SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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



                                    FORM 8-K

                                 CURRENT REPORT



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


                           Date of Report: May 5, 2003
                        (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)


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

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



<PAGE>

ITEM 7.  EXHIBITS.

99.1    First Quarter 2003 Earnings Release.


ITEM 12.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 5, 2003,  Principal Financial Group, Inc. publicly announced  information
regarding  its results of  operations  and  financial  condition for the quarter
ended March 31,  2003.  The text of the  announcement  is  included  herewith as
Exhibit 99.1.




                                    SIGNATURE

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

                                PRINCIPAL FINANCIAL GROUP, INC.


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



Date:  May 5, 2003

                                       2
<PAGE>
                                                                   Exhibit 99.1

RELEASE: On receipt                                  May 5, 2003
MEDIA CONTACT: Jeff Rader, 515-247-7883, rader.jeff@principal.com
INVESTOR RELATIONS
CONTACT: Tom Graf, 515-235-9500, investor-relations@principal.com

          PRINCIPAL FINANCIAL GROUP, INC. REPORTS FIRST QUARTER RESULTS

Des Moines,  IA (May 5, 2003) -- Principal  Financial  Group,  Inc. (NYSE:  PFG)
today announced  quarterly net income for the three months ended March 31, 2003,
of $155.7  million,  or $0.47 per diluted share  compared to a net loss of $34.9
million,  or $0.10 per diluted  share for the three months ended March 31, 2002.
The company  reported  record  operating  earnings  of $210.5  million for first
quarter 2003, up 15 percent  compared to $182.5  million for first quarter 2002.
Operating earnings per diluted share for first quarter 2003 increased 24 percent
to a record  $0.63  compared  to $0.51 for the same  period  in 2002.  Operating
revenues  for first  quarter  2003  increased  11  percent to  $2,378.9  million
compared to the same period last year,  reflecting  increases in all four of the
company's operating segments.1

"The Principal's  record first quarter  performance was particularly  strong, in
light of a 26 percent  drop in the S&P over the last 12  months,"  said J. Barry
Griswell, chairman,  president, and chief executive officer. "Operating earnings
per share improved 24 percent, reflecting strong execution of our strategy and a
continued focus on fundamentals - outstanding  customer  service,  comprehensive
employee benefit  solutions,  pricing  discipline,  and effective  management of
capital and expenses."

"Each of our  operating  segments  made a strong  contribution  to first quarter
results.  Mortgage  banking was the  largest  contributor,  as segment  earnings
nearly doubled," said Griswell.  "But we also experienced  double-digit earnings
growth  from   several   other   businesses   including   pension  full  service
accumulation,   Principal   International,   health   insurance  and  disability
insurance.

"Our  dedication  to quality has helped us build a  tremendous  reputation  with
small and medium sized  businesses and their  employees,  an important driver of
our continued  success," said  Griswell.  "Our  commitment was recognized  again
during the quarter,  as we received the top client satisfaction rating in Boston
Research Group's 401(k) plan sponsor satisfaction study.

"This strong customer focus,  combined with our unrivaled  distribution network,
continues to fuel extraordinary sales growth.  Pension full service accumulation
sales reached a record $2.5 billion during the quarter,  up 101 percent compared
to a year ago. We also  generated  $288 million in individual  annuity sales and
$423 million in mutual fund sales,  putting us on track for record 2003 sales of
each of these key retirement and investment products," said Griswell.

                                       3
<PAGE>

"Importantly,  our sales  momentum over the past several  quarters is generating
outstanding  deposit growth.  In the first quarter,  deposits for our U.S. asset
accumulation businesses increased 29 percent to a record $6.2 billion, including
full-service  accumulation  deposits of $3.6 billion," said Griswell.  "Deposits
are an  important  leading  indicator  of  earnings  growth,  and our success in
delivering  deposit growth has clearly helped offset the negative impact of poor
equity markets on our results."

Assets under management were $116.3 billion as of March 31, 2003, an increase of
$5.2  billion,  or 5%,  compared to December  31,  2002,  and a decrease of $3.9
billion, or 3%, compared to March 31, 2002.  Excluding the sale of substantially
all of BT Financial Group, assets under management have increased $13.8 billion,
or 13%, from March 31, 2002.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating  earnings for first quarter 2003 were $97.5 million,  compared
to $100.2  million for the same period in 2002. The decline was primarily due to
a $4.3 million  decrease from  Principal  Global  Investors,  reflecting  higher
incentive compensation accruals due to continued improvement in Principal Global
Investors'  investment  performance,  and  reflecting  the  expansion  of  asset
management  offshore  operations.  While operating earnings for the segment were
down  slightly,  the pension  business  generated  earnings of $81.9 million for
first  quarter  2003,  a 7  percent  increase  over the same  period a year ago,
despite  the  difficult  equity  market  environment  over the past  year.  This
reflects strong sales and excellent  retention,  which contributed to strong net
cash flow from pension full-service  accumulation operations of $1.8 billion for
the quarter.

Operating revenues for the first quarter were $886.0 million, compared to $862.1
million  for the same  period  in 2002.  Increased  revenues  in the  Individual
Annuity and Principal Global Investors  operations were the main contributors to
the increase.

Segment assets under management continued to increase, reaching $97.5 billion as
of March 31,  2003,  compared to $92.3  billion as of  December  31,  2002,  and
compared to $83.2 billion as of March 31, 2002.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Operating  earnings for the quarter were $6.6 million,  compared to $1.2 million
for the same  period in 2002.  Principal  International,  which  consists of the
company's  international  businesses  outside the U.S. and Australia,  had first
quarter  operating  earnings of $6.6  million,  compared to $2.0 million for the
same  period  in  2002.  Principal   International's  earnings  growth  reflects
increased earnings from its Chilean operations, and from its Mexican pension
business  reflecting  strong  results from the second  quarter 2002 Zurich AFORE
acquisition.

