Principal Life had established special purpose entities to issue secured medium-term notes. Under the program, the payment obligations of principal and interest on the notes were secured by funding agreements issued by Principal Life. Both the notes and supporting funding agreements were registered with the SEC. Principal Life’s payment obligations on the funding agreements were fully and unconditionally guaranteed by PFG. All of the outstanding stock of Principal Life is indirectly owned by PFG and PFG was the only guarantor of the payment obligations of the funding agreements. As of April 2020, there were no outstanding funding agreements or medium-term notes associated with this program.

Under our current shelf registration that was filed with the SEC and became effective April 29, 2020, we have the ability to issue, in unlimited amounts, unsecured senior debt securities or subordinated debt securities, junior subordinated debt, preferred stock, common stock, warrants, depositary shares, purchase contracts and purchase units of PFG. Our wholly owned subsidiary, Principal Financial Services, Inc. (“PFS”), may guarantee, fully and unconditionally or otherwise, our obligations with respect to any non-convertible securities, other than common stock, described in the shelf registration.

The following tables set forth condensed consolidating financial information of (i) PFG, (ii) PFS, (iii) Principal Life and all other direct and indirect subsidiaries of PFG on a combined basis and (iv) the eliminations necessary to arrive at the information for PFG on a consolidated basis as of September 30, 2020 and December 31, 2019, and for the nine months ended September 30, 2020 and 2019.

In presenting the condensed consolidating financial statements, the equity method of accounting has been applied to (i) PFG’s interest in all direct subsidiaries of PFG and (ii) PFS’s interest in Principal Life and all other subsidiaries, where applicable, even though all such subsidiaries meet the requirements to be consolidated under U.S. GAAP. Earnings of subsidiaries are, therefore, reflected in the parent’s investment and earnings. All intercompany balances and transactions, including elimination of the parent’s investment in subsidiaries, between PFG, PFS and Principal Life and all other subsidiaries have been eliminated, as shown in the column “Eliminations.” These condensed consolidating financial statements should be read in conjunction with the consolidated financial statements. The financial information may not necessarily be indicative of results of operations, cash flows or financial position had the subsidiaries operated as independent entities.

PFG sponsors nonqualified benefit plans for select employees and agents and is responsible for the obligations of these plans. Nonqualified plan assets are held in Rabbi trusts for the benefit of all nonqualified plan participants. The Rabbi trusts are separate legal entities and are not a part of PFG on a stand-alone basis. The plan assets are available to satisfy the claims of general creditors only in the event of bankruptcy and are, therefore, consolidated in our statements of financial position.

(1)	PFG sponsors nonqualified benefit plans. Nonqualified benefit plan assets and liabilities held in Rabbi trusts were $781.8 million and $635.1 million, respectively.

Condensed Consolidating Statements of Financial Position

December 31, 2019


					Principal Life
	Principal		Principal		Insurance Company				Principal
	Financial		Financial		and other				Financial
	Group, Inc.		Services, Inc.		subsidiaries				Group, Inc.
	parent only		only		combined (1)		Eliminations		consolidated

