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

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99  Second 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:    July 31, 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 SECOND QUARTER 2007 RESULTS

    RECORD OPERATING REVENUES, RECORD NET INCOME, RECORD OPERATING EARNINGS,
          RECORD EARNINGS PER SHARE AND RECORD ASSETS UNDER MANAGEMENT

Des Moines,  IA (July 30, 2007) - Principal  Financial Group,  Inc. (NYSE:  PFG)
today announced record net income available to common stockholders for the three
months  ended June 30,  2007,  of $303.8  million,  or $1.12 per  diluted  share
compared  to $210.5  million,  or $0.76 per diluted  share for the three  months
ended June 30, 2006. The company  reported record  operating  earnings of $282.9
million for second  quarter 2007,  compared to $225.2 million for second quarter
2006.  Operating earnings per diluted share (EPS) for second quarter 2007 were a
record $1.05 compared to $0.82 for the same period in 2006.(1)

"We're very pleased with second quarter 2007 results,  which coupled outstanding
performance  from our core asset  management and  accumulation  businesses  with
meaningful  improvement from first quarter in the life and health segment," said
J. Barry Griswell, chairman and chief executive officer. "Reflecting significant
underlying  growth in assets under  management  (AUM) and account values,  total
company operating earnings improved 26 percent from a year ago, driving earnings
per share up 28 percent."

"Both the U.S. and  International  Asset  Management and  Accumulation  segments
delivered  record  earnings,  improving 34 percent on a combined basis, on a $75
billion or 39 percent  increase in AUM," said  Griswell.  "Through the first six
months,  these  segments  make up 81 percent of total  company  earnings,  which
compares to 74 percent for the same period a year ago."

"Looking at our operating  segments,  U.S.  Asset  Management  and  Accumulation
remains our key growth driver, as we continue to experience strong momentum from
the company's three key retirement and investment businesses, and from Principal
Global Investors," said Larry Zimpleman,  president and chief operating officer.
"Each  achieved  record or  near-record  earnings  in the second  quarter.  On a
combined  basis,  earnings for Full Service  Accumulation,  Principal Funds (the
company's  mutual funds  business) and Individual  Annuities were up 31 percent.
Account values for these three businesses are approaching  $150 billion,  up $46
billion  or 43  percent  from a year ago,  and up 22  percent  excluding  assets
acquired in the WM Advisor  transaction.  Principal Global  Investors'  earnings
improved  34  percent  from a year ago,  reflecting  strong  AUM growth as well,
including a $21 billion or 44 percent increase in third party assets."

                                       3
<PAGE>

"Earnings  in the  second  quarter  for the Life and  Health  Insurance  segment
rebounded solidly from the first quarter,  as claims experience returned to more
normal  levels  for  the  Individual  Life  and  Specialty  Benefits  divisions,
contributing to a $15 million sequential  improvement in segment earnings," said
Zimpleman.  "We continue to make good  progress in a number of important  areas.
Through mid-year:  we've held segment operating  expenses flat,  including a six
percent reduction for the Health division;  Specialty Benefits division premiums
and fees are up 13 percent;  and the  Individual  Life division is building good
sales  momentum,  with first year premiums and deposits up 34 percent and single
premiums and deposits up 26 percent.  Going forward,  we'll continue to focus on
improving  returns in each of the divisions,  and driving  profitable growth for
the segment."

Additional  highlights  for second  quarter  2007  include:

o Record  operating revenues of $2,785.5  million compared to $2,478.6 million
  for the same period a year ago.
o Record assets under management of $282.1 billion,  up $76.1 billion, or
  37 percent  from second  quarter  2006(2).
o Record  ROE(3) of 15.8  percent compared to 15.0 percent for the trailing
  twelve  months ended June 30, 2006.
o Continued  strong  sales  of each of the company's  three  key  retirement and
  investment  products  during second  quarter 2007,  including:  $2.2 billion
  for Principal Funds;  $1.4 billion for organic full service accumulation; and
  $0.7 billion for individual annuities.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND  ACCUMULATION
Segment operating earnings for second quarter 2007 were a record $196.7 million,
compared  to  $151.2  million  for  the  same  period  in  2006.   Full  service
accumulation  generated  record  earnings  of $84.7  million,  compared to $68.4
million  in second  quarter  2006,  as a result of  increased  fees from  higher
account values.  Principal  Global  Investors and Principal Funds also generated
record earnings for the quarter.  Principal Global Investors'  earnings improved
34 percent from a year ago to $32.2  million,  reflecting  continued  strong fee
revenue growth.  Principal Global  Investors'  second quarter 2007 earnings also
include a benefit of $3.5 million after-tax, primarily due to higher performance
incentive fees.  Principal Funds' earnings  improved 102 percent from a year ago
to $12.3  million,  reflecting  strong  organic  growth  and  earnings  from the
acquisition  of WM Advisors,  Inc.,  which was  effective  December 31, 2006. At
$17.6  million,  Full Service  Payout  earnings were up $6.1 million from a year
ago. $4.1 million of the increase reflects higher mortality gains and prepayment
fee income.

