SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               ------------------



                                    FORM 8-K

                                 CURRENT REPORT



                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        Date of Report: OCTOBER 29, 2007
                        (Date of earliest event reported)



                         PRINCIPAL FINANCIAL GROUP, INC.
             (Exact name of registrant as specified in its charter)


       DELAWARE                       1-16725                42-1520346
(State or other jurisdiction    (Commission file number)   (I.R.S. Employer
     of incorporation)                                   Identification Number)


                     711 HIGH STREET, DES MOINES, IOWA 50392
                    (Address of principal executive offices)

                          (515) 247-5111
              (Registrant's telephone number, including area code)

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
    230.425)
[ ] Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17  CFR
    240.14a-12)
[ ] Pre-commencement  communications  pursuant  to  Rule 14d-2(b) under the
    Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
    Act (17 CFR 240.13e-4(c))

                               ------------------



<PAGE>


ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  October  29,  2007,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  September  30, 2007.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Third Quarter 2007 Earnings Release


                                    SIGNATURE

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.


                                    PRINCIPAL FINANCIAL GROUP, INC.


                                    By:  /S/ MICHAEL H. GERSIE
                                        ---------------------------------------
                                    Name:    Michael H. Gersie
                                    Title:   Executive Vice President and Chief
                                             Financial Officer


Date:    October 30, 2007

                                       2
<PAGE>

                                                                     EXHIBIT 99

RELEASE: On receipt
MEDIA CONTACT:   Jeff Rader, 515-247-7883, RADER.JEFF@PRINCIPAL.COM
INVESTOR RELATIONS CONTACT: Tom Graf, 515-235-9500,
                            investor-relations@principal.com


PRINCIPAL FINANCIAL GROUP, INC. REPORTS THIRD QUARTER 2007 RESULTS


Des Moines, IA (October 29, 2007) - Principal  Financial Group, Inc. (NYSE: PFG)
today announced net income available to common stockholders for the three months
ended  September  30, 2007,  of $232.3  million(1),  or $0.87 per diluted  share
compared  to $251.0  million,  or $0.92 per diluted  share for the three  months
ended  September 30, 2006. The company  reported  record  operating  earnings of
$312.9  million for third  quarter  2007,  compared to $254.7  million for third
quarter  2006(2).  Operating  earnings per diluted  share for third quarter 2007
were a record $1.17 compared to $0.94 for the same period in 2006.(3)

"We're particularly  pleased with third quarter 2007 performance,  which coupled
continued  strength  and  momentum  in our  asset  management  and  accumulation
businesses  with solid  underlying  earnings from the Life and Health  Insurance
segment," said J. Barry Griswell, chairman and chief executive officer.

"Our U.S. and International Asset Management and Accumulation  segments continue
to achieve  significant  growth in assets under management (AUM),  driving total
company  AUM up 42  percent,  or $91  billion  from a year ago, to a record $306
billion.(4)  Approximately half of the increase is from strategic  acquisitions,
the other half, from strong organic  growth," said Griswell.  "Growth in AUM, in
turn, is driving significant growth in operating earnings and operating earnings
per share, which are up 16 percent and 19 percent, respectively, year-to-date."

Added Larry Zimpleman,  president and chief operating officer,  "We believe this
strong financial performance and growth reflects our constant attention - to the
needs of our customers,  and the financial  advisors and  consultants  who serve
them."

"To meet  those  needs,  we remain  sharply  focused  on a number of key  areas:
managing  assets   appropriate  for  retirement   savings  and  other  long-term
investment strategies;  achieving strong investment performance;  and delivering
bundled, cost-effective solutions like Total Retirement SUITE SM, which provides
meaningful  benefits to plan sponsors and  participants  alike," said Zimpleman.


                                       3
<PAGE>

"That focus is driving  continued strong sales and retention.  Total company net
cash flows, nearly $19 billion over the trailing twelve months, include a record
$3.2 billion for U.S. Asset Accumulation in the third quarter,  Principal Global
Investors' second best quarter of institutional net cash flows, at $2.8 billion,
and a record $1.5 billion of net cash flows for Principal International."

Additional highlights as of September 30, 2007:

o    Record  operating  revenues  for third  quarter  2007 of  $2,938.8  million
     compared to $2,456.3 million for the same period a year ago.
o    Record  ROE(5) of 16.3  percent  compared to 15.1  percent for the trailing
     twelve months ended September 30, 2006.
o    Continued  strong  organic  sales  of  the  company's  key  retirement  and
     investment   products  for  the  nine  months  ended  September  30,  2007,
     including:  full service  accumulation sales of $7.1 billion, up 32 percent
     (record sales of $3.4 billion in third quarter 2007);  mutual fund sales of
     $6.7 billion, up 137 percent (sales of $2.0 billion in third quarter 2007);
     and individual  annuity sales of $2.3 billion,  up 24 percent (record sales
     of $1.2 billion in third quarter 2007).


                               SEGMENT HIGHLIGHTS


U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating  earnings for third quarter 2007 were a record $211.9 million,
compared  to  $157.4  million  for  the  same  period  in  2006.   Full  service
accumulation  earnings of $111.0 million for third quarter 2007 compare to $73.5
million for the same period a year ago,  reflecting  increased  fees from higher
account values,  and a $30.1 million benefit from unlocking deferred revenue and
expense  assumptions,  partially offset by a $2.2 million tax refinement charge.
Full service accumulation account values were $103.3 billion as of September 30,
2007, compared to $85.1 billion as of September 30, 2006.

Operating  revenues  were a record  $1,509.8  million  for third  quarter  2007,
compared to $1,111.3 million for the same period in 2006. Excluding  recognition
of previously deferred revenues as a result of assumption  refinements described
above, segment revenues improved 27 percent,  reflecting 20-plus percent revenue
growth in five of the segment's seven businesses.

Segment assets under management were a record $262.4 billion as of September 30,
2007, compared to $181.2 billion as of September 30, 2006.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
Segment  operating  earnings for third  quarter 2007 were a record $39.3 million
compared to $23.2  million for the same period in 2006.  The  increase  from the
year ago quarter reflects  continued  strong growth in assets under  management,
and a $9.2 million unlocking  benefit from newly enacted  regulations in Mexico,
which changed the fee and compensation  structure of Mexican pension  companies.
Third quarter 2007 earnings also included a $5.1 million experience benefit from
higher yields on invested assets in Chile due to unusually high inflation.

                                       4
<PAGE>

Operating revenues were a record $224.6 million for third quarter 2007, compared
to $169.2 million for the same period in 2006, primarily due to higher yields on
invested assets in Chile.