	(in millions)
Assets
Fixed maturities, available-for-sale	$	265.8	$	—	$	69,840.4	$	—	$	70,106.2
Fixed maturities, trading		268.2		—		407.7		—		675.9
Equity securities		—		41.4		1,838.0		—		1,879.4
Mortgage loans		—		—		16,486.9		—		16,486.9
Real estate		—		—		1,714.8		—		1,714.8
Policy loans		—		—		798.0		—		798.0
Investment in unconsolidated entities		17,539.6		16,664.1		649.4		(34,022.9)		830.2
Other investments		10.4		251.9		3,597.7		—		3,860.0
Cash and cash equivalents		394.9		598.4		2,656.2		(1,133.6)		2,515.9
Accrued investment income		1.6		0.4		684.6		—		686.6
Premiums due and other receivables		—		100.0		1,961.1		(320.8)		1,740.3
Deferred acquisition costs		—		—		3,521.3		—		3,521.3
Property and equipment		—		—		967.7		—		967.7
Goodwill		—		618.5		1,075.3		—		1,693.8
Other intangibles		—		531.7		1,255.0		—		1,786.7
Separate account assets		—		—		165,468.0		—		165,468.0
Other assets		383.2		35.2		1,509.5		(571.8)		1,356.1
Total assets	$	18,863.7	$	18,841.6	$	274,431.6	$	(36,049.1)	$	276,087.8
Liabilities
Contractholder funds	$	—	$	—	$	41,367.5	$	—	$	41,367.5
Future policy benefits and claims		—		—		40,838.2		—		40,838.2
Other policyholder funds		—		—		959.4		—		959.4
Short-term debt		—		—		93.4		—		93.4
Long-term debt		3,625.5		320.7		108.7		(320.8)		3,734.1
Income taxes currently payable		—		—		66.4		(50.2)		16.2
Deferred income taxes		—		5.9		2,285.8		(495.1)		1,796.6
Separate account liabilities		—		—		165,468.0		—		165,468.0
Other liabilities		620.2		1,113.6		6,104.7		(974.8)		6,863.7
Total liabilities		4,245.7		1,440.2		257,292.1		(1,840.9)		261,137.1

Redeemable noncontrolling interest		—		—		264.9		—		264.9

Stockholders' equity
Common stock		4.8		—		11.0		(11.0)		4.8
Additional paid-in capital		10,182.6		9,658.3		12,157.9		(21,816.2)		10,182.6
Retained earnings		11,074.3		6,263.5		2,985.1		(9,248.6)		11,074.3
Accumulated other comprehensive income		1,037.9		1,479.6		1,654.8		(3,134.4)		1,037.9
Treasury stock, at cost		(7,681.6)		—		(2.0)		2.0		(7,681.6)
Total stockholders' equity attributable to PFG		14,618.0		17,401.4		16,806.8		(34,208.2)		14,618.0
Noncontrolling interest		—		—		67.8		—		67.8
Total stockholders’ equity		14,618.0		17,401.4		16,874.6		(34,208.2)		14,685.8
Total liabilities and stockholders' equity	$	18,863.7	$	18,841.6	$	274,431.6	$	(36,049.1)	$	276,087.8

(1)	PFG sponsors nonqualified benefit plans. Nonqualified benefit plan assets and liabilities held in Rabbi trusts were $731.9 million and $593.7 million, respectively.

Condensed Consolidating Statements of Operations

For the nine months ended September 30, 2020

Principal Life

Principal

Insurance Company

Principal

Financial

and other

Financial

Group, Inc.

Services, Inc.

subsidiaries

Group, Inc.

parent only

only

combined

Eliminations

consolidated

(in millions)

Revenues

Premiums and other considerations

—

4,628.4

—

4,628.4

Fees and other revenues

—

261.9

3,079.7

(9.0)

3,332.6

Net investment income (loss)

9.9

(1.4)

2,828.1

9.5

2,846.1

Net realized capital gains

5.0

41.1

123.3

0.1

169.5

Total revenues

14.9

301.6

10,659.5

0.6

10,976.6

Expenses

Benefits, claims and settlement expenses

—

6,299.8

—

6,299.8

Dividends to policyholders

—

90.2

—

90.2

Operating expenses

148.4

403.0

2,941.2

(7.9)

3,484.7

Total expenses

148.4

403.0

9,331.2

(7.9)

9,874.7

Income (loss) before income taxes

(133.5)

(101.4)

1,328.3

8.5

1,101.9

Income taxes (benefits)

(34.8)

(30.6)

230.3

—

164.9

Equity in the net income of subsidiaries

1,021.9

1,084.2

—

(2,106.1)

—

Net income

923.2

1,013.4

1,098.0

(2,097.6)

937.0

Net income attributable to noncontrolling interest

—

13.8

—

13.8

Net income attributable to PFG

923.2

1,013.4

1,084.2

(2,097.6)

923.2

Net income

923.2

1,013.4

1,098.0

(2,097.6)

937.0

Other comprehensive income

619.7

582.4

658.3

(1,152.2)

708.2

Comprehensive income

1,542.9

1,595.8

1,756.3

(3,249.8)

