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: OCTOBER 30, 2006
                        (Date of earliest event reported)



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


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


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

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

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

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

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



<PAGE>


ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On  October  30,  2006,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  September  30, 2006.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Third Quarter 2006 Earnings Release




                                    SIGNATURE

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


                                    PRINCIPAL FINANCIAL GROUP, INC.


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

Date:    October 31, 2006


                                       2
<PAGE>

                                                                     EXHIBIT 99


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


       PRINCIPAL FINANCIAL GROUP, INC. REPORTS THIRD QUARTER 2006 RESULTS

Des Moines, IA (October 30, 2006) - Principal  Financial Group, Inc. (NYSE: PFG)
today announced net income available to common stockholders for the three months
ended September 30, 2006, of $251.0 million, or $0.92 per diluted share compared
to $210.0  million,  or $0.74 per  diluted  share  for the  three  months  ended
September 30, 2005. The company  reported  operating  earnings of $254.7 million
for third  quarter  2006,  compared to $214.3  million for third  quarter  2005.
Operating  earnings  per diluted  share (EPS) for third  quarter 2006 were $0.94
compared  to $0.75 for the same  period in 2005.  Operating  revenues  for third
quarter 2006 were  $2,445.0  million  compared to $2,221.9  million for the same
period last  year.(1)

"We're  particularly  pleased, so close to the five year anniversary of our IPO,
to report record results, with all time highs for earnings per share,  operating
earnings  and assets under  management,"  said J. Barry  Griswell,  chairman and
chief  executive  officer.  "With  record or  near-record  earnings in the third
quarter for each of our three operating segments,  we continue to deliver on our
commitments  -  accelerating  growth in our U.S.  and  international  retirement
businesses,  creating a successful global asset manager,  and profitably growing
our life and health insurance  businesses."

"At $255 million, third quarter 2006 operating earnings improved $40 million, or
19 percent  from a year ago,  reflecting  record  performance  and double  digit
earnings  growth for Full  Service  Accumulation,  Mutual  Funds and  Individual
Annuities,  our three key retirement and investment  businesses," said Griswell.
"We also achieved  double digit earnings growth in Principal  Global  Investors,
Principal  International,  Bank and Trust Services, and our Health and Specialty
Benefits  divisions."

"Strong earnings growth in the quarter,  coupled with ongoing  effective capital
management,  drove  EPS up 25  percent  from a year  ago to a record  94  cents,
contributing to 19 percent EPS growth through nine months,  significantly  ahead
of our long-term  target" said  Griswell.  "Growth  across each of our operating
segments reflects  continued  enhancements to distribution and an expanded array
of value-added solutions. It also reflects an ongoing investment in technology -
to drive  efficient,  cost-effective  operations and  importantly,  to help meet
changing  customer needs and serve customers the way they want to be served.  On
this last point,  we were  extremely  proud to rank  number one in the  recently
released INFORMATIONWEEK 500 most innovative users of technology."


                                       3
<PAGE>


                 Additional highlights as of September 30, 2006

o    Record total company assets under management of $215.0 billion, an increase
     of $26.6 billion, or 14 percent compared to September 30, 2005.
o    Continued  strong  organic  sales  of  the  company's  key  retirement  and
     investment  products.  Through nine months: full service accumulation sales
     of $5.4  billion,  up 20 percent  (including  $1.4 million in third quarter
     2006);  mutual funds sales of $2.8 billion,  up 16 percent;  and individual
     annuities sales of $1.9 billion, up 24 percent.
o    Record  operating  revenues of $1.2  billion in third  quarter 2006 for the
     Life and Health Insurance  segment,  an eighth  consecutive record quarter,
     driven by record revenues from the Health and Specialty Benefits divisions.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
Segment operating earnings for third quarter 2006 were $157.4 million,  compared
to  $133.3  million  for the same  period  in 2005.  Full  service  accumulation
generated  record  earnings of $73.5 million,  a 19 percent  increase from third
quarter 2005 reflecting  increased fees from higher account values. Full service
accumulation account values were $85.1 billion as of September 30, 2006 compared
to $75.1 billion as of September 30, 2005.  Principal Global Investors generated
earnings of $23.8  million for the quarter,  a 32 percent  increase,  reflecting
management  fee growth in all lines.

Operating  revenues  for the third  quarter  increased  13 percent  to  $1,100.0
million  compared to $975.4  million  for the same  period in 2005,  as revenues
increased  solidly in all  businesses  within the segment.

Segment assets under management continued to increase,  reaching a record $182.1
billion as of  September  30,  2006,  up 15 percent  from  $159.0  billion as of
September 30, 2005.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Segment  operating  earnings for third quarter 2006 were a record $23.2 million,
compared  to $19.7  million  for the same  period in 2005.  Third  quarter  2006
earnings  included a net benefit of $5.2 million  related to tax  refinements in
Mexico.  Third  quarter 2005  earnings  included a $3.0  million  benefit due to
refinement of accrued revenues and a $1.0 million tax benefit.

Operating  revenues  were $169.2  million for third  quarter  2006,  compared to
$148.4  million for the same period last year,  driven by higher sales of single
premium annuities with life contingencies in Chile.

Assets  under  management  for the  segment  were a record  $17.8  billion as of
September 30, 2006, compared to $14.7 billion as of September 30, 2005.

