UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
1. ANNUAL REPORT PURSUANT TO SECTION 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2001 Commission File Number 2-39957 and
(current number) Commission File Number 33-58028
PRINCIPAL LIFE INSURANCE COMPANY
f/k/a PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
SEPARATE ACCOUNT C
(Exact Name of Registrant, as specified in its charter)
Iowa 42-0127290
- ------------------------------- ----------------------------------
(State or other jurisdiction of IRS Employer Identification No.
incorporation or organization) (Principal Life Insurance Company)
The Principal Financial Group
Des Moines, Iowa 50392-0200
- ------------------------------- ---------------------------------
(Address) (Zip Code)
Registrant's telephone number, including area code (515) 248-3842
Securities registered pursuant to Section 12(g) of the Act:
Variable Contracts - Participating with Pooled Separate Account
Variable Benefits - HR-10 Plans
---------------------------------------------------------------
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes ___X___ No _______
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K (Section 229.405 of this chapter) is not contained herein,
and will not be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. [X]
The Registrant has no voting stock.
PART I
Item 1. Business
The Registrant is a separate account established under the Iowa
insurance laws and regulations as Principal Life Insurance Company
Separate Account C on April 12, 1971, pursuant to a resolution of the
Executive Committee of the Board of Directors of Principal Life
Insurance Company. Principal Life Insurance Company was incorporated
under Iowa law as a mutual life insurance company named Bankers Life
Association. It changed its name to Bankers Life Company in 1911 and
then to Principal Mutual Life Insurance Company in 1986. The name change
to Principal LIfe Insurance Company and reorganization into a mutual
holding company structure took place in 1998. The account was formed to
receive payments under Principal Life Insurance Company Contracts
designed for use in connection with pension or profit sharing plans
which qualify under the Self-Employed Individuals Tax Retirement Act of
1962, as amended ("HR-10"). Principal Life Insurance Company offers
life, disability, health and annuity contracts written on an individual
and group basis.
Pursuant to the Amendments enacted in 1970 to the Investment Company Act
of 1940, the Account is not an investment company for purposes of the
Act.
The objective of these Contracts is to provide for the accumulation of
retirement funds and to provide for payments, usually commencing at
retirement, which tend to reflect changes in the cost of living both
during the years prior to and the years following the commencement of
annuity payments. With Bankers Flexible Annuity Contracts (Registration
No. 2-39957), Principal Life Insurance Company, as a depositor for the
Account, seeks to accomplish this objective by investing the payments
made under the Contracts in shares of Principal Variable Contracts Fund,
Inc. - Capital Value Account (f/k/a Principal Capital Accumulation Fund,
Inc.) which invests principally in common stocks. Similarly, with
Pension Builder Contracts (Registration No. 33-58028), it seeks to
accomplish this objective by investing payments made under the Contract
in three Divisions. One is a "Common Stock Division" where payments are
invested in shares of Principal Variable Contracts Fund, Inc. - Capital
Value Account. Another is a "Money Market Division" where payments are
invested in Principal Variable Contracts Fund, Inc., - Money Market
Account (f/k/a Principal Money Market Fund, Inc.), which invests in
short-term money market instruments. The third Division is a "Government
Securities Division" where payments are invested in Principal Variable
Contracts Fund, Inc. - Government Securities Account (f/k/a Principal
Government Securities Fund, Inc.), which invests in obligations issued
or guaranteed by the United States Government or its agencies. There may
be a combination of investments in the three Divisions, as directed by
Participants.
Except for those Contracts described above with payments credited to the
Registrant (Principal Life Insurance Company Separate Account C) and
Variable Annuity Contracts and Variable Life Insurance Contracts with
payments credited to Principal Life Insurance Company Separate Account B
and Variable Life Separate Account, respectively, the Company
distributes its own products as permitted under the laws of the various
jurisdictions in which the Company is authorized to do business, namely
the fifty states of the United States, the District of Columbia, the
Commonwealth of Puerto Rico and the Canadian provinces of Alberta,
British Columbia, Manitoba, Ontario and Quebec. Such distribution is
through a field agency system of approximately 1045 full-time agents, a
group insurance sales organization of approximately 266 individuals and
through a large number of independent insurance brokers.
The Contracts described above with payments credited to the Registrant
and other Variable Annuity Contracts and Variable Life Insurance
Contracts are distributed through Princor Financial Services
Corporation, an affiliated broker-dealer offering open-end management
investment company shares, variable annuities, variable life insurance,
interests in limited partnerships and general securities to the public.
