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     <TD align=center colSpan=4><B><FONT face=serif size=5>SECURITIES AND EXCHANGE COMMISSION</FONT></B> </TD></TR>
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     <TD align=center colSpan=4><B><FONT face=serif size=2>Washington, D.C. 20549</FONT></B> </TD></TR>
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     <TD align=center colSpan=4><B><FONT face=serif size=5>FORM 8-K</FONT></B> </TD></TR>
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     <TD align=center colSpan=4><B><FONT face=serif>CURRENT REPORT</FONT></B> </TD></TR>
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     <TD align=center colSpan=4><B><FONT face=serif>Pursuant to Section 13 or 15(d) of the</FONT></B> </TD></TR>
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     <TD align=center colSpan=4><B><FONT face=serif>Securities Exchange Act of 1934</FONT></B> </TD></TR>
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     <TD align=center colSpan=4><FONT face=serif>Date of Report: </FONT><B><FONT face=serif>May 4, 2009</FONT></B> </TD></TR>
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     <TD align=center colSpan=4><FONT face=serif>(Date of earliest event reported)</FONT> </TD></TR>
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     <TD align=center colSpan=4><B><FONT face=serif size=5>PRINCIPAL FINANCIAL GROUP, INC.</FONT></B> </TD></TR>
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     <TD align=center colSpan=4><FONT face=serif>(Exact name of registrant as specified in its charter)</FONT> </TD></TR>
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     <TD align=center><B><FONT face=serif size=2>Delaware</FONT></B></TD>
     <TD align=center><B><FONT face=serif size=2>1-16725</FONT></B></TD>
     <TD align=center><B><FONT face=serif size=2>42-1520346</FONT></B>&nbsp; </TD></TR>
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     <TD align=center><FONT face=serif size=2>(State or other jurisdiction</FONT></TD>
     <TD align=center>&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>(Commission file number)</FONT></TD>
     <TD align=center><FONT face=serif size=2>(I.R.S. Employer</FONT></TD></TR>
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     <TD align=center><FONT face=serif size=2>of incorporation)</FONT></TD>
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     <TD align=center><FONT face=serif size=2>Identification Number)</FONT></TD></TR>
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     <TD align=center colSpan=4><B><FONT face=serif size=2>711 High Street, Des Moines, Iowa 50392</FONT></B> </TD></TR>
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     <TD align=center colSpan=4><FONT face=serif size=2>(Address of principal executive offices)</FONT> </TD></TR>
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     <TD align=center colSpan=4><B><FONT face=serif size=2>(515) 247-5111</FONT></B> </TD></TR>
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     <TD align=center colSpan=4><FONT face=serif size=2>(Registrant&#146;s telephone number, including area code)</FONT> </TD></TR>
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     <TD align=left colSpan=4><FONT face=serif size=2>Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3><FONT face=serif size=2>registrant under any of the following provisions:</FONT>&nbsp; </TD>
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     <TD align=left><FONT face=serif size=2>[&nbsp;&nbsp; &nbsp;]</FONT>&nbsp; </TD>
     <TD align=left colSpan=3><FONT face=serif size=2>Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>[&nbsp;&nbsp; &nbsp;]</FONT>&nbsp; </TD>
     <TD align=left colSpan=3><FONT face=serif size=2>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>[&nbsp;&nbsp; &nbsp;]</FONT>&nbsp; </TD>
     <TD align=left colSpan=3><FONT face=serif size=2>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR <FONT face=serif size=2>240.14d-2(b))</FONT>&nbsp; </FONT></TD></TR>
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     <TD align=left><FONT face=serif size=2>[&nbsp;&nbsp; &nbsp;]</FONT>&nbsp; </TD>
     <TD align=left colSpan=3><FONT face=serif size=2>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR <FONT face=serif size=2>240.13e-4(c))</FONT>&nbsp; </FONT></TD></TR>
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     <TD align=left><FONT face=serif>Page 2</FONT>&nbsp; </TD>
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     <TD align=left colSpan=2><B><FONT face=serif>Item 2.02. Results of Operations and Financial Condition</FONT></B>&nbsp; </TD></TR>
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     <TD align=left colSpan=2>&nbsp;</TD></TR>
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     <TD align=left colSpan=2 rowSpan=3><FONT face=serif>On May 4, 2009, Principal Financial Group, Inc. publicly announced information regarding its</FONT><BR>
<FONT face=serif>results of operations and financial condition for the quarter ended March 31, 2009. The text of the</FONT><BR>
<FONT face=serif>announcement is included herewith as Exhibit 99.</FONT>&nbsp; </TD></TR>
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     <TD align=left><B><FONT face=serif>Item 9.01 Financial Statements and Exhibits</FONT></B>&nbsp; </TD>
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     <TD align=left><FONT face=serif>99 First Quarter 2009 Earnings Release</FONT>&nbsp; </TD>
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     <TD align=center colSpan=2><FONT face=serif>SIGNATURE</FONT> </TD></TR>
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     <TD align=center colSpan=2>&nbsp;</TD></TR>
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     <TD align=left colSpan=2 rowSpan=2><FONT face=serif>Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused</FONT><BR>
<FONT face=serif>this report to be signed on its behalf by the undersigned thereunto duly authorized.</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>PRINCIPAL FINANCIAL GROUP, INC.</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>By:</FONT> <U><FONT face=serif>/s/ </FONT></U><FONT face=serif><U>Terrance J. Lillis</U></FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>Name: Terrance J. Lillis</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif>Title: Senior Vice President and Chief Financial Officer</FONT></TD></TR>
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     <TD align=left><FONT face=serif>Date: May 5, 2009</FONT>&nbsp; </TD>
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     <TD align=right colSpan=3><B><FONT face=serif>EXHIBIT 99</FONT></B>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><B><FONT face=serif>RELEASE</FONT></B><B><I><FONT face=serif>:</FONT></I></B>&nbsp; </TD>
     <TD align=left><FONT face=serif>On receipt</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><B><FONT face=serif>MEDIA CONTACT:</FONT></B>&nbsp; </TD>
     <TD align=left><FONT face=serif>Susan Houser, 515-248-2268,</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
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     <TD align=left><FONT face=serif>Houser.Susan@principal.com</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><B><FONT face=serif size=2>INVESTOR RELATIONS CONTACT:</FONT></B>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>Tom Graf, 515-235-9500,</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
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     <TD align=left><FONT face=serif size=2>investor-relations@principal.com</FONT>&nbsp; </TD></TR>
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     <TD align=center colSpan=3><B><FONT face=serif size=2>PRINCIPAL FINANCIAL GROUP, INC. REPORTS FIRST QUARTER 2009 RESULTS</FONT></B>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Des Moines, IA (May 4, 2009) &#150; Principal Financial Group, Inc. (NYSE: PFG) today announced net income</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>available to common stockholders for the three months ended March 31, 2009, of $112.8 million, or $0.43</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>per diluted share compared to $174.2 million, or $0.67 per diluted share for the three months ended March</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>31, 2008. The company reported operating earnings of $164.0 million for first quarter 2009, compared to</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>$258.4 million for first quarter 2008. Operating earnings per diluted share (EPS) for first quarter 2009 were</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>$0.63 compared to $0.99 for the same period in 2008.</FONT><SUP><FONT face=serif size=2>1 </FONT></SUP><FONT face=serif size=2>The declines from a year ago reflect lower asset</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>valuations, including the impact of significant equity market declines, as represented by a 41 percent decline</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>in the S&amp;P 500 daily average comparing first quarter 2009 to first quarter 2008. This reduced total company</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>assets under management (AUM) by 22 percent from a year ago, to $236.6 billion as of March 31, 2009,</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>compared to $304.2 billion as of March 31, 2008. In addition, poor market performance in 2008 resulted in</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>higher costs for employee pension and other post-retirement benefits</FONT><SUP><FONT face=serif size=2>2 </FONT></SUP><FONT face=serif size=2>in first quarter 2009 than first quarter</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>2008 of $0.08 on an EPS basis.</FONT>&nbsp; </TD>
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     <TD align=left colSpan=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><FONT face=serif size=2>Business Highlights</FONT></B><FONT face=serif size=2>:</FONT>&nbsp; </TD>
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     <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>&#149;</FONT>&nbsp; </TD>
     <TD align=left colSpan=2><B><FONT face=serif size=2>Strong sales</FONT></B><FONT face=serif size=2>: the company&#146;s three key retirement and investment products generated $6.0 billion of</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>sales, on a combined basis in first quarter 2009, despite a difficult sales environment, with $2.8 billion</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>of sales for full service accumulation, $2.1 billion for Principal Funds, and $1.0 billion for</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>individual annuities.</FONT>&nbsp; </TD>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>&#149;</FONT>&nbsp; </TD>
     <TD align=left colSpan=2><B><FONT face=serif size=2>Expense management</FONT></B><FONT face=serif size=2>: management action reduced compensation and other expenses by $86 million,</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>or 15 percent, compared to first quarter 2008.</FONT>&nbsp; </TD>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>&#149;</FONT>&nbsp; </TD>
     <TD align=left colSpan=2><B><FONT face=serif size=2>Capital and liquidity management</FONT></B><FONT face=serif size=2>: the company increased its position in highly liquid assets 76</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>percent from a year ago to $5.8 billion at March 31, 2009, increasing cash and cash equivalent holdings</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>by 141 percent to $2.7 billion as of March 31, 2009, and increasing government-backed securities by 43</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>percent from a year ago to $3.1 billion as of March 31, 2009. Strong liquidity enabled the company to</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>continue scaling back on the Investment Only business, reducing the block by $1.5 billion during the</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>first quarter from year-end levels.</FONT>&nbsp; </TD>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>&#149;</FONT>&nbsp; </TD>
