting practices differ from U.S. GAAP primarily due to charging policy acquisition costs to expense as incurred, establishing reserves using different actuarial assumptions, valuing investments on a different basis and not admitting certain assets, including certain net deferred income tax assets.

For the years ended, December 31, 2019 and 2018, our use of prescribed statutory accounting practices resulted in higher statutory surplus of $862.1 million and $546.3 million, respectively, relative to the accounting practices and procedures of the NAIC due to its accounting for reserve credits associated with a reinsurance transaction with an affiliated reinsurer. In addition, as of December 31, 2019 and 2018, our permitted statutory accounting practice relating to variable annuities with a guaranteed living benefit rider resulted in lower statutory surplus of $151.3 million and $69.9 million, respectively, relative to carrying certain interest rate swaps at book value rather than fair value, as if they received hedge accounting treatment for statutory. Effective January 1, 2020, the Iowa Insurance Division approved our request to discontinue the use of this permitted practice due to changes in the practices and procedures of the NAIC. The discontinuance of the permitted practice will create a one-time increase to surplus.

We cede certain term and universal life insurance statutory reserves to our affiliated reinsurance subsidiaries on a funds withheld coinsurance basis. The reserves are secured by cash, invested assets and financing provided by highly rated third parties. As of December 31, 2019 and 2018, our affiliated reinsurance subsidiaries assumed statutory reserves of $7,902.3 million and $6,850.3 million from us, respectively. In the states of Vermont and Delaware, the affiliated reinsurers had permitted and prescribed practices allowing for the admissibility of certain assets backing these reserves. As of December 31, 2019 and 2018, assets admitted under these practices totaled $3,358.0 million and $2,852.0 million, respectively.

Life and health insurance companies are subject to certain risk-based capital (“RBC”) requirements as specified by the NAIC. Under those requirements, the amount of capital and surplus maintained by a life and health insurance company is to be determined based on the various risk factors related to it. As of December 31, 2019, we met the minimum RBC requirements.

B-96

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Our statutory net income and statutory capital and surplus were as follows:



	As of or for the year ended December 31,
	2019		2018		2017
	(in millions)
Statutory net income	$	989.3	$	1,017.6	$	1,976.7
Statutory capital and surplus		5,193.4		5,319.6		4,946.8

18. Revenues from Contracts with Customers

Administrative Service Fee Revenue

We offer service and trust agreements for defined contribution plans, including 401(k) plans, 403(b) plans, and employee stock ownership plans. The investment components of these service agreements are in the form of mutual fund offerings. In addition, plan sponsor trust services are also available through an affiliated trust company.

•

Fees and other revenues are earned for administrative activities performed for the defined contribution plans including recordkeeping and reporting as well as trust, asset management and investment services. The majority of these activities are performed daily over time. Fee-for-service transactions are also provided upon client request. These services are considered distinct or grouped into a bundle until a distinct performance obligation is identified. Some performance obligations are considered a series of distinct services, which are substantially the same and have the same pattern of transfer to the customer.

•

Fees and other revenues can be based on a fixed contractual rate for these services or can be variable based upon contractual rates applied to the market value of the client's investment portfolio each day. If the consideration for this series of performance obligations is based on daily market value, it is considered variable each day as the services are performed over time. The consideration becomes unconstrained and thus recognized as revenue for each day’s series of distinct services once the market value of the clients’ investment portfolios is determined at market close or carried over at the end of the day for days when the market is closed. Additionally, fixed fees and other revenues are recognized point-in-time as fee-for-service transactions upon completion.

We offer administrative services performed for our fee-for-service products, nonqualified benefit plans, separate accounts and dental networks.

•

Fees and other revenues are earned for administrative services performed, which include recordkeeping and reporting services. Services within contracts are not distinct on their own; however, we combine the services into a distinct bundle and account for the bundle as a single performance obligation, which is satisfied over time utilizing the output method as services are rendered. The transaction price corresponds with the performance completed to date, for which the value is recognized as revenue during the period. Variability of consideration is resolved at the end of each period and payments are due when billed.

Deposit Account Fee Revenue

We offer individual retirement accounts (“IRAs”) through Principal Bank, which are primarily funded by retirement savings rolled over from qualified retirement plans. The IRAs are held in savings accounts, money market accounts and certificates of deposit. Revenues are earned through fees as the performance of establishing and maintaining IRA accounts is completed. Fee-for-service transactions are also provided upon client request. The establishment fees and annual maintenance fees are accrued into earnings over a period of time using the average account life. Upfront and recurring bank fees are related to performance obligations that have the same pattern of transfer to the customer and are recognized in income over time with control transferred to the customers utilizing the output method. These fees are based on a fixed contractual rate. Fixed fees and other revenues are also recognized point-in-time as fee-for-service transactions upon completion.