Such Contracts are sold primarily by registered representatives of the
broker-dealer who are also insurance agents of or brokers for Principal
Life Insurance Company and authorized by applicable law to sell life and
other forms of personal insurance and who are similarly authorized to
sell variable annuities. Such Contracts may also be sold through other
selected broker-dealers.
The Registration Statement filed by the Registrant was made effective
September 13, 1971, and the first sale of Bankers Flexible Annuity
Contracts occurred on October 8, 1971. Effective January 4, 1989, sales
of Bankers Flexible Annuity Contracts were discontinued.
In 1982 the Registrant filed a Registration Statement in File No.
2-78747, to register a new class of securities (called "Pension
Builder") for the same HR-10 plan market utilizing the contingent
deferred sales charge concept. The registration for Pension Builder
contracts first became effective on May 5, 1983 and the first sale under
the Pension Builder Contract was made on September 19, 1983.
In 1989 the Registrant filed a new Registration Statement in File No.
33-27256 for the contracts in view of the fact that aggregate sales
under the prior registration statement approached the amount of
contracts registered thereunder. The contracts offered by the new
registration statement are identical to contracts previously registered
under the 1933 Act in File No. 2-78747.
In 1993 the Registrant filed a new Registration Statement in File No.
33-58028 for the contracts in view of the fact that aggregate sales
under the prior registration statement approached the amount of
contracts registered thereunder. The contracts offered by the new
registration statement are identical to contracts previously registered
under the 1933 Act in File No. 33-27256. Effective September 30, 1995,
sales of Pension Builder Contracts were discontinued.
Item 2. Properties
The Registrant owns no physical properties. The principal properties of
the Depositor, Principal Life Insurance Company, are its home office
complex at The Principal Financial Group in Des Moines, Iowa.
Item 3. Legal Proceedings
None.
Item 4. Submission of Matters to a Vote of Security Holders
Inapplicable.
PART II
Item 5. Market for the Registrant's Common Equity and Related Stockholder
Matters
a. The Registrant does not issue common stock. The Contracts
described in Item 1. are distributed through Princor Financial
Services Corporation, an affiliated broker-dealer offering
open-end management investment company shares, variable annuities,
variable life insurance, interests in limited partnerships and
general securities to the public. Such Contracts are sold
primarily by registered representatives of the broker-dealer who
are also insurance agents of or brokers for Principal Life
Insurance Company and authorized by applicable law to sell life
and other forms of personal insurance and who are similarly
authorized to sell variable annuities. Such Contracts may also be
sold through other selected broker-dealers.
For Bankers Flexible Annuity Contracts (Registration No. 2-39957)
the high and low unit values for each quarterly period during 2000
and 2001 are:
Lowest Unit Value Highest Unit Value
First Quarter 2000 29.0662723 28.5818838
Second " 2000 30.1740744 28.8265762
Third " 2000 27.9917253 28.5325063
Fourth " 2000 27.4644119 29.2275660
First " 2001 25.5367558 29.4086271
Second " 2001 26.2071573 29.8454156
Third " 2001 23.3997283 28.3678286
Fourth " 2001 24.7707271 26.7602748
For Pension Builder Contracts (Registration No. 33-58028) units
were first valued at $1.00 on September 19, 1983 for the Capital
Value Division f/k/a Common Stock Division, September 22, 1983 for
the Money Market Division and March 30, 1987 for the Government
Securities Division. Listed below are the low and high unit values
for each quarterly period during 2000 and 2001.
Government
Capital Value Money Market Securities
Division Division Division
------------------- ------------------- -------------------
Lowest Highest Lowest Highest Lowest Highest
--------- --------- --------- --------- --------- ---------
First Quarter 2000 5.6831195 5.5349559 1.9609123 2.0455166 2.1436620 2.1578413
Second " 2000 5.8911639 5.5606528 1.9760268 2.0669305 2.1102814 2.1999721
Third " 2000 5.4368687 5.4900413 1.9899396 2.0909730 2.0846646 2.2543731
Fourth " 2000 5.3320720 5.6054033 2.0066813 2.1153717 2.1230148 2.3492361
First " 2001 4.8860965 5.6329121 2.1164459 2.1367857 2.3521859 2.4058434
Second " 2001 5.0126990 5.7009944 2.1373695 2.1517168 2.3816853 2.4202842
Third " 2001 4.4543989 5.4124029 2.1521011 2.1608960 2.4041577 2.4993210
Fourth " 2001 4.7140829 5.0802540 2.1611510 2.1646261 2.4652652 2.5295411
b. The approximate number of holders of record of each group contract
and the number of the participants therein as of December 31,
2001, are as follows:
(1) (2)
Number of Group Number of
Contract Holders Participants
---------------- ------------
Bankers Flexible Annuity 12 12
Pension Builder 26 32
c. No dividends have been declared on units held by participants. Any
changes in net investment income, net realized gains and net
realized appreciation are included in the daily valuation of the
units of the Registrant.
