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 4, 2008
                        (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  4,  2008,   Principal   Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter ended June 30, 2008. The text of the  announcement is included  herewith
as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Second Quarter 2008 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 5, 2008


                                       2
<PAGE>


                                                                      EXHIBIT 99
RELEASE: On receipt
MEDIA CONTACT:   Jeff Rader, 515-247-7883, RADER.JEFF@PRINCIPAL.COM
INVESTOR RELATIONS CONTACT:  Tom Graf, 515-235-9500,
                             investor-relations@principal.com


       PRINCIPAL FINANCIAL GROUP, INC. REPORTS SECOND QUARTER 2008 RESULTS

Des Moines,  IA (August 4, 2008) - Principal  Financial Group,  Inc. (NYSE: PFG)
today announced net income available to common stockholders for the three months
ended June 30, 2008, of $168.3  million,  or $0.64 per diluted share compared to
$303.8  million,  or $1.12 per diluted share for the three months ended June 30,
2007.  The company  reported  operating  earnings  of $253.7  million for second
quarter 2008,  compared to $282.9  million for second  quarter  2007.  Operating
earnings per diluted share (EPS) for second  quarter 2008 were $0.97 compared to
$1.05 for the same period in 2007.  Operating  revenues for second  quarter 2008
were  $2,789.1  million  compared to  $2,785.5  million for the same period last
year.(1)

"The Principal  achieved very solid  operating  earnings in the second  quarter,
with  strong  growth  in our key  sales,  retention  and AUM  measures,  despite
difficult market conditions.  We again benefited from earnings  diversification,
with Individual  Annuities  delivering record results,  Principal  International
delivering its second best quarter,  and the Life and Health  segment  achieving
double-digit  improvement from a year ago," said Larry Zimpleman,  president and
chief executive  officer.  "With our asset management and accumulation  segments
generating  approximately  three-fourths of total company  earnings,  strong net
cash flows have been  critical,  enabling  us to  withstand  substantial  equity
market  declines  over the  past  three  quarters."

Net cash flow and other highlights:

     o    Second  quarter 2008 net cash flows were $5.3 billion,  an increase of
          86 percent from second  quarter  2007,  for U.S.  Asset  Accumulation,
          Principal International,  and Principal Global Investors (unaffiliated
          assets) on a combined basis.
     o    For the  trailing  twelve  months  ended  June  30,  2008,  the  asset
          management and  accumulation  segments  generated $23.8 billion of net
          cash  flows,  with U.S.  Asset  Accumulation  flows  doubling to $10.8
          billion, Principal International's flows increasing 50 percent to $2.5
          billion and Principal Global Investors'  unaffiliated flows increasing
          19 percent to $10.4 billion.
     o    24 percent  higher sales on a combined  basis for the company's  three
          key retirement and  investment  businesses  compared to second quarter
          2007, including:  $1.4 billion in second quarter 2008 for organic full
          service  accumulation;  $2.5  billion for  Principal  Funds;  and $1.5
          billion  for  individual  annuities.  Combined  sales from these three
          businesses  increased 56 percent over the  trailing  twelve  months to
          $24.6 billion.
     o    Total company  assets under  management  (AUM) of $308.0 billion as of
          June 30, 2008, an increase of nine percent from a year ago,  including
          $88.7 billion of third party assets for Principal Global Investors, an
          increase of 32 percent(2).

                                       3
<PAGE>

"Clearly,  the  fundamentals of our business remain strong,  with net cash flows
reflecting the competitive  strength of our product and service  offerings,  our
distribution  network,  our  investment  performance  and  our  asset  retention
capabilities," said Zimpleman. "With our organic growth trends intact, we remain
confident  in our ability to achieve our EPS and return on equity  targets  when
more normal markets return.

"Importantly,  we experienced a significant  improvement in our credit portfolio
during  the  quarter,  with net  unrealized  losses  related  to credit  spreads
improving by approximately $1 billion(3). The gain from the end of first quarter
2008 is a meaningful  improvement from depressed valuations caused by turmoil in
the  credit  markets.  We  reiterate  our  confidence  - in the  quality  of our
investment  portfolio,  and in the adequacy of our capital position."

NET INCOME
Net income  available  to common  stockholders  of $168.3  million  reflects net
realized/unrealized  capital  losses of $85.4  million,  which  includes:  $23.0
million of losses related to impairments of fixed maturity securities (including
$7.4 million related to Alt-A and subprime residential mortgages);  $7.3 million
of impairments on equity securities; and capital losses of $55.7 million related
to  hedging  activities,  primarily  from the mark to market of  interest  rates
swaps.

                               SEGMENT HIGHLIGHTS

U.S. ASSET ACCUMULATION
Segment operating earnings for second quarter 2008 were $152.9 million, compared
to  $164.5  million  for the same  period  in 2007.  Full  service  accumulation
earnings were $78.2 million in second quarter 2008, compared to $84.7 million in
second  quarter  2007.  The decline  reflects $7.2 million from lower income tax
benefits, and $5.1 million after-tax of lower earnings due to market conditions,
including: lower earnings from market value adjustments on customer withdrawals,
lower yields on general account assets,  and lower  prepayment fee income.  Full
service  accumulation  earnings  benefited by $4.3  million  after-tax in second
quarter 2008 due to lower operating  expenses.  The decline in segment  earnings
from a year ago also  reflects  lower  prepayment  fee  income  of $4.5  million
after-tax for other  businesses in the segment,  primarily  investment  only and
full service payout.

Operating  revenues  for the second  quarter  decreased  one percent to $1,255.7
million,  compared  to $1,265.9  million for the same period in 2007.  Excluding
lower single  premium group annuity  sales,  revenues for the segment  increased
four percent.  Single premium group annuities,  which are typically used to fund
defined benefit plan  terminations,  generate large premiums from a small number
of customers and tend to vary from period to period.