Segment assets under  management were a record $26.9 billion as of September 30,
2007, compared to $17.8 billion as of September 30, 2006.

LIFE AND HEALTH INSURANCE
Segment operating  earnings for third quarter 2007 were $73.4 million,  compared
to $82.0  million for the same period in 2006. As  previously  disclosed,  third
quarter  2006  earnings  benefited  by a total of $12.0  million,  from  reserve
refinements in the Health and Specialty Benefits divisions,  and deferred policy
acquisition  cost unlocking in the Individual Life division.  Third quarter 2006
also benefited  from earnings on a higher  capital base in the  Individual  Life
division. Excluding these items, segment earnings improved 7 percent compared to
the year ago  quarter,  reflecting  record  earnings in the  Specialty  Benefits
division and solid  underlying  growth in the Individual  Life division.  Health
earnings  declined from a year ago,  primarily due to worsened loss ratios and a
decline in covered members, partially offset by expense improvements.

Operating revenues for third quarter 2007 were $1,211.6 million,  an increase of
two  percent  from the same  period in 2006.  Specialty  Benefits  continued  to
achieve  strong  growth,  with  revenues  improving  12 percent from a year ago.
Individual  Life  revenues  increased  4  percent,  reflecting  solid  growth in
fee-based  universal life and variable universal life products.  Health revenues
decreased 5 percent, primarily due to lower insured medical covered members.

CORPORATE AND OTHER
Operating  losses  for  third  quarter  2007 were  $11.7  million,  compared  to
operating losses of $7.9 million for the same period in 2006,  reflecting higher
interest  expense  associated with the company's fourth quarter 2006 issuance of
long-term debt.

COMPANY OUTLOOK
The company has no current  guidance  for 2007  operating  earnings  per diluted
share. The most recent guidance for this measure was provided by the company, in
a public release, on April 30, 2007. As a reminder, company guidance speaks only
as of the date it is made.  The  company  does not  undertake  to update  annual
guidance during the year, but may do so if significant  changes occur in general
business conditions or company operations.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  The company does not
undertake to update these statements, which are based on a number of assumptions
concerning future conditions that may ultimately prove to be inaccurate.  Future
events and their effects on the company may not be those anticipated, and actual
results  may  differ   materially   from  the  results   anticipated   in  these
forward-looking  statements.  The risks,  uncertainties  and factors  that could
cause or contribute to such material  differences are discussed in the company's
annual  report on Form 10-K for the year ended  December  31,  2006,  and in the
company's  quarterly  report on Form 10-Q for the quarter  ended June 30,  2007,
filed by the company with the  Securities and Exchange  Commission.  These risks


                                       5
<PAGE>

and uncertainties include, without limitation:  competitive factors;  volatility
of financial markets; decrease in ratings;  interest rate changes;  inability to
attract and retain sales representatives;  international business risks; foreign
currency  exchange  rate  fluctuations;  a pandemic,  terrorist  attack or other
catastrophic  event;  default  of  the  company's  re-insurers;  and  investment
portfolio risks.

USE OF NON-GAAP FINANCIAL MEASURES
The  company  uses a number  of  non-GAAP  financial  measures  that  management
believes are useful to investors  because they  illustrate  the  performance  of
normal,  ongoing operations,  which is important in understanding and evaluating
the  company's  financial  condition  and results of  operations.  They are not,
however, a substitute for U.S. GAAP financial measures.  Therefore,  the company
has  provided  reconciliations  of the  non-GAAP  measures to the most  directly
comparable U.S. GAAP measure at the end of the release. The company adjusts U.S.
GAAP measures for items not directly related TO ongoing operations.  However, it
is possible these  adjusting  items have occurred in the past and could recur in
the future. Management also uses non-GAAP measures for goal setting, determining
employee  and  senior  management   awards  and  compensation,   and  evaluating
performance  on a basis  comparable  to that used by  investors  and  securities
analysts.

SHARE REPURCHASES
On November 28, 2006, the Board  authorized the repurchase of up to $250 million
of the company's  outstanding  common stock.  This program was completed in July
2007, with third quarter repurchases of 0.6 million shares for $32.2 million. On
May 22, 2007,  the Board  authorized the repurchase of up to $250 million of the
company's  outstanding  common  stock.  During the third  quarter,  the  company
repurchased 3.2 million shares for a cost of $180.0 million,  under the May 2007
authorization.   The  company  completed  the  remaining  $70  million  of  that
authorization in October 2007, repurchasing 1.1 million shares.

EARNINGS CONFERENCE CALL
At 9:00 A.M. (CT) tomorrow,  Chairman and CEO J. Barry  Griswell,  President and
COO Larry Zimpleman,  and Executive Vice President and CFO Mike Gersie will lead
a discussion of results during a live  conference  call.  Parties  interested in
listening to the  conference  call live may access the webcast on the  company's
Investor Relations (IR) website (www.principal.com/investor) or by dialing (800)
374-1609 (U.S. callers) or (706) 643-7701  (International callers) approximately
10 minutes  prior to the start of the call.  To access the call,  leader name is
Tom Graf. Listeners can access an audio replay of the call on the IR website, or
by  calling  (800)  642-1687  (US  callers)  or  (706)  645-9291  (International
callers). The access code for the replay is 16893229.  Replays will be available
through  November 6, 2007.  The financial  supplement is currently  available on
company's website and may be referred to during the conference call.

ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial Group(R) (The Principal (R))(6) is a leader in offering
businesses,  individuaLS  and  institutional  clients a wide range of  financial
products and services,  including retirement and investment  services,  life and
health insurance,  and banking through its diverse family of financial  services
companies. A member of the Fortune 500, the Principal Financial Group has $306.0
billion in assets under  management(7)  and serves some 18.3  million  customers
worldwide from offices in Asia, Australia,  Europe, Latin America and the United
States. Principal Financial Group, Inc. is traded on the New York Stock Exchange
under the ticker symbol PFG. For more information, visit WWW.PRINCIPAL.COM.