Item 6. Selected Financial Data
The information contained in the "Statements of Net Assets, Statements
of Operations and Statements of Changes in Net Assets for Principal Life
Insurance Company Separate Account C", filed as Item 8. should be read
in conjunction with this item.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operation
All payments made to the Registrant on behalf of a Participant under a
contract (less any authorized deductions) are used to purchase shares of
Principal Variable Contracts Fund, Inc. - Capital Value Account, Money
Market Account, Inc., or Government Securities Account, as appropriate,
at net asset value. In addition, any distributions made by the Fund with
respect to shares held by the Registrant are reinvested by the Fund at
net asset value. Values under the contract increase or decrease to
reflect the investment performance of the underlying investments.
Principal Variable Contracts Fund, Inc. is an open-end diversified
management investment company, sponsored by Principal Life Insurance
Company. The principal objective of the Capital Value Account is
long-term capital appreciation and growth of future investment income.
It is intended that the assets of the Fund will consist primarily of a
portfolio of common stocks. The value of the investments held by the
Fund fluctuates daily. It is subject to the risks of changing economic
conditions as well as the risks inherent in the ability of the
management of the Account to anticipate changes in such investments
necessary to meet changes in economic conditions.
The principal objective of the Money Market Account is to seek as high a
level of income available from short-term securities as is considered
consistent with preservation of principal and maintenance of liquidity
by investing all of its assets in a portfolio of money market
instruments.
The principal objective of the Government Securities Account is to seek
a high level of current income, liquidity and safety of principal
through the purchase of obligations issued or guaranteed by the United
States Government or its agencies, with emphasis on Government National
Mortgage Association Certificates ("GNMA Certificates").
Item 8. Financial Statements and Supplementary Data
FINANCIAL STATEMENTS
Principal Life Insurance Company Separate Account C
Year Ended December 31, 2001
Principal Life Insurance Company
Separate Account C
Financial Statements
Year Ended December 31, 2001
Contents
Report of Independent Auditors.................................................1
Audited Financial Statements
Statements of Assets and Liabilities...........................................2
Statements of Operations.......................................................3
Statements of Changes in Net Assets............................................4
Notes to Financial Statements..................................................5
Report of Independent Auditors
Board of Directors and Participants
Principal Life Insurance Company
We have audited the accompanying statements of assets and liabilities of each of
the divisions of Principal Life Insurance Company Separate Account C (comprised
of the Capital Value, Government Securities, and Money Market Divisions) as of
December 31, 2001, and the related statements of operations for the year then
ended, and changes in net assets for each of the two years in the period then
ended. These financial statements are the responsibility of the management of
Principal Life Insurance Company. 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 includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of securities owned as of December 31, 2001, by
correspondence with the transfer agent. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of each of the divisions of
Principal Life Insurance Company Separate Account C at December 31, 2001, and
the results of their operations for the year then ended, and the changes in
their net assets for each of the two years in the period then ended, in
conformity with accounting principles generally accepted in the United States.
/s/ Ernst & Young LLP
Des Moines, Iowa
February 11, 2002
Principal Life Insurance Company
Separate Account C
Statements of Assets and Liabilities
December 31, 2001
Government
Capital Value Securities Money Market
Division Division Division
-------------------------------------------
-------------------------------------------
Assets
Investments in shares of mutual funds
at market $975,691 $15,136 $299,133
Liabilities - - -
-------------------------------------------
-------------------------------------------
Net assets $975,691 $15,136 $299,133
===========================================
===========================================
Net assets
Accumulation units $950,795 $15,136 $299,133
Contracts in annuitization period 24,896 - -
-------------------------------------------
-------------------------------------------
Total net assets $975,691 $15,136 $299,133
===========================================
===========================================
Investment in shares of mutual funds,
at cost $929,135 $13,863 $299,133
Shares of mutual fund owned 35,122 1,307 299,133
Accumulation units outstanding:
Bankers Flexible Annuity 19,829 - -
Pension Builders Plus 83,728 6,092 138,248
Accumulation unit value:
Bankers Flexible Annuity $26.62 $ - $ -
Pension Builders Plus 5.05 2.49 2.16
Annuitized units outstanding:
Bankers Flexible Annuity 431 - -
Pension Builders Plus 2,658 - -
Annuitized unit value:
Bankers Flexible Annuity $26.62 $ - $ -
Pension Builders Plus 5.05 - -
See accompanying notes.
