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 1, 2005
                        (Date of earliest event reported)



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


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

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

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

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

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

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


<PAGE>

ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  August  1,  2005,   Principal   Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter ended June 30, 2005. The text of the  announcement is included  herewith
as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Second Quarter 2005 Earnings Release



                                    SIGNATURE

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


                                    PRINCIPAL FINANCIAL GROUP, INC.


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

Date:    August 2, 2005

                                       2
<PAGE>

RELEASE: On receipt
CONTACT:                    Jeff Rader, 515-247-7883, rader.jeff@principal.com
INVESTOR RELATIONS CONTACT: Tom Graf, 515-235-9500,
                            investor-relations@principal.com

       PRINCIPAL FINANCIAL GROUP, INC. REPORTS SECOND QUARTER 2005 RESULTS

Des Moines,  IA (August 1, 2005) - Principal  Financial Group,  Inc. (NYSE: PFG)
today  announced  net income for the three months ended June 30, 2005, of $238.9
million, or $0.82 per diluted share compared to net income of $119.7 million, or
$0.37 per diluted  share for the three months  ended June 30, 2004.  The company
reported  record  operating  earnings of $221.0 million for second quarter 2005,
compared to $173.4  million for second  quarter  2004.  Operating  earnings  per
diluted share for second  quarter 2005 were a record $0.76 compared to $0.54 for
the same  period  in 2004.  Operating  revenues  for  second  quarter  2005 were
$2,190.8  million compared to $2,047.9 million for the same period last year.(1)

Highlights for the second quarter 2005 include:

o    Record assets under management (AUM) of $187.8 billion,  up 23 percent from
     a year ago,  including  $33.7 billion,  or 26 percent growth for U.S. Asset
     Management and Accumulation.
o    Record operating earnings of $221.0 million, up 27 percent from a year ago,
     including  a record  $76.3  million  of  earnings  for the Life and  Health
     Insurance  segment and a record $19.1 million of earnings for International
     Asset Management and Accumulation.(2)
o    Continued  strong sales of the  company's  key  retirement  and  investment
     products,  including  $833  million  for mutual  funds,  $604  million  for
     individual  annuities,  and $1.2  billion for organic  pension full service
     accumulation.

"The Principal's  record second quarter results,  including 41 percent growth in
operating  earnings per diluted  share,  reflect  continued  strong  performance
across  the  organization,  and  effective  capital  management,"  said J. Barry
Griswell,  chairman and chief  executive  officer.  "Our  consistent  focus - on
innovative retirement and employee benefit solutions, investment performance and
choice, and exceptional  service and convenience - is strengthening  performance
across our businesses.  Through mid-year,  we've achieved  double-digit earnings
growth in each of our  operating  segments,  driving 20 percent  improvement  in
total company earnings compared to the first six months of 2004."

"Reflecting the competitive strength of our retirement and investment offerings,
total company assets under  management are up $36 billion from a year ago," said
Griswell.  "Principal Global Investors' third party institutional  assets are up
$18 billion,  or 65 percent,  Pension account values have increased $13 billion,
or 16 percent,  and  Principal  International's  AUM is up $3.5  billion,  or 42
percent."

"Our  outstanding  growth in assets under management has in turn driven improved
operating results over the longer-term.  For the trailing  twelve-month  period,
total earnings for our U.S. and International  Asset Management and Accumulation
segments have  increased more than $80 million,  or 16 percent,  compared to the
same period a year ago," said Griswell. "We're also seeing increased strength in
our life and health insurance businesses. Earnings for the segment are up nearly
eight  percent on a trailing  twelve  month basis,  reflecting  strong sales and
improving retention, particularly within our Specialty Benefits division."

                                       3
<PAGE>

Highlights for the six months ended June 30, 2005 include:

o    Net income increased to $444.4 million, or $1.49 per diluted share compared
     to $313.3 million, or $0.98 per diluted share during the same period a year
     ago. The increase includes a $33.8 million after-tax gain in second quarter
     2005 due to a recovery of previously impaired fixed maturity securities.
o    Operating  earnings  increased  20 percent to $430.2  million,  from $359.9
     million in the year earlier period.
o    Operating  earnings  per share  increased  29 percent to $1.44 per  diluted
     share  compared  to $1.12 per diluted  share  during the same period a year
     ago.
o    Operating  revenues  increased 6 percent to $4,339.4  million from $4,091.1
     million in the year earlier period.


                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
Segment operating earnings for second quarter 2005 were $130.5 million, compared
to $121.7  million  for the same  period in 2004.  The  improvement  was largely
driven by a 10 percent increase in Pension Full Service  Accumulation  earnings,
which were $62.1 million in second quarter 2005 compared to $56.6 million in the
same period a year ago. The increase in full service  accumulation  earnings was
primarily the result of increased fees  generated  from higher  account  values.
Pension Full Service  Accumulation  account values were $71.0 billion as of June
30, 2005 compared to $59.0 billion as of June 30, 2004,  with  approximately  $4
billion of the increase as a result of the fourth  quarter 2004  acquisition  of
ABN AMRO Trust Services Company.

Operating  revenues for the second quarter increased 7 percent to $971.1 million
compared  to  $906.8  million  for the  same  period  in 2004.  Revenues  in the
Individual Annuity  operations  reached record levels,  increasing $30.4 million
from a year ago, due to higher  payout  annuity  premiums and higher  investment
income from a larger asset base. Pension revenues increased $21.5 million,  with
higher   revenues  from  Pension   Investment  Only  and  Pension  Full  Service
Accumulation operations more than offsetting lower sales of single premium group
annuities.  The single premium product,  which is typically used to fund defined
benefit plan terminations,  can generate large premiums from very few customers.
Because demand for the product is highly sensitive to interest rates, the volume
of product  sales tends to vary from period to period.  Excluding  this product,
revenues for the segment increased 10 percent.