Segment  assets  under  management  were  $173.2  billion  as of June 30,  2008,
compared to $173.1 billion as of June 30, 2007.

                                       4
<PAGE>

GLOBAL ASSET MANAGEMENT
Segment operating earnings for second quarter 2008 were $23.7 million,  compared
to $32.2 million for the same period in 2007. Fee mandate business earnings were
$23.4  million  in second  quarter  2008,  compared  to $23.7  million in second
quarter  2007.  Higher  earnings  in the  current  quarter  from growth in asset
management  fees were  offset  by a  slowdown  in the real  estate  markets.  In
addition,  second  quarter  2007  earnings  benefited  from a mandate  that pays
performance  incentives  once  every  three  years.  Spread  and  securitization
business  earnings of $0.3 million in second quarter 2008 compare to earnings of
$8.5  million in second  quarter  2007.  The  decline  from a year ago  reflects
current  inactivity in the  commercial  mortgage  backed  securitization  (CMBS)
business due to adverse credit market conditions.

Operating  revenues were $146.1  million for second  quarter  2008,  compared to
$154.5  million  for the same  period in 2007.  Strong  growth  in  unaffiliated
management  fees of $11.0 million or 20 percent(4) was more than offset by lower
real estate  transaction  and  borrower  fees and lower  revenues  from the CMBS
business.

Third party assets under  management  were $88.7 billion as of June 30, 2008, up
32 percent from $67.1 billion as of June 30, 2007.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
Segment  operating  earnings for second quarter 2008 were $31.8 million compared
to $26.7 million for the same period in 2007, reflecting continued strong growth
in assets  under  management.  Second  quarter 2008 also  benefited  from higher
yields on invested assets in Chile due to higher inflation.

Operating  revenues were $251.2  million for second  quarter  2008,  compared to
$175.0 million for the same period last year primarily due to higher  investment
yields and higher sales of payout  annuities in Chile,  and continued  growth in
assets under management.

Segment assets under management were $30.0 billion as of June 30, 2008, compared
to $25.3 billion as of June 30, 2007.

LIFE AND HEALTH INSURANCE
Segment operating earnings for second quarter 2008 were $66.7 million,  compared
to $60.1 million for the same period in 2007. Specialty Benefits earnings were a
record  $30.9  million  compared  to  $23.1  million  in  second  quarter  2007,
reflecting   favorable  claims   experience,   particularly  in  the  individual
disability line, and growth in the business. Individual Life earnings were $24.0
million  compared  to $23.6  million in second  quarter  2007.  Health  division
earnings were $11.8 million,  compared to $13.4 million for second quarter 2007.
The  decrease  reflects a decline in covered  members,  and  reduced  investment
income from a lower asset base  reflecting the  division's  return of capital to
the corporate and other segment at year-end 2007.

Operating  revenues were $1,180.6 million,  compared to $1,211.5 million for the
same period a year ago.  Individual  Life and  Specialty  Benefits  continued to
achieve solid growth,  with revenues in both divisions  increasing four percent.


                                       5
<PAGE>

Health division  revenues  decreased 12 percent,  primarily due to a decrease in
covered members.

CORPORATE AND OTHER
Operating  losses  for  second  quarter  2008 were $21.4  million,  compared  to
operating  losses of $0.6  million for the same period in 2007.  Second  quarter
2007 results reflected higher invested assets and higher operating earnings from
real estate sales operations.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  The company does not
undertake to update these statements, which are based on a number of assumptions
concerning future conditions that may ultimately prove to be inaccurate.  Future
events and their effects on the company may not be those anticipated, and actual
results  may  differ   materially   from  the  results   anticipated   in  these
forward-looking  statements.  The risks,  uncertainties  and factors  that could
cause or contribute to such material  differences are discussed in the company's
annual  report on Form 10-K for the year ended  December  31,  2007,  and in the
company's  quarterly  report on Form 10-Q for the quarter  ended March 31, 2008,
filed by the company with the  Securities and Exchange  Commission.  These risks
and uncertainties include, without limitation:  competitive factors;  volatility
of financial markets; decrease in ratings;  interest rate changes;  inability to
attract and retain sales representatives;  international business risks; foreign
currency  exchange  rate  fluctuations;  a pandemic,  terrorist  attack or other
catastrophic  event;  default  of  the  company's  re-insurers;  and  investment
portfolio risks.

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

EARNINGS CONFERENCE CALL
At 9:00 A.M. (CST) tomorrow,  President and CEO Larry  Zimpleman,  and Executive
Vice  President  and CFO Mike Gersie will lead a  discussion  of results,  asset
quality and capital adequacy during a live conference call.  Parties  interested
in listening to the conference call live may access the webcast on the company's
Investor Relations (IR) website (www.principal.com/investor) or by dialing (800)
374-1609 (U.S. callers) or (706) 643-7701  (International callers) approximately
10 minutes  prior to the start of the call.  To access the call,  leader name is
Tom Graf. Listeners can access an audio replay of the call on the IR website, or
by  calling  (800)  642-1687  (US  callers)  or  (706)  645-9291  (International
callers). The access code for the replay is 53322914.  Replays will be available
through  August 13, 2008.  The financial  supplement  is currently  available on
company's website and may be referred to during the conference call.