                                       4
<PAGE>

As a result of the sale of substantially all of BT Financial Group, which closed
on October 31, 2002,  the  operating  earnings of BT reflect only the  corporate
overhead  expenses  allocated to BT. This  treatment is pursuant to Statement of
Accounting  Standard  No.  144,  ACCOUNTING  FOR THE  IMPAIRMENT  OR DISPOSAL OF
LONG-LIVED  ASSETS  ("SFAS 144"),  whereby all revenues and expenses  (excluding
corporate  overhead  allocated to the  discontinued  operations) are reported as
discontinued operations.  Therefore, first quarter 2002 operating results for BT
reflect  three months of allocated  expenses with no  corresponding  activity in
2003.

Operating  revenues for the segment were $76.8  million for first  quarter 2003,
compared to $75.9 million for the same period last year.

Assets under  management for the segment were $4.9 billion as of March 31, 2003,
compared to $4.4 billion as of December 31, 2002,  and compared to $24.6 billion
as of March 31,  2002.  A $20.7  billion  decrease  from first  quarter  2002 is
attributable  to the sale of  substantially  all of BT Financial  Group.  Assets
under  management for Principal  International  increased 26 percent compared to
March 31, 2002.

LIFE AND HEALTH INSURANCE

Operating earnings for first quarter 2003 were $59.1 million,  compared to $54.3
million for the same  period in 2002.  This  increase  was largely the result of
improved loss ratios within the group medical,  life,  disability,  dental,  and
vision businesses.

Operating  revenues  were $1,012.3  million for the quarter,  compared to $978.5
million for the same period in 2002, largely as a result of increases within the
group medical and disability  operations.  As expected,  operating revenues were
relatively  flat in the Life  business,  as the company  has  shifted  marketing
emphasis in recent years from  traditional  premium-based  products to fee-based
universal  life  and  variable  universal  life  products.   Unlike  traditional
premium-based  products,  universal life and variable  universal life premium is
not reported as GAAP revenue.

MORTGAGE BANKING

Operating earnings for the first quarter 2003 were $52.3 million compared to
$26.5 million for the same period in 2002.  Production earnings during the first
quarter  improved 310 percent to $109.6  million,  compared to $26.7 million for
the same period in 2002, due to increased  mortgage loan  production  volume and
increased margins.  Servicing generated a loss of $57.3 million during the first
quarter,  compared to a loss of $0.2  million  for the same period in 2002.  The
first quarter 2003 loss from servicing reflects: a $55.8 million loss from model
refinements  impacting the mortgage  servicing rights valuation;  a $9.0 million

                                       5
<PAGE>

loss from other  impairments of mortgage  servicing rights (net of hedges);  and
$7.5 million of earnings from servicing operations.

Mortgage loan production was $15.5 billion in the first quarter 2003 compared to
$10.0  billion in the year  earlier  period.  At $113.3  billion as of March 31,
2003, the servicing  portfolio also continued to grow at a solid pace during the
quarter,  up $5.6 billion from December 31, 2002, and up $24.3 billion  compared
to March 31, 2002.

Operating  revenues  increased  94 percent to $404.5  million  for the  quarter,
compared to $208.7  million for the same  period last year.  Production  related
revenues  increased  $159.3  million,  or 196 percent,  and  servicing  revenues
increased $36.5 million, or 29 percent, from the same quarter a year
ago.

CORPORATE AND OTHER

Operating losses for first quarter 2003 were $5.0 million, compared to operating
earnings of $0.3 million for the same period in 2002.  The decline was primarily
the result of lower investment yields in first quarter 2003 compared to the same
period a year ago.

FORWARD LOOKING AND CAUTIONARY STATEMENTS

This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  These statements are
based  on  a  number  of  assumptions  concerning  future  conditions  that  may
ultimately  prove to be  inaccurate.  Future  events  and their  effects  on the
company may not be those  anticipated,  and actual results may differ materially
from the results  anticipated in these  forward-looking  statements.  The risks,
uncertainties  and  factors  that could  cause or  contribute  to such  material
differences  are discussed in the  company's  annual report on Form 10-K for the
year ended  December  31,  2002 filed by the  company  with the  Securities  and
Exchange Commission.  These risks and uncertainties include, without limitation:
competitive  factors;  volatility  of  financial  markets;  decrease in ratings;
interest  rate changes;  inability to attract and retain sales  representatives;
international  business risks; foreign currency exchange rate fluctuations;  and
investment portfolio risks.

OUTLOOK FOR SECOND QUARTER AND FULL YEAR 2003

Based on estimated net realized  capital  losses ranging from $40 to $60 million
after-tax  in the second  quarter  and of $170  million  for 2003,  the  company
expects  second quarter 2003 net income to range from $0.37 to $0.47 per diluted
share and 2003 net income to range from $1.73 to $1.88 per  diluted  share.  The
company  expects second  quarter 2003 operating  earnings to range from $0.56 to
$0.59 per diluted share and 2003 operating earnings to range from $2.25 to $2.40
per diluted  share.  These  estimates  include the impact of expensing  employee
stock options and the employee  stock purchase plan of  approximately  4 cents a
share in 2003 and additional pension benefit expense of approximately 11 cents a
share in 2003. These  expectations are based on certain  assumptions,  including
domestic equity market performance improvement,  from March 31, 2003, of roughly
two percent per quarter for the remainder of the year.

SHARE REPURCHASES

On November 26, 2002, the board of directors  authorized a repurchase program of
up to $300.0 million of our outstanding common stock. During first quarter 2003,
we repurchased  approximately  6.5 million shares for $184 million at an average
price per share repurchased of $28.17.

                                       6
<PAGE>

STOCK OPTIONS

As communicated in the third quarter 2002 earnings release,  The Principal began
expensing   employee  stock  options  and  the  employee  stock  purchase  plan,
retroactive  to January 1, 2002.  This resulted in an after-tax  expense of $2.6
million for the three months ended March 31, 2003, with no corresponding expense
for the first quarter 2002.