Operating  revenues  for the  second  quarter  increased  23 percent to a record
$1,386.5  million,  compared  to  $1,127.5  million for the same period in 2006,
reflecting record revenues in five of the seven businesses within the segment.

Segment assets under  management  reached a record $240.2 billion as of June 30,
2007, up 38 percent from $174.1 billion as of June 30, 2006.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

                                       4
<PAGE>

Segment  operating  earnings for second quarter 2007 were a record $26.7 million
compared  to $16.1  million for the same  period in 2006,  reflecting  continued
strong  growth  in  assets  under  management  and fee  revenues.  The  increase
primarily  reflects  higher  earnings in Brazil,  which  included  an  after-tax
benefit of $4.0  million  from an  investment  gain that is treated as operating
earnings  under equity method  accounting.  The increase  also  reflects  strong
earnings growth in Chile,  Hong Kong and China.

Operating  revenues were $175.0  million for second  quarter  2007,  compared to
$164.2  million for the same period last year as  increases  in Chile and Brazil
more than offset lower sales of single premium annuities in Mexico.

Segment assets under management were a record $25.3 billion as of June 30, 2007,
compared to $16.3 billion as of June 30, 2006.(4)

LIFE AND HEALTH  INSURANCE
Segment operating earnings for second quarter 2007 were $60.1 million,  compared
to $65.2 million for the same period in 2006.  Individual Life division earnings
were $23.6  million,  compared to $22.1  million for second  quarter  2006.  The
increase  reflects  growth in premiums  and deposits and a return to more normal
claims experience,  partially offset by reduced investment income resulting from
a lower  asset  base,  reflecting  the  division's  release of excess  statutory
reserves to the corporate and other segment in 2006.  Health  division  earnings
were $13.4  million,  compared to $17.4  million for second  quarter  2006.  The
decline is  primarily  due to  worsened  loss  ratios  compared  to the year ago
period.  Specialty  Benefits earnings were $23.1 million in second quarter 2007,
the  division's  second best earnings  quarter.  This compared to a record $25.7
million in second quarter 2006, which benefited from favorable claims experience
in each of the division's group product lines.

Operating  revenues were $1,211.5 million,  compared to $1,183.1 million for the
same period a year ago. Specialty Benefits revenues increased $37.1 million,  or
11  percent,  primarily  due to  growth in the  business,  while  revenues  were
essentially flat for the Health and Individual Life divisions.

CORPORATE AND OTHER
Operating  losses  for  second  quarter  2007 were  $0.6  million,  compared  to
operating  losses of $7.3  million for the same period in 2006.  Second  quarter
2007 results  benefited by $7.2 million  after-tax from higher than normal gains
on joint  venture  real  estate  sales  activity,  reflecting  favorable  market
conditions,  and by $2.5 million  after-tax from recovered  interest income on a
previously non-performing asset. These benefits more than offset higher interest
expense in second quarter 2007 associated with the company's fourth quarter 2006
debt issuance.

                                       5
<PAGE>

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 March 31, 2007,
filed by the company with the  Securities and Exchange  Commission.  These risks
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 reporting  periods.  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. As of June 30, 2007, the company had
repurchased  3.6 million shares for a cost of $217.8 million under this program.
The remaining  $32.2 million under this  authorization  was completed in July of
2007. On May 22, 2007, the Board authorized the repurchase of up to $250 million
of our  outstanding  common stock.  No repurchases  have been made to date under
this authorization.

EARNINGS CONFERENCE CALL
At 9:00 A.M. (CST) 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 1014712.  Replays will be available
through  August 8, 2007.  The  financial  supplement  is currently  available on
company's website and may be referred to during the conference call.

                                       6
<PAGE>

ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial Group(R) (The Principal (R))(5) 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 $282.1
billion in assets under  management(6)  and serves some 18.1  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.