LIFE AND HEALTH INSURANCE

Segment  operating  earnings for third quarter 2006 were a record $82.0 million,
compared to $65.4 million for the same period in 2005.  Health division earnings
increased $12.8 million to $27.8 million,  reflecting growth in the business,  a
return  to more  normal  loss  ratios,  and a $4.4  million  reserve  refinement
benefit.  Specialty  Benefits division earnings  increased $4.6 million to $23.0
million,  due to solid growth in all product lines,  and a $3.1 million  benefit

                                       4
<PAGE>

from a group long-term  disability reserve refinement.  Individual Life earnings
were  $31.2  million,  down  $0.8  million  from  the  year  ago  period,  which
experienced  favorable  death  claims.  Third  quarter 2006 also included a $4.5
million  benefit in the  individual  life  division  related to deferred  policy
acquisition cost unlocking.

Operating  revenues were $1,183.4 million,  an eighth consecutive record quarter
for the segment,  and an increase of seven percent from the same period in 2005.
Specialty  Benefits  revenues  increased 16 percent,  driven by strong sales and
steady  retention  in each  of the  Specialty  Benefits  product  lines.  Health
revenues  increased nine percent,  primarily due to a seven percent  increase in
insured medical covered members. Individual Life revenues decreased slightly, as
the company  continued  its shift in marketing  emphasis to fee-based  universal
life  (UL) and  variable  universal  life  (VUL)  products.  Unlike  traditional
premium-based products, UL and VUL deposits are not reported as GAAP revenue.

CORPORATE AND OTHER

Operating losses for third quarter 2006 were $7.9 million, compared to operating
losses of $4.1  million for the same period in 2005.  Results for third  quarter
2006 reflect a $3.1 million benefit for a refund of federal income tax interest.
Third quarter 2005 results reflect higher operating  earnings from joint venture
real estate sales activity.

FORWARD LOOKING AND CAUTIONARY STATEMENTS

This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  The company does not
undertake to update these statements, which are based on a number of assumptions
concerning future conditions that may ultimately prove to be inaccurate.  Future
events and their effects on the company may not be those anticipated, and actual
results  may  differ   materially   from  the  results   anticipated   in  these
forward-looking  statements.  The risks,  uncertainties  and factors  that could
cause or contribute to such material  differences are discussed in the company's
annual  report on Form 10-K for the year ended  December  31,  2005,  and in the
company's  quarterly  report on Form 10-Q for the quarter  ended June 30,  2006,
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.

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. Management also uses non-GAAP measures for goal setting, determining
employee  and  senior  management   awards  and  compensation,   and  evaluating
performance  on a basis  comparable  to that used by  investors  and  securities
analysts.

                                       5
<PAGE>

SHARE REPURCHASES

In May 2006,  the company  completed the $250 million share  repurchase  program
authorized by the Board in November 2005.  Under this program,  during the first
five months of the year, the company repurchased 5.1 million common shares for a
cost of $250 million.  Also in May 2006,  following the Board's share repurchase
authorization  of up to $500 million,  the company  entered into an  accelerated
common stock repurchase agreement with an investment bank. Under this agreement,
the company paid $500 million and received an initial  delivery of approximately
7.7 million  common  shares,  while  retaining  the right to receive  additional
common  shares  depending  on the volume  weighted  average  share  price of the
company's  common  stock over the  program's  execution  period.  The program is
expected to be completed in fourth  quarter 2006, at which time the company will
receive any remaining common shares owed to it under the agreement.

EARNINGS CONFERENCE CALL

At 9:00 A.M.  (CDT)  tomorrow,  Chairman 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  webcast  on  the   company's   Investor   Relations   (IR)  website
(www.principal.com/investor)  or by dialing  (800)  374-1609  (U.S.  callers) or
(706) 643-7701  (International  callers)  approximately  10 minutes prior to the
start of the call.  To access the call,  leader name is Tom Graf.  Listeners can
access  an audio  replay  of the call on the IR  website,  or by  calling  (800)
642-1687 (US callers) or (706) 645-9291 (International callers). The access code
for the replay is 5040488.  Replays will be available  through November 7, 2006.
The financial supplement is currently available on the company's website and may
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 banking through its diverse family of financial  services
companies. A member of the Fortune 500, the Principal Financial Group has $215.0
billion in assets under  management(3)  and serves some 16.4  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.


                                      ###

                                       6
<PAGE>

<TABLE>
<CAPTION>

SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

                                              OPERATING EARNINGS (LOSS)* IN MILLIONS

                                  SEGMENT
------------------------------------------ ------------------------------ ---------------------------
                                              THREE MONTHS ENDED,            NINE MONTHS ENDED,
------------------------------------------ --------------- -------------- -------------- ------------
                                             9/30/06          9/30/05        9/30/06        9/30/05
------------------------------------------ --------------- -------------- -------------- ------------
<S>                                          <C>              <C>            <C>            <C>
U.S. ASSET MANAGEMENT AND ACCUMULATION       $157.4           $133.3         $466.4         $402.4
------------------------------------------ --------------- -------------- -------------- ------------
INTERNATIONAL ASSET MANAGEMENT AND
ACCUMULATION                                   23.2             19.7           56.9           48.3
------------------------------------------ --------------- -------------- -------------- ------------
LIFE AND HEALTH INSURANCE                      82.0             65.4          217.6          211.2
------------------------------------------ --------------- -------------- -------------- ------------
CORPORATE AND OTHER                            (7.9)            (4.1)         (20.8)         (17.4)
------------------------------------------ --------------- -------------- -------------- ------------
OPERATING EARNINGS                            254.7            214.3          720.1          644.5
------------------------------------------ --------------- -------------- -------------- ------------
NET REALIZED/UNREALIZED CAPITAL
GAINS (LOSSES), AS ADJUSTED                    (3.7)            (4.2)           8.3           (4.7)
------------------------------------------ --------------- -------------- -------------- ------------
OTHER AFTER-TAX ADJUSTMENTS                     0.0             (0.1)          18.8           14.6
------------------------------------------ --------------- -------------- -------------- ------------
NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS                                 $251.0           $210.0         $747.2         $654.4