EARNINGS CONFERENCE CALL

At 9:00 A.M. (CST) tomorrow,  Chairman,  President and CEO J. Barry Griswell and
Executive  Vice  President  and CFO Mike Gersie will lead a discussion  during a
live  conference  call.  Parties  interested in listening to the conference call
live may access the call by  accessing  the webcast on the  Principal  Financial
Group Investor Relations (IR) website (www.principal.com/investor) or by dialing
(800)   374-1609  (US  callers)  or  (706)  643-7701   (International   callers)
approximately  10  minutes  prior to the start of the call.  To access the call,
leader name is Tom Graf. Listeners can access an audio replay of the call on the
IR  website,  or by  calling  (800)  642-1687  (US  callers)  or (706)  645-9291
(International  callers).  The access  code  needed  for the replay is  9489438.
Replays will be available  through May 13, 2003.  The  financial  supplement  is
currently available on our website and will be referred to during the conference
call.

ABOUT THE PRINCIPAL FINANCIAL GROUP

The Principal  Financial  Group(R) (The Principal  (R))2 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 mortgage  banking  through its diverse family of financial
services  companies.  More employers  choose the Principal  Financial  Group for
their 401(k) plans than any other bank, mutual fund, or insurance company in the
United States3.  A member of the Fortune 500, the Principal  Financial Group has
$116.3 billion in assets under  management4 and serves some 13 million customers
worldwide from offices in Asia, Australia,  Europe, Latin America and the United
States. Principal Financial Group, Inc. is traded on the New York Stock Exchange
under the ticker symbol PFG. For more information, visit WWW.PRINCIPAL.COM.

                                      # # #


                                       7
<PAGE>


         SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS



<TABLE>
<CAPTION>
                                                             OPERATING EARNINGS* (LOSS) IN MILLIONS
---------------------------------------------------- -------------------------------------------------------------
                                                                         THREE MONTHS ENDED,
                                                     -------------------------------------------------------------
<S>                                                        <C>                           <C>
                   SEGMENT                                     3/31/03                        3/31/02
---------------------------------------------------- ----------------------------- -------------------------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION        $     97.5                    $     100.2
---------------------------------------------------- ----------------------------- -------------------------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION               6.6                            1.2
    ------------------------------------------------ ----------------------------- -------------------------------
                          LIFE AND HEALTH INSURANCE              59.1                           54.3
---------------------------------------------------- ----------------------------- -------------------------------
                                   MORTGAGE BANKING              52.3                           26.5
---------------------------------------------------- ----------------------------- -------------------------------
                                CORPORATE AND OTHER              (5.0)                           0.3
---------------------------------------------------- ----------------------------- -------------------------------
       OPERATING EARNINGS (NET INCOME EXCLUDING NET
                        REALIZED/UNREALIZED CAPITAL
                     GAINS (LOSSES) AS ADJUSTED AND
                       OTHER AFTER-TAX ADJUSTMENTS)             210.5                          182.5
---------------------------------------------------- ----------------------------- -------------------------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED             (54.1)                          63.2
---------------------------------------------------- ----------------------------- -------------------------------
                        OTHER AFTER-TAX ADJUSTMENTS              (0.7)                         (280.6)
---------------------------------------------------- ----------------------------- -------------------------------
                                NET INCOME (LOSS)**        $    155.7                    $     (34.9)
---------------------------------------------------- ----------------------------- -------------------------------
------------------------------------------------------------------------------------------------------------------
                                                                          PER DILUTED SHARE
                                                                          THREE MONTHS ENDED,
---------------------------------------------------- ----------------------------- -------------------------------
                                                               3/31/03                        3/31/02
---------------------------------------------------- ----------------------------- -------------------------------
       OPERATING EARNINGS (NET INCOME EXCLUDING NET
                        REALIZED/UNREALIZED CAPITAL
                     GAINS (LOSSES) AS ADJUSTED AND
                       OTHER AFTER-TAX ADJUSTMENTS)        $      0.63                   $       0.51
---------------------------------------------------- ----------------------------- -------------------------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED              (0.16)                          0.18
---------------------------------------------------- ----------------------------- -------------------------------
                        OTHER AFTER-TAX ADJUSTMENTS               -                             (0.79)
---------------------------------------------------- ----------------------------- -------------------------------
                                  NET INCOME (LOSS)        $      0.47                   $      (0.10)
---------------------------------------------------- ----------------------------- -------------------------------
       WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING              331.7                          360.7
                                                     ----------------------------- -------------------------------
</TABLE>

*OPERATING EARNINGS VERSUS U.S. GAAP (GAAP) NET INCOME

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

**  Net  income  for  the  three  months  ended  March  31,  2003  reflects  net
realized/unrealized  capital  losses  of $54.1  million,  which  includes  $52.7
million  in  credit  losses,  as well  as  $(0.7)  million  in  other  after-tax
adjustments  from  discontinued  operations.  The net loss for the three  months
ended March 31, 2002  reflects net  realized/unrealized  capital  gains of $63.2
million, primarily made up of $114.5 million in after tax gains from the sale of
Coventry stock,  partially offset by credit losses of $44.3 million,  as well as
$(280.6)  million  in other  after-tax  adjustments,  primarily  reflecting  the
$(280.9) million impact of SFAS 142 implementation.

                                       8
<PAGE>

<TABLE>
<CAPTION>
                         PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)
---------------------------------------------------------------------------------------------------------

                                                        -------------------------------------------------
                                                                      THREE MONTHS ENDED,
                                                        -------------------------------------------------
                                                                 3/31/03                 3/31/02
                                                        -------------------------------------------------

<S>                                                               <C>                      <C>
Premiums and other considerations                           $     905.5               $    885.7
Fees and other revenues                                           632.0                    432.9
Net investment income                                             836.0                    811.1
Net realized/unrealized capital gains (losses)                    (76.7)                   98.1
                                                        -------------------------------------------------
TOTAL REVENUES                                                  2,296.8                  2,227.8

Benefits, claims and settlement expenses                        1,195.2                  1,203.2
Dividends to policyholders                                         80.1                     82.4
Operating expenses                                                799.3                    592.2
                                                        -------------------------------------------------
TOTAL EXPENSES                                                  2,074.6                  1,877.8

Income from continuing operations before income
taxes                                                             222.2                    350.0
Income taxes                                                       65.8                    106.3
                                                        -------------------------------------------------
Income from continuing operations, net of taxes                   156.4                    243.7