                                       ###



                                       7
<PAGE>

<TABLE>
<CAPTION>


SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS


                                                               OPERATING EARNINGS (LOSS)* IN MILLIONS
                                                -------------------------- ---------------------------
                                                          THREE MONTHS ENDED,             SIX MONTHS ENDED,
<S>                                                       <C>              <C>            <C>             <C>
                                             SEGMENT     6/30/07         6/30/06        6/30/07        6/30/06
---------------------------------------------------- --------------- -------------- -------------- ----------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION       $196.7           $151.2         $375.1          $309.0
---------------------------------------------------- --------------- -------------- -------------- ----------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION         26.7             16.1           46.0            33.7
---------------------------------------------------- --------------- -------------- -------------- ----------------
                          LIFE AND HEALTH INSURANCE         60.1             65.2          105.6           135.6
---------------------------------------------------- --------------- -------------- -------------- ----------------
                                CORPORATE AND OTHER         (0.6)            (7.3)          (7.0)          (12.9)
---------------------------------------------------- --------------- -------------- -------------- ----------------
                                 OPERATING EARNINGS        282.9            225.2          519.7           465.4
---------------------------------------------------- --------------- -------------- -------------- ----------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED         20.9            (12.9)          41.2            12.0
---------------------------------------------------- --------------- -------------- -------------- ----------------
                        OTHER AFTER-TAX ADJUSTMENTS          0.0             (1.8)           0.0            18.8
---------------------------------------------------- --------------- -------------- -------------- ----------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS       $303.8           $210.5         $560.9          $496.2
---------------------------------------------------- --------------- -------------- -------------- ----------------

                                                                       PER DILUTED SHARE
                                                     ------------------------------ -------------------------------
                                                          THREE MONTHS ENDED,            SIX MONTHS ENDED,
                                                     ------------------------------ -------------------------------
                                                         6/30/07         6/30/06        6/30/07        6/30/06
                                                     --------------- -------------- -------------- ----------------
                                 OPERATING EARNINGS         $1.05            $0.82          $1.92           $1.67
---------------------------------------------------- --------------- -------------- -------------- ----------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED          0.07            (0.05)          0.15            0.04
---------------------------------------------------- --------------- -------------- -------------- ----------------
                        OTHER AFTER-TAX ADJUSTMENTS          0.00            (0.01)          0.00            0.07
---------------------------------------------------- --------------- -------------- -------------- ----------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS         $1.12            $0.76          $2.07           $1.78
---------------------------------------------------- --------------- -------------- -------------- ----------------
 WEIGHTED-AVERAGE DILUTED COMMON SHARES OUTSTANDING        270.3            276.2          270.6           279.0
                                                     --------------- -------------- -------------- ----------------

</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: it is possible
these  adjusting  items  have  occurred  in the past and  could  recur in future
reporting  periods.   While  these  items  may  be  significant   components  in
understanding and assessing our 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.

                                       8
<PAGE>


<TABLE>
<CAPTION>

                         PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
-----------------------------------------------------------------------------------------------------------------
                                                       THREE MONTHS ENDED,               SIX MONTHS ENDED,

                                                 ---------------- --------------- --------------- ---------------
                                                     6/30/07        6/30/06          6/30/07         6/30/06
                                                 ---------------- --------------- --------------- ---------------
<S>                                                <C>               <C>             <C>             <C>
Premiums and other considerations                  $   1,176.9       $  1,104.6      $ 2,284.6       $   2,146.4
Fees and other revenues                                  622.9            462.6        1,215.4             922.2
Net investment income                                    976.4            911.7        1,899.5           1,763.6
Net realized/unrealized capital gains (losses)            55.4            (19.1)          93.0              29.8
                                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                      2,831.6          2,459.8        5,492.5           4,862.0
                                                 ---------------- --------------- --------------- ---------------

Benefits, claims, and settlement expenses              1,584.7          1,459.6        3,082.7           2,801.4
Dividends to policyholders                                74.0             72.5          148.0             144.4
Operating expenses                                       760.4            631.1        1,515.1           1,246.3
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                      2,419.1          2,163.2        4,745.8           4,192.1
                                                 ---------------- --------------- --------------- ---------------

Income from continuing operations before income
   taxes                                                 412.5            296.6          746.7             669.9
Income taxes                                             100.4             77.7          169.3             157.3
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations, net of related
   income taxes                                          312.1            218.9          577.4             512.6

Income (loss) from discontinued operations, net
   of related taxes                                        0.0            (0.1)            0.0               0.1
                                                 ---------------- --------------- --------------- ---------------
    NET INCOME                                           312.1            218.8          577.4             512.7
Preferred stock dividends                                  8.3              8.3           16.5              16.5
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS     $     303.8       $    210.5      $   560.9       $     496.2

Less:
Net realized/unrealized capital gains (losses),
   as adjusted                                            20.9            (12.9)          41.2              12.0
Other after-tax adjustments                                0.0             (1.8)           0.0              18.8
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                              $     282.9       $    225.2      $   519.7       $     465.4
                                                 ================ =============== =============== ===============


                                                     SELECTED BALANCE SHEET STATISTICS

                                                              PERIOD ENDED,
                                                     ------------------------------------------------------------
                                                           6/30/07               12/31/06            6/30/06
                                                     -------------------- --------------------- -----------------
Total assets (in billions)                                 $   150.8            $   143.7            $   131.4
Total common equity (in millions)                          $ 7,444.7            $ 7,318.8            $ 6,302.7
Total common equity excluding accumulated other
   comprehensive income (in millions)                      $ 6,890.7            $ 6,471.9            $ 6,084.2
End of period common shares outstanding
   (in millions)                                               266.0                268.4                269.1
Book value per common share                                $    27.99           $    27.27           $    23.42
Book value per common share excluding accumulated
   other comprehensive income                              $    25.90           $    24.11           $    22.61

