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     <TD align=center><B><FONT face=serif size=5>SECURITIES AND EXCHANGE COMMISSION</FONT></B>&nbsp; </TD></TR>
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     <TD align=center><B><FONT face=serif size=2>Washington, D.C. 20549</FONT></B> </TD></TR>
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     <TD align=center>________________________________</TD></TR>
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     <TD align=center><B><FONT face=serif size=5>FORM 8-K</FONT></B> </TD></TR>
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     <TD align=center><B><FONT face=serif>CURRENT REPORT</FONT></B> </TD></TR>
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     <TD align=center><B><FONT face=serif>Pursuant to Section 13 or 15(d) of the</FONT></B> </TD></TR>
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     <TD align=center>&nbsp;</TD></TR>
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     <TD align=center><FONT face=serif>Date of Report: </FONT><B><FONT face=serif>August 3, 2009</FONT></B> </TD></TR>
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     <TD align=center><FONT face=serif>(Date of earliest event reported)</FONT> </TD></TR>
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     <TD align=center><B><FONT face=serif size=5>PRINCIPAL FINANCIAL GROUP, INC.</FONT></B>&nbsp; </TD></TR>
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     <TD align=center><FONT face=serif>(Exact name of registrant as specified in its charter)</FONT> </TD></TR></TABLE><BR>
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     <TD align=center><B><FONT face=serif size=2>Delaware</FONT></B>&nbsp; </TD>
     <TD align=center><B><FONT face=serif size=2>1-16725</FONT></B>&nbsp; </TD>
     <TD align=center><B><FONT face=serif size=2>42-1520346</FONT></B>&nbsp; </TD></TR>
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     <TD align=center><FONT face=serif size=2>(State or other jurisdiction</FONT>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>(Commission file number)</FONT>&nbsp; </TD>
     <TD align=center><FONT face=serif size=2>(I.R.S. Employer</FONT>&nbsp; </TD></TR>
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     <TD align=center><FONT face=serif size=2>of incorporation)</FONT>&nbsp; </TD>
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     <TD align=center><FONT face=serif size=2>Identification Number)</FONT>&nbsp; </TD></TR></TABLE></DIV><BR>
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     <TD align=center><B><FONT face=serif size=2>711 High Street, Des Moines, Iowa 50392</FONT></B>&nbsp; </TD></TR>
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     <TD align=center><FONT face=serif size=2>(Address of principal executive offices)</FONT> </TD></TR>
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     <TD>&nbsp; </TD></TR>
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     <TD align=center><B><FONT face=serif size=2>(515) 247-5111</FONT></B> </TD></TR>
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     <TD align=center><FONT face=serif size=2>(Registrant&#146;s telephone number, including area code)</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left colSpan=2><FONT face=serif size=2>Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>registrant under any of the following provisions:</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>[&nbsp;&nbsp; &nbsp;]</FONT>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>[&nbsp;&nbsp; &nbsp;]</FONT>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>[&nbsp;&nbsp; &nbsp;]</FONT>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>240.14d-2(b))</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>[&nbsp;&nbsp;&nbsp; ]</FONT>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>240.13e-4(c))</FONT>&nbsp; </TD></TR>
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     <TD align=center>__________________________</TD></TR></TABLE></DIV><BR>
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     <TD align=left><FONT face=serif>Page 2</FONT>&nbsp; </TD></TR>
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<P><B><FONT face=serif>Item 2.02. Results of Operations and Financial Condition</FONT></B>&nbsp; </P>
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     <TD align=left><FONT face=serif size=2>On August 3, 2009, Principal Financial Group, Inc. publicly announced information regarding its results of operations</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>and financial condition for the quarter ended July 31, 2009. The text of the announcement is included herewith as</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>Exhibit 99.</FONT>&nbsp; </TD></TR>
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<P><B><FONT face=serif></FONT></B>&nbsp;</P>
<P><B><FONT face=serif>Item 9.01 Financial Statements and Exhibits</FONT></B>&nbsp; </P>
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     <TD align=left><FONT face=serif size=2>99 Second Quarter 2009 Earnings Release</FONT>&nbsp; </TD></TR></TABLE><BR>
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<P>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT face=serif size=2>SIGNATURE</FONT></I></B>&nbsp; </P>
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     <TD align=left><FONT face=serif size=2>Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>report to be signed on its behalf by the undersigned thereunto duly authorized.</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left>&nbsp; </TD>
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     <TD align=left colSpan=2><FONT face=serif size=2>PRINCIPAL FINANCIAL GROUP, INC.</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>By:</FONT>&nbsp; </TD>
     <TD align=left><U><FONT face=serif size=2>&nbsp;&nbsp; /s/ </FONT></U><FONT face=serif size=2><U>Terrance J. Lillis&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; </U></FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>Name:</FONT>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>Terrance J. Lillis</FONT></TD></TR>
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     <TD align=left>&nbsp; </TD>
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     <TD align=left><FONT face=serif size=2>Title:</FONT>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>Senior Vice President and Chief Financial Officer</FONT></TD></TR>
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     <TD align=left><FONT face=serif>Date:</FONT>&nbsp; </TD>
     <TD align=left><FONT face=serif>August 4, 2009</FONT>&nbsp; </TD>
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     <TD align=left><B><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; EXHIBIT 99</FONT></B>&nbsp; </TD></TR>
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     <TD align=left><B><I><FONT face=serif size=2>RELEASE:</FONT></I></B>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>On receipt</FONT>&nbsp; </TD>
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     <TD align=left colSpan=2><FONT face=serif size=2>MEDIA CONTACT:</FONT>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>&nbsp;Susan Houser, 515-248-2268, Houser.Susan@principal.com</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>INVESTOR RELATIONS CONTACT:</FONT>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>&nbsp;Tom Graf, 515-235-9500, investor-relations@principal.com</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=3><B><I><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; PRINCIPAL FINANCIAL GROUP, INC. REPORTS SECOND QUARTER 2009 RESULTS</FONT></I></B>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left><FONT face=serif size=2>Des Moines, IA (August 3, 2009) &#150; Principal Financial Group, Inc. (NYSE: PFG) today announced net</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>income available to common stockholders for the three months ended June 30, 2009, of $150.3 million, or</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>$0.52 per diluted share compared to $168.3 million, or $0.64 per diluted share for the three months ended</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>June 30, 2008. The company reported operating earnings of $200.5 million for second quarter 2009,</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>compared to $254.1 million for second quarter 2008. Operating earnings per diluted share (EPS) for second</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>quarter 2009 were $0.69 compared to $0.97 for the same period in 2008.</FONT><SUP><FONT face=serif size=2>1 </FONT></SUP><FONT face=serif size=2>The decline in operating earnings</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>from a year ago primarily reflects lower fee income due to lower equity</FONT><SUP><FONT face=serif size=2>2 </FONT></SUP><FONT face=serif size=2>and fixed income asset valuations,</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>which reduced total company assets under management (AUM) by 16 percent to $257.7 billion as of June 30,</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>2009, compared to $308.0 billion as of June 30, 2008. The decline in per share results also reflects the</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>company&#146;s common stock offering on May 11, 2009, which increased weighted average shares outstanding</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>from 261.2 million for the quarter ending June 30, 2008, to 291.4 million for the quarter ending June 30,</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>2009. In addition, negative market performance in 2008 resulted in higher costs for employee pension and</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>other post-retirement benefits</FONT><SUP><FONT face=serif size=2>3 </FONT></SUP><FONT face=serif size=2>in second quarter 2009 than second quarter 2008 of $0.07 on an EPS basis.</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &#147;We view our operating results for second quarter 2009 as solid,&#148; said Larry D. Zimpleman,</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>chairman, president and chief executive officer. &#147;We continued to benefit from diversification in our</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>businesses and our investment portfolio, and improved equity markets during the second quarter helped drive</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>a strong rebound from first quarter 2009 in assets under management, operating earnings and net income.&#148;</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left colSpan=2><FONT face=serif size=2>Highlights comparing second quarter 2009 to first quarter 2009:</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>&nbsp;<FONT size=4>&#183;</FONT></FONT>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>Assets under management up 9 percent, or $21.1 billion, to $257.7 billion as of June 30, 2009.</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>&nbsp;<FONT size=4>&#183;</FONT></FONT>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>Operating earnings up 22 percent, driven by a 50 percent or $58 million improvement from the</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>company&#146;s three asset management and asset accumulation segments.</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>&nbsp;<FONT size=4>&#183;</FONT></FONT>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>Net income available to common stockholders up 33 percent, reflecting improved operating earnings and</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>a comparable level of net realized capital losses.</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>&#147;During the quarter we successfully completed two capital raises totaling $1.9 billion, with $1.15</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>billion from equity and $750 million from long-term debt. These raises demonstrated investor confidence in</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>our ability to deliver sustainable, profitable growth and meet our obligations,&#148; said Zimpleman. &#147;Between</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>our equity raise and a $3 billion improvement in net unrealized losses</FONT><SUP><FONT face=serif size=2>4 </FONT></SUP><FONT face=serif size=2>from narrowing of credit spreads, our</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>book value more than doubled from March 31</FONT><SUP><FONT face=serif size=2>st </FONT></SUP><FONT face=serif size=2>to $16.19 per share.&#148;</FONT>&nbsp; </TD></TR>
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     <TD align=left><SUP><FONT face=serif size=1>1 </FONT></SUP><FONT face=serif size=1>Use of non-GAAP financial measures is discussed in this release after Segment Highlights.</FONT>&nbsp; </TD></TR>
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     <TD align=left><SUP><FONT face=serif size=1>2 </FONT></SUP><FONT face=serif size=1>S&amp;P 500 daily average down 35 percent comparing second quarter 2009 to second quarter 2008.</FONT>&nbsp; </TD></TR>
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     <TD align=left><SUP><FONT face=serif size=1>3 </FONT></SUP><FONT face=serif size=1>SFAS 87 Pension Expense and SFAS 106 Other Post-Retirement Benefits.</FONT>&nbsp; </TD></TR>
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     <TD align=left><SUP><FONT face=serif size=1>4 </FONT></SUP><FONT face=serif size=1>Before adjustment for deferred policy acquisition costs and taxes.</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left><FONT face=serif>Page 4</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; Added Terry Lillis, senior vice president and chief financial officer, &#147;The quarter was not without its</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>challenges: institutional investors continue to delay funding due to market volatility and fewer plan sponsors</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>are changing their retirement plan providers due to the economy; rising unemployment is reducing the</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>number of participants in existing employee benefit plans; and investment income has declined. We expect</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>these pressures to ease over the next several quarters, but in the meantime, we continue to focus on managing</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>expenses and reducing risk in the investment portfolio. As always, we also remain focused on meeting the</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>needs of our customers and the advisors who serve them. Our success here is reflected in improving</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>retention, with withdrawals, as a percent of beginning assets under management, down 100 basis points</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>through mid-year.&#148;</FONT>&nbsp; </TD></TR>
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<P><B><FONT face=serif size=2></FONT></B>&nbsp;</P>
<P><B><FONT face=serif size=2>Other Business Highlights</FONT></B><FONT face=serif size=2>:</FONT>&nbsp; </P>
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     <TD align=left><FONT face=serif size=4>&nbsp;&#183;</FONT><FONT size=4>&nbsp;</FONT> </TD>
     <TD align=left><B><FONT face=serif size=2>Expense management</FONT></B><FONT face=serif size=2>: management action reduced compensation and other expenses $156 million or</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>13 percent comparing the six months ended June 30, 2009 to the same period a year ago.</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=4>&nbsp;&#183;</FONT><FONT size=4>&nbsp;</FONT> </TD>
     <TD align=left><B><FONT face=serif size=2>Capital and liquidity management</FONT></B><FONT face=serif size=2>: the company increased its position in highly liquid assets 80</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>percent from a year ago to $7.5 billion at June 30, 2009. Compared to June 30, 2008, cash and cash</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>equivalent holdings were up 184 percent to $4.3 billion as of June 30, 2009, and government-backed</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>securities were up 18 percent to $3.2 billion. Strong asset/liability matching and liquidity enabled the</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>company to continue scaling back on the Investment Only business, reducing the block by $1.1 billion</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>during the second quarter.</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=4>&nbsp;&#183;</FONT><FONT size=4>&nbsp; </FONT></TD>