Income (loss) from discontinued operations, net of
Taxes                                                              (0.7)                     2.3
                                                        -------------------------------------------------
Income before cumulative effect of accounting change              155.7                    246.0

Cumulative effect of accounting change, net of taxes                -                     (280.9)
                                                        -------------------------------------------------
NET INCOME (LOSS)                                           $     155.7               $    (34.9)

Less:
Net realized/unrealized capital gains (losses), as
adjusted                                                          (54.1)                    63.2
Other after-tax adjustments                                        (0.7)                  (280.6)
                                                        -------------------------------------------------
OPERATING EARNINGS                                          $     210.5               $    182.5
                                                        =================================================

BALANCE SHEET STATISTICS
                                                                3/31/03                 3/31/02
                                                                -------                ---------
Total assets (in billions)                                  $      91.8               $     88.8
Total equity (in millions)                                  $   6,836.8               $    598.0
Total equity excluding accumulated other
comprehensive income (in millions)                          $   5,995.3               $  6,625.6
End of period shares outstanding (in millions)                    328.0                    359.7
Book value per share                                        $      20.84              $     18.34
Book value per share excluding accumulated other            $      18.28              $     18.42
comprehensive income

</TABLE>
                                       9
<PAGE>


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

<TABLE>
<CAPTION>
                                                                      THREE MONTHS ENDED,
                                                        -------------------------------------------------
                                                                 3/31/03                 3/31/02
                                                        -------------------------------------------------
<S>                                                           <C>                   <C>
DILUTED EARNINGS PER SHARE:
Operating Earnings                                            $       0.63           $       0.51
Net realized/unrealized capital gains/(losses)                       (0.16)                  0.18
Other after-tax adjustments                                           -                     (0.79)
                                                        -------------------------------------------------
Net income                                                    $       0.47           $      (0.10)
                                                        =================================================


BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income               $      18.28           $      18.42
Net unrealized capital gains/(losses)                                 3.16                   0.65
Foreign currency translation                                         (0.60)                 (0.73)
                                                        -------------------------------------------------
Book value including other comprehensive income               $      20.84           $      18.34
                                                        =================================================

OPERATING REVENUES:
U.S. Asset Management and Accumulation                        $     886.0            $     862.1
International Asset Management and Accumulation                      76.8                   75.9
Life and Health Insurance                                         1,012.3                  978.5
Mortgage Banking                                                    404.5                  208.7
Corporate and Other                                                  (0.7)                  10.5
                                                        -------------------------------------------------
Total operating revenues                                          2,378.9                2,135.7
Net realized/unrealized capital gains (losses)                      (82.1)                  92.1
                                                        -------------------------------------------------
Total GAAP revenues                                           $   2,296.8            $   2,227.8
                                                        =================================================

OPERATING EARNINGS:
U.S. Asset Management and Accumulation                        $      97.5            $     100.2
International Asset Management and Accumulation                       6.6                    1.2
Life and Health Insurance                                            59.1                   54.3
Mortgage Banking                                                     52.3                   26.5
Corporate and Other                                                  (5.0)                   0.3
                                                        -------------------------------------------------
Total operating earnings                                            210.5                  182.5
Net realized/unrealized capital gains (losses)                      (54.1)                  63.2
Other after-tax adjustments                                          (0.7)                (280.6)
                                                        -------------------------------------------------
Net income                                                    $     155.7            $     (34.9)
                                                        =================================================
</TABLE>

                                       10
<PAGE>


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

<TABLE>
<CAPTION>
                                                                        THREE MONTHS ENDED,
                                                        -------------------------------------------------
                                                                 3/31/03                 3/31/02
                                                        -------------------------------------------------
<S>                                                           <C>                    <C>
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Total net realized/unrealized capital gains (losses)          $     (54.1)           $      63.2
Add:
Amortization of DPAC                                                 (3.7)                 (10.9)
Capital gains distributed                                            (1.6)                   -
Tax impacts                                                         (22.8)                  39.8
Minority interest capital gains                                       0.1                    -
Less:
Unearned front-end fee income                                         4.4                    2.6
Certain market value adjustments to fee revenue                      (9.8)                  (8.6)
                                                        -------------------------------------------------
GAAP net realized/unrealized capital gains (losses)           $     (76.7)           $      98.1
                                                        =================================================

OTHER AFTER TAX ADJUSTMENTS:
Demutualization expenses                                      $       -              $      (2.0)
SFAS 142 implementation                                               -                   (280.9)
Discontinued operations                                              (0.7)                   2.3
                                                        -------------------------------------------------
Total other after-tax adjustments                             $      (0.7)           $    (280.6)
                                                        =================================================
</TABLE>

                                       11
<PAGE>

--------
1 We use a number of non-GAAP  financial  measures that management  believes are
useful to  investors  because they  illustrate  the  performance  of our normal,
ongoing  operations,  which is important in  understanding  and  evaluating  our
financial  condition  and  results  of  operations.   While  such  measures  are
consistent with measures utilized by investors to evaluate performance, they are
not a substitute for U.S. GAAP financial measures.  Therefore,  we have provided
reconciliations  of the  non-GAAP  financial  measures,  including  consolidated
operating  earnings and consolidated  operating  revenues,  to the most directly
comparable U.S. GAAP financial measure at the end of the release. We adjust U.S.
GAAP financial  measures for items not directly  related to ongoing  operations.
However, it is possible that these adjusting items have occurred in the past and
could recur in the future.  Management also uses non-GAAP financial measures for
goal   setting,   determining   employee  and  senior   management   awards  and
compensation,  and evaluating  performance on a basis comparable to that used by
securities analysts.

2 "The Principal Financial Group" and "The Principal" are registered  trademarks
referring to Principal Financial Group, Inc.