                                       6
<PAGE>

ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial Group(R) (The  Principal(R))(5) is a leader in offering
businesses,  individuals  and  institutional  clients a wide range of  financial
products and services,  including retirement and investment  services,  life and
health insurance,  and banking through its diverse family of financial  services
companies. A member of the Fortune 500, the Principal Financial Group has $308.0
billion in assets under  management(6)  and serves some 19.0  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,
                                                                     ----------------------------     ---------------------------
                                                                         6/30/08        6/30/07         6/30/08           6/30/07
                                                                     ----------------------------     ---------------------------
<S>                                                                     <C>              <C>            <C>              <C>
                                       U.S. ASSET ACCUMULATION          $152.9           $164.5         $292.0           $319.2
                                       GLOBAL ASSET MANAGEMENT            23.7             32.2           26.4             55.9
               INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION            31.8             26.7           63.5             46.0
                                     LIFE AND HEALTH INSURANCE            66.7             60.1          145.9            105.6
                                           CORPORATE AND OTHER           (21.4)            (0.6)         (32.8)            (7.0)
                                            OPERATING EARNINGS           253.7            282.9          495.0            519.7
                               NET REALIZED/UNREALIZED CAPITAL
                                   GAINS (LOSSES), AS ADJUSTED           (85.4)            20.9         (160.1)            41.2
                                   OTHER AFTER-TAX ADJUSTMENTS             0.0              0.0            7.6              0.0
                   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS          $168.3           $303.8         $342.5           $560.9

                                                                                       PER DILUTED SHARE


                                                                         THREE MONTHS ENDED,                SIX MONTHS ENDED,
                                                                     ----------------------------    ----------------------------
                                                                         6/30/08        6/30/07         6/30/08           6/30/07
                                                                     ----------------------------    ----------------------------
                                            OPERATING EARNINGS           $  0.97            $1.05          $1.90            $ 1.92
                               NET REALIZED/UNREALIZED CAPITAL
                                   GAINS (LOSSES), AS ADJUSTED             (0.33)            0.07          (0.62)             0.15
                                   OTHER AFTER-TAX ADJUSTMENTS              0.00             0.00           0.03              0.00
                   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS           $  0.64            $1.12          $1.31            $ 2.07
            WEIGHTED-AVERAGE DILUTED COMMON SHARES OUTSTANDING            261.2            270.3          261.2             270.6


</TABLE>




*OPERATING  EARNINGS  VERSUS  U.S.  GAAP (GAAP) NET INCOME  AVAILABLE  TO COMMON
STOCKHOLDERS  Management uses operating  earnings,  which excludes the effect of
net  realized/unrealized  capital  gains  and  losses,  as  adjusted,  and other
after-tax  adjustments,  for goal setting,  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/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments the company believes are not indicative of overall operating trends.
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  consolidated  financial  performance,  management
believes  the   presentation  of  segment   operating   earnings   enhances  the
understanding of results of operations by highlighting  earnings attributable to
the normal, ongoing operations of the company's businesses.


                                       8
<PAGE>

<TABLE>
<CAPTION>

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

                                                               THREE MONTHS ENDED,                SIX MONTHS ENDED,
                                                                6/30/08          6/30/07          6/30/08         6/30/07
                                                         ---------------- ---------------- ---------------- ---------------
<S>                                                       <C>             <C>              <C>               <C>
   Premiums and other considerations                      $     1,156.2   $       1,176.9  $       2,209.2   $      2,284.6
   Fees and other revenues                                        622.5             622.9          1,235.9          1,215.4
   Net investment income                                          991.0             976.6          1,951.3          1,899.8
   Net realized/unrealized capital gains (losses)                (111.5)             55.4          (237.5)             93.0
                                                         ---------------- ---------------- ---------------- ---------------
   TOTAL REVENUES                                               2,658.2           2,831.8          5,158.9          5,492.8
                                                         ---------------- ---------------- ---------------- ---------------
   Benefits, claims, and settlement expenses                    1,634.0           1,584.7          3,106.0          3,082.7
   Dividends to policyholders                                      69.0              74.0            139.8           148.0
   Operating expenses                                             749.2             760.4          1,495.1          1,515.1
                                                         ---------------- ---------------- ---------------- ---------------
   TOTAL EXPENSES                                               2,452.2           2,419.1          4,740.9          4,745.8
                                                         ---------------- ---------------- ---------------- ---------------
   Income from continuing operations before income
        taxes                                                     206.0             412.7            418.0            747.0
   Income taxes                                                    29.4             100.4             59.0            169.4
                                                         ---------------- ---------------- ---------------- ---------------
   Income from continuing operations, net of related              176.6             312.3            359.0            577.6
        income taxes
   Loss from discontinued operations, net of related
        taxes                                                       0.0              (0.2)             0.0             (0.2)
                                                         ---------------- ---------------- ---------------- ---------------
   NET INCOME                                                     176.6             312.1            359.0            577.4
   Preferred stock dividends                                        8.3               8.3             16.5             16.5
                                                         ---------------- ---------------- ---------------- ---------------
   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS            $       168.3   $         303.8  $         342.5   $        560.9

   Less:
   Net realized/unrealized capital gains (losses), as
        adjusted                                                  (85.4)             20.9           (160.1)            41.2
   Other after-tax adjustments                                      0.0               0.0              7.6              0.0
                                                         ---------------- ---------------- ---------------- ---------------
   OPERATING EARNINGS                                     $       253.7   $         282.9  $         495.0   $        519.7
                                                         ================ ================ ================ ===============

                                                   SELECTED BALANCE SHEET STATISTICS

                                                     ------------------------------------------------------------
                                                                            PERIOD ENDED,
                                                     ------------------------------------------------------------
                                                           6/30/08              12/31/07            6/30/07
                                                     -------------------- --------------------- -----------------
  Total assets (in billions)                              $       151.5           $   154.5       $   150.8
  Total common equity (in millions)                       $     6,077.9           $ 6,879.7       $ 7,444.7
  Total common equity excluding accumulated other
       comprehensive income (in millions)                 $     6,851.8           $ 6,459.5       $ 6,890.7
  End of period common shares outstanding
       (in millions)                                              259.0               259.1           266.0
  Book value per common share                             $        23.47          $    26.55      $    27.99
  Book value per common share excluding
      accumulated other comprehensive income              $        26.45          $    24.93      $    25.90