Principal Life Insurance Company
Separate Account C
Statements of Operations
Year Ended December 31, 2001
Capital Government Money
Value Securities Market
Division Division Division
---------------------------------
---------------------------------
Investment income
Income:
Dividends $ 11,864 $ 962 $11,511
Expenses:
Mortality and expense risks 9,078 247 4,613
---------------------------------
Net investment income 2,786 715 6,898
Realized gains on investments
Realized gains on sale of fund shares 5,258 529 -
Capital gains distributions 4,675 - -
---------------------------------
---------------------------------
Total realized gains on investments 529 -
Change in net unrealized appreciation or
depreciation of investments (103,788) (206) -
---------------------------------
---------------------------------
Net increase (decrease) in net assets $ (91,069) $1,038 $ 6,898
resulting from operations
=================================
See accompanying notes.
Principal Life Insurance Company
Separate Account C
Statements of Changes in Net Assets
Capital Government Money
Value Securities Market
Division Division Division
------------------------- ------------------------ -------------------------
------------------------- ------------------------ -------------------------
2001 2000 2001 2000 2001 2000
------------------------- ------------------------ -------------------------
------------------------- ------------------------ -------------------------
Increase (decrease) in net assets from operations:
Net investment income
(loss) $ 2,786 $ 9,575 $ 715 $ (1,664) $ 6,898 $ 12,288
Net realized gains on
investments 5,258 36,743 529 4,011 - -
Capital gains
distributions 4,675 - - - - -
Change in net unrealized
appreciation or
depreciation of
investments (103,788) (44,146) (206) 5,065 - -
------------------------- ------------------------ -------------------------
Net increase (decrease) in
net assets resulting
from operations (91,069) 2,172 1,038 7,412 6,898 12,288
Changes from principal
transactions:
Premiums received from
contractholders 52,215 - 2,690 - 8,063 -
Administration charges (2,525) - (228) - (1,415) -
Contract terminations (2,787) (387,842) (4,612) (37,035) - -
Transfer payments to
other contracts (12,890) - - (202,784) - -
Annuity payments (2,838) (7,687) - - - -
------------------------- ------------------------ -------------------------
Increase (decrease) in net
assets from principal
transactions 31,175 (395,529) (2,150) (239,819) 6,648 -
------------------------- ------------------------ -------------------------
------------------------- ------------------------ -------------------------
Total increase (decrease) (59,894) (393,357) (1,112) (232,407) 13,546 12,288
Net assets at beginning of
period 1,035,585 1,428,942 16,248 248,655 285,587 273,299
------------------------- ------------------------ -------------------------
Net assets at end of period $ 975,691 $1,035,585 $15,136 $ 16,248 $299,133 $285,587
========================= ======================== =========================
See accompanying notes.
Principal Life Insurance Company
Separate Account C
Notes to Financial Statements
December 31, 2001
1. Investment and Accounting Policies
Principal Life Insurance Company Separate Account C (Separate Account C) was
organized by Principal Life Insurance Company (Principal Life) in accordance
with the provisions of the Iowa Insurance Laws and is a part of the total
operations of Principal Life. The assets and liabilities of Separate Account C
are clearly identified and distinguished from the other assets and liabilities
of Principal Life, with the remaining aggregate value of units registered with
the Securities and Exchange Commission under the current registration statement
(but not the authorized number of units) limited to $10.6 million. As directed
by eligible contractholders, Separate Account C invests solely in shares
representing interests in a corresponding investment option. As of December 31,
2001, the contractholder investment options consisted of the accounts of the
following diversified open-end management investment company, organized by
Principal Life: Principal Variable Contracts Fund, Inc. - Capital Value Account,
Government Securities Account and Money Market Account.
Investments are stated at the closing net asset values per share on December 31,
2001. The average cost method is used to determine realized gains and losses on
investments. Dividends are taken into income on an accrual basis as of the
ex-dividend date.
Separate Account C supports the following variable annuity contracts of
Principal Life: Bankers Flexible Annuity Contracts and Pension Builder Plus
Contracts. Contributions to Separate Account C are no longer accepted.
Use of Estimates in the Preparation of Financial Statements
The preparation of Separate Account C's financial statements and accompanying
notes requires management to make estimates and assumptions that affect the
amounts reported and disclosed. These estimates and assumptions could change in
the future as more information becomes known, which could impact the amounts
reported and disclosed in the financial statements and accompanying notes.
Change in Presentation
Separate Account C has presented the 2001 financial information in accordance
with the revised AICPA Audit and Accounting Guide for Investment Companies
effective January 1, 2001. The 2000 financial information has not been
reclassified.
