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     <TD noWrap align=center><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=5>SECURITIES AND EXCHANGE COMMISSION</FONT></B>&nbsp;</TD></TR>
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     <TD align=center><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>Washington, D.C. 20549</FONT></B></TD></TR>
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     <TD align=center><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=5>FORM 8-K</FONT></B></TD></TR>
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     <TD align=center><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif">CURRENT REPORT</FONT></B></TD></TR>
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     <TD align=center><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Pursuant to Section 13 or 15(d) of the</FONT></B></TD></TR>
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     <TD align=center><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Securities Exchange Act of 1934</FONT></B></TD></TR>
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     <TD align=center><FONT face="Times New Roman,Arial,Helvetica,sans-serif">Date of Report: </FONT><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif">August 2, 2010</FONT></B></TD></TR>
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     <TD noWrap align=center><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=5>PRINCIPAL FINANCIAL GROUP, INC.</FONT></B>&nbsp;</TD></TR>
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     <TD align=center><FONT face="Times New Roman,Arial,Helvetica,sans-serif">(Exact name of registrant as specified in its charter)</FONT></TD></TR></TABLE></DIV>
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     <TD noWrap align=left colSpan=3><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=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; Delaware&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&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></B>&nbsp;<B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>1-16725</FONT></B>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; <B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>42-1520346</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=center><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=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; (State or other jurisdiction</FONT>&nbsp;</TD>
     <TD noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (Commission file number)&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</FONT>&nbsp;<FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>(I.R.S. Employer</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=center><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=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; of incorporation)</FONT>&nbsp;</TD>
     <TD noWrap 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; <FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Identification Number)</FONT>&nbsp;</TD></TR></TABLE></DIV>
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     <TD align=center colSpan=2><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>711 High Street, Des Moines, Iowa 50392</FONT></B></TD></TR>
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     <TD align=center colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>(Address of principal executive offices)</FONT></TD></TR>
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     <TD align=center colSpan=2><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>(515) 247-5111</FONT></B></TD></TR>
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     <TD noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp; 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 noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp; registrant under any of the following provisions:</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp; [&nbsp; &nbsp;]</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-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 noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp; [&nbsp; &nbsp;]</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-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 noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp; [&nbsp; &nbsp;]</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>240.14d-2(b))</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>240.13e-4(c))</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif">Page 2</FONT>&nbsp;</TD>
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     <TD noWrap align=left colSpan=3><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Item 2.02. Results of Operations and Financial Condition</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif">On August 2, 2010, Principal Financial Group, Inc. publicly announced information regarding its</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif">results of operations and financial condition for the quarter ended June 30, 2010. The text of the</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif">announcement is included herewith as Exhibit 99.</FONT>&nbsp;</TD>
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     <TD noWrap align=left colSpan=2><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Item 9.01 Financial Statements and Exhibits</FONT></B>&nbsp;</TD>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif">99</FONT>&nbsp;</TD>
     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp; Second Quarter 2010 Earnings Release</FONT>&nbsp;</TD>
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     <TD align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;SIGNATURE</FONT></TD></TR>
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     <TD style="TEXT-INDENT: 3px" noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp; Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif">caused this report to be signed on its behalf by the undersigned thereunto duly authorized.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 54px" noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PRINCIPAL FINANCIAL GROUP, INC.</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;By:</FONT>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<U>&nbsp;&nbsp;&nbsp; </U><FONT face="Times New Roman,Arial,Helvetica,sans-serif"><U>/s/ Terrance J. Lillis&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></FONT><U>&nbsp;</U></TD></TR>
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     <TD style="TEXT-INDENT: 54px" noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Name:&nbsp; Terrance J. Lillis</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 54px" noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Title:&nbsp;&nbsp;&nbsp;&nbsp; Senior Vice President and Chief Financial</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Officer</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif">Date: August 2, 2010</FONT>&nbsp;</TD>
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     <TD noWrap align=left><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=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; EXHIBIT 99</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><B><I><FONT face="Times New Roman,BoldItalic,Arial,Helvetica,sans-serif" size=2>RELEASE:</FONT></I></B>&nbsp;</TD>