     <TD align=left colSpan=2><B><FONT face=serif size=2>Distribution enhancements</FONT></B><FONT face=serif size=2>: the company expanded its distribution relationship with BofA/Merrill</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>Lynch to cover defined contribution (DC) plans, gaining access to a market leader with 15,000 advisors</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>focused on the small to midsize DC market.</FONT>&nbsp; </TD>
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     <TD align=left colSpan=3><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#147;Operating earnings for the quarter were solid, as our expense initiatives helped to offset some of the</FONT> </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>decline in revenues caused by reduced asset valuations,&#148; said Larry D. Zimpleman, president and chief</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>executive officer. &#147;Our investment portfolio continued to perform well, resulting in a manageable level of</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>capital losses. And we continued to demonstrate our ability to attract and retain customers.&#148;</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3><SUP><FONT face=serif size=2>1 </FONT></SUP><FONT face=serif size=2>Use of non-GAAP financial measures is discussed in this release after Segment Highlights.</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>&#147;Our asset management and accumulation growth engines delivered $4.6 billion of net cash flows</FONT><SUP><FONT face=serif size=2>3 </FONT></SUP><FONT face=serif size=2>,</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>including near-record flows for full service accumulation,&#148; said Zimpleman. &#147;This strong result</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>demonstrates our focus on meeting customer needs, which is also reflected in recent recognition by Pensions</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>and Investments, for excellence in investment education; and in a Chatham Partners survey, where our client</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>loyalty scores beat the benchmark by double-digit percentages. We were also extremely proud to recently be</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>named one of the "World's Most Ethical Companies" by the Ethisphere Institute, for the third year in a row.</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>The Principal was one of only three in the financial services industry to make the prestigious list this year.</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>We believe this recognition demonstrates to customers and investors alike that The Principal remains a</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>company they can count on during uncertain times.&#148;</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Added Zimpleman, &#147;During the quarter, we continued to invest new cash into high quality, liquid</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>assets. We moved cash to the holding company from the life company, positioning the holding company to</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>meet its obligations in 2009, while continuing to maintain strong life company capital ratios</FONT><SUP><FONT face=serif size=2>4 </FONT></SUP><FONT face=serif size=2>. We reduced</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>our exposure to BBB bonds, selling approximately $340 million of these securities during the quarter. And</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>as we&#146;ve scaled back our Investment Only business, we&#146;ve reduced our weighting to commercial real estate,</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>with approximately $240 million of commercial mortgages and CMBS paying off at maturity during the first</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>quarter.&#148;</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face=serif size=2>Net Income</FONT></B>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Net income available to common stockholders of $112.8 million for first quarter 2009 reflects net realized</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>capital losses of $50.9 million, which includes: $66.5 million of losses related to sales and other than temporary</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>impairment of fixed maturity securities; $16.1 million of losses related to deferred policy acquisition costs;</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>$16.4 million of losses on bridge and mezzanine loans held in the Global Asset Management segment; $29.6</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>million of gains on bonds sales; and $15.3 million of gains on mark to market of fixed maturity securities held</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>as trading. Net income also includes a $0.3 million net loss from other after-tax adjustments. Excluding the</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>impact of early adopting new FASB requirements for measuring and presenting other-than-temporary</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>impairment charges on available for sale securities, which is discussed in this release after Segment Highlights,</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>losses on available for sale fixed maturity securities would have been $28.5 million higher, after-tax, reducing</FONT>&nbsp; </TD></TR>
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     <TD align=center><B><I><FONT face=serif size=2>Segment Highlights</FONT></I></B></TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face=serif size=2>U.S. Asset Accumulation</FONT></B>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating earnings for first quarter 2009 were $93.1 million, compared to $139.1 million</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>for the same period in 2008. The variance primarily reflects lower revenues due to the impact on account</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>values of significant equity market declines over the trailing twelve-month period. The decline also reflects</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>the impact of higher costs for employee pension and other post-retirement benefits in first quarter 2009 than</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>first quarter 2008, which reduced segment operating earnings by $8.5 million. Full service accumulation</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>earnings were $51.1 million for first quarter 2009, compared to $68.1 million in first quarter 2008, reflecting</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>a 22 percent decline in average account values. Individual annuities earnings were $5.3 million in first</FONT>&nbsp; </TD></TR>
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     <TD align=left><SUP><FONT face=serif size=2>2 </FONT></SUP><FONT face=serif size=2>SFAS 87 Pension Expense and SFAS 106 Other Post-Retirement Benefits</FONT>&nbsp; </TD></TR>
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     <TD align=left><SUP><FONT face=serif size=2>3 </FONT></SUP><FONT face=serif size=2>Full Service Accumulation, Principal Funds, Individual Annuities, Principal International and Principal Global Investors non-</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>affiliated net cash flows.</FONT>&nbsp; </TD></TR>
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     <TD align=left><SUP><FONT face=serif size=2>4 </FONT></SUP><FONT face=serif size=2>Cash and cash equivalents discussed in more detail in this release after Segment Highlights.</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left rowSpan=8><FONT face=serif size=2>quarter 2009 compared to earnings of $16.8 million for first quarter 2008. Earnings from the fixed annuity </FONT><FONT face=serif size=2>business improved 10 percent compared to the year ago quarter to $16.9 million reflecting growth in account </FONT><FONT face=serif size=2>values. The decline reflects the impact of unfavorable equity markets on the variable annuity business, </FONT><FONT face=serif size=2>which resulted in a true-up of deferred policy acquisition costs during first quarter 2009, a decrease in </FONT><FONT face=serif size=2>separate account asset fees, and an increase in guaranteed minimum death benefit reserves and claims.&nbsp; </FONT><FONT face=serif size=2>Principal Funds&#146; earnings were $1.8 million for first quarter 2009, compared to $8.1 million in first quarter </FONT><FONT face=serif size=2>2008, reflecting a 34 percent decline in average account values.</FONT></TD></TR>
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     <TD align=left rowSpan=5><FONT face=serif size=2>Operating revenues for the first quarter were $1,007.5 million, compared to $1,204.7 million for the </FONT><FONT face=serif size=2>same period in 2008. The decline primarily reflects lower net investment income in the Investment Only </FONT><FONT face=serif size=2>business </FONT><FONT face=serif size=2>due to lower yields on a smaller base of account values, and lower fees in the full service accumulation and </FONT><FONT face=serif size=2>mutual fund businesses resulting from the negative impact of markets on account values.</FONT></TD></TR>
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     <TD align=left rowSpan=2><FONT face=serif size=2>Segment assets under management were $133.9 billion as of March 31, 2009, compared to $170.9 </FONT><FONT face=serif size=2>billion as of March 31, 2008.</FONT></TD></TR>
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     <TD align=left><B><FONT face=serif size=2>Global Asset Management</FONT></B>&nbsp; </TD></TR>
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     <TD align=left rowSpan=5><FONT face=serif size=2>Segment operating earnings for first quarter 2009 were $6.8 million, compared to $19.8 million in </FONT><FONT face=serif size=2>the prior year quarter, reflecting a 20 percent decline in average assets under management and lower fees due </FONT><FONT face=serif size=2>to a slowdown in the real estate market. The decline also reflects the impact of higher costs for employee </FONT><FONT face=serif size=2>pension and other post-retirement benefits in first quarter 2009 than first quarter 2008, and severance costs in </FONT><FONT face=serif size=2>first quarter 2009, which in total reduced segment operating earnings by $5.4 million.</FONT></TD></TR>
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     <TD align=left rowSpan=2><FONT face=serif size=2>Operating revenues for first quarter were $104.4 million, compared to $139.6 million for the same </FONT><FONT face=serif size=2>period in 2008.</FONT></TD></TR>
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     <TD align=left rowSpan=2><FONT face=serif size=2>Third party assets under management were $64.8 billion as of March 31, 2009, compared to $86.6 b</FONT><FONT face=serif size=2>illion as of March 31, 2008, reflecting primarily the impact of market performance.</FONT></TD></TR>
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     <TD align=left><B><FONT face=serif size=2>International Asset Management and Accumulation</FONT></B>&nbsp; </TD></TR>
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     <TD align=left rowSpan=4><FONT face=serif size=2>Segment operating earnings for first quarter 2009 were $17.0 million compared to $31.7 million </FONT><FONT face=serif size=2>for the same period in 2008, primarily due to macroeconomic conditions: deflation in Chile in first quarter </FONT><FONT face=serif size=2>2009 reduced earnings by $7.0 million; and weakening of Latin American currencies relative to the U.S. </FONT><FONT face=serif size=2>dollar reduced earnings by $6.5 million.</FONT></TD></TR>