Segment assets under management continued to increase,  reaching a record $161.3
billion as of June 30, 2005,  up 8 percent  from $149.6  billion as of March 31,
2005, and up 26 percent from $127.6 billion as of June 30, 2004.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
Segment operating  earnings for second quarter 2005 were a record $19.1 million,
compared to $9.3 million for second  quarter 2004.  $3.1 million of the increase
relates to higher fee revenues,  due to continued  strong growth in assets under
management.  Three other primary contributors to increased earnings were: higher
inflation-linked investment yields in Chile; foreign currency strengthening; and
a tax benefit  related to the second quarter  repatriation  of funds to the U.S.
parent under the American Jobs Creation Act.

Operating  revenues were $158.2  million for second  quarter  2005,  compared to
$122.3  million for the same period last year. The increase  primarily  reflects
increased premium collections from payout annuities and higher  inflation-linked
investment yields in Chile.

                                       4
<PAGE>

Assets under  management for the segment were $11.8 billion as of June 30, 2005,
compared to $10.6 billion as of March 31, 2005,  and compared to $8.3 billion as
of June 30, 2004.

LIFE AND HEALTH INSURANCE
Segment operating  earnings for second quarter 2005 were a record $76.3 million,
compared to $56.9 million for the same period in 2004.  The increase from a year
ago reflects:  a $6.6 million benefit,  primarily from methodology  improvements
related to reinsurance values in the Individual Life division; strong growth and
favorable, but unsustainable loss ratios in the Specialty Benefits division; and
a return to more normal loss ratios in the Health division.

Operating  revenues  increased  to a record  $1,089.5  million for the  quarter,
compared to $1,030.7  million  for the same period in 2004.  Specialty  Benefits
division  revenues  increased  $36.0 million,  driven by strong sales and steady
retention  in all of the  specialty  benefits  product  lines.  Health  revenues
increased  $24.0  million,  primarily due to higher premium per member and a 1.9
percent  increase in group medical  covered  members.  Individual  Life revenues
decreased by $1.2 million, reflecting the company's continued shift in marketing
emphasis from traditional premium-based products to fee-based universal life and
variable  universal life products.  Unlike traditional  premium-based  products,
universal  life and  variable  universal  life  premium are not reported as GAAP
revenue.

MORTGAGE BANKING
The  operating  earnings of the  segment,  prior to the July 1, 2004 sale of the
mortgage  banking  operations,  reflect  only the  corporate  overhead  expenses
allocated to the segment.  This is pursuant to Statement of Financial Accounting
Standard No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
("SFAS 144"),  whereby all revenues and expenses  (excluding  corporate overhead
allocated to the discontinued segment) are reported as discontinued  operations.
Based on this  treatment,  there was an  operating  loss of $5.4  million in the
prior year quarter,  compared to no operating earnings for the segment in second
quarter 2005.

CORPORATE AND OTHER
Operating  losses  for  second  quarter  2005 were  $4.9  million,  compared  to
operating  losses  of $9.1  million  for the same  period in 2004.  Because  the
corporate  operations are varied,  many items  contributed to the variance.  The
improvement  primarily  reflects  higher  earnings  on excess  capital and lower
interest expense on debt in second quarter 2005.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  These statements 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, 2004, and in the company's quarterly report on Form 10-Q
for the quarter ended March 31, 2005,  filed by the company with the  Securities
and  Exchange  Commission.   These  risks  and  uncertainties  include,  without
limitation:  competitive factors;  volatility of financial markets;  decrease in
ratings;   interest  rate  changes;   inability  to  attract  and  retain  sales
representatives;  international  business risks;  foreign currency exchange rate
fluctuations; and investment portfolio risks.

                                       5
<PAGE>

OUTLOOK FOR FULL YEAR 2005
Based on an estimated  $20 million in 2005 for net  realized/unrealized  capital
losses,  the  company  expects  2005 net income to range from $2.73 to $2.79 per
diluted share.  The company expects 2005 operating  earnings to range from $2.80
to $2.86 per diluted share.(3)

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

SHARE REPURCHASES
In May 2005,  the company  completed the $250 million share  repurchase  program
authorized  by the  Board  in  March  2005.  Under  this  program,  the  company
repurchased  6.5 million shares for $250.0  million,  an average price of $38.29
per share. In June 2005, following the Board's share repurchase authorization of
up to 15.0  million  shares,  the  company  entered  into an  accelerated  stock
repurchase  agreement with a third party investment bank for approximately  13.7
million shares of Principal  Financial Group,  Inc. common stock with an initial
payment of $542.3 million,  using cash proceeds from the company's June issuance
of  perpetual  preferred  stock.  The  transaction  is subject to a market price
adjustment  provision based on the volume weighted average market price over the
execution period.

STOCK OPTIONS
The Principal  expenses  employee  stock options and the employee stock purchase
plan,  resulting  in an  after-tax  expense of $5.7  million and $10.5  million,
respectively for the three and six months ended June 30, 2005,  compared to $6.1
million and $11.4 million,  respectively for the three and six months ended June
30, 2004.

EARNINGS CONFERENCE CALL
At 9:00 A.M.  (CST)  tomorrow,  Chairman and CEO J. Barry Griswell and Executive
Vice  President  and CFO  Mike  Gersie  will  lead a  discussion  during  a live
conference call.  Interested parties may access the call live via webcast on the
Principal     Financial     Group     Investor     Relations     (IR)    website
(www.principal.com/investor)  or by dialing  (800)  374-1609  (U.S.  callers) or
(706) 643-7701  (International  callers)  approximately  10 minutes prior to the
start of the call.  To access the call,  leader name is Tom Graf.  Listeners can
access  an audio  replay  of the call on the IR  website,  or by  calling  (800)
642-1687 (US callers) or (706) 645-9291 (International callers). The access code
for the replay is 7110537. Replays will be available through August 9, 2005. The
financial  supplement is currently available on our website and will be referred
to during the conference call.