</TABLE>

                                       9
<PAGE>

<TABLE>
<CAPTION>


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

                                                               THREE MONTHS ENDED,              SIX MONTHS ENDED,
                                                          ------------------------------  -------------------------------
                                                                  6/30/07       6/30/06          6/30/07        6/30/06
                                                          --------------- -------------- --------------- ----------------
<S>                                                                <C>             <C>             <C>             <C>
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                 1.05            0.82            1.92            1.67
Net realized/unrealized capital gains (losses)                     0.07           (0.05)           0.15            0.04
Other after-tax adjustments                                        0.00           (0.01)           0.00            0.07
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                        1.12            0.76            2.07            1.78
                                                          =============== ============== =============== ================

BOOK VALUE PER COMMON SHARE EXCLUDING ACCUMULATED OTHER
COMPREHENSIVE INCOME:
Book value per common share excluding accumulated other
   comprehensive income                                           25.90           22.61           25.90           22.61
Net unrealized capital gains                                       2.00            1.05            2.00            1.05
Foreign currency translation                                       0.04           (0.20)           0.04           (0.20)
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                                           27.99           23.42           27.99           23.42
                                                          =============== ============== =============== ================

OPERATING REVENUES:
USAMA                                                          1,386.5         1,127.5         2,668.2         2,188.1
IAMA                                                             175.0           164.2           316.3           307.6
Life and Health                                                1,211.5         1,183.1         2,423.9         2,342.7
Corporate and Other                                               12.5             3.8             0.8            (5.9)
                                                          --------------- -------------- --------------- ----------------
Total operating revenues                                       2,785.5         2,478.6         5,409.2         4,832.5
Add:
Net realized/unrealized capital gains (losses) and related
   adjustments                                                    46.1           (18.9)           83.3            29.7
Less:  Operating revenues from discontinued real estate            0.0            (0.1)            0.0             0.2
                                                          --------------- -------------- --------------- ----------------
Total GAAP revenues                                            2,831.6         2,459.8         5,492.5         4,862.0
                                                          =============== ============== =============== ================

OPERATING EARNINGS:
USAMA                                                            196.7           151.2           375.1           309.0
IAMA                                                              26.7            16.1            46.0            33.7
Life and Health                                                   60.1            65.2           105.6           135.6
Corporate and Other                                               (0.6)           (7.3)           (7.0)          (12.9)
                                                          --------------- -------------- --------------- ----------------
Total operating earnings                                         282.9           225.2           519.7           465.4
Net realized/unrealized capital gains (losses)                    20.9           (12.9)           41.2            12.0
Other after-tax adjustments                                        0.0            (1.8)            0.0            18.8
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                      303.8           210.5           560.9           496.2
                                                          =============== ============== =============== ================

NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as adjusted       20.9           (12.9)           41.2            12.0
Add:
Periodic settlements and accruals on non-hedge derivatives         9.5             0.0             9.5             0.0
Amortization of DPAC and sale inducement costs                    (1.8)            0.6            (1.1)            1.2
Capital gains distributed                                          8.6             0.0            10.6             3.6
Tax impacts                                                       12.8            (4.8)           25.7            11.1
Minority interest capital gains (losses)                           5.6            (1.8)            6.9             1.8
Less related fee adjustments:
Unearned front-end fee income                                      0.4             0.5             0.8             1.1
Certain market value adjustments to fee revenues                  (0.2)           (0.3)           (1.0)           (1.2)
                                                          --------------- -------------- --------------- ----------------
GAAP net realized/unrealized capital gains (losses)               55.4           (19.1)           93.0            29.8
                                                          =============== ============== =============== ================

OTHER AFTER TAX ADJUSTMENTS:
IRS audit issues                                                   0.0            (1.8)            0.0            18.8
                                                          --------------- -------------- --------------- ----------------
Total other after-tax adjustments                                  0.0            (1.8)            0.0            18.8
                                                          =============== ============== =============== ================

</TABLE>



(1)  Use of non-GAAP  financial  measures is  discussed  in this  release  after
     Segment Highlights.
(2)  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.
(3)  Operating return on average equity excluding other comprehensive income
(4)  Includes $2.2 billion of AUM from operations  acquired during first quarter
     2007 by CIMB-Principal, the company's joint venture in Malaysia.
(5)  "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
(6)  As of June 30, 2007