     <TD align=left><B><FONT face=serif size=2>Solid sales</FONT></B><FONT face=serif size=2>: the company&#146;s three key retirement and investment products generated $3.0 billion of sales,</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>on a combined basis in second quarter 2009, despite a difficult sales environment, with $720 million of</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>sales for full service accumulation, $1.9 billion for Principal Funds, and $371 million for individual</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD align=left><FONT face=serif size=2>annuities.</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left><B><FONT face=serif size=2>Net Income</FONT></B>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>Net income available to common stockholders of $150.3 million for second quarter 2009 reflects net realized</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>capital losses of $50.2 million, which includes: $80.6 million of losses related to sales and other than</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>temporary impairment of fixed maturity securities; $36.5 million of losses related to hedging activities; $16.0</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>million of losses on commercial mortgage loans; $72.6 million of gains related to deferred policy acquisition</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>costs; and $11.8 million of gains on mark to market of fixed maturity securities held as trading. Of the $80.6</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>million of losses related to sales and other than temporary impairment of fixed maturity securities, $27.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>million reflects the sale of $526.0 million of securities to reduce the company&#146;s exposure to ratings drift risk.</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=center><B><I><FONT face=serif size=2>Segment Highlights</FONT></I></B>&nbsp; </TD></TR></TABLE><BR>
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<P><B><FONT face=serif size=2>U.S. Asset Accumulation</FONT></B>&nbsp; </P>
</TD></TR>
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     <TD align=left></TD></TR>
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     <TD align=left><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp; &nbsp; Segment operating earnings for second quarter 2009 declined 10 percent to $137.4 million,</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>compared to $152.9 million for the same period in 2008. The variance primarily reflects 17 percent lower</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>average account values for the segment due to significant equity market declines over the trailing twelve-</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>month period. The decline also reflects the impact of higher costs for employee pension and other post-</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>retirement benefits in second quarter 2009 than second quarter 2008, which reduced segment operating</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>earnings by $8.0 million. The impact of lower average account values was partially offset by expense</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>actions, which reduced compensation and other expense by $33.7 million or 13 percent compared to second</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>quarter 2008. Full service accumulation earnings were $62.4 million for second quarter 2009, compared to</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>$78.2 million in second quarter 2008, primarily reflecting an 18 percent decline in average account values.</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left><FONT face=serif>Page 5</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Operating revenues for the second quarter decreased 21 percent to $991.3 million, compared to</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>$1,255.7 million for the same period in 2008. Excluding lower single premium group annuity (SPGA) sales,</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>operating revenues for the segment decreased 17 percent, consistent with the decline in average account</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>values. SPGA sales tend to vary from period to period as the product is typically used to fund defined</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>benefit plan terminations and therefore generates large premiums from a small number of customers.</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Segment assets under management were $145.3 billion as of June 30, 2009, compared to $173.2</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>billion as of June 30, 2008.</FONT>&nbsp; </TD></TR>
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     <TD>&nbsp; </TD></TR>
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     <TD align=left><B><FONT face=serif size=2>Global Asset Management</FONT></B>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Segment operating earnings for second quarter 2009 were $8.2 million, compared to $24.1 million in</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>the prior year quarter, reflecting a 19 percent decline in average assets under management, lower net investment</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>income, lower fees due to a slowdown in the real estate market and higher costs for employee pension and other</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>post-retirement benefits. The impact of these items was partially offset by expense management, including a</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>$16.6 million or 25 percent reduction in compensation costs compared to the year ago quarter.</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;Operating revenues for second quarter decreased to $103.3 million from $143.7 million for the same</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>period in 2008.</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Third party assets under management were $67.3 billion as of June 30, 2009, compared to $88.7</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>billion as of June 30, 2008.</FONT>&nbsp; </TD></TR>
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     <TD>&nbsp; </TD></TR>
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     <TD align=left><B><FONT face=serif size=2>International Asset Management and Accumulation</FONT></B>&nbsp; </TD></TR>
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     <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Segment operating earnings for second quarter 2009 were $29.3 million compared to $31.8</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>million for the same period in 2008. Second quarter 2009 earnings were dampened by unfavorable</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>macroeconomic conditions &#150; modest deflation in Chile and weakening of Latin American currencies relative</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>to the U.S. dollar.</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Operating revenues were $161.7 million for second quarter 2009, compared to $251.2 million for the</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>same period last year primarily due to lower investment yields from inflation-adjusted assets in Latin America.</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Segment assets under management were $28.7 billion as of June 30, 2009, compared to $30.0</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>billion as of June 30, 2008. Had currency rates remained unchanged from 2008, segment assets under</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>management would have increased 10 percent over last year.</FONT>&nbsp; </TD></TR>
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     <TD>&nbsp; </TD></TR>
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     <TD align=left><B><FONT face=serif size=2>Life and Health Insurance</FONT></B>&nbsp; </TD></TR>
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     <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Segment operating earnings for second quarter 2009 were $57.7 million, compared to $66.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>million for the same period in 2008, with the decline reflecting $9.1 million of higher after-tax costs for</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>employee pension and other post-retirement benefits in second quarter 2009 than second quarter 2008.</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>Individual Life earnings were $28.3 million compared to $24.0 million in second quarter 2008, reflecting</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>lower deferred policy acquisition cost amortization expense resulting from improved equity market</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>performance during the quarter. Despite expense efficiencies in both divisions, Health earnings decreased to</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>$5.7 million compared to $11.8 million for second quarter 2008, and Specialty Benefits earnings decreased to</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left><FONT face=serif>Page 6</FONT>&nbsp; </TD></TR>
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     <TD>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>$23.7 million compared to $30.9 million. Health experienced higher claim costs in second quarter 2009 and</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>Specialty Benefits experienced unfavorable dental claims. Both divisions also experienced a reduction in the</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>number of participants in existing plans and lower investment income.</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Operating revenues were $1,116.9 million, compared to $1,180.6 million for the same period a</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>year ago. The decline was primarily due to an 8 percent decline in Health division premiums, which</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>primarily reflects a decline in covered members.</FONT>&nbsp; </TD></TR>
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     <TD>&nbsp; </TD></TR>
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     <TD align=left><B><FONT face=serif size=2>Corporate and Other</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<FONT face=serif size=2>Operating losses for second quarter 2009 were $32.1 million, compared to operating losses of $21.4</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>million for the same period in 2008. The increase in losses reflects higher interest expense resulting from the</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>company&#146;s $750 million debt issuance during the second quarter 2009.</FONT>&nbsp; </TD></TR>
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     <TD>&nbsp; </TD></TR>
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     <TD align=left><B><FONT face=serif size=2>Other-than-temporary impairments for second quarter 2009</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>On April 9, 2009, the Financial Accounting Standards Board established new requirements for measuring</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>and presenting other-than-temporary impairment charges on available for sale securities, which the Company</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>adopted with first quarter 2009 reporting. Based on the new requirements, on a pre-tax basis, total other than</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>temporary impairment losses on available for sale securities were $200.9 million and the noncredit portion of</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>loss recognized in other comprehensive income was $66.5 million. Net impairment losses on available for</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>sale securities of $134.4 million for second quarter 2009 reflect: the company&#146;s actions to reduce capital drift</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>risk by selling or tendering certain securities, which resulted in a loss of $48.1 million; and deterioration in</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>expected cash flows, which resulted in a $19.8 million net impairment charge on non-agency residential</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>mortgage backed securities and residential collateralized debt obligations. The remainder of the net</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>impairment losses for second quarter 2009 is primarily related to impairments of corporate credits.</FONT>&nbsp; </TD></TR>
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     <TD>&nbsp; </TD></TR>
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     <TD align=left><B><FONT face=serif size=2>Forward looking and cautionary statements</FONT></B>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>This press release contains forward-looking statements, including, without limitation, statements as to</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>operating earnings, net income available to common stockholders, net cash flows, realized and unrealized</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>losses, capital and liquidity positions, sales and earnings trends, and management's beliefs, expectations,</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>goals and opinions. The company does not undertake to update or revise these statements, which are based</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Future</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>events and their effects on the company may not be those anticipated, and actual results may differ materially</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>could cause or contribute to such material differences are discussed in the company's annual report on Form</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>10-K for the year ended December 31, 2008, and in company&#146;s quarterly report on Form 10-Q for the quarter</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>ended March 31, 2009, filed by the company with the Securities and Exchange Commission, as updated or</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>supplemented from time to time in subsequent filings. These risks and uncertainties include, without</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>limitation: adverse capital and credit market conditions that may significantly affect the company&#146;s ability to</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>meet liquidity needs, access to capital and cost of capital; difficult conditions in the global capital markets</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>and the general economy, which the company does not expect to improve in the near future, that may</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>materially adversely affect the company&#146;s business and results of operations; the actions of the U.S.</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>government, Federal Reserve and other governmental and regulatory bodies for purposes of stabilizing the</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>financial markets might not achieve the intended effect; the risk from acquiring new businesses, which could</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>result in the impairment of goodwill and/or intangible assets recognized at the time of acquisition;</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>impairment of other financial institutions that could adversely affect the company; investment risks which</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>may diminish the value of the company&#146;s invested assets and the investment returns credited to customers,</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>which could reduce sales, revenues, assets under management and net income; requirements to post collateral</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>or make payments related to declines in market value of specified assets may adversely affect company</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>liquidity and expose the company to counterparty credit risk; changes in laws, regulations or accounting</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>standards that may reduce company profitability; fluctuations in foreign currency exchange rates that could</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>reduce company profitability; Principal Financial Group, Inc.&#146;s primary reliance, as a holding company, on</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left><FONT face=serif>Page 7</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