                                       ###


                                       6
<PAGE>

<TABLE>
<CAPTION>

SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

                                               OPERATING EARNINGS (LOSS)* IN MILLIONS

                                             THREE MONTHS ENDED,               NINE MONTHS ENDED,
                                        --------------------------------------------------------------------------
SEGMENT                                         9/30/07             9/30/06          9/30/07         9/30/06
--------------------------------------------------------------- ----------------- --------------- ----------------
<S>                                               <C>                <C>              <C>            <C>
U.S. ASSET MANAGEMENT AND ACCUMULATION            $211.9             $157.4           $587.0         $466.4
--------------------------------------------------------------- ----------------- --------------- ----------------
INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION     39.3               23.2             85.3           56.9
--------------------------------------------------------------- ----------------- --------------- ----------------
LIFE AND HEALTH INSURANCE                           73.4               82.0            179.0          217.6
------------------------------------------------- ------------- --------------- ----------------- ----------------
CORPORATE AND OTHER                                (11.7)              (7.9)           (18.7)         (20.8)
---------------------------------------------- ---------------- --------------- ----------------- ----------------
OPERATING EARNINGS                                 312.9              254.7            832.6          720.1
--------------------------------------------------------------- ----------------- --------------- ----------------
NET REALIZED/UNREALIZED CAPITAL
  GAINS (LOSSES), AS ADJUSTED                      (59.4)              (3.7)           (18.2)           8.3
--------------------------------------------------------------- ----------------- --------------- ----------------
OTHER AFTER-TAX ADJUSTMENTS                        (21.2)               0.0            (21.2)          18.8
--------------------------------------------------------------- ----------------- --------------- ----------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS       $232.3             $251.0           $793.2         $747.2
------------------------------------------------------------------------------------------------------------------

                                                          PER DILUTED SHARE

                                             THREE MONTHS ENDED,               NINE MONTHS ENDED,
                                        --------------------------------------------------------------------------
                                                   9/30/07             9/30/06          9/30/07         9/30/06
OPERATING EARNINGS                             $     1.17              $  0.94         $   3.09         $  2.60
--------------------------------------------------------------- ----------------- --------------- ----------------
NET REALIZED/UNREALIZED CAPITAL
  GAINS (LOSSES), AS ADJUSTED                       (0.22)               (0.02)           (0.07)           0.03
--------------------------------------------------------------- ----------------- --------------- ----------------
OTHER AFTER-TAX ADJUSTMENTS                         (0.08)                0.00            (0.08)           0.07
--------------------------------------------------------------- ----------------- --------------- ----------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS    $     0.87              $  0.92         $   2.94         $  2.70
--------------------------------------------------------------- ----------------- --------------- ----------------
WEIGHTED-AVERAGE DILUTED COMMON SHARES
  OUTSTANDING (IN MILLIONS)                        267.3                272.1            269.5           276.7
--------------------------------------------------------------- ----------------- --------------- ----------------

</TABLE>








*OPERATING  EARNINGS  VERSUS  U.S.  GAAP (GAAP) NET INCOME  AVAILABLE  TO COMMON
STOCKHOLDERS  Management uses operating  earnings,  which excludes the effect of
net  realized/unrealized  capital  gains  and  losses,  as  adjusted,  and other
after-tax adjustments, for goal setting, determining employee compensation,  and
evaluating  performance  on a basis  comparable  to that used by  investors  and
securities analysts. Segment operating earnings are determined by adjusting U.S.
GAAP net income  available to common  stockholders  for net  realized/unrealized
capital  gains and losses,  as adjusted,  and other  after-tax  adjustments  the
company believes are not indicative of overall operating trends. Note: after-tax
adjustments  have  occurred  in the past and  could  recur in  future  reporting
periods.  While these items may be significant  components in understanding  and
assessing the company's consolidated financial performance,  management believes
the presentation of segment  operating  earnings  enhances the  understanding of
results of  operations  by  highlighting  earnings  attributable  to the normal,
ongoing operations of the company's businesses.




                                       7
<PAGE>

<TABLE>
<CAPTION>

                                            PRINCIPAL FINANCIAL GROUP, INC.
                                                 RESULTS OF OPERATIONS
                                                     (IN MILLIONS)

                                                             THREE MONTHS ENDED               NINE MONTHS ENDED
                                                       -------------------------------- ------------------------------
                                                             9/30/07         9/30/06         9/30/07        9/30/06
                                                       ---------------- --------------- -------------- ---------------
  <S>                                                         <C>             <C>            <C>            <C>
   Premiums and other considerations                          $1,171.4        $1,060.0       $3,456.0       $ 3,206.4
   Fees and other revenues                                       738.5           465.3        1,953.9         1,387.5
   Net investment income                                       1,028.9           931.0        2,928.4         2,694.6
   Net realized/unrealized capital gains (losses)                (89.3)           (6.7)           3.7            23.1
                                                       ---------------- --------------- -------------- ---------------
   TOTAL REVENUES                                              2,849.5         2,449.6        8,342.0         7,311.6
                                                       ---------------- --------------- -------------- ---------------
   Benefits, claims, and settlement expenses                   1,643.2         1,426.2        4,725.9         4,227.6
   Dividends to policyholders                                     73.9            73.0          221.9           217.4
   Operating expenses                                            800.9           619.5        2,316.0         1,865.8
                                                       ---------------- --------------- -------------- ---------------
   TOTAL EXPENSES                                              2,518.0         2,118.7        7,263.8         6,310.8
                                                       ---------------- --------------- -------------- ---------------
   Income from continuing operations before income
        taxes                                                    331.5           330.9        1,078.2         1,000.8
   Income taxes                                                   91.0            72.1          260.3           229.4
                                                       ---------------- --------------- -------------- ---------------
   Income from continuing operations, net of related             240.5           258.8          817.9           771.4
        income taxes
   Income from discontinued operations, net of
        related taxes                                              0.0             0.4            0.0             0.5
                                                         -------------- --------------- -------------- ---------------
   NET INCOME                                                    240.5           259.2          817.9           771.9
   Preferred stock dividends                                       8.2             8.2           24.7            24.7
                                                          ------------- --------------- -------------- ---------------
   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS                $  232.3          $251.0       $  793.2       $   747.2

   Less:
   Net realized/unrealized capital gains (losses),
        as adjusted                                              (59.4)           (3.7)         (18.2)            8.3
   Other after-tax adjustments                                   (21.2)            0.0          (21.2)           18.8
                                                          ------------- --------------- -------------- ---------------
   OPERATING EARNINGS                                         $  312.9          $254.7       $  832.6       $   720.1
                                                          ============= =============== ============== ===============