</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,
                                                                   --------------- ------------- ------------- ------------
                                                                      6/30/08        6/30/07       6/30/08       6/30/07
                                                                   --------------- ------------- ------------- ------------
<S>                                                                         <C>             <C>           <C>          <C>
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                          0.97            1.05          1.90         1.92
Net realized/unrealized capital gains (losses)                             (0.33)           0.07         (0.62)        0.15
Other after-tax adjustments                                                 0.00            0.00          0.03         0.00
                                                                   --------------- ------------- ------------- ------------
Net income available to common stockholders                                 0.64            1.12          1.31         2.07
                                                                   =============== ============= ============= ============

BOOK VALUE PER COMMON SHARE EXCLUDING ACCUMULATED OTHER
COMPREHENSIVE INCOME:
Book value per common share excluding accumulated other
     comprehensive income                                                  26.45           25.90         26.45        25.90
Net unrealized capital gains                                               (3.49)           2.00         (3.49)        2.00
Foreign currency translation                                                0.27            0.04          0.27         0.04
Net unrecognized post-retirement benefit obligations                        0.24            0.05          0.24         0.05
                                                                   --------------- ------------- ------------- ------------
Book value per common share including accumulated other
     comprehensive income                                                  23.47           27.99         23.47        27.99
                                                                   =============== ============= ============= ============
OPERATING REVENUES:
USAA                                                                    1,255.7         1,265.9       2,460.4      2,445.0
GAM                                                                       146.1           154.5         264.4        289.3
IAMA                                                                      251.2           175.0         434.9        316.3
Life and Health                                                         1,180.6         1,211.5       2,368.2      2,423.9
Corporate and Other                                                       (44.5)          (21.4)        (99.8)       (65.3)
                                                                   --------------- ------------- ------------- ------------
Total operating revenues                                                2,789.1         2,785.5       5,428.1      5,409.2
Add:
Net realized/unrealized capital gains (losses) and related
     adjustments                                                         (130.9)           46.1        (269.2)        83.3
Less:  Operating revenues from discontinued real estate
                                                                            0.0            (0.2)          0.0         (0.3)
                                                                   --------------- ------------- ------------- ------------
Total GAAP revenues                                                     2,658.2         2,831.8       5,158.9      5,492.8
                                                                   =============== ============= ============= ============
OPERATING EARNINGS:
USAA                                                                      152.9           164.5         292.0        319.2
GAM                                                                        23.7            32.2          26.4         55.9
IAMA                                                                       31.8            26.7          63.5         46.0
Life and Health                                                            66.7            60.1         145.9        105.6
Corporate and Other                                                       (21.4)           (0.6)        (32.8)        (7.0)
                                                                   --------------- ------------- ------------- ------------
Total operating earnings                                                  253.7           282.9          495.0       519.7
Net realized/unrealized capital gains (losses)                            (85.4)           20.9        (160.1)        41.2
Other after-tax adjustments                                                 0.0             0.0           7.6          0.0
                                                                   --------------- ------------- ------------- ------------
Net income available to common stockholders                               168.3           303.8         342.5        560.9
                                                                   =============== ============= ============= ============

NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as adjusted               (85.4)           20.9        (160.1)        41.2
Add:
Periodic settlements and accruals on non-hedge derivatives                 19.4             9.5          28.2          9.5
Amortization of DPAC and sale inducement costs                            (16.4)           (1.8)        (29.9)        (1.1)
Certain market value adjustments of embedded derivatives                    3.2             0.0           3.2          0.0
Capital gains distributed                                                   6.9             8.6          (2.4)        10.6
Tax impacts                                                               (42.2)           12.8         (76.3)        25.7
Minority interest capital gains (losses)                                    3.0             5.6          (3.7)         6.9
Less related fee adjustments:
Unearned front-end fee income                                               0.0             0.4           0.0          0.8
Certain market value adjustments to fee revenues                            0.0            (0.2)         (3.5)        (1.0)
                                                                   --------------- ------------- ------------- ------------
GAAP net realized/unrealized capital gains (losses)                      (111.5)           55.4        (237.5)        93.0
                                                                   =============== ============= ============= ============
OTHER AFTER TAX ADJUSTMENTS:
Change in estimated loss related to a loss contingency reserve              0.0             0.0           7.6          0.0
                                                                   --------------- ------------- ------------- ------------
Total other after-tax adjustments                                           0.0             0.0           7.6          0.0
                                                                   =============== ============= ============= ============
</TABLE>

                                       10
<PAGE>

(1)  Use of non-GAAP  financial  measures is  discussed  in this  release  after
     Segment Highlights.
(2)  The increase from second quarter 2007 includes $13.7 billion of AUM related
     to the  company's  third  quarter  2007  acquisition  of  Morley  Financial
     Services, Inc.
(3)  Gross unrealized  losses for the company  increased from $2.5 billion as of
     March 31, 2008 to $2.7  billion as of June 30,  2008.  The  decrease in net
     unrealized  losses from improved  credit spreads was more than offset by an
     increase in net unrealized losses from other factors,  the largest of which
     was an increase in interest rates in the second quarter.
(4)  The increase  excludes revenues related to the company's third quarter 2007
     acquisition of Morley Financial Services, Inc.
(5)  "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
(6)  As of June 30, 2008