                                       10
[{"type": "8-K", "sequence": "1", "filename": "final2ndqtr07er.txt", "description": "8K - 2ND QUARTER EARNINGS", "secsgml_size_bytes": 36572}]
{"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": "071011151"}, "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: JULY 30, 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 July 30, 2007, Principal Financial Group, Inc. publicly announced information
regarding  its results of  operations  and  financial  condition for the quarter
ended June 30,  2007.  The text of the  announcement  is  included  herewith  as
Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99  Second 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:    July 31, 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 SECOND QUARTER 2007 RESULTS

    RECORD OPERATING REVENUES, RECORD NET INCOME, RECORD OPERATING EARNINGS,
          RECORD EARNINGS PER SHARE AND RECORD ASSETS UNDER MANAGEMENT

Des Moines,  IA (July 30, 2007) - Principal  Financial Group,  Inc. (NYSE:  PFG)
today announced record net income available to common stockholders for the three
months  ended June 30,  2007,  of $303.8  million,  or $1.12 per  diluted  share
compared  to $210.5  million,  or $0.76 per diluted  share for the three  months
ended June 30, 2006. The company  reported record  operating  earnings of $282.9
million for second  quarter 2007,  compared to $225.2 million for second quarter
2006.  Operating earnings per diluted share (EPS) for second quarter 2007 were a
record $1.05 compared to $0.82 for the same period in 2006.(1)

"We're very pleased with second quarter 2007 results,  which coupled outstanding
performance  from our core asset  management and  accumulation  businesses  with
meaningful  improvement from first quarter in the life and health segment," said
J. Barry Griswell, chairman and chief executive officer. "Reflecting significant
underlying  growth in assets under  management  (AUM) and account values,  total
company operating earnings improved 26 percent from a year ago, driving earnings
per share up 28 percent."

"Both the U.S. and  International  Asset  Management and  Accumulation  segments
delivered  record  earnings,  improving 34 percent on a combined basis, on a $75
billion or 39 percent  increase in AUM," said  Griswell.  "Through the first six
months,  these  segments  make up 81 percent of total  company  earnings,  which
compares to 74 percent for the same period a year ago."

"Looking at our operating  segments,  U.S.  Asset  Management  and  Accumulation
remains our key growth driver, as we continue to experience strong momentum from
the company's three key retirement and investment businesses, and from Principal
Global Investors," said Larry Zimpleman,  president and chief operating officer.
"Each  achieved  record or  near-record  earnings  in the second  quarter.  On a
combined  basis,  earnings for Full Service  Accumulation,  Principal Funds (the
company's  mutual funds  business) and Individual  Annuities were up 31 percent.
Account values for these three businesses are approaching  $150 billion,  up $46
billion  or 43  percent  from a year ago,  and up 22  percent  excluding  assets
acquired in the WM Advisor  transaction.  Principal Global  Investors'  earnings
improved  34  percent  from a year ago,  reflecting  strong  AUM growth as well,
including a $21 billion or 44 percent increase in third party assets."

                                       3
"Earnings  in the  second  quarter  for the Life and  Health  Insurance  segment
rebounded solidly from the first quarter,  as claims experience returned to more
normal  levels  for  the  Individual  Life  and  Specialty  Benefits  divisions,
contributing to a $15 million sequential  improvement in segment earnings," said
Zimpleman.  "We continue to make good  progress in a number of important  areas.
Through mid-year:  we've held segment operating  expenses flat,  including a six
percent reduction for the Health division;  Specialty Benefits division premiums
and fees are up 13 percent;  and the  Individual  Life division is building good
sales  momentum,  with first year premiums and deposits up 34 percent and single
premiums and deposits up 26 percent.  Going forward,  we'll continue to focus on
improving  returns in each of the divisions,  and driving  profitable growth for
the segment."

Additional  highlights  for second  quarter  2007  include:

o Record  operating revenues of $2,785.5  million compared to $2,478.6 million
  for the same period a year ago.
o Record assets under management of $282.1 billion,  up $76.1 billion, or
  37 percent  from second  quarter  2006(2).
o Record  ROE(3) of 15.8  percent compared to 15.0 percent for the trailing
  twelve  months ended June 30, 2006.
o Continued  strong  sales  of each of the company's  three  key  retirement and
  investment  products  during second  quarter 2007,  including:  $2.2 billion
  for Principal Funds;  $1.4 billion for organic full service accumulation; and
  $0.7 billion for individual annuities.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND  ACCUMULATION
Segment operating earnings for second quarter 2007 were a record $196.7 million,
compared  to  $151.2  million  for  the  same  period  in  2006.   Full  service
accumulation  generated  record  earnings  of $84.7  million,  compared to $68.4
million  in second  quarter  2006,  as a result of  increased  fees from  higher
account values.  Principal  Global  Investors and Principal Funds also generated
record earnings for the quarter.  Principal Global Investors'  earnings improved
34 percent from a year ago to $32.2  million,  reflecting  continued  strong fee
revenue growth.  Principal Global  Investors'  second quarter 2007 earnings also
include a benefit of $3.5 million after-tax, primarily due to higher performance
incentive fees.  Principal Funds' earnings  improved 102 percent from a year ago
to $12.3  million,  reflecting  strong  organic  growth  and  earnings  from the
acquisition  of WM Advisors,  Inc.,  which was  effective  December 31, 2006. At
$17.6  million,  Full Service  Payout  earnings were up $6.1 million from a year
ago. $4.1 million of the increase reflects higher mortality gains and prepayment
fee income.