3 CFO Magazine, April/May 2002, based on total plans served in 2001 by insurance
companies, banks and investment firms.

4 As of March 31, 2003
[{"type": "8-K", "sequence": "1", "filename": "final8k2003.txt", "description": "8K 2003", "secsgml_size_bytes": 36674}]
{"company-data": {"conformed-name": "PRINCIPAL FINANCIAL GROUP INC", "cik": "0001126328", "assigned-sic": "6321", "irs-number": "421520346", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-16725", "film-number": "03683281"}, "business-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392", "phone": "5152475111"}}
SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 8-K

                                 CURRENT REPORT

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

                           Date of Report: May 5, 2003
                        (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)

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

                               ------------------
ITEM 7.  EXHIBITS.

99.1    First Quarter 2003 Earnings Release.

ITEM 12.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On May 5, 2003,  Principal Financial Group, Inc. publicly announced  information
regarding  its results of  operations  and  financial  condition for the quarter
ended March 31,  2003.  The text of the  announcement  is  included  herewith as
Exhibit 99.1.

                                    SIGNATURE

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

                                PRINCIPAL FINANCIAL GROUP, INC.

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

Date:  May 5, 2003

                                       2
Exhibit 99.1

RELEASE: On receipt                                  May 5, 2003
MEDIA CONTACT: Jeff Rader, 515-247-7883, rader.jeff@principal.com
INVESTOR RELATIONS
CONTACT: Tom Graf, 515-235-9500, investor-relations@principal.com

          PRINCIPAL FINANCIAL GROUP, INC. REPORTS FIRST QUARTER RESULTS

Des Moines,  IA (May 5, 2003) -- Principal  Financial  Group,  Inc. (NYSE:  PFG)
today announced  quarterly net income for the three months ended March 31, 2003,
of $155.7  million,  or $0.47 per diluted share  compared to a net loss of $34.9
million,  or $0.10 per diluted  share for the three months ended March 31, 2002.
The company  reported  record  operating  earnings  of $210.5  million for first
quarter 2003, up 15 percent  compared to $182.5  million for first quarter 2002.
Operating earnings per diluted share for first quarter 2003 increased 24 percent
to a record  $0.63  compared  to $0.51 for the same  period  in 2002.  Operating
revenues  for first  quarter  2003  increased  11  percent to  $2,378.9  million
compared to the same period last year,  reflecting  increases in all four of the
company's operating segments.1

"The Principal's  record first quarter  performance was particularly  strong, in
light of a 26 percent  drop in the S&P over the last 12  months,"  said J. Barry
Griswell, chairman,  president, and chief executive officer. "Operating earnings
per share improved 24 percent, reflecting strong execution of our strategy and a
continued focus on fundamentals - outstanding  customer  service,  comprehensive
employee benefit  solutions,  pricing  discipline,  and effective  management of
capital and expenses."

"Each of our  operating  segments  made a strong  contribution  to first quarter
results.  Mortgage  banking was the  largest  contributor,  as segment  earnings
nearly doubled," said Griswell.  "But we also experienced  double-digit earnings
growth  from   several   other   businesses   including   pension  full  service
accumulation,   Principal   International,   health   insurance  and  disability
insurance.

"Our  dedication  to quality has helped us build a  tremendous  reputation  with
small and medium sized  businesses and their  employees,  an important driver of
our continued  success," said  Griswell.  "Our  commitment was recognized  again
during the quarter,  as we received the top client satisfaction rating in Boston
Research Group's 401(k) plan sponsor satisfaction study.

"This strong customer focus,  combined with our unrivaled  distribution network,
continues to fuel extraordinary sales growth.  Pension full service accumulation
sales reached a record $2.5 billion during the quarter,  up 101 percent compared
to a year ago. We also  generated  $288 million in individual  annuity sales and
$423 million in mutual fund sales,  putting us on track for record 2003 sales of
each of these key retirement and investment products," said Griswell.

                                       3
"Importantly,  our sales  momentum over the past several  quarters is generating
outstanding  deposit growth.  In the first quarter,  deposits for our U.S. asset
accumulation businesses increased 29 percent to a record $6.2 billion, including
full-service  accumulation  deposits of $3.6 billion," said Griswell.  "Deposits
are an  important  leading  indicator  of  earnings  growth,  and our success in
delivering  deposit growth has clearly helped offset the negative impact of poor
equity markets on our results."

Assets under management were $116.3 billion as of March 31, 2003, an increase of
$5.2  billion,  or 5%,  compared to December  31,  2002,  and a decrease of $3.9
billion, or 3%, compared to March 31, 2002.  Excluding the sale of substantially
all of BT Financial Group, assets under management have increased $13.8 billion,
or 13%, from March 31, 2002.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION

Segment operating  earnings for first quarter 2003 were $97.5 million,  compared
to $100.2  million for the same period in 2002. The decline was primarily due to
a $4.3 million  decrease from  Principal  Global  Investors,  reflecting  higher
incentive compensation accruals due to continued improvement in Principal Global
Investors'  investment  performance,  and  reflecting  the  expansion  of  asset
management  offshore  operations.  While operating earnings for the segment were
down  slightly,  the pension  business  generated  earnings of $81.9 million for
first  quarter  2003,  a 7  percent  increase  over the same  period a year ago,
despite  the  difficult  equity  market  environment  over the past  year.  This
reflects strong sales and excellent  retention,  which contributed to strong net
cash flow from pension full-service  accumulation operations of $1.8 billion for
the quarter.

Operating revenues for the first quarter were $886.0 million, compared to $862.1
million  for the same  period  in 2002.  Increased  revenues  in the  Individual
Annuity and Principal Global Investors  operations were the main contributors to
the increase.

Segment assets under management continued to increase, reaching $97.5 billion as
of March 31,  2003,  compared to $92.3  billion as of  December  31,  2002,  and
compared to $83.2 billion as of March 31, 2002.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Operating  earnings for the quarter were $6.6 million,  compared to $1.2 million
for the same  period in 2002.  Principal  International,  which  consists of the
company's  international  businesses  outside the U.S. and Australia,  had first
quarter  operating  earnings of $6.6  million,  compared to $2.0 million for the
same  period  in  2002.  Principal   International's  earnings  growth  reflects
increased earnings from its Chilean operations, and from its Mexican pension
business  reflecting  strong  results from the second  quarter 2002 Zurich AFORE
acquisition.