                                       11
<PAGE>
[{"type": "8-K", "sequence": "1", "filename": "final2ndqtrer08.txt", "description": "FORM 8-K", "secsgml_size_bytes": 36859}]
{"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": "08989799"}, "business-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392-0300", "phone": "5152475111"}, "mail-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392-0300"}}
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 4, 2008
                        (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  4,  2008,   Principal   Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter ended June 30, 2008. The text of the  announcement is included  herewith
as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Second Quarter 2008 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 5, 2008

                                       2
EXHIBIT 99
RELEASE: On receipt
MEDIA CONTACT:   Jeff Rader, 515-247-7883, RADER.JEFF@PRINCIPAL.COM
INVESTOR RELATIONS CONTACT:  Tom Graf, 515-235-9500,
                             investor-relations@principal.com

       PRINCIPAL FINANCIAL GROUP, INC. REPORTS SECOND QUARTER 2008 RESULTS

Des Moines,  IA (August 4, 2008) - Principal  Financial Group,  Inc. (NYSE: PFG)
today announced net income available to common stockholders for the three months
ended June 30, 2008, of $168.3  million,  or $0.64 per diluted share compared to
$303.8  million,  or $1.12 per diluted share for the three months ended June 30,
2007.  The company  reported  operating  earnings  of $253.7  million for second
quarter 2008,  compared to $282.9  million for second  quarter  2007.  Operating
earnings per diluted share (EPS) for second  quarter 2008 were $0.97 compared to
$1.05 for the same period in 2007.  Operating  revenues for second  quarter 2008
were  $2,789.1  million  compared to  $2,785.5  million for the same period last
year.(1)

"The Principal  achieved very solid  operating  earnings in the second  quarter,
with  strong  growth  in our key  sales,  retention  and AUM  measures,  despite
difficult market conditions.  We again benefited from earnings  diversification,
with Individual  Annuities  delivering record results,  Principal  International
delivering its second best quarter,  and the Life and Health  segment  achieving
double-digit  improvement from a year ago," said Larry Zimpleman,  president and
chief executive  officer.  "With our asset management and accumulation  segments
generating  approximately  three-fourths of total company  earnings,  strong net
cash flows have been  critical,  enabling  us to  withstand  substantial  equity
market  declines  over the  past  three  quarters."

Net cash flow and other highlights:

     o    Second  quarter 2008 net cash flows were $5.3 billion,  an increase of
          86 percent from second  quarter  2007,  for U.S.  Asset  Accumulation,
          Principal International,  and Principal Global Investors (unaffiliated
          assets) on a combined basis.
     o    For the  trailing  twelve  months  ended  June  30,  2008,  the  asset
          management and  accumulation  segments  generated $23.8 billion of net
          cash  flows,  with U.S.  Asset  Accumulation  flows  doubling to $10.8
          billion, Principal International's flows increasing 50 percent to $2.5
          billion and Principal Global Investors'  unaffiliated flows increasing
          19 percent to $10.4 billion.
     o    24 percent  higher sales on a combined  basis for the company's  three
          key retirement and  investment  businesses  compared to second quarter
          2007, including:  $1.4 billion in second quarter 2008 for organic full
          service  accumulation;  $2.5  billion for  Principal  Funds;  and $1.5
          billion  for  individual  annuities.  Combined  sales from these three
          businesses  increased 56 percent over the  trailing  twelve  months to
          $24.6 billion.
     o    Total company  assets under  management  (AUM) of $308.0 billion as of
          June 30, 2008, an increase of nine percent from a year ago,  including
          $88.7 billion of third party assets for Principal Global Investors, an
          increase of 32 percent(2).

                                       3
"Clearly,  the  fundamentals of our business remain strong,  with net cash flows
reflecting the competitive  strength of our product and service  offerings,  our
distribution  network,  our  investment  performance  and  our  asset  retention
capabilities," said Zimpleman. "With our organic growth trends intact, we remain
confident  in our ability to achieve our EPS and return on equity  targets  when
more normal markets return.

"Importantly,  we experienced a significant  improvement in our credit portfolio
during  the  quarter,  with net  unrealized  losses  related  to credit  spreads
improving by approximately $1 billion(3). The gain from the end of first quarter
2008 is a meaningful  improvement from depressed valuations caused by turmoil in
the  credit  markets.  We  reiterate  our  confidence  - in the  quality  of our
investment  portfolio,  and in the adequacy of our capital position."

NET INCOME
Net income  available  to common  stockholders  of $168.3  million  reflects net
realized/unrealized  capital  losses of $85.4  million,  which  includes:  $23.0
million of losses related to impairments of fixed maturity securities (including
$7.4 million related to Alt-A and subprime residential mortgages);  $7.3 million
of impairments on equity securities; and capital losses of $55.7 million related
to  hedging  activities,  primarily  from the mark to market of  interest  rates
swaps.

                               SEGMENT HIGHLIGHTS

U.S. ASSET ACCUMULATION
Segment operating earnings for second quarter 2008 were $152.9 million, compared
to  $164.5  million  for the same  period  in 2007.  Full  service  accumulation
earnings were $78.2 million in second quarter 2008, compared to $84.7 million in
second  quarter  2007.  The decline  reflects $7.2 million from lower income tax
benefits, and $5.1 million after-tax of lower earnings due to market conditions,
including: lower earnings from market value adjustments on customer withdrawals,
lower yields on general account assets,  and lower  prepayment fee income.  Full
service  accumulation  earnings  benefited by $4.3  million  after-tax in second
quarter 2008 due to lower operating  expenses.  The decline in segment  earnings
from a year ago also  reflects  lower  prepayment  fee  income  of $4.5  million
after-tax for other  businesses in the segment,  primarily  investment  only and
full service payout.