                                                         PER DILUTED SHARE

                                              THREE MONTHS ENDED,            NINE MONTHS ENDED,
                                           --------------- -------------- -------------- ------------
                                             9/30/06          9/30/05        9/30/06        9/30/05

OPERATING EARNINGS                           $  0.94            $0.75          $2.60          $2.19
------------------------------------------ --------------- -------------- -------------- ------------
NET REALIZED/UNREALIZED CAPITAL
GAINS (LOSSES), AS ADJUSTED                    (0.02)           (0.01)          0.03          (0.01)
------------------------------------------ --------------- -------------- -------------- ------------
OTHER AFTER-TAX ADJUSTMENTS                     -                -              0.07           0.05
------------------------------------------ --------------- -------------- -------------- ------------
NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS                                 $  0.92            $0.74          $2.70          $2.23
------------------------------------------ --------------- -------------- -------------- ------------
WEIGHTED-AVERAGE DILUTED COMMON
SHARES OUTSTANDING                            272.1            283.9          276.7          294.0

</TABLE>


*OPERATING  EARNINGS  VERSUS  U.S.  GAAP (GAAP) NET INCOME  AVAILABLE  TO COMMON
STOCKHOLDERS

Management   uses  operating   earnings,   which  excludes  the  effect  of  net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments, for goal setting, determining employee compensation, and evaluating
performance  on a basis  comparable  to that used by  investors  and  securities
analysts.  Segment operating  earnings are determined by adjusting U.S. GAAP net
income  available to common  stockholders  for net  realized/unrealized  capital
gains and losses,  as  adjusted,  and other  after-tax  adjustments  the company
believes  are not  indicative  of  overall  operating  trends.  Note:  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,  management  believes  the
presentation of segment  operating  earnings  enhances the  understanding of our
results of  operations  by  highlighting  earnings  attributable  to the normal,
ongoing operations of the company's businesses.


                                       7
<PAGE>

<TABLE>
<CAPTION>

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

                                                        THREE MONTHS ENDED               NINE MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                     9/30/06         9/30/05         9/30/06         9/30/05
                                                 ---------------- --------------- --------------- ---------------
<S>                                                <C>               <C>           <C>              <C>
Premiums and other considerations                  $1,060.0          $ 943.4       $3,206.4         $2,826.4
Fees and other revenues                               454.0            423.3        1,354.1          1,245.8
Net investment income                                 931.6            853.5        2,695.4          2,483.4
Net realized/unrealized capital gains                  (6.7)            (1.8)          23.1              6.9
  (losses)
                                                 ---------------- --------------- --------------- ---------------
TOTAL REVENUES                                      2,438.9          2,218.4        7,279.0          6,562.5
                                                 ---------------- --------------- --------------- ---------------
Benefits, claims, and settlement expenses           1,426.2          1,281.3        4,227.6          3,780.1
Dividends to policyholders                             73.0             73.9          217.4            219.0
Operating expenses                                    608.2            576.8        1,832.4          1,714.5
                                                 ---------------- --------------- --------------- ---------------
TOTAL EXPENSES                                      2,107.4          1,932.0        6,277.4          5,713.6
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations before
  income taxes                                        331.5            286.4        1,001.6            848.9
Income taxes                                           72.3             67.1          229.7            201.1
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations, net of
  related income taxes                                259.2            219.3          771.9            647.8
Income from discontinued operations, net of
  related taxes                                        --                0.1           --               16.0
                                                 ---------------- --------------- --------------- ---------------
NET INCOME                                            259.2            219.4          771.9            663.8
Preferred stock dividends                               8.2              9.4           24.7              9.4
                                                 ---------------- --------------- --------------- ---------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS        $  251.0          $ 210.0       $  747.2         $  654.4

Less:
Net realized/unrealized capital gains
  (losses), as adjusted                                (3.7)            (4.2)           8.3             (4.7)
Other after-tax adjustments                            --               (0.1)          18.8             14.6
                                                 ---------------- --------------- --------------- ---------------
OPERATING EARNINGS                                 $  254.7          $ 214.3       $  720.1         $  644.5
                                                 ================ =============== =============== ===============

                        SELECTED BALANCE SHEET STATISTICS

                                                                           PERIOD ENDED
                                                     -------------------- --------------------- -----------------
                                                          09/30/06              12/31/05            09/30/05
                                                     -------------------- --------------------- -----------------
Total assets (in billions)                                $   136.2             $   127.0         $   121.1
Total common equity (in millions)                         $ 7,146.1             $ 7,265.2         $ 7,258.1
Total common equity excluding accumulated other
  comprehensive income (in millions)                      $ 6,368.5             $ 6,270.4         $ 6,093.6
End of period common shares outstanding
  (in millions)                                               269.6                 280.6             279.9
Book value per common share                               $    26.51            $    25.89        $    25.93
Book value per common share excluding
  accumulated other comprehensive income                  $    23.62            $    22.35        $    21.77