     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>On receipt</FONT>&nbsp;</TD>
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     <TD noWrap align=left colSpan=2><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>MEDIA CONTACT:</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Susan Houser, 515-248-2268, houser.susan@principal.com</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=2><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>INVESTOR RELATIONS CONTACT:</FONT></B>&nbsp;</TD>
     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; John Egan, 515-235-9500, investor-relations@principal.com</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=3><B><I><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PRINCIPAL FINANCIAL GROUP, INC. REPORTS SECOND QUARTER 2010 RESULTS</FONT></I></B>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Des Moines, IA (August 2, 2010) &#150; Principal Financial Group, Inc. (NYSE: PFG) today announced</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>results for second quarter 2010. The company reported net income available to common stockholders of $134.0</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>million, or $0.42 per diluted share for the three months ended June 30, 2010, compared to $150.3 million, or</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>$0.52 per diluted share for the three months ended June 30, 2009. The company reported operating earnings of</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>$203.5 million for second quarter 2010, compared to $200.5 million for second quarter 2009. Operating</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>earnings per diluted share (EPS) for second quarter 2010 were $0.63 compared to $0.69 for the same period in</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>2009. Operating revenues for second quarter 2010 were $2,321.0 million compared to $2,335.8 million for the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>same period last year.</FONT><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>1</FONT></SUP>&nbsp;</TD>
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     <TD noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&#147;The Principal&#146;s second quarter results contributed to very solid financial performance for the first</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>half of 2010. Compared to 2009, we&#146;ve delivered double-digit growth in assets under management,</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>operating earnings, net income and book value per share.</FONT><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>2 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&#148; said Larry D. Zimpleman, chairman, president</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>and chief executive officer. &#147;This reflects not only ongoing improvement in credit and equity market</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>conditions, but also strong execution of our strategy, and ongoing discipline around expenses and the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>investment portfolio.&#148;</FONT>&nbsp;</TD>
     <TD noWrap align=left>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&#147;Our asset management and accumulation growth engines continued to deliver strong results in the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>second quarter,&#148; said Zimpleman. &#147;Principal International, Principal Global Investors and Principal Funds all</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>reported double digit earnings growth compared to the prior year quarter, improving 33 percent on a combined</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>basis. Full Service Accumulation&#146;s operating earnings improved strongly, as well, up 21 percent adjusting for the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>impact of equity market true-ups on deferred policy acquisition cost amortization expense. Principal International</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>also generated record net cash flows of $1.5 billion during the quarter, and our three largest U.S. accumulation</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>businesses</FONT><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>3 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>delivered a $650 million improvement in sales compared to the year ago quarter.&#148;</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left>&nbsp;</TD>
     <TD noWrap align=left colSpan=2><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&#147;We continue to see signs of economic recovery,&#148; said Terry Lillis, senior vice president and chief</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>financial officer. &#147;During the second quarter, Full Service Accumulation recurring deposits improved from the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left colSpan=3><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>prior year period for the first time since third quarter 2008. Sales pipelines continue to build, and retirement plan</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=3><FONT face="Times New Roman" size=1>_______________________________</FONT></TD></TR>
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<P><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>1 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>Use of non-GAAP financial measures is discussed in this release after Segment Highlights.</FONT></P>
</TD></TR>
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     <TD noWrap align=left colSpan=3><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>2 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>Book value per share including accumulated other comprehensive income.</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left colSpan=3><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>3 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>Full Service Accumulation, Principal Funds and Individual Annuities.</FONT>&nbsp;</TD></TR></TABLE></DIV>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif">Page 4</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>terminations</FONT><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>4 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>continue to decline, suggesting increasing stability among small and medium-sized businesses. And</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>in Specialty Benefits, premium and fees increased sequentially for the first time since fourth quarter 2008.&#148;</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 15px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Added Zimpleman, &#147;As always, we remain committed to helping businesses, their employees and other</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>individuals rebuild their financial futures. While we believe there will be challenges ahead, we look to the future</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>with a continued focus on maintaining our financial strength; managing risks throughout the enterprise; and</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>serving customers and financial advisors the way they want to be served.&#148;</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>Additional Highlights</FONT></B>&nbsp;</TD></TR>