</TABLE>

<TABLE>
<CAPTION>

                        SELECTED BALANCE SHEET STATISTICS

                                                                            PERIOD ENDED
                                                     ------------------------------------------------------------
                                                          09/30/07              12/31/06            09/30/06
                                                     -------------------- --------------------- -----------------
  <S>                                                      <C>                  <C>               <C>
  Total assets (in billions)                               $  155.6             $   143.7         $   136.2
  Total common equity (in millions)                        $7,326.3             $ 7,318.8         $ 7,146.1
  Total common equity excluding accumulated other
       comprehensive income (in millions)                  $6,937.9             $ 6,471.9         $ 6,368.5
  End of period common shares outstanding
       (in                           millions)                262.5                 268.4             269.6
  Book value per common share                              $   27.91            $    27.27        $    26.51
  Book value per common share excluding
      accumulated other comprehensive income               $   26.43            $    24.11        $    23.62

</TABLE>


                                       8
<PAGE>

<TABLE>
<CAPTION>


                         PRINCIPAL FINANCIAL GROUP, INC.
           RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
                      (IN MILLIONS, EXCEPT PER SHARE DATA)

                                                                         THREE MONTHS ENDED             NINE MONTHS ENDED
                                                                   -------------------------------  ------------------------------
                                                                      9/30/07         9/30/06         9/30/07        9/30/06
                                                                   --------------- --------------- --------------- ---------------
<S>                                                                         <C>             <C>             <C>              <C>
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                          1.17            0.94            3.09             2.60
Net realized/unrealized capital gains (losses)                             (0.22)          (0.02)          (0.07)            0.03
Other after-tax adjustments                                                (0.08)           0.00           (0.08)            0.07
                                                                   --------------- --------------- --------------- ---------------
Net income available to common stockholders                                 0.87            0.92            2.94             2.70
                                                                   =============== =============== =============== ===============

BOOK VALUE PER COMMON SHARE EXCLUDING ACCUMULATED OTHER
COMPREHENSIVE INCOME:
Book value per common share excluding accumulated other
     comprehensive income                                                  26.43           23.62           26.43            23.62
Net unrealized capital gains                                                1.40            3.05            1.40             3.05
Foreign currency translation                                                0.03           (0.12)           0.03            (0.12)
Net unrecognized post-retirement benefit obligations                        0.05            0.00            0.05             0.00
Minimum pension liability                                                   0.00           (0.04)           0.00            (0.04)
                                                                   --------------- --------------- --------------- ---------------
Book value per common share including accumulated other
     comprehensive income                                                  27.91           26.51           27.91            26.51
                                                                   =============== =============== =============== ===============
OPERATING REVENUES:
USAMA                                                                   1,509.8         1,111.3         4,178.0          3,299.4
IAMA                                                                      224.6           169.2           540.9            476.8
Life and Health                                                         1,211.6         1,183.4         3,635.5          3,526.1
Corporate and Other                                                        (7.2)           (7.6)           (6.4)           (13.5)
                                                                   --------------- --------------- --------------- ---------------
Total operating revenues                                                2,938.8         2,456.3         8,348.0          7,288.8
Add:
Net realized/unrealized capital gains (losses) and related
     adjustments                                                          (89.3)           (6.1)           (6.0)            23.6
Less:  Operating revenues from discontinued real estate                     0.0             0.6             0.0              0.8
                                                                   --------------- --------------- --------------- ---------------
Total GAAP revenues                                                     2,849.5         2,449.6         8,342.0          7,311.6
                                                                   =============== =============== =============== ===============

OPERATING EARNINGS:
USAMA                                                                     211.9           157.4           587.0            466.4
IAMA                                                                       39.3            23.2            85.3             56.9
Life and Health                                                            73.4            82.0           179.0            217.6
Corporate and Other                                                       (11.7)           (7.9)          (18.7)           (20.8)
                                                                   --------------- --------------- --------------- ---------------
Total operating earnings                                                  312.9           254.7           832.6            720.1
Net realized/unrealized capital gains (losses)                            (59.4)           (3.7)          (18.2)             8.3
Other after-tax adjustments                                               (21.2)            0.0           (21.2)            18.8
                                                                   --------------- --------------- --------------- ---------------
Net income available to common stockholders                               232.3           251.0           793.2            747.2
                                                                   =============== =============== =============== ===============

NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as adjusted               (59.4)           (3.7)          (18.2)             8.3
Add:
Periodic settlements and accruals on non-hedge derivatives                  5.4             0.0            14.9              0.0
Amortization of DPAC and sale inducement costs                              6.0            (5.1)            4.9             (3.9)
Capital gains (losses) distributed                                         (2.9)            2.2             7.7              5.8
Tax impacts                                                               (32.8)           (2.5)           (7.1)             8.6
Minority interest capital gains (losses)                                   (0.2)            3.0             6.7              4.8
Less related fee adjustments:
Unearned front-end fee income                                               7.9             0.5             8.7              1.6
Certain market value adjustments to fee revenues                           (2.5)            0.1            (3.5)            (1.1)
                                                                   --------------- --------------- --------------- ---------------
GAAP net realized/unrealized capital gains (losses)                       (89.3)           (6.7)            3.7             23.1
                                                                   =============== =============== =============== ===============
OTHER AFTER TAX ADJUSTMENTS:
IRS audit issue                                                             0.0             0.0             0.0             18.8
Tax refinements relaed to prior years                                     (21.2)            0.0           (21.2)             0.0
                                                                   --------------- --------------- --------------- ---------------
Total other after-tax adjustments                                         (21.2)            0.0           (21.2)            18.8
                                                                   =============== =============== =============== ===============

</TABLE>


                                       9
<PAGE>



(1)  Net income of $232.3  million  reflects:  net  realized/unrealized  capital
     losses of $59.4  million,  primarily  related to unrealized  capital losses
     from net hedging activities and the mark-to-market of credit default swaps;
     and  a  $21.2  million  other  after-tax  adjustments  charge  due  to  tax
     refinements related to prior years.
(2)  See Segment  Highlights for items  benefiting  operating  earnings for both
     periods.
(3)  Use of non-GAAP  financial  measures is  discussed  in this  release  after
     Segment Highlights.
(4)  Total  company  AUM,  as  well  as AUM in the  U.S.  Asset  Management  and
     Accumulation  segment,  includes assets under management from the company's
     acquisition of WM Advisors,  Inc.,  which were $27.9 billion as of closing,
     effective  December 31, 2006, and from the acquisition of Morley  Financial
     Services, Inc. which were $13.7 billion as of closing, effective August 31,
     2007.  Total company AUM also includes $2.2 billion of AUM from  operations
     acquired during first quarter 2007 by  CIMB-Principal,  the company's joint
     venture in Malaysia.
(5)  Operating return on average equity excluding other comprehensive income.
(6)  "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
(7)  As of September 30, 2007