                                       6
<PAGE>

ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial Group(R) (The Principal (R))(4) 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 $187.8
billion in assets under  management(5)  and serves some 15.2  million  customers
worldwide from offices in Asia, Australia,  Europe, Latin America and the United
States. Principal Financial Group, Inc. is traded on the New York Stock Exchange
under the ticker symbol PFG. For more information, visit WWW.PRINCIPAL.COM. ###

                                       7
<PAGE>


<TABLE>
<CAPTION>

SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

                                                      --------------------------------------------------------------
                                                                OPERATING EARNINGS (LOSS)* IN MILLIONS
                                                      --------------------------------------------------------------
                                                          THREE MONTHS ENDED              SIX MONTHS ENDED
                                                      --------------- -------------- -------------- ----------------
<S>                                                        <C>            <C>              <C>             <C>
                     SEGMENT                                6/30/05         6/30/04        6/30/05         6/30/04
----------------------------------------------------- --------------- -------------- -------------- ----------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION        $130.5         $  121.7         $269.1          $241.2
----------------------------------------------------- --------------- -------------- -------------- ----------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION          19.1              9.3           28.6            17.9
----------------------------------------------------- --------------- -------------- -------------- ----------------
                          LIFE AND HEALTH INSURANCE          76.3             56.9          145.8           131.7
----------------------------------------------------- --------------- -------------- -------------- ----------------
                                   MORTGAGE BANKING           -               (5.4)           -             (10.3)
----------------------------------------------------- --------------- -------------- -------------- ----------------
                                CORPORATE AND OTHER          (4.9)            (9.1)         (13.3)          (20.6)
----------------------------------------------------- --------------- -------------- -------------- ----------------
                                 OPERATING EARNINGS         221.0            173.4          430.2           359.9
----------------------------------------------------- --------------- -------------- -------------- ----------------
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED           3.2            (44.5)          (0.5)          (67.6)
----------------------------------------------------- --------------- -------------- -------------- ----------------
                        OTHER AFTER-TAX ADJUSTMENTS          14.7             (9.2)          14.7            21.0
----------------------------------------------------- --------------- -------------- -------------- ----------------
                                       NET INCOME *        $238.9         $  119.7         $444.4          $313.3
----------------------------------------------------- --------------- -------------- -------------- ----------------

                                                                          PER DILUTED SHARE
                                                      --------------------------------------------------------------
                                                          THREE MONTHS ENDED,             SIX MONTHS ENDED,
                                                      ------------------------------ -------------------------------
                                                           6/30/05         6/30/04        6/30/05        6/30/04
                                                      --------------- -------------- -------------- ----------------
                                 OPERATING EARNINGS        $  0.76        $    0.54        $  1.44         $  1.12
----------------------------------------------------- --------------- -------------- -------------- ----------------
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED           0.01            (0.14)          -              (0.21)
----------------------------------------------------- --------------- -------------- -------------- ----------------
                        OTHER AFTER-TAX ADJUSTMENTS           0.05            (0.03)          0.05            0.07
----------------------------------------------------- --------------- -------------- -------------- ----------------
                                         NET INCOME        $  0.82        $    0.37        $  1.49         $  0.98
----------------------------------------------------- --------------- -------------- -------------- ----------------
                     WEIGHTED-AVERAGE DILUTED COMMON
                                  SHARES OUTSTANDING        291.4            319.2          298.2           320.6
----------------------------------------------------- --------------- -------------- -------------- ----------------
</TABLE>


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

                                       8
<PAGE>

<TABLE>
<CAPTION>

                         PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
-----------------------------------------------------------------------------------------------------------------
                                                       THREE MONTHS ENDED,              SIX MONTHS ENDED,
                                                 ---------------- --------------- --------------- ---------------
                                                       6/30/05        6/30/04         6/30/05         6/30/04
                                                 ---------------- --------------- --------------- ---------------
<S>                                                 <C>             <C>               <C>             <C>
Premiums and other considerations                   $      948.9    $  892.6          $1,883.0        $1,813.0
Fees and other revenues                                    405.3       364.2             822.5           696.8
Net investment income                                      836.3       789.2           1,630.4         1,574.5
Net realized/unrealized capital gains (losses)              10.2       (66.3)              8.7         (108.8)
                                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                        2,200.7     1,979.7           4,344.6         3,975.5
                                                 ---------------- --------------- --------------- ---------------
Benefits, claims, and settlement expenses                1,264.5     1,221.1           2,498.8         2,407.2
Dividends to policyholders                                  72.2        74.4             145.1           147.7
Operating expenses                                         580.8       521.1           1,137.7         1,050.6
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                        1,917.5     1,816.6           3,781.6         3,605.5
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations before
   income taxes                                            283.2       163.1             563.0           370.0
Income taxes                                                59.4        34.2             134.2            78.3
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations, net of
   related income taxes                                    223.8       128.9             428.8           291.7
Income (loss) from discontinued operations,
   net of related taxes                                     15.1        (9.2)             15.6            27.3
                                                 ---------------- --------------- --------------- ---------------
Income before cumulative effect of
   accounting change                                       238.9       119.7             444.4           319.0
Cumulative effect of accounting change, net
   of related income taxes                                   -           -                 -              (5.7)
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                       $      238.9    $  119.7          $  444.4        $  313.3

Less:
Net realized/unrealized capital gains
   (losses), as adjusted                                     3.2       (44.5)             (0.5)          (67.6)
Other after-tax adjustments                                 14.7        (9.2)             14.7            21.0
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                               $      221.0    $  173.4          $  430.2        $  359.9
                                                 ================ =============== =============== ===============
</TABLE>

<TABLE>
<CAPTION>
                        SELECTED BALANCE SHEET STATISTICS

                                                                            PERIOD ENDED
                                                     ------------------------------------------------------------
                                                           6/30/05              12/31/04            6/30/04
                                                     --------------------- -------------------- -----------------
<S>                                                       <C>                  <C>                 <C>
Total assets (in billions)                                $   117.2            $   113.8           $   111.4
Total common equity (in millions)                         $ 7,310.2            $ 7,544.3           $ 7,139.1
Total common equity excluding accumulated other
   comprehensive income (in millions)                     $ 5,856.3            $ 6,231.0           $ 6,378.0
End of period common shares outstanding (in
   millions)                                                  279.4                300.6               314.9
Book value per common share                               $    26.16           $    25.10          $    22.67
Book value per common share excluding
   accumulated other comprehensive income                 $    20.96           $    20.73          $    20.25