2. Expenses
Principal Life is compensated for the following expenses:
Bankers Flexible Annuity Contracts - Mortality and expense risks assumed by
Principal Life are compensated for by a charge equivalent to an annual rate
of 0.48% of the asset value of each contract. An annual administration charge
of $7 for each participant's account is deducted as compensation for
administrative expenses. The mortality and expense risk and annual
administration charges amounted to $2,600 and $56, respectively, during the
year ended December 31, 2001.
Pension Builder Plus Contracts - Mortality and expense risks assumed by
Principal Life are compensated for by a charge equivalent to an annual rate
of 1.4965% of the asset value of each contract. A contingent sales charge of
up to 7% may be deducted from withdrawals made during the first 10 years of a
contract, except for death or permanent disability. An annual administration
charge will be deducted ranging from a minimum of $25 to a maximum of $275
depending upon a participant's investment account values and the number of
participants under the retirement plan and their participant investment
account value. The charges for mortality and expense risks, and annual
administration amounted to $11,338 and $4,112, respectively, during the year
ended December 31, 2001. There were no contingent sales charges during the
year ended December 31, 2001.
In addition, during the year ended December 31, 2001, management fees were paid
indirectly to Principal Management Corporation, an affiliate of Principal Life
Insurance Company, in its capacity as advisor to Principal Variable Contracts
Fund, Inc. Investment advisory and management fees are computed based on average
daily net asset value. The fee is calculated at an annual rate of .60% of the
Capital Value Account, for the initial $250 million of net asset value,
decreasing by .05% for each incremental $250 million of net asset value with a
floor of .40%.
The fee for the Government Securities and Money Market Account is calculated at
an annual rate of .50% for the initial $100 million of net asset value,
decreasing by .05% for each incremental $100 million of net asset value with a
floor of .30%.
3. Federal Income Taxes
Operations of Separate Account C are a part of the operations of Principal Life.
Under current practice, no federal income taxes are allocated by Principal Life
to the operations of Separate Account C.
4. Purchases and Sales of Investments
The aggregate cost of purchases and proceeds from sales of investments were as
follows during the year ended December 31, 2001:
Division Purchases Sales
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Capital Value:
Bankers Flexible Annuity $24,772 $ 5,263
Pension Builder Plus 43,982 24,855
Government Securities:
Pension Builder Plus 3,652 5,087
Money Market:
Pension Builder Plus 19,330 5,784
Purchases include reinvested dividends and capital gains. Mortality adjustments
are included in purchases or redemptions, as applicable.
Money Market purchases include transactions where investment allocations are not
known at the time of the deposit. Sales reflect subsequent allocations to
directed investment divisions.
5. Changes in Units Outstanding
Transactions in units were as follows for each of the years ended December 31:
2001 2000
------------------------------------------------
Division Purchased Redeemed Purchased Redeemed
-----------------------------------------------------------------------------
-----------------------------------------------------------------------------
Capital Value:
Bankers Flexible Annuity 609 96 - 4,324
Pension Builder Plus 7,131 3,419 - 51,007
Government Securities:
Pension Builder Plus 1,087 1,927 - 109,478
Money Market:
Pension Builder Plus 3,727 661 - -
6. Financial Highlights
Principal Life sells a number of variable annuity products, which have unique
combinations of features and fees that are charged against the contract owner's
account balance. Differences in the fee structures result in a variety of unit
values, expense ratios, and total returns.
Effective with these 2001 annual financial statements, Separate Account C has
presented the following disclosures required by the revised AICPA Audit and
Accounting Guide for Investment Companies. The following table was developed by
determining which products offered by Principal Life have the lowest and highest
total return. Only product designs within each subaccount 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 the Company as contract owners may not have
selected all available and applicable contract options as discussed in Note 2.
6. Financial Highlights (continued)
At December 31, 2001 Year Ended December 31, 2001
---------------------------------------------------------------------------------------
Division Units Unit Value Net Investment Expense Ratio Total Return
Lowest to Assets Lowest to
(000s) Highest (000s) Income Ratio* Highest** Lowest to Highest***
- ----------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------
Capital Value 107 $5.05 to $26.62 $976 1.23% .48% to 1.50% (9.50%) to (8.49%)
Government
Securities 6 2.49 15 5.91 1.50 6.41
Money Market 138 2.16 299 3.96 1.50 2.37
* 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 represent the annualized contract expenses of the separate
account, consisting primarily of mortality and expense charges, for each
period indicated. The ratios include only those expenses that result in a
direct reduction to unit values. Charges made directly to contract owner
accounts through the redemption of units and expenses of the underlying
fund are excluded.