Operating  revenues  for the  second  quarter  increased  23 percent to a record
$1,386.5  million,  compared  to  $1,127.5  million for the same period in 2006,
reflecting record revenues in five of the seven businesses within the segment.

Segment assets under  management  reached a record $240.2 billion as of June 30,
2007, up 38 percent from $174.1 billion as of June 30, 2006.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

                                       4
Segment  operating  earnings for second quarter 2007 were a record $26.7 million
compared  to $16.1  million for the same  period in 2006,  reflecting  continued
strong  growth  in  assets  under  management  and fee  revenues.  The  increase
primarily  reflects  higher  earnings in Brazil,  which  included  an  after-tax
benefit of $4.0  million  from an  investment  gain that is treated as operating
earnings  under equity method  accounting.  The increase  also  reflects  strong
earnings growth in Chile,  Hong Kong and China.

Operating  revenues were $175.0  million for second  quarter  2007,  compared to
$164.2  million for the same period last year as  increases  in Chile and Brazil
more than offset lower sales of single premium annuities in Mexico.

Segment assets under management were a record $25.3 billion as of June 30, 2007,
compared to $16.3 billion as of June 30, 2006.(4)

LIFE AND HEALTH  INSURANCE
Segment operating earnings for second quarter 2007 were $60.1 million,  compared
to $65.2 million for the same period in 2006.  Individual Life division earnings
were $23.6  million,  compared to $22.1  million for second  quarter  2006.  The
increase  reflects  growth in premiums  and deposits and a return to more normal
claims experience,  partially offset by reduced investment income resulting from
a lower  asset  base,  reflecting  the  division's  release of excess  statutory
reserves to the corporate and other segment in 2006.  Health  division  earnings
were $13.4  million,  compared to $17.4  million for second  quarter  2006.  The
decline is  primarily  due to  worsened  loss  ratios  compared  to the year ago
period.  Specialty  Benefits earnings were $23.1 million in second quarter 2007,
the  division's  second best earnings  quarter.  This compared to a record $25.7
million in second quarter 2006, which benefited from favorable claims experience
in each of the division's group product lines.

Operating  revenues were $1,211.5 million,  compared to $1,183.1 million for the
same period a year ago. Specialty Benefits revenues increased $37.1 million,  or
11  percent,  primarily  due to  growth in the  business,  while  revenues  were
essentially flat for the Health and Individual Life divisions.

CORPORATE AND OTHER
Operating  losses  for  second  quarter  2007 were  $0.6  million,  compared  to
operating  losses of $7.3  million for the same period in 2006.  Second  quarter
2007 results  benefited by $7.2 million  after-tax from higher than normal gains
on joint  venture  real  estate  sales  activity,  reflecting  favorable  market
conditions,  and by $2.5 million  after-tax from recovered  interest income on a
previously non-performing asset. These benefits more than offset higher interest
expense in second quarter 2007 associated with the company's fourth quarter 2006
debt issuance.

                                       5
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 March 31, 2007,
filed by the company with the  Securities and Exchange  Commission.  These risks
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 reporting  periods.  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. As of June 30, 2007, the company had
repurchased  3.6 million shares for a cost of $217.8 million under this program.
The remaining  $32.2 million under this  authorization  was completed in July of
2007. On May 22, 2007, the Board authorized the repurchase of up to $250 million
of our  outstanding  common stock.  No repurchases  have been made to date under
this authorization.

EARNINGS CONFERENCE CALL
At 9:00 A.M. (CST) 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 1014712.  Replays will be available
through  August 8, 2007.  The  financial  supplement  is currently  available on
company's website and may be referred to during the conference call.

                                       6
ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial Group(R) (The Principal (R))(5) 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 $282.1
billion in assets under  management(6)  and serves some 18.1  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.