</TABLE>

                                       8
<PAGE>


<TABLE>
<CAPTION>


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

                                                               THREE MONTHS ENDED               NINE MONTHS ENDED
                                                          --------------- -------------- --------------- ----------------
                                                                9/30/06       9/30/05          9/30/06          9/30/05
                                                          --------------- -------------- --------------- ----------------
<S>                                                                <C>             <C>             <C>             <C>
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                 0.94            0.75            2.60            2.19
Net realized/unrealized capital gains (losses)                    (0.02)          (0.01)           0.03           (0.01)
Other after-tax adjustments                                        -               -               0.07            0.05
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                        0.92            0.74            2.70            2.23
                                                          =============== ============== =============== ================
BOOK VALUE PER COMMON SHARE EXCLUDING
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Book value per common share excluding accumulated
  other comprehensive income                                      23.62           21.77           23.62           21.77
Net unrealized capital gains                                       3.05            4.32            3.05            4.32
Foreign currency translation                                      (0.12)          (0.14)          (0.12)          (0.14)
Minimum pension liability                                         (0.04)          (0.02)          (0.04)          (0.02)
                                                          --------------- -------------- --------------- ----------------
Book value per common share including accumulated other
  comprehensive income                                            26.51           25.93           26.51          25.93
                                                          =============== ============== =============== ================
OPERATING REVENUES:
USAMA                                                          1,100.0           975.4         3,266.0         2,903.8
IAMA                                                             169.2           148.4           476.8           439.4
Life and Health                                                1,183.4         1,106.1         3,526.1         3,264.2
Corporate and Other                                               (7.6)           (8.0)          (13.5)          (46.1)
                                                          --------------- -------------- --------------- ----------------
Total operating revenues                                       2,445.0         2,221.9         7,255.4         6,561.3
Add:  Net realized/unrealized capital gains (losses) and
  related fee adjustments                                         (6.1)           (3.2)           23.6             3.4
Less:  Operating revenues from discontinued real estate            -               0.3             -               2.2
                                                          --------------- -------------- --------------- ----------------
Total GAAP revenues                                            2,438.9         2,218.4         7,279.0         6,562.5
                                                          =============== ============== =============== ================
OPERATING EARNINGS:
USAMA                                                            157.4           133.3           466.4           402.4
IAMA                                                              23.2            19.7            56.9            48.3
Life and Health                                                   82.0            65.4           217.6           211.2
Corporate and Other                                               (7.9)           (4.1)          (20.8)          (17.4)
                                                          --------------- -------------- --------------- ----------------
Total operating earnings                                         254.7           214.3           720.1           644.5
Net realized/unrealized capital gains (losses)                    (3.7)           (4.2)            8.3            (4.7)
Other after-tax adjustments                                        -              (0.1)           18.8            14.6
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                      251.0           210.0           747.2           654.4
                                                          =============== ============== =============== ================
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as                (3.7)           (4.2)            8.3            (4.7)
  adjusted
Add:
Amortization of DPAC and sale inducement costs                    (5.1)           (3.6)           (3.9)            0.3
Capital gains distributed                                          2.2             2.6             5.8             3.8
Tax impacts                                                       (2.5)            -               8.6             1.8
Minority interest capital gains                                    3.0             2.0             4.8             2.2
Less related fee adjustments:
Unearned front-end fee income                                      0.5            (1.0)            1.6             0.8
Certain market value adjustments to fee revenues                   0.1            (0.4)           (1.1)           (4.3)
                                                          --------------- -------------- --------------- ----------------
GAAP net realized/unrealized capital gains (losses)               (6.7)           (1.8)           23.1             6.9
                                                          =============== ============== =============== ================
OTHER AFTER TAX ADJUSTMENTS:
IRS Audit Issue                                                    -               -              18.8             -
Discontinued operations - Mortgage Banking                         -              (7.7)            -              (7.7)
Gain on disposal of discontinued real estate investments           -               7.6             -              22.3
                                                          --------------- -------------- --------------- ----------------
Total other after-tax adjustments                                  -              (0.1)           18.8            14.6
                                                          =============== ============== =============== ================

</TABLE>

-----------------
(1)  Use of non-GAAP  financial  measures is  discussed  in this  release  after
     Segment Highlights.
(2)  "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
(3)  As of September 30, 2006.

                                       9
<PAGE>
[{"type": "8-K", "sequence": "1", "filename": "finalthirdq06er.txt", "description": "FORM 8-K", "secsgml_size_bytes": 34137}]
{"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": "061174036"}, "business-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392", "phone": "5152475111"}, "mail-address": {"street1": "711 HIGH STREET", "city": "DES MOINES", "state": "IA", "zip": "50392"}}
SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 8-K

                                 CURRENT REPORT

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

                        Date of Report: OCTOBER 30, 2006
                        (Date of earliest event reported)

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

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

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

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

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

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

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

On  October  30,  2006,  Principal  Financial  Group,  Inc.  publicly  announced
information  regarding its results of operations and financial condition for the
quarter  ended  September  30, 2006.  The text of the  announcement  is included
herewith as Exhibit 99.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

99    Third Quarter 2006 Earnings Release

                                    SIGNATURE

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

                                    PRINCIPAL FINANCIAL GROUP, INC.