*** These amounts represent the total return to 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 the total
return presented.
9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure
Inapplicable.
PART III
Item 10. Directors and Executive Officers of the Registrant
Inapplicable, the Registrant does not have any directors or executive
officers.
Item 11. Executive Compensation
Inapplicable, the Registrant does not have any directors or executive
officers.
Item 12. Security Ownership of Certain Beneficial Owners and Management
No person owns beneficially or of record the assets held by the
Depositor, Principal Life Insurance Company, in the Separate Account.
As contractholders of the variable contracts each contractholder has
one vote in the election of the Board of Directors at annual meetings
and upon other Principal Life Insurance Company matters, if any, where
a policyholder's vote is taken. The contractholders have the same
voting privilege as do all other policyholders of Principal Life
Insurance Company. An individual participant (certificateholder) does
not have a vote. There are no policyholders that are entitled to cast
more than 5% of the votes to be cast.
Item 13. Certain Relationships and Related Transactions
Inapplicable.
PART IV
Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K
(a) Documents filed as part of this report:
1. The following financial statements are submitted herewith:
Statements of Net Assets -- December 31, 2001
Statements of Operations -- Year ended December 31, 2001
Statements of Changes in Net Assets -- Years ended December 31,
2001 and 2000.
Notes to Financial Statements -- December 31, 2001
2. Schedules - All other schedules for which provision is made in
the applicable accounting regulation of the Securities and
Exchange Commission are not required under the related
instructions or are inapplicable, and therefore have been
omitted.
3. Exhibits:
(20) Subsidiaries of the Registrant
Subsidiaries of the Registrant
The Registrant is a separate account of Principal Life Insurance Company. It has
no subsidiary. Principal Life Insurance Company, as the Depositor of the
Account, owns or controls, as of December 31, 2001, subsidiaries as follows:
I. Principal Holding Company
A. Organized in Iowa.
B. Depositor owns 100% of outstanding stock.
C. Subsidiaries of Principal Holding Company as of December 31,
2001, are as follows:
1. Patrician Associates, Inc. - a real estate development
company.
a. Organized in California.
b. Principal Holding Company owns 100% of outstanding
stock.
2. Petula Associates, Ltd. - a real estate development company.
a. Organized in Iowa.
b. Principal Holding Company owns 100% of outstanding
stock.
c. Subsidiary of Petula Associates, Ltd. as of
December 31, 2001, is as follows:
(1) Petula Prolix Development Company (a general
business corporation involved in joint real estate
ventures).
(a) Organized in Iowa.
(b) Petula Associates, LTD. owns 100% of
outstanding stock.
3. Principal Development Associates, Inc. - a real estate
development company.
a. Organized in California.
b. Principal Holding Company owns 100% of outstanding
stock.
4. Principal Spectrum Associates, Inc. - a real estate
development company.
a. Organized in California.
b. Principal Holding Company owns 100% of outstanding
stock.
5. Principal FC, Ltd. - a limited purpose investment
corporation.
a. Organized in Iowa.
b. Principal Holding Company owns 100% of outstanding
stock.
6. Equity FC, Ltd. - a general business corporation that
engages in investment transactions including limited
partnership and limited liability companies.
a. Organized in Iowa.
b. Principal Holding Company owns 100% of outstanding
stock.
7. HealthRisk Resource Group, Inc. - a general business
corporation engaged in providing managed care expertise and
administrative services to provider organizations.
a. Organized in Iowa.
b. Principal Holding Company owns 100% of outstanding
stock.
8. Principal Residential Mortgage, Inc. - a full service
mortgage banking company.
a. Organized in Iowa.
b. Principal Holding Company owns 100% of outstanding
stock.
c. Subsidiaries of Principal Residential Mortgage, Inc. as
of December 31, 2001, are as follows:
(1) Principal Wholesale Mortgage, Inc. - a brokerage
and servicer of residential mortgages.
(a) Organized in Iowa.
(b) Principal Residential Mortgage, Inc. owns
100% of outstanding stock.
(2) Principal Mortgage Reinsurance Company - a
mortgage reinsurance company.
(a) Organized in Vermont.
(b) Principal Residential Mortgage, Inc. owns
100% of outstanding stock.
(3) Principal Residential Mortgage Funding, LLC - a
limited liability company.
(a) Organized in Delaware.
(b) Principal Residential Mortgage, Inc. owns
100% of outstanding stock.
10. Principal Asset Markets, Inc. - a residential mortgage loan
broker - currently inactive.
a. Organized in Iowa.
b. Principal Holding Company owns 100% of outstanding
stock.