</TABLE>
                                       9
<PAGE>

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

                                                                 THREE MONTHS ENDED,           SIX MONTHS ENDED,
                                                             ----------------------------- ---------------------------
                                                                  6/30/05        6/30/04       6/30/05       6/30/04
                                                             -------------- -------------- ------------- -------------
<S>                                                                   <C>            <C>           <C>           <C>
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                    0.76           0.54          1.44          1.12
Net realized/unrealized capital losses                                0.01          (0.14)         -            (0.21)
Other after-tax adjustments                                           0.05          (0.03)         0.05          0.07
                                                             -------------- -------------- ------------- -------------
Net income                                                            0.82           0.37          1.49          0.98
                                                             ============== ============== ============= =============

BOOK VALUE PER COMMON SHARE EXCLUDING OTHER
COMPREHENSIVE INCOME:
Book value per common share excluding other comprehensive
   income                                                            20.96          20.25         20.96         20.25
Net unrealized capital gains                                          5.46           2.94          5.46          2.94
Foreign currency translation                                         (0.24)         (0.51)        (0.24)        (0.51)
Minimum pension liability                                            (0.02)         (0.01)        (0.02)        (0.01)
                                                             -------------- -------------- ------------- -------------
Book value per common share including other comprehensive
   income                                                            26.16          22.67         26.16         22.67
                                                             ============== ============== ============= =============
OPERATING REVENUES:
USAMA                                                               971.1          906.8       1,928.4       1,800.1
IAMA                                                                158.2          122.3         291.0         235.3
Life and Health                                                   1,089.5        1,030.7       2,158.1       2,066.0
Mortgage Banking                                                      -              -             -             -
Corporate and Other                                                 (28.0)         (11.9)        (38.1)        (10.3)
                                                             -------------- -------------- ------------- -------------
Total operating revenues                                          2,190.8        2,047.9       4,339.4       4,091.1
Add:  Net realized/unrealized capital losses and related
   fee adjustments                                                   10.6         (68.2)           6.6       (114.7)
Less:  Operating revenues from discontinued real estate               0.7              -           1.4           0.9
                                                             -------------- -------------- ------------- -------------
Total GAAP revenues                                               2,200.7        1,979.7       4,344.6       3,975.5
                                                             ============== ============== ============= =============
OPERATING EARNINGS:
USAMA                                                               130.5          121.7         269.1         241.2
IAMA                                                                 19.1            9.3          28.6          17.9
Life and Health                                                      76.3           56.9         145.8         131.7
Mortgage Banking                                                      -             (5.4)          -           (10.3)
Corporate and Other                                                  (4.9)          (9.1)        (13.3)        (20.6)
                                                             -------------- -------------- ------------- -------------
Total operating earnings                                            221.0          173.4         430.2         359.9
Net realized/unrealized capital losses                                3.2          (44.5)         (0.5)        (67.6)
Other after-tax adjustments                                          14.7           (9.2)         14.7          21.0
                                                             -------------- -------------- ------------- -------------
Net income                                                          238.9          119.7         444.4         313.3
                                                             ============== ============== ============= =============
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital losses, as adjusted                   3.2          (44.5)         (0.5)        (67.6)
Add:
Amortization of DPAC and sale inducement costs                        4.4           (0.5)          3.9          (2.6)
Capital gains (losses) distributed                                   (0.2)          (0.8)          1.2           1.2
Tax impacts                                                           3.0          (22.5)          1.8         (45.9)
Minority interest capital gains                                       0.2            0.1           0.2           0.2
Less related fee adjustments:
Unearned front-end fee income                                         1.4            1.0           1.8          (0.1)
Certain market value adjustments to fee revenues                     (1.0)          (2.9)         (3.9)         (5.8)
                                                             -------------- -------------- ------------- -------------
GAAP net realized/unrealized capital gains (losses)                  10.2          (66.3)          8.7        (108.8)
                                                             ============== ============== ============= =============
OTHER AFTER TAX ADJUSTMENTS:
SOP 03-1 implementation                                               -              -             -            (5.7)
Discontinued operations - Mortgage Banking                            -             (9.5)          -            26.5
Discontinued operations - Argentina                                   -              0.3           -             0.2
Gain on disposal of discontinued real estate                         14.7            -            14.7           -
                                                             -------------- -------------- ------------- -------------
Total other after-tax adjustments                                    14.7           (9.2)         14.7          21.0
                                                             ============== ============== ============= =============
</TABLE>

                                       10
<PAGE>

---------------------
(1)  Use of non-GAAP financial measures is discussed on page 4 of this release.
(2)  Segment Highlights,  beginning on page 2 of this release,  discuss a number
     of items benefiting second quarter 2005 operating earnings.
(3)  While the Company's policy is not to provide quarterly updates to full year
     earnings  per  share  or net  income  per  share  expectations  as the year
     progresses, the Company may revisit guidance to ensure clarity if events or
     changes in the  environment  occur during the year. Full year 2005 guidance
     is  based  on  certain   assumptions,   including  domestic  equity  market
     performance  improvement of roughly 2% per quarter. Other items that we are
     unable to predict could significantly affect net income such as: changes to
     laws, regulations, or accounting standards; litigation; unrealized gains or
     losses from  mark-to-market  adjustments  related to hedging activities and
     seed money investments; and gains or losses from discontinued operations.
(4)  "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
(5)  As of June 30, 2005

                                       11
<PAGE>
[{"type": "8-K", "sequence": "1", "filename": "pr2q05pressrelease.txt", "description": "FORM 8-K", "secsgml_size_bytes": 39327}]
{"company-data": {"conformed-name": "PRINCIPAL FINANCIAL GROUP INC", "cik": "0001126328", "assigned-sic": "6321", "irs-number": "421520346", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-16725", "film-number": "05989956"}, "business-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392", "phone": "5152475111"}, "mail-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392"}}
SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 8-K

                                 CURRENT REPORT

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

                         Date of Report: AUGUST 1, 2005
                        (Date of earliest event reported)

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

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

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

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

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

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

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

On  August  1,  2005,   Principal   Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter ended June 30, 2005. The text of the  announcement is included  herewith
as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Second Quarter 2005 Earnings Release

                                    SIGNATURE

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

                                    PRINCIPAL FINANCIAL GROUP, INC.