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<LI><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Assets under management were $284.7 billion as of June 30, 2010, an increase of 10 percent compared</FONT> <FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>to $257.7 billion as of June 30, 2009.</FONT>
<LI><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Solid sales of the company&#146;s three key U.S. retirement and investment products in the second quarter,</FONT> <FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>despite a difficult sales environment with $918 million for Full Service Accumulation, $2.2 billion for</FONT> <FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Principal Funds and $528 million for Individual Annuities.</FONT>
<LI><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Continued strong operating leverage, reflected in 26 percent growth in operating earnings through six</FONT> <FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>months compared to 13 percent growth in average assets under management.</FONT>
<LI><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Strong capital and liquidity, with: an estimated risk based capital ratio of 440 percent at quarter-end; $2.0</FONT> <FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>billion of excess capital;</FONT><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>5 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>and $5.7 billion of liquid assets.</FONT> </LI></UL></TD></TR></TABLE></DIV>
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     <TD noWrap align=left width="100%"><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>Net Income</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Net income available to common stockholders of $134.0 million for second quarter 2010 reflects net realized</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>capital losses of $69.5 million, which include:</FONT>&nbsp;</TD></TR>
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<LI><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>$35.9 million of net losses related to credit gains and losses on sales and permanent impairments of fixed</FONT> <FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>maturity securities, including $32.9 million of losses on commercial mortgage backed securities;</FONT>
<LI><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>$25.6 million of losses related to marks on derivatives, primarily interest rate swaps used for hedging</FONT> <FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>activities;</FONT>
<LI><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>$10.2 million of losses on commercial mortgage whole loans;</FONT>
<LI><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>$17.1 million of losses related to deferred policy acquisition costs;</FONT>
<LI><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>$41.9 million of losses on residential mortgage loan loss provisions for Principal Bank, primarily relating</FONT> <FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>to the home equity portfolio; and</FONT>
<LI><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>$72.1 million of gains from the change in the company&#146;s economic interest in the Brasilprev joint</FONT> <FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>venture.</FONT> </LI></UL></TD></TR></TABLE></DIV>
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     <TD noWrap align=center width="100%"><B><I><FONT face="Times New Roman,BoldItalic,Arial,Helvetica,sans-serif" size=2>Segment Highlights</FONT></I></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>U.S. Asset Accumulation</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating earnings for second quarter 2010 were $129.0 million, compared to $137.4</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>million for the same period in 2009, as higher earnings from the full service accumulation and mutual funds</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>businesses were offset by lower earnings from the individual annuities and investment only businesses. Full</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>service accumulation earnings increased $5.5 million from a year ago to $67.9 million for second quarter 2010,</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>reflecting a 19 percent increase in average account values partially offset by $17.0 million of higher deferred</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>policy acquisition cost (DPAC) amortization expense.</FONT><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>6 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Principal Funds earnings increased $4.4 million from a</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>year ago to $10.3 million for second quarter 2010, primarily due to a 23 percent increase in average account</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>values. Individual annuities earnings decreased $12.5 million from a year ago to $22.6 million for second</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman" size=1>______________________________________________</FONT></TD></TR>
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     <TD noWrap align=left><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>4 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>Plan sponsors shutting down retirement plans as opposed to moving them to another provider.</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>5 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>Excess capital includes cash at the holding company and capital at the life company above that needed to maintain a 350 percent</FONT><FONT size=1>&nbsp;</FONT></TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>NAIC risk based capital ratio for the life company.</FONT><FONT size=1>&nbsp;</FONT></TD></TR></TABLE></DIV>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif">Page 5</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>quarter 2010, primarily due to a $19.8 million increase in DPAC amortization expense.</FONT><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>6 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Investment Only</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>earnings were $13.0 million for second quarter 2010, compared to $22.3 million for the same period a year ago.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>The decline is primarily due to: a 19 percent drop in average account values, reflecting the company&#146;s</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>continued scale back of its institutional GIC and funding agreement business; and $7.3 million of earnings in</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>second quarter 2009 from the opportunistic early redemption of medium-term notes with no corresponding</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>activity in second quarter 2010.