                                       ###

                                       7
SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

                                                               OPERATING EARNINGS (LOSS)* IN MILLIONS
                                                -------------------------- ---------------------------
                                                          THREE MONTHS ENDED,             SIX MONTHS ENDED,
SEGMENT     6/30/07         6/30/06        6/30/07        6/30/06
---------------------------------------------------- --------------- -------------- -------------- ----------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION       $196.7           $151.2         $375.1          $309.0
---------------------------------------------------- --------------- -------------- -------------- ----------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION         26.7             16.1           46.0            33.7
---------------------------------------------------- --------------- -------------- -------------- ----------------
                          LIFE AND HEALTH INSURANCE         60.1             65.2          105.6           135.6
---------------------------------------------------- --------------- -------------- -------------- ----------------
                                CORPORATE AND OTHER         (0.6)            (7.3)          (7.0)          (12.9)
---------------------------------------------------- --------------- -------------- -------------- ----------------
                                 OPERATING EARNINGS        282.9            225.2          519.7           465.4
---------------------------------------------------- --------------- -------------- -------------- ----------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED         20.9            (12.9)          41.2            12.0
---------------------------------------------------- --------------- -------------- -------------- ----------------
                        OTHER AFTER-TAX ADJUSTMENTS          0.0             (1.8)           0.0            18.8
---------------------------------------------------- --------------- -------------- -------------- ----------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS       $303.8           $210.5         $560.9          $496.2
---------------------------------------------------- --------------- -------------- -------------- ----------------

                                                                       PER DILUTED SHARE
                                                     ------------------------------ -------------------------------
                                                          THREE MONTHS ENDED,            SIX MONTHS ENDED,
                                                     ------------------------------ -------------------------------
                                                         6/30/07         6/30/06        6/30/07        6/30/06
                                                     --------------- -------------- -------------- ----------------
                                 OPERATING EARNINGS         $1.05            $0.82          $1.92           $1.67
---------------------------------------------------- --------------- -------------- -------------- ----------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED          0.07            (0.05)          0.15            0.04
---------------------------------------------------- --------------- -------------- -------------- ----------------
                        OTHER AFTER-TAX ADJUSTMENTS          0.00            (0.01)          0.00            0.07
---------------------------------------------------- --------------- -------------- -------------- ----------------
        NET INCOME AVAILABLE TO COMMON STOCKHOLDERS         $1.12            $0.76          $2.07           $1.78
---------------------------------------------------- --------------- -------------- -------------- ----------------
 WEIGHTED-AVERAGE DILUTED COMMON SHARES OUTSTANDING        270.3            276.2          270.6           279.0
                                                     --------------- -------------- -------------- ----------------
*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: it is possible
these  adjusting  items  have  occurred  in the past and  could  recur in future
reporting  periods.   While  these  items  may  be  significant   components  in
understanding and assessing our 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.

                                       8
PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
-----------------------------------------------------------------------------------------------------------------
                                                       THREE MONTHS ENDED,               SIX MONTHS ENDED,

                                                 ---------------- --------------- --------------- ---------------
                                                     6/30/07        6/30/06          6/30/07         6/30/06
                                                 ---------------- --------------- --------------- ---------------
Premiums and other considerations                  $   1,176.9       $  1,104.6      $ 2,284.6       $   2,146.4
Fees and other revenues                                  622.9            462.6        1,215.4             922.2
Net investment income                                    976.4            911.7        1,899.5           1,763.6
Net realized/unrealized capital gains (losses)            55.4            (19.1)          93.0              29.8
                                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                      2,831.6          2,459.8        5,492.5           4,862.0
                                                 ---------------- --------------- --------------- ---------------

Benefits, claims, and settlement expenses              1,584.7          1,459.6        3,082.7           2,801.4
Dividends to policyholders                                74.0             72.5          148.0             144.4
Operating expenses                                       760.4            631.1        1,515.1           1,246.3
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                      2,419.1          2,163.2        4,745.8           4,192.1
                                                 ---------------- --------------- --------------- ---------------

Income from continuing operations before income
   taxes                                                 412.5            296.6          746.7             669.9
Income taxes                                             100.4             77.7          169.3             157.3
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations, net of related
   income taxes                                          312.1            218.9          577.4             512.6

Income (loss) from discontinued operations, net
   of related taxes                                        0.0            (0.1)            0.0               0.1
                                                 ---------------- --------------- --------------- ---------------
    NET INCOME                                           312.1            218.8          577.4             512.7
Preferred stock dividends                                  8.3              8.3           16.5              16.5
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS     $     303.8       $    210.5      $   560.9       $     496.2

Less:
Net realized/unrealized capital gains (losses),
   as adjusted                                            20.9            (12.9)          41.2              12.0
Other after-tax adjustments                                0.0             (1.8)           0.0              18.8
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                              $     282.9       $    225.2      $   519.7       $     465.4
                                                 ================ =============== =============== ===============