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     <TD align=left rowSpan=4><FONT face=serif size=2>Operating revenues were $64.0 million for first quarter 2009, compared to $183.7 million for the same </FONT><FONT face=serif size=2>period last year. The decline primarily reflects lower investment income in Chile, which declined $96.3 million </FONT><FONT face=serif size=2>compared to first quarter 2008 as that country moved from an inflationary environment to a deflationary </FONT><FONT face=serif size=2>environment in first quarter 2009.</FONT></TD></TR>
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     <TD align=left rowSpan=2><FONT face=serif size=2>Segment assets under management were $23.5 billion as of March 31, 2009, compared to $30.2 </FONT><FONT face=serif size=2>billion as of March 31, 2008, reflecting a $6.7 billion decline due to foreign currency.</FONT></TD></TR>
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     <TD align=left colSpan=2><B><FONT face=serif size=2>Life and Health Insurance</FONT></B>&nbsp; </TD></TR>
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     <TD align=left colSpan=2 rowSpan=6><FONT face=serif size=2>Segment operating earnings for first quarter 2009 were $71.8 million, compared to $79.2 million for </FONT><FONT face=serif size=2>the same period in 2008. The variance reflects higher costs for employee pension and other post-retirement </FONT><FONT face=serif size=2>benefits in first quarter 2009 than first quarter 2008, which reduced segment earnings by $8.8 million. It also </FONT><FONT face=serif size=2>reflects the impact of favorable reserve adjustments in the individual disability line and in the health division, </FONT><FONT face=serif size=2>which resulted in an $8.1 million after-tax net benefit in first quarter 2008. Excluding these items, segment </FONT><FONT face=serif size=2>earnings increased 14 percent.</FONT></TD></TR>
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     <TD align=left colSpan=2 rowSpan=3><FONT face=serif size=2>Operating revenues were $1,131.0 million, compared to $1,187.6 million for the same period a </FONT><FONT face=serif size=2>year ago. The decline was primarily due to a $30.4 million drop in Health division premiums, which </FONT><FONT face=serif size=2>primarily reflects a decline in covered members.</FONT></TD></TR>
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     <TD align=left colSpan=2><B><FONT face=serif size=2>Corporate</FONT></B>&nbsp; </TD></TR>
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     <TD align=left colSpan=2 rowSpan=3><FONT face=serif size=2>Operating losses for first quarter 2009 were $24.7 million, compared to operating losses of $11.4 </FONT><FONT face=serif size=2>million for the same period in 2008. First quarter 2008 results included favorable state tax items of $13.7 </FONT><FONT face=serif size=2>million.</FONT></TD></TR>
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     <TD align=left colSpan=2><B><FONT face=serif size=2>Other-than-temporary impairments for first quarter 2009</FONT></B>&nbsp; </TD></TR>
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     <TD align=left colSpan=2 rowSpan=6><FONT face=serif size=2>On April 9, 2009, the Financial Accounting Standards Board established new requirements for measuring </FONT><FONT face=serif size=2>and presenting other-than-temporary impairment charges on available for sale securities, which the Company </FONT><FONT face=serif size=2>adopted for first quarter 2009 reporting. Based on the new requirements, on a pre-tax basis, total other than </FONT><FONT face=serif size=2>temporary impairment losses on available for sale securities were $146.6 million and the noncredit portion of </FONT><FONT face=serif size=2>loss recognized in other comprehensive income was $50.6 million. Net impairment losses on available for </FONT><FONT face=serif size=2>sale securities of $96.0 million for first quarter 2009 primarily reflect the following:</FONT></TD></TR>
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     <TD vAlign=top align=left rowSpan=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=sans-serif size=2>&#149;</FONT></TD>
     <TD align=left rowSpan=3><FONT face=serif size=2>Deterioration in expected cash flows resulted in a $26.6 million net impairment charge on CMBS </FONT><FONT face=serif size=2>collateralized debt obligations and a $15.5 million net impairment charge on non-agency residential </FONT><FONT face=serif size=2>mortgage backed securities.</FONT></TD></TR>
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     <TD align=left rowSpan=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=sans-serif size=2>&#149;</FONT></TD>
     <TD align=left rowSpan=2><FONT face=serif size=2>Sales of previously impaired securities and other credit impairments resulted in a $47.3 million net </FONT><FONT face=serif size=2>impairment charge.</FONT></TD></TR>
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     <TD align=left colSpan=2><B><FONT face=serif size=2>Cash and cash equivalents</FONT></B>&nbsp; </TD></TR>
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     <TD align=left colSpan=2 rowSpan=10><FONT face=serif size=2>Cash and cash equivalents at the holding company level (Principal Financial Group, Inc. and Principal </FONT><FONT face=serif size=2>Financial Services, Inc.) were approximately $850 million as of March 31, 2009. This amount is sufficient to </FONT><FONT face=serif size=2>meet holding company needs for 2009, primarily senior debt maturing in August, of which $441 million </FONT><FONT face=serif size=2>remains outstanding. The holding company also maintains access to a $579 million credit facility. </FONT><FONT face=serif size=2>T</FONT><FONT face=serif size=2>he </FONT><FONT face=serif size=2>company currently estimates cash needs at the holding company in 2010 of approximately $80 million. </FONT><FONT face=serif size=2>The increase in holding company cash from December 31, 2008 is primarily attributable to $645 million of </FONT><FONT face=serif size=2>ordinary dividends from the life company (Principal Life Insurance Company), pursuant to statutory </FONT><FONT face=serif size=2>authority. The company estimates the risk based capital ratio for the life company to be in the range of 350 </FONT><FONT face=serif size=2>to 375 percent as of March 31, 2009.</FONT></TD></TR>
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     <TD align=left colSpan=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>Total company cash and cash equivalents were approximately $2.7 billion as of March 31, 2009.</FONT>&nbsp;</TD></TR>
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     <TD align=left colSpan=2><B><FONT face=serif size=2>Forward looking and cautionary statements</FONT></B>&nbsp; </TD></TR>
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     <TD align=left colSpan=2 rowSpan=4><FONT face=serif size=2>This press release contains forward-looking statements, including, without limitation, statements as to operating </FONT><FONT face=serif size=2>earnings, net income available to common stockholders, net cash flows, realized and unrealized losses, capital </FONT><FONT face=serif size=2>and liquidity positions, sales and earnings trends, and management's beliefs, expectations, goals and opinions.&nbsp; </FONT><FONT face=serif size=2>The company does not undertake to update or revise these </FONT></TD></TR>
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     <TD align=left rowSpan=24><FONT face=serif size=2>statements, which are based on a number of</FONT>&nbsp;<FONT face=serif size=2>assumptions concerning future conditions that may ultimately prove to be inaccurate. Future events and their </FONT><FONT face=serif size=2>effects on the company may not be those anticipated, and actual results may differ materially from the results </FONT><FONT face=serif size=2>anticipated in these forward-looking statements. The risks, uncertainties and factors that could cause or </FONT><FONT face=serif size=2>contribute to such material differences are discussed in the company's annual report on Form 10-K for the year </FONT><FONT face=serif size=2>ended December 31, 2008, filed by the company&nbsp; with the Securities and Exchange Commission, as updated or </FONT><FONT face=serif size=2>supplemented from time to time in subsequent filings. These risks and uncertainties include, without limitation:&nbsp; </FONT><FONT face=serif size=2>adverse capital and credit market conditions that may significantly affect the company&#146;s ability to meet liquidity </FONT><FONT face=serif size=2>needs, access to capital and cost of capital; difficult conditions in the global capital markets and the general </FONT><FONT face=serif size=2>economy, which the company does not expect to improve in the near future, that may materially adversely </FONT><FONT face=serif size=2>affect the company&#146;s business and results of operations; the actions of the U.S. government, Federal Reserve </FONT><FONT face=serif size=2>and other governmental and regulatory bodies for purposes of stabilizing the financial markets might not </FONT><FONT face=serif size=2>achieve the intended effect; the risk from acquiring new businesses, which could result in the impairment of </FONT><FONT face=serif size=2>goodwill and/or intangible assets recognized at the time of acquisition; impairment of other financial </FONT><FONT face=serif size=2>institutions that could adversely affect the company; investment risks which may diminish the value of the </FONT><FONT face=serif size=2>company&#146;s invested assets and the investment returns credited to customers, which could reduce sales, </FONT><FONT face=serif size=2>revenues, assets under management and net income; requirements to post collateral or make payments related to </FONT><FONT face=serif size=2>declines in market value of specified assets may adversely affect company liquidity and expose the company to </FONT><FONT face=serif size=2>counterparty credit risk; changes in laws, regulations or accounting standards that may reduce company </FONT><FONT face=serif size=2>profitability; fluctuations in foreign currency exchange rates that could reduce company profitability; Principal </FONT><FONT face=serif size=2>Financial Group, Inc.&#146;s primary reliance, as a holding company, on dividends from its subsidiaries to meet debt </FONT><FONT face=serif size=2>payment obligations and regulatory restrictions on the ability of subsidiaries to pay such dividends; competitive </FONT><FONT face=serif size=2>factors; volatility of financial markets; decrease in ratings; interest rate changes; inability to attract and retain </FONT><FONT face=serif size=2>sales representatives; international business risks; a pandemic, terrorist attack or other catastrophic event; and </FONT><FONT face=serif size=2>default of the company&#146;s re-insurers.</FONT></TD></TR>
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     <TD align=left><B><FONT face=serif size=2>Use of Non-GAAP Financial Measures</FONT></B>&nbsp; </TD></TR>