                                       4
As a result of the sale of substantially all of BT Financial Group, which closed
on October 31, 2002,  the  operating  earnings of BT reflect only the  corporate
overhead  expenses  allocated to BT. This  treatment is pursuant to Statement of
Accounting  Standard  No.  144,  ACCOUNTING  FOR THE  IMPAIRMENT  OR DISPOSAL OF
LONG-LIVED  ASSETS  ("SFAS 144"),  whereby all revenues and expenses  (excluding
corporate  overhead  allocated to the  discontinued  operations) are reported as
discontinued operations.  Therefore, first quarter 2002 operating results for BT
reflect  three months of allocated  expenses with no  corresponding  activity in
2003.

Operating  revenues for the segment were $76.8  million for first  quarter 2003,
compared to $75.9 million for the same period last year.

Assets under  management for the segment were $4.9 billion as of March 31, 2003,
compared to $4.4 billion as of December 31, 2002,  and compared to $24.6 billion
as of March 31,  2002.  A $20.7  billion  decrease  from first  quarter  2002 is
attributable  to the sale of  substantially  all of BT Financial  Group.  Assets
under  management for Principal  International  increased 26 percent compared to
March 31, 2002.

LIFE AND HEALTH INSURANCE

Operating earnings for first quarter 2003 were $59.1 million,  compared to $54.3
million for the same  period in 2002.  This  increase  was largely the result of
improved loss ratios within the group medical,  life,  disability,  dental,  and
vision businesses.

Operating  revenues  were $1,012.3  million for the quarter,  compared to $978.5
million for the same period in 2002, largely as a result of increases within the
group medical and disability  operations.  As expected,  operating revenues were
relatively  flat in the Life  business,  as the company  has  shifted  marketing
emphasis in recent years from  traditional  premium-based  products to fee-based
universal  life  and  variable  universal  life  products.   Unlike  traditional
premium-based  products,  universal life and variable  universal life premium is
not reported as GAAP revenue.

MORTGAGE BANKING

Operating earnings for the first quarter 2003 were $52.3 million compared to
$26.5 million for the same period in 2002.  Production earnings during the first
quarter  improved 310 percent to $109.6  million,  compared to $26.7 million for
the same period in 2002, due to increased  mortgage loan  production  volume and
increased margins.  Servicing generated a loss of $57.3 million during the first
quarter,  compared to a loss of $0.2  million  for the same period in 2002.  The
first quarter 2003 loss from servicing reflects: a $55.8 million loss from model
refinements  impacting the mortgage  servicing rights valuation;  a $9.0 million

                                       5
loss from other  impairments of mortgage  servicing rights (net of hedges);  and
$7.5 million of earnings from servicing operations.

Mortgage loan production was $15.5 billion in the first quarter 2003 compared to
$10.0  billion in the year  earlier  period.  At $113.3  billion as of March 31,
2003, the servicing  portfolio also continued to grow at a solid pace during the
quarter,  up $5.6 billion from December 31, 2002, and up $24.3 billion  compared
to March 31, 2002.

Operating  revenues  increased  94 percent to $404.5  million  for the  quarter,
compared to $208.7  million for the same  period last year.  Production  related
revenues  increased  $159.3  million,  or 196 percent,  and  servicing  revenues
increased $36.5 million, or 29 percent, from the same quarter a year
ago.

CORPORATE AND OTHER

Operating losses for first quarter 2003 were $5.0 million, compared to operating
earnings of $0.3 million for the same period in 2002.  The decline was primarily
the result of lower investment yields in first quarter 2003 compared to the same
period a year ago.

FORWARD LOOKING AND CAUTIONARY STATEMENTS

This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  These statements are
based  on  a  number  of  assumptions  concerning  future  conditions  that  may
ultimately  prove to be  inaccurate.  Future  events  and their  effects  on the
company may not be those  anticipated,  and actual results may differ materially
from the results  anticipated in these  forward-looking  statements.  The risks,
uncertainties  and  factors  that could  cause or  contribute  to such  material
differences  are discussed in the  company's  annual report on Form 10-K for the
year ended  December  31,  2002 filed by the  company  with the  Securities  and
Exchange Commission.  These risks and uncertainties include, without limitation:
competitive  factors;  volatility  of  financial  markets;  decrease in ratings;
interest  rate changes;  inability to attract and retain sales  representatives;
international  business risks; foreign currency exchange rate fluctuations;  and
investment portfolio risks.

OUTLOOK FOR SECOND QUARTER AND FULL YEAR 2003

Based on estimated net realized  capital  losses ranging from $40 to $60 million
after-tax  in the second  quarter  and of $170  million  for 2003,  the  company
expects  second quarter 2003 net income to range from $0.37 to $0.47 per diluted
share and 2003 net income to range from $1.73 to $1.88 per  diluted  share.  The
company  expects second  quarter 2003 operating  earnings to range from $0.56 to
$0.59 per diluted share and 2003 operating earnings to range from $2.25 to $2.40
per diluted  share.  These  estimates  include the impact of expensing  employee
stock options and the employee  stock purchase plan of  approximately  4 cents a
share in 2003 and additional pension benefit expense of approximately 11 cents a
share in 2003. These  expectations are based on certain  assumptions,  including
domestic equity market performance improvement,  from March 31, 2003, of roughly
two percent per quarter for the remainder of the year.

SHARE REPURCHASES

On November 26, 2002, the board of directors  authorized a repurchase program of
up to $300.0 million of our outstanding common stock. During first quarter 2003,
we repurchased  approximately  6.5 million shares for $184 million at an average
price per share repurchased of $28.17.

                                       6
STOCK OPTIONS

As communicated in the third quarter 2002 earnings release,  The Principal began
expensing   employee  stock  options  and  the  employee  stock  purchase  plan,
retroactive  to January 1, 2002.  This resulted in an after-tax  expense of $2.6
million for the three months ended March 31, 2003, with no corresponding expense
for the first quarter 2002.