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating revenues for the second quarter were $1,021.3 million compared to $991.3 million for</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>the same period in 2009. Higher revenues for the accumulation businesses,</FONT><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>7 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>which improved $61.3 million,</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>or 9 percent increase from a year ago, were partially offset by a $45.3 million decline in revenues for the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>investment only business.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment assets under management were $157.9 billion as of June 30, 2010, compared to $145.3</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>billion as of June 30, 2009.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>Global Asset Management</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating earnings for second quarter 2010 were $12.3 million, compared to $8.2 million in</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>the prior year quarter, primarily due to an 11 percent increase in average assets under management.</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating revenues for second quarter were $114.3 million, compared to $103.3 million for the same</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>period in 2009, primarily due to higher management fees.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 15px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Unaffiliated assets under management were $71.2 billion as of June 30, 2010, compared to $67.3</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>billion as of June 30, 2009.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>International Asset Management and Accumulation</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating earnings for second quarter 2010 were $35.0 million compared to $29.3 million</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>for the same period in 2009, primarily due to improved macroeconomic conditions and higher assets under</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>management.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Operating revenues were $188.2 million for second quarter, compared to $161.7 million for the same</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>period last year, primarily due to higher net investment income from inflation-linked investments in Chile, the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>impact of foreign currency movements, and an increase in fees on higher assets under management.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment assets under management were a record $38.1 billion as of June 30, 2010, compared to</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>$28.7 billion as of June 30, 2009. This includes a record $3.4 billion of net cash flows over the trailing</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>twelve months, or 12 percent of beginning of period assets under management.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>Life and Health Insurance</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating earnings for second quarter 2010 were $54.6 million, compared to $57.7</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>million for the same period in 2009. Specialty Benefits earnings were up slightly at $24.0 million in second</FONT>&nbsp;</TD></TR>
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     <TD>&nbsp;_________________________</TD></TR>
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     <TD noWrap align=left><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>6 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>The variances in DPAC amortization expense for both full service accumulation and individual annuities primarily reflect the</FONT><FONT size=1>&nbsp;</FONT></TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>impact of declining equity markets during second quarter 2010 compared to improving equity markets during second quarter 2009.</FONT><FONT size=1>&nbsp;</FONT></TD></TR>
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     <TD noWrap align=left><SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>7 </FONT></SUP><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=1>Full Service Accumulation, Principal Funds, Individual Annuities and Bank and Trust Services.</FONT><FONT size=1>&nbsp;</FONT></TD></TR></TABLE></DIV>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif">Page 6</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>quarter 2010, compared to $23.7 million in the same period a year ago. Individual Life earnings were $26.0</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>million compared to $28.3 million in second quarter 2009, as growth in the block of business was offset by the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>impact of equity market performance true-ups on DPAC amortization expense. The Health division had</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>operating earnings of $4.6 million in second quarter 2010 compared to earnings of $5.7 million for second</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>quarter 2009, reflecting the decline from a year ago in group medical covered members.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left>&nbsp;&nbsp;&nbsp;&nbsp;<FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp; Operating revenues for second quarter were $1,037.1 million, compared to $1,116.9 million for the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>same period a year ago. The decline was primarily due to a 16 percent decline in Health division premiums,</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>which primarily reflects a decline in group medical covered members.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>Corporate</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 18px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>&nbsp;&nbsp;&nbsp;&nbsp; Operating losses for second quarter 2010 were $27.4 million. This compares to operating losses of</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>$32.1 million in second quarter 2009, reflecting higher debt outstanding.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>Forward looking and cautionary statements</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>This press release contains forward-looking statements, including, without limitation, statements as to</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>operating earnings, net income available to common stockholders, net cash flows, realized and unrealized</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>losses, capital and liquidity positions, sales and earnings trends, and management's beliefs, expectations,</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>goals and opinions. The company does not undertake to update or revise these statements, which are based</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Future</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>events and their effects on the company may not be those anticipated, and actual results may differ materially</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>could cause or contribute to such material differences are discussed in the company's annual