Operating  revenues  for the second  quarter  decreased  one percent to $1,255.7
million,  compared  to $1,265.9  million for the same period in 2007.  Excluding
lower single  premium group annuity  sales,  revenues for the segment  increased
four percent.  Single premium group annuities,  which are typically used to fund
defined benefit plan  terminations,  generate large premiums from a small number
of customers and tend to vary from period to period.

Segment  assets  under  management  were  $173.2  billion  as of June 30,  2008,
compared to $173.1 billion as of June 30, 2007.

                                       4
GLOBAL ASSET MANAGEMENT
Segment operating earnings for second quarter 2008 were $23.7 million,  compared
to $32.2 million for the same period in 2007. Fee mandate business earnings were
$23.4  million  in second  quarter  2008,  compared  to $23.7  million in second
quarter  2007.  Higher  earnings  in the  current  quarter  from growth in asset
management  fees were  offset  by a  slowdown  in the real  estate  markets.  In
addition,  second  quarter  2007  earnings  benefited  from a mandate  that pays
performance  incentives  once  every  three  years.  Spread  and  securitization
business  earnings of $0.3 million in second quarter 2008 compare to earnings of
$8.5  million in second  quarter  2007.  The  decline  from a year ago  reflects
current  inactivity in the  commercial  mortgage  backed  securitization  (CMBS)
business due to adverse credit market conditions.

Operating  revenues were $146.1  million for second  quarter  2008,  compared to
$154.5  million  for the same  period in 2007.  Strong  growth  in  unaffiliated
management  fees of $11.0 million or 20 percent(4) was more than offset by lower
real estate  transaction  and  borrower  fees and lower  revenues  from the CMBS
business.

Third party assets under  management  were $88.7 billion as of June 30, 2008, up
32 percent from $67.1 billion as of June 30, 2007.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION
Segment  operating  earnings for second quarter 2008 were $31.8 million compared
to $26.7 million for the same period in 2007, reflecting continued strong growth
in assets  under  management.  Second  quarter 2008 also  benefited  from higher
yields on invested assets in Chile due to higher inflation.

Operating  revenues were $251.2  million for second  quarter  2008,  compared to
$175.0 million for the same period last year primarily due to higher  investment
yields and higher sales of payout  annuities in Chile,  and continued  growth in
assets under management.

Segment assets under management were $30.0 billion as of June 30, 2008, compared
to $25.3 billion as of June 30, 2007.

LIFE AND HEALTH INSURANCE
Segment operating earnings for second quarter 2008 were $66.7 million,  compared
to $60.1 million for the same period in 2007. Specialty Benefits earnings were a
record  $30.9  million  compared  to  $23.1  million  in  second  quarter  2007,
reflecting   favorable  claims   experience,   particularly  in  the  individual
disability line, and growth in the business. Individual Life earnings were $24.0
million  compared  to $23.6  million in second  quarter  2007.  Health  division
earnings were $11.8 million,  compared to $13.4 million for second quarter 2007.
The  decrease  reflects a decline in covered  members,  and  reduced  investment
income from a lower asset base  reflecting the  division's  return of capital to
the corporate and other segment at year-end 2007.

Operating  revenues were $1,180.6 million,  compared to $1,211.5 million for the
same period a year ago.  Individual  Life and  Specialty  Benefits  continued to
achieve solid growth,  with revenues in both divisions  increasing four percent.

                                       5
Health division  revenues  decreased 12 percent,  primarily due to a decrease in
covered members.

CORPORATE AND OTHER
Operating  losses  for  second  quarter  2008 were $21.4  million,  compared  to
operating  losses of $0.6  million for the same period in 2007.  Second  quarter
2007 results reflected higher invested assets and higher operating earnings from
real estate sales operations.

FORWARD LOOKING AND CAUTIONARY STATEMENTS
This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  The company does not
undertake to update these statements, which are based on a number of assumptions
concerning future conditions that may ultimately prove to be inaccurate.  Future
events and their effects on the company may not be those anticipated, and actual
results  may  differ   materially   from  the  results   anticipated   in  these
forward-looking  statements.  The risks,  uncertainties  and factors  that could
cause or contribute to such material  differences are discussed in the company's
annual  report on Form 10-K for the year ended  December  31,  2007,  and in the
company's  quarterly  report on Form 10-Q for the quarter  ended March 31, 2008,
filed by the company with the  Securities and Exchange  Commission.  These risks
and uncertainties include, without limitation:  competitive factors;  volatility
of financial markets; decrease in ratings;  interest rate changes;  inability to
attract and retain sales representatives;  international business risks; foreign
currency  exchange  rate  fluctuations;  a pandemic,  terrorist  attack or other
catastrophic  event;  default  of  the  company's  re-insurers;  and  investment
portfolio risks.

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

EARNINGS CONFERENCE CALL
At 9:00 A.M. (CST) tomorrow,  President and CEO Larry  Zimpleman,  and Executive
Vice  President  and CFO Mike Gersie will lead a  discussion  of results,  asset
quality and capital adequacy during a live conference call.  Parties  interested
in listening to the conference call live may access the webcast on the company's
Investor Relations (IR) website (www.principal.com/investor) or by dialing (800)
374-1609 (U.S. callers) or (706) 643-7701  (International callers) approximately
10 minutes  prior to the start of the call.  To access the call,  leader name is
Tom Graf. Listeners can access an audio replay of the call on the IR website, or
by  calling  (800)  642-1687  (US  callers)  or  (706)  645-9291  (International
callers). The access code for the replay is 53322914.  Replays will be available
through  August 13, 2008.  The financial  supplement  is currently  available on
company's website and may be referred to during the conference call.