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     <TD align=left rowSpan=10><FONT face=serif size=2>The company uses a number of non-GAAP financial measures that management believes are useful to investors </FONT><FONT face=serif size=2>because they illustrate the performance of normal, ongoing operations, which is important in understanding and </FONT><FONT face=serif size=2>evaluating the company&#146;s financial condition and results of operations. They are not, however, a substitute for </FONT><FONT face=serif size=2>U.S. GAAP financial measures. Therefore, the company has provided reconciliations of the non-GAAP </FONT><FONT face=serif size=2>measures to the most directly comparable U.S. GAAP measure at the end of the release. The company adjusts </FONT><FONT face=serif size=2>U.S. GAAP measures for items not directly related to ongoing operations. However, it is possible these </FONT><FONT face=serif size=2>adjusting items have occurred in the past and could recur in the future reporting periods. Management also uses </FONT><FONT face=serif size=2>non-GAAP measures for goal setting, as a basis for determining employee and senior management awards and </FONT><FONT face=serif size=2>compensation, and evaluating performance on a basis comparable to that used by investors and securities </FONT><FONT face=serif size=2>analysts.</FONT></TD></TR>
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     <TD align=left><B><FONT face=serif size=2>Earnings Conference Call</FONT></B>&nbsp; </TD></TR>
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     <TD align=left rowSpan=3><FONT face=serif size=2>At 9:00 A.M. (CST) tomorrow, President and Chief Executive Officer Larry Zimpleman and Senior Vice </FONT><FONT face=serif size=2>President and Chief Financial Officer Terry Lillis will lead a discussion of results during a live conference </FONT><FONT face=serif size=2>call, which can be accessed as follows:</FONT></TD></TR>
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<UL>
<LI><FONT face=serif size=2>Via live Internet webcast. Please go to </FONT><U><FONT face=serif size=2>www</FONT></U><FONT face=serif size=2><U>.principal.com</U>/investor </FONT><FONT face=serif size=2>at least 10-15 minutes prior to the</FONT> <FONT face=serif size=2>start of the call to register, and to download and install any necessary audio software.</FONT>
<LI><FONT face=serif size=2>Via telephone by dialing 800-374-1609 (U.S. and Canadian callers) or 706-643-7701 (International</FONT> <FONT face=serif size=2>callers) approximately 10 minutes prior to the start of the call. The call leader's name is Tom Graf.</FONT>
<LI><FONT face=serif size=2>Replays of the earnings call are available at: </FONT><U><FONT face=serif size=2>www</FONT></U><FONT face=serif size=2><U>.principal.com</U>/investor </FONT><FONT face=serif size=2>or by dialing 800-642-1687</FONT> <FONT face=serif size=2>(U.S. and Canadian callers) or 706-645-9291 (International callers). The access code is 91753676.</FONT><BR>
<FONT face=serif size=2>Replays will be available beginning approximately two hours after the completion of the live earnings</FONT> <FONT face=serif size=2>call through the end of day May 12, 2009.</FONT> </LI></UL>
<P align=left><FONT face=serif size=2>The company's financial supplement for first quarter 2009 is currently available at </FONT><U><FONT face=serif size=2>www</FONT></U><FONT face=serif size=2><U>.principal.com</U>/investor</FONT><FONT face=serif size=2>, and may be referred to during the call.</FONT></P>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><FONT face=serif size=2>About the Principal Financial Group</FONT></B>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>The Principal Financial Group</FONT><SUP><FONT face=sans-serif size=2>&#174; </FONT></SUP><FONT face=serif size=2>(The Principal </FONT><SUP><FONT face=serif size=2>&#174; </FONT></SUP><FONT face=serif size=2>)</FONT><SUP><FONT face=serif size=2>5 </FONT></SUP><FONT face=serif size=2>is a leader in offering businesses, individuals and</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>institutional clients a wide range of financial products and services, including retirement and investment</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>services, life and health insurance, and banking through its diverse family of financial services companies. A</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>member of the Fortune 500, the Principal Financial Group has $236.6 billion in assets under management</FONT><SUP><FONT face=serif size=2>6</FONT></SUP>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>and serves some 18.8 million customers worldwide from offices in Asia, Australia, Europe, Latin America</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>ticker symbol PFG. For more information, visit </FONT><U><FONT face=serif size=2>www</FONT></U><FONT face=serif size=2><U>.principal.com</U></FONT><FONT face=serif size=2>.</FONT>&nbsp; </TD></TR>
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     <TD align=center><FONT face=serif>###</FONT></TD></TR></TABLE><BR>
<P align=left><SUP><FONT face=serif size=1>5 </FONT></SUP><FONT face=serif size=1>"The Principal Financial Group" and &#147;The Principal&#148; are registered service marks of Principal Financial Services, Inc., a member of the Principal Financial Group.</FONT></P>
<P align=left><SUP><FONT face=serif size=1>6 </FONT></SUP><FONT face=serif size=1>As of March 31, 2009</FONT></P>
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     <TD align=center colSpan=2><B><FONT face=serif size=2>Summary of Segment and Principal Financial Group, Inc. Results</FONT></B></TD>
     <TD align=left>&nbsp; </TD></TR>
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     <TD colSpan=3>&nbsp; </TD></TR>
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     <TD colSpan=3>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=center colSpan=2><B><FONT face=serif>Operating Earnings (Loss)*</FONT></B></TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=center colSpan=2><B><I><FONT face=serif>in millions</FONT></I></B></TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=center colSpan=2><I><FONT face=serif>Three Months Ended,</FONT></I></TD></TR>
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     <TD align=right><B><I><FONT face=serif>Segment</FONT></I></B>&nbsp; </TD>
     <TD align=center><FONT face=serif>3/31/09</FONT></TD>
     <TD align=center><FONT face=serif>3/31/08</FONT></TD></TR>
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     <TD align=right><I><FONT face=serif>U.S. Asset Accumulation</FONT></I>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$93.1</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$139.1</FONT>&nbsp; </TD></TR>
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     <TD align=right><I><FONT face=serif>Global Asset Management</FONT></I>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>6.8</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>19.8</FONT>&nbsp; </TD></TR>
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     <TD align=right><I><FONT face=serif>International Asset Management and Accumulation</FONT></I>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>17.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>31.7</FONT>&nbsp; </TD></TR>
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     <TD align=right><I><FONT face=serif>Life and Health Insurance</FONT></I>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>71.8</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>79.2</FONT>&nbsp; </TD></TR>
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     <TD align=right><I><FONT face=serif>Corporate and Other</FONT></I>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(24.7)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(11.4)</FONT>&nbsp; </TD></TR>
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     <TD align=right><B><I><FONT face=serif>Operating Earnings</FONT></I></B>&nbsp; </TD>
     <TD align=right><B><FONT face=serif size=2>164.0</FONT></B>&nbsp; </TD>
     <TD align=right><B><FONT face=serif size=2>258.4</FONT></B>&nbsp; </TD></TR>
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     <TD align=right><I><FONT face=serif>Net realized capital losses, as adjusted</FONT></I>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(50.9)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(74.7)</FONT>&nbsp; </TD></TR>
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     <TD align=right><I><FONT face=serif>Other after-tax adjustments</FONT></I>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.3)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(9.5)</FONT>&nbsp; </TD></TR>
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     <TD align=right><B><I><FONT face=serif>Net income available to common stockholders</FONT></I></B>&nbsp; </TD>
     <TD align=right><B><FONT face=serif size=2>$112.8</FONT></B>&nbsp; </TD>
     <TD align=right><B><FONT face=serif size=2>$174.2</FONT></B>&nbsp; </TD></TR>
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     <TD colSpan=3>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=center colSpan=2><B><FONT face=serif>Per Diluted Share</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=center colSpan=2><I><FONT face=serif>Three Months Ended,</FONT></I></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=center><FONT face=serif>3/31/09</FONT></TD>
     <TD align=center><FONT face=serif>3/31/08</FONT></TD></TR>
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     <TD align=right><B><I><FONT face=serif>Operating Earnings</FONT></I></B>&nbsp; </TD>
     <TD align=right><B><FONT face=serif size=2>$0.63</FONT></B>&nbsp; </TD>
     <TD align=right><B><FONT face=serif size=2>$0.99</FONT></B>&nbsp; </TD></TR>
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     <TD align=right><I><FONT face=serif>Net realized capital losses, as adjusted</FONT></I>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.20)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.28)</FONT>&nbsp; </TD></TR>
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     <TD align=right><I><FONT face=serif>Other after-tax adjustments</FONT></I>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.00)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.04)</FONT>&nbsp; </TD></TR>
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     <TD align=right><B><I><FONT face=serif>Net income available to common stockholders</FONT></I></B>&nbsp; </TD>
     <TD align=right><B><FONT face=serif size=2>$0.43</FONT></B>&nbsp; </TD>
     <TD align=right><B><FONT face=serif size=2>$0.67</FONT></B>&nbsp; </TD></TR>
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     <TD align=right><B><I><FONT face=serif>Weighted-average diluted common shares</FONT></I></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
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     <TD align=right><B><I><FONT face=serif>outstanding</FONT></I></B>&nbsp; </TD>
     <TD align=right><B><FONT face=serif size=2>260.5</FONT></B>&nbsp; </TD>
     <TD align=right><B><FONT face=serif size=2>261.3</FONT></B>&nbsp; </TD></TR></TABLE>
<P>&nbsp;</P>
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<P><BR>
&nbsp;</P>
<P align=left><B><FONT face=serif size=2>*Operating earnings versus U.S. GAAP (GAAP) net income available to common stockholders</FONT></B></P>
<P align=left><FONT face=serif size=2>Management uses operating earnings, which excludes the effect of net realized capital gains and losses, as adjusted, and other after-tax adjustments, for goal setting, as a basis for 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 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&#146;s businesses.</FONT></P>
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     <TD align=center colSpan=4 rowSpan=3><B><FONT face=serif>Principal Financial Group, Inc.</FONT></B><BR>
<B><FONT face=serif size=2>Results of Operations</FONT></B><BR>
<B><FONT face=serif>(in millions)</FONT></B></TD></TR>
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     <TD align=left>&nbsp; </TD>
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     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=center><B><FONT face=serif>3/31/09</FONT></B>&nbsp; </TD>
     <TD align=center><B><FONT face=serif>3/31/08</FONT></B>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Premiums and other considerations</FONT>&nbsp; </TD>