report on Form</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>10-K for the year ended December 31, 2009, and in the company&#146;s quarterly report on Form 10-Q for the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>quarter ended March 31, 2010, filed by the company with the Securities and Exchange Commission, as</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>updated or supplemented from time to time in subsequent filings. These risks and uncertainties include,</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>without limitation: adverse capital and credit market conditions that may significantly affect the company&#146;s</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>ability to meet liquidity needs, access to capital and cost of capital; a continuation of difficult conditions in</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>the global capital markets and the general economy that may materially adversely affect the company&#146;s</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>business and results of operations; the actions of the U.S. government, Federal Reserve and other</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>governmental and regulatory bodies for purposes of stabilizing the financial markets might not achieve the</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>intended effect; the risk from acquiring new businesses, which could result in the impairment of goodwill</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>and/or intangible assets recognized at the time of acquisition; impairment of other financial institutions that</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>could adversely affect the company; investment risks which may diminish the value of the company&#146;s</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>invested assets and the investment returns credited to customers, which could reduce sales, revenues, assets</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>under management and net income; requirements to post collateral or make payments related to declines in</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>market value of specified assets may adversely affect company liquidity and expose the company to</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>counterparty credit risk; changes in laws, regulations or accounting standards that may reduce</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>company profitability; fluctuations in foreign currency exchange rates that could reduce company</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>profitability; Principal Financial Group, Inc.&#146;s primary reliance, as a holding company, on dividends from its</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>subsidiaries to meet debt payment obligations and regulatory restrictions on the ability of subsidiaries to pay</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>such dividends; competitive factors; volatility of financial markets; decrease in ratings; interest rate changes;</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>inability to attract and retain sales representatives; international business risks; a pandemic, terrorist attack or</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>other catastrophic event; and default of the company&#146;s re-insurers.</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>Use of Non-GAAP Financial Measures</FONT></B>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>The company uses a number of non-GAAP financial measures that management believes are useful to investors</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>because they illustrate the performance of normal, ongoing operations, which is important in understanding and</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>evaluating the company&#146;s financial condition and results of operations. They are not, however, a substitute for</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>U.S. GAAP financial measures. Therefore, the company has provided reconciliations of the non-GAAP</FONT>&nbsp;</TD></TR>
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     <TD style="TEXT-INDENT: 5px" noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>measures to the most directly comparable U.S. GAAP measure at the end of the release. The company adjusts</FONT>&nbsp;</TD></TR></TABLE></DIV>
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     <TD align=left nowrap> <FONT face="Times New Roman,Arial,Helvetica,sans-serif">Page 7</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">U.S. GAAP measures for items not directly related to ongoing operations. However, it is possible these</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">adjusting items have occurred in the past and could recur in the future reporting periods. Management also uses</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">non-GAAP measures for goal setting, as a basis for determining employee and senior management</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">awards and compensation, and evaluating performance on a basis comparable to that used by investors</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">and securities analysts.</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">Earnings Conference Call</FONT></B>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">On Tuesday, August 3, 2010 at 10:00 A.M. (ET), Chairman, President and Chief Executive Officer Larry</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Zimpleman and Senior Vice President and Chief Financial Officer Terry Lillis will lead a discussion of</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">results, asset quality and capital adequacy during a live conference call, which can be accessed as follows:</FONT>&nbsp;</TD> </TR> </TABLE> </DIV>
<P style="MARGIN:0px">&nbsp;</P>
<UL>
<LI> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Via live Internet webcast. Please go to </FONT><U><FONT color="#0000ff" size=2 face="Times New Roman,Arial,Helvetica,sans-serif">www.principal.com/investor </FONT></U><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">at least 10-15 minutes prior to the</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">start of the call to register, and to download and install any necessary audio software.</FONT></LI>
<LI> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Via telephone by dialing 800-374-1609 (U.S. and Canadian callers) or 706-643-7701 (International</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">callers) approximately 10 minutes prior to the start of the call. The access code is 4587874.</FONT></LI>
<LI> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Replays of the earnings call are available at: </FONT><U><FONT color="#0000ff" size=2 face="Times New Roman,Arial,Helvetica,sans-serif">www.principal.com/investor </FONT></U><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">or by dialing 800-642-1687</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">(U.S. and Canadian callers) or 706-645-9291 (International callers). The access code is 4587874.</FONT><BR>
<FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">Replays will be available approximately two hours after the completion of the live earnings call through</FONT> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">the end of day August 10, 2010.</FONT></LI> </UL>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">The company's financial supplement and additional investment portfolio detail for second quarter 2010 is</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">currently available at </FONT><FONT color="#0000ff" size=2 face="Times New Roman,Arial,Helvetica,sans-serif">www.principal.com/investor</FONT><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">, and may be referred to during the call.</FONT>&nbsp;</TD> </TR>
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     <TD> &nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <B><FONT size=2 face="Times New Roman,Bold,Arial,Helvetica,sans-serif">About the Principal Financial Group</FONT></B>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">The Principal Financial Group</FONT><SUP><FONT size=2 face="Symbol,Symbol">&Ograve; </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">(The Principal </FONT><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">&#174; </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">)</FONT><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">8 </FONT></SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">is a leader in offering businesses, individuals and</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">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 nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">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 nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">member of the Fortune 500, the Principal Financial Group has &#36;284.7 billion in assets under management</FONT><SUP><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">9</FONT></SUP>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">and serves some 18.9 million customers worldwide from offices in Asia, Australia, Europe, Latin America</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">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 nowrap style="TEXT-INDENT:5.000000px"> <FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">ticker symbol PFG. For more information, visit </FONT><FONT color="#0000ff" size=2 face="Times New Roman,Arial,Helvetica,sans-serif">www.principal.com</FONT><FONT size=2 face="Times New Roman,Arial,Helvetica,sans-serif">.</FONT>&nbsp;</TD> </TR>
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     <TD> &nbsp;</TD> </TR>
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     <TD> &nbsp;</TD> </TR>
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     <TD> &nbsp;</TD> </TR>
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     <TD align=center nowrap> <FONT face="Times New Roman,Arial,Helvetica,sans-serif">###</FONT>&nbsp;</TD> </TR>
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     <TD> &nbsp;</TD> </TR>
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     <TD> &nbsp;</TD> </TR>
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     <TD> &nbsp;</TD> </TR>
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     <TD> &nbsp;</TD> </TR>
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     <TD align=left nowrap> <SUP><FONT size=1 face="Times New Roman,Arial,Helvetica,sans-serif">8 </FONT></SUP><FONT size=1 face="Times New Roman,Arial,Helvetica,sans-serif">"The Principal Financial Group" and &#147;The Principal&#148; are registered service marks of Principal Financial Services, Inc., a member of the</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap> <FONT size=1 face="Times New Roman,Arial,Helvetica,sans-serif">Principal Financial Group.</FONT>&nbsp;</TD> </TR>
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     <TD align=left nowrap> <SUP><FONT size=1 face="Times New Roman,Arial,Helvetica,sans-serif">9 </FONT></SUP><FONT size=1 face="Times New Roman,Arial,Helvetica,sans-serif">As of June 30, 2010.</FONT>&nbsp;</TD> </TR> </TABLE> </DIV>
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     <TD noWrap align=left><B><FONT face="Times New Roman,Bold,Arial,Helvetica,sans-serif" size=2>*Operating earnings versus U.S. GAAP (GAAP) net income available to common stockholders</FONT></B>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>Management uses operating earnings, which excludes the effect of net realized capital gains and losses, as adjusted, and other after-</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>tax adjustments, for goal setting, as a basis for determining employee compensation, and evaluating performance on a basis</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>comparable to that used by investors and securities analysts. Segment operating earnings are determined by adjusting U.S. GAAP</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>net income available to common stockholders for net realized capital gains and losses, as adjusted, and other after-tax adjustments</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>the company believes are not indicative of overall operating trends. Note: it is possible these adjusting items have occurred in the</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>past and could recur in future reporting periods. While these items may be significant components in understanding and assessing</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>our consolidated financial performance, management believes the presentation of segment operating earnings enhances the</FONT>&nbsp;</TD></TR>
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     <TD noWrap align=left><FONT face="Times New Roman,Arial,Helvetica,sans-serif" size=2>businesses.</FONT>&nbsp;</TD></TR></TABLE></DIV>
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secondqtrer10.htm - Generated by SEC Publisher 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:
August 2, 2010
(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 August 2, 2010, Principal Financial Group, Inc. publicly announced information regarding its
results of operations and financial condition for the quarter ended June 30, 2010. The text of the
announcement is included herewith as Exhibit 99.
Item 9.01 Financial Statements and Exhibits
99
Second Quarter 2010 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: August 2, 2010
Page 3
EXHIBIT 99
RELEASE:
On receipt
MEDIA CONTACT:
Susan Houser, 515-248-2268, houser.susan@principal.com
INVESTOR RELATIONS CONTACT:
John Egan, 515-235-9500, investor-relations@principal.com
PRINCIPAL FINANCIAL GROUP, INC. REPORTS SECOND QUARTER 2010 RESULTS
Des Moines, IA (August 2, 2010) – Principal Financial Group, Inc. (NYSE: PFG) today announced
results for second quarter 2010. The company reported net income available to common stockholders of $134.0
million, or $0.42 per diluted share for the three months ended June 30, 2010, compared to $150.3 million, or
$0.52 per diluted share for the three months ended June 30, 2009. The company reported operating earnings of
$203.5 million for second quarter 2010, compared to $200.5 million for second quarter 2009. Operating
earnings per diluted share (EPS) for second quarter 2010 were $0.63 compared to $0.69 for the same period in
2009. Operating revenues for second quarter 2010 were $2,321.0 million compared to $2,335.8 million for the
same period last year.