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

Date:    October 31, 2006

                                       2
EXHIBIT 99

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

       PRINCIPAL FINANCIAL GROUP, INC. REPORTS THIRD QUARTER 2006 RESULTS

Des Moines, IA (October 30, 2006) - Principal  Financial Group, Inc. (NYSE: PFG)
today announced net income available to common stockholders for the three months
ended September 30, 2006, of $251.0 million, or $0.92 per diluted share compared
to $210.0  million,  or $0.74 per  diluted  share  for the  three  months  ended
September 30, 2005. The company  reported  operating  earnings of $254.7 million
for third  quarter  2006,  compared to $214.3  million for third  quarter  2005.
Operating  earnings  per diluted  share (EPS) for third  quarter 2006 were $0.94
compared  to $0.75 for the same  period in 2005.  Operating  revenues  for third
quarter 2006 were  $2,445.0  million  compared to $2,221.9  million for the same
period last  year.(1)

"We're  particularly  pleased, so close to the five year anniversary of our IPO,
to report record results, with all time highs for earnings per share,  operating
earnings  and assets under  management,"  said J. Barry  Griswell,  chairman and
chief  executive  officer.  "With  record or  near-record  earnings in the third
quarter for each of our three operating segments,  we continue to deliver on our
commitments  -  accelerating  growth in our U.S.  and  international  retirement
businesses,  creating a successful global asset manager,  and profitably growing
our life and health insurance  businesses."

"At $255 million, third quarter 2006 operating earnings improved $40 million, or
19 percent  from a year ago,  reflecting  record  performance  and double  digit
earnings  growth for Full  Service  Accumulation,  Mutual  Funds and  Individual
Annuities,  our three key retirement and investment  businesses," said Griswell.
"We also achieved  double digit earnings growth in Principal  Global  Investors,
Principal  International,  Bank and Trust Services, and our Health and Specialty
Benefits  divisions."

"Strong earnings growth in the quarter,  coupled with ongoing  effective capital
management,  drove  EPS up 25  percent  from a year  ago to a record  94  cents,
contributing to 19 percent EPS growth through nine months,  significantly  ahead
of our long-term  target" said  Griswell.  "Growth  across each of our operating
segments reflects  continued  enhancements to distribution and an expanded array
of value-added solutions. It also reflects an ongoing investment in technology -
to drive  efficient,  cost-effective  operations and  importantly,  to help meet
changing  customer needs and serve customers the way they want to be served.  On
this last point,  we were  extremely  proud to rank  number one in the  recently
released INFORMATIONWEEK 500 most innovative users of technology."

                                       3
Additional highlights as of September 30, 2006

o    Record total company assets under management of $215.0 billion, an increase
     of $26.6 billion, or 14 percent compared to September 30, 2005.
o    Continued  strong  organic  sales  of  the  company's  key  retirement  and
     investment  products.  Through nine months: full service accumulation sales
     of $5.4  billion,  up 20 percent  (including  $1.4 million in third quarter
     2006);  mutual funds sales of $2.8 billion,  up 16 percent;  and individual
     annuities sales of $1.9 billion, up 24 percent.
o    Record  operating  revenues of $1.2  billion in third  quarter 2006 for the
     Life and Health Insurance  segment,  an eighth  consecutive record quarter,
     driven by record revenues from the Health and Specialty Benefits divisions.

                               SEGMENT HIGHLIGHTS

U.S. ASSET MANAGEMENT AND ACCUMULATION
Segment operating earnings for third quarter 2006 were $157.4 million,  compared
to  $133.3  million  for the same  period  in 2005.  Full  service  accumulation
generated  record  earnings of $73.5 million,  a 19 percent  increase from third
quarter 2005 reflecting  increased fees from higher account values. Full service
accumulation account values were $85.1 billion as of September 30, 2006 compared
to $75.1 billion as of September 30, 2005.  Principal Global Investors generated
earnings of $23.8  million for the quarter,  a 32 percent  increase,  reflecting
management  fee growth in all lines.

Operating  revenues  for the third  quarter  increased  13 percent  to  $1,100.0
million  compared to $975.4  million  for the same  period in 2005,  as revenues
increased  solidly in all  businesses  within the segment.

Segment assets under management continued to increase,  reaching a record $182.1
billion as of  September  30,  2006,  up 15 percent  from  $159.0  billion as of
September 30, 2005.

INTERNATIONAL ASSET MANAGEMENT AND ACCUMULATION

Segment  operating  earnings for third quarter 2006 were a record $23.2 million,
compared  to $19.7  million  for the same  period in 2005.  Third  quarter  2006
earnings  included a net benefit of $5.2 million  related to tax  refinements in
Mexico.  Third  quarter 2005  earnings  included a $3.0  million  benefit due to
refinement of accrued revenues and a $1.0 million tax benefit.

Operating  revenues  were $169.2  million for third  quarter  2006,  compared to
$148.4  million for the same period last year,  driven by higher sales of single
premium annuities with life contingencies in Chile.

Assets  under  management  for the  segment  were a record  $17.8  billion as of
September 30, 2006, compared to $14.7 billion as of September 30, 2005.