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     <TD colSpan=2>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>dividends from its subsidiaries to meet debt payment obligations and regulatory restrictions on the ability of</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>subsidiaries to pay such dividends; competitive factors; volatility of financial markets; decrease in ratings;</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>interest rate changes; inability to attract and retain sales representatives; international business risks; a</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>pandemic, terrorist attack or other catastrophic event; and default of the company&#146;s re-insurers.</FONT>&nbsp; </TD></TR>
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     <TD colSpan=2>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><B><FONT face=serif size=2>Use of Non-GAAP Financial Measures</FONT></B>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>The company uses a number of non-GAAP financial measures that management believes are useful to</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>investors because they illustrate the performance of normal, ongoing operations, which is important in</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>understanding and evaluating the company&#146;s financial condition and results of operations. They are not,</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>however, a substitute for U.S. GAAP financial measures.&nbsp;Therefore, the company has provided reconciliations</FONT></TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>of the non-GAAP measures to the most directly comparable U.S. GAAP measure at the end of the release.&nbsp;</FONT></TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>The company adjusts <FONT face=serif size=2>U.S. GAAP measures for items not directly related to ongoing operations. However,</FONT></FONT></TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>it is possible these <FONT face=serif size=2>adjusting items have occurred in the past and could recur</FONT> in the future reporting periods.</FONT></TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>Management also uses <FONT face=serif size=2>non-GAAP measures for goal setting, as a basis for determining employee and&nbsp; </FONT></FONT></TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>senior management awards <FONT face=serif size=2>and compensation, and evaluating performance on a basis comparable</FONT>&nbsp;to that</FONT></TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>used by investors and securities analysts.</FONT></TD></TR>
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     <TD colSpan=2>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><B><FONT face=serif size=2>Earnings Conference Call</FONT></B>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>At 9:00 A.M. (CST) tomorrow, Chairman, President and Chief Executive Officer Larry Zimpleman and</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>Senior Vice President and Chief Financial Officer Terry Lillis will lead a discussion of results, asset quality</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>and capital adequacy during a live conference call, which can be accessed as follows:</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2>&nbsp;</TD></TR>
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     <TD align=left colSpan=2>&nbsp;&nbsp;<FONT size=4>&nbsp;&nbsp;</FONT><FONT face=serif size=4>&#183;</FONT>&nbsp;&nbsp; &nbsp;<FONT face=serif size=2>Via live Internet webcast. Please go to </FONT><U><FONT face=serif size=2>www</FONT></U><FONT face=serif size=2><U>.principal.com/investor</U> </FONT><FONT face=serif size=2>at least 10-15 minutes prior to the</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; start of the call to register, and to download and install any necessary audio software.</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=2>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT size=4>&nbsp;&nbsp;&nbsp;</FONT><FONT face=serif size=4>&#183;&nbsp; &nbsp;</FONT>&nbsp;<FONT face=serif size=2>Via telephone by dialing 800-374-1609 (U.S. and Canadian callers) or 706-643-7701 (International</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; callers) approximately 10 minutes prior to the start of the call. The call leader's name is Tom Graf.</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=2>&nbsp; </TD></TR>
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     <TD align=left colSpan=2>&nbsp; &nbsp;<FONT size=4>&nbsp;</FONT><FONT face=serif size=4>&#183;</FONT>&nbsp; &nbsp; <FONT face=serif size=2>Replays of the earnings call are available at: </FONT><U><FONT face=serif size=2>www</FONT></U><FONT face=serif size=2><U>.principal.com/investor</U> </FONT><FONT face=serif size=2>or by dialing 800-642-1687</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; (U.S. and Canadian callers) or 706-645-9291 (International callers). The access code is 17748880.</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; Replays will be available approximately two hours after the completion of the live earnings call through</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;the end of day August 11, 2009.</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=2>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>The company's financial supplement and additional investment portfolio detail for second quarter 2009 is</FONT>&nbsp; </TD></TR>
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     <TD align=left colSpan=2><FONT face=serif size=2>currently available at </FONT><U><FONT face=serif size=2>www</FONT></U><FONT face=serif size=2><U>.principal.com/investor</U></FONT><FONT face=serif size=2>, and may be referred to during the call.</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left><FONT face=serif>Page 8</FONT>&nbsp; </TD></TR>
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     <TD>&nbsp; </TD></TR>
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     <TD align=left><B><FONT face=serif size=2>About the Principal Financial Group</FONT></B>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>The Principal Financial Group<FONT face=serif size=2></FONT><SUP><FONT face=serif size=2>&#174; </FONT></SUP></FONT><FONT face=serif size=2>(The Principal </FONT><SUP><FONT face=serif size=2>&#174; </FONT></SUP><FONT face=serif size=2>)</FONT><SUP><FONT face=serif size=2>5 </FONT></SUP><FONT face=serif size=2>is a leader in offering businesses, individuals and</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>institutional clients a wide range of financial products and services, including retirement and investment</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>services, life and health insurance, and banking through its diverse family of financial services companies. A</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>member of the Fortune 500, the Principal Financial Group has $257.7 billion in assets under management</FONT><SUP><FONT face=serif size=2>6</FONT></SUP>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>and serves some 18.8 million customers worldwide from offices in Asia, Australia, Europe, Latin America</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=2>ticker symbol PFG. For more information, visit </FONT><U><FONT face=serif size=2>www</FONT></U><FONT face=serif size=2><U>.principal.com</U></FONT><FONT face=serif size=2>.</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=center>&nbsp;<FONT face=serif size=2>###</FONT>&nbsp; </TD></TR>
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     <TD>&nbsp; </TD></TR>
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     <TD>_________________________________&nbsp; </TD></TR>
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     <TD align=left><SUP><FONT face=serif size=1>5 </FONT></SUP><FONT face=serif size=1>"The Principal Financial Group" and &#147;The Principal&#148; are registered service marks of Principal Financial Services, Inc., a member of the</FONT>&nbsp; </TD></TR>
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     <TD align=left><FONT face=serif size=1>Principal Financial Group.</FONT>&nbsp; </TD></TR>
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     <TD align=left><SUP><FONT face=serif size=1>6 </FONT></SUP><FONT face=serif size=1>As of June 30, 2009</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left><FONT face=serif>Page 9</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp;</TD></TR>
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     <TD align=left><B><I><FONT face=serif size=2>Summary of Segment and Principal Financial Group, Inc. Results</FONT></I></B>&nbsp; </TD></TR></TABLE><BR>
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     <TD width="50%"></TD>
     <TD style="BORDER-TOP: #000000 1pt solid" width="13%"></TD>
     <TD style="BORDER-TOP: #000000 1pt solid" width="12%"></TD>
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     <TD style="BORDER-TOP: #000000 1pt solid" width="9%"></TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD style="BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid" align=center colSpan=3><B><FONT face=serif>Operating Earnings (Loss)*</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-TOP: #000000 1pt solid" align=left>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left colSpan=2>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<B><I><FONT face=serif>in millions</FONT></I></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right colSpan=2><I><FONT face=serif>Three Months Ended,</FONT></I>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right colSpan=2><I><FONT face=serif>Six Months Ended,</FONT></I>&nbsp; </TD></TR>
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     <TD style="BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><I><FONT face=serif>Segment</FONT></I></B>&nbsp; </TD>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif>6/30/09</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif>6/30/08</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif>6/30/09</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif>6/30/08</FONT>&nbsp; </TD></TR>
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     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=serif>U.S. Asset Accumulation</FONT></I>&nbsp; </TD>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>$137.4</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>$152.9</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>$230.5</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>$292.0</FONT>&nbsp; </TD></TR>
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     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=serif>Global Asset Management</FONT></I>&nbsp; </TD>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>8.2</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>24.1</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>15.0</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>43.9</FONT>&nbsp; </TD></TR>
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     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=serif>International Asset Management and Accumulation</FONT></I>&nbsp; </TD>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>29.3</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>31.8</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>46.3</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>63.5</FONT>&nbsp; </TD></TR>
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     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=serif>Life and Health Insurance</FONT></I>&nbsp; </TD>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>57.7</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>66.7</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>129.5</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>145.9</FONT>&nbsp; </TD></TR>
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     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=serif>Corporate and Other</FONT></I>&nbsp; </TD>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(32.1)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(21.4)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(56.8)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(32.8)</FONT>&nbsp; </TD></TR>
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     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><B><I><FONT face=serif>Operating Earnings</FONT></I></B>&nbsp; </TD>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>200.5</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>254.1</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>364.5</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><B><FONT face=serif size=2>512.5</FONT></B>&nbsp; </TD></TR>
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     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=serif>Net realized capital losses, as adjusted</FONT></I>&nbsp; </TD>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(50.2)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(85.4)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(101.1)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(160.1)</FONT>&nbsp; </TD></TR>
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     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=serif>Other after-tax adjustments</FONT></I>&nbsp; </TD>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(0.0)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(0.4)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(0.3)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(9.9)</FONT>&nbsp; </TD></TR>
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     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><I><FONT face=serif>Net income available to common stockholders</FONT></I></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>$150.3</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>$168.3</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>$263.1</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>$342.5</FONT></B>&nbsp; </TD></TR>
<TR>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid" colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid" align=left>&nbsp; </TD>
     <TD style="BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=left>&nbsp; </TD>
     <TD style="BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=center colSpan=2><B><FONT face=serif>Per Diluted Share</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-LEFT: #000000 1pt solid" align=left>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right colSpan=2><I><FONT face=serif>Three Months Ended,</FONT></I>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right colSpan=2><I><FONT face=serif>Six Months Ended,</FONT></I>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif>6/30/09</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif>6/30/08</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif>6/30/09</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif>6/30/08</FONT>&nbsp; </TD></TR>
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     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><B><I><FONT face=serif>Operating Earnings</FONT></I></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>$0.69</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>$0.97</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>$1.32</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>$1.96</FONT></B>&nbsp; </TD></TR>