1
"The Principal's second quarter results contributed to very solid financial performance for the first
half of 2010. Compared to 2009, we've delivered double-digit growth in assets under management,
operating earnings, net income and book value per share.
2
" said Larry D. Zimpleman, chairman, president
and chief executive officer. "This reflects not only ongoing improvement in credit and equity market
conditions, but also strong execution of our strategy, and ongoing discipline around expenses and the
investment portfolio."
"Our asset management and accumulation growth engines continued to deliver strong results in the
second quarter," said Zimpleman. "Principal International, Principal Global Investors and Principal Funds all
reported double digit earnings growth compared to the prior year quarter, improving 33 percent on a combined
basis. Full Service Accumulation's operating earnings improved strongly, as well, up 21 percent adjusting for the
impact of equity market true-ups on deferred policy acquisition cost amortization expense. Principal International
also generated record net cash flows of $1.5 billion during the quarter, and our three largest U.S. accumulation
businesses
3
delivered a $650 million improvement in sales compared to the year ago quarter."
"We continue to see signs of economic recovery," said Terry Lillis, senior vice president and chief
financial officer. "During the second quarter, Full Service Accumulation recurring deposits improved from the
prior year period for the first time since third quarter 2008. Sales pipelines continue to build, and retirement plan
_______________________________
1
Use of non-GAAP financial measures is discussed in this release after Segment Highlights.
2
Book value per share including accumulated other comprehensive income.
3
Full Service Accumulation, Principal Funds and Individual Annuities.
Page 4
terminations
4
continue to decline, suggesting increasing stability among small and medium-sized businesses. And
in Specialty Benefits, premium and fees increased sequentially for the first time since fourth quarter 2008."
Added Zimpleman, "As always, we remain committed to helping businesses, their employees and other
individuals rebuild their financial futures. While we believe there will be challenges ahead, we look to the future
with a continued focus on maintaining our financial strength; managing risks throughout the enterprise; and
serving customers and financial advisors the way they want to be served."
Additional Highlights
Assets under management were $284.7 billion as of June 30, 2010, an increase of 10 percent compared
to $257.7 billion as of June 30, 2009.
Solid sales of the company's three key U.S. retirement and investment products in the second quarter,
despite a difficult sales environment with $918 million for Full Service Accumulation, $2.2 billion for
Principal Funds and $528 million for Individual Annuities.
Continued strong operating leverage, reflected in 26 percent growth in operating earnings through six
months compared to 13 percent growth in average assets under management.
Strong capital and liquidity, with: an estimated risk based capital ratio of 440 percent at quarter-end; $2.0
billion of excess capital;
5
and $5.7 billion of liquid assets.
Net Income
Net income available to common stockholders of $134.0 million for second quarter 2010 reflects net realized
capital losses of $69.5 million, which include:
$35.9 million of net losses related to credit gains and losses on sales and permanent impairments of fixed
maturity securities, including $32.9 million of losses on commercial mortgage backed securities;
$25.6 million of losses related to marks on derivatives, primarily interest rate swaps used for hedging
activities;
$10.2 million of losses on commercial mortgage whole loans;
$17.1 million of losses related to deferred policy acquisition costs;
$41.9 million of losses on residential mortgage loan loss provisions for Principal Bank, primarily relating
to the home equity portfolio; and
$72.1 million of gains from the change in the company's economic interest in the Brasilprev joint
venture.
Segment Highlights
U.S. Asset Accumulation
Segment operating earnings for second quarter 2010 were $129.0 million, compared to $137.4
million for the same period in 2009, as higher earnings from the full service accumulation and mutual funds
businesses were offset by lower earnings from the individual annuities and investment only businesses. Full
service accumulation earnings increased $5.5 million from a year ago to $67.9 million for second quarter 2010,
reflecting a 19 percent increase in average account values partially offset by $17.0 million of higher deferred
policy acquisition cost (DPAC) amortization expense.
6
Principal Funds earnings increased $4.4 million from a
year ago to $10.3 million for second quarter 2010, primarily due to a 23 percent increase in average account
values. Individual annuities earnings decreased $12.5 million from a year ago to $22.6 million for second
______________________________________________
4
Plan sponsors shutting down retirement plans as opposed to moving them to another provider.