<PAGE>
[{"type": "8-K", "sequence": "1", "filename": "final3rdqtr07er.txt", "description": "FORM 8-K", "secsgml_size_bytes": 36797}]
{"company-data": {"conformed-name": "PRINCIPAL FINANCIAL GROUP INC", "cik": "0001126328", "assigned-sic": "6321", "irs-number": "421520346", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-16725", "film-number": "071198080"}, "business-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392", "phone": "5152475111"}, "mail-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392"}}
SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                               ------------------

                                    FORM 8-K

                                 CURRENT REPORT

                     PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                        Date of Report: OCTOBER 29, 2007
                        (Date of earliest event reported)

                         PRINCIPAL FINANCIAL GROUP, INC.
             (Exact name of registrant as specified in its charter)

       DELAWARE                       1-16725                42-1520346
(State or other jurisdiction    (Commission file number)   (I.R.S. Employer
     of incorporation)                                   Identification Number)

                     711 HIGH STREET, DES MOINES, IOWA 50392
                    (Address of principal executive offices)

                          (515) 247-5111
              (Registrant's telephone number, including area code)

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions:

[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR
    230.425)
[ ] Soliciting  material pursuant to Rule 14a-12 under the Exchange Act (17  CFR
    240.14a-12)
[ ] Pre-commencement  communications  pursuant  to  Rule 14d-2(b) under the
    Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
    Act (17 CFR 240.13e-4(c))

                               ------------------
ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  October  29,  2007,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  September  30, 2007.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Third Quarter 2007 Earnings Release

                                    SIGNATURE

         Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
the  registrant  has duly  caused  this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                                    PRINCIPAL FINANCIAL GROUP, INC.

                                    By:  /S/ MICHAEL H. GERSIE
                                        ---------------------------------------
                                    Name:    Michael H. Gersie
                                    Title:   Executive Vice President and Chief
                                             Financial Officer

Date:    October 30, 2007

                                       2
EXHIBIT 99

RELEASE: On receipt
MEDIA CONTACT:   Jeff Rader, 515-247-7883, RADER.JEFF@PRINCIPAL.COM
INVESTOR RELATIONS CONTACT: Tom Graf, 515-235-9500,
                            investor-relations@principal.com

PRINCIPAL FINANCIAL GROUP, INC. REPORTS THIRD QUARTER 2007 RESULTS

Des Moines, IA (October 29, 2007) - Principal  Financial Group, Inc. (NYSE: PFG)
today announced net income available to common stockholders for the three months
ended  September  30, 2007,  of $232.3  million(1),  or $0.87 per diluted  share
compared  to $251.0  million,  or $0.92 per diluted  share for the three  months
ended  September 30, 2006. The company  reported  record  operating  earnings of
$312.9  million for third  quarter  2007,  compared to $254.7  million for third
quarter  2006(2).  Operating  earnings per diluted  share for third quarter 2007
were a record $1.17 compared to $0.94 for the same period in 2006.(3)

"We're particularly  pleased with third quarter 2007 performance,  which coupled
continued  strength  and  momentum  in our  asset  management  and  accumulation
businesses  with solid  underlying  earnings from the Life and Health  Insurance
segment," said J. Barry Griswell, chairman and chief executive officer.

"Our U.S. and International Asset Management and Accumulation  segments continue
to achieve  significant  growth in assets under management (AUM),  driving total
company  AUM up 42  percent,  or $91  billion  from a year ago, to a record $306
billion.(4)  Approximately half of the increase is from strategic  acquisitions,
the other half, from strong organic  growth," said Griswell.  "Growth in AUM, in
turn, is driving significant growth in operating earnings and operating earnings
per share, which are up 16 percent and 19 percent, respectively, year-to-date."

Added Larry Zimpleman,  president and chief operating officer,  "We believe this
strong financial performance and growth reflects our constant attention - to the
needs of our customers,  and the financial  advisors and  consultants  who serve
them."

"To meet  those  needs,  we remain  sharply  focused  on a number of key  areas:
managing  assets   appropriate  for  retirement   savings  and  other  long-term
investment strategies;  achieving strong investment performance;  and delivering
bundled, cost-effective solutions like Total Retirement SUITE SM, which provides
meaningful  benefits to plan sponsors and  participants  alike," said Zimpleman.

                                       3
"That focus is driving  continued strong sales and retention.  Total company net
cash flows, nearly $19 billion over the trailing twelve months, include a record
$3.2 billion for U.S. Asset Accumulation in the third quarter,  Principal Global
Investors' second best quarter of institutional net cash flows, at $2.8 billion,
and a record $1.5 billion of net cash flows for Principal International."

Additional highlights as of September 30, 2007:

o    Record  operating  revenues  for third  quarter  2007 of  $2,938.8  million
     compared to $2,456.3 million for the same period a year ago.
o    Record  ROE(5) of 16.3  percent  compared to 15.1  percent for the trailing
     twelve months ended September 30, 2006.
o    Continued  strong  organic  sales  of  the  company's  key  retirement  and
     investment   products  for  the  nine  months  ended  September  30,  2007,
     including:  full service  accumulation sales of $7.1 billion, up 32 percent
     (record sales of $3.4 billion in third quarter 2007);  mutual fund sales of
     $6.7 billion, up 137 percent (sales of $2.0 billion in third quarter 2007);
     and individual  annuity sales of $2.3 billion,  up 24 percent (record sales
     of $1.2 billion in third quarter 2007).

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating  earnings for third quarter 2007 were a record $211.9 million,
compared  to  $157.4  million  for  the  same  period  in  2006.   Full  service
accumulation  earnings of $111.0 million for third quarter 2007 compare to $73.5
million for the same period a year ago,  reflecting  increased  fees from higher
account values,  and a $30.1 million benefit from unlocking deferred revenue and
expense  assumptions,  partially offset by a $2.2 million tax refinement charge.
Full service accumulation account values were $103.3 billion as of September 30,
2007, compared to $85.1 billion as of September 30, 2006.

Operating  revenues  were a record  $1,509.8  million  for third  quarter  2007,
compared to $1,111.3 million for the same period in 2006. Excluding  recognition
of previously deferred revenues as a result of assumption  refinements described
above, segment revenues improved 27 percent,  reflecting 20-plus percent revenue
growth in five of the segment's seven businesses.