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

Date:    August 2, 2005

                                       2
RELEASE: On receipt
CONTACT:                    Jeff Rader, 515-247-7883, rader.jeff@principal.com
INVESTOR RELATIONS CONTACT: Tom Graf, 515-235-9500,
                            investor-relations@principal.com

       PRINCIPAL FINANCIAL GROUP, INC. REPORTS SECOND QUARTER 2005 RESULTS

Des Moines,  IA (August 1, 2005) - Principal  Financial Group,  Inc. (NYSE: PFG)
today  announced  net income for the three months ended June 30, 2005, of $238.9
million, or $0.82 per diluted share compared to net income of $119.7 million, or
$0.37 per diluted  share for the three months  ended June 30, 2004.  The company
reported  record  operating  earnings of $221.0 million for second quarter 2005,
compared to $173.4  million for second  quarter  2004.  Operating  earnings  per
diluted share for second  quarter 2005 were a record $0.76 compared to $0.54 for
the same  period  in 2004.  Operating  revenues  for  second  quarter  2005 were
$2,190.8  million compared to $2,047.9 million for the same period last year.(1)

Highlights for the second quarter 2005 include:

o    Record assets under management (AUM) of $187.8 billion,  up 23 percent from
     a year ago,  including  $33.7 billion,  or 26 percent growth for U.S. Asset
     Management and Accumulation.
o    Record operating earnings of $221.0 million, up 27 percent from a year ago,
     including  a record  $76.3  million  of  earnings  for the Life and  Health
     Insurance  segment and a record $19.1 million of earnings for International
     Asset Management and Accumulation.(2)
o    Continued  strong sales of the  company's  key  retirement  and  investment
     products,  including  $833  million  for mutual  funds,  $604  million  for
     individual  annuities,  and $1.2  billion for organic  pension full service
     accumulation.

"The Principal's  record second quarter results,  including 41 percent growth in
operating  earnings per diluted  share,  reflect  continued  strong  performance
across  the  organization,  and  effective  capital  management,"  said J. Barry
Griswell,  chairman and chief  executive  officer.  "Our  consistent  focus - on
innovative retirement and employee benefit solutions, investment performance and
choice, and exceptional  service and convenience - is strengthening  performance
across our businesses.  Through mid-year,  we've achieved  double-digit earnings
growth in each of our  operating  segments,  driving 20 percent  improvement  in
total company earnings compared to the first six months of 2004."

"Reflecting the competitive strength of our retirement and investment offerings,
total company assets under  management are up $36 billion from a year ago," said
Griswell.  "Principal Global Investors' third party institutional  assets are up
$18 billion,  or 65 percent,  Pension account values have increased $13 billion,
or 16 percent,  and  Principal  International's  AUM is up $3.5  billion,  or 42
percent."

"Our  outstanding  growth in assets under management has in turn driven improved
operating results over the longer-term.  For the trailing  twelve-month  period,
total earnings for our U.S. and International  Asset Management and Accumulation
segments have  increased more than $80 million,  or 16 percent,  compared to the
same period a year ago," said Griswell. "We're also seeing increased strength in
our life and health insurance businesses. Earnings for the segment are up nearly
eight  percent on a trailing  twelve  month basis,  reflecting  strong sales and
improving retention, particularly within our Specialty Benefits division."

                                       3
Highlights for the six months ended June 30, 2005 include:

o    Net income increased to $444.4 million, or $1.49 per diluted share compared
     to $313.3 million, or $0.98 per diluted share during the same period a year
     ago. The increase includes a $33.8 million after-tax gain in second quarter
     2005 due to a recovery of previously impaired fixed maturity securities.
o    Operating  earnings  increased  20 percent to $430.2  million,  from $359.9
     million in the year earlier period.
o    Operating  earnings  per share  increased  29 percent to $1.44 per  diluted
     share  compared  to $1.12 per diluted  share  during the same period a year
     ago.
o    Operating  revenues  increased 6 percent to $4,339.4  million from $4,091.1
     million in the year earlier period.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
Segment operating earnings for second quarter 2005 were $130.5 million, compared
to $121.7  million  for the same  period in 2004.  The  improvement  was largely
driven by a 10 percent increase in Pension Full Service  Accumulation  earnings,
which were $62.1 million in second quarter 2005 compared to $56.6 million in the
same period a year ago. The increase in full service  accumulation  earnings was
primarily the result of increased fees  generated  from higher  account  values.
Pension Full Service  Accumulation  account values were $71.0 billion as of June
30, 2005 compared to $59.0 billion as of June 30, 2004,  with  approximately  $4
billion of the increase as a result of the fourth  quarter 2004  acquisition  of
ABN AMRO Trust Services Company.

Operating  revenues for the second quarter increased 7 percent to $971.1 million
compared  to  $906.8  million  for the  same  period  in 2004.  Revenues  in the
Individual Annuity  operations  reached record levels,  increasing $30.4 million
from a year ago, due to higher  payout  annuity  premiums and higher  investment
income from a larger asset base. Pension revenues increased $21.5 million,  with
higher   revenues  from  Pension   Investment  Only  and  Pension  Full  Service
Accumulation operations more than offsetting lower sales of single premium group
annuities.  The single premium product,  which is typically used to fund defined
benefit plan terminations,  can generate large premiums from very few customers.
Because demand for the product is highly sensitive to interest rates, the volume
of product  sales tends to vary from period to period.  Excluding  this product,
revenues for the segment increased 10 percent.

Segment assets under management continued to increase,  reaching a record $161.3
billion as of June 30, 2005,  up 8 percent  from $149.6  billion as of March 31,
2005, and up 26 percent from $127.6 billion as of June 30, 2004.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
Segment operating  earnings for second quarter 2005 were a record $19.1 million,
compared to $9.3 million for second  quarter 2004.  $3.1 million of the increase
relates to higher fee revenues,  due to continued  strong growth in assets under
management.  Three other primary contributors to increased earnings were: higher
inflation-linked investment yields in Chile; foreign currency strengthening; and
a tax benefit  related to the second quarter  repatriation  of funds to the U.S.
parent under the American Jobs Creation Act.

