Statutory Insurance Financial Information

12 Months Ended

Dec. 31, 2023

Statutory Insurance Financial Information

Statutory Insurance Financial Information

19. Statutory Insurance Financial Information

Principal Life, the largest indirect subsidiary of PFG, prepares 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.

Principal Life cedes certain term, universal life and Closed Block life insurance statutory reserves to its 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, 2023 and 2022, Principal Life’s affiliated reinsurance subsidiaries assumed statutory reserves of $18,474.2 million and $17,815.1 million from Principal Life, respectively. In the states of Vermont and Delaware, Principal Life’s affiliated reinsurance subsidiaries had permitted and prescribed practices allowing for the admissibility of certain assets backing these reserves. As of December 31, 2023 and 2022, assets admitted under these practices totaled $4,153.8 million and $3,748.4 million, respectively. In addition, as of December 31, 2023 and 2022, one of Principal Life’s affiliated reinsurance subsidiaries in Vermont ceded $10,406.3 million and $9,956.9 million, respectively, of the ULSG reserves it assumed from Principal Life to Talcott Life & Annuity Re.

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, 2023, Principal Life met the minimum RBC requirements.

Statutory net income (loss) and statutory capital and surplus of Principal Life were as follows:

	As of or for the year ended December 31,
	2023		2022		2021
	(in millions)
Statutory net income (loss)	$	1,285.0	$	(1,563.1)	$	864.0
Statutory capital and surplus		4,753.4		4,304.4		5,375.2