Segment assets under management were a record $262.4 billion as of September 30,
2007, compared to $181.2 billion as of September 30, 2006.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
Segment  operating  earnings for third  quarter 2007 were a record $39.3 million
compared to $23.2  million for the same period in 2006.  The  increase  from the
year ago quarter reflects  continued  strong growth in assets under  management,
and a $9.2 million unlocking  benefit from newly enacted  regulations in Mexico,
which changed the fee and compensation  structure of Mexican pension  companies.
Third quarter 2007 earnings also included a $5.1 million experience benefit from
higher yields on invested assets in Chile due to unusually high inflation.

                                       4
Operating revenues were a record $224.6 million for third quarter 2007, compared
to $169.2 million for the same period in 2006, primarily due to higher yields on
invested assets in Chile.

Segment assets under  management were a record $26.9 billion as of September 30,
2007, compared to $17.8 billion as of September 30, 2006.

LIFE AND HEALTH INSURANCE
Segment operating  earnings for third quarter 2007 were $73.4 million,  compared
to $82.0  million for the same period in 2006. As  previously  disclosed,  third
quarter  2006  earnings  benefited  by a total of $12.0  million,  from  reserve
refinements in the Health and Specialty Benefits divisions,  and deferred policy
acquisition  cost unlocking in the Individual Life division.  Third quarter 2006
also benefited  from earnings on a higher  capital base in the  Individual  Life
division. Excluding these items, segment earnings improved 7 percent compared to
the year ago  quarter,  reflecting  record  earnings in the  Specialty  Benefits
division and solid  underlying  growth in the Individual  Life division.  Health
earnings  declined from a year ago,  primarily due to worsened loss ratios and a
decline in covered members, partially offset by expense improvements.

Operating revenues for third quarter 2007 were $1,211.6 million,  an increase of
two  percent  from the same  period in 2006.  Specialty  Benefits  continued  to
achieve  strong  growth,  with  revenues  improving  12 percent from a year ago.
Individual  Life  revenues  increased  4  percent,  reflecting  solid  growth in
fee-based  universal life and variable universal life products.  Health revenues
decreased 5 percent, primarily due to lower insured medical covered members.

CORPORATE AND OTHER
Operating  losses  for  third  quarter  2007 were  $11.7  million,  compared  to
operating losses of $7.9 million for the same period in 2006,  reflecting higher
interest  expense  associated with the company's fourth quarter 2006 issuance of
long-term debt.

COMPANY OUTLOOK
The company has no current  guidance  for 2007  operating  earnings  per diluted
share. The most recent guidance for this measure was provided by the company, in
a public release, on April 30, 2007. As a reminder, company guidance speaks only
as of the date it is made.  The  company  does not  undertake  to update  annual
guidance during the year, but may do so if significant  changes occur in general
business conditions or company operations.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  The company does not
undertake to update these statements, which are based on a number of assumptions
concerning future conditions that may ultimately prove to be inaccurate.  Future
events and their effects on the company may not be those anticipated, and actual
results  may  differ   materially   from  the  results   anticipated   in  these
forward-looking  statements.  The risks,  uncertainties  and factors  that could
cause or contribute to such material  differences are discussed in the company's
annual  report on Form 10-K for the year ended  December  31,  2006,  and in the
company's  quarterly  report on Form 10-Q for the quarter  ended June 30,  2007,
filed by the company with the  Securities and Exchange  Commission.  These risks

                                       5
and uncertainties include, without limitation:  competitive factors;  volatility
of financial markets; decrease in ratings;  interest rate changes;  inability to
attract and retain sales representatives;  international business risks; foreign
currency  exchange  rate  fluctuations;  a pandemic,  terrorist  attack or other
catastrophic  event;  default  of  the  company's  re-insurers;  and  investment
portfolio risks.

USE OF NON-GAAP FINANCIAL MEASURES
The  company  uses a number  of  non-GAAP  financial  measures  that  management
believes are useful to investors  because they  illustrate  the  performance  of
normal,  ongoing operations,  which is important in understanding and evaluating
the  company's  financial  condition  and results of  operations.  They are not,
however, a substitute for U.S. GAAP financial measures.  Therefore,  the company
has  provided  reconciliations  of the  non-GAAP  measures to the most  directly
comparable U.S. GAAP measure at the end of the release. The company adjusts U.S.
GAAP measures for items not directly related TO ongoing operations.  However, it
is possible these  adjusting  items have occurred in the past and could recur in
the future. Management also uses non-GAAP measures for goal setting, determining
employee  and  senior  management   awards  and  compensation,   and  evaluating
performance  on a basis  comparable  to that used by  investors  and  securities
analysts.

SHARE REPURCHASES
On November 28, 2006, the Board  authorized the repurchase of up to $250 million
of the company's  outstanding  common stock.  This program was completed in July
2007, with third quarter repurchases of 0.6 million shares for $32.2 million. On
May 22, 2007,  the Board  authorized the repurchase of up to $250 million of the
company's  outstanding  common  stock.  During the third  quarter,  the  company
repurchased 3.2 million shares for a cost of $180.0 million,  under the May 2007
authorization.   The  company  completed  the  remaining  $70  million  of  that
authorization in October 2007, repurchasing 1.1 million shares.

EARNINGS CONFERENCE CALL
At 9:00 A.M. (CT) tomorrow,  Chairman and CEO J. Barry  Griswell,  President and
COO Larry Zimpleman,  and Executive Vice President and CFO Mike Gersie will lead
a discussion of results during a live  conference  call.  Parties  interested in
listening to the  conference  call live may access the webcast on the  company's
Investor Relations (IR) website (www.principal.com/investor) or by dialing (800)
374-1609 (U.S. callers) or (706) 643-7701  (International callers) approximately
10 minutes  prior to the start of the call.  To access the call,  leader name is
Tom Graf. Listeners can access an audio replay of the call on the IR website, or
by  calling  (800)  642-1687  (US  callers)  or  (706)  645-9291  (International
callers). The access code for the replay is 16893229.  Replays will be available
through  November 6, 2007.  The financial  supplement is currently  available on
company's website and may be referred to during the conference call.

ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial Group(R) (The Principal (R))(6) is a leader in offering
businesses,  individuaLS  and  institutional  clients a wide range of  financial
products and services,  including retirement and investment  services,  life and
health insurance,  and banking through its diverse family of financial  services
companies. A member of the Fortune 500, the Principal Financial Group has $306.0
billion in assets under  management(7)  and serves some 18.3  million  customers
worldwide from offices in Asia, Australia,  Europe, Latin America and the United
States. Principal Financial Group, Inc. is traded on the New York Stock Exchange
under the ticker symbol PFG. For more information, visit WWW.PRINCIPAL.COM.