11. Principal Portfolio Services, Inc. - a corporation which
provides mortgage diligence services.
a. Organized in Iowa.
b. Principal Holding Company owns 100% of outstanding
stock.
12. The Admar Group, Inc. - a national managed care service
organization that develops and manages preferred provider
organizations (PPO's).
a. Organized in Florida.
b. Principal Holding Company owns 100% of outstanding
stock.
c. Subsidiary of The Admar Group, Inc. as of December 31,
2001, is as follows:
(1) Admar Corporation - a managed care services
organization.
(a) Organized in California.
(b) The Admar Group, Inc. owns 100% of
outstanding stock.
13. Principal Bank - a federally chartered direct delivery
savings bank.
a. Federally organized.
b. Principal Holding Company owns 100% of outstanding
stock.
14. Principal Health Care, Inc. - a developer and administrator
of health maintenance organizations HMO's.
a. Organized in Iowa.
b. Principal Holding Company owns 100% of outstanding
stock.
15. Dental-Net, Inc. - a managed dental care services
organization.
a. Organized in Arizona.
b. Principal Holding Company owns 100% of outstanding
stock.
c. Subsidiary of Dental-Net, Inc. as of December 31, 2001,
is as follows:
(1) Employers Dental Services, Inc. - an prepaid
dental plan organization.
(a) Organized in Arizona.
(b) Dental-Net, Inc. owns 100% outstanding stock.
16. Principal Financial Advisors, Inc. - a registered investment
advisor.
a. Organized in Iowa.
b. Principal Holding Company owns 100% of outstanding
stock.
17. Delaware Charter Guarantee & Trust Company (d/b/a Trustar
Retirement Services) - a corporation that administers
individual and group retirement plans.
a. Organized in Delaware.
b. Principal Holding Company currently owns 100% of
outstanding stock.
18. Principal Investors Corporation - general business
corporation - not currently active.
a. Organized in New Jersey.
b. Principal Holding Company currently owns 100% of
outstanding stock.
19. Preferred Product Network, Inc. - an insurance broker which
markets select products.
a. Organized in Delaware.
b. Principal Holding Company owns 100% of outstanding
stock.
20. Professional Pensions, Inc. - a corporation engaged in
sales, marketing and administration of group insurance plans
and third party administration for defined contribution
plans.
a. Organized in Connecticut.
b. Principal Holding Company owns 100% of outstanding
stock.
c. Subsidiaries of Professional Pensions, Inc. as of
December 31, 2001, are as follows:
(1) Benefit Fiduciary Corporation - a corporation
which services as a corporate trustee for
retirement funds.
(a) Organized in Rhode Island.
(b) The Professional Pensions, Inc. owns 100% of
outstanding stock.
(2) PPI Employee Benefit Corporation - a registered
broker dealer, limited to the sale of open-end
mutual funds and variable insurance products.
(a) Organized in Connecticut.
(b) The Professional Pensions, Inc. owns 100% of
outstanding stock.
(3) Boston Insurance Trust, Inc. - a corporation which
serves as trustee and administrator of insurance
trusts and arrangements.
(a) Organized in Massachusetts.
(b) The Professional Pensions, Inc. owns 100% of
outstanding stock.
21. Principal Generation Plant, LLC - a limited liability
company that sales excess power.
a. Organized in Delaware.
b. Principal Holding Company owns 100% of outstanding
stock.
22. InSource Group, LLC - a limited liability company which is
an SEC Registered Investment Advisor.
a. Organized in Delaware.
b. Principal Holding Company owns 100% of outstanding
stock.
23. Principal Delaware Name Holding Company, Inc. - currently
inactive.
a. Organized in Delaware.
b. Principal Holding Company owns 100% of outstanding
stock.
II. Principal Development Investors, LLC - a limited liability company.
A. Organized in Delaware.
B. Depositor owns 100% of the outstanding stock.
III. Principal Capital Management, LLC - a limited liability company that
provides investment management services.
A. Organized in Delaware.
B. Depositor owns 100% of the outstanding stock.
C. Subsidiaries of Principal Capital Management, LLC as of December
31, 2001, are as follows:
1. Principal Enterprise Capital, LLC - a limited liability
company.
a. Organized in Delaware.
b. Principal Capital Management, LLC owns 100% outstanding
stock.
2. Principal Commercial Acceptance, LLC - a Delaware LLC.
a. Organized in Delaware.
b. Principal Capital Management, LLC owns 100% outstanding
stock.
3. Principal Capital Real Estate Investors, LLC - a registered
investment advisor.
a. Organized in Delaware.
b. Principal Capital Management, LLC owns 100% outstanding
stock.