     <TD align=right colSpan=2><FONT face=serif>$ 949.9</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>$ 1,053.0</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Fees and other revenues</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif>473.5</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>613.4</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Net investment income</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif>828.5</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>960.3</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Net realized capital gains (losses), excluding</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>impairment losses on available-for-sale securities</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif>32.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>(58.5)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Total other-than-temporary impairment losses on</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>available-for-sale securities</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif>(146.6)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>(67.5)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Portion of impairment losses on fixed maturities,</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>available-for-sale recognized in other</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>comprehensive income</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif>50.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Net impairment losses on available-for-sale securities</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif>(96.0)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>(67.5)</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Net realized capital losses</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif>(63.3)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>(126.0)</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face=serif size=2>Total revenues</FONT></I>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif>2,188.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>2,500.7</FONT>&nbsp; </TD></TR>
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     <TD colSpan=4>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Benefits, claims, and settlement expenses</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; <FONT face=serif>1,306.6</FONT></TD>
     <TD align=right>&nbsp; <FONT face=serif>1,472.0</FONT></TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Dividends to policyholders</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; <FONT face=serif>63.5</FONT></TD>
     <TD align=right>&nbsp; <FONT face=serif>70.8</FONT></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Operating expenses</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; <FONT face=serif>688.4</FONT></TD>
     <TD align=right>&nbsp; <FONT face=serif>750.7</FONT></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face=serif>Total expenses</FONT></I>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; <FONT face=serif>2,058.5</FONT>&nbsp;</TD>
     <TD align=right>&nbsp; <FONT face=serif>2,293.5</FONT></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp;</TD>
     <TD align=right>&nbsp; </TD></TR>
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     <TD colSpan=4>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Income before income taxes</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; <FONT face=serif>130.1</FONT></TD>
     <TD align=right>&nbsp; <FONT face=serif>207.2</FONT></TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Income taxes</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; <FONT face=serif>7.5</FONT>&nbsp;</TD>
     <TD align=right>&nbsp; <FONT face=serif>29.6</FONT></TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Net income</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; <FONT face=serif>122.6</FONT></TD>
     <TD align=right>&nbsp; <FONT face=serif>177.6</FONT></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; </TD>
     <TD align=right>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Net income (loss) attributable to noncontrolling</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>interest</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif>1.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>(4.8)</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face=serif>Net income attributable to Principal Financial Group,</FONT></I>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face=serif>Inc.</FONT></I>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif>121.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>182.4</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Preferred stock dividends</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>8.2</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>8.2</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<I><FONT face=serif>Net income available to common stockholders</FONT></I>&nbsp; </TD>
     <TD align=right colSpan=2><FONT face=serif>$ 112.8</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>$ 174.2</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=4>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Less:</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Net realized capital losses, as adjusted</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right>&nbsp; <FONT face=serif>(50.9)</FONT>&nbsp;</TD>
     <TD align=right>&nbsp; <FONT face=serif>(74.7)</FONT></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif>Other after-tax adjustments</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif>(0.3)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>(9.5)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face=serif>Operating earnings</FONT></I>&nbsp; </TD>
     <TD align=right colSpan=2><FONT face=serif>$ 164.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif>$ 258.4</FONT>&nbsp; </TD></TR></TABLE><BR>
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<A name="page_11"></A>
<TABLE cellSpacing=0 cellPadding=0 width="95%" border=0>
<TR>
     <TD width="47%"></TD>
     <TD width="17%"></TD>
     <TD width="21%"></TD>
     <TD width="13%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif>Page 11</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=4>&nbsp; </TD></TR>
<TR>
     <TD colSpan=4>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=center colSpan=4><B><I><FONT face=serif size=2>Selected Balance Sheet Statistics</FONT></I></B></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=center>&nbsp; </TD>
     <TD align=center><B><FONT face=serif size=2>Period Ended,</FONT></B>&nbsp; </TD>
     <TD align=center>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>3/31/09</FONT>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>12/31/08</FONT>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>3/31/08</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Total assets (in billions)</FONT>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>$ 123.2</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD align=center><FONT face=serif size=2>$ 128.2</FONT>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>$ 152.0</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Total common equity (in millions)</FONT>&nbsp; </TD>
     <TD align=center><FONT size=2>&nbsp; <FONT face=serif size=2>$ 2,086.6</FONT><FONT size=2>&nbsp;</FONT></FONT></TD>
     <TD align=center>&nbsp; <FONT face=serif size=2>$ 1,930.8</FONT></TD>
     <TD align=center>&nbsp; <FONT face=serif size=2>$ 6,300.1</FONT></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=center><FONT size=2>&nbsp;</FONT></TD>
     <TD align=center>&nbsp; </TD>
     <TD align=center>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Total common equity excluding accumulated</FONT>&nbsp; </TD>
     <TD align=center><FONT size=2>&nbsp; </FONT></TD>
     <TD align=center>&nbsp; </TD>
     <TD align=center>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>other comprehensive income (in millions)</FONT>&nbsp; </TD>
     <TD align=center><FONT size=2>&nbsp; <FONT face=serif size=2>$ 6,927.7</FONT></FONT></TD>
     <TD align=center>&nbsp; <FONT face=serif size=2>$ 6,842.4</FONT></TD>
     <TD align=center>&nbsp; <FONT face=serif size=2>$ 6,659.2</FONT></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=center><FONT size=2>&nbsp; </FONT></TD>
     <TD align=center>&nbsp; </TD>
     <TD align=center>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>End of period common shares outstanding (in</FONT>&nbsp; </TD>
     <TD align=center><FONT size=2>&nbsp; </FONT></TD>
     <TD align=center>&nbsp; </TD>
     <TD align=center>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>millions)</FONT>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>260.0</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD align=center><FONT face=serif size=2>259.3</FONT>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>258.6</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Book value per common share</FONT>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>$ 8.03</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD align=center><FONT face=serif size=2>$ 7.45</FONT>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>$ 24.36</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Book value per common share excluding</FONT>&nbsp; </TD>
     <TD align=center><FONT size=2>&nbsp; </FONT></TD>
     <TD align=center>&nbsp; </TD>
     <TD align=center>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>accumulated other comprehensive income</FONT>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>$ 26.65</FONT><FONT size=2>&nbsp; </FONT></TD>
     <TD align=center><FONT face=serif size=2>$ 26.39</FONT>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>$ 25.75</FONT>&nbsp; </TD></TR></TABLE><BR>
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<A name="page_12"></A>
<TABLE cellSpacing=0 cellPadding=0 width="95%" border=0>
<TR>
     <TD width="70%"></TD>
     <TD width="16%"></TD>
     <TD width="12%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif>Page 12</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=center colSpan=3><B><FONT face=serif size=2>Principal Financial Group, Inc.</FONT></B> </TD></TR>
<TR vAlign=bottom>
     <TD align=center colSpan=3><B><FONT face=serif size=2>Reconciliation of Non-GAAP Financial Measures to U.S. GAAP</FONT></B> </TD></TR>
<TR vAlign=bottom>
     <TD align=center colSpan=3><B><FONT face=serif size=2>(in millions, except as indicated)</FONT></B> </TD></TR>
<TR>
     <TD colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=center colSpan=2><B><FONT face=serif size=2>Three Months Ended,</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD align=center><B><FONT face=serif size=2>03/31/09</FONT></B>&nbsp; </TD>