EARNINGS CONFERENCE CALL

At 9:00 A.M. (CST) tomorrow,  Chairman,  President and CEO J. Barry Griswell and
Executive  Vice  President  and CFO Mike Gersie will lead a discussion  during a
live  conference  call.  Parties  interested in listening to the conference call
live may access the call by  accessing  the webcast on the  Principal  Financial
Group Investor Relations (IR) website (www.principal.com/investor) or by dialing
(800)   374-1609  (US  callers)  or  (706)  643-7701   (International   callers)
approximately  10  minutes  prior to the start of the call.  To access the call,
leader name is Tom Graf. Listeners can access an audio replay of the call on the
IR  website,  or by  calling  (800)  642-1687  (US  callers)  or (706)  645-9291
(International  callers).  The access  code  needed  for the replay is  9489438.
Replays will be available  through May 13, 2003.  The  financial  supplement  is
currently available on our website and will be referred to during the conference
call.

ABOUT THE PRINCIPAL FINANCIAL GROUP

The Principal  Financial  Group(R) (The Principal  (R))2 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 mortgage  banking  through its diverse family of financial
services  companies.  More employers  choose the Principal  Financial  Group for
their 401(k) plans than any other bank, mutual fund, or insurance company in the
United States3.  A member of the Fortune 500, the Principal  Financial Group has
$116.3 billion in assets under  management4 and serves some 13 million customers
worldwide from offices in Asia, Australia,  Europe, Latin America and the United
States. Principal Financial Group, Inc. is traded on the New York Stock Exchange
under the ticker symbol PFG. For more information, visit WWW.PRINCIPAL.COM.

                                      # # #

                                       7
SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS
OPERATING EARNINGS* (LOSS) IN MILLIONS
---------------------------------------------------- -------------------------------------------------------------
                                                                         THREE MONTHS ENDED,
                                                     -------------------------------------------------------------
SEGMENT                                     3/31/03                        3/31/02
---------------------------------------------------- ----------------------------- -------------------------------
             U.S. ASSET MANAGEMENT AND ACCUMULATION        $     97.5                    $     100.2
---------------------------------------------------- ----------------------------- -------------------------------
    INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION               6.6                            1.2
    ------------------------------------------------ ----------------------------- -------------------------------
                          LIFE AND HEALTH INSURANCE              59.1                           54.3
---------------------------------------------------- ----------------------------- -------------------------------
                                   MORTGAGE BANKING              52.3                           26.5
---------------------------------------------------- ----------------------------- -------------------------------
                                CORPORATE AND OTHER              (5.0)                           0.3
---------------------------------------------------- ----------------------------- -------------------------------
       OPERATING EARNINGS (NET INCOME EXCLUDING NET
                        REALIZED/UNREALIZED CAPITAL
                     GAINS (LOSSES) AS ADJUSTED AND
                       OTHER AFTER-TAX ADJUSTMENTS)             210.5                          182.5
---------------------------------------------------- ----------------------------- -------------------------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED             (54.1)                          63.2
---------------------------------------------------- ----------------------------- -------------------------------
                        OTHER AFTER-TAX ADJUSTMENTS              (0.7)                         (280.6)
---------------------------------------------------- ----------------------------- -------------------------------
                                NET INCOME (LOSS)**        $    155.7                    $     (34.9)
---------------------------------------------------- ----------------------------- -------------------------------
------------------------------------------------------------------------------------------------------------------
                                                                          PER DILUTED SHARE
                                                                          THREE MONTHS ENDED,
---------------------------------------------------- ----------------------------- -------------------------------
                                                               3/31/03                        3/31/02
---------------------------------------------------- ----------------------------- -------------------------------
       OPERATING EARNINGS (NET INCOME EXCLUDING NET
                        REALIZED/UNREALIZED CAPITAL
                     GAINS (LOSSES) AS ADJUSTED AND
                       OTHER AFTER-TAX ADJUSTMENTS)        $      0.63                   $       0.51
---------------------------------------------------- ----------------------------- -------------------------------
                    NET REALIZED/UNREALIZED CAPITAL
                        GAINS (LOSSES), AS ADJUSTED              (0.16)                          0.18
---------------------------------------------------- ----------------------------- -------------------------------
                        OTHER AFTER-TAX ADJUSTMENTS               -                             (0.79)
---------------------------------------------------- ----------------------------- -------------------------------
                                  NET INCOME (LOSS)        $      0.47                   $      (0.10)
---------------------------------------------------- ----------------------------- -------------------------------
       WEIGHTED-AVERAGE DILUTED SHARES OUTSTANDING              331.7                          360.7
                                                     ----------------------------- -------------------------------
*OPERATING EARNINGS VERSUS U.S. GAAP (GAAP) NET INCOME

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

**  Net  income  for  the  three  months  ended  March  31,  2003  reflects  net
realized/unrealized  capital  losses  of $54.1  million,  which  includes  $52.7
million  in  credit  losses,  as well  as  $(0.7)  million  in  other  after-tax
adjustments  from  discontinued  operations.  The net loss for the three  months
ended March 31, 2002  reflects net  realized/unrealized  capital  gains of $63.2
million, primarily made up of $114.5 million in after tax gains from the sale of
Coventry stock,  partially offset by credit losses of $44.3 million,  as well as
$(280.6)  million  in other  after-tax  adjustments,  primarily  reflecting  the
$(280.9) million impact of SFAS 142 implementation.