Operating  revenues were $158.2  million for second  quarter  2005,  compared to
$122.3  million for the same period last year. The increase  primarily  reflects
increased premium collections from payout annuities and higher  inflation-linked
investment yields in Chile.

                                       4
Assets under  management for the segment were $11.8 billion as of June 30, 2005,
compared to $10.6 billion as of March 31, 2005,  and compared to $8.3 billion as
of June 30, 2004.

LIFE AND HEALTH INSURANCE
Segment operating  earnings for second quarter 2005 were a record $76.3 million,
compared to $56.9 million for the same period in 2004.  The increase from a year
ago reflects:  a $6.6 million benefit,  primarily from methodology  improvements
related to reinsurance values in the Individual Life division; strong growth and
favorable, but unsustainable loss ratios in the Specialty Benefits division; and
a return to more normal loss ratios in the Health division.

Operating  revenues  increased  to a record  $1,089.5  million for the  quarter,
compared to $1,030.7  million  for the same period in 2004.  Specialty  Benefits
division  revenues  increased  $36.0 million,  driven by strong sales and steady
retention  in all of the  specialty  benefits  product  lines.  Health  revenues
increased  $24.0  million,  primarily due to higher premium per member and a 1.9
percent  increase in group medical  covered  members.  Individual  Life revenues
decreased by $1.2 million, reflecting the company's continued shift in marketing
emphasis from traditional premium-based products to fee-based universal life and
variable  universal life products.  Unlike traditional  premium-based  products,
universal  life and  variable  universal  life  premium are not reported as GAAP
revenue.

MORTGAGE BANKING
The  operating  earnings of the  segment,  prior to the July 1, 2004 sale of the
mortgage  banking  operations,  reflect  only the  corporate  overhead  expenses
allocated to the segment.  This is pursuant to Statement of Financial Accounting
Standard No. 144, ACCOUNTING FOR THE IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
("SFAS 144"),  whereby all revenues and expenses  (excluding  corporate overhead
allocated to the discontinued segment) are reported as discontinued  operations.
Based on this  treatment,  there was an  operating  loss of $5.4  million in the
prior year quarter,  compared to no operating earnings for the segment in second
quarter 2005.

CORPORATE AND OTHER
Operating  losses  for  second  quarter  2005 were  $4.9  million,  compared  to
operating  losses  of $9.1  million  for the same  period in 2004.  Because  the
corporate  operations are varied,  many items  contributed to the variance.  The
improvement  primarily  reflects  higher  earnings  on excess  capital and lower
interest expense on debt in second quarter 2005.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  These statements 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, 2004, and in the company's quarterly report on Form 10-Q
for the quarter ended March 31, 2005,  filed by the company with the  Securities
and  Exchange  Commission.   These  risks  and  uncertainties  include,  without
limitation:  competitive factors;  volatility of financial markets;  decrease in
ratings;   interest  rate  changes;   inability  to  attract  and  retain  sales
representatives;  international  business risks;  foreign currency exchange rate
fluctuations; and investment portfolio risks.

                                       5
OUTLOOK FOR FULL YEAR 2005
Based on an estimated  $20 million in 2005 for net  realized/unrealized  capital
losses,  the  company  expects  2005 net income to range from $2.73 to $2.79 per
diluted share.  The company expects 2005 operating  earnings to range from $2.80
to $2.86 per diluted share.(3)

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

SHARE REPURCHASES
In May 2005,  the company  completed the $250 million share  repurchase  program
authorized  by the  Board  in  March  2005.  Under  this  program,  the  company
repurchased  6.5 million shares for $250.0  million,  an average price of $38.29
per share. In June 2005, following the Board's share repurchase authorization of
up to 15.0  million  shares,  the  company  entered  into an  accelerated  stock
repurchase  agreement with a third party investment bank for approximately  13.7
million shares of Principal  Financial Group,  Inc. common stock with an initial
payment of $542.3 million,  using cash proceeds from the company's June issuance
of  perpetual  preferred  stock.  The  transaction  is subject to a market price
adjustment  provision based on the volume weighted average market price over the
execution period.

STOCK OPTIONS
The Principal  expenses  employee  stock options and the employee stock purchase
plan,  resulting  in an  after-tax  expense of $5.7  million and $10.5  million,
respectively for the three and six months ended June 30, 2005,  compared to $6.1
million and $11.4 million,  respectively for the three and six months ended June
30, 2004.

EARNINGS CONFERENCE CALL
At 9:00 A.M.  (CST)  tomorrow,  Chairman and CEO J. Barry Griswell and Executive
Vice  President  and CFO  Mike  Gersie  will  lead a  discussion  during  a live
conference call.  Interested parties may access the call live via webcast on the
Principal     Financial     Group     Investor     Relations     (IR)    website
(www.principal.com/investor)  or by dialing  (800)  374-1609  (U.S.  callers) or
(706) 643-7701  (International  callers)  approximately  10 minutes prior to the
start of the call.  To access the call,  leader name is Tom Graf.  Listeners can
access  an audio  replay  of the call on the IR  website,  or by  calling  (800)
642-1687 (US callers) or (706) 645-9291 (International callers). The access code
for the replay is 7110537. Replays will be available through August 9, 2005. The
financial  supplement is currently available on our website and will be referred
to during the conference call.