                                       ###

                                       6
SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

                                               OPERATING EARNINGS (LOSS)* IN MILLIONS

                                             THREE MONTHS ENDED,               NINE MONTHS ENDED,
                                        --------------------------------------------------------------------------
SEGMENT                                         9/30/07             9/30/06          9/30/07         9/30/06
--------------------------------------------------------------- ----------------- --------------- ----------------
U.S. ASSET MANAGEMENT AND ACCUMULATION            $211.9             $157.4           $587.0         $466.4
--------------------------------------------------------------- ----------------- --------------- ----------------
INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION     39.3               23.2             85.3           56.9
--------------------------------------------------------------- ----------------- --------------- ----------------
LIFE AND HEALTH INSURANCE                           73.4               82.0            179.0          217.6
------------------------------------------------- ------------- --------------- ----------------- ----------------
CORPORATE AND OTHER                                (11.7)              (7.9)           (18.7)         (20.8)
---------------------------------------------- ---------------- --------------- ----------------- ----------------
OPERATING EARNINGS                                 312.9              254.7            832.6          720.1
--------------------------------------------------------------- ----------------- --------------- ----------------
NET REALIZED/UNREALIZED CAPITAL
  GAINS (LOSSES), AS ADJUSTED                      (59.4)              (3.7)           (18.2)           8.3
--------------------------------------------------------------- ----------------- --------------- ----------------
OTHER AFTER-TAX ADJUSTMENTS                        (21.2)               0.0            (21.2)          18.8
--------------------------------------------------------------- ----------------- --------------- ----------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS       $232.3             $251.0           $793.2         $747.2
------------------------------------------------------------------------------------------------------------------

                                                          PER DILUTED SHARE

                                             THREE MONTHS ENDED,               NINE MONTHS ENDED,
                                        --------------------------------------------------------------------------
                                                   9/30/07             9/30/06          9/30/07         9/30/06
OPERATING EARNINGS                             $     1.17              $  0.94         $   3.09         $  2.60
--------------------------------------------------------------- ----------------- --------------- ----------------
NET REALIZED/UNREALIZED CAPITAL
  GAINS (LOSSES), AS ADJUSTED                       (0.22)               (0.02)           (0.07)           0.03
--------------------------------------------------------------- ----------------- --------------- ----------------
OTHER AFTER-TAX ADJUSTMENTS                         (0.08)                0.00            (0.08)           0.07
--------------------------------------------------------------- ----------------- --------------- ----------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS    $     0.87              $  0.92         $   2.94         $  2.70
--------------------------------------------------------------- ----------------- --------------- ----------------
WEIGHTED-AVERAGE DILUTED COMMON SHARES
  OUTSTANDING (IN MILLIONS)                        267.3                272.1            269.5           276.7
--------------------------------------------------------------- ----------------- --------------- ----------------
*OPERATING  EARNINGS  VERSUS  U.S.  GAAP (GAAP) NET INCOME  AVAILABLE  TO COMMON
STOCKHOLDERS  Management uses operating  earnings,  which excludes the effect of
net  realized/unrealized  capital  gains  and  losses,  as  adjusted,  and other
after-tax adjustments, for goal setting, determining employee compensation,  and
evaluating  performance  on a basis  comparable  to that used by  investors  and
securities analysts. Segment operating earnings are determined by adjusting U.S.
GAAP net income  available to common  stockholders  for net  realized/unrealized
capital  gains and losses,  as adjusted,  and other  after-tax  adjustments  the
company believes are not indicative of overall operating trends. Note: after-tax
adjustments  have  occurred  in the past and  could  recur in  future  reporting
periods.  While these items may be significant  components in understanding  and
assessing the company's consolidated financial performance,  management believes
the presentation of segment  operating  earnings  enhances the  understanding of
results of  operations  by  highlighting  earnings  attributable  to the normal,
ongoing operations of the company's businesses.

                                       7
PRINCIPAL FINANCIAL GROUP, INC.
                                                 RESULTS OF OPERATIONS
                                                     (IN MILLIONS)

                                                             THREE MONTHS ENDED               NINE MONTHS ENDED
                                                       -------------------------------- ------------------------------
                                                             9/30/07         9/30/06         9/30/07        9/30/06
                                                       ---------------- --------------- -------------- ---------------
Premiums and other considerations                          $1,171.4        $1,060.0       $3,456.0       $ 3,206.4
   Fees and other revenues                                       738.5           465.3        1,953.9         1,387.5
   Net investment income                                       1,028.9           931.0        2,928.4         2,694.6
   Net realized/unrealized capital gains (losses)                (89.3)           (6.7)           3.7            23.1
                                                       ---------------- --------------- -------------- ---------------
   TOTAL REVENUES                                              2,849.5         2,449.6        8,342.0         7,311.6
                                                       ---------------- --------------- -------------- ---------------
   Benefits, claims, and settlement expenses                   1,643.2         1,426.2        4,725.9         4,227.6
   Dividends to policyholders                                     73.9            73.0          221.9           217.4
   Operating expenses                                            800.9           619.5        2,316.0         1,865.8
                                                       ---------------- --------------- -------------- ---------------
   TOTAL EXPENSES                                              2,518.0         2,118.7        7,263.8         6,310.8
                                                       ---------------- --------------- -------------- ---------------
   Income from continuing operations before income
        taxes                                                    331.5           330.9        1,078.2         1,000.8
   Income taxes                                                   91.0            72.1          260.3           229.4
                                                       ---------------- --------------- -------------- ---------------
   Income from continuing operations, net of related             240.5           258.8          817.9           771.4
        income taxes
   Income from discontinued operations, net of
        related taxes                                              0.0             0.4            0.0             0.5
                                                         -------------- --------------- -------------- ---------------
   NET INCOME                                                    240.5           259.2          817.9           771.9
   Preferred stock dividends                                       8.2             8.2           24.7            24.7
                                                          ------------- --------------- -------------- ---------------
   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS                $  232.3          $251.0       $  793.2       $   747.2

   Less:
   Net realized/unrealized capital gains (losses),
        as adjusted                                              (59.4)           (3.7)         (18.2)            8.3
   Other after-tax adjustments                                   (21.2)            0.0          (21.2)           18.8
                                                          ------------- --------------- -------------- ---------------
   OPERATING EARNINGS                                         $  312.9          $254.7       $  832.6       $   720.1
                                                          ============= =============== ============== ===============
SELECTED BALANCE SHEET STATISTICS