4. Principal Commercial Funding, LLC - a correspondent lender
and service provider for loans.
a. Organized in Delaware.
b. Principal Capital Management, LLC owns 100% outstanding
stock.
5. Principal Capital Income Investors, LLC - a limited
liability company.
a. Organized in Delaware.
b. Principal Capital Management, LLC owns 100% outstanding
stock.
6. Principal Capital Futures Trading Advisor, LLC - a limited
liability company.
a. Organized in Delaware.
b. Principal Capital Management, LLC owns 100% outstanding
stock.
7. Spectrum Asset Management, Inc. - a corporation specializing
in all aspects of the preferred market including portfolio
management.
a. Organized in Connecticut.
b. Principal Capital Management, LLC owns 80% of
outstanding stock.
8. Invista Capital Management, LLC - an investment advisor.
a. Organized in Delaware.
b. Principal Capital Management, LLC owns 100% of
outstanding stock.
c. Subsidiary of Invista Capital Management, LLC is as
of December 31, 2001, is as follows:
(1) Principal Capital Trust (a business trust and
private investment company).
(a) Organized in Delaware.
(b) Invista Capital Management, LLC owns 100% of
outstanding shares.
IV. Principal Net Lease Investors, LLC - a limited liability company which
operates as a buyer and seller of net leased investments.
A. Organized in Delaware.
B. Depositor owns 100% of the outstanding stock.
V. Executive Benefit Services, Inc.- marketing, sales and administration
of executive employee benefit services.
A. Organized in North Carolina.
B. Depositor owns 100% of the outstanding stock.
The Depositor's investment in its subsidiaries, which in turn includes the
subsidiary's investment in its subsidiaries, is included in the financial
statements of the Depositor.The Depositor's investment in its subsidiaries,
which in turn includes the subsidiary's investment in its subsidiaries, is
included in the financial statements of the Depositor.
SIGNATURES
Pursuant to the requirements of Section 15(d) of the Securities Exchange
Act of 1934, Principal Life Insurance Company has duly caused this report to be
signed on behalf of Principal Life Insurance Company Separate Account C by the
undersigned thereto duly authorized in the city of Des Moines and State of Iowa,
on the 28th day of March, 2002.
PRINCIPAL LIFE INSURANCE COMPANY SEPARATE ACCOUNT C
/s/J. B. Griswell
By ________________________________________________
Chairman, President and Chief Executive Officer
Attest:
/s/ Joyce N. Hoffman
- -----------------------------------
Joyce N. Hoffman
Senior Vice President and
Corporate Secretary
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant in
the capacities with Principal Life Insurance Company and on the dates indicated.
Signature Title Date
/s/ J. B. Griswell President, Chairman and 03/28/2002
- -------------------- Chief Executive Officer
J. B. Griswell
/s/ D. C. Cunningham Vice President and 03/28/2002
- -------------------- Controller (Principal
D. C. Cunningham Accounting Officer)
/s/ M. H. Gersie Executive Vice President 03/28/2002
- -------------------- and Chief Financial Officer
M. H. Gersie (Principal Financial
Officer)
(B. J. Bernard)* Director 03/28/2002
- --------------------
B. J. Bernard
(J. Carter-Miller)* Director 03/28/2002
- --------------------
J. Carter-Miller
(G. E. Costley)* Director 03/28/2002
- --------------------
G. E. Costley
(D. J. Drury)* Director 03/28/2002
- --------------------
D. J. Drury
(C. D. Gelatt, Jr.)* Director 03/28/2002
- --------------------
C. D. Gelatt, Jr.
(S. L. Helton)* Director 03/28/2002
- --------------------
S. L. Helton
(C. S. Johnson)* Director 03/28/2002
- --------------------
C. S. Johnson
(W. T. Kerr)* Director 03/28/2002
- --------------------
W. T. Kerr
(R. L. Keyser)* Director 03/28/2002
- --------------------
R. L. Keyser
(V. H. Loewenstein)* Director 03/28/2002
- --------------------
V. H. Loewenstein
(R. D. Pearson)* Director 03/28/2002
- --------------------
R. D. Pearson
(F. F. Pena)* Director 03/28/2002
- --------------------
F. F. Pena
(D. M. Stewart)* Director 03/28/2002
- --------------------
D. M. Stewart
(E. E. Tallett)* Director 03/28/2002
- --------------------
E. E. Tallett
*By /s/ J. Barry Griswell
------------------------------------
J. Barry Griswell
Chairman, President and
Chief Executive Officer
Pursuant to Powers of Attorney
Previously Filed or Included Herein