                                       6
ABOUT THE PRINCIPAL FINANCIAL GROUP
The Principal  Financial Group(R) (The  Principal(R))(5) is a leader in offering
businesses,  individuals  and  institutional  clients a wide range of  financial
products and services,  including retirement and investment  services,  life and
health insurance,  and banking through its diverse family of financial  services
companies. A member of the Fortune 500, the Principal Financial Group has $308.0
billion in assets under  management(6)  and serves some 19.0  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,
                                                                     ----------------------------     ---------------------------
                                                                         6/30/08        6/30/07         6/30/08           6/30/07
                                                                     ----------------------------     ---------------------------
U.S. ASSET ACCUMULATION          $152.9           $164.5         $292.0           $319.2
                                       GLOBAL ASSET MANAGEMENT            23.7             32.2           26.4             55.9
               INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION            31.8             26.7           63.5             46.0
                                     LIFE AND HEALTH INSURANCE            66.7             60.1          145.9            105.6
                                           CORPORATE AND OTHER           (21.4)            (0.6)         (32.8)            (7.0)
                                            OPERATING EARNINGS           253.7            282.9          495.0            519.7
                               NET REALIZED/UNREALIZED CAPITAL
                                   GAINS (LOSSES), AS ADJUSTED           (85.4)            20.9         (160.1)            41.2
                                   OTHER AFTER-TAX ADJUSTMENTS             0.0              0.0            7.6              0.0
                   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS          $168.3           $303.8         $342.5           $560.9

                                                                                       PER DILUTED SHARE

                                                                         THREE MONTHS ENDED,                SIX MONTHS ENDED,
                                                                     ----------------------------    ----------------------------
                                                                         6/30/08        6/30/07         6/30/08           6/30/07
                                                                     ----------------------------    ----------------------------
                                            OPERATING EARNINGS           $  0.97            $1.05          $1.90            $ 1.92
                               NET REALIZED/UNREALIZED CAPITAL
                                   GAINS (LOSSES), AS ADJUSTED             (0.33)            0.07          (0.62)             0.15
                                   OTHER AFTER-TAX ADJUSTMENTS              0.00             0.00           0.03              0.00
                   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS           $  0.64            $1.12          $1.31            $ 2.07
            WEIGHTED-AVERAGE DILUTED COMMON SHARES OUTSTANDING            261.2            270.3          261.2             270.6
*OPERATING  EARNINGS  VERSUS  U.S.  GAAP (GAAP) NET INCOME  AVAILABLE  TO COMMON
STOCKHOLDERS  Management uses operating  earnings,  which excludes the effect of
net  realized/unrealized  capital  gains  and  losses,  as  adjusted,  and other
after-tax  adjustments,  for goal setting,  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/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments the company believes are not indicative of overall operating trends.
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  consolidated  financial  performance,  management
believes  the   presentation  of  segment   operating   earnings   enhances  the
understanding of results of operations by highlighting  earnings attributable to
the normal, ongoing operations of the company's businesses.

                                       8
PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)

                                                               THREE MONTHS ENDED,                SIX MONTHS ENDED,
                                                                6/30/08          6/30/07          6/30/08         6/30/07
                                                         ---------------- ---------------- ---------------- ---------------
Premiums and other considerations                      $     1,156.2   $       1,176.9  $       2,209.2   $      2,284.6
   Fees and other revenues                                        622.5             622.9          1,235.9          1,215.4
   Net investment income                                          991.0             976.6          1,951.3          1,899.8
   Net realized/unrealized capital gains (losses)                (111.5)             55.4          (237.5)             93.0
                                                         ---------------- ---------------- ---------------- ---------------
   TOTAL REVENUES                                               2,658.2           2,831.8          5,158.9          5,492.8
                                                         ---------------- ---------------- ---------------- ---------------
   Benefits, claims, and settlement expenses                    1,634.0           1,584.7          3,106.0          3,082.7
   Dividends to policyholders                                      69.0              74.0            139.8           148.0
   Operating expenses                                             749.2             760.4          1,495.1          1,515.1
                                                         ---------------- ---------------- ---------------- ---------------
   TOTAL EXPENSES                                               2,452.2           2,419.1          4,740.9          4,745.8
                                                         ---------------- ---------------- ---------------- ---------------
   Income from continuing operations before income
        taxes                                                     206.0             412.7            418.0            747.0
   Income taxes                                                    29.4             100.4             59.0            169.4
                                                         ---------------- ---------------- ---------------- ---------------
   Income from continuing operations, net of related              176.6             312.3            359.0            577.6
        income taxes
   Loss from discontinued operations, net of related
        taxes                                                       0.0              (0.2)             0.0             (0.2)
                                                         ---------------- ---------------- ---------------- ---------------
   NET INCOME                                                     176.6             312.1            359.0            577.4
   Preferred stock dividends                                        8.3               8.3             16.5             16.5
                                                         ---------------- ---------------- ---------------- ---------------
   NET INCOME AVAILABLE TO COMMON STOCKHOLDERS            $       168.3   $         303.8  $         342.5   $        560.9

   Less:
   Net realized/unrealized capital gains (losses), as
        adjusted                                                  (85.4)             20.9           (160.1)            41.2
   Other after-tax adjustments                                      0.0               0.0              7.6              0.0
                                                         ---------------- ---------------- ---------------- ---------------
   OPERATING EARNINGS                                     $       253.7   $         282.9  $         495.0   $        519.7
                                                         ================ ================ ================ ===============