     <TD align=center><B><FONT face=serif size=2>03/31/08</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Diluted Earnings Per Common Share:</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Operating Earnings</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>0.63</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>0.99</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net realized capital losses</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.20)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.28)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Other after-tax adjustments</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.00)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.04)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net income available to common stockholders</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>0.43</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>0.67</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Book Value Per Common Share Excluding Accumulated Other Comprehensive</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Income:</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Book value per common share excluding accumulated other comprehensive income</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>26.65</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>25.75</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net unrealized capital losses</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(15.90)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(2.01)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Foreign currency translation</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.60)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>0.38</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net unrecognized post-retirement benefit obligations</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(2.12)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>0.24</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Book value per common share including accumulated other comprehensive income</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>8.03</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>24.36</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Operating Revenues:</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>USAA</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,007.5</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,204.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>GAM</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>104.4</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>139.6</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>IAMA</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>64.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>183.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Life and Health</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,131.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,187.6</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Corporate and Other</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(45.7)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(55.3)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Total operating revenues</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>2,261.2</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>2,660.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Add:</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net realized capital losses and related adjustments</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(72.5)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(138.3)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Terminated commercial securities issuance operation</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.1)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(21.3)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Total GAAP revenues</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>2,188.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>2,500.7</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Operating Earnings:</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>USAA</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>93.1</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>139.1</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>GAM</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>6.8</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>19.8</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>IAMA</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>17.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>31.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Life and Health</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>71.8</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>79.2</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Corporate and Other</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(24.7)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(11.4)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Total operating earnings</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>164.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>258.4</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net realized capital losses</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(50.9)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(74.7)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Other after-tax adjustments</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.3)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(9.5)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net income available to common stockholders</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>112.8</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>174.2</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Net Realized Capital Gains (losses):</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net realized capital gains losses, as adjusted</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(50.9)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(74.7)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Add:</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Periodic settlements and accruals on non-hedge derivatives</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>7.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>8.8</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Amortization of DPAC and sale inducement costs</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>24.8</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(13.5)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Certain market value adjustments of embedded derivatives</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(4.0)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Capital gains distributed</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(6.7)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(9.3)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Tax impacts</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(36.8)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(34.1)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Noncontrolling interest capital gains (losses)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1.1</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(6.7)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Less related fee adjustments:</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Certain market value adjustments to fee revenues</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(1.5)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(3.5)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>GAAP net realized capital losses</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(63.3)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(126.0)</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=3>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Other After Tax Adjustments:</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Change in estimated loss related to a prior year legal contingency</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>7.6</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Terminated commercial securities issuance operation</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.3)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(17.1)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Total other after-tax adjustments</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.3)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(9.5)</FONT>&nbsp; </TD></TR></TABLE><BR>
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{"company-data": {"conformed-name": "PRINCIPAL FINANCIAL GROUP INC", "cik": "0001126328", "assigned-sic": "6321", "irs-number": "421520346", "state-of-incorporation": "DE", "fiscal-year-end": "0224"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-16725", "film-number": "09795683"}, "business-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392-0300", "phone": "5152475111"}, "mail-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392-0300"}}
final1stqtrer.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing
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:
May 4, 2009
(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 2
Item 2.02. Results of Operations and Financial Condition
On May 4, 2009, Principal Financial Group, Inc. publicly announced information regarding its
results of operations and financial condition for the quarter ended March 31, 2009. The text of the
announcement is included herewith as Exhibit 99.
Item 9.01 Financial Statements and Exhibits
99 First Quarter 2009 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/
Terrance J. Lillis
Name: Terrance J. Lillis
Title: Senior Vice President and Chief Financial Officer
Date: May 5, 2009
Page 3
EXHIBIT 99
RELEASE
:
On receipt
MEDIA CONTACT:
Susan Houser, 515-248-2268,
Houser.Susan@principal.com
INVESTOR RELATIONS CONTACT:
Tom Graf, 515-235-9500,
investor-relations@principal.com
PRINCIPAL FINANCIAL GROUP, INC. REPORTS FIRST QUARTER 2009 RESULTS
Des Moines, IA (May 4, 2009) – Principal Financial Group, Inc. (NYSE: PFG) today announced net income
available to common stockholders for the three months ended March 31, 2009, of $112.8 million, or $0.43
per diluted share compared to $174.2 million, or $0.67 per diluted share for the three months ended March
31, 2008. The company reported operating earnings of $164.0 million for first quarter 2009, compared to
$258.4 million for first quarter 2008. Operating earnings per diluted share (EPS) for first quarter 2009 were
$0.63 compared to $0.99 for the same period in 2008.
1
The declines from a year ago reflect lower asset
valuations, including the impact of significant equity market declines, as represented by a 41 percent decline
in the S&P 500 daily average comparing first quarter 2009 to first quarter 2008. This reduced total company
assets under management (AUM) by 22 percent from a year ago, to $236.6 billion as of March 31, 2009,
compared to $304.2 billion as of March 31, 2008. In addition, poor market performance in 2008 resulted in
higher costs for employee pension and other post-retirement benefits
2
in first quarter 2009 than first quarter
2008 of $0.08 on an EPS basis.
Business Highlights
:
•
Strong sales
: the company's three key retirement and investment products generated $6.0 billion of
sales, on a combined basis in first quarter 2009, despite a difficult sales environment, with $2.8 billion
of sales for full service accumulation, $2.1 billion for Principal Funds, and $1.0 billion for
individual annuities.
•
Expense management
: management action reduced compensation and other expenses by $86 million,
or 15 percent, compared to first quarter 2008.
•
Capital and liquidity management
: the company increased its position in highly liquid assets 76
percent from a year ago to $5.8 billion at March 31, 2009, increasing cash and cash equivalent holdings
by 141 percent to $2.7 billion as of March 31, 2009, and increasing government-backed securities by 43
percent from a year ago to $3.1 billion as of March 31, 2009. Strong liquidity enabled the company to
continue scaling back on the Investment Only business, reducing the block by $1.5 billion during the
first quarter from year-end levels.
•
Distribution enhancements
: the company expanded its distribution relationship with BofA/Merrill
Lynch to cover defined contribution (DC) plans, gaining access to a market leader with 15,000 advisors
focused on the small to midsize DC market.
"Operating earnings for the quarter were solid, as our expense initiatives helped to offset some of the
decline in revenues caused by reduced asset valuations," said Larry D. Zimpleman, president and chief
executive officer. "Our investment portfolio continued to perform well, resulting in a manageable level of
capital losses. And we continued to demonstrate our ability to attract and retain customers."