LIFE AND HEALTH INSURANCE

Segment  operating  earnings for third quarter 2006 were a record $82.0 million,
compared to $65.4 million for the same period in 2005.  Health division earnings
increased $12.8 million to $27.8 million,  reflecting growth in the business,  a
return  to more  normal  loss  ratios,  and a $4.4  million  reserve  refinement
benefit.  Specialty  Benefits division earnings  increased $4.6 million to $23.0
million,  due to solid growth in all product lines,  and a $3.1 million  benefit

                                       4
from a group long-term  disability reserve refinement.  Individual Life earnings
were  $31.2  million,  down  $0.8  million  from  the  year  ago  period,  which
experienced  favorable  death  claims.  Third  quarter 2006 also included a $4.5
million  benefit in the  individual  life  division  related to deferred  policy
acquisition cost unlocking.

Operating  revenues were $1,183.4 million,  an eighth consecutive record quarter
for the segment,  and an increase of seven percent from the same period in 2005.
Specialty  Benefits  revenues  increased 16 percent,  driven by strong sales and
steady  retention  in each  of the  Specialty  Benefits  product  lines.  Health
revenues  increased nine percent,  primarily due to a seven percent  increase in
insured medical covered members. Individual Life revenues decreased slightly, as
the company  continued  its shift in marketing  emphasis to fee-based  universal
life  (UL) and  variable  universal  life  (VUL)  products.  Unlike  traditional
premium-based products, UL and VUL deposits are not reported as GAAP revenue.

CORPORATE AND OTHER

Operating losses for third quarter 2006 were $7.9 million, compared to operating
losses of $4.1  million for the same period in 2005.  Results for third  quarter
2006 reflect a $3.1 million benefit for a refund of federal income tax interest.
Third quarter 2005 results reflect higher operating  earnings from joint venture
real estate sales activity.

FORWARD LOOKING AND CAUTIONARY STATEMENTS

This press  release  contains  forward-looking  statements,  including,  without
limitation,  statements  as to sales  targets,  sales and earnings  trends,  and
management's  beliefs,  expectations,  goals and opinions.  The company does not
undertake to update these statements, which are based on a number of assumptions
concerning future conditions that may ultimately prove to be inaccurate.  Future
events and their effects on the company may not be those anticipated, and actual
results  may  differ   materially   from  the  results   anticipated   in  these
forward-looking  statements.  The risks,  uncertainties  and factors  that could
cause or contribute to such material  differences are discussed in the company's
annual  report on Form 10-K for the year ended  December  31,  2005,  and in the
company's  quarterly  report on Form 10-Q for the quarter  ended June 30,  2006,
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.

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. Management also uses non-GAAP measures for goal setting, determining
employee  and  senior  management   awards  and  compensation,   and  evaluating
performance  on a basis  comparable  to that used by  investors  and  securities
analysts.

                                       5
SHARE REPURCHASES

In May 2006,  the company  completed the $250 million share  repurchase  program
authorized by the Board in November 2005.  Under this program,  during the first
five months of the year, the company repurchased 5.1 million common shares for a
cost of $250 million.  Also in May 2006,  following the Board's share repurchase
authorization  of up to $500 million,  the company  entered into an  accelerated
common stock repurchase agreement with an investment bank. Under this agreement,
the company paid $500 million and received an initial  delivery of approximately
7.7 million  common  shares,  while  retaining  the right to receive  additional
common  shares  depending  on the volume  weighted  average  share  price of the
company's  common  stock over the  program's  execution  period.  The program is
expected to be completed in fourth  quarter 2006, at which time the company will
receive any remaining common shares owed to it under the agreement.

EARNINGS CONFERENCE CALL

At 9:00 A.M.  (CDT)  tomorrow,  Chairman 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  webcast  on  the   company's   Investor   Relations   (IR)  website
(www.principal.com/investor)  or by dialing  (800)  374-1609  (U.S.  callers) or
(706) 643-7701  (International  callers)  approximately  10 minutes prior to the
start of the call.  To access the call,  leader name is Tom Graf.  Listeners can
access  an audio  replay  of the call on the IR  website,  or by  calling  (800)
642-1687 (US callers) or (706) 645-9291 (International callers). The access code
for the replay is 5040488.  Replays will be available  through November 7, 2006.
The financial supplement is currently available on the company's website and may
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 banking through its diverse family of financial  services
companies. A member of the Fortune 500, the Principal Financial Group has $215.0
billion in assets under  management(3)  and serves some 16.4  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.

                                      ###

                                       6
SUMMARY OF SEGMENT AND PRINCIPAL FINANCIAL GROUP, INC. RESULTS

                                              OPERATING EARNINGS (LOSS)* IN MILLIONS

                                  SEGMENT
------------------------------------------ ------------------------------ ---------------------------
                                              THREE MONTHS ENDED,            NINE MONTHS ENDED,
------------------------------------------ --------------- -------------- -------------- ------------
                                             9/30/06          9/30/05        9/30/06        9/30/05
------------------------------------------ --------------- -------------- -------------- ------------
U.S. ASSET MANAGEMENT AND ACCUMULATION       $157.4           $133.3         $466.4         $402.4
------------------------------------------ --------------- -------------- -------------- ------------
INTERNATIONAL ASSET MANAGEMENT AND
ACCUMULATION                                   23.2             19.7           56.9           48.3
------------------------------------------ --------------- -------------- -------------- ------------
LIFE AND HEALTH INSURANCE                      82.0             65.4          217.6          211.2
------------------------------------------ --------------- -------------- -------------- ------------
CORPORATE AND OTHER                            (7.9)            (4.1)         (20.8)         (17.4)
------------------------------------------ --------------- -------------- -------------- ------------
OPERATING EARNINGS                            254.7            214.3          720.1          644.5
------------------------------------------ --------------- -------------- -------------- ------------
NET REALIZED/UNREALIZED CAPITAL
GAINS (LOSSES), AS ADJUSTED                    (3.7)            (4.2)           8.3           (4.7)
------------------------------------------ --------------- -------------- -------------- ------------
OTHER AFTER-TAX ADJUSTMENTS                     0.0             (0.1)          18.8           14.6
------------------------------------------ --------------- -------------- -------------- ------------
NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS                                 $251.0           $210.0         $747.2         $654.4