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     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=serif>Net realized capital losses, as adjusted</FONT></I>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(0.17)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(0.33)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(0.37)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(0.62)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><I><FONT face=serif>Other after-tax adjustments</FONT></I>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(0.00)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(0.00)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(0.00)</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>(0.03)</FONT>&nbsp; </TD></TR>
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     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1px solid" align=right><B><I><FONT face=serif>Net income available to common stockholders</FONT></I></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>$0.52</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>$0.64</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>$0.95</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>$1.31</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-LEFT: #000000 1pt solid" align=right><B><I><FONT face=serif>Weighted-average diluted common shares</FONT></I></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=left rowSpan=2><B><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 291.4</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=left rowSpan=2><B><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 261.2</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=left rowSpan=2><B><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;275.8</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=left rowSpan=2><B><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;261.2</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><I><FONT face=serif>outstanding</FONT></I></B>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left><B><FONT face=serif size=2>*Operating earnings versus U.S. GAAP (GAAP) net income available to common stockholders</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Management uses operating earnings, which excludes the effect of net realized capital gains and losses, as adjusted, and other after-</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>tax adjustments, for goal setting, as a basis for determining employee compensation, and evaluating performance on a basis</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>comparable to that used by investors and securities analysts. Segment operating earnings are determined by adjusting U.S. GAAP</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>net income available to common stockholders for net realized capital gains and losses, as adjusted, and other after-tax adjustments</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>the company believes are not indicative of overall operating trends. Note: it is possible these adjusting items have occurred in the</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>past and could recur in future reporting periods. While these items may be significant components in understanding and assessing</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>our consolidated financial performance, management believes the presentation of segment operating earnings enhances the</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>understanding of results of operations by highlighting earnings attributable to the normal, ongoing operations of the company&#146;s</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>businesses.</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left><FONT face=serif>Page 10</FONT>&nbsp; </TD>
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     <TD align=center colSpan=6 rowSpan=3><B><FONT face=serif size=2>Principal Financial Group, Inc.</FONT></B><BR>
<B><FONT face=serif size=2>Results of Operations</FONT></B><BR>
<B><FONT face=serif size=2>(in millions)</FONT></B></TD></TR>
<TR vAlign=bottom></TR>
<TR vAlign=bottom></TR>
<TR>
     <TD colSpan=6>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD style="BORDER-TOP: #000000 1pt solid" align=left>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=center colSpan=3><B><FONT face=serif size=2>Three Months Ended,</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-TOP: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=center colSpan=2><B><FONT face=serif size=2>Six Months Ended,</FONT></B>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; </TD>
     <TD style="BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=center><B><FONT face=serif size=2>6/30/09</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=center><B><FONT face=serif size=2>6/30/08</FONT></B>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=center><B><FONT face=serif size=2>6/30/09</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=center><B><FONT face=serif size=2>6/30/08</FONT></B>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Premiums and other considerations</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 937.7</FONT>&nbsp; </TD>
     <TD align=right colSpan=2><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 1,156.2</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;1,887.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;2,209.2</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Fees and other revenues</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>515.2</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>622.5</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>988.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,235.9</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Net investment income</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>860.1</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>990.9</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,688.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,951.2</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Net realized capital gains (losses), excluding</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>impairment losses on available-for-sale</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>securities</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(20.8)</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(65.6)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>11.9</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(124.1)</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Total other-than-temporary impairment losses</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>on available-for-sale securities</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(200.9)</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(45.9)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(347.5)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(113.4)</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Portion of impairment losses on fixed</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>maturities, available-for-sale recognized</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>in other comprehensive income</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>66.5</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>117.1</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Net impairment losses on available-for-sale</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>securities</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(134.4)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(45.9)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(230.4)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(113.4)</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Net realized capital losses</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(155.2)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(111.5)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(218.5)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(237.5)</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face=serif size=2>Total revenues</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>2,157.8</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>2,658.1</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>4,346.4</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>5,158.8</FONT>&nbsp; </TD></TR>
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     <TD colSpan=6>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Benefits, claims, and settlement expenses</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,334.3</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,634.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>2,640.9</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>3,106.0</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Dividends to policyholders</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>62.9</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>69.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>126.4</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>139.8</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Operating expenses</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>562.7</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>742.6</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>1,251.1</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>1,493.3</FONT>&nbsp; </TD></TR>
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     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face=serif size=2>Total expenses</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>1,959.9</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>2,445.6</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>4,018.4</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>4,739.1</FONT>&nbsp; </TD></TR>
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     <TD colSpan=6>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Income before income taxes</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>197.9</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>212.5</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>328.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>419.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Income taxes</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>33.9</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>29.4</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>41.4</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>59.0</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Net income</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>164.0</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>183.1</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>286.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>360.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Net income attributable to noncontrolling</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>interest</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>5.4</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>6.5</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>7.0</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>1.7</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face=serif size=2>Net income attributable to PFG</FONT></I>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>158.6</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>176.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>279.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>359.0</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Preferred stock dividends</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>8.3</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>8.3</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>16.5</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>16.5</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<I><FONT face=serif size=2>Net income available to common stockholders</FONT></I>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;150.3</FONT>&nbsp; </TD>
     <TD align=right colSpan=2><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; 168.3</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;263.1</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;342.5</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=6>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Less:</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Net realized capital losses, as adjusted</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(50.2)</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(85.4)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(101.1)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(160.1)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>Other after-tax adjustments</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.0)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=left>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.4)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.3)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(9.9)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp;<I><FONT face=serif size=2>Operating earnings</FONT></I>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 2pt double" align=right><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;200.5</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right colSpan=2><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;254.1</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;364.5</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>$&nbsp;&nbsp;&nbsp;&nbsp; &nbsp;512.5</FONT>&nbsp; </TD></TR></TABLE><BR>
<TABLE cellSpacing=0 cellPadding=0 width="85%" border=0>
<TR>
     <TD width="46%"></TD>
     <TD width="17%"></TD>
     <TD width="21%"></TD>
     <TD width="14%"></TD></TR>
<TR vAlign=bottom>
     <TD align=left colSpan=3>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I><FONT face=serif size=2>Selected Balance Sheet Statistics</FONT></I></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR>
     <TD colSpan=4>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=center colSpan=3><B><FONT face=serif size=2>Period Ended,</FONT></B></TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>6/30/09</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>12/31/08</FONT>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><FONT face=serif size=2>6/30/08</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Total assets (in billions)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 130.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 128.2</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 151.5</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Total common equity (in millions)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 5,153.2</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 1,930.8</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 6,077.9</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Total common equity excluding accumulated</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>other comprehensive income (in millions)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 8,195.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 6,842.4</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 6,851.8</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>End of period common shares outstanding (in</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp;<FONT face=serif size=2>millions)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>318.3</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>259.3</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>259.0</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Book value per common share</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 16.19</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 7.45</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 23.47</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Book value per common share excluding</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; &nbsp; &nbsp;<FONT face=serif size=2>accumulated other comprehensive income</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 25.75</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 26.39</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>$ 26.45</FONT>&nbsp; </TD></TR></TABLE><BR>
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     <TD align=left><FONT face=serif>Page 11</FONT>&nbsp; </TD>
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     <TD colSpan=2>&nbsp; </TD></TR>