Commission Income

Commission income is earned through sponsored brokerage services. Performance obligations are satisfied at a point in time, upon delivery of a placed case, and the transaction price calculated per the compensation schedule is recognized as revenue.

B-97

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

Disaggregation of Revenues from Contracts with Customers

The following table summarizes the disaggregation of revenues from contracts with customers and reconciles totals to those reported in the consolidated financial statements. Revenues from contracts with customers are included in fees and other revenues on the consolidated statements of operations.



		For the year ended December 31,
		2019		2018		2017

		(in millions)
Administrative service fee revenue		$	283.2	$	284.1	$	288.0
Deposit account fee revenue			9.3		10.5		10.2
Commission income			26.9		19.6		14.9
Other fee revenue			2.5		2.3		2.1
	Total revenues from contracts with customers		321.9		316.5		315.2
Fees and other revenues not within the scope of revenue
	recognition guidance (1)		2,074.8		1,905.7		1,866.9
Total fees and other revenues per consolidated statements of
	operations	$	2,396.7	$	2,222.2	$	2,182.1


(1)	Fees and other revenues not within the scope of the revenue recognition guidance primarily represent revenue on contracts accounted for under the financial instruments or insurance contracts standards.

Contract Costs

Sales compensation and other incremental costs of obtaining a contract are capitalized and amortized over the period of contract benefit if the costs are expected to be recovered. The contract cost asset, which is included in other assets on the consolidated statements of financial position, was $42.1 million and $42.5 million as of December 31, 2019 and December 31, 2018, respectively.

We apply the practical expedient for certain costs where we recognize the incremental costs of obtaining these contracts as an expense when incurred if the amortization period of the assets is one year or less. These costs, along with costs that are not deferrable, are included in operating expenses on the consolidated statements of operations.

Deferred contract costs consist primarily of commissions and variable compensation. We amortize capitalized contract costs on a straight-line basis over the expected contract life, reflecting lapses as they are incurred. Deferred contract costs are subject to impairment testing on an annual basis, or when a triggering event occurs that could warrant an impairment. To the extent future revenues less future maintenance expenses are not adequate to cover the asset balance, an impairment is recognized. For the years ended December 31, 2019 and 2018, $7.5 million and $8.4 million, respectively, of amortization expense was recorded in operating expenses on the consolidated statements of operations and no impairment loss was recognized in relation to the costs capitalized.

19. Stock‑Based Compensation Plans

As of December 31, 2019, our ultimate parent, PFG, sponsored the 2014 Stock Incentive Plan, the Employee Stock Purchase Plan, the Amended and Restated 2010 Stock Incentive Plan and the Stock Incentive Plan ("Stock-Based Compensation Plans"), which resulted in expense to us. As of May 20, 2014, no new grants will be made under the Amended and Restated 2010 Stock Incentive Plan. No grants have been made under the Stock Incentive Plan since at least 2005. Under the terms of the 2014 Stock Incentive Plan, grants may be nonqualified stock options, incentive stock options qualifying under Section 422 of the Internal Revenue Code, restricted stock, restricted stock units, stock appreciation rights, performance shares, performance units or other stock-based awards. To date, PFG has not granted any incentive stock options, restricted stock or performance units under any plans. The following Stock-Based Compensation Plans information represents all share-based compensation data related to us and our subsidiaries’ employees.

B-98

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

For awards with graded vesting, we use an accelerated expense attribution method. The compensation cost that was charged against income from continuing operations for stock-based awards granted under the Stock-Based Compensation Plans was as follows:



	For the year ended December 31,
	2019		2018		2017
	(in millions)
Compensation cost	$	21.9	$	26.4	$	28.4
Related income tax benefit		4.1		5.2		9.8
Capitalized as part of an asset		1.7		1.9		2.5

Nonqualified Stock Options

Nonqualified stock options were granted to certain employees under the 2014 Stock Incentive Plan, the Amended and Restated 2010 Stock Incentive Plan and the Stock Incentive Plan. Options outstanding were granted at an exercise price equal to the fair market value of PFG common stock on the date of grant and expire ten years after the grant date. These options have graded vesting over a three-year period, except in the case of specific types of terminations.