                                                         PER DILUTED SHARE

                                              THREE MONTHS ENDED,            NINE MONTHS ENDED,
                                           --------------- -------------- -------------- ------------
                                             9/30/06          9/30/05        9/30/06        9/30/05

OPERATING EARNINGS                           $  0.94            $0.75          $2.60          $2.19
------------------------------------------ --------------- -------------- -------------- ------------
NET REALIZED/UNREALIZED CAPITAL
GAINS (LOSSES), AS ADJUSTED                    (0.02)           (0.01)          0.03          (0.01)
------------------------------------------ --------------- -------------- -------------- ------------
OTHER AFTER-TAX ADJUSTMENTS                     -                -              0.07           0.05
------------------------------------------ --------------- -------------- -------------- ------------
NET INCOME AVAILABLE TO COMMON
STOCKHOLDERS                                 $  0.92            $0.74          $2.70          $2.23
------------------------------------------ --------------- -------------- -------------- ------------
WEIGHTED-AVERAGE DILUTED COMMON
SHARES OUTSTANDING                            272.1            283.9          276.7          294.0
*OPERATING  EARNINGS  VERSUS  U.S.  GAAP (GAAP) NET INCOME  AVAILABLE  TO COMMON
STOCKHOLDERS

Management   uses  operating   earnings,   which  excludes  the  effect  of  net
realized/unrealized  capital gains and losses, as adjusted,  and other after-tax
adjustments, for goal setting, determining employee compensation, and evaluating
performance  on a basis  comparable  to that used by  investors  and  securities
analysts.  Segment operating  earnings are determined by adjusting U.S. GAAP net
income  available to common  stockholders  for net  realized/unrealized  capital
gains and losses,  as  adjusted,  and other  after-tax  adjustments  the company
believes  are not  indicative  of  overall  operating  trends.  Note:  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,  management  believes  the
presentation of segment  operating  earnings  enhances the  understanding of our
results of  operations  by  highlighting  earnings  attributable  to the normal,
ongoing operations of the company's businesses.

                                       7
PRINCIPAL FINANCIAL GROUP, INC.
                              RESULTS OF OPERATIONS
                                  (IN MILLIONS)

                                                        THREE MONTHS ENDED               NINE MONTHS ENDED
                                                 ---------------- --------------- --------------- ---------------
                                                     9/30/06         9/30/05         9/30/06         9/30/05
                                                 ---------------- --------------- --------------- ---------------
Premiums and other considerations                  $1,060.0          $ 943.4       $3,206.4         $2,826.4
Fees and other revenues                               454.0            423.3        1,354.1          1,245.8
Net investment income                                 931.6            853.5        2,695.4          2,483.4
Net realized/unrealized capital gains                  (6.7)            (1.8)          23.1              6.9
  (losses)
                                                 ---------------- --------------- --------------- ---------------
TOTAL REVENUES                                      2,438.9          2,218.4        7,279.0          6,562.5
                                                 ---------------- --------------- --------------- ---------------
Benefits, claims, and settlement expenses           1,426.2          1,281.3        4,227.6          3,780.1
Dividends to policyholders                             73.0             73.9          217.4            219.0
Operating expenses                                    608.2            576.8        1,832.4          1,714.5
                                                 ---------------- --------------- --------------- ---------------
TOTAL EXPENSES                                      2,107.4          1,932.0        6,277.4          5,713.6
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations before
  income taxes                                        331.5            286.4        1,001.6            848.9
Income taxes                                           72.3             67.1          229.7            201.1
                                                 ---------------- --------------- --------------- ---------------
Income from continuing operations, net of
  related income taxes                                259.2            219.3          771.9            647.8
Income from discontinued operations, net of
  related taxes                                        --                0.1           --               16.0
                                                 ---------------- --------------- --------------- ---------------
NET INCOME                                            259.2            219.4          771.9            663.8
Preferred stock dividends                               8.2              9.4           24.7              9.4
                                                 ---------------- --------------- --------------- ---------------
NET INCOME AVAILABLE TO COMMON STOCKHOLDERS        $  251.0          $ 210.0       $  747.2         $  654.4

Less:
Net realized/unrealized capital gains
  (losses), as adjusted                                (3.7)            (4.2)           8.3             (4.7)
Other after-tax adjustments                            --               (0.1)          18.8             14.6
                                                 ---------------- --------------- --------------- ---------------
OPERATING EARNINGS                                 $  254.7          $ 214.3       $  720.1         $  644.5
                                                 ================ =============== =============== ===============