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     <TD align=center colSpan=2 rowSpan=3><B><FONT face=serif size=2>Principal Financial Group, Inc.</FONT></B><BR>
<B><FONT face=serif size=2>Reconciliation of Non-GAAP Financial Measures to U.S. GAAP</FONT></B><BR>
<B><FONT face=serif size=2>(in millions, except as indicated)</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom></TR>
<TR vAlign=bottom></TR></TABLE><BR>
<TABLE cellSpacing=0 cellPadding=0 width="85%" border=0>
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     <TD width="50%"></TD>
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     <TD align=left>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=center colSpan=2><B><FONT face=serif size=2>Three Months Ended,</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-TOP: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=center colSpan=2><B><FONT face=serif size=2>Six Months Ended,</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>06/30/09</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>06/30/08</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>06/30/09</FONT></B>&nbsp; </TD>
     <TD style="BORDER-RIGHT: #000000 1pt solid; BORDER-LEFT: #000000 1pt solid; BORDER-BOTTOM: #000000 1pt solid" align=right><B><FONT face=serif size=2>06/30/08</FONT></B>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Diluted Earnings Per Common Share:</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Operating Earnings</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>0.69</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>0.97</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1.32</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1.96</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net realized capital losses</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.17)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.33)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.37)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.62)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Other after-tax adjustments</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.00)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.00)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.00)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.03)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net income available to common stockholders</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 2pt double" align=right><FONT face=serif size=2>0.52</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>0.64</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>0.95</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>1.31</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Book Value Per Common Share Excluding Accumulated Other</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Comprehensive Income:</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Book value per common share excluding accumulated other</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; comprehensive income</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>25.75</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>26.45</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>25.75</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>26.45</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net unrealized capital losses</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(7.67)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(3.49)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(7.67)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(3.49)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Foreign currency translation</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.20)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>0.27</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(0.20)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>0.27</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net unrecognized post-retirement benefit obligations</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(1.69)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>0.24</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(1.69)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>0.24</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Book value per common share including accumulated other</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; comprehensive income</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 2pt double" align=right><FONT face=serif size=2>16.19</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>23.47</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>16.19</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>23.47</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Operating Revenues:</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>USAA</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>991.3</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,255.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,998.8</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>2,460.4</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>GAM</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>103.3</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>143.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>207.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>283.3</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>IAMA</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>161.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>251.2</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>225.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>434.9</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Life and Health</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,116.9</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>1,180.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>2,247.9</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>2,368.2</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Corporate and Other</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(37.4)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(44.6)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(83.1)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(99.9)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Total operating revenues</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>2,335.8</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>2,786.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>4,597.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>5,446.9</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Add:</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net realized capital losses and related adjustments</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(178.0)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(130.9)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(250.5)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(269.2)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Terminated commercial mortgage securities issuance operation</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>0.0</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>2.4</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.1)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(18.9)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Total GAAP revenues</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 2pt double" align=right><FONT face=serif size=2>2,157.8</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>2,658.1</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>4,346.4</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>5,158.8</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Operating Earnings:</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>USAA</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>137.4</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>152.9</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>230.5</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>292.0</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>GAM</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>8.2</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>24.1</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>15.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>43.9</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>IAMA</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>29.3</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>31.8</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>46.3</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>63.5</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Life and Health</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>57.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>66.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>129.5</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>145.9</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Corporate and Other</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(32.1)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(21.4)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(56.8)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(32.8)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Total operating earnings</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>200.5</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>254.1</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>364.5</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>512.5</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net realized capital losses</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(50.2)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(85.4)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(101.1)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(160.1)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Other after-tax adjustments</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.0)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.4)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.3)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(9.9)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net income available to common stockholders</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 2pt double" align=right><FONT face=serif size=2>150.3</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>168.3</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>263.1</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>342.5</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Net Realized Capital Gains (losses):</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Net realized capital gains losses, as adjusted</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(50.2)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(85.4)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(101.1)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(160.1)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Add:</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Periodic settlements and accruals on non-hedge derivatives</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>20.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>19.4</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>27.7</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>28.2</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Amortization of DPAC and sale inducement costs</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(114.4)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(16.4)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(89.6)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(29.9)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Certain market value adjustments of embedded derivatives</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(2.5)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>3.2</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(6.5)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>3.2</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Capital gains (losses) distributed</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>13.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>6.9</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>6.9</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(2.4)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Tax impacts</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(29.0)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(42.2)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(65.8)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(76.3)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Noncontrolling interest capital gains (losses)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>4.5</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>3.0</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>5.6</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(3.7)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Less related fee adjustments:</FONT>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Unearned front-end fee income</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(2.8)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>(2.8)</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Certain market value adjustments to fee revenues</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(1.5)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(3.5)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>GAAP net realized capital losses</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 2pt double" align=right><FONT face=serif size=2>(155.2)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>(111.5)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>(218.5)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>(237.5)</FONT>&nbsp; </TD></TR>
<TR>
     <TD colSpan=5>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><B><FONT face=serif size=2>Other After Tax Adjustments:</FONT></B>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD>
     <TD align=left>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Change in estimated loss related to a prior year legal contingency</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD>
     <TD align=right><FONT face=serif size=2>7.6</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Terminated commercial mortgage securities issuance operation</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.4)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(0.3)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 1px solid" align=right><FONT face=serif size=2>(17.5)</FONT>&nbsp; </TD></TR>
<TR vAlign=bottom>
     <TD align=left><FONT face=serif size=2>Total other after-tax adjustments</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>-</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>(0.4)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>(0.3)</FONT>&nbsp; </TD>
     <TD style="BORDER-BOTTOM: #000000 3px double" align=right><FONT face=serif size=2>(9.9)</FONT>&nbsp; </TD></TR></TABLE><BR>
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secondqtrer09.htm -- Converted by SEC Publisher, created by BCL Technologies Inc., for SEC Filing
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report:
August 3, 2009
(Date of earliest event reported)
PRINCIPAL FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
1-16725
42-1520346
(State or other jurisdiction
(Commission file number)
(I.R.S. Employer
of incorporation)
Identification Number)
711 High Street, Des Moines, Iowa 50392
(Address of principal executive offices)
(515) 247-5111
(Registrant's telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the
registrant under any of the following provisions:
[    ]
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[    ]
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[    ]
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
[    ]
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
__________________________
Page 2
Item 2.02. Results of Operations and Financial Condition
On August 3, 2009, Principal Financial Group, Inc. publicly announced information regarding its results of operations
and financial condition for the quarter ended July 31, 2009. The text of the announcement is included herewith as
Exhibit 99.