                                       6
ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial Group(R) (The Principal (R))(4) 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 $187.8
billion in assets under  management(5)  and serves some 15.2  million  customers
worldwide from offices in Asia, Australia,  Europe, Latin America and the United
States. Principal Financial Group, Inc. is traded on the New York Stock Exchange
under the ticker symbol PFG. For more information, visit WWW.PRINCIPAL.COM. ###

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

                                                      --------------------------------------------------------------
                                                                OPERATING EARNINGS (LOSS)* IN MILLIONS
                                                      --------------------------------------------------------------
                                                          THREE MONTHS ENDED              SIX MONTHS ENDED
                                                      --------------- -------------- -------------- ----------------
SEGMENT                                6/30/05         6/30/04        6/30/05         6/30/04
----------------------------------------------------- --------------- -------------- -------------- ----------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION        $130.5         $  121.7         $269.1          $241.2
----------------------------------------------------- --------------- -------------- -------------- ----------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION          19.1              9.3           28.6            17.9
----------------------------------------------------- --------------- -------------- -------------- ----------------
                          LIFE AND HEALTH INSURANCE          76.3             56.9          145.8           131.7
----------------------------------------------------- --------------- -------------- -------------- ----------------
                                   MORTGAGE BANKING           -               (5.4)           -             (10.3)
----------------------------------------------------- --------------- -------------- -------------- ----------------
                                CORPORATE AND OTHER          (4.9)            (9.1)         (13.3)          (20.6)
----------------------------------------------------- --------------- -------------- -------------- ----------------
                                 OPERATING EARNINGS         221.0            173.4          430.2           359.9
----------------------------------------------------- --------------- -------------- -------------- ----------------
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED           3.2            (44.5)          (0.5)          (67.6)
----------------------------------------------------- --------------- -------------- -------------- ----------------
                        OTHER AFTER-TAX ADJUSTMENTS          14.7             (9.2)          14.7            21.0
----------------------------------------------------- --------------- -------------- -------------- ----------------
                                       NET INCOME *        $238.9         $  119.7         $444.4          $313.3
----------------------------------------------------- --------------- -------------- -------------- ----------------

                                                                          PER DILUTED SHARE
                                                      --------------------------------------------------------------
                                                          THREE MONTHS ENDED,             SIX MONTHS ENDED,
                                                      ------------------------------ -------------------------------
                                                           6/30/05         6/30/04        6/30/05        6/30/04
                                                      --------------- -------------- -------------- ----------------
                                 OPERATING EARNINGS        $  0.76        $    0.54        $  1.44         $  1.12
----------------------------------------------------- --------------- -------------- -------------- ----------------
                    NET REALIZED/UNREALIZED CAPITAL
                                LOSSES, AS ADJUSTED           0.01            (0.14)          -              (0.21)
----------------------------------------------------- --------------- -------------- -------------- ----------------
                        OTHER AFTER-TAX ADJUSTMENTS           0.05            (0.03)          0.05            0.07
----------------------------------------------------- --------------- -------------- -------------- ----------------
                                         NET INCOME        $  0.82        $    0.37        $  1.49         $  0.98
----------------------------------------------------- --------------- -------------- -------------- ----------------
                     WEIGHTED-AVERAGE DILUTED COMMON
                                  SHARES OUTSTANDING        291.4            319.2          298.2           320.6
----------------------------------------------------- --------------- -------------- -------------- ----------------
*OPERATING EARNINGS VERSUS U.S. GAAP (GAAP) NET INCOME
Management   uses  operating   earnings,   which  excludes  the  effect  of  net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments, for goal setting, determining employee compensation, and evaluating
performance on a basis comparable to that used by securities  analysts.  Segment
operating  earnings are  determined  by adjusting  U.S.  GAAP net income for net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments we believe are not  indicative of overall  operating  trends.  Other
after-tax  adjustments  have  occurred  in the past and  could  recur in  future
reporting  periods.   While  these  items  may  be  significant   components  in
understanding and assessing our consolidated financial  performance,  we believe
the presentation of segment operating earnings enhances the understanding of our
results of  operations  by  highlighting  earnings  attributable  to the normal,
ongoing operations of our businesses.

                                       8
PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
-----------------------------------------------------------------------------------------------------------------
                                                       THREE MONTHS ENDED,              SIX MONTHS ENDED,
                                                 ---------------- --------------- --------------- ---------------
                                                       6/30/05        6/30/04         6/30/05         6/30/04
                                                 ---------------- --------------- --------------- ---------------
Premiums and other considerations                   $      948.9    $  892.6          $1,883.0        $1,813.0
Fees and other revenues                                    405.3       364.2             822.5           696.8
Net investment income                                      836.3       789.2           1,630.4         1,574.5
Net realized/unrealized capital gains (losses)              10.2       (66.3)              8.7         (108.8)
                                                 ---------------- --------------- --------------- ---------------
   TOTAL REVENUES                                        2,200.7     1,979.7           4,344.6         3,975.5
                                                 ---------------- --------------- --------------- ---------------
Benefits, claims, and settlement expenses                1,264.5     1,221.1           2,498.8         2,407.2
Dividends to policyholders                                  72.2        74.4             145.1           147.7
Operating expenses                                         580.8       521.1           1,137.7         1,050.6
                                                 ---------------- --------------- --------------- ---------------
   TOTAL EXPENSES                                        1,917.5     1,816.6           3,781.6         3,605.5
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations before
   income taxes                                            283.2       163.1             563.0           370.0
Income taxes                                                59.4        34.2             134.2            78.3
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations, net of
   related income taxes                                    223.8       128.9             428.8           291.7
Income (loss) from discontinued operations,
   net of related taxes                                     15.1        (9.2)             15.6            27.3
                                                 ---------------- --------------- --------------- ---------------
Income before cumulative effect of
   accounting change                                       238.9       119.7             444.4           319.0
Cumulative effect of accounting change, net
   of related income taxes                                   -           -                 -              (5.7)
                                                 ---------------- --------------- --------------- ---------------
   NET INCOME                                       $      238.9    $  119.7          $  444.4        $  313.3

Less:
Net realized/unrealized capital gains
   (losses), as adjusted                                     3.2       (44.5)             (0.5)          (67.6)
Other after-tax adjustments                                 14.7        (9.2)             14.7            21.0
                                                 ---------------- --------------- --------------- ---------------
   OPERATING EARNINGS                               $      221.0    $  173.4          $  430.2        $  359.9
                                                 ================ =============== =============== ===============
SELECTED BALANCE SHEET STATISTICS