1,645.2

Condensed Consolidating Statements of Operations

For the nine months ended September 30, 2019


					Principal Life
	Principal		Principal		Insurance Company				Principal
	Financial		Financial		and other				Financial
	Group, Inc.		Services, Inc.		subsidiaries				Group, Inc.
	parent only		only		combined		Eliminations		consolidated

	(in millions)
Revenues
Premiums and other considerations	$	—	$	—	$	5,932.0	$	—	$	5,932.0
Fees and other revenues		—		104.3		3,114.5		(8.7)		3,210.1
Net investment income (loss)		14.3		(5.6)		2,979.2		6.8		2,994.7
Net realized capital gains, excluding impairment losses on available-for-sale securities		11.6		16.0		45.7		—		73.3
Net other-than-temporary impairment losses on available-for-sale securities		—		—		(31.3)		—		(31.3)
Other-than-temporary impairment losses on fixed maturities, available-for-sale reclassified from other comprehensive income		—		—		(3.9)		—		(3.9)
Net impairment losses on available-for-sale securities		—		—		(35.2)		—		(35.2)
Net realized capital gains		11.6		16.0		10.5		—		38.1
Total revenues		25.9		114.7		12,036.2		(1.9)		12,174.9
Expenses
Benefits, claims and settlement expenses		—		—		7,481.3		—		7,481.3
Dividends to policyholders		—		—		90.3		—		90.3
Operating expenses		160.2		205.5		2,923.2		(7.6)		3,281.3
Total expenses		160.2		205.5		10,494.8		(7.6)		10,852.9

Income (loss) before income taxes		(134.3)		(90.8)		1,541.4		5.7		1,322.0
Income taxes (benefits)		(33.2)		(15.2)		241.6		—		193.2
Equity in the net income of subsidiaries		1,194.4		1,264.3		—		(2,458.7)		—
Net income		1,093.3		1,188.7		1,299.8		(2,453.0)		1,128.8
Net income attributable to noncontrolling interest		—		—		35.5		—		35.5
Net income attributable to PFG	$	1,093.3	$	1,188.7	$	1,264.3	$	(2,453.0)	$	1,093.3

Net income	$	1,093.3	$	1,188.7	$	1,299.8	$	(2,453.0)	$	1,128.8
Other comprehensive income		2,833.4		2,749.2		2,797.6		(5,504.9)		2,875.3
Comprehensive income	$	3,926.7	$	3,937.9	$	4,097.4	$	(7,957.9)	$	4,004.1

Condensed Consolidating Statements of Cash Flows

For the nine months ended September 30, 2020

Principal Life

Principal

Insurance Company

Principal

Financial

and other

Financial

Group, Inc.

Services, Inc.

subsidiaries

Group, Inc.

parent only

only

combined

Eliminations

consolidated

(in millions)

Operating activities

Net cash provided by (used in) operating activities

(8.4)

900.7

3,142.4

(924.3)

3,110.4

Investing activities

Fixed maturities available-for-sale and equity securities with intent to hold:

Purchases

(635.2)

—

(11,425.4)

—

(12,060.6)

Sales

—

2,677.3

—

2,677.3

Maturities

146.5

—

6,101.2

—

6,247.7

Mortgage loans acquired or originated

—

(2,281.7)

—

(2,281.7)

Mortgage loans sold or repaid

—

1,877.0

—

1,877.0

Real estate acquired

—

(177.1)

—

(177.1)

Net purchases of property and equipment

—

(2.4)

(80.5)

—

(82.9)

Dividends and returns of capital received from unconsolidated entities

534.1

653.2

—

(1,187.3)

—

Net change in other investments

—

(892.6)

(0.9)

1,053.9

160.4

Net cash provided by (used in) investing activities

45.4

(241.8)

(3,310.1)

(133.4)

(3,639.9)

Financing activities

Issuance of common stock

34.6

—

34.6

Acquisition of treasury stock

(232.0)

—

(232.0)

Payments for financing element derivatives

—

(22.2)

—

(22.2)

Purchase of subsidiary shares from noncontrolling interest

—

(0.9)

—

(0.9)

Dividends to common stockholders

(460.8)