                                                   SELECTED BALANCE SHEET STATISTICS

                                                     ------------------------------------------------------------
                                                                            PERIOD ENDED,
                                                     ------------------------------------------------------------
                                                           6/30/08              12/31/07            6/30/07
                                                     -------------------- --------------------- -----------------
  Total assets (in billions)                              $       151.5           $   154.5       $   150.8
  Total common equity (in millions)                       $     6,077.9           $ 6,879.7       $ 7,444.7
  Total common equity excluding accumulated other
       comprehensive income (in millions)                 $     6,851.8           $ 6,459.5       $ 6,890.7
  End of period common shares outstanding
       (in millions)                                              259.0               259.1           266.0
  Book value per common share                             $        23.47          $    26.55      $    27.99
  Book value per common share excluding
      accumulated other comprehensive income              $        26.45          $    24.93      $    25.90
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,
                                                                   --------------- ------------- ------------- ------------
                                                                      6/30/08        6/30/07       6/30/08       6/30/07
                                                                   --------------- ------------- ------------- ------------
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                          0.97            1.05          1.90         1.92
Net realized/unrealized capital gains (losses)                             (0.33)           0.07         (0.62)        0.15
Other after-tax adjustments                                                 0.00            0.00          0.03         0.00
                                                                   --------------- ------------- ------------- ------------
Net income available to common stockholders                                 0.64            1.12          1.31         2.07
                                                                   =============== ============= ============= ============

BOOK VALUE PER COMMON SHARE EXCLUDING ACCUMULATED OTHER
COMPREHENSIVE INCOME:
Book value per common share excluding accumulated other
     comprehensive income                                                  26.45           25.90         26.45        25.90
Net unrealized capital gains                                               (3.49)           2.00         (3.49)        2.00
Foreign currency translation                                                0.27            0.04          0.27         0.04
Net unrecognized post-retirement benefit obligations                        0.24            0.05          0.24         0.05
                                                                   --------------- ------------- ------------- ------------
Book value per common share including accumulated other
     comprehensive income                                                  23.47           27.99         23.47        27.99
                                                                   =============== ============= ============= ============
OPERATING REVENUES:
USAA                                                                    1,255.7         1,265.9       2,460.4      2,445.0
GAM                                                                       146.1           154.5         264.4        289.3
IAMA                                                                      251.2           175.0         434.9        316.3
Life and Health                                                         1,180.6         1,211.5       2,368.2      2,423.9
Corporate and Other                                                       (44.5)          (21.4)        (99.8)       (65.3)
                                                                   --------------- ------------- ------------- ------------
Total operating revenues                                                2,789.1         2,785.5       5,428.1      5,409.2
Add:
Net realized/unrealized capital gains (losses) and related
     adjustments                                                         (130.9)           46.1        (269.2)        83.3
Less:  Operating revenues from discontinued real estate
                                                                            0.0            (0.2)          0.0         (0.3)
                                                                   --------------- ------------- ------------- ------------
Total GAAP revenues                                                     2,658.2         2,831.8       5,158.9      5,492.8
                                                                   =============== ============= ============= ============
OPERATING EARNINGS:
USAA                                                                      152.9           164.5         292.0        319.2
GAM                                                                        23.7            32.2          26.4         55.9
IAMA                                                                       31.8            26.7          63.5         46.0
Life and Health                                                            66.7            60.1         145.9        105.6
Corporate and Other                                                       (21.4)           (0.6)        (32.8)        (7.0)
                                                                   --------------- ------------- ------------- ------------
Total operating earnings                                                  253.7           282.9          495.0       519.7
Net realized/unrealized capital gains (losses)                            (85.4)           20.9        (160.1)        41.2
Other after-tax adjustments                                                 0.0             0.0           7.6          0.0
                                                                   --------------- ------------- ------------- ------------
Net income available to common stockholders                               168.3           303.8         342.5        560.9
                                                                   =============== ============= ============= ============

NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as adjusted               (85.4)           20.9        (160.1)        41.2
Add:
Periodic settlements and accruals on non-hedge derivatives                 19.4             9.5          28.2          9.5
Amortization of DPAC and sale inducement costs                            (16.4)           (1.8)        (29.9)        (1.1)
Certain market value adjustments of embedded derivatives                    3.2             0.0           3.2          0.0
Capital gains distributed                                                   6.9             8.6          (2.4)        10.6
Tax impacts                                                               (42.2)           12.8         (76.3)        25.7
Minority interest capital gains (losses)                                    3.0             5.6          (3.7)         6.9
Less related fee adjustments:
Unearned front-end fee income                                               0.0             0.4           0.0          0.8
Certain market value adjustments to fee revenues                            0.0            (0.2)         (3.5)        (1.0)
                                                                   --------------- ------------- ------------- ------------
GAAP net realized/unrealized capital gains (losses)                      (111.5)           55.4        (237.5)        93.0
                                                                   =============== ============= ============= ============
OTHER AFTER TAX ADJUSTMENTS:
Change in estimated loss related to a loss contingency reserve              0.0             0.0           7.6          0.0
                                                                   --------------- ------------- ------------- ------------
Total other after-tax adjustments                                           0.0             0.0           7.6          0.0
                                                                   =============== ============= ============= ============
10
(1)  Use of non-GAAP  financial  measures is  discussed  in this  release  after
     Segment Highlights.
(2)  The increase from second quarter 2007 includes $13.7 billion of AUM related
     to the  company's  third  quarter  2007  acquisition  of  Morley  Financial
     Services, Inc.
(3)  Gross unrealized  losses for the company  increased from $2.5 billion as of
     March 31, 2008 to $2.7  billion as of June 30,  2008.  The  decrease in net
     unrealized  losses from improved  credit spreads was more than offset by an
     increase in net unrealized losses from other factors,  the largest of which
     was an increase in interest rates in the second quarter.
(4)  The increase  excludes revenues related to the company's third quarter 2007
     acquisition of Morley Financial Services, Inc.
(5)  "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
(6)  As of June 30, 2008

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