                                                                            PERIOD ENDED
                                                     ------------------------------------------------------------
                                                          09/30/07              12/31/06            09/30/06
                                                     -------------------- --------------------- -----------------
Total assets (in billions)                               $  155.6             $   143.7         $   136.2
  Total common equity (in millions)                        $7,326.3             $ 7,318.8         $ 7,146.1
  Total common equity excluding accumulated other
       comprehensive income (in millions)                  $6,937.9             $ 6,471.9         $ 6,368.5
  End of period common shares outstanding
       (in                           millions)                262.5                 268.4             269.6
  Book value per common share                              $   27.91            $    27.27        $    26.51
  Book value per common share excluding
      accumulated other comprehensive income               $   26.43            $    24.11        $    23.62
8
PRINCIPAL FINANCIAL GROUP, INC.
           RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
                      (IN MILLIONS, EXCEPT PER SHARE DATA)

                                                                         THREE MONTHS ENDED             NINE MONTHS ENDED
                                                                   -------------------------------  ------------------------------
                                                                      9/30/07         9/30/06         9/30/07        9/30/06
                                                                   --------------- --------------- --------------- ---------------
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                          1.17            0.94            3.09             2.60
Net realized/unrealized capital gains (losses)                             (0.22)          (0.02)          (0.07)            0.03
Other after-tax adjustments                                                (0.08)           0.00           (0.08)            0.07
                                                                   --------------- --------------- --------------- ---------------
Net income available to common stockholders                                 0.87            0.92            2.94             2.70
                                                                   =============== =============== =============== ===============

BOOK VALUE PER COMMON SHARE EXCLUDING ACCUMULATED OTHER
COMPREHENSIVE INCOME:
Book value per common share excluding accumulated other
     comprehensive income                                                  26.43           23.62           26.43            23.62
Net unrealized capital gains                                                1.40            3.05            1.40             3.05
Foreign currency translation                                                0.03           (0.12)           0.03            (0.12)
Net unrecognized post-retirement benefit obligations                        0.05            0.00            0.05             0.00
Minimum pension liability                                                   0.00           (0.04)           0.00            (0.04)
                                                                   --------------- --------------- --------------- ---------------
Book value per common share including accumulated other
     comprehensive income                                                  27.91           26.51           27.91            26.51
                                                                   =============== =============== =============== ===============
OPERATING REVENUES:
USAMA                                                                   1,509.8         1,111.3         4,178.0          3,299.4
IAMA                                                                      224.6           169.2           540.9            476.8
Life and Health                                                         1,211.6         1,183.4         3,635.5          3,526.1
Corporate and Other                                                        (7.2)           (7.6)           (6.4)           (13.5)
                                                                   --------------- --------------- --------------- ---------------
Total operating revenues                                                2,938.8         2,456.3         8,348.0          7,288.8
Add:
Net realized/unrealized capital gains (losses) and related
     adjustments                                                          (89.3)           (6.1)           (6.0)            23.6
Less:  Operating revenues from discontinued real estate                     0.0             0.6             0.0              0.8
                                                                   --------------- --------------- --------------- ---------------
Total GAAP revenues                                                     2,849.5         2,449.6         8,342.0          7,311.6
                                                                   =============== =============== =============== ===============

OPERATING EARNINGS:
USAMA                                                                     211.9           157.4           587.0            466.4
IAMA                                                                       39.3            23.2            85.3             56.9
Life and Health                                                            73.4            82.0           179.0            217.6
Corporate and Other                                                       (11.7)           (7.9)          (18.7)           (20.8)
                                                                   --------------- --------------- --------------- ---------------
Total operating earnings                                                  312.9           254.7           832.6            720.1
Net realized/unrealized capital gains (losses)                            (59.4)           (3.7)          (18.2)             8.3
Other after-tax adjustments                                               (21.2)            0.0           (21.2)            18.8
                                                                   --------------- --------------- --------------- ---------------
Net income available to common stockholders                               232.3           251.0           793.2            747.2
                                                                   =============== =============== =============== ===============

NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as adjusted               (59.4)           (3.7)          (18.2)             8.3
Add:
Periodic settlements and accruals on non-hedge derivatives                  5.4             0.0            14.9              0.0
Amortization of DPAC and sale inducement costs                              6.0            (5.1)            4.9             (3.9)
Capital gains (losses) distributed                                         (2.9)            2.2             7.7              5.8
Tax impacts                                                               (32.8)           (2.5)           (7.1)             8.6
Minority interest capital gains (losses)                                   (0.2)            3.0             6.7              4.8
Less related fee adjustments:
Unearned front-end fee income                                               7.9             0.5             8.7              1.6
Certain market value adjustments to fee revenues                           (2.5)            0.1            (3.5)            (1.1)
                                                                   --------------- --------------- --------------- ---------------
GAAP net realized/unrealized capital gains (losses)                       (89.3)           (6.7)            3.7             23.1
                                                                   =============== =============== =============== ===============
OTHER AFTER TAX ADJUSTMENTS:
IRS audit issue                                                             0.0             0.0             0.0             18.8
Tax refinements relaed to prior years                                     (21.2)            0.0           (21.2)             0.0
                                                                   --------------- --------------- --------------- ---------------
Total other after-tax adjustments                                         (21.2)            0.0           (21.2)            18.8
                                                                   =============== =============== =============== ===============
9
(1)  Net income of $232.3  million  reflects:  net  realized/unrealized  capital
     losses of $59.4  million,  primarily  related to unrealized  capital losses
     from net hedging activities and the mark-to-market of credit default swaps;
     and  a  $21.2  million  other  after-tax  adjustments  charge  due  to  tax
     refinements related to prior years.
(2)  See Segment  Highlights for items  benefiting  operating  earnings for both
     periods.
(3)  Use of non-GAAP  financial  measures is  discussed  in this  release  after
     Segment Highlights.
(4)  Total  company  AUM,  as  well  as AUM in the  U.S.  Asset  Management  and
     Accumulation  segment,  includes assets under management from the company's
     acquisition of WM Advisors,  Inc.,  which were $27.9 billion as of closing,
     effective  December 31, 2006, and from the acquisition of Morley  Financial
     Services, Inc. which were $13.7 billion as of closing, effective August 31,
     2007.  Total company AUM also includes $2.2 billion of AUM from  operations
     acquired during first quarter 2007 by  CIMB-Principal,  the company's joint
     venture in Malaysia.
(5)  Operating return on average equity excluding other comprehensive income.
(6)  "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
(7)  As of September 30, 2007