—

(460.8)

Issuance of long-term debt

595.1

6.5

13.7

(6.5)

608.8

Principal repayments of long-term debt

—

(36.4)

(65.3)

36.4

(65.3)

Net repayments of short-term borrowings

—

(12.3)

—

(12.3)

Dividends and capital paid to parent

—

(534.1)

(653.2)

1,187.3

—

Investment contract deposits

—

7,798.7

—

7,798.7

Investment contract withdrawals

—

(6,520.3)

—

(6,520.3)

Net increase in banking operation deposits

—

441.8

—

441.8

Other

—

0.2

—

0.2

Net cash provided by (used in) financing activities

(63.1)

(564.0)

980.2

1,217.2

1,570.3

Net increase (decrease) in cash and cash equivalents

(26.1)

94.9

812.5

159.5

1,040.8

Cash and cash equivalents at beginning of period

394.9

598.4

2,656.2

(1,133.6)

2,515.9

Cash and cash equivalents at end of period

368.8

693.3

3,468.7

(974.1)

3,556.7

Condensed Consolidating Statements of Cash Flows

For the nine months ended September 30, 2019


					Principal Life
	Principal		Principal		Insurance Company				Principal
	Financial		Financial		and other				Financial
	Group, Inc.		Services, Inc.		subsidiaries				Group, Inc.
	parent only		only		combined		Eliminations		consolidated

	(in millions)
Operating activities
Net cash provided by (used in) operating activities	$	52.9	$	(168.3)	$	4,500.1	$	80.1	$	4,464.8
Investing activities
Fixed maturities available-for-sale and equity securities with intent to hold:
Purchases		(150.2)		(0.2)		(8,545.9)		—		(8,696.3)
Sales		—		0.2		1,815.9		—		1,816.1
Maturities		171.9		—		4,557.8		—		4,729.7
Mortgage loans acquired or originated		—		—		(2,872.5)		—		(2,872.5)
Mortgage loans sold or repaid		—		—		1,720.9		—		1,720.9
Real estate acquired		—		—		(89.2)		—		(89.2)
Real estate sold		—		—		96.3		—		96.3
Net purchases of property and equipment		(0.1)		(1.5)		(96.5)		—		(98.1)
Purchase of business or interests in subsidiaries, net of cash acquired		—		(1,209.6)		—		—		(1,209.6)
Dividends and returns of capital received from unconsolidated entities		59.1		1,474.5		—		(1,533.6)		—
Net change in other investments		(40.7)		(62.8)		(153.5)		(66.5)		(323.5)
Net cash provided by (used in) investing activities		40.0		200.6		(3,566.7)		(1,600.1)		(4,926.2)
Financing activities
Issuance of common stock		30.9		—		—		—		30.9
Acquisition of treasury stock		(197.5)		—		—		—		(197.5)
Payments for financing element derivatives		—		—		(19.7)		—		(19.7)
Purchase of subsidiary shares from noncontrolling interest		—		—		(1.1)		—		(1.1)
Dividends to common stockholders		(453.6)		—		—		—		(453.6)
Issuance of long-term debt		493.6		7.5		10.4		(7.5)		504.0
Principal repayments of long-term debt		—		(37.3)		(1.0)		37.3		(1.0)
Net proceeds from short-term borrowings		—		—		58.6		—		58.6
Dividends and capital paid to parent		—		(59.1)		(1,474.5)		1,533.6		—
Investment contract deposits		—		—		6,202.5		—		6,202.5
Investment contract withdrawals		—		—		(5,942.3)		—		(5,942.3)
Net increase in banking operation deposits		—		—		495.6		—		495.6
Other		—		—		5.5		—		5.5
Net cash provided by (used in) financing activities		(126.6)		(88.9)		(666.0)		1,563.4		681.9
Net increase (decrease) in cash and cash equivalents		(33.7)		(56.6)		267.4		43.4		220.5
Cash and cash equivalents at beginning of period		334.9		649.0		3,096.8		(1,103.2)		2,977.5
Cash and cash equivalents at end of period	$	301.2	$	592.4	$	3,364.2	$	(1,059.8)	$	3,198.0