                                                     SELECTED BALANCE SHEET STATISTICS

                                                              PERIOD ENDED,
                                                     ------------------------------------------------------------
                                                           6/30/07               12/31/06            6/30/06
                                                     -------------------- --------------------- -----------------
Total assets (in billions)                                 $   150.8            $   143.7            $   131.4
Total common equity (in millions)                          $ 7,444.7            $ 7,318.8            $ 6,302.7
Total common equity excluding accumulated other
   comprehensive income (in millions)                      $ 6,890.7            $ 6,471.9            $ 6,084.2
End of period common shares outstanding
   (in millions)                                               266.0                268.4                269.1
Book value per common share                                $    27.99           $    27.27           $    23.42
Book value per common share excluding accumulated
   other comprehensive income                              $    25.90           $    24.11           $    22.61
9
PRINCIPAL FINANCIAL GROUP, INC.
           RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
                       (IN MILLIONS, EXCEPT AS INDICATED)

                                                               THREE MONTHS ENDED,              SIX MONTHS ENDED,
                                                          ------------------------------  -------------------------------
                                                                  6/30/07       6/30/06          6/30/07        6/30/06
                                                          --------------- -------------- --------------- ----------------
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                 1.05            0.82            1.92            1.67
Net realized/unrealized capital gains (losses)                     0.07           (0.05)           0.15            0.04
Other after-tax adjustments                                        0.00           (0.01)           0.00            0.07
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                        1.12            0.76            2.07            1.78
                                                          =============== ============== =============== ================

BOOK VALUE PER COMMON SHARE EXCLUDING ACCUMULATED OTHER
COMPREHENSIVE INCOME:
Book value per common share excluding accumulated other
   comprehensive income                                           25.90           22.61           25.90           22.61
Net unrealized capital gains                                       2.00            1.05            2.00            1.05
Foreign currency translation                                       0.04           (0.20)           0.04           (0.20)
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                                           27.99           23.42           27.99           23.42
                                                          =============== ============== =============== ================

OPERATING REVENUES:
USAMA                                                          1,386.5         1,127.5         2,668.2         2,188.1
IAMA                                                             175.0           164.2           316.3           307.6
Life and Health                                                1,211.5         1,183.1         2,423.9         2,342.7
Corporate and Other                                               12.5             3.8             0.8            (5.9)
                                                          --------------- -------------- --------------- ----------------
Total operating revenues                                       2,785.5         2,478.6         5,409.2         4,832.5
Add:
Net realized/unrealized capital gains (losses) and related
   adjustments                                                    46.1           (18.9)           83.3            29.7
Less:  Operating revenues from discontinued real estate            0.0            (0.1)            0.0             0.2
                                                          --------------- -------------- --------------- ----------------
Total GAAP revenues                                            2,831.6         2,459.8         5,492.5         4,862.0
                                                          =============== ============== =============== ================

OPERATING EARNINGS:
USAMA                                                            196.7           151.2           375.1           309.0
IAMA                                                              26.7            16.1            46.0            33.7
Life and Health                                                   60.1            65.2           105.6           135.6
Corporate and Other                                               (0.6)           (7.3)           (7.0)          (12.9)
                                                          --------------- -------------- --------------- ----------------
Total operating earnings                                         282.9           225.2           519.7           465.4
Net realized/unrealized capital gains (losses)                    20.9           (12.9)           41.2            12.0
Other after-tax adjustments                                        0.0            (1.8)            0.0            18.8
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                      303.8           210.5           560.9           496.2
                                                          =============== ============== =============== ================

NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as adjusted       20.9           (12.9)           41.2            12.0
Add:
Periodic settlements and accruals on non-hedge derivatives         9.5             0.0             9.5             0.0
Amortization of DPAC and sale inducement costs                    (1.8)            0.6            (1.1)            1.2
Capital gains distributed                                          8.6             0.0            10.6             3.6
Tax impacts                                                       12.8            (4.8)           25.7            11.1
Minority interest capital gains (losses)                           5.6            (1.8)            6.9             1.8
Less related fee adjustments:
Unearned front-end fee income                                      0.4             0.5             0.8             1.1
Certain market value adjustments to fee revenues                  (0.2)           (0.3)           (1.0)           (1.2)
                                                          --------------- -------------- --------------- ----------------
GAAP net realized/unrealized capital gains (losses)               55.4           (19.1)           93.0            29.8
                                                          =============== ============== =============== ================

OTHER AFTER TAX ADJUSTMENTS:
IRS audit issues                                                   0.0            (1.8)            0.0            18.8
                                                          --------------- -------------- --------------- ----------------
Total other after-tax adjustments                                  0.0            (1.8)            0.0            18.8
                                                          =============== ============== =============== ================
(1)  Use of non-GAAP  financial  measures is  discussed  in this  release  after
     Segment Highlights.
(2)  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.
(3)  Operating return on average equity excluding other comprehensive income
(4)  Includes $2.2 billion of AUM from operations  acquired during first quarter
     2007 by CIMB-Principal, the company's joint venture in Malaysia.
(5)  "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
(6)  As of June 30, 2007

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