1
Use of non-GAAP financial measures is discussed in this release after Segment Highlights.
Page 4
"Our asset management and accumulation growth engines delivered $4.6 billion of net cash flows
3
,
including near-record flows for full service accumulation," said Zimpleman. "This strong result
demonstrates our focus on meeting customer needs, which is also reflected in recent recognition by Pensions
and Investments, for excellence in investment education; and in a Chatham Partners survey, where our client
loyalty scores beat the benchmark by double-digit percentages. We were also extremely proud to recently be
named one of the "World's Most Ethical Companies" by the Ethisphere Institute, for the third year in a row.
The Principal was one of only three in the financial services industry to make the prestigious list this year.
We believe this recognition demonstrates to customers and investors alike that The Principal remains a
company they can count on during uncertain times."
Added Zimpleman, "During the quarter, we continued to invest new cash into high quality, liquid
assets. We moved cash to the holding company from the life company, positioning the holding company to
meet its obligations in 2009, while continuing to maintain strong life company capital ratios
4
. We reduced
our exposure to BBB bonds, selling approximately $340 million of these securities during the quarter. And
as we've scaled back our Investment Only business, we've reduced our weighting to commercial real estate,
with approximately $240 million of commercial mortgages and CMBS paying off at maturity during the first
quarter."
Net Income
Net income available to common stockholders of $112.8 million for first quarter 2009 reflects net realized
capital losses of $50.9 million, which includes: $66.5 million of losses related to sales and other than temporary
impairment of fixed maturity securities; $16.1 million of losses related to deferred policy acquisition costs;
$16.4 million of losses on bridge and mezzanine loans held in the Global Asset Management segment; $29.6
million of gains on bonds sales; and $15.3 million of gains on mark to market of fixed maturity securities held
as trading. Net income also includes a $0.3 million net loss from other after-tax adjustments. Excluding the
impact of early adopting new FASB requirements for measuring and presenting other-than-temporary
impairment charges on available for sale securities, which is discussed in this release after Segment Highlights,
losses on available for sale fixed maturity securities would have been $28.5 million higher, after-tax, reducing
net income in the same amount.
Segment Highlights
U.S. Asset Accumulation
Segment operating earnings for first quarter 2009 were $93.1 million, compared to $139.1 million
for the same period in 2008. The variance primarily reflects lower revenues due to the impact on account
values of significant equity market declines over the trailing twelve-month period. The decline also reflects
the impact of higher costs for employee pension and other post-retirement benefits in first quarter 2009 than
first quarter 2008, which reduced segment operating earnings by $8.5 million. Full service accumulation
earnings were $51.1 million for first quarter 2009, compared to $68.1 million in first quarter 2008, reflecting
a 22 percent decline in average account values. Individual annuities earnings were $5.3 million in first
2
SFAS 87 Pension Expense and SFAS 106 Other Post-Retirement Benefits
3
Full Service Accumulation, Principal Funds, Individual Annuities, Principal International and Principal Global Investors non-
affiliated net cash flows.
4
Cash and cash equivalents discussed in more detail in this release after Segment Highlights.
Page 5
quarter 2009 compared to earnings of $16.8 million for first quarter 2008. Earnings from the fixed annuity
business improved 10 percent compared to the year ago quarter to $16.9 million reflecting growth in account
values. The decline reflects the impact of unfavorable equity markets on the variable annuity business,
which resulted in a true-up of deferred policy acquisition costs during first quarter 2009, a decrease in
separate account asset fees, and an increase in guaranteed minimum death benefit reserves and claims.
Principal Funds' earnings were $1.8 million for first quarter 2009, compared to $8.1 million in first quarter
2008, reflecting a 34 percent decline in average account values.
Operating revenues for the first quarter were $1,007.5 million, compared to $1,204.7 million for the
same period in 2008. The decline primarily reflects lower net investment income in the Investment Only
business
due to lower yields on a smaller base of account values, and lower fees in the full service accumulation and
mutual fund businesses resulting from the negative impact of markets on account values.
Segment assets under management were $133.9 billion as of March 31, 2009, compared to $170.9
billion as of March 31, 2008.
Global Asset Management
Segment operating earnings for first quarter 2009 were $6.8 million, compared to $19.8 million in
the prior year quarter, reflecting a 20 percent decline in average assets under management and lower fees due
to a slowdown in the real estate market. The decline also reflects the impact of higher costs for employee
pension and other post-retirement benefits in first quarter 2009 than first quarter 2008, and severance costs in
first quarter 2009, which in total reduced segment operating earnings by $5.4 million.
Operating revenues for first quarter were $104.4 million, compared to $139.6 million for the same
period in 2008.
Third party assets under management were $64.8 billion as of March 31, 2009, compared to $86.6 b
illion as of March 31, 2008, reflecting primarily the impact of market performance.
International Asset Management and Accumulation
Segment operating earnings for first quarter 2009 were $17.0 million compared to $31.7 million
for the same period in 2008, primarily due to macroeconomic conditions: deflation in Chile in first quarter
2009 reduced earnings by $7.0 million; and weakening of Latin American currencies relative to the U.S.
dollar reduced earnings by $6.5 million.
Operating revenues were $64.0 million for first quarter 2009, compared to $183.7 million for the same
period last year. The decline primarily reflects lower investment income in Chile, which declined $96.3 million
compared to first quarter 2008 as that country moved from an inflationary environment to a deflationary
environment in first quarter 2009.
Segment assets under management were $23.5 billion as of March 31, 2009, compared to $30.2
billion as of March 31, 2008, reflecting a $6.7 billion decline due to foreign currency.
Page 6
Life and Health Insurance
Segment operating earnings for first quarter 2009 were $71.8 million, compared to $79.2 million for
the same period in 2008. The variance reflects higher costs for employee pension and other post-retirement
benefits in first quarter 2009 than first quarter 2008, which reduced segment earnings by $8.8 million. It also
reflects the impact of favorable reserve adjustments in the individual disability line and in the health division,
which resulted in an $8.1 million after-tax net benefit in first quarter 2008. Excluding these items, segment
earnings increased 14 percent.
Operating revenues were $1,131.0 million, compared to $1,187.6 million for the same period a
year ago. The decline was primarily due to a $30.4 million drop in Health division premiums, which
primarily reflects a decline in covered members.
Corporate
Operating losses for first quarter 2009 were $24.7 million, compared to operating losses of $11.4
million for the same period in 2008. First quarter 2008 results included favorable state tax items of $13.7
million.
Other-than-temporary impairments for first quarter 2009
On April 9, 2009, the Financial Accounting Standards Board established new requirements for measuring
and presenting other-than-temporary impairment charges on available for sale securities, which the Company
adopted for first quarter 2009 reporting. Based on the new requirements, on a pre-tax basis, total other than
temporary impairment losses on available for sale securities were $146.6 million and the noncredit portion of
loss recognized in other comprehensive income was $50.6 million. Net impairment losses on available for
sale securities of $96.0 million for first quarter 2009 primarily reflect the following:
•
Deterioration in expected cash flows resulted in a $26.6 million net impairment charge on CMBS
collateralized debt obligations and a $15.5 million net impairment charge on non-agency residential
mortgage backed securities.
•
Sales of previously impaired securities and other credit impairments resulted in a $47.3 million net
impairment charge.
Cash and cash equivalents
Cash and cash equivalents at the holding company level (Principal Financial Group, Inc. and Principal
Financial Services, Inc.) were approximately $850 million as of March 31, 2009. This amount is sufficient to
meet holding company needs for 2009, primarily senior debt maturing in August, of which $441 million
remains outstanding. The holding company also maintains access to a $579 million credit facility.
T
he
company currently estimates cash needs at the holding company in 2010 of approximately $80 million.
The increase in holding company cash from December 31, 2008 is primarily attributable to $645 million of
ordinary dividends from the life company (Principal Life Insurance Company), pursuant to statutory
authority. The company estimates the risk based capital ratio for the life company to be in the range of 350
to 375 percent as of March 31, 2009.
Total company cash and cash equivalents were approximately $2.7 billion as of March 31, 2009.
Forward looking and cautionary statements
This press release contains forward-looking statements, including, without limitation, statements as to operating
earnings, net income available to common stockholders, net cash flows, realized and unrealized losses, capital
and liquidity positions, sales and earnings trends, and management's beliefs, expectations, goals and opinions.