                                                                            PERIOD ENDED
                                                     ------------------------------------------------------------
                                                           6/30/05              12/31/04            6/30/04
                                                     --------------------- -------------------- -----------------
Total assets (in billions)                                $   117.2            $   113.8           $   111.4
Total common equity (in millions)                         $ 7,310.2            $ 7,544.3           $ 7,139.1
Total common equity excluding accumulated other
   comprehensive income (in millions)                     $ 5,856.3            $ 6,231.0           $ 6,378.0
End of period common shares outstanding (in
   millions)                                                  279.4                300.6               314.9
Book value per common share                               $    26.16           $    25.10          $    22.67
Book value per common share excluding
   accumulated other comprehensive income                 $    20.96           $    20.73          $    20.25
9
PRINCIPAL FINANCIAL GROUP, INC.
           RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
                       (IN MILLIONS, EXCEPT AS INDICATED)

                                                                 THREE MONTHS ENDED,           SIX MONTHS ENDED,
                                                             ----------------------------- ---------------------------
                                                                  6/30/05        6/30/04       6/30/05       6/30/04
                                                             -------------- -------------- ------------- -------------
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                    0.76           0.54          1.44          1.12
Net realized/unrealized capital losses                                0.01          (0.14)         -            (0.21)
Other after-tax adjustments                                           0.05          (0.03)         0.05          0.07
                                                             -------------- -------------- ------------- -------------
Net income                                                            0.82           0.37          1.49          0.98
                                                             ============== ============== ============= =============

BOOK VALUE PER COMMON SHARE EXCLUDING OTHER
COMPREHENSIVE INCOME:
Book value per common share excluding other comprehensive
   income                                                            20.96          20.25         20.96         20.25
Net unrealized capital gains                                          5.46           2.94          5.46          2.94
Foreign currency translation                                         (0.24)         (0.51)        (0.24)        (0.51)
Minimum pension liability                                            (0.02)         (0.01)        (0.02)        (0.01)
                                                             -------------- -------------- ------------- -------------
Book value per common share including other comprehensive
   income                                                            26.16          22.67         26.16         22.67
                                                             ============== ============== ============= =============
OPERATING REVENUES:
USAMA                                                               971.1          906.8       1,928.4       1,800.1
IAMA                                                                158.2          122.3         291.0         235.3
Life and Health                                                   1,089.5        1,030.7       2,158.1       2,066.0
Mortgage Banking                                                      -              -             -             -
Corporate and Other                                                 (28.0)         (11.9)        (38.1)        (10.3)
                                                             -------------- -------------- ------------- -------------
Total operating revenues                                          2,190.8        2,047.9       4,339.4       4,091.1
Add:  Net realized/unrealized capital losses and related
   fee adjustments                                                   10.6         (68.2)           6.6       (114.7)
Less:  Operating revenues from discontinued real estate               0.7              -           1.4           0.9
                                                             -------------- -------------- ------------- -------------
Total GAAP revenues                                               2,200.7        1,979.7       4,344.6       3,975.5
                                                             ============== ============== ============= =============
OPERATING EARNINGS:
USAMA                                                               130.5          121.7         269.1         241.2
IAMA                                                                 19.1            9.3          28.6          17.9
Life and Health                                                      76.3           56.9         145.8         131.7
Mortgage Banking                                                      -             (5.4)          -           (10.3)
Corporate and Other                                                  (4.9)          (9.1)        (13.3)        (20.6)
                                                             -------------- -------------- ------------- -------------
Total operating earnings                                            221.0          173.4         430.2         359.9
Net realized/unrealized capital losses                                3.2          (44.5)         (0.5)        (67.6)
Other after-tax adjustments                                          14.7           (9.2)         14.7          21.0
                                                             -------------- -------------- ------------- -------------
Net income                                                          238.9          119.7         444.4         313.3
                                                             ============== ============== ============= =============
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital losses, as adjusted                   3.2          (44.5)         (0.5)        (67.6)
Add:
Amortization of DPAC and sale inducement costs                        4.4           (0.5)          3.9          (2.6)
Capital gains (losses) distributed                                   (0.2)          (0.8)          1.2           1.2
Tax impacts                                                           3.0          (22.5)          1.8         (45.9)
Minority interest capital gains                                       0.2            0.1           0.2           0.2
Less related fee adjustments:
Unearned front-end fee income                                         1.4            1.0           1.8          (0.1)
Certain market value adjustments to fee revenues                     (1.0)          (2.9)         (3.9)         (5.8)
                                                             -------------- -------------- ------------- -------------
GAAP net realized/unrealized capital gains (losses)                  10.2          (66.3)          8.7        (108.8)
                                                             ============== ============== ============= =============
OTHER AFTER TAX ADJUSTMENTS:
SOP 03-1 implementation                                               -              -             -            (5.7)
Discontinued operations - Mortgage Banking                            -             (9.5)          -            26.5
Discontinued operations - Argentina                                   -              0.3           -             0.2
Gain on disposal of discontinued real estate                         14.7            -            14.7           -
                                                             -------------- -------------- ------------- -------------
Total other after-tax adjustments                                    14.7           (9.2)         14.7          21.0
                                                             ============== ============== ============= =============
10
---------------------
(1)  Use of non-GAAP financial measures is discussed on page 4 of this release.
(2)  Segment Highlights,  beginning on page 2 of this release,  discuss a number
     of items benefiting second quarter 2005 operating earnings.
(3)  While the Company's policy is not to provide quarterly updates to full year
     earnings  per  share  or net  income  per  share  expectations  as the year
     progresses, the Company may revisit guidance to ensure clarity if events or
     changes in the  environment  occur during the year. Full year 2005 guidance
     is  based  on  certain   assumptions,   including  domestic  equity  market
     performance  improvement of roughly 2% per quarter. Other items that we are
     unable to predict could significantly affect net income such as: changes to
     laws, regulations, or accounting standards; litigation; unrealized gains or
     losses from  mark-to-market  adjustments  related to hedging activities and
     seed money investments; and gains or losses from discontinued operations.
(4)  "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
(5)  As of June 30, 2005

                                       11