Item 9.01 Financial Statements and Exhibits
99 Second Quarter 2009 Earnings Release
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned thereunto duly authorized.
PRINCIPAL FINANCIAL GROUP, INC.
By:
/s/
Terrance J. Lillis
Name:
Terrance J. Lillis
Title:
Senior Vice President and Chief Financial Officer
Date:
August 4, 2009
Page 3
EXHIBIT 99
RELEASE:
On receipt
MEDIA CONTACT:
Susan Houser, 515-248-2268, Houser.Susan@principal.com
INVESTOR RELATIONS CONTACT:
Tom Graf, 515-235-9500, investor-relations@principal.com
PRINCIPAL FINANCIAL GROUP, INC. REPORTS SECOND QUARTER 2009 RESULTS
Des Moines, IA (August 3, 2009) – Principal Financial Group, Inc. (NYSE: PFG) today announced net
income available to common stockholders for the three months ended June 30, 2009, of $150.3 million, or
$0.52 per diluted share compared to $168.3 million, or $0.64 per diluted share for the three months ended
June 30, 2008. The company reported operating earnings of $200.5 million for second quarter 2009,
compared to $254.1 million for second quarter 2008. Operating earnings per diluted share (EPS) for second
quarter 2009 were $0.69 compared to $0.97 for the same period in 2008.
1
The decline in operating earnings
from a year ago primarily reflects lower fee income due to lower equity
2
and fixed income asset valuations,
which reduced total company assets under management (AUM) by 16 percent to $257.7 billion as of June 30,
2009, compared to $308.0 billion as of June 30, 2008. The decline in per share results also reflects the
company's common stock offering on May 11, 2009, which increased weighted average shares outstanding
from 261.2 million for the quarter ending June 30, 2008, to 291.4 million for the quarter ending June 30,
2009. In addition, negative market performance in 2008 resulted in higher costs for employee pension and
other post-retirement benefits
3
in second quarter 2009 than second quarter 2008 of $0.07 on an EPS basis.
"We view our operating results for second quarter 2009 as solid," said Larry D. Zimpleman,
chairman, president and chief executive officer. "We continued to benefit from diversification in our
businesses and our investment portfolio, and improved equity markets during the second quarter helped drive
a strong rebound from first quarter 2009 in assets under management, operating earnings and net income."
Highlights comparing second quarter 2009 to first quarter 2009:
·
Assets under management up 9 percent, or $21.1 billion, to $257.7 billion as of June 30, 2009.
·
Operating earnings up 22 percent, driven by a 50 percent or $58 million improvement from the
company's three asset management and asset accumulation segments.
·
Net income available to common stockholders up 33 percent, reflecting improved operating earnings and
a comparable level of net realized capital losses.
"During the quarter we successfully completed two capital raises totaling $1.9 billion, with $1.15
billion from equity and $750 million from long-term debt. These raises demonstrated investor confidence in
our ability to deliver sustainable, profitable growth and meet our obligations," said Zimpleman. "Between
our equity raise and a $3 billion improvement in net unrealized losses
4
from narrowing of credit spreads, our
book value more than doubled from March 31
st
to $16.19 per share."
_____________________________
1
Use of non-GAAP financial measures is discussed in this release after Segment Highlights.
2
S&P 500 daily average down 35 percent comparing second quarter 2009 to second quarter 2008.
3
SFAS 87 Pension Expense and SFAS 106 Other Post-Retirement Benefits.
4
Before adjustment for deferred policy acquisition costs and taxes.
Page 4
Added Terry Lillis, senior vice president and chief financial officer, "The quarter was not without its
challenges: institutional investors continue to delay funding due to market volatility and fewer plan sponsors
are changing their retirement plan providers due to the economy; rising unemployment is reducing the
number of participants in existing employee benefit plans; and investment income has declined. We expect
these pressures to ease over the next several quarters, but in the meantime, we continue to focus on managing
expenses and reducing risk in the investment portfolio. As always, we also remain focused on meeting the
needs of our customers and the advisors who serve them. Our success here is reflected in improving
retention, with withdrawals, as a percent of beginning assets under management, down 100 basis points
through mid-year."
Other Business Highlights
:
·
Expense management
: management action reduced compensation and other expenses $156 million or
13 percent comparing the six months ended June 30, 2009 to the same period a year ago.
·
Capital and liquidity management
: the company increased its position in highly liquid assets 80
percent from a year ago to $7.5 billion at June 30, 2009. Compared to June 30, 2008, cash and cash
equivalent holdings were up 184 percent to $4.3 billion as of June 30, 2009, and government-backed
securities were up 18 percent to $3.2 billion. Strong asset/liability matching and liquidity enabled the
company to continue scaling back on the Investment Only business, reducing the block by $1.1 billion
during the second quarter.
·
Solid sales
: the company's three key retirement and investment products generated $3.0 billion of sales,
on a combined basis in second quarter 2009, despite a difficult sales environment, with $720 million of
sales for full service accumulation, $1.9 billion for Principal Funds, and $371 million for individual
annuities.
Net Income
Net income available to common stockholders of $150.3 million for second quarter 2009 reflects net realized
capital losses of $50.2 million, which includes: $80.6 million of losses related to sales and other than
temporary impairment of fixed maturity securities; $36.5 million of losses related to hedging activities; $16.0
million of losses on commercial mortgage loans; $72.6 million of gains related to deferred policy acquisition
costs; and $11.8 million of gains on mark to market of fixed maturity securities held as trading. Of the $80.6
million of losses related to sales and other than temporary impairment of fixed maturity securities, $27.7
million reflects the sale of $526.0 million of securities to reduce the company's exposure to ratings drift risk.
Segment Highlights
U.S. Asset Accumulation
Segment operating earnings for second quarter 2009 declined 10 percent to $137.4 million,
compared to $152.9 million for the same period in 2008. The variance primarily reflects 17 percent lower
average account values for the segment due to significant equity market declines over the trailing twelve-
month period. The decline also reflects the impact of higher costs for employee pension and other post-
retirement benefits in second quarter 2009 than second quarter 2008, which reduced segment operating
earnings by $8.0 million. The impact of lower average account values was partially offset by expense
actions, which reduced compensation and other expense by $33.7 million or 13 percent compared to second
quarter 2008. Full service accumulation earnings were $62.4 million for second quarter 2009, compared to
$78.2 million in second quarter 2008, primarily reflecting an 18 percent decline in average account values.