The company does not undertake to update or revise these
Page 7
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, 2008, filed by the company  with the Securities and Exchange Commission, as updated or
supplemented from time to time in subsequent filings. These risks and uncertainties include, without limitation:
adverse capital and credit market conditions that may significantly affect the company's ability to meet liquidity
needs, access to capital and cost of capital; difficult conditions in the global capital markets and the general
economy, which the company does not expect to improve in the near future, that may materially adversely
affect the company's business and results of operations; the actions of the U.S. government, Federal Reserve
and other governmental and regulatory bodies for purposes of stabilizing the financial markets might not
achieve the intended effect; the risk from acquiring new businesses, which could result in the impairment of
goodwill and/or intangible assets recognized at the time of acquisition; impairment of other financial
institutions that could adversely affect the company; investment risks which may diminish the value of the
company's invested assets and the investment returns credited to customers, which could reduce sales,
revenues, assets under management and net income; requirements to post collateral or make payments related to
declines in market value of specified assets may adversely affect company liquidity and expose the company to
counterparty credit risk; changes in laws, regulations or accounting standards that may reduce company
profitability; fluctuations in foreign currency exchange rates that could reduce company profitability; Principal
Financial Group, Inc.'s primary reliance, as a holding company, on dividends from its subsidiaries to meet debt
payment obligations and regulatory restrictions on the ability of subsidiaries to pay such dividends; competitive
factors; volatility of financial markets; decrease in ratings; interest rate changes; inability to attract and retain
sales representatives; international business risks; a pandemic, terrorist attack or other catastrophic event; and
default of the company's re-insurers.
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, as a basis for determining employee and senior management awards and
compensation, and evaluating performance on a basis comparable to that used by investors and securities
analysts.
Earnings Conference Call
At 9:00 A.M. (CST) tomorrow, President and Chief Executive Officer Larry Zimpleman and Senior Vice
President and Chief Financial Officer Terry Lillis will lead a discussion of results during a live conference
call, which can be accessed as follows:
Via live Internet webcast. Please go to
www
.principal.com
/investor
at least 10-15 minutes prior to the
start of the call to register, and to download and install any necessary audio software.
Via telephone by dialing 800-374-1609 (U.S. and Canadian callers) or 706-643-7701 (International
callers) approximately 10 minutes prior to the start of the call. The call leader's name is Tom Graf.
Replays of the earnings call are available at:
www
.principal.com
/investor
or by dialing 800-642-1687
(U.S. and Canadian callers) or 706-645-9291 (International callers). The access code is 91753676.
Replays will be available beginning approximately two hours after the completion of the live earnings
call through the end of day May 12, 2009.
The company's financial supplement for first quarter 2009 is currently available at
www
.principal.com
/investor
, and may be referred to during the call.
Page 8
About the Principal Financial Group
The Principal Financial Group
®
(The Principal
®
)
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 $236.6 billion in assets under management
6
and serves some 18.8 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
.
###
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 March 31, 2009
Page 9
Summary of Segment and Principal Financial Group, Inc. Results
Operating Earnings (Loss)*
in millions
Three Months Ended,
Segment
3/31/09
3/31/08
U.S. Asset Accumulation
$93.1
$139.1
Global Asset Management
6.8
19.8
International Asset Management and Accumulation
17.0
31.7
Life and Health Insurance
71.8
79.2
Corporate and Other
(24.7)
(11.4)
Operating Earnings
164.0
258.4
Net realized capital losses, as adjusted
(50.9)
(74.7)
Other after-tax adjustments
(0.3)
(9.5)
Net income available to common stockholders
$112.8
$174.2
Per Diluted Share
Three Months Ended,
3/31/09
3/31/08
Operating Earnings
$0.63
$0.99
Net realized capital losses, as adjusted
(0.20)
(0.28)
Other after-tax adjustments
(0.00)
(0.04)
Net income available to common stockholders
$0.43
$0.67
Weighted-average diluted common shares
outstanding
260.5
261.3
*Operating earnings versus U.S. GAAP (GAAP) net income available to common stockholders
Management uses operating earnings, which excludes the effect of net realized capital gains and losses, as adjusted, and other after-tax adjustments, for goal setting, as a basis for 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 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.
Page 10
Principal Financial Group, Inc.
Results of Operations
(in millions)
Three Months Ended,
3/31/09
3/31/08
Premiums and other considerations
$ 949.9
$ 1,053.0
Fees and other revenues
473.5
613.4
Net investment income
828.5
960.3
Net realized capital gains (losses), excluding
impairment losses on available-for-sale securities
32.7
(58.5)
Total other-than-temporary impairment losses on
available-for-sale securities
(146.6)
(67.5)
Portion of impairment losses on fixed maturities,
available-for-sale recognized in other
comprehensive income
50.6
-
Net impairment losses on available-for-sale securities
(96.0)
(67.5)
Net realized capital losses
(63.3)
(126.0)
Total revenues
2,188.6
2,500.7
Benefits, claims, and settlement expenses
1,306.6
1,472.0
Dividends to policyholders
63.5
70.8
Operating expenses
688.4
750.7
Total expenses
2,058.5
2,293.5
Income before income taxes
130.1
207.2
Income taxes
7.5
29.6
Net income
122.6
177.6
Net income (loss) attributable to noncontrolling
interest
1.6
(4.8)
Net income attributable to Principal Financial Group,
Inc.
121.0
182.4
Preferred stock dividends
8.2
8.2
Net income available to common stockholders
$ 112.8
$ 174.2
Less:
Net realized capital losses, as adjusted
(50.9)
(74.7)
Other after-tax adjustments
(0.3)
(9.5)
Operating earnings
$ 164.0
$ 258.4
Page 11
Selected Balance Sheet Statistics
Period Ended,
3/31/09
12/31/08
3/31/08
Total assets (in billions)
$ 123.2
$ 128.2
$ 152.0
Total common equity (in millions)
$ 2,086.6
$ 1,930.8
$ 6,300.1
Total common equity excluding accumulated
other comprehensive income (in millions)
$ 6,927.7
$ 6,842.4
$ 6,659.2
End of period common shares outstanding (in
millions)
260.0
259.3
258.6
Book value per common share
$ 8.03
$ 7.45
$ 24.36
Book value per common share excluding
accumulated other comprehensive income
$ 26.65
$ 26.39
$ 25.75
Page 12
Principal Financial Group, Inc.
Reconciliation of Non-GAAP Financial Measures to U.S. GAAP
(in millions, except as indicated)
Three Months Ended,
03/31/09
03/31/08
Diluted Earnings Per Common Share:
Operating Earnings
0.63
0.99
Net realized capital losses
(0.20)
(0.28)
Other after-tax adjustments
(0.00)
(0.04)
Net income available to common stockholders
0.43
0.67
Book Value Per Common Share Excluding Accumulated Other Comprehensive
Income:
Book value per common share excluding accumulated other comprehensive income
26.65
25.75
Net unrealized capital losses
(15.90)
(2.01)
Foreign currency translation
(0.60)
0.38
Net unrecognized post-retirement benefit obligations
(2.12)
0.24
Book value per common share including accumulated other comprehensive income
8.03
24.36
Operating Revenues:
USAA
1,007.5
1,204.7
GAM
104.4
139.6
IAMA
64.0
183.7
Life and Health
1,131.0
1,187.6
Corporate and Other
(45.7)
(55.3)
Total operating revenues
2,261.2
2,660.3
Add:
Net realized capital losses and related adjustments
(72.5)
(138.3)
Terminated commercial securities issuance operation
(0.1)
(21.3)
Total GAAP revenues
2,188.6
2,500.7
Operating Earnings:
USAA
93.1
139.1
GAM
6.8
19.8
IAMA
17.0
31.7
Life and Health
71.8
79.2
Corporate and Other
(24.7)
(11.4)
Total operating earnings
164.0
258.4
Net realized capital losses
(50.9)
(74.7)
Other after-tax adjustments
(0.3)
(9.5)
Net income available to common stockholders
112.8
174.2
Net Realized Capital Gains (losses):
Net realized capital gains losses, as adjusted
(50.9)
(74.7)
Add:
Periodic settlements and accruals on non-hedge derivatives
7.7
8.8
Amortization of DPAC and sale inducement costs
24.8
(13.5)
Certain market value adjustments of embedded derivatives
(4.0)
-
Capital gains distributed
(6.7)
(9.3)
Tax impacts
(36.8)
(34.1)
Noncontrolling interest capital gains (losses)
1.1
(6.7)
Less related fee adjustments:
Certain market value adjustments to fee revenues
(1.5)
(3.5)
GAAP net realized capital losses
(63.3)
(126.0)
Other After Tax Adjustments:
Change in estimated loss related to a prior year legal contingency
-
7.6
Terminated commercial securities issuance operation
(0.3)
(17.1)
Total other after-tax adjustments
(0.3)
(9.5)