5
Excess capital includes cash at the holding company and capital at the life company above that needed to maintain a 350 percent
NAIC risk based capital ratio for the life company.
Page 5
quarter 2010, primarily due to a $19.8 million increase in DPAC amortization expense.
6
Investment Only
earnings were $13.0 million for second quarter 2010, compared to $22.3 million for the same period a year ago.
The decline is primarily due to: a 19 percent drop in average account values, reflecting the company's
continued scale back of its institutional GIC and funding agreement business; and $7.3 million of earnings in
second quarter 2009 from the opportunistic early redemption of medium-term notes with no corresponding
activity in second quarter 2010.
Operating revenues for the second quarter were $1,021.3 million compared to $991.3 million for
the same period in 2009. Higher revenues for the accumulation businesses,
7
which improved $61.3 million,
or 9 percent increase from a year ago, were partially offset by a $45.3 million decline in revenues for the
investment only business.
Segment assets under management were $157.9 billion as of June 30, 2010, compared to $145.3
billion as of June 30, 2009.
Global Asset Management
Segment operating earnings for second quarter 2010 were $12.3 million, compared to $8.2 million in
the prior year quarter, primarily due to an 11 percent increase in average assets under management.
Operating revenues for second quarter were $114.3 million, compared to $103.3 million for the same
period in 2009, primarily due to higher management fees.
Unaffiliated assets under management were $71.2 billion as of June 30, 2010, compared to $67.3
billion as of June 30, 2009.
International Asset Management and Accumulation
Segment operating earnings for second quarter 2010 were $35.0 million compared to $29.3 million
for the same period in 2009, primarily due to improved macroeconomic conditions and higher assets under
management.
Operating revenues were $188.2 million for second quarter, compared to $161.7 million for the same
period last year, primarily due to higher net investment income from inflation-linked investments in Chile, the
impact of foreign currency movements, and an increase in fees on higher assets under management.
Segment assets under management were a record $38.1 billion as of June 30, 2010, compared to
$28.7 billion as of June 30, 2009. This includes a record $3.4 billion of net cash flows over the trailing
twelve months, or 12 percent of beginning of period assets under management.
Life and Health Insurance
Segment operating earnings for second quarter 2010 were $54.6 million, compared to $57.7
million for the same period in 2009. Specialty Benefits earnings were up slightly at $24.0 million in second
_________________________
6
The variances in DPAC amortization expense for both full service accumulation and individual annuities primarily reflect the
impact of declining equity markets during second quarter 2010 compared to improving equity markets during second quarter 2009.
7
Full Service Accumulation, Principal Funds, Individual Annuities and Bank and Trust Services.
Page 6
quarter 2010, compared to $23.7 million in the same period a year ago. Individual Life earnings were $26.0
million compared to $28.3 million in second quarter 2009, as growth in the block of business was offset by the
impact of equity market performance true-ups on DPAC amortization expense. The Health division had
operating earnings of $4.6 million in second quarter 2010 compared to earnings of $5.7 million for second
quarter 2009, reflecting the decline from a year ago in group medical covered members.
Operating revenues for second quarter were $1,037.1 million, compared to $1,116.9 million for the
same period a year ago. The decline was primarily due to a 16 percent decline in Health division premiums,
which primarily reflects a decline in group medical covered members.
Corporate
Operating losses for second quarter 2010 were $27.4 million. This compares to operating losses of
$32.1 million in second quarter 2009, reflecting higher debt outstanding.
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 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, 2009, and in the company's quarterly report on Form 10-Q for the
quarter ended March 31, 2010, 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; a continuation of difficult conditions in
the global capital markets and the general economy 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
Page 7
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
On Tuesday, August 3, 2010 at 10:00 A.M. (ET), Chairman, President and Chief Executive Officer Larry
Zimpleman and Senior Vice President and Chief Financial Officer Terry Lillis will lead a discussion of
results, asset quality and capital adequacy 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 access code is 4587874.
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 4587874.
Replays will be available approximately two hours after the completion of the live earnings call through
the end of day August 10, 2010.
The company's financial supplement and additional investment portfolio detail for second quarter 2010 is
currently available at
www.principal.com/investor
, and may be referred to during the call.
About the Principal Financial Group
The Principal Financial Group
Ò
(The Principal
®
)
8
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 $284.7 billion in assets under management
9
and serves some 18.9 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
.
###
8
"The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the
Principal Financial Group.
9
As of June 30, 2010.
*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.