Page 5
Operating revenues for the second quarter decreased 21 percent to $991.3 million, compared to
$1,255.7 million for the same period in 2008. Excluding lower single premium group annuity (SPGA) sales,
operating revenues for the segment decreased 17 percent, consistent with the decline in average account
values. SPGA sales tend to vary from period to period as the product is typically used to fund defined
benefit plan terminations and therefore generates large premiums from a small number of customers.
Segment assets under management were $145.3 billion as of June 30, 2009, compared to $173.2
billion as of June 30, 2008.
Global Asset Management
Segment operating earnings for second quarter 2009 were $8.2 million, compared to $24.1 million in
the prior year quarter, reflecting a 19 percent decline in average assets under management, lower net investment
income, lower fees due to a slowdown in the real estate market and higher costs for employee pension and other
post-retirement benefits. The impact of these items was partially offset by expense management, including a
$16.6 million or 25 percent reduction in compensation costs compared to the year ago quarter.
Operating revenues for second quarter decreased to $103.3 million from $143.7 million for the same
period in 2008.
Third party assets under management were $67.3 billion as of June 30, 2009, compared to $88.7
billion as of June 30, 2008.
International Asset Management and Accumulation
Segment operating earnings for second quarter 2009 were $29.3 million compared to $31.8
million for the same period in 2008. Second quarter 2009 earnings were dampened by unfavorable
macroeconomic conditions – modest deflation in Chile and weakening of Latin American currencies relative
to the U.S. dollar.
Operating revenues were $161.7 million for second quarter 2009, compared to $251.2 million for the
same period last year primarily due to lower investment yields from inflation-adjusted assets in Latin America.
Segment assets under management were $28.7 billion as of June 30, 2009, compared to $30.0
billion as of June 30, 2008. Had currency rates remained unchanged from 2008, segment assets under
management would have increased 10 percent over last year.
Life and Health Insurance
Segment operating earnings for second quarter 2009 were $57.7 million, compared to $66.7
million for the same period in 2008, with the decline reflecting $9.1 million of higher after-tax costs for
employee pension and other post-retirement benefits in second quarter 2009 than second quarter 2008.
Individual Life earnings were $28.3 million compared to $24.0 million in second quarter 2008, reflecting
lower deferred policy acquisition cost amortization expense resulting from improved equity market
performance during the quarter. Despite expense efficiencies in both divisions, Health earnings decreased to
$5.7 million compared to $11.8 million for second quarter 2008, and Specialty Benefits earnings decreased to
Page 6
$23.7 million compared to $30.9 million. Health experienced higher claim costs in second quarter 2009 and
Specialty Benefits experienced unfavorable dental claims. Both divisions also experienced a reduction in the
number of participants in existing plans and lower investment income.
Operating revenues were $1,116.9 million, compared to $1,180.6 million for the same period a
year ago. The decline was primarily due to an 8 percent decline in Health division premiums, which
primarily reflects a decline in covered members.
Corporate and Other
Operating losses for second quarter 2009 were $32.1 million, compared to operating losses of $21.4
million for the same period in 2008. The increase in losses reflects higher interest expense resulting from the
company's $750 million debt issuance during the second quarter 2009.
Other-than-temporary impairments for second quarter 2009
On April 9, 2009, the Financial Accounting Standards Board established new requirements for measuring
and presenting other-than-temporary impairment charges on available for sale securities, which the Company
adopted with first quarter 2009 reporting. Based on the new requirements, on a pre-tax basis, total other than
temporary impairment losses on available for sale securities were $200.9 million and the noncredit portion of
loss recognized in other comprehensive income was $66.5 million. Net impairment losses on available for
sale securities of $134.4 million for second quarter 2009 reflect: the company's actions to reduce capital drift
risk by selling or tendering certain securities, which resulted in a loss of $48.1 million; and deterioration in
expected cash flows, which resulted in a $19.8 million net impairment charge on non-agency residential
mortgage backed securities and residential collateralized debt obligations. The remainder of the net
impairment losses for second quarter 2009 is primarily related to impairments of corporate credits.
Forward looking and cautionary statements
This press release contains forward-looking statements, including, without limitation, statements as to
operating earnings, net income available to common stockholders, net cash flows, realized and unrealized
losses, capital and liquidity positions, sales and earnings trends, and management's beliefs, expectations,
goals and opinions. The company does not undertake to update or revise these statements, which are based
on a number of assumptions concerning future conditions that may ultimately prove to be inaccurate. Future
events and their effects on the company may not be those anticipated, and actual results may differ materially
from the results anticipated in these forward-looking statements. The risks, uncertainties and factors that
could cause or contribute to such material differences are discussed in the company's annual report on Form
10-K for the year ended December 31, 2008, and in company's quarterly report on Form 10-Q for the quarter
ended March 31, 2009, filed by the company with the Securities and Exchange Commission, as updated or
supplemented from time to time in subsequent filings. These risks and uncertainties include, without
limitation: adverse capital and credit market conditions that may significantly affect the company's ability to
meet liquidity needs, access to capital and cost of capital; difficult conditions in the global capital markets
and the general economy, which the company does not expect to improve in the near future, that may
materially adversely affect the company's business and results of operations; the actions of the U.S.
government, Federal Reserve and other governmental and regulatory bodies for purposes of stabilizing the
financial markets might not achieve the intended effect; the risk from acquiring new businesses, which could
result in the impairment of goodwill and/or intangible assets recognized at the time of acquisition;
impairment of other financial institutions that could adversely affect the company; investment risks which
may diminish the value of the company's invested assets and the investment returns credited to customers,
which could reduce sales, revenues, assets under management and net income; requirements to post collateral
or make payments related to declines in market value of specified assets may adversely affect company
liquidity and expose the company to counterparty credit risk; changes in laws, regulations or accounting
standards that may reduce company profitability; fluctuations in foreign currency exchange rates that could
reduce company profitability; Principal Financial Group, Inc.'s primary reliance, as a holding company, on
Page 7
dividends from its subsidiaries to meet debt payment obligations and regulatory restrictions on the ability of
subsidiaries to pay such dividends; competitive factors; volatility of financial markets; decrease in ratings;
interest rate changes; inability to attract and retain sales representatives; international business risks; a
pandemic, terrorist attack or other catastrophic event; and default of the company's re-insurers.
Use of Non-GAAP Financial Measures
The company uses a number of non-GAAP financial measures that management believes are useful to
investors because they illustrate the performance of normal, ongoing operations, which is important in
understanding and evaluating the company's financial condition and results of operations. They are not,
however, a substitute for U.S. GAAP financial measures. Therefore, the company has provided reconciliations
of the non-GAAP measures to the most directly comparable U.S. GAAP measure at the end of the release.
The company adjusts
U.S. GAAP measures for items not directly related to ongoing operations. However,
it is possible these
adjusting items have occurred in the past and could recur
in the future reporting periods.
Management also uses
non-GAAP measures for goal setting, as a basis for determining employee and
senior management awards
and compensation, and evaluating performance on a basis comparable
to that
used by investors and securities analysts.
Earnings Conference Call
At 9:00 A.M. (CST) tomorrow, Chairman, President and Chief Executive Officer Larry Zimpleman and
Senior Vice President and Chief Financial Officer Terry Lillis will lead a discussion of results, asset quality
and capital adequacy during a live conference call, which can be accessed as follows:
·
Via live Internet webcast. Please go to
www
.principal.com/investor
at least 10-15 minutes prior to the
start of the call to register, and to download and install any necessary audio software.
·
Via telephone by dialing 800-374-1609 (U.S. and Canadian callers) or 706-643-7701 (International
callers) approximately 10 minutes prior to the start of the call. The call leader's name is Tom Graf.
·
Replays of the earnings call are available at:
www
.principal.com/investor
or by dialing 800-642-1687
(U.S. and Canadian callers) or 706-645-9291 (International callers). The access code is 17748880.
Replays will be available approximately two hours after the completion of the live earnings call through
the end of day August 11, 2009.
The company's financial supplement and additional investment portfolio detail for second quarter 2009 is
currently available at
www
.principal.com/investor
, and may be referred to during the call.
Page 8
About the Principal Financial Group
The Principal Financial Group
®
(The Principal
®
)
5
is a leader in offering businesses, individuals and
institutional clients a wide range of financial products and services, including retirement and investment
services, life and health insurance, and banking through its diverse family of financial services companies. A
member of the Fortune 500, the Principal Financial Group has $257.7 billion in assets under management
6
and serves some 18.8 million customers worldwide from offices in Asia, Australia, Europe, Latin America
and the United States. Principal Financial Group, Inc. is traded on the New York Stock Exchange under the
ticker symbol PFG. For more information, visit
www
.principal.com
.