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

                                                        -------------------------------------------------
                                                                      THREE MONTHS ENDED,
                                                        -------------------------------------------------
                                                                 3/31/03                 3/31/02
                                                        -------------------------------------------------
Premiums and other considerations                           $     905.5               $    885.7
Fees and other revenues                                           632.0                    432.9
Net investment income                                             836.0                    811.1
Net realized/unrealized capital gains (losses)                    (76.7)                   98.1
                                                        -------------------------------------------------
TOTAL REVENUES                                                  2,296.8                  2,227.8

Benefits, claims and settlement expenses                        1,195.2                  1,203.2
Dividends to policyholders                                         80.1                     82.4
Operating expenses                                                799.3                    592.2
                                                        -------------------------------------------------
TOTAL EXPENSES                                                  2,074.6                  1,877.8

Income from continuing operations before income
taxes                                                             222.2                    350.0
Income taxes                                                       65.8                    106.3
                                                        -------------------------------------------------
Income from continuing operations, net of taxes                   156.4                    243.7

Income (loss) from discontinued operations, net of
Taxes                                                              (0.7)                     2.3
                                                        -------------------------------------------------
Income before cumulative effect of accounting change              155.7                    246.0

Cumulative effect of accounting change, net of taxes                -                     (280.9)
                                                        -------------------------------------------------
NET INCOME (LOSS)                                           $     155.7               $    (34.9)

Less:
Net realized/unrealized capital gains (losses), as
adjusted                                                          (54.1)                    63.2
Other after-tax adjustments                                        (0.7)                  (280.6)
                                                        -------------------------------------------------
OPERATING EARNINGS                                          $     210.5               $    182.5
                                                        =================================================

BALANCE SHEET STATISTICS
                                                                3/31/03                 3/31/02
                                                                -------                ---------
Total assets (in billions)                                  $      91.8               $     88.8
Total equity (in millions)                                  $   6,836.8               $    598.0
Total equity excluding accumulated other
comprehensive income (in millions)                          $   5,995.3               $  6,625.6
End of period shares outstanding (in millions)                    328.0                    359.7
Book value per share                                        $      20.84              $     18.34
Book value per share excluding accumulated other            $      18.28              $     18.42
comprehensive income
9
PRINCIPAL FINANCIAL GROUP, INC.
           RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
                       (IN MILLIONS, EXCEPT AS INDICATED)
THREE MONTHS ENDED,
                                                        -------------------------------------------------
                                                                 3/31/03                 3/31/02
                                                        -------------------------------------------------
DILUTED EARNINGS PER SHARE:
Operating Earnings                                            $       0.63           $       0.51
Net realized/unrealized capital gains/(losses)                       (0.16)                  0.18
Other after-tax adjustments                                           -                     (0.79)
                                                        -------------------------------------------------
Net income                                                    $       0.47           $      (0.10)
                                                        =================================================

BOOK VALUE EXCLUDING OTHER COMPREHENSIVE INCOME:
Book value excluding other comprehensive income               $      18.28           $      18.42
Net unrealized capital gains/(losses)                                 3.16                   0.65
Foreign currency translation                                         (0.60)                 (0.73)
                                                        -------------------------------------------------
Book value including other comprehensive income               $      20.84           $      18.34
                                                        =================================================

OPERATING REVENUES:
U.S. Asset Management and Accumulation                        $     886.0            $     862.1
International Asset Management and Accumulation                      76.8                   75.9
Life and Health Insurance                                         1,012.3                  978.5
Mortgage Banking                                                    404.5                  208.7
Corporate and Other                                                  (0.7)                  10.5
                                                        -------------------------------------------------
Total operating revenues                                          2,378.9                2,135.7
Net realized/unrealized capital gains (losses)                      (82.1)                  92.1
                                                        -------------------------------------------------
Total GAAP revenues                                           $   2,296.8            $   2,227.8
                                                        =================================================

OPERATING EARNINGS:
U.S. Asset Management and Accumulation                        $      97.5            $     100.2
International Asset Management and Accumulation                       6.6                    1.2
Life and Health Insurance                                            59.1                   54.3
Mortgage Banking                                                     52.3                   26.5
Corporate and Other                                                  (5.0)                   0.3
                                                        -------------------------------------------------
Total operating earnings                                            210.5                  182.5
Net realized/unrealized capital gains (losses)                      (54.1)                  63.2
Other after-tax adjustments                                          (0.7)                (280.6)
                                                        -------------------------------------------------
Net income                                                    $     155.7            $     (34.9)
                                                        =================================================
10
PRINCIPAL FINANCIAL GROUP, INC.
     RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP (CONTINUED)
                       (IN MILLIONS, EXCEPT AS INDICATED)
THREE MONTHS ENDED,
                                                        -------------------------------------------------
                                                                 3/31/03                 3/31/02
                                                        -------------------------------------------------
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Total net realized/unrealized capital gains (losses)          $     (54.1)           $      63.2
Add:
Amortization of DPAC                                                 (3.7)                 (10.9)
Capital gains distributed                                            (1.6)                   -
Tax impacts                                                         (22.8)                  39.8
Minority interest capital gains                                       0.1                    -
Less:
Unearned front-end fee income                                         4.4                    2.6
Certain market value adjustments to fee revenue                      (9.8)                  (8.6)
                                                        -------------------------------------------------
GAAP net realized/unrealized capital gains (losses)           $     (76.7)           $      98.1
                                                        =================================================

OTHER AFTER TAX ADJUSTMENTS:
Demutualization expenses                                      $       -              $      (2.0)
SFAS 142 implementation                                               -                   (280.9)
Discontinued operations                                              (0.7)                   2.3
                                                        -------------------------------------------------
Total other after-tax adjustments                             $      (0.7)           $    (280.6)
                                                        =================================================
11
--------
1 We use a number of non-GAAP  financial  measures that management  believes are
useful to  investors  because they  illustrate  the  performance  of our normal,
ongoing  operations,  which is important in  understanding  and  evaluating  our
financial  condition  and  results  of  operations.   While  such  measures  are
consistent with measures utilized by investors to evaluate performance, they are
not a substitute for U.S. GAAP financial measures.  Therefore,  we have provided
reconciliations  of the  non-GAAP  financial  measures,  including  consolidated
operating  earnings and consolidated  operating  revenues,  to the most directly
comparable U.S. GAAP financial measure at the end of the release. We adjust U.S.
GAAP financial  measures for items not directly  related to ongoing  operations.
However, it is possible that these adjusting items have occurred in the past and
could recur in the future.  Management also uses non-GAAP financial measures for
goal   setting,   determining   employee  and  senior   management   awards  and
compensation,  and evaluating  performance on a basis comparable to that used by
securities analysts.

2 "The Principal Financial Group" and "The Principal" are registered  trademarks
referring to Principal Financial Group, Inc.

3 CFO Magazine, April/May 2002, based on total plans served in 2001 by insurance
companies, banks and investment firms.

4 As of March 31, 2003