                        SELECTED BALANCE SHEET STATISTICS

                                                                           PERIOD ENDED
                                                     -------------------- --------------------- -----------------
                                                          09/30/06              12/31/05            09/30/05
                                                     -------------------- --------------------- -----------------
Total assets (in billions)                                $   136.2             $   127.0         $   121.1
Total common equity (in millions)                         $ 7,146.1             $ 7,265.2         $ 7,258.1
Total common equity excluding accumulated other
  comprehensive income (in millions)                      $ 6,368.5             $ 6,270.4         $ 6,093.6
End of period common shares outstanding
  (in millions)                                               269.6                 280.6             279.9
Book value per common share                               $    26.51            $    25.89        $    25.93
Book value per common share excluding
  accumulated other comprehensive income                  $    23.62            $    22.35        $    21.77
8
PRINCIPAL FINANCIAL GROUP, INC.
           RECONCILIATION OF NON-GAAP FINANCIAL MEASURES TO U.S. GAAP
                       (IN MILLIONS, EXCEPT AS INDICATED)

                                                               THREE MONTHS ENDED               NINE MONTHS ENDED
                                                          --------------- -------------- --------------- ----------------
                                                                9/30/06       9/30/05          9/30/06          9/30/05
                                                          --------------- -------------- --------------- ----------------
DILUTED EARNINGS PER COMMON SHARE:
Operating Earnings                                                 0.94            0.75            2.60            2.19
Net realized/unrealized capital gains (losses)                    (0.02)          (0.01)           0.03           (0.01)
Other after-tax adjustments                                        -               -               0.07            0.05
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                        0.92            0.74            2.70            2.23
                                                          =============== ============== =============== ================
BOOK VALUE PER COMMON SHARE EXCLUDING
ACCUMULATED OTHER COMPREHENSIVE INCOME:
Book value per common share excluding accumulated
  other comprehensive income                                      23.62           21.77           23.62           21.77
Net unrealized capital gains                                       3.05            4.32            3.05            4.32
Foreign currency translation                                      (0.12)          (0.14)          (0.12)          (0.14)
Minimum pension liability                                         (0.04)          (0.02)          (0.04)          (0.02)
                                                          --------------- -------------- --------------- ----------------
Book value per common share including accumulated other
  comprehensive income                                            26.51           25.93           26.51          25.93
                                                          =============== ============== =============== ================
OPERATING REVENUES:
USAMA                                                          1,100.0           975.4         3,266.0         2,903.8
IAMA                                                             169.2           148.4           476.8           439.4
Life and Health                                                1,183.4         1,106.1         3,526.1         3,264.2
Corporate and Other                                               (7.6)           (8.0)          (13.5)          (46.1)
                                                          --------------- -------------- --------------- ----------------
Total operating revenues                                       2,445.0         2,221.9         7,255.4         6,561.3
Add:  Net realized/unrealized capital gains (losses) and
  related fee adjustments                                         (6.1)           (3.2)           23.6             3.4
Less:  Operating revenues from discontinued real estate            -               0.3             -               2.2
                                                          --------------- -------------- --------------- ----------------
Total GAAP revenues                                            2,438.9         2,218.4         7,279.0         6,562.5
                                                          =============== ============== =============== ================
OPERATING EARNINGS:
USAMA                                                            157.4           133.3           466.4           402.4
IAMA                                                              23.2            19.7            56.9            48.3
Life and Health                                                   82.0            65.4           217.6           211.2
Corporate and Other                                               (7.9)           (4.1)          (20.8)          (17.4)
                                                          --------------- -------------- --------------- ----------------
Total operating earnings                                         254.7           214.3           720.1           644.5
Net realized/unrealized capital gains (losses)                    (3.7)           (4.2)            8.3            (4.7)
Other after-tax adjustments                                        -              (0.1)           18.8            14.6
                                                          --------------- -------------- --------------- ----------------
Net income available to common stockholders                      251.0           210.0           747.2           654.4
                                                          =============== ============== =============== ================
NET REALIZED/UNREALIZED CAPITAL GAINS (LOSSES):
Net realized/unrealized capital gains (losses), as                (3.7)           (4.2)            8.3            (4.7)
  adjusted
Add:
Amortization of DPAC and sale inducement costs                    (5.1)           (3.6)           (3.9)            0.3
Capital gains distributed                                          2.2             2.6             5.8             3.8
Tax impacts                                                       (2.5)            -               8.6             1.8
Minority interest capital gains                                    3.0             2.0             4.8             2.2
Less related fee adjustments:
Unearned front-end fee income                                      0.5            (1.0)            1.6             0.8
Certain market value adjustments to fee revenues                   0.1            (0.4)           (1.1)           (4.3)
                                                          --------------- -------------- --------------- ----------------
GAAP net realized/unrealized capital gains (losses)               (6.7)           (1.8)           23.1             6.9
                                                          =============== ============== =============== ================
OTHER AFTER TAX ADJUSTMENTS:
IRS Audit Issue                                                    -               -              18.8             -
Discontinued operations - Mortgage Banking                         -              (7.7)            -              (7.7)
Gain on disposal of discontinued real estate investments           -               7.6             -              22.3
                                                          --------------- -------------- --------------- ----------------
Total other after-tax adjustments                                  -              (0.1)           18.8            14.6
                                                          =============== ============== =============== ================
-----------------
(1)  Use of non-GAAP  financial  measures is  discussed  in this  release  after
     Segment Highlights.
(2)  "The Principal  Financial Group" and "The Principal" are registered service
     marks of Principal  Financial  Services,  Inc.,  a member of the  Principal
     Financial Group.
(3)  As of September 30, 2006.

                                       9