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"The Principal Financial Group" and "The Principal" are registered service marks of Principal Financial Services, Inc., a member of the
Principal Financial Group.
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As of June 30, 2009
Page 9
Summary of Segment and Principal Financial Group, Inc. Results
Operating Earnings (Loss)*
in millions
Three Months Ended,
Six Months Ended,
Segment
6/30/09
6/30/08
6/30/09
6/30/08
U.S. Asset Accumulation
$137.4
$152.9
$230.5
$292.0
Global Asset Management
8.2
24.1
15.0
43.9
International Asset Management and Accumulation
29.3
31.8
46.3
63.5
Life and Health Insurance
57.7
66.7
129.5
145.9
Corporate and Other
(32.1)
(21.4)
(56.8)
(32.8)
Operating Earnings
200.5
254.1
364.5
512.5
Net realized capital losses, as adjusted
(50.2)
(85.4)
(101.1)
(160.1)
Other after-tax adjustments
(0.0)
(0.4)
(0.3)
(9.9)
Net income available to common stockholders
$150.3
$168.3
$263.1
$342.5
Per Diluted Share
Three Months Ended,
Six Months Ended,
6/30/09
6/30/08
6/30/09
6/30/08
Operating Earnings
$0.69
$0.97
$1.32
$1.96
Net realized capital losses, as adjusted
(0.17)
(0.33)
(0.37)
(0.62)
Other after-tax adjustments
(0.00)
(0.00)
(0.00)
(0.03)
Net income available to common stockholders
$0.52
$0.64
$0.95
$1.31
Weighted-average diluted common shares
291.4
261.2
275.8
261.2
outstanding
*Operating earnings versus U.S. GAAP (GAAP) net income available to common stockholders
Management uses operating earnings, which excludes the effect of net realized capital gains and losses, as adjusted, and other after-
tax adjustments, for goal setting, as a basis for determining employee compensation, and evaluating performance on a basis
comparable to that used by investors and securities analysts. Segment operating earnings are determined by adjusting U.S. GAAP
net income available to common stockholders for net realized capital gains and losses, as adjusted, and other after-tax adjustments
the company believes are not indicative of overall operating trends. Note: it is possible these adjusting items have occurred in the
past and could recur in future reporting periods. While these items may be significant components in understanding and assessing
our consolidated financial performance, management believes the presentation of segment operating earnings enhances the
understanding of results of operations by highlighting earnings attributable to the normal, ongoing operations of the company's
businesses.
Page 10
Principal Financial Group, Inc.
Results of Operations
(in millions)
Three Months Ended,
Six Months Ended,
6/30/09
6/30/08
6/30/09
6/30/08
Premiums and other considerations
$      937.7
$      1,156.2
$      1,887.6
$      2,209.2
Fees and other revenues
515.2
622.5
988.7
1,235.9
Net investment income
860.1
990.9
1,688.6
1,951.2
Net realized capital gains (losses), excluding
impairment losses on available-for-sale
securities
(20.8)
(65.6)
11.9
(124.1)
Total other-than-temporary impairment losses
on available-for-sale securities
(200.9)
(45.9)
(347.5)
(113.4)
Portion of impairment losses on fixed
maturities, available-for-sale recognized
in other comprehensive income
66.5
-
117.1
-
Net impairment losses on available-for-sale
securities
(134.4)
(45.9)
(230.4)
(113.4)
Net realized capital losses
(155.2)
(111.5)
(218.5)
(237.5)
Total revenues
2,157.8
2,658.1
4,346.4
5,158.8
Benefits, claims, and settlement expenses
1,334.3
1,634.0
2,640.9
3,106.0
Dividends to policyholders
62.9
69.0
126.4
139.8
Operating expenses
562.7
742.6
1,251.1
1,493.3
Total expenses
1,959.9
2,445.6
4,018.4
4,739.1
Income before income taxes
197.9
212.5
328.0
419.7
Income taxes
33.9
29.4
41.4
59.0
Net income
164.0
183.1
286.6
360.7
Net income attributable to noncontrolling
interest
5.4
6.5
7.0
1.7
Net income attributable to PFG
158.6
176.6
279.6
359.0
Preferred stock dividends
8.3
8.3
16.5
16.5
Net income available to common stockholders
$      150.3
$      168.3
$      263.1
$      342.5
Less:
Net realized capital losses, as adjusted
(50.2)
(85.4)
(101.1)
(160.1)
Other after-tax adjustments
(0.0)
(0.4)
(0.3)
(9.9)
Operating earnings
$      200.5
$      254.1
$      364.5
$      512.5
Selected Balance Sheet Statistics
Period Ended,
6/30/09
12/31/08
6/30/08
Total assets (in billions)
$ 130.7
$ 128.2
$ 151.5
Total common equity (in millions)
$ 5,153.2
$ 1,930.8
$ 6,077.9
Total common equity excluding accumulated
other comprehensive income (in millions)
$ 8,195.6
$ 6,842.4
$ 6,851.8
End of period common shares outstanding (in
millions)
318.3
259.3
259.0
Book value per common share
$ 16.19
$ 7.45
$ 23.47
Book value per common share excluding
accumulated other comprehensive income
$ 25.75
$ 26.39
$ 26.45
Page 11
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,
06/30/09
06/30/08
06/30/09
06/30/08
Diluted Earnings Per Common Share:
Operating Earnings
0.69
0.97
1.32
1.96
Net realized capital losses
(0.17)
(0.33)
(0.37)
(0.62)
Other after-tax adjustments
(0.00)
(0.00)
(0.00)
(0.03)
Net income available to common stockholders
0.52
0.64
0.95
1.31
Book Value Per Common Share Excluding Accumulated Other
Comprehensive Income:
Book value per common share excluding accumulated other
comprehensive income
25.75
26.45
25.75
26.45
Net unrealized capital losses
(7.67)
(3.49)
(7.67)
(3.49)
Foreign currency translation
(0.20)
0.27
(0.20)
0.27
Net unrecognized post-retirement benefit obligations
(1.69)
0.24
(1.69)
0.24
Book value per common share including accumulated other
comprehensive income
16.19
23.47
16.19
23.47
Operating Revenues:
USAA
991.3
1,255.7
1,998.8
2,460.4
GAM
103.3
143.7
207.7
283.3
IAMA
161.7
251.2
225.7
434.9
Life and Health
1,116.9
1,180.6
2,247.9
2,368.2
Corporate and Other
(37.4)
(44.6)
(83.1)
(99.9)
Total operating revenues
2,335.8
2,786.6
4,597.0
5,446.9
Add:
Net realized capital losses and related adjustments
(178.0)
(130.9)
(250.5)
(269.2)
Terminated commercial mortgage securities issuance operation
0.0
2.4
(0.1)
(18.9)
Total GAAP revenues
2,157.8
2,658.1
4,346.4
5,158.8
Operating Earnings:
USAA
137.4
152.9
230.5
292.0
GAM
8.2
24.1
15.0
43.9
IAMA
29.3
31.8
46.3
63.5
Life and Health
57.7
66.7
129.5
145.9
Corporate and Other
(32.1)
(21.4)
(56.8)
(32.8)
Total operating earnings
200.5
254.1
364.5
512.5
Net realized capital losses
(50.2)
(85.4)
(101.1)
(160.1)
Other after-tax adjustments
(0.0)
(0.4)
(0.3)
(9.9)
Net income available to common stockholders
150.3
168.3
263.1
342.5
Net Realized Capital Gains (losses):
Net realized capital gains losses, as adjusted
(50.2)
(85.4)
(101.1)
(160.1)
Add:
Periodic settlements and accruals on non-hedge derivatives
20.0
19.4
27.7
28.2
Amortization of DPAC and sale inducement costs
(114.4)
(16.4)
(89.6)
(29.9)
Certain market value adjustments of embedded derivatives
(2.5)
3.2
(6.5)
3.2
Capital gains (losses) distributed
13.6
6.9
6.9
(2.4)
Tax impacts
(29.0)
(42.2)
(65.8)
(76.3)
Noncontrolling interest capital gains (losses)
4.5
3.0
5.6
(3.7)
Less related fee adjustments:
Unearned front-end fee income
(2.8)
-
(2.8)
-
Certain market value adjustments to fee revenues
-
-
(1.5)
(3.5)
GAAP net realized capital losses
(155.2)
(111.5)
(218.5)
(237.5)
Other After Tax Adjustments:
Change in estimated loss related to a prior year legal contingency
-
-
-
7.6
Terminated commercial mortgage securities issuance operation
-
(0.4)
(0.3)
(17.5)
Total other after-tax adjustments
-
(0.4)
(0.3)
(9.9)