The fair value of stock options is estimated using the Black‑Scholes option pricing model. The following is a summary of the assumptions used in this model for the stock options granted during the period:



	For the year ended December 31,
Options	2019			2018			2017
Expected volatility		23.3	%		26.0	%		27.6	%
Expected term (in years)		7.0			7.0			7.0
Risk-free interest rate		2.6	%		2.8	%		2.2	%
Expected dividend yield		4.07	%		3.19	%		2.87	%
Weighted average estimated fair value	$	10.00		$	14.85		$	15.31

We determine expected volatility based on a combination of historical volatility using daily price observations and implied volatility from traded options on PFG common stock. We believe that incorporating both historical and implied volatility into our expected volatility assumption calculation better reflects market expectations. The expected term represents the period of time that options granted are expected to be outstanding. We determine expected term using historical exercise and employee termination data. The risk-free rate for periods within the expected term of the option is based on the U.S. Treasury risk-free interest rate in effect at the time of grant. The dividend yield is based on historical dividend distributions compared to the closing price of PFG common shares on the grant date.

As of December 31, 2019, we had $1.5 million of total unrecognized compensation cost related to nonvested stock options. The cost is expected to be recognized over a weighted‑average service period of approximately 1.8 years.

Performance Share Awards

Performance share awards were granted to certain employees under the 2014 Stock Incentive Plan and the Amended and Restated 2010 Stock Incentive Plan. The performance share awards are treated as an equity award and are paid in shares. Whether the performance shares are earned depends upon the participant's continued employment through the performance period (except in the case of specific types of terminations) and PFG’s performance against three-year goals set at the beginning of the performance period. Performance goals based on various PFG factors must be achieved for any of the performance shares to be earned. If the performance requirements are not met, the performance shares will be forfeited, no compensation cost will be recognized and any previously recognized compensation cost will be reversed. These awards have no maximum contractual term. Dividend equivalents are credited on performance shares outstanding as of the record date. These dividend equivalents are only paid on the shares released.

The fair value of performance share awards is determined based on the closing stock price of PFG common shares on the grant date. The weighted‑average grant-date fair value of performance share awards granted during 2019, 2018 and 2017 was $53.09, $63.98 and $62.78, respectively.

B-99

Principal Life Insurance Company
Notes to Consolidated Financial Statements – (continued)
December 31, 2019

As of December 31, 2019, we had $1.9 million of total unrecognized compensation cost related to nonvested performance share awards granted. The cost is expected to be recognized over a weighted‑average service period of approximately 1.6 years.

Restricted Stock Units

Restricted stock units were granted to certain employees and agents under the 2014 Stock Incentive Plan, the Amended and Restated 2010 Stock Incentive Plan and Stock Incentive Plan. Restricted stock units are treated as equity awards and are paid in shares. Under these plans, awards have graded or cliff vesting over a three-year service period. When service for PFG ceases (except in the case of specific types of terminations), all vesting stops and unvested units are forfeited. These awards have no maximum contractual term. Dividend equivalents are credited on restricted stock units outstanding as of the record date. These dividend equivalents are only paid on the shares released.

The fair value of restricted stock units is determined based on the closing stock price of PFG common shares on the grant date. The weighted‑average grant-date fair value of restricted stock units granted during 2019, 2018 and 2017 was $53.19, $63.77 and $62.80, respectively.

As of December 31, 2019, we had $18.1 million of total unrecognized compensation cost related to nonvested restricted stock unit awards granted under these plans. The cost is expected to be recognized over a weighted‑average period of approximately 1.7 years.

Employee Stock Purchase Plan

Under the Employee Stock Purchase Plan, participating employees had the opportunity to purchase shares of PFG common stock on a semi-annual basis through 2017. Beginning in 2018, participating employees had the opportunity to purchase shares of PFG common stock on a quarterly basis. Employees may purchase up to $25,000 in PFG stock value annually. Employees may purchase shares of PFG common stock at a price equal to 85% of the shares' fair market value as of the beginning or end of the purchase period, whichever is lower.

We recognize compensation expense for the fair value of the discount granted to employees participating in the employee stock purchase plan in the period of grant. Shares of the Employee Stock Purchase Plan are treated as an equity award. The weighted‑average fair value of the discount on the stock purchased was $11.37, $9.27 and $14.72 during 2019, 2018